<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

(Mark One)

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
  OF 1934 [FEE REQUIRED]

For the fiscal year ended December 31, 1996

                                       OR

_ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
  ACT OF 1934 [NO FEE REQUIRED]


Commission file number 33-20083








                   THE PRUDENTIAL INSURANCE COMPANY OF AMERICA




                                  in respect of

             THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY ACCOUNT
             (Exact name of Registrant as specified in its charter)



         New Jersey                                  22-1211670
-------------------------------        ---------------------------------
(State or other jurisdiction of        (IRS Employer Identification No.)
incorporation or organization)









                 751 Broad Street, Newark, New Jersey 07102-2992
               ---------------------------------------------------
               (Address of principal executive offices) (Zip Code)

                                (201) 802-6000
      ----------------------------------------------------------------------
              (Registrant's Telephone Number, including area code)






   Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.   YES  X   NO
                                                ---     ---


<PAGE>

                        THE PRUDENTIAL VARIABLE  CONTRACT
                              REAL PROPERTY ACCOUNT
                                  (Registrant)

                                      INDEX
ITEM                                                                    PAGE
 NO.                                                                     NO.
---                                                                     ----
      Cover Page                                                          -


      Index                                                               2

PART I



  1.  Business                                                            3

  2.  Properties                                                          4


  3.  Legal Proceedings                                                   5

  4.  Submission of Matters to a Vote of Security Holders                 5

PART II


  5.  Market for the Registrant's Interests and Related
        Security Holder Matters                                           6



  6.  Selected Financial Data                                             6

  7.  Management's Discussion and Analysis of Financial Condition
        and Results of Operations                                         7

  8.  Financial Statements and Supplementary Data                        15


  9.  Changes in and Disagreements with Accountants on Accounting
        and Financial Disclosure                                         15

PART III

 10. Directors and Executive Officers of Prudential                      16

 11.  Executive Compensation                                             20

 12.  Security Ownership of Certain Beneficial Owners and Management     20

 13.  Certain Relationships and Related Transactions                     21

PART IV

 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K    22


      Exhibit Index                                                      22

      Signatures                                                         25



                                        2
<PAGE>


                                     PART I



ITEM 1.  BUSINESS

The Prudential Variable Contract Real Property Account (the "Real Property
Account"), the Registrant, was established on November 20, 1986 by The
Prudential Insurance Company of America ("Prudential"), as a separate
investment account, pursuant to New Jersey law.  The Real Property Account was
established to provide a real estate investment option offered in connection
with the funding of benefits under certain variable life insurance and variable
annuity contracts (the "Contracts") issued by Prudential.

The assets of the Real Property Account are invested in The Prudential Variable
Contract Real Property Partnership (the "Partnership").  The Partnership, a
general partnership organized under New Jersey law on April 29, 1988, was formed
through agreement among Prudential, Pruco Life Insurance Company, and Pruco
Life Insurance Company of New Jersey, to provide a means for assets allocated to
the real property option under certain variable life insurance and variable
annuity contracts issued by the respective companies to be invested in a
commingled pool.


The Partnership has an investment policy of investing at least 65% of its assets
in direct ownership interests in income-producing real estate and participating
mortgage loans.  The largest portion of these real estate investments will be
direct ownership interests in income-producing real estate, such as office
buildings, agricultural land, shopping centers, hotels, apartments, or
industrial properties.  From 10% to 15% of the Partnership's assets generally
will be invested in short-term or intermediate-term marketable debt instruments.
The remainder of the Partnership's assets may be invested in other types of real
estate-related investments, including conventional, non-participating mortgage
loans.


The Partnership's investments will be maintained so as to meet the
diversification requirements set forth in Treasury Regulations issued pursuant
to Section 817(h) of the Internal Revenue Code relating to the investments of
variable life insurance and variable annuity separate accounts.

For information regarding the Partnership's investments, operations, and other
significant events, see Item 2, Properties, Item 7, Management's Discussion and
Analysis of Financial Condition and Results of Operations, and Item 8, Financial
Statements and Supplementary Data.




                                        3
<PAGE>

ITEM 2.  PROPERTIES


The Partnership owns the following properties as of December 31, 1996.


OFFICE FACILITY IN LISLE, ILLINOIS
The property is a four-story office building on 5.6 acres of land.  It was
constructed in 1985 and contains approximately 102,000 square feet of leasable
space. R.R. Donnelley & Sons Company currently leases the entire building under
a renewable lease expiring in 1997.  The facility is located at 750 Warrenville
Road in the Corporetum Office Park in Lisle, Illinois.  Corporetum Office Park
is a 75 acre planned office development located 25 miles west of downtown
Chicago.

APARTMENT COMPLEX IN ATLANTA, GEORGIA
Brookwood Valley Apartments is a garden apartment complex located approximately
3 miles north of downtown Atlanta.  It consists of eight three-story buildings
containing a total of 240 units.  Construction of the 7.1 acre site was
completed in 1987.  At December 31, 1996 the property was 93% leased.


WAREHOUSE FACILITY IN POMONA, CALIFORNIA
The Partnership owns a leasehold estate in six industrial buildings on
approximately 28 acres in Pomona, California.  The site is approximately 30
miles east of downtown Los Angeles.  The buildings were constructed between 1982
and 1984 and contain approximately 531,000 square feet of leasable space.  The
property was 100% leased at December 31, 1996.

Land under the leasehold estate was capitalized upon the assignment of a ground
lease from the previous owner.  The lease term extends until November 2078 with
no renewal options.  The annual ground lease payments are $250,000 through
November 1994, and, for each ten year increment thereafter, are subject to
increase by 50% of the increase in the Consumer Price Index during the previous
period.  For 1995, the annual ground lease payment  increased by $126,450 to
$376,450.  The ground lease agreement contains a purchase option from November
1994 to November 1997 at a fixed price of $4,000,000, which management intends
to exercise.

SHOPPING CENTER IN ROSWELL, GEORGIA
King's Market shopping center was constructed in 1988.  It is located
approximately 22 miles north of downtown Atlanta on a 30 acre site.  It contains
approximately 300,000 square feet of rentable space.  At December 31, 1996 it
was 96% leased.



OFFICE FACILITY IN MORRISTOWN, NEW JERSEY
This four-story suburban office building was constructed in 1981 and contains
83,000 rentable square feet.  It is located on a 5.1 acre site, approximately 30
miles west of New York City.  At December 31, 1996 it was 93% leased.

WAREHOUSE FACILITY IN BOLINGBROOK, ILLINOIS
This single-story warehouse was completed in 1989.  It contains 224,640 rentable
square feet.  It is located approximately 20 miles southwest of downtown
Chicago.  The entire facility is leased to the Gillette Company under a lease
expiring in October, 2000.


APARTMENT COMPLEX IN FARMINGTON HILLS, MICHIGAN
Indian Creek Apartments consists of fifteen two-story buildings containing 156
two-bedroom and 40 one- bedroom units.  It was constructed in 1988 and is
located approximately 20 miles northwest of Detroit.  At December 31, 1996, the
property was 88% leased.


                                        4
<PAGE>

WAREHOUSE FACILITIES IN JACKSONVILLE, FLORIDA
The Partnership owns a 50% interest in four single-story warehouse/distribution
buildings located in Jacksonville, Fl.  The remaining 50% is owned by The
Prudential and one of its subsidiaries.  The buildings contain approximately
502,000 rentable square feet and were 85% leased at December 31, 1996

APARTMENT COMPLEX IN RALEIGH, N.C
Dunhill Trace  consists of fourteen two and three story apartment buildings.  It
was constructed and acquired  in June, 1995 and  located on a 16.2 acre site in
Northwest  Raleigh, N.C. At December 31, 1996 the property was 97% leased.

OFFICE FACILITY IN NASHVILLE, TN
Westpark is a 97,000 square foot office center located in suburban Nashville,
Tennessee.  The property was constructed in 1982, at December 31, 1996 the
building was 99% leased.

OFFICE FACILITY IN OAKBROOK TERRACE, ILLINOIS
Oakbrook Terrace Corporate Center is a 123,000 square foot building located in a
western suburb of Chicago, Illinois.   At December 31, 1996 the property is
99% leased.

OFFICE FACILITY IN BEAVERTON, OREGON
This three story office building was completed in 1995.  It contains
approximately 72,000 square feet of rentable space.  The building is located on
a 3.89 acre land parcel in Beaverton, Oregon.  At December 31, 1996 the building
was 100% leased.



ITEM 3.  LEGAL PROCEEDINGS

None.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS

Contract owners participating in the Real Property Account have no voting rights
with respect to the Real Property Account.




                                        5
<PAGE>

                                     PART II


ITEM 5.  MARKET FOR THE REGISTRANT'S INTERESTS AND RELATED SECURITY HOLDER
         MATTERS

Owners of the Contracts may participate by allocating all or part of the net
premiums or purchase payments to the Real Property Account.  Contract values
will vary with the performance of the Real Property Account's investments
through the Partnership.  Participating interests in the Real Property Account
are not traded in any public market, thus a discussion of market information is
not relevant.

As of March 14, 1997, there were approximately 61,337 Contract owners of record
investing in the Real Property Account.



ITEM 6.  SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>

                                                                          Year Ended December 31,
                                                -------------------------------------------------------------------------
                                                     1996           1995           1994           1993          1992
                                                -------------   ------------  ------------   -------------  -------------
<S>                                             <C>             <C>           <C>            <C>            <C>
RESULTS OF OPERATIONS:

Net Investment Income                           $  6,615,307    $ 6,200,851   $  5,252,476   $  4,906,836   $  4,396,240
Net Gain/(Loss) on Investment
 in Partnership                                 $ (2,197,584)   $   314,267   $    634,661   $   (935,754)  $ (6,443,108)
                                                -------------   ------------  ------------   -------------  -------------
Net Increase/(Decrease) in Net Assets
 Resulting From Operations                      $  4,417,723    $ 6,515,118   $  5,887,137   $  3,971,082   $ (2,046,868)
                                                -------------   ------------  ------------   -------------  -------------
                                                -------------   ------------  ------------   -------------  -------------
FINANCIAL POSITION:

<CAPTION>
                                                                              December 31,
                                                -------------------------------------------------------------------------

                                                     1996           1995           1994           1993          1992
                                                -------------   ------------  ------------   -------------  -------------
<S>                                             <C>             <C>           <C>            <C>            <C>


Total Assets                                     $90,992,994    $86,101,883    $79,136,103    $75,841,656    $71,488,007

</TABLE>


                                        6

<PAGE>


ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS


All of the assets of The Prudential Variable Contract Real Property Account
(the "Real Property Account") are invested in The Prudential Variable
Contract Real Property Partnership (the "Partnership").  Correspondingly, the
liquidity, capital resources and results of operations for the Real Property
Account are contingent upon those of the Partnership.  Therefore, all of
management's discussion of these items is at the Partnership level.  The
partners in the Partnership are The Prudential Insurance Company of America,
Pruco Life Insurance Company and Pruco Life Insurance Company of New Jersey.

(A) LIQUIDITY AND CAPITAL RESOURCES


At December 31, 1996, the Partnership's liquid assets consisted of cash and cash
equivalents and marketable securities totaling $45,164,848.  This is an increase
of $20,409,428 from liquid assets at December 31, 1995 of $24,755,420.  The
increase is due primarily to (1) $5,509,976 in cash received from the sale of
Oak Creek Office Park in Flint, Michigan, (2) $14,697,789 in cash received from
the sale of the Azusa, California warehouse, (3) operations of the Partnership's
properties,  and (4) interest income received from short-term investments. This
was partially offset by (1) the purchase of an office building in Beaverton,
Oregon for $10,713,722, and (2) withdrawals by the partners of $3 million.
Sources of liquidity include net cash flow from property operations and interest
from short-term investments.


Prudential has committed to fund up to $100 million to enable the
Partnership to acquire real estate investments.  Contributions to the
Partnership under this commitment are utilized for property acquisitions and
returned to Prudential on an ongoing basis from Contract owners' net
contributions.  The amount of the commitment is reduced by $10 million for every
$100 million in current value net assets of the Partnership.  The amount
available for future investments is approximately $50.2 million as of December
31, 1996.


The Partnership will ordinarily invest 10-15% of its assets in cash and short-
term obligations to maintain liquidity; however, its investment policy allows up
to 30% investment in cash and short-term obligations.  At December 31, 1996,
22.1%  of the Partnership's assets consisted of cash and cash equivalents and
marketable securities.  This is in excess of the target range because proceeds
from the sales, noted earlier are being retained in the Partnership in
anticipation of potential acquisitions.  Two industrial projects are scheduled
to close in mid 1997, one in Aurora, CO for an estimated purchase price of $10.4
million, and the other in Salt Lake City, UT for an estimated price of $7
million.  Also during 1997, the Partnership expects to exercise an option to
acquire the land under the Pomona, CA warehouse, already owned by the
Partnership, for a cost of $4 million.

During 1996, the partners withdrew $3.0 million.  Withdrawals may be made during
1997 based upon the percentage of assets invested in short-term obligations and
taking into consideration anticipated cash needs of the Partnership including
potential property acquisitions and dispositions and capital expenditures.  At
December 31, 1996, and currently, the Partnership has adequate liquidity.
Management anticipates that ongoing cashflow from operations will satisfy the
Partnership's needs over the next twelve months and the foreseeable future.

The Partnership acquired an office building in Beaverton, Oregon on December 20,
1996 for $10,713,721.  The acquisition was funded entirely by cash held by the
Partnership.

During 1996 the Partnership made $550,056 in capital expenditures for tenant
alterations, leasing commissions, and land and building improvements.  The most
significant of these expenses was approximately $244,000 for tenant alterations
and leasing commissions at the industrial property in Pomona, CA, of which
approximately $166,000 related to a renewal for the Treasure Chest,


                                        7
<PAGE>


approximately $46,000 related to a lease signed by Prestige Auto, a new tenant
and approximately $30,000 related to a renewal for SCI.  Other significant
capital expenditures included approximately $122,000 in tenant alterations and
leasing commissions, of which approximately $100,000 related to the lease signed
by Spectrum Financial at the Morristown, NJ office building, garage repairs of
approximately $81,000 at the Oakbrook Terrace office facility in Oakbrook
Terrace, IL, and tenant improvements and leasing commissions of approximately
$65,000, of which approximately $36,000 related to Shepherd's Staff Christian
Book Store, a new tenant at the Roswell, GA retail center.

Other major capital expenditures in 1996 included approximately $29,000 for
access gates at the Atlanta, GA apartments. At the Farmington Hills apartments,
approximately $25,000 was spent for repairs to brick facade, landscaping and
replacement of fitness equipment.

Projected capital expenditures for 1997 total approximately $5,291,000.  Of
this, approximately $4,581,000 consists of leasing commission and tenant
alterations.  The largest of these is $3,108,000 planned for the Lisle, IL
office center. The property expects to pay approximately $2,298,000 in tenant
improvements and $810,000 in leasing commissions to acquire a new tenant, as
R.R. Donnelley will be leaving at the expiration of their lease in September.
At the Morristown Office Center, approximately $914,000 has been budgeted in
tenant improvements and leasing commissions, of which approximately $878,000
relates to efforts to renew the Smith Barney lease prior to the October, 1997
expiration. Tenant improvements and leasing commissions have been budgeted for
approximately $254,000 at the Roswell, GA retail center, approximately $186,000
at the Nashville office center and approximately $119,000 at the Pomona
warehouse. All of these projected expenditures relate to prospective leases and
are based on reasonable cost.  The actual amount of such expenditures will
depend on the number of new leases signed, the actual needs of the particular
construction or repair, and the timing of lease executions.

