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
|- | ------------------------------------------------------------------------------------

For the fiscal year ended December 31, 2010

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

Commission file number 033-20083-01

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
incorporation or organization) |  | (IRS Employer Identification No.)

751 Broad Street, Newark, New Jersey 07102-2992

(Address of principal executive offices) (Zip Code)

(973)
802-6000

(Registrants telephone number, including area code)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. YES ̈NOx

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YES ̈NOx

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. YESxNO ̈

Indicate by check mark if disclosure of
delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated
by reference in part III of this Form 10-K or any amendment to this Form 10-K. ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of large accelerated
filer, accelerated filer, and smaller reporting company in Rule 12b-2 of the Exchange Act (check one)

Large accelerated filer ̈Accelerated filer ̈Non-accelerated filerxSmaller reporting company ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of this Act) Yes ̈Nox

DOCUMENTS INCORPORATED BY REFERENCE

INFORMATION REQUIRED TO BE
FURNISHED PURSUANT TO PART III OF THIS FORM 10-K IS SET FORTH IN, AND IS HEREBY INCORPORATED BY REFERENCE HEREIN FROM, THE DEFINITIVE PROXY STATEMENT OF PRUDENTIAL FINANCIAL, INC., FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 10, 2011,
TO BE FILED BY PRUDENTIAL FINANCIAL, INC. WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO REGULATION 14A NOT LATER THAN 120 DAYS AFTER DECEMBER 31, 2010.



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THE PRUDENTIAL VARIABLE CONTRACT

REAL PROPERTY ACCOUNT

(Registrant)

INDEX



|         |  |                                                                                                              |  |        
|-------- |  | ------------------------------------------------------------------------------------------------------------ |  | -------
|Item No. |  |                                                                                                              |  | PageNo.
|         |  | Cover Page                                                                                                   |  |        
|         |  | Index                                                                                                        |  |        
|         |  | Forward-Looking Statement Disclosure                                                                         |  | 2      
|         |  |                                                                                                             
|PART I   |  |                                                                                                              |  |        
|1.       |  | Business                                                                                                     |  | 3      
|1A.      |  | Risk Factors                                                                                                 |  | 5      
|1B.      |  | Unresolved Staff Comments                                                                                    |  | 8      
|2.       |  | Properties                                                                                                   |  | 8      
|3.       |  | Legal Proceedings                                                                                            |  | 8      
|         |  |                                                                                                             
|PART II  |  |                                                                                                              |  |        
|5.       |  | Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |  | 9      
|6.       |  | Selected Financial Data                                                                                      |  | 9      
|7.       |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                        |  | 10     
|7A.      |  | Quantitative and Qualitative Disclosures About Market Risk                                                   |  | 18     
|8.       |  | Financial Statements and Supplementary Data                                                                  |  | 19     
|9.       |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                         |  | 19     
|9A.      |  | Controls and Procedures                                                                                      |  | 19     
|9B.      |  | Other Information                                                                                            |  | 19     
|         |  |                                                                                                             
|PART III |  |                                                                                                              |  |        
|10.      |  | Directors, Executive Officers and Corporate Governance                                                       |  | 20     
|11.      |  | Executive Compensation                                                                                       |  | 22     
|12.      |  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters               |  | 22     
|13.      |  | Certain Relationships and Related Transactions, and Director Independence                                    |  | 22     
|14.      |  | Principal Accountant Fees and Services                                                                       |  | 22     
|         |  |                                                                                                             
|PART IV  |  |                                                                                                              |  |        
|15.      |  | Exhibits and Financial Statement Schedules                                                                   |  | 23     
|         |  | Exhibit Index                                                                                                |  | 23     
|         |  | Signatures                                                                                                   |  | 25     



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Forward-Looking Statement Disclosure