Other major capital projects planned for 1997 include, at the Lisle office
building $200,000 for upgrading of the heating and air conditioning system and
$35,000  for repairs to the roof; at the Roswell retail center, $140,000 for a
new traffic layout to ease traffic in and around the center; at the Atlanta
apartments $132,000 for exterior wood replacement and building painting; at the
Raleigh apartments $37,000 for regrading the land; at the Oakbrook Terrace
office building $15,000 for pressure washing of the exterior. Approximately
$151,000 is budgeted for smaller projects among the various properties.

(B) RESULTS OF OPERATIONS

The following is a brief discussion of a comparison of the results of operations
for the three years ended December 31, 1996, 1995 and 1994.

1996 VS 1995

The Partnership's net investment income for 1996 was $15,419,518, an increase of
$699,247 (4.8%) from net investment income for 1995 of $14,720,271.  The
increase was primarily the result of higher net income from property operations
($1,455,941) offset primarily by a higher management fee ($152,351) and lower
interest income from short-term investments ($526,479).

Income from property operations, including income from interest in properties,
was $16,061,409 for 1996.  This is an increase of $980,119 (6.5%) from
$15,081,290 for 1995. This was due primarily to increased rent from properties
(approximately $2,973,000). The increase was offset by increased operating
expense (approximately $1,034,000) and real estate  taxes (approximately
$429,000).



                                        8
<PAGE>


Rent from properties for 1996 increased by $2,972,650 (15.0%) to $22,799,694
from $19,827,044 for 1995.  A large portion of this was the result of properties
that were acquired during 1995 and held for the full year of 1996.  This
increase in revenue totaled approximately $4,367,000.

These additional revenues were primarily offset by the sale of the Azusa
industrial building which resulted in approximately $1,092,000 reduction in
revenues from last year and the Roswell, GA shopping center which accounted for
a decrease of approximately $214,000 due to lower percentage rents in 1996 and
decreased occupancy.

Income from interest in properties relates to the Partnership's 50% co-
investment in several warehouses (the Unit warehouses).  Income from this source
decreased approximately $31,624 (4.9%) from $638,183 for 1995 to $606,558. The
reduction is the result of GATX vacating a portion of its space in October and
the space not being leased.

Administrative expenses on the statement of operations includes both those
related to property operations and the administration of the Partnership.
Property administrative expenses for 1996 were $1,653,934. This is $78,271
(5.0%) higher than the $1,575,663 for 1995.  The increase was primarily the
result of full year administrative expenses of approximately $234,000 at the
Nashville, TN office building, Oakbrook Terrace, IL office facility and the
Raleigh, NC apartment complex, partially offset by decreases due to the partial
year of  two 1996 sold properties totaling approximately $130,000.

Property operating expenses for 1996 were $2,904,620 compared to $1,870,183 for
1995, an increase of $1,034,437 (55%).  The increase was primarily due to a full
year of operating expenses totaling approximately $943,000 related to the
Raleigh, Oakbrook Terrace and Nashville properties, all which were acquired in
1995. Increases were also due to the Morristown office property incurring window
repairs of approximately $21,000 and an increase to its grounds contract for
approximately $59,000 offset by lower repairs and maintenance expenses totaling
$23,000.  The Atlanta and the Farmington Hills apartments had increases totaling
approximately $57,000 for 1996 apartment make-ready due to higher turnover as
compared to 1995.

Real estate taxes for 1996 were $2,367,404, an increase of $429,314 (22.2%) from
$1,938,090 for 1995. The increase was primarily due to a full year of real
estate tax expense totaling approximately $572,000 related to the Raleigh,
Oakbrook Terrace and Nashville properties.  At the Morristown office building,
real estate taxes increased by approximately $32,000. These increases were
offset by decreases of approximately $106,000,  the result of the Azusa and
Flint properties being sold in 1996.  Real estate taxes at the Farmington Hills
apartments reduced by approximately $26,000 due to last year's tax appeal.

Administrative expenses related to the Partnership totaled $211,499 for 1996.
This is an increase of $7,930 (3.6%) from $219,429 for 1995.

The investment management fee for 1996 was $2,494,229.  This is  $152,351 (6.5%)
higher than the fee for 1995 of $2,341,878.  The fee is computed as 1.25% of
gross assets.  During 1995, gross assets were slightly higher than the prior
year due to cash flow retained by the Partnership and increased market values of
the  real estate investments.



                                        9
<PAGE>

MARKET VALUES OF INVESTED ASSETS AND PROPERTY LEASING ACTIVITY:  1996 VS 1995


During 1996, the Partnership recognized an unrealized loss of $3,211,436 on its
real estate investments. This represents 1.9% of the value of the investments at
December  31, 1995. The retail center experienced the largest unrealized loss,
approximately $3,787,000. The offices experienced a net unrealized loss of
approximately $560,000. The industrial properties experienced a net unrealized
loss of approximately $75,000 offset by the apartments experiencing net
unrealized gains of approximately $1,210,000.

Occupancy at the Partnership's properties at December 31, 1996 were generally
lower than at December 31,1995. During 1996, the Partnership acquired a 72,109
square feet office building in Beaverton, Oregon.  At December 31, 1996 the
Beaverton office building was 100% occupied to five tenants and there are no
expirations in 1997.

The Partnership's Atlanta apartment complex experienced an unrealized gain of
approximately $1,083,000 (8.6% of its year-end 1995 value) and the Farmington
Hills apartment complex experienced an unrealized gain of approximately $477,000
(3.4% of its year-end 1995 value).  These increases were primarily the result of
higher rental rates and occupancy than were previously projected for these
properties. The luxury garden apartment complex in Raleigh experienced an
unrealized loss of approximately $350,000 (2.0% of its year-end 1995 value). The
property had experienced lowered loss of occupancy but has currently recovered
to a December 31, 1996 occupancy of 97%.

Occupancy at the Atlanta and the Farmington Hills apartments decreased from 97%
and 98% at December 31, 1995 to 93% and 88%, respectively. Occupancy at the
Raleigh apartments increased from 95% at December 31, 1995 to 97% at the end of
1996.  All vacant apartments are being marketed as of December 31, 1996.

The Bolingbrook warehouse experienced the largest unrealized loss of this
property type, approximately $300,000 (4.1% of its year-end 1995 value).
Gillette, a tenant of the entire property, has indicated they need additional
space and will relocate at the expiration of their lease in 2000. The Pomona
property experienced an unrealized gain of approximately $175,000 (1.0% of its
year-end 1995 value), this  was the result of signing leases that maintained the
property occupancy at 100%.  The market values of the four Unit warehouses in
which the Partnership owns a 50% interest at the end of 1996 experienced an
unrealized gain of approximately $50,000 (.9% of their December 31, 1995 value).

Occupancy at the Pomona warehouse remained at 100%.  During 1996, a total of
234,292 square feet expired and was leased at the property. The most significant
renewal included SCI signing an amendment to their lease to extend the term for
five years.  During 1997, JB Engineering's 49,697 square feet lease is expiring.
Occupancy at the Bolingbrook warehouse also remained at 100%.  Gillette's lease
of this entire facility will expire in the year 2000, at which time they will
relocate. At the Unit warehouses, occupancy decreased from 100% at 1995 to 85%
at 1996.  GATX vacated its space in October and the space has not been leased.
All vacant space is being marketed as of December 31,1996.

The Lisle office, experienced an unrealized loss of approximately $1,700,000
(14.7% of its year-end 1995 value). This was caused by R.R. Donnelley (sole-
tenant) not renewing its lease, which expires September 1997, and the
anticipated expenses that will be incurred in order to release the building in
1997. The Morristown property experienced an unrealized gain of approximately
$409,000 (4.3% of its December 31, 1995 value), due to improved market
conditions in the Northern, NJ market. The Nashville office experienced an
unrealized gain of approximately $166,000. The increase represented 1.9% of its
year-end 1995 value.  The rise in value reflects the expectations of continued
high



                                       10
<PAGE>


occupancy and the potential for higher rental rates in the future.  The Oakbrook
Terrace office building experienced an increase of $565,000 (4.5% of its
December 31, 1995 value).  This was the result of two tenant rent increases that
occurred in 1996.

Occupancy at the Lisle office building remained at 100% during 1996.  R.R.
Donnelley has given notice they will be vacating their space in 1997.  The
Oakbrook Terrace office building continued its 99% occupancy.  The Nashville
office building occupancy remained at 99%.  During 1996, a total of 25,394
square feet was re-leased, leaving a vacant space of 1,350 square feet.  During
1997, at the Nashville office building, 11,966 square feet will expire.
Occupancy at the Morristown office decreased from 98% to 93% as of December 31,
1996.  There are four vacant suites totaling 9,583 square feet. During 1996,
Mutual of Omaha renewed their lease of 5,479 square feet and Sprint Spectrum
signed a two month temporary agreement for 4,010 square feet, while Chase Home
Mortgage vacated their suite of 4,010 square feet.  During 1997, at the
Morristown office building, a total of 15,753 square feet will be up for
renewal.  All vacant space is currently being marketed.

The Partnership's sole retail property in Roswell, GA, experienced an unrealized
loss of $3,786,554 (11.8% of its December 31, 1995 value).  This was due to
increased competition in the local market resulting in downward pressure on
rental rates and occupancy.

Occupancy at the Roswell center decreased from 99% at December 31, 1995 to 96%
at December 31, 1996, a loss of 3%. During 1996 a total of 10,464 square feet
expired and 4,127 square feet was renewed.  Shepherd's Staff Christian Book
Store leased 6,100 square feet.  Two tenants leasing a total of 6,100 square
feet have vacated prior to their lease expiration.  At December 31, 1996 a total
of 10,464 square feet remained vacant. Several lease proposals are in
negotiation, while all other vacant space is currently being marketed.


During 1996, the Partnership sold its Azusa, CA industrial property and its
Flint, MI office building.  The sale of these two properties resulted in a
realized loss of $1,573,147.  The Flint, MI property experienced the largest
loss of $1,094,521 (16.7% of its year-end 1995 value).  This was the result of
both the uncertain economic outlook and leasing demand for Flint, MI, as well as
the physical condition of the property.  The Azusa property experienced a
realized loss of $478,627 (3.2% of its year-end 1995 value).  The gross sales
price of the property was $15,250,000 and the net proceeds were $14,697,789.


1995 VS 1994

Income from property operations, including income from interest in properties,
was $15,081,290 for 1995.  This is an increase of $1,058,039 (7.5%) from
$14,023,251 for 1994. This was due primarily to increased rent from properties
(approximately $3,482,785). The increase was offset by lower income from
interest in properties due to the sale for the seven Unit warehouses in October,
1994 (approximately $1,717,000), higher real estate taxes (approximately
$145,000), property administrative expenses (approximately $399,000). and
property operating expenses (approximately $163,000).

Rent from properties for 1995 increased by $3,482,785 (21.3%) to $19,827,044
from $16,344,259 for 1994.  A large portion of this was the result of properties
that were acquired during 1995.  This revenue totaled approximately $1,466,000.
Revenue at the apartments in Raleigh were $1,111,744, the office building in
Nashville,$331,165 and the office building in Oakbrook Terrace $23,587. Rental
income at the Flint office park increased by approximately $662,600 in 1995.
This was primarily due to the acquisition of this property through foreclosure
in July, 1994. As a result, only six months of operating results are included in
1994 as compared to a full year in 1995. Increased occupancy in 1995 resulted in
an additional $906,000 in rental revenue for the Azusa and Morristown buildings
as well as the Partnership's two other apartment properties. Rental income at
the Bolingbrook


                                       11
<PAGE>


warehouse increased about $82,000 in 1995 as a result of the expiration of a
free rent period granted to the tenant in the first quarter of 1994. Revenue at
the Pomona warehouse was almost $221,000 higher  due to increased occupancy and
higher expense recoveries.

 These additional revenues were partially offset by lower rental income from the
Roswell, GA shopping center (approximately $15,000) due to lower percentage rent
in 1995, offset by higher rental income and expense recoveries.

Income from interest in properties relates to the Partnership's 50% co-
investment in several warehouses (the Unit warehouses).  Income from this source
decreased $1,717,021 (72.9%) from $2,355,204 for 1994 to $638,183 for 1995.  The
Partnership sold its investments in seven of these warehouses in 1994.  This
resulted in a reduction of income of approximately $1,800,000 in 1995.  Of the
four remaining warehouses income increased by approximately $83,000 due to
higher occupancy at one of the warehouses.

Administrative expenses on the statement of operations includes both those
related to property operations and the administration of the Partnership.
Property administrative expenses for 1995 were $1,575,663. This is $399,265
(33.9%) higher than the $1,176,398 for 1994.  Most of the increase was the
result of the inclusion of the Flint, Raleigh and Nashville properties, (almost
$270,000), higher insurance premiums ($72,000) primarily at the two California
properties and in increase in bad debt expense ($63,000).  The increase in bad
debt expense arose from the 1994 application of a security deposit to amounts
owed by that tenant which reduced 1994 bad debt expense by approximately
$33,000. Professional fees also increased approximately $45,000 in 1995 due to
the utilization of real estate tax consultants to assist with the appeal of
assessed values at several of the properties. The appeal generated significant
tax savings as noted below. Advertising and promotional expenses were lower at
several of the properties which offset the increased administrative expenses by
about $40,000.

Property operating expenses for 1995 were $1,870,183 compared to $1,707,039 for
1994, an increase of $163,144 (9.6%).  The increase was primarily due to the
inclusion of  approximately $217,336 in operating expenses related to the
Raleigh and Nashville properties. The  Flint property had an increase of $73,600
for 1995 compared to the last six months of 1994. In addition there were higher
repairs and maintenance at the Farmington Hills apartments of approximately
$18,500. These increases were reduced by lower expenses at the Azusa warehouse
related to the painting of building exteriors in 1994 ($88,500), at Pomona,
($24,500) due to lower repairs and maintenance,  and lower repairs and
maintenance, security and utilities at Roswell ($35,000).

Real estate taxes for 1995 were $1,938,090, an increase of $145,315 (8.1%) from
$1,792,775 for 1994.  Approximately $244,000 of this increase was due to the
inclusion of the  Flint office buildings, the Raleigh apartments and the
Nashville office center. This includes $101,000 of 1994 taxes at the Flint
property.  At the Roswell shopping center, real estate taxes increased by
$31,500. Approximately $153,000 of the decreases were achieved as the result of
appealing  the assessed values at the Azusa, Pomona, Morristown and Farmington
Hills properties.  Real estate taxes at the net lease properties in Bolingbrook
and Lisle also increased nearly $22,000.

There was no interest income from mortgage loans in 1995.  This was due to the
maturing of the Lincoln, NE loan in May 1994 and the default of the mortgagor on
the Flint loan.  Interest income from short-term investments increased
$1,089,471 (69.3%) from $1,571,394 for 1994 to $2,660,865 for 1995.  This was
the result of increased amounts invested and higher interest rates in 1995. The
Partnership had retained increased cash balances in anticipation of acquiring
properties in 1995.

Administrative expenses related to the Partnership totaled $219,429 for 1995.
This is a reduction of $17,895 (7.5%) from $237,324 for 1994.  The decrease
resulted primarily from lower professional fees for 1995.


                                       12
<PAGE>


The investment management fee for 1995 was $2,341,878.  This is  $54,062 (2.4%)
higher than the fee for 1994 of $2,287,816.  The fee is computed as 1.25% of
gross assets.  During 1995, gross assets were slightly higher than the prior
year due to cash flow retained by the Partnership and increased market values of
the  real estate investments.

MARKET VALUES OF INVESTED ASSETS:  1995 VS 1994

During 1995, the Partnership recognized an unrealized gain of $661,623 on its
real estate investments. This represents 0.5% of the investments'  December  31,
1994 value. The apartments experienced the largest increase, approximately
$2,700,000. The warehouses increased by about $421,000.  The office building
properties experienced an unrealized loss of approximately $1,933,000 and the
retail property, an unrealized loss of about $528,000.

The Partnership's luxury garden apartments in Raleigh had an unrealized gain
of nearly $1,441,300. The property has benefited from very strong leasing
demand (occupancy at December 31, 1995 was 95%) and is performing at a higher
level than anticipated. The Farmington Hills apartments experienced an
unrealized gain of $626,143 (4.6% of its year-end 1994 value) and Atlanta
$634,165 (5.3% of its year-end 1994 value).  These increases were primarily
the result of higher rental rates, occupancy and tenant retention than
previously projected for these properties.

The warehouses experienced an unrealized gain of about $421,000 during 1995.
The Pomona property had the largest unrealized gain, $684,153 (4.2% of its year-
end 1994 value).  This  was the result of two leases that were signed which
brought the occupancy to 100%.  The market values of the four Unit warehouses in
which the Partnership owns a 50% interest at the end of 1995 increased $49,134
(.9% of their December 31, 1994 value).

The warehouse in Bolingbrook experienced an unrealized gain of $357,563 (5.1% of
the property's December 31, 1994 value). This was due to lower estimates of
operating expenditures and a scheduled step-up in the rental rate.

The increases in the market values of these warehouses were partially offset by
a decrease of $669,928 (4.3% of the property's December 31, 1994 value) in the
market value of the Azusa warehouse.  The decrease in market value was partially
attributable to less optimistic assumptions of expense growth, future rental
rates and leasing activity as current leases expire, based on the property's
competitive position in the local market.

The office buildings experienced an unrealized loss approximately $1,933,000.
The Flint, property value decreased $1,314,060 (17.1% of its December 31, 1994
value). This was caused by reduced expectations of future rental rate increases
and tenant renewals due to increased competition from new construction in the
Flint market. The  Lisle office building decreased in value by $400,000 (3.3% of
the property's December 31, 1994 value) and the Morristown property  also
decreased in value by $473,993 (4.8% of its December 31, 1994 value). The Lisle
property's decrease in value reflects the possibility that the current tenant,
R.R. Donnelley, may not remain in the building when their current lease expires
in 1997. This would result in downtime while a new tenant was found and
necessitate incurring additional tenant improvements and leasing commissions.
It is also likely that the rental rate on any new lease would be lower than that
currently paid by Donnelley.  The decline in the value of the Morristown
property was the result of  increases in the discount rates, reflecting the soft
market conditions in the local areas and the expectations potential buyers are
requiring higher returns on such investments. The decreases in value at the
office buildings were partially offset by an increase of $254,871 at the
Nashville building. The increase represented  3% of its acquisition cost.  The
rise in value reflects the expectations of continued high occupancy and the
potential for higher rental rates in the future.


                                       13
<PAGE>


The Partnership's sole retail property, King's Market Shopping Center in
Roswell, GA, experienced an unrealized loss of $527,726 (1.6% of its December
31, 1994 value).  This was due to increased competition in the local market due
to the construction of a competing shopping center which is expected to exert
downward pressure on rental rates.





                                       14


<PAGE>

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See Index to Financial Statements and Financial Schedules on pages F-1 and
F-2.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

The Registrant engaged Price Waterhouse LLP as its new independent accountants
as of May 14, 1996.  During the two most recent fiscal years and through May 14,
1996, the Registrant has not consulted with Price Waterhouse LLP on items which
1)were or should have been subject to SAS 50 or 2) concerned the subject matter
of a disagreement or reportable event with the former auditor (as described in
Regulation S-K Item 304(a)(2)).

The Board of Directors of The Prudential Insurance Company of America approved
the recommendation by its auditing committee to engage Price Waterhouse LLP as
independent accountants.  The auditing committee of The Prudential Insurance
Company of America supervises the audit activities in respect of affiliates,
including the Registrant.





                                       15
<PAGE>


                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF PRUDENTIAL


                           DIRECTORS OF PRUDENTIAL

FRANKLIN  E. AGNEW, Director since 1994 (current term expires April, 2000).
Member, Finance Committee; Member, Committee on Dividends.  Business Consultant
since 1986.  Senior Vice President H.J. Heinz from 1971 to 1986.  Mr. Agnew is
also a director of Bausch & Lomb Inc. and John Wiley & Sons, Inc.  Age 62.


FREDERIC K. BECKER, Director since 1994 (current term expires April, 1999).
Member, Auditing Committee; Member, Committee on Business Ethics.  President,
Wilentz Goldman and Spitzer (law firm) since 1989, with firm since 1960.  Age
61.

WILLIAM  W.  BOESCHENSTEIN, Director since 1982 (current term expires April,
1997).  Chairman, Executive Committee; Member, Auditing Committee.  Retired
since 1990.  Chairman of the Board and Chief Executive Officer, Owens-Corning
Fiberglas Corporation from 1981 to 1990.  Mr. Boeschenstein is also a director
of FMC Corporation.  Age 71.

LISLE C. CARTER, JR., Director since 1987 (current term expires April, 1997).
Chairman, Committee on Nominations; Member, Executive Committee; Member, Finance
Committee.  Retired since 1991.  Senior Vice President and General Counsel,
United Way of America from 1988 to 1991.  Age 71.

JAMES G. CULLEN, Director since 1994 (current term expires April, 2001).
Member, Compensation Committee;  Member, Committee on Business Ethics.  Vice-
Chairman, Bell Atlantic Corporation since 1995.  President, New Jersey Bell
1989-1995.  Mr. Cullen is also a director of Bell Atlantic Corporation and
Johnson & Johnson.  Age 54.

CAROLYNE K. DAVIS, Director since 1989 (current term expires April, 1997).
Member, Compensation Committee; Member, Finance Committee; Member, Committee on
Business Ethics.  Retired Health Care Consultant.  Health Care Advisor, Ernst &
Young from 1985 to 1995.   Dr. Davis is also a director of Merck & Co. Inc.,
Beckman Instruments, Inc., Pharmaceutical Marketing Services, Inc. and Science
Applications International Corporation.  Age 65.

ROGER A. ENRICO, Director since 1994 (current term expires April, 1998).
Member, Committee on Nominations; Member, Compensation Committee.  Vice Chairman
and CEO, Pepsi Co. Inc. since 1996.   Vice Chairman, Pepsi Co. Inc.,  from 1993
to 1996.  Chairman and CEO, Pepsi Co. Worldwide Food, from 1991 to 1993.
President and CEO Pepsi Co. Worldwide Beverage from 1986-1991.  Mr. Enrico is
also a director of Pepsi Co. Inc., A. H. Belo Corporation and Dayton Hudson
Corporation.  Age 52.

ALLAN D. GILMOUR, Director since 1995 (current term expires April, 1999).
Member, Finance Committee; Member, Committee on Dividends.  Retired Vice
Chairman, Ford Motor Company.  Mr. Gilmour is also a director of Whirlpool
Corporation, U.S. West, Inc., The Detroit Edison Company and The Dow Chemical
Company.  Age 62.

WILLIAM  H. GRAY  III, Director since 1991 (current term expires April, 2000).
Member, Finance Committee; Member, Committee on Nominations.  President and
Chief Executive Officer, United Negro College Fund, Inc. since 1991. Mr. Gray
served in Congress from 1979 to 1991. Mr. Gray is also a director of Warner-
Lambert Co., Chase Manhattan Corp., Municipal Bond Investors Assurance Corp.,
Westinghouse Electric Corp., Union Pacific Corp., Lotus Development Corp. and
Rockwell International Corp. Age 55.


                                       16
<PAGE>


JON F. HANSON, Director since 1991 (current term expires April, 1997).  Member,
Committee on Dividends; Member, Finance Committee. Chairman, Hampshire
Management Company since 1976. Mr. Hanson is also a director of Orange &
Rockland Utilities, Inc., Hampton Management Company and United Water Resources.
Age 60.

CONSTANCE  J. HORNER, Director since 1994 (current term expires April, 1998).
Member, Committee on Nominations; Member, Auditing Committee.  Guest Scholar,
The Brookings Institution since 1992. Assistant to the President and Director of
Presidential Personnel, U.S. Government, 1991-1992.  Deputy Secretary,
Department of Health and Human Services from 1989 to 1991.  Ms. Horner is also a
director of Pfizer, Inc., Foster Wheeler Corporation, and Ingersoll-Rand
Company.   Age 55.

ALLEN  F. JACOBSON, Director since 1992 (current term expires April, 1998).
Member, Auditing Committee; Member, Compensation Committee.  Retired since 1991.
Chairman of the Board and Chief Executive Officer, Minnesota Mining &
Manufacturing Co. (3M) from 1986 to 1991.  Mr. Jacobson is also a director of
Abbott Laboratories,  Deluxe Corporation, Northern States Power Company, Silicon
Graphics, Inc., Valmont Industries, 3M, Mobil Corporation, U.S. West, Inc., Sara
Lee Corporation and Potlatch Corporation. Age 70.

BURTON G. MALKIEL, Director since 1978 (current term expires April, 1998).
Chairman, Finance Committee; Member, Committee on Dividends; Member, Executive
Committee.  Chemical Bank Chairman's Professor of Economics, Princeton
University, since 1988.  Dr. Malkiel is also a director of The Jeffrey Company,
Vanguard Group, Inc., Amdahl Corporation, Baker Fentress & Company and The
Southern New England Telecommunications Company.  Age 64.

ARTHUR F. RYAN, Chairman of the Board, President and Chief Executive Officer of
Prudential since 1994.  President and Chief Operating Officer, Chase Manhattan
Corp. from 1990 to 1994, with Chase since 1972.
Age 54.

CHARLES R. SITTER, Director since 1995 (current term expires April, 1999).
Member, Finance Committee; Member, Committee on Dividends.  Retired President,
Exxon Corporation.  Age 66.

DONALD L. STAHELI, Director since 1995 (current term expires April, 1999).
Member, Compensation Committee.  Chairman and CEO, Continental Grain Company
since 1988.  Mr. Staheli is also a director of Continental Grain Company and
Bankers Trust Company.  Age 65.

RICHARD  M. THOMSON, Director since 1976 (current term expires April, 2000).
Chairman, Compensation Committee; Member, Committee on Nominations; Member,
Executive Committee.  Retired.  Chairman of the Board and Chief Executive
Officer, The Toronto-Dominion Bank 1978-1997.  Mr. Thomson is also a director of
The Toronto-Dominion Bank, CGC, Inc., Eaton's of Canada, Ltd., INCO, Ltd.,
National Retail Credit Services Limited, Thomglen Corporation, The Thomson
Corp., S.C. Johnson and Son, Inc., and TEC Leaseholds Limited.  Age 63.

JAMES A. UNRUH, Director since 1996 (current term expires April, 2000).  Member,
Compensation Committee.  Chairman and CEO, Unisys Corporation since 1990.  Mr.
Unruh is also a director of Unisys Corporation and Ameritech Corporation.  Age
55.


                                       17
<PAGE>

P. ROY VAGELOS, M.D., Director since 1989 (current term expires April, 1997).
Chairman, Auditing Committee; Member, Committee on Nominations; Member,
Executive Committee.  Chairman, Regeneron Pharmaceuticals since 1995.  Chairman
and Chief Executive Officer, Merck & Co., Inc. from 1986 to 1994.  Dr. Vagelos
is also a director of The Estee Lauder Companies Inc., Pepsi Co., Inc.,
Regeneron Pharmaceuticals, Inc., and McDonnell Douglas Corporation.  Age 67.

STANLEY C. VAN NESS, Director since 1990 (current term expires April, 2002).
Chairman, Committee on Business Ethics; Member, Auditing Committee; Member,
Executive Committee.  Attorney,  Picco Herbert Kennedy (law firm) since 1990.
Mr. Van Ness is also a director of Jersey Central Power & Light Company.  Age
63.

PAUL A. VOLCKER, Director since 1988 (current term expires April, 2000).
Chairman, Committee on Dividends; Member, Executive Committee; Member, Committee
on Nominations.  Consultant since 1996.  Chairman, James D. Wolfensohn, Inc.
from 1988 to 1996.  Chairman, J. Rothschild, Wolfensohn & Co. 1992 to 1996.  Mr.
Volcker is also a director of UAL Corporation, Bankers Trust Company, Nestle,
S.A., and is a public member of the Board of Governors, American Stock Exchange.
Age 69.

JOSEPH H. WILLIAMS, Director since 1994 (current term expires April, 1998).
Member, Committee on Dividends; Member, Auditing Committee.  Chairman of the
Board, The Williams Companies since 1994.  Chairman and Chief Executive Officer,
The Williams Companies 1979-1993.   Mr. Williams is also a director of Flint
Industries, The Orvis Company, The Williams Companies and MTC Investors LLC.
Age 63.



                                       18
<PAGE>


                      EXECUTIVE  OFFICERS OF PRUDENTIAL


ARTHUR F. RYAN, Chairman, Chief Executive Officer, and President since 1994;
1990-1994, President and Chief Operating Officer, Chase Manhattan Corp.  Age 54.

E. MICHAEL CAULFIELD, Chief Executive Officer, Prudential Investments since
1995; 1992-1995, Senior Vice President; 1989-1992, Managing Director.  Age 50.

MARK B. GRIER, Executive Vice President and CFO since 1995; 1995-1984, Executive
Vice President, Chase Manhattan Bank.  Age 44.

RODGER A. LAWSON, Executive Vice President, Marketing and Planning since 1996;
1994-1996, President and CEO, Van Eck Global; 1992-1994, Partner and Managing
Director, Bankers Trust Company.  Age 50.

JOHN V. SCICUTELLA, Operations and Systems Executive Officer since 1995; 1970-
1995, Executive Vice President, The Chase Manhattan Bank.  Age 47.

WILLIAM F. YELVERTON, Chief Executive Officer, Individual Insurance Group since
1995; 1990-1995, Chief Executive Officer, New York Life Worldwide.  Age 55.

MARTIN A. BERKOWITZ, Senior Vice President and Comptroller since 1995; 1991-
1995, Senior Vice President and CFO, Prudential Investment Company.  Age 48.

WILLIAM  M. BETHKE, President, Capital Markets Group since 1995; Senior Vice
President since 1986.   Age 49.

WILLIAM  D. FRIEL, Senior Vice President and Chief Information Officer since
1995; 1993-1995, Senior Vice President; 1988-1992, Vice President.  Age 57.

JAMES R. GILLEN, Senior Vice President and General Counsel since 1984. Age 59.

BRUCE J. GOODMAN, Chief Executive Officer, Prudential Service Company since
1995; 1993-1995, Senior Vice President; 1992-1993, Senior Vice President,
Metropolitan Life; 1977-1991, Vice President, Metropolitan Life.  Age 55.


JONATHAN M. GREENE, President, Investment Management, Money Management Group
since 1996; 1977-1996, Vice President, T. Rowe Price Associates, Inc.  Age 53.

IRA J. KLEINMAN, Chief Marketing and Product Development Officer, Individual
Insurance Group since 1995; 1992-1995, Senior Vice President; 1978-1992, Vice
President.  Age 49.

DONALD C. MANN, Senior Vice President, Human Resources since 1995; 1990-1995,
Senior Vice President. Age 54.

NEIL A. MCGUINNESS, Senior Vice President, Marketing, Prudential Investments
since 1996; 1991-1996, Managing Director, Putnam Investments.  Age 50.

PRISCILLA A. MYERS, Senior Vice President and Auditor since 1995; 1989-1995,
Vice President and Auditor, Prudential. Age 47.


                                       19
<PAGE>

RICHARD O. PAINTER, President, Prudential Insurance & Financial Services since
1995; 1989-1995, Senior Vice President, New York Life Insurance Company  Age 48.

I. EDWARD PRICE, Senior Vice President and Actuary, Individual Insurance Group
since 1995; 1993-1995, Senior Vice President; 1990-1993, Senior Vice President
and Company Actuary.  Age 54.

KIYOFUMI SAKAGUCHI, President, Prudential  International Insurance since 1995;
1994-1995, Chairman and CEO, Prudential Life Insurance Ltd., Japan; 1992-1994,
President and CEO, Prudential International   Insurance.  Age 53.

GREGORY W. SCOTT, Chief Financial Officer, Prudential Health Care Group since
1995; 1993-1995, Executive Vice President and CFO, Prudential Securities Inc.
Age 43.

BRIAN M. STORMS, President, Individual Investments, Money Management Group since
1996; 1991-1996, Managing Director, Fidelity Investments.  Age 42.

SUSAN L. BLOUNT, Vice President and Secretary since 1995; 1989-1995, Assistant
General Counsel, PRSC. Age 39.

C. EDWARD CHAPLIN, Vice President and Treasurer since 1996; 1983-1995, Vice
President and Assistant Treasurer.  Age 40.


ITEM 11.  EXECUTIVE COMPENSATION

The Real Property Account does not pay any fees, compensation or reimbursement
to any Director or Officer of the Registrant.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Not applicable.



                                       20
<PAGE>

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Pursuant to an investment management agreement, Prudential charges the
Partnership a daily investment management fee at an annual rate of 1.25% of the
average daily gross asset valuation of the Partnership.  For the years ended
December 31, 1996, 1995 and 1994 management fees incurred by the Partnership
were $2,494,229, $2,341,878 and $2,287,816, respectively.

The Partnership also reimburses Prudential for certain administrative services
rendered by Prudential.  The amounts incurred for the years ended December 31,
1996, 1995 and 1994 were $116,818; $219,429; and $95,015, respectively, and are
classified as administrative expenses in the statements of operations.

The Partnership owns a 50% interest in four warehouse/distribution buildings in
Jacksonville, Florida (the Unit warehouses).  The remaining 50% interest is
owned by Prudential and one of its subsidiaries. At December 31, 1996,  these
properties had total assets of $17,668,652 and liabilities of $60,987.  For the
year ended December 31,  1996, the Unit warehouses had revenues of $1,516,876
and expenses of $303,754.

The Partnership has contracted with PREMISYS Real Estate Services, Inc.
(PREMISYS), an affiliate of Prudential, to provide property management services
at the Unit warehouses,  and through 1994 at the Bolingbrook,  IL warehouse.
The property management fee earned by PREMISYS, incurred by the Parnership and
Prudential for the years ended December 31, 1996, 1995 and 1994 was $36,000;
$31,360 and; $92,382, respectively.

On January 9, 1990, Prudential committed to fund up to $100 million to enable
the Partnership to take advantage of opportunities to acquire attractive real
property investments whose cost is greater than the Partnership's then available
cash.  Contributions to the Partnership under this commitment are utilized for
property acquisitions and returned to Prudential on an ongoing basis from
Contract owners' net contributions. Also, the amount of the commitment  is
reduced by $10 million for every $100 million in estimated market value net
assets of the Partnership.  The amount available under this commitment for
property purchases as of December 31, 1996 is approximately $50.2  million.



                                       21
<PAGE>


                                     PART IV


ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) The following documents are filed as part of this report:

    1.  Financial Statements

        See the Index to Financial Statements on pages F-1 and F-2.


    2.  Financial Statement Schedules

        The following financial statement schedules of The Prudential Variable
        Contract Real Property Partnership should be read in conjunction with
        the financial statements in Item 8 of this Annual Report on Form 10-K:

        III    Real Estate Owned: Properties
        III    Real Estate Owned: Interest in Properties

        See the Index to Financial Statement Schedules on pages
        F-1 and F-2.

    3.  Documents Incorporated by Reference

        See the following list of exhibits.

    4.  Exhibits

        See the following list of exhibits.

(b) Reports on Form 8-K.


    See Form 8-K as filed May 17, 1996.

(c) The following is a list of Exhibits to the Registrant's Annual Report on
    Form 10-K for the fiscal year ended December 31, 1994.  The Registrant will
    furnish a copy of any Exhibit listed below to any security holder of the
    Registrant who requests it upon payment of a fee of 15 cents per page.  All
    Exhibits are either contained in this Annual Report on Form 10-K or are
    incorporated by reference as indicated below.


    3.1 Amended Charter of The Prudential Insurance Company of America, filed
        as Exhibit 1.A.(6)(a) to Post-Effective Amendment No. 2 to Form S-6,
        Registration Statement No. 33-19999, filed March 2, 1989, and
        incorporated herein by reference.

    3.2 Amended By-Laws of The Prudential Insurance Company of America, filed
        as Exhibit 1.A.(6)(b) to Post-Effective Amendment No. 4 to Form S-6,
        Registration Statement No. 33-19999, filed March 2, 1990, and
        incorporated herein by reference.


                                       22
<PAGE>


        3.3   Resolution of the Board of Directors establishing The Prudential
              Variable Contract Real Property Account, filed as Exhibit (3C) to
              Form S-1, Registration Statement No. 33-20083, filed February 10,
              1988, and incorporated herein by reference.

        4.1   Revised Individual Variable Annuity Contract filed as Exhibit
              A(4)(w) to Post-Effective Amendment No. 8 to Form N-4,
              Registration Statement No. 2-80897, filed October 23, 1986, and
              incorporated herein by reference.

        4.2   Discovery Plus Contract, filed as Exhibit (4)(a) to Form N-4,
              Registration Statement No. 33-25434, filed November 8, 1988, and
              incorporated herein by reference.

        4.3   Custom VAL (previously named Adjustable Premium VAL) Life
              Insurance Contracts with fixed death benefit, filed as Exhibit
              1.A.(5) to Form S-6, Registration Statement No. 33-25372, filed
              November 4, 1988, and incorporated herein by reference.

        4.4   Custom VAL (previously named Adjustable Premium VAL) Life
              Insurance Contracts with  variable death benefit, filed as
              Exhibit 1.A.(5) to Form S-6, Registration Statement No. 33-25372,
              filed November 4, 1988, and incorporated herein by reference.

        4.5   Variable Appreciable Life Insurance Contracts with fixed death
              benefit, filed as Exhibit 1.A.(5) to Pre-Effective Amendment No.
              1 to Form S-6, Registration Statement No. 33-20000, filed June
              15, 1988, and incorporated herein by reference.

        4.6   Variable Appreciable Life Insurance Contracts with variable death
              benefit, filed as Exhibit 1.A.(5) to Pre-Effective Amendment No.
              1 to Form S-6, Registration Statement No. 33-20000, filed June
              15, 1988, and incorporated herein by reference.

        9.    None.

        10.1  Investment Management Agreement between The Prudential Insurance
              Company of America and The Prudential Variable Contract Real
              Property Partnership, filed as Exhibit (10A) to Pre-Effective
              Amendment No. 1 to Form S-1, Registration Statement No. 33-20083,
              filed May 2, 1988, and incorporated herein by reference.

        10.2  Service Agreement between The Prudential Insurance Company of
              America and The Prudential Investment Corporation, filed as
              Exhibit (10B) to Form S-1, Registration Statement No. 33-8698,
              filed September 12, 1986, and incorporated herein by reference.

        10.3  Partnership Agreement of The Prudential Variable Contract Real
              Property Partnership filed as Exhibit (10C) to Pre-Effective
              Amendment No. 1 to Form S-1, Registration Statement No. 33-20083,
              filed May 2, 1988, and incorporated herein by reference.

        11.   Not applicable.

        12.   Not applicable.

        13.   None.

        18.   None.


                                       23
<PAGE>


        21. Not applicable.

        22. Not applicable.

        23. None.

        24. Power of Attorney:  Incorporated by reference to Pre-Effective
            Amendment No. 1 to Form S-6, Registration No. 333-01031, filed
            August 22, 1996 on behalf of The Prudential Variable Contract
            Account GI-2.

        27. Not applicable.

        28. None.






                                       24
<PAGE>



                                   SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.


                   THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
                                  in respect of
             The Prudential Variable Contract Real Property Account
             ------------------------------------------------------
                                  (Registrant)






Date:         March 25, 1997           By: /s/ Esther H. Milnes
        ---------------------------       ----------------------------
                                       Esther H. Milnes
                                       Vice President


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.


SIGNATURE                                 TITLE                 DATE
---------                                 -----                 ----

*
 -----------------------------  Chairman of the Board and   March 25, 1997
Arthur F. Ryan                  Chief Executive Officer

*
 -----------------------------  Chief Financial Officer     March 25, 1997
Mark B. Grier

 /s/ Linda S. Dougherty
 -----------------------------  Chief Accounting Officer    March 25, 1997
Linda S. Dougherty



                                By:  * /s/ Thomas C. Castano
                                      -------------------------
                                Thomas C. Castano
                                (Attorney-in-Fact)


                                       25
<PAGE>

SIGNATURE                         TITLE                        DATE
---------                         -----                        ----

*
 ----------------------------   Director                    March 25, 1997
Franklin E. Agnew

*
 ----------------------------   Director                    March 25, 1997
Frederic K. Becker

*
 ----------------------------   Director                    March 25, 1997
William W. Boeschenstein

*
 ----------------------------   Director                    March 25, 1997
Lisle C. Carter, Jr.

*
 ----------------------------   Director                    March 25, 1997
James G. Cullen

*
 ----------------------------   Director                    March 25, 1997
Carolyne K. Davis

*
 ----------------------------   Director                    March 25, 1997
Roger A. Enrico

*
 ----------------------------   Director                    March 25, 1997
Allan D. Gilmour

*
 ----------------------------   Director                    March 25, 1997
William H. Gray, III

*
 ----------------------------   Director                    March 25, 1997
Jon F. Hanson

*
 ----------------------------   Director                    March 25, 1997
Constance J. Horner

*
 ----------------------------   Director                    March 25, 1997
Allen F. Jacobson

*
 ----------------------------   Director                    March 25, 1997
Burton J. Malkiel





                                By:  * /s/ Thomas C. Castano
                                      --------------------------------
                                Thomas C. Castano
                                (Attorney-in-Fact)



                                       26
<PAGE>

SIGNATURE                         TITLE                        DATE
---------                         -----                        ----

*
 ----------------------------   Director                    March 25, 1997
Charles R. Sitter

*
 ----------------------------   Director                    March 25, 1997
Donald L. Staheli

*
 ----------------------------   Director                    March 25, 1997
Richard M. Thomson

*
 ----------------------------   Director                    March 25, 1997
James A. Unruh

*
 ----------------------------   Director                    March 25, 1997
P. Roy Vagelos, M.D.

*
 ----------------------------   Director                    March 25, 1997
Stanley C. Van Ness

*
 ----------------------------   Director                    March 25, 1997
Paul A. Volcker

*
 ----------------------------   Director                    March 25, 1997
Joseph H. Williams





                                By:  * /s/ Thomas C. Castano
                                      --------------------------------
                                Thomas C. Castano
                                (Attorney-in-Fact)


                                       27
<PAGE>


                        THE PRUDENTIAL VARIABLE  CONTRACT
                              REAL PROPERTY ACCOUNT
                                  (Registrant)

                                      INDEX

                                                                           PAGE
                                                                           ----
A.     THE PRUDENTIAL VARIABLE  CONTRACT  REAL PROPERTY ACCOUNT

       Reports of Independent Accountants                                  F-3

       Financial Statements:

          Statement of Net Assets - December 31, 1996 and 1995             F-5

          Statement of Operations and Changes in Net Assets -
          Years Ended December 31, 1996, 1995 and 1994                     F-5

          Notes to Financial Statements                                    F-6

B.     THE PRUDENTIAL VARIABLE  CONTRACT  REAL PROPERTY PARTNERSHIP

       Reports of Independent Accountants                                  F-9

       1.   Financial Statements:

            Statements of Assets and Liabilities - December 31, 1996
            and 1995                                                      F-11

            Statements of Operations - Years Ended December 31, 1996,
            1995 and 1994                                                 F-12

            Statements of Changes in Net Assets - Years Ended
            December 31, 1996, 1995 and 1994                              F-13

            Statements of Cash Flows - Years Ended December 31, 1996,
            1995 and 1994                                                 F-14

            Schedule of Investments - December 31, 1996 and 1995          F-15

            Notes to Financial Statements                                 F-18


                                       F-1
<PAGE>


                        THE PRUDENTIAL VARIABLE  CONTRACT
                              REAL PROPERTY ACCOUNT
                                  (Registrant)

                                      INDEX

                                                                          PAGE
                                                                          ----

B.     THE PRUDENTIAL VARIABLE  CONTRACT  REAL PROPERTY PARTNERSHIP (continued)

       2.   Financial Statement Schedules:


            Real Estate Owned: Properties                                 F-23

            Real Estate Owned: Interest in Properties                     F-24


All other schedules are omitted because they are not applicable, or because the
required information is included in the financial statements or notes thereto.



                                       F-2
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS


To the Contract Owners of
Prudential Variable Contract Real Property Account
and the Board of Directors of
The Prudential Insurance Company of America


In our opinion, the accompanying statement of net assets and the related
statement of operations and changes in net assets present fairly, in all
material respects, the financial position of Prudential Variable Contract Real
Property Account (the "Account") at December 31, 1996, and the results of its
operations and the changes in its net assets for the year then ended, in
conformity with generally accepted accounting principles.  These financial
statements are the responsibility of the Account's management; our
responsibility is to express an opinion on these financial statements based on
our audit.  We conducted our audit of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audit, which included confirmation of shares owned in The
Prudential Variable Contract Real Property Partnership at December 31, 1996 by
correspondence with the transfer agent, provides a reasonable basis for the
opinion expressed above.


Price Waterhouse LLP
New York, New York
March 25, 1997


                                      F-3
<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Partners of
 The Prudential Variable Contract Real Property Account
Newark, New Jersey


We have audited the accompanying statement of assets of the Prudential
Variable Contract Real Property Account ("Real Property Account") as of
December 31, 1995, and the related statements of operations and changes in
net assets for each of the two years in the period ended December 31, 1995.
These financial statement are the responsibility of the Real Property
Account's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, such financial statements present fairly, in all material
respects, the financial position of The Prudential Variable Contract Real
Property Account as of December 31, 1995, and the results of its operations
and changes in net assets for each of the two years in the period ended
December 31, 1995 in conformity with generally accepted accounting principles.

Investments in shares of The Prudential Variable Contract Real Property
Partnership are stated at current value at December 31, 1995, as discussed in
Note 1 to the financial statements. Determination of current value involves
subjective judgment because the actual market value of real estate can be
determined only by negotiation between the parties in a sales transaction.

Deloitte & Touche LLP
Parsippany, New Jersey

March 1, 1996


                                      F-4
<PAGE>

                             FINANCIAL STATEMENTS OF
             THE PRUDENTIAL  VARIABLE CONTRACT REAL PROPERTY ACCOUNT

                             STATEMENT OF NET ASSETS
<TABLE>
<CAPTION>

                                                                                                           DECEMBER 31,
                                                                                                 ----------------------------
                                                                                                       1996           1995
                                                                                                 -------------  -------------
<S>                                                                                              <C>            <C>
Investment in shares of The Prudential Variable Contract
  Real Property Partnership (Note 3)                                                             $  90,992,994  $  86,101,883
                                                                                                 -------------  -------------
                                                                                                 -------------  -------------
NET ASSETS, representing:
Equity of Contract Owners                                                                        $  56,878,802  $  56,252,299
Equity of The Prudential Insurance Company of America                                               34,114,192     29,849,584
                                                                                                 -------------  -------------
                                                                                                 $  90,992,994  $  86,101,883
                                                                                                 -------------  -------------
                                                                                                 -------------  -------------


               STATEMENT OF OPERATIONS AND CHANGES IN NET ASSETS


                                                                                             YEAR ENDED DECEMBER 31,
                                                                                   ------------------------------------------
                                                                                         1996           1995          1994
                                                                                   ------------   ------------   ------------
<S>                                                                                <C>            <C>            <C>
INVESTMENT INCOME:

Net Investment Income from Partnership Operations                                  $  7,088,695   $  6,651,513   $  5,659,786

EXPENSES:
Asset Based Charges to Contract Owners (Note 5)                                         473,388        450,662        407,310
                                                                                   ------------   ------------   ------------

NET INVESTMENT INCOME                                                                 6,615,307      6,200,851      5,252,476
                                                                                   ------------   ------------   ------------
Net Unrealized (Loss)/Gain on Investments in Partnership                             (1,474,373)       314,267      1,179,744
Net Realized Loss on Sale of Investments in Partnership                                (723,211)             0       (545,083)
                                                                                   ------------   ------------   ------------

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS                                  4,417,723      6,515,118      5,887,137
                                                                                   ------------   ------------   ------------

CAPITAL TRANSACTIONS:

Net (Withdrawals)/Contributions by Contract Owners (Note 7)                          (2,022,824)       588,074      1,195,248

Net Contributions/(Withdrawals) by The Prudential
  Insurance Company of America                                                        2,496,212       (137,412)    (3,787,938)
                                                                                   ------------   ------------   ------------
NET INCREASE/(DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL TRANSACTIONS                                                     473,388        450,662     (2,592,690)
                                                                                   ------------   ------------   ------------

TOTAL INCREASE IN NET ASSETS                                                       $  4,891,111   $  6,965,780   $  3,294,447

NET ASSETS:
Beginning of period                                                                $ 86,101,883   $ 79,136,103   $ 75,841,656
                                                                                   ------------   ------------   ------------
End of period                                                                      $ 90,992,994   $ 86,101,883   $ 79,136,103
                                                                                   ------------   ------------   ------------
                                                                                   ------------   ------------   ------------
</TABLE>



           SEE NOTES TO FINANCIAL STATEMENTS ON PAGES F-6 THROUGH F-8.


                                       F-5
<PAGE>

                      NOTES TO THE FINANCIAL STATEMENTS OF
            THE PRUDENTIAL VARIABLE  CONTRACT  REAL  PROPERTY ACCOUNT
                      FOR THE YEAR ENDED DECEMBER 31, 1996

NOTE 1:  GENERAL


The Prudential Variable Contract Real Property Account (the "Real Property
Account") was established on November 20, 1986 by resolution of the Board of
Directors of The Prudential Insurance Company of America ("Prudential"), as a
separate investment account pursuant to New Jersey law.  The assets of the Real
Property Account are segregated from Prudential's other assets.  The Real
Property Account is used to fund benefits under certain variable life insurance
and variable annuity contracts issued by Prudential.  These products are
Variable Appreciable Life Insurance ("PVAL60"/"PVAL90"), Discovery Plus
("PDISC+") and Variable Investment Plan ("VIP").

The assets of the Real Property Account are invested in The Prudential
Variable Contract Real Property Partnership (the "Partnership").  The
Partnership is organized under New Jersey law and is registered under the
Securities Act of 1933.  The Partnership is the investment vehicle for assets
allocated to the real property option under certain variable life insurance
and variable annuity contracts.  The Real Property Account, along with the
Pruco Life Variable Contract Real Property Account and Pruco Life of New
Jersey Variable Contract Real Property Account, are the sole investors in the
Partnership.

The Partnership has a policy of investing at least 65% of its assets in direct
ownership interests in income-producing real estate and participating mortgage
loans.

NOTE 2:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A.       BASIS OF ACCOUNTING

The accompanying financial statements are prepared in conformity with generally
accepted accounting principles (GAAP).  The preparation of the financial
statements in conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts and disclosures.  Actual results
could differ from those estimates.

B.       INVESTMENT IN PARTNERSHIP INTEREST

The investment in the Partnership is based on the Real Property Account's
proportionate interest of the Partnership's market value.  At December 31,
1996 and 1995 the Real Property Account's interest in the Partnership, based
on market value equity was 46.1% or 5,465,515 shares and 45.4% or 5,465,515
shares, respectively.

C.       INCOME RECOGNITION

Net investment income, realized and unrealized gains and losses are
recognized daily.  Amounts are based upon the Real Property Account's
proportionate interest in the Partnership.

D.       EQUITY OF THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

Prudential maintains a position in the Real Property Account representing
anticipated property acquisition and capital expenditure funding needs.  The
position is also utilized for the purpose of administering activity in the
Real Property Account.  The activity includes unit transactions, Partnership
share transactions, and expense processing.  The position does not have an
effect on the Contract owner's account or the related unit value.


                                       F-6
<PAGE>

NOTE 3:  INVESTMENT INFORMATION FOR THE PRUDENTIAL VARIABLE CONTRACT REAL
         PROPERTY PARTNERSHIP

As of December 31, 1996, the investment in the Real Property Account of
$90,992,994 was derived from the share value of $16.64859 and 5,465,516
shares outstanding.  The related historical cost of the investment in the
Real Property Account was $ 63,790,895.

NOTE 4:  CONTRACT OWNER UNIT INFORMATION

Outstanding Contract owner units, unit values and total value of Contract
owner equity for the year ended December 31, 1996 were as follows:

<TABLE>
<CAPTION>

                                      PDISC+      PVAL60        PVAL90        VIP         TOTAL
                                   ----------  -----------  -----------   ----------  -----------
<S>                                <C>         <C>          <C>           <C>         <C>
CONTRACT OWNER
UNITS OUTSTANDING:                  3,265,637   14,481,635   20,561,123    3,042,282   41,350,677
UNIT VALUE:                          $1.34933     $1.39926     $1.36684     $1.34933          n/a
CONTRACT OWNER EQUITY:             $4,406,421  $20,263,573  $28,103,765   $4,105,043  $56,878,802
</TABLE>

NOTE 5:   CHARGES AND EXPENSES

A.        MORTALITY RISK AND EXPENSE RISK CHARGES

Mortality risk and expense charges are determined daily using an effective
annual rate of  1.0%, 0.6%, 0.9% and 1.2% for PDISC+, PVAL60, PVAL90 and VIP,
respectively.  Mortality risk is that life insurance contract holders may not
live as long as estimated or annuitants may live longer than estimated and
expense risk is that the cost of issuing and administering the policies may
exceed the estimated expenses.  For 1996, the amount of these charges paid to
Prudential was $464,909.

B.        ADMINISTRATIVE CHARGES

Administrative charges are determined daily using an effective annual rate of
0.2% for PDISC+.  Administrative charges include costs associated with issuing
the Contract, establishing and maintaining records, and providing reports to
Contract owners.  For 1996, the amount of these charges paid to Prudential was
$8,479.

NOTE 6:    TAXES

The Prudential Insurance Company of America is taxed as a "life insurance
company" under the Internal Revenue Code and the operations of the Real Property
Account form a part of and are taxed with those of The Prudential Insurance
Company of America.  Under current federal law, no federal income taxes are
payable by the Real Property Account.  As such, no provision for tax liability
has been recorded.

                                       F-7
<PAGE>


NOTE 7:   NET WITHDRAWALS BY CONTRACT OWNERS

Contract owner activity for the Prudential products for the year ended December
31, 1996, was as follows:

<TABLE>
<CAPTION>

                                              PDISC+/VIP     PVAL60/PVAL90        TOTAL
                                             ------------    --------------   -------------
<S>                                          <C>             <C>              <C>
CONTRACT OWNER CONTRIBUTIONS:                $  1,442,018    $  12,045,706    $  13,487,724
CONTRACT OWNER REDEMPTIONS:                      (812,263)     (11,535,649)     (12,347,912)
NET TRANSFERS FROM (TO) OTHER
    SUBACCOUNTS OR FIXED RATE OPTION:          (1,034,616)      (2,128,020)      (3,162,636)
                                             -------------   --------------   --------------
NET DECREASE                                 $   (404,861)   $  (1,617,963)   $  (2,022,824)
                                             -------------   --------------   --------------
                                             -------------   --------------   --------------
</TABLE>

NOTE 8:   UNIT ACTIVITY

Transactions in units for the year ended December 31, 1996 were as follows:

                                 PDISC+/VIP          PVAL60/PVAL90
                               --------------      ----------------
CONTRACT OWNER CONTRIBUTIONS:   1,090,424.904        8,934,265.218
CONTRACT OWNER REDEMPTIONS:    (1,399,897.340)     (10,137,311.602)




                                       F-8


<PAGE>


                          REPORT OF INDEPENDENT ACCOUNTANTS


To the Partners of The Prudential
Variable Contract Real Property Partnership


In our opinion, the financial statements listed in the accompanying index
present fairly, in all material respects, the financial position of The
Prudential Variable Contract Real Property Partnership (the "Partnership") at
December 31, 1996, the results of its operations and its cash flows for the
year ended December 31, 1996, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
Partnership's management; our responsibility is to express an opinion on these
financial statements based on our audit. We conducted our audit of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for the opinion expressed above.


Price Waterhouse LLP
New York, New York
March 25, 1997



                                     F-9


<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Partners of
 The Prudential Variable Contract Real Property Partnership
Newark, New Jersey

We have audited the accompanying statement of assets and liabilities
including the schedule of investments, of the Prudential Variable Contract
Real Property Partnership as of December 31, 1995, and the related statements
of operations, changes in net assets and cash flows for each of the two years
in the period ended December 31, 1995 (collectively referred to as the
financial statements). Our audit also included the financial statement
schedules listed in the index at Item 14 for each of the two years in the
period ended December 31, 1995.These financial statements and financial
statement schedules are the responsibility of the Partnership's management.
Our responsibility is to express an opinion on these financial statements and
financial statement schedules based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material
respects, the financial position of The Prudential Variable Contract Real
Property Partnership as of December 31, 1995, and the results of its
operations and its cash flows for each of the two years in the period ended
December 31, 1995 in conformity with generally accepted accounting principles.
Also, in our opinion, such financial statement schedules, when considered
in relation to the basic financial statements taken as a whole, present
fairly in all material respects the information set forth therein.

Investments in properties and interest in properties are stated at current
value at December 31, 1995, as discussed in Note 1 to the financial
statements. Determination of current value involves subjective judgment
because the actual market value of real estate can be determined only by
negotiation between the parties in a sales transaction.

Deloitte & Touche LLP
Parsippany, NJ

March 1, 1996


                                         F-10
<PAGE>

          THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                  STATEMENTS OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
                                                                    DECEMBER 31,
                                                  ---------------------------------------------
                                                        1996                         1995
                                                  ---------------              ----------------
<S>                                               <C>                          <C>
ASSETS:

Properties at estimated market value
  (cost $177,082,291 and $191,981,608,
   respectively)                                  $   151,074,276               $   164,695,033
Interest in properties at estimated market value
  (cost $6,133,157 and $6,133,157,
   respectively)                                        5,850,000                     5,800,000
Marketable securities at estimated market value
  (cost $24,345,000 and $10,480,000,
   respectively)                                       24,426,644                    10,532,155
Cash and cash equivalents                              20,738,204                    14,223,265
Other assets and accounts receivable
  (net of allowance for uncollectible
   accounts of $55,823 and $18,896, respectively)       2,066,916                     1,743,305
                                                  ---------------              ----------------

Total Assets                                       $  204,156,040                $  196,993,758
                                                  ---------------              ----------------
                                                  ---------------              ----------------

LIABILITIES AND PARTNERS' EQUITY:

Obligation under capital lease                       $  4,072,677                  $  3,882,421
Accounts payable and accrued expenses                   1,640,360                     2,142,614
Due to affiliates                                         719,200                       682,795
Other liabilities                                         467,009                       664,069
                                                  ---------------              ----------------

Total liabilities                                       6,899,246                     7,371,899
                                                  ---------------              ----------------

Commitments and contingencies

Partners' Equity                                      197,256,794                   189,621,859
                                                  ---------------              ----------------

Total Liabilities and Partners' Equity             $  204,156,040                $  196,993,758
                                                  ---------------              ----------------
                                                  ---------------              ----------------

Number of shares outstanding at end of period          11,848,275                    12,036,684
                                                  ---------------              ----------------
                                                  ---------------              ----------------

Share Value at end of period                               $16.65                        $15.75
                                                  ---------------              ----------------
                                                  ---------------              ----------------
</TABLE>




                          SEE NOTES TO FINANCIAL STATEMENTS

                                     F-11
<PAGE>

          THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                         STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                           YEAR ENDED DECEMBER 31,
                                                                   --------------------------------------------
                                                                       1996             1995          1994
                                                                   -------------  -------------   -------------
<S>                                                                <C>            <C>             <C>
INVESTMENT INCOME:

Rent from properties                                               $  22,799,694  $  19,827,044   $  16,344,259
Income from interest in properties                                       606,558        638,183       2,355,204
Interest on mortgage loans                                                     0              0         105,694
Interest from short-term investments                                   2,134,386      2,660,865       1,571,394
                                                                   -------------  -------------   -------------
                                                                      25,540,638     23,126,092      20,376,551
                                                                   -------------  -------------   -------------

INVESTMENT EXPENSES:

Investment management fee                                              2,494,229      2,341,878      2,287,816
Real estate taxes                                                      2,367,404      1,938,090      1,792,775
Administrative                                                         1,865,433      1,795,092      1,413,722
Operating                                                              2,904,620      1,870,183      1,707,039
Interest                                                                 489,434        460,578        327,000
                                                                   -------------  -------------   ------------
                                                                      10,121,120      8,405,821      7,528,352
                                                                   -------------  -------------   ------------

NET INVESTMENT INCOME                                                 15,419,518     14,720,271     12,848,199
                                                                   -------------  -------------   ------------

REALIZED AND UNREALIZED LOSS ON
    INVESTMENTS:
  Net proceeds from real estate investments sold                      20,497,789              0     19,014,872
  Less:   Cost of real estate investments sold                        26,610,932              0     18,337,052
          Realization of prior years' unrealized
           (loss)/gain on real estate investments sold                (4,539,996)             0      1,915,205
                                                                   -------------  -------------   ------------

NET LOSS REALIZED ON REAL ESTATE
    INVESTMENTS SOLD                                                  (1,573,147)             0     (1,237,385)
                                                                   -------------  -------------   ------------

NET UNREALIZED (LOSS)/GAIN
    ON INVESTMENTS                                                    (3,211,436)       661,623      2,576,828
                                                                   -------------  -------------   ------------

NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS                                          $  10,634,935  $  15,381,894   $ 14,187,642
                                                                   -------------  -------------   ------------
                                                                   -------------  -------------   ------------
</TABLE>



                       SEE NOTES TO FINANCIAL STATEMENTS

                                  F-12

<PAGE>

          THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP


                   STATEMENTS OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
                                                                            YEAR ENDED DECEMBER 31,
                                                                   -------------------------------------------

                                                                       1996           1995            1994
                                                                   -------------  -------------   -------------
<S>                                                                <C>            <C>             <C>

OPERATIONS:

Net Investment Income                                              $  15,419,518  $  14,720,271   $  12,848,199
Net Realized and Unrealized
  Gain/(Loss) on Investments                                          (4,784,583)       661,623       1,339,443
                                                                   -------------  -------------   -------------

NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS                                             10,634,935     15,381,894      14,187,642
                                                                   -------------  -------------   -------------

CAPITAL TRANSACTIONS:

Withdrawals by partners
  (188,409, 204,350 and 790,390
   shares, respectively)                                              (3,000,000)    (3,000,000)    (11,000,000)
                                                                   -------------  -------------   -------------

NET DECREASE IN NET ASSETS RESULTING
FROM CAPITAL TRANSACTIONS                                             (3,000,000)    (3,000,000)    (11,000,000)
                                                                   -------------  -------------   -------------


TOTAL INCREASE IN NET ASSETS                                           7,634,935     12,381,894       3,187,642

NET ASSETS:

  Beginning of year                                                  189,621,859    177,239,965     174,052,323
                                                                   -------------  -------------   -------------
  End of year                                                      $ 197,256,794  $ 189,621,859   $ 177,239,965
                                                                   -------------  -------------   -------------
                                                                   -------------  -------------   -------------
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS

                                   F-13

<PAGE>

          THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                       STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                                YEAR ENDED DECEMBER 31,
                                                                   -------------------------------------------
                                                                       1996           1995            1994
                                                                   -------------  -------------  -------------
<S>                                                                <C>            <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net increase in net assets resulting from operations               $  10,634,935  $  15,381,894  $  14,187,642
Adjustments to reconcile net increase in net assets
  resulting from operations to net cash provided by
  operating activities:
   Net realized and unrealized loss (gain) on investments              4,784,583       (661,623)    (1,339,443)
   Changes in assets and liabilities:
     (Increase) Decrease in other assets
       and accounts receivable                                          (323,611)       474,790       (727,821)
     Decrease in obligation under capital lease                          190,256         77,585          6,271
     (Decrease) Increase in accounts payable
       and accrued expenses                                             (502,254)     1,337,548         75,876
     Increase (Decrease) in due to affiliates                             36,405         58,589        (70,438)
     (Decrease) Increase in other liabilities                           (197,060)        18,156        165,049
                                                                   -------------  -------------   ------------

  Net cash provided by operating activities                           14,623,254     16,686,939     12,297,136
                                                                   -------------  -------------   ------------


CASH FLOWS FROM INVESTING ACTIVITIES:
  Net proceeds from real estate investments sold                      20,497,789              0     19,014,842
  Acquisition of property                                            (10,713,722)   (36,774,343)             0
  Capital improvements on real estate owned                             (997,893)    (1,050,197)    (1,161,224)
  Capital improvements on interest in properties                               0        (24,415)       (12,087)
  Principal repayments recieved on mortgage loans                              0              0      3,947,528
  (Purchase) Sale of marketable securities                           (13,894,489)     5,292,044    (13,845,191)
                                                                   -------------  -------------   ------------

  Net cash provided by (used in) investing activities                 (5,108,315)   (32,556,911)     7,943,868
                                                                   -------------  -------------   ------------


CASH FLOWS FROM FINANCING ACTIVITIES:

  Withdrawals                                                         (3,000,000)    (3,000,000)   (11,000,000)
                                                                   -------------  -------------   ------------

  Net cash (used in)provided by financing activities                  (3,000,000)    (3,000,000)   (11,000,000)
                                                                   -------------  -------------   ------------

Net increase (decrease) in cash and cash equivalents                   6,514,939    (18,869,972)     9,241,004

CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR                         14,223,265     33,093,237     23,852,233
                                                                   -------------  -------------   ------------

CASH AND CASH EQUIVALENTS - END OF YEAR                            $  20,738,204  $  14,223,265  $  33,093,237
                                                                   -------------  -------------   ------------
                                                                   -------------  -------------   ------------

SUPPLEMENTAL SCHEDULE
OF NONCASH INVESTING ACTIVITIES
  Foreclosure on mortgage loan                                     $           0  $           0   $  5,276,262
                                                                   -------------  -------------   ------------
                                                                   -------------  -------------   ------------

SUPPLEMENTAL INFORMATION:
  Interest paid                                                    $     376,450  $     376,450   $    250,000
                                                                   -------------  -------------   ------------
                                                                   -------------  -------------   ------------
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS



                                   F-14

<PAGE>

          THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                        SCHEDULE OF INVESTMENTS

<TABLE>
<CAPTION>

                                                             DECEMBER 31, 1996             DECEMBER 31, 1995
----------------------------------------------------------------------------------------------------------------
INVESTMENT IN PROPERTIES (PERCENT OF NET ASSETS)                            76.6%                          86.8%
                                                                        Estimated                      Estimated
                                                                           Market                         Market
Location                Description                          Cost           Value           Cost           Value
----------------------------------------------------------------------------------------------------------------
<S>                     <C>                         <C>            <C>             <C>             <C>
Azusa, CA               Warehouse                   $           0  $            0  $  18,546,247   $  15,083,725
Lisle, IL               Office Building                17,524,421       9,900,000     17,524,421      11,600,000
Atlanta, GA             Garden Apartments              15,396,738      13,707,814     15,371,495      12,600,000
Pomona, CA (a)          Warehouse                      23,456,751      17,553,849     23,205,172      17,127,292
Roswell, GA             Retail Shopping Center         31,754,073      28,333,818     31,688,912      32,055,216
Morristown, NJ          Office Building                18,797,224      10,113,986     18,664,969       9,572,688
Bolingbrook, IL         Warehouse                       8,948,028       7,100,000      8,948,028       7,400,000
Farmington Hills, MI    Garden Apartments              13,623,952      14,706,400     13,594,950      14,200,000
Flint, MI               Office Building                         0               0      7,616,842       6,539,368
Raleigh, NC             Garden Apartments              15,762,951      16,854,252     15,758,699      17,200,000
Nashville, TN           Office Building                 8,379,326       8,800,436      8,431,680       8,686,551
Oakbrook Terrace, IL    Office Complex                 12,725,105      13,289,999     12,630,193      12,630,193
Beaverton, OR           Office Complex                 10,713,722      10,713,722              0               0
                                                    -------------  --------------  -------------   -------------
                                                    $ 177,082,291  $  151,074,276  $ 191,981,608   $ 164,695,033
                                                    -------------  --------------  -------------   -------------
                                                    -------------  --------------  -------------   -------------

</TABLE>

(a) Cost and estimated market value include land under capital lease of
    $3,412,636 representing the present value of minimum future lease
    payments at the inception of the lease.

<TABLE>
<CAPTION>
INVESTMENT IN INTEREST IN PROPERTIES (PERCENT OF NET ASSETS)                 3.0%                           3.1%
                                                                        Estimated                      Estimated
                                                                           Market                         Market
Location                Description                          Cost           Value           Cost           Value
----------------------------------------------------------------------------------------------------------------
<S>                     <C>                         <C>            <C>             <C>             <C>
Jacksonville, FL        Warehouse/Distribution          1,317,453       1,225,000      1,317,453       1,225,000
Jacksonville, FL        Warehouse/Distribution          1,002,448       1,000,000      1,002,448         975,000
Jacksonville, FL        Warehouse/Distribution          1,442,894       1,325,000      1,442,894       1,300,000
Jacksonville, FL        Warehouse/Distribution          2,370,362       2,300,000      2,370,362       2,300,000
                                                    -------------  --------------  -------------   -------------
                                                     $  6,133,157  $    5,850,000  $   6,133,157   $   5,800,000
                                                    -------------  --------------  -------------   -------------
                                                    -------------  --------------  -------------   -------------
</TABLE>

<TABLE>
<CAPTION>
MARKETABLE SECURITIES (PERCENT OF NET ASSETS)                               12.4%                           5.6%
                                                                        Estimated                      Estimated
                                                             Face          Market           Face          Market
Description                                                Amount           Value         Amount           Value
----------------------------------------------------------------------------------------------------------------
<S>                                                 <C>            <C>             <C>             <C>
Marketable Securities                               $  23,345,000  $   24,426,644  $  10,480,000   $  10,532,155
                                                    -------------  --------------  -------------   -------------
                                                    -------------  --------------  -------------   -------------
</TABLE>

<TABLE>
<CAPTION>
CASH AND CASH EQUIVALENTS (PERCENT OF NET ASSETS)                          10.5%                            7.5%
                                                                       Estimated                       Estimated
                                                             Face         Market            Face          Market
Description                                                Amount          Value          Amount           Value
----------------------------------------------------------------------------------------------------------------
<S>                                                 <C>            <C>             <C>             <C>
Commercial Paper and Cash                           $  20,804,826  $  20,738,204   $  14,282,697   $  14,223,265
                                                    -------------  --------------  -------------   -------------
                                                    -------------  --------------  -------------   -------------

OTHER ASSETS                                                                -2.5%                           -3.0%
(net of liabilities)                                               $  (4,832,330)                  $  (5,628,594)
                                                                  --------------                   -------------

TOTAL NET ASSETS                                                  $  197,256,794                  $  189,621,859
                                                                  --------------                   -------------
                                                                  --------------                   -------------
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS

                                    F-15



<PAGE>

           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                             SCHEDULE OF INVESTMENTS

<TABLE>
<CAPTION>

                                                                                                            DECEMBER 31, 1996
                                                                                                  ------------------------------
MARKETABLE SECURITIES (PERCENT OF NET ASSETS)                                                                              12.4%
                                                                                                                       Estimated
                                                                                                          Face            Market
DESCRIPTION                                                                                             Amount             Value
-----------------------------------------------------                                             ------------------------------
<S>                                                                                               <C>                  <C>
Commercial Paper (with stated rate and maturity date)

PNC Bank, 5.48%, January 6, 1997                                                                  $  2,200,000      $  2,199,643
Wells Fargo, 5.54%, January 28, 1997                                                                 2,300,000         2,300,446
Sears Roebuck Acceptance Corp, 7.48%, February 19, 1997                                                100,000           102,187
General Motors Acceptance Corp, 5.88%, February 27, 1997                                               105,000           107,143
Sears Roebuck Acceptance Corp,7.72%, February 27, 1997                                                 800,000           812,000
Dean Wiitter Discover & Co., 5.75%, March 6,1997                                                       500,000           500,387
General Motors Acceptance Corp, 5.74%, March 18, 1997                                                1,200,000         1,201,344
Sears Discover Credit Corp, 7.81%, March 18, 1997                                                    1,150,000         1,164,548
American Home Products, 6.88%, April 15, 1997                                                        2,000,000         2,019,323
Ford Motor Credit, 5.90%, May 5, 1997                                                                1,400,000         1,405,337
Ford Motor Credit, 5.90%, May 5, 1997                                                                  350,000           350,875
Ford Motor Credit, 9.15%, May 7, 1997                                                                  500,000           515,010
Key Bank NA, 5.58%, May 14, 1997                                                                       900,000           899,130
American Express Centurion Bank, 5.58%, June 10, 1997                                                2,300,000         2,299,862
Associates Corp of North America, 7.05%, June 30, 1997                                                 600,000           604,766
Bank One Columbus, 5.58%, July 1, 1997                                                               1,110,000         1,108,812
Associates Corp of North America, 5.88%, August 15, 1997                                             1,230,000         1,230,744
Key Bank of New York, 4.82%, September 4, 1997                                                       1,300,000         1,298,740
Bank One Milwaukee, NA, 5.26%, October 8, 1997                                                       1,000,000         1,002,870
Morgan Guaranty TRust Co., 5.38%, November 14, 1997                                                  1,000,000           999,271
Norwest Financial Inc., 6.50%, November 15, 1997                                                       300,000           302,286
Norwest Corp., 5.55%, November 21, 1997                                                              2,000,000         2,001,922
                                                                                                 -------------     -------------
TOTAL MARKETABLE SECURITIES                                                                      $  24,345,000     $  24,426,644
                                                                                                 -------------     -------------
                                                                                                 -------------     -------------
<CAPTION>
CASH AND CASH EQUIVALENTS (PERCENT OF NET ASSETS)                                                                          10.5%
                                                                                                                       Estimated
                                                                                                          Face            Market
DESCRIPTION                                                                                             Amount             Value
-----------------------------------------------------                                           --------------    --------------
<S>                                                                                             <C>               <C>
Commercial Paper (with stated rate and maturity date)

Gateway Fuel Corp, 7.15%, January 2, 1997                                                        $   2,177,000     $   2,176,135
Bell Atlantic Financial Services, 5.50%, January 14, 1997                                            2,650,000         2,638,664
Pioneer Hi-Bred Intl, 5.47%, January 15, 1997                                                        1,200,000         1,194,712
Bank of Montreal, 5.43%, January 27, 1997                                                            2,300,000         2,300,000
Canadian Imperial Bank, 5.39%, January 27, 1997                                                      2,400,000         2,400,000
HJ Heinz Co., 5.46%, January 29, 1997                                                                2,370,000         2,354,184
General Electric Capital Corp, 5.34%, February 3, 1997                                               2,300,000         2,279,871
Bankers Trust Co., 5.35%, February 20, 1997                                                          2,000,000         2,007,723
Colonial PL Co Note, 5.60%, February 21, 1997                                                          800,000           792,658
Colonial PL Co Note, 5.35%, March 4, 1997                                                              783,000           773,109
General Electric Capital Corp., 5.45%, March 14, 1997                                                  300,000           296,321
                                                                                                 -------------     -------------
TOTAL COMMERCIAL PAPER                                                                              19,280,000        19,213,378

TOTAL CASH                                                                                           1,524,826         1,524,826
                                                                                                 -------------     -------------
TOTAL CASH AND CASH EQUIVALENTS                                                                  $  20,804,826     $  20,738,204
                                                                                                 -------------     -------------
                                                                                                 -------------     -------------
</TABLE>

                   SEE NOTES TO FINANCIAL STATEMENTS

                               F-16
<PAGE>

           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                             SCHEDULE OF INVESTMENTS
<TABLE>
<CAPTION>

                                                                                                           DECEMBER 31, 1995
                                                                                                --------------------------------
MARKETABLE SECURITIES (PERCENT OF NET ASSETS)                                                                               5.6%
                                                                                                                       Estimated
                                                                                                          Face            Market
DESCRIPTION                                                                                             Amount             Value
----------------------------------------------------------                                       -------------     -------------
<S>                                                                                              <C>               <C>
Commercial Paper (with stated rate and maturity date)

Associates Corp. of North America, 8.75%, February 1, 1996                                       $     410,000     $     416,810
General Motors Acceptance Corp., 8.75%, February 1, 1996                                               650,000           658,860
General Motors Acceptance Corp., 8.95%, February 5, 1996                                               350,000           356,370
General Motors Acceptance Corp., 4.75%, February 14, 1996                                              430,000           426,212
General Motors Acceptance Corp., 6.01%, February 22, 1996                                              240,000           240,057
Household Finance Corp., 5.75%, April 19, 1996                                                       2,000,000         1,996,520
Ford Motor Credit Corp., 6.24%, April 22, 1996                                                         500,000           500,658
Society National Bank Cleveland, 6.00%, April 25, 1996                                                 150,000           149,295
International Lease Finance Corp., 5.00%, May 28, 1996                                               1,000,000           992,120
Transamerica Financial Corp., 8.55%, June 15, 1996                                                     400,000           409,284
John Deere Capital Corp., 6.16%, July 22, 1996                                                       1,000,000         1,002,267
Sears Roebuck Acceptance Corp., 8.55%, August 1, 1996                                                1,000,000         1,039,335
Key Bank of New York, N.A., 5.43%, September 6, 1996                                                 1,000,000           999,210
Bank One Columbus, 5.56%, September 12, 1996                                                         1,000,000           999,297
Associates Corp. of North America, 4.48%, October 15, 1996                                             350,000           345,860
                                                                                                 -------------     -------------
TOTAL MARKETABLE SECURITIES                                                                      $  10,480,000     $  10,532,155
                                                                                                 -------------     -------------
                                                                                                 -------------     -------------

<CAPTION>
CASH AND CASH EQUIVALENTS (PERCENT OF NET ASSETS)                                                                           7.5%
                                                                                                                       Estimated
                                                                                                          Face            Market
DESCRIPTION                                                                                             Amount             Value
----------------------------------------------------------                                       -------------     -------------
<S>                                                                                              <C>               <C>
Commercial Paper (with stated rate and maturity date)

Morgan Stanley Group, Inc., 6.10%, January 2, 1996                                                $  1,146,000      $  1,146,000
Engelhard Corp., 6.25%, January 3, 1996                                                              1,038,000         1,038,000
Finova Capital Corp., 5.95%, January 4, 1996                                                           800,000           792,198
Philip Morris Companies Inc., 5.80%, January 5, 1996                                                   505,000           504,430
Gannett Co. Inc., 5.85%, January 9, 1996                                                             1,700,000         1,696,409
Hanson Finance, 5.80%, January 12, 1996                                                                354,000           352,175

Riverwoods Funding Corp., 5.78%, January 12, 1996                                                    1,189,000         1,183,273
Finova Capital Corp., 5.97%, January 16, 1996                                                          780,000           771,980
Smith Barney Inc., 5.79%, January 18, 1996                                                           1,628,000         1,618,836
Fleet Financial Group, 5.75%, January 30, 1996                                                       1,700,000         1,689,139
Countrywide Funding Corp., 5.82%, February 14, 1996                                                  1,500,000         1,488,128
                                                                                                  ------------      ------------
TOTAL COMMERCIAL PAPER                                                                              12,340,000        12,280,568

TOTAL CASH                                                                                           1,942,697         1,942,697
                                                                                                  ------------      ------------
TOTAL CASH AND CASH EQUIVALENTS                                                                  $  14,282,697     $  14,223,265
                                                                                                  ------------      ------------
                                                                                                  ------------      ------------
</TABLE>

                        SEE NOTES TO FINANCIAL STATEMENTS

                                      F-17

<PAGE>

                        NOTES TO FINANCIAL STATEMENTS OF
             PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
                FOR YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994


GENERAL

ON APRIL 29, 1988, PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP (THE
"PARTNERSHIP"), A GENERAL PARTNERSHIP ORGANIZED UNDER NEW JERSEY LAW, WAS FORMED
THROUGH AN AGREEMENT AMONG PRUDENTIAL INSURANCE COMPANY OF AMERICA
("PRUDENTIAL"), PRUCO LIFE INSURANCE COMPANY ("PRUCO LIFE"), AND PRUCO LIFE
INSURANCE COMPANY OF NEW JERSEY ("PRUCO LIFE OF NEW JERSEY").  THE PARTNERSHIP
WAS ESTABLISHED AS A MEANS BY WHICH ASSETS ALLOCATED TO THE REAL ESTATE
INVESTMENT OPTION UNDER CERTAIN VARIABLE LIFE INSURANCE AND VARIABLE ANNUITY
CONTRACTS ISSUED BY THE RESPECTIVE COMPANIES COULD BE INVESTED IN A COMMINGLED
POOL.  THE PARTNERS IN THE PARTNERSHIP ARE PRUDENTIAL,  PRUCO LIFE AND PRUCO
LIFE OF NEW JERSEY.

THE PARTNERSHIP HAS A POLICY OF INVESTING AT LEAST 65% OF ITS ASSETS IN DIRECT
OWNERSHIP INTERESTS IN INCOME-PRODUCING REAL ESTATE AND PARTICIPATING MORTGAGE
LOANS.

THE PARTNERSHIP'S INVESTMENTS ARE VALUED ON A DAILY BASIS, CONSISTENT WITH THE
PARTNERSHIP AGREEMENT.  ON EACH DAY DURING WHICH THE NEW YORK STOCK EXCHANGE IS
OPEN FOR BUSINESS, THE NET ASSETS OF THE PARTNERSHIP ARE VALUED USING THE
ESTIMATED MARKET VALUE OF ITS INVESTMENTS AS DESCRIBED IN NOTES 1A AND 1B BELOW,
PLUS AN ESTIMATE OF NET INCOME FROM OPERATIONS REDUCED BY ANY LIABILITIES OF THE
PARTNERSHIP.

THE PERIODIC ADJUSTMENTS TO PROPERTY AND MORTGAGE LOAN VALUES DESCRIBED IN NOTES
1A AND 1B BELOW AND THE CORRECTIONS OF PREVIOUS ESTIMATES OF NET INCOME ARE MADE
ON A PROSPECTIVE BASIS. THERE CAN BE NO ASSURANCE THAT ALL SUCH ADJUSTMENTS AND
ESTIMATES WILL BE MADE TIMELY.

SHARES OF THE PARTNERSHIP ARE SOLD TO PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY
ACCOUNT, PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT, AND PRUCO LIFE OF
NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT, (THE "REAL PROPERTY
ACCOUNTS") AT THE CURRENT SHARE VALUE OF THE PARTNERSHIP'S NET ASSETS.  SHARE
VALUE IS CALCULATED BY DIVIDING THE ESTIMATED MARKET VALUE OF NET ASSETS OF THE
PARTNERSHIP AS DETERMINED BELOW BY THE NUMBER OF SHARES OUTSTANDING.  A CONTRACT
OWNER PARTICIPATES IN THE PARTNERSHIP THROUGH INTERESTS IN THE REAL PROPERTY
ACCOUNTS.


     NOTE 1:   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

          A:   REAL ESTATE OWNED AND INTEREST IN PROPERTIES - THE PARTNERSHIP'S
          INVESTMENTS IN REAL ESTATE OWNED AND INTERESTS IN PROPERTIES ARE
          INITIALLY VALUED AT THEIR PURCHASE PRICE.  THEREAFTER, REAL ESTATE
          INVESTMENTS ARE REPORTED AT THEIR ESTIMATED MARKET VALUES BASED UPON
          APPRAISAL REPORTS PREPARED BY INDEPENDENT REAL ESTATE APPRAISERS
          (MEMBERS OF THE APPRAISAL INSTITUTE) WHICH ARE ORDINARILY OBTAINED ON
          AN ANNUAL BASIS.  THE PROPERTY VALUATIONS ARE REVIEWED INTERNALLY AT
          LEAST EVERY THREE MONTHS AND ADJUSTED IF THERE HAS BEEN A CHANGE IN
          THE VALUE OF THE PROPERTY SINCE THE LAST VALUATION.

          THE CHIEF APPRAISER OF PRUDENTIAL COMPTROLLER'S  DEPARTMENT VALUATION
          UNIT IS RESPONSIBLE TO ASSURE THAT THE VALUATION PROCESS PROVIDES
          INDEPENDENT AND ACCURATE ESTIMATED MARKET VALUE ESTIMATES.  IN THE
          INTEREST OF MAINTAINING AND MONITORING THE INDEPENDENCE AND THE
          ACCURACY OF THE APPRAISAL PROCESS, THE COMPTROLLER OF PRUDENTIAL HAS
          APPOINTED A THIRD PARTY FIRM TO ACT  AS THE APPRAISAL MANAGEMENT FIRM.
          THE APPRAISAL MANAGEMENT FIRM, AMONG

                                      F-18
<PAGE>

                        NOTES TO FINANCIAL STATEMENTS OF
             PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
                FOR YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

          OTHER RESPONSIBILITIES, APPROVES THE SELECTION AND SCHEDULING OF
          EXTERNAL APPRAISALS; DEVELOPS A STANDARD PACKAGE OF  INFORMATION TO BE
          SUPPLIED TO THE APPRAISERS; REVIEWS AND PROVIDES COMMENTS ON ALL
          EXTERNAL APPRAISALS AND  A SAMPLE OF INTERNAL APPRAISALS; ASSISTS IN
          DEVELOPING POLICY AND PROCEDURES AND ASSISTS IN THE EVALUATION OF THE
          PERFORMANCE AND COMPETENCY OF EXTERNAL APPRAISERS. THE PROPERTY
          VALUATIONS ARE REVIEWED QUARTERLY BY PRUDENTIAL COMPTROLLER'S
          DEPARTMENT VALUATION UNIT AND THE CHIEF APPRAISER AND ADJUSTED IF
          THERE HAS BEEN ANY SIGNIFICANT CHANGES RELATED TO THE PROPERTY SINCE
          THE MOST RECENT INDEPENDENT APPRAISAL.

          THE PURPOSE OF AN APPRAISAL IS TO ESTIMATE THE MARKET VALUE OF A
          PROPERTY AS OF A SPECIFIC DATE.  ESTIMATED MARKET VALUE HAS BEEN
          DEFINED AS THE MOST PROBABLE PRICE FOR WHICH THE APPRAISED PROPERTY
          WILL SELL IN A COMPETITIVE MARKET UNDER ALL CONDITIONS REQUISITE TO
          FAIR SALE, WITH THE BUYER AND SELLER EACH ACTING PRUDENTLY,
          KNOWLEDGEABLY, AND FOR SELF INTEREST, AND ASSUMING THAT NEITHER IS
          UNDER UNDUE DURESS.  THIS ESTIMATE OF  MARKET VALUE GENERALLY IS A
          CORRELATION OF THREE APPROACHES, ALL OF WHICH REQUIRE THE EXERCISE OF
          SUBJECTIVE JUDGMENT. THE THREE APPROACHES ARE: (1) CURRENT COST OF
          REPRODUCING A PROPERTY LESS DETERIORATION AND FUNCTIONAL AND ECONOMIC
          OBSOLESCENCE; (2) DISCOUNTING OF A SERIES OF INCOME STREAMS AND
          REVERSION AT A SPECIFIED YIELD OR BY DIRECTLY CAPITALIZING A SINGLE -
          YEAR INCOME ESTIMATE BY AN APPROPRIATE FACTOR;  AND (3) VALUE
          INDICATED BY RECENT SALES OF COMPARABLE PROPERTIES IN THE MARKET. IN
          THE RECONCILIATION OF THESE THREE APPROACHES, THE ONE MOST HEAVILY
          RELIED UPON IS THE ONE GENERALLY RECOGNIZED FOR THE TYPE OF PROPERTY
          IN THE MARKET.

          AS DESCRIBED ABOVE, THE ESTIMATED MARKET VALUE OF REAL ESTATE IS
          DETERMINED THROUGH AN APPRAISAL PROCESS.  THESE ESTIMATED MARKET
          VALUES MAY VARY SIGNIFICANTLY FROM THE PRICES AT WHICH THE REAL ESTATE
          INVESTMENTS WOULD SELL SINCE MARKET PRICES OF REAL ESTATE INVESTMENTS
          CAN ONLY BE DETERMINED BY NEGOTIATION BETWEEN A WILLING BUYER AND
          SELLER.  ALTHOUGH THE ESTIMATED MARKET VALUES REPRESENT SUBJECTIVE
          ESTIMATES, MANAGEMENT BELIEVES THAT ESTIMATED MARKET VALUES ARE
          REASONABLE APPROXIMATIONS OF MARKET PRICES AND THE AGGREGATE VALUE OF
          INVESTMENTS IN REAL ESTATE FAIRLY REPRESENT THEIR ESTIMATED MARKET
          VALUES AS OF DECEMBER 31, 1996 AND 1995.

          B:   REVENUE RECOGNITION - RENT FROM PROPERTIES CONSISTS OF ALL
               AMOUNTS EARNED UNDER TENANT OPERATING LEASES INCLUDING BASE RENT,
               RECOVERIES OF REAL ESTATE TAXES AND OTHER EXPENSES AND CHARGES
               FOR MISCELLANEOUS SERVICES PROVIDED TO TENANTS.  REVENUE FROM
               LEASES WHICH PROVIDE FOR SCHEDULED RENT INCREASES IS RECOGNIZED
               AS BILLED.

          C:   CASH EQUIVALENTS - THE PARTNERSHIP CONSIDERS ALL HIGHLY LIQUID
               INVESTMENTS WITH AN ORIGINAL MATURITY OF THREE MONTHS OR LESS
               WHEN PURCHASED TO BE CASH EQUIVALENTS. CASH EQUIVALENTS ARE
               CARRIED AT  MARKET VALUE.

          D:   MARKETABLE SECURITIES - MARKETABLE SECURITIES ARE HIGHLY LIQUID
               INVESTMENTS WITH MATURITIES OF MORE THAN THREE MONTHS WHEN
               PURCHASED AND ARE CARRIED AT MARKET VALUE.

          E:   FEDERAL INCOME TAXES - THE PARTNERSHIP IS NOT A TAXABLE ENTITY
               UNDER THE PROVISIONS OF THE INTERNAL REVENUE CODE.  THE INCOME
               AND CAPITAL GAINS AND LOSSES OF THE PARTNERSHIP ARE ATTRIBUTED,
               FOR FEDERAL INCOME TAX PURPOSES, TO THE PARTNERS IN THE
               PARTNERSHIP.  THE PARTNERSHIP MAY BE SUBJECT TO STATE AND LOCAL
               TAXES IN JURISDICTIONS IN WHICH IT OPERATES.

                                      F-19
<PAGE>

                        NOTES TO FINANCIAL STATEMENTS OF
             PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
                FOR YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

          F:   RECLASSIFICATIONS - CERTAIN RECLASSIFICATIONS WERE MADE TO THE
               1995 AND 1994 BALANCES TO CONFORM WITH THE 1996 PRESENTATION.

          G:   THE PREPARATION OF FINANCIAL STATEMENTS IN CONFORMITY WITH
               GENERALLY ACCEPTED ACCOUNTING PRINCIPLES REQUIRES MANAGEMENT TO
               MAKE ESTIMATES AND ASSUMPTIONS THAT AFFECT THE REPORTED AMOUNTS
               OF ASSETS AND LIABILITIES AT THE DATE OF THE FINANCIAL STATEMENTS
               AND THE REPORTED AMOUNTS OF REVENUES AND EXPENSES DURING THE
               REPORTING PERIOD.  ACTUAL RESULTS COULD DIFFER FROM THOSE
               ESTIMATES.


NOTE 2:  OBLIGATION UNDER CAPITAL LEASE

THE PARTNERSHIP MAINTAINS AN INTEREST IN A LEASEHOLD ESTATE CONSISTING OF SIX
ONE-STORY INDUSTRIAL WAREHOUSE BUILDINGS LOCATED IN POMONA, CALIFORNIA.  IN
CONJUNCTION WITH THIS INTEREST, THE PARTNERSHIP ASSUMED ASSIGNMENT OF A GROUND
LEASE AGREEMENT WHICH EXPIRES IN NOVEMBER 2078, WITH NO RENEWAL OPTIONS.  THE
ANNUAL GROUND LEASE PAYMENTS AFTER NOVEMBER 1994, AND FOR EACH 10 YEAR INCREMENT
THEREAFTER, ARE SUBJECT TO INCREASE 50% OF THE INCREASE IN THE CONSUMER PRICE
INDEX DURING THE PREVIOUS PERIOD .   IN  1995, THE ANNUAL GROUND LEASE PAYMENT
INCREASED $126,450 TO $376,450.    THE GROUND LEASE CONTAINS A PURCHASE OPTION
EXERCISABLE AT A FIXED PRICE OF $4,000,000 FROM NOVEMBER 1994 TO NOVEMBER 1997,
WHICH THE PARTNERSHIP INTENDS TO EXERCISE IN 1997.  FUTURE MINIMUM GROUND LEASE
PAYMENTS UNDER CAPITAL LEASE AT DECEMBER 31, 1996 THRU THE EXERCISE DATE OF
NOVEMBER 1997 IS $4,349,158.


NOTE 3:  LEASING ACTIVITY

THE PARTNERSHIP LEASES SPACE TO TENANTS UNDER VARIOUS OPERATING LEASE
AGREEMENTS.  THESE AGREEMENTS, WITHOUT GIVING EFFECT TO RENEWAL OPTIONS, HAVE
EXPIRATION DATES RANGING FROM 1997 TO 2010.  AT DECEMBER 31, 1996, FUTURE
MINIMUM BASE RENTAL INCOME UNDER NON-CANCELABLE OPERATING LEASES BY YEAR, AND IN
THE AGGREGATE ARE SHOWN BELOW.  ALTHOUGH THESE ARE NON-CANCELABLE LEASES, THERE
IS NO ASSURANCE THAT ALL AMOUNTS WILL BE RECEIVED.

          YEAR ENDING
          DECEMBER 31,                                 (000'S)
          ------------                               ---------
               1997                                  $ 12,294
               1998                                    10,365
               1999                                     9,563
               2000                                     8,089
               2001                                     6,818
               THEREAFTER                              17,125
                                                     --------
               TOTAL                                 $ 64,253
                                                     --------
                                                     --------


                                      F-20
<PAGE>


                        NOTES TO FINANCIAL STATEMENTS OF
             PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
                FOR YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

NOTE 4:  COMMITMENT FROM PARTNER

ON JANUARY 9, 1990, PRUDENTIAL COMMITTED TO FUND UP TO $100 MILLION TO ENABLE
THE PARTNERSHIP TO TAKE ADVANTAGE OF OPPORTUNITIES TO ACQUIRE ATTRACTIVE REAL
PROPERTY INVESTMENTS WHOSE COST IS GREATER THAN THE PARTNERSHIP'S THEN AVAILABLE
CASH.  CONTRIBUTIONS TO THE PARTNERSHIP UNDER THIS COMMITMENT ARE UTILIZED FOR
PROPERTY ACQUISITIONS AND RETURNED TO PRUDENTIAL ON AN ONGOING BASIS FROM
CONTRACT OWNERS' NET CONTRIBUTIONS. ALSO, THE AMOUNT OF THE COMMITMENT  IS
REDUCED BY $10 MILLION FOR EVERY $100 MILLION IN ESTIMATED MARKET VALUE NET
ASSETS OF THE PARTNERSHIP.  THE AMOUNT AVAILABLE UNDER THIS COMMITMENT FOR
PROPERTY PURCHASES AS OF DECEMBER 31, 1996 IS APPROXIMATELY $50.2  MILLION.


NOTE 5:  OTHER TRANSACTIONS WITH AFFILIATES

PURSUANT TO AN INVESTMENT MANAGEMENT AGREEMENT, PRUDENTIAL CHARGES THE
PARTNERSHIP A DAILY INVESTMENT MANAGEMENT FEE AT AN ANNUAL RATE OF 1.25% OF THE
AVERAGE DAILY GROSS ASSET VALUATION OF THE PARTNERSHIP.  FOR THE YEARS ENDED
DECEMBER 31, 1996, 1995 AND 1994 MANAGEMENT FEES INCURRED BY THE PARTNERSHIP
WERE $2,494,229, $2,341,878 AND $2,287,816, RESPECTIVELY.

THE PARTNERSHIP ALSO REIMBURSES PRUDENTIAL FOR CERTAIN ADMINISTRATIVE SERVICES
RENDERED BY PRUDENTIAL.  THE AMOUNTS INCURRED FOR THE YEARS ENDED DECEMBER 31,
1996, 1995 AND 1994 WERE $116,818; $123,919; AND $95,015, RESPECTIVELY, AND ARE
CLASSIFIED AS ADMINISTRATIVE EXPENSES IN THE STATEMENTS OF OPERATIONS.

THE PARTNERSHIP OWNS A 50% INTEREST IN FOUR WAREHOUSE/DISTRIBUTION BUILDINGS IN
JACKSONVILLE, FLORIDA (THE UNIT WAREHOUSES).  THE REMAINING 50% INTEREST IS
OWNED BY PRUDENTIAL AND ONE OF ITS SUBSIDIARIES. AT DECEMBER 31, 1996,  THESE
PROPERTIES HAD TOTAL ASSETS OF $17,668,652 AND LIABILITIES OF $60,987.  FOR THE
YEAR ENDED DECEMBER 31,  1996, THE UNIT WAREHOUSES HAD REVENUES OF $1,516,876
AND EXPENSES OF $303,754.

THE PARTNERSHIP HAS CONTRACTED WITH PREMISYS REAL ESTATE SERVICES, INC.
(PREMISYS), AN AFFILIATE OF PRUDENTIAL, TO PROVIDE PROPERTY MANAGEMENT SERVICES
AT THE UNIT WAREHOUSES,  AND THROUGH 1994 AT THE BOLINGBROOK,  IL WAREHOUSE.
THE PROPERTY MANAGEMENT FEE EARNED BY PREMISYS, INCURRED BY THE PARNERSHIP AND
PRUDENTIAL FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 WAS $36,000;
$31,360 AND;  $92,382,  RESPECTIVELY.









                                      F-21



<PAGE>

NOTE 6:  PER SHARE INFORMATION (FOR A SHARE OUTSTANDING THOUGHOUT THE PERIOD)
<TABLE>
<CAPTION>


                                            01/01/96      01/01/95    01/01/94
                                               TO            TO          TO
                                            12/31/96      12/31/95    12/31/94
                                           ---------    ---------    ---------
<S>                                        <C>          <C>          <C>
Rent from properties                       $  1.9173    $  1.6387    $  1.2754
Income from interest in properties         $  0.0510    $  0.0527    $  0.1838
Interest on mortgage loans                 $  0.0000    $  0.0000    $  0.0082
Interest from short-term investments       $  0.1795    $  0.2199    $  0.1226
                                           ---------    ---------    ---------

INVESTMENT INCOME                          $  2.1478    $  1.9113    $  1.5900
                                           ---------    ---------    ---------
                                           ---------    ---------    ---------

Investment management fee                  $  0.2097    $  0.1936    $  0.1786
Real estate tax expense                    $  0.1991    $  0.1602    $  0.1399
Administrative expenses                    $  0.1569    $  0.1484    $  0.1103
Operating expenses                         $  0.2442    $  0.1546    $  0.1332
Interest expense                           $  0.0412    $  0.0381    $  0.0255
                                           ---------    ---------    ---------
EXPENSES                                   $  0.8511    $  0.6949    $  0.5875
                                           ---------    ---------    ---------
                                           ---------    ---------    ---------

NET INVESTMENT INCOME                      $  1.2967    $  1.2164    $  1.0025
                                           ---------    ---------    ---------
                                           ---------    ---------    ---------

Net realized loss on investments sold     ($  0.1323)   $  0.0000    $ (0.0966)
Net unrealized gain/(loss) on investments ($  0.2695)   $  0.0581    $  0.2169
                                           ---------    ---------    ---------
NET REALIZED AND UNREALIZED
GAIN/(LOSS) ON INVESTMENTS                ($  0.4018)   $  0.0581    $  0.1203
                                           ---------    ---------    ---------
Net increase/(decrease) in share value     $  0.8949    $  1.2745    $  1.1228

Share Value at beginning of period         $ 15.7537    $ 14.4792    $ 13.3564
                                           ---------    ---------    ---------
Share Value at end of period               $ 16.6486    $ 15.7537    $ 14.4792
                                           ---------    ---------    ---------
                                           ---------    ---------    ---------

Ratio of expenses to average net assets        5.26%        4.62%        4.27%

Ratio of net investment income to
 average net assets                            8.01%        8.08%        7.29%

Number of shares outstanding at
 end of period (000's)                        11,848       12,037       12,241

</TABLE>

ALL CALCULATIONS ARE BASED ON AVERAGE MONTH-END SHARES OUTSTANDING WHERE
APPLICABLE.
PER SHARE INFORMATION PRESENTED HEREIN IS SHOWN ON A BASIS CONSISTENT WITH THE
FINANCIAL STATEMENTS AS DISCUSSED IN NOTE 1G.

                                              F-22



<PAGE>


           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
                  SCHEDULE III - REAL ESTATE OWNED:  PROPERTIES
                                DECEMBER 31, 1996
<TABLE>
<CAPTION>

                                                                                                 GROSS AMOUNT AT WHICH
                          INTIAL COSTS TO THE PARTNERSHIP                                       CARRIED AT CLOSE OF YEAR
                        ------------------------------------------       COSTS         --------------------------------------
                                                                      CAPITALIZED
                                                      BUILDING &     SUBSEQUENT TO              BUILDING &
  DESCRIPTION           ENCUMBRANCES     LAND        IMPROVEMENTS     ACQUISITION      LAND    IMPROVEMENTS   TOTAL (A)(B)(C)
  -----------           ------------     ----        ------------     -----------      ----    ------------   ---------------
<S>                     <C>           <C>            <C>             <C>           <C>         <C>            <C>
Properties:

Office Building
Lisle, IL                  None        1,780,000       15,743,881          540      1,780,000    15,744,421     17,524,421

Garden Apartments
Atlanta, GA                None        3,631,212       11,168,904      596,622(c)   3,631,212    11,765,526     15,396,738

Warehouse
Pomona, CA                 None        3,412,636(b)    19,091,210      952,905      3,412,636    20,044,115     23,456,751

Retail Shopping Center
Roswell, GA                None        9,454,622       21,513,677      785,774      9,462,951    22,291,122     31,754,073

Office Building
Morristown, NJ             None        2,868,660       12,958,451    2,970,113      2,868,660    15,928,564     18,797,224

Office/Warehouse
Bolingbrook, IL            None        1,373,199        7,302,518      272,311      1,373,199     7,574,829      8,948,028

Garden Apartments
Farmington Hills, MI       None        1,550,000       11,744,571      329,381      1,583,320    12,040,632     13,623,952

Garden Apartments
Raleigh, NC                None        1,623,146       14,135,553        4,252      1,623,146    14,139,805     15,762,951

Office Building
Nashville, TN              None        1,797,000        6,588,451       (6,125)     1,797,327     6,581,999      8,379,326

Office Park
Oakbrook Terrace, IL       None        1,313,310       11,316,883       94,912      1,313,821    11,411,284     12,725,105

Office Building
Beaverton, OR              None          816,415        9,897,307            0        816,415     9,897,307     10,713,722
                                      ----------      -----------    ---------     ----------   -----------    -----------
                                      29,620,200      141,461,406    6,000,685     29,662,687   147,419,604    177,082,291
                                      ----------      -----------    ---------     ----------   -----------    -----------
                                      ----------      -----------    ---------     ----------   -----------    -----------

<CAPTION>
  DESCRIPTION                 YEAR OF       DATE
  -----------              CONSTRUCTION   ACQUIRED
<S>                        ------------  ----------
Properties:                  <C>          <C>

Office Building
Lisle, IL
                            1985         Sept., 1987
Garden Apartments
Atlanta, GA
                            1987          Oct., 1987
Warehouse
Pomona, CA
                            1984          Apr., 1988
Retail Shopping Center
Roswell, GA
                            1988          Jan., 1989
Office Building
Morristown, NJ
                            1981          Aug., 1988
Office/Warehouse
Bolingbrook, IL
                            1989          Feb., 1990
Garden Apartments
Farmington Hills, MI
                            1988          Jan., 1990
Garden Apartments
Raleigh, NC
                            1995          Jun., 1995
Office Building
Nashville, TN
                            1982          Oct., 1995
Office Park
Oakbrook Terrace, IL
                            1988          Dec., 1995
Office Building
Beaverton, OR
                            1995          Dec., 1996

</TABLE>

                                           1996         1995        1994
                                           ----         ----        ----
(a)     Balance at beginning of year   191,981,608  154,157,068  145,532,430
         Additions:
          Acquistions                   10,713,722   36,774,343    7,463,414
          Improvements, etc.               550,050    1,050,197    1,161,224
         Deletions:
          Sale                         (26,163,089)           0            0
                                       -----------  -----------  -----------
        Balance at end of year         177,082,291  191,981,608  154,157,068
                                       -----------  -----------  -----------

                                       -----------  -----------  -----------

(b)     Represents land under capital lease.

(c)     Net of $1,000,000 settlement received from lawsuit.

                                      F-23
<PAGE>

           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
            SCHEDULE III - REAL ESTATE OWNED:  INTEREST IN PROERTIES
                                DECEMBER 31, 1996


<TABLE>
<CAPTION>
                                                                                                GROSS AMOUNT AT WHICH
                         INTIAL COSTS TO THE PARTNERSHIP                                       CARRIED AT CLOSE OF YEAR
                       ------------------------------------------       COSTS         ---------------------------------------
                                                                     CAPITALIZED
                                                     BUILDING &     SUBSEQUENT TO              BUILDING &
  DESCRIPTION           ENCUMBRANCES     LAND       IMPROVEMENTS     ACQUISITION       LAND    IMPROVEMENTS   TOTAL (A)(B)(C)
  -----------           ------------     ----       ------------     -----------       ----    ------------   ---------------
<S>                     <C>           <C>          <C>              <C>           <C>          <C>            <C>

Interest in properties:

Warehouse/Distribution
Jacksonville, FL           None         $231,119   $1,073,849          $12,485      $231,119    $1,086,334    $1,317,453

Warehouse/Distribution
Jacksonville, FL           None          176,256      818,935            7,257       176,256       826,192     1,002,448

Warehouse/Distribution
Jacksonville, FL           None          255,545    1,187,335               14       255,545     1,187,349     1,442,894

Warehouse/Distribution
Jacksonville, FL           None          415,548    1,930,761           24,053       415,548     1,954,814     2,370,362
                                      ----------   ----------          -------    ----------    ----------    ----------
                                      $1,078,468   $5,010,880          $43,809    $1,078,468    $5,054,689    $6,133,157
                                      ----------   ----------          -------    ----------    ----------    ----------
                                      ----------   ----------          -------    ----------    ----------    ----------

<CAPTION>

                                  YEAR OF        DATE
  DESCRIPTION                  CONSTRUCTION    ACQUIRED
  -----------                  ------------    --------
<S>                            <C>           <C>

Interest in properties:

Warehouse/Distribution
Jacksonville, FL                    1988     Jan., 1990

Warehouse/Distribution
Jacksonville, FL                    1986     Jan., 1990

Warehouse/Distribution
Jacksonville, FL                    1982     Jan., 1990

Warehouse/Distribution
Jacksonville, FL                    1979     Jan., 1990

</TABLE>

                                               1996       1995        1994
                                               ----       ----        ----
(a)       Balance at beginning of year     $6,133,157  $6,108,742  $26,348,882
           Additions:
            Acquistions                             0      24,415            0
            Improvements, etc.                      0           0       12,087
           Deletions:
            Sale                                    0           0  (20,252,227)
                                           ----------  ----------  ------------
          Balance at end of year           $6,133,157  $6,133,157  $ 6,108,742
                                           ----------  ----------  ------------
                                           ----------  ----------  ------------





                                      F-24