Certain of the statements included in this Annual Report on Form 10-K, including but not limited to those in Managements Discussion
and Analysis of Financial Condition and Results of Operations, constitute forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Words such as expects, believes,
anticipates, includes, plans, assumes, estimates, projects, intends, should, will, shall or variations of such words are
generally part of forward-looking statements. Forward-looking statements are made based on managements current expectations and beliefs concerning future developments and their potential effects upon The Prudential Insurance Company of
America, or the Company, or the Prudential Variable Contract Real Property Account, or the Real Property Account. There can be no assurance that future developments affecting the Company and the Real Property Account will be
those anticipated by management. These forward-looking statements are not a guarantee of future performance and involve risks and uncertainties, and there are certain important factors that could cause actual results to differ, possibly materially,
from expectations or estimates reflected in such forward-looking statements, including, among others: (1) general economic, market and political conditions, including the performance and fluctuations of fixed income, equity, real estate and
other financial markets; (2) interest rate fluctuations or prolonged periods of low interest rates; (3) reestimates of our reserves for future policy benefits and claims; (4) differences between actual experience regarding mortality,
morbidity, persistency, surrender experience, interest rates, or market returns and the assumptions we use in pricing our products, establishing liabilities and reserves or for other purposes; (5) changes in our assumptions related to deferred
policy acquisition costs and valuation of business acquired; (6) changes in our financial strength or credit ratings; (7) investment losses and defaults; (8) competition in our product lines and for personnel; (9) changes in tax
law; (10) regulatory or legislative changes, including the recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act; (11) adverse determinations in litigation or regulatory matters and our exposure to contingent
liabilities; (12) domestic or international military actions, natural or man-made disasters including terrorist activities or pandemic disease, or other events resulting in catastrophic loss of life; (13) ineffectiveness of risk management
policies and procedures in identifying, monitoring and managing risks; (14) changes in statutory or U.S. GAAP accounting principles, practices or policies. The Company and the Real Property Account do not intend, and are under no
obligation, to update any particular forward-looking statement included in this document. See Risk Factors included in this Annual Report Form 10-K for discussion of certain risks relating to the operation of the Partnership and
investment in our securities.



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PART I

Item 1. Business

The
Prudential Variable Contract Real Property Account (the Real Property Account or the Registrant) was established on November 20, 1986. Pursuant to New Jersey law, the Real Property Account was established as a separate
investment account of The Prudential Insurance Company of America (Prudential). 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 an 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 estate investment 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 are direct ownership interests in
income-producing real estate, such as office buildings, shopping centers, hotels, apartments, or industrial properties. Approximately 10% of the Partnerships assets are generally held in cash or invested in liquid instruments and securities
although the General Partners reserve discretion to increase this amount to meet partnership liquidity requirements.

Office Properties  The Partnership owns office properties in Lisle, Illinois; Brentwood, Tennessee; and Beaverton, Oregon. Total square footage owned is approximately 372,007, of which 78%,
or 288,322 square feet, are leased for terms ranging from 1 to 10 years.

Apartment Complexes  The
Partnership owns apartment properties in Atlanta, Georgia; Austin, Texas; Charlotte, North Carolina; and Raleigh, North Carolina, comprising a total of 615 apartment units, of which 96%, or 591 units, are leased. Leases range from month-to-month to
eighteen months.

Retail Property  The Partnership owns retail properties in Ocean City, Maryland;
Hampton, Virginia; Dunn, North Carolina; and Westminster, Maryland. Total square footage owned is approximately 650,671 of which 79%, or 512,754 square feet, are leased for terms ranging from 1 to 30 years.

Hotel Property  The Partnership owns a hotel property in Lake Oswego, Oregon. This joint venture investment
has 161 rooms. Occupancy for the year ended 2010 averaged 59%.

Investment in Real Estate Trust 
The Partnership liquidated its entire investment in shares of a real estate investment trust, or REIT in December 2001. The Partnership does, however, maintain a preferred equity investment in an existing private real estate investment
trust, or REIT (See Item 7, Managements Discussion and Analysis of Financial Condition and Results of Operations and Financial Statements and Supplementary Data).

The Partnerships investments are 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. Section 817(h) requires, among other things, that the Partnership
will have no more than 55% of the assets invested in any one investment, no more than 70% of the assets invested in any two investments, no more than 80% of the assets invested in any three investments, and no more than 90% of the assets invested in
any four investments. Also, to comply with regulatory requirements of the State of Arizona, the Partnership will limit additional investments in any one parcel or related parcels to an amount not exceeding 10% of the Partnerships gross assets
as of the prior fiscal year.

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

The following is a description of general conditions in the U.S. real estate markets for 2010, to which the
Partnerships investments were subject. It does not relate to specific properties held by the Partnership. The Partnership does not have widely diversified holdings; therefore, the discussions of vacancy rates, property values and returns in
this section are not necessarily relevant to the Partnerships portfolio. These results are not indicative of future performance.



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Market Conditions

Despite a slowing in the economy and job growth during the third quarter of 2010, the commercial real estate market
continued to recover last year from the downturn in 2008/2009. Space market fundamentals, which always lag changes in the broader economy, remain weak but have stabilized and are beginning to improve in certain sectors and markets. Capital is
returning to real estate, as investors and lenders become more confident in the demand outlook, but the market remains bifurcated with capital focused almost exclusively on the best quality assets in the largest markets. Although commercial property
values have recovered from the low levels in the first half of 2009, a meaningful recovery in fundamentals most likely will not occur until job growth accelerates.

Debt Markets

The lending environment has improved, and
while activity is far from pre-crisis levels, capital is more readily available today than a year ago. According to Commercial Mortgage Alert, a trade publication that tracks the commercial mortgage market, new issuance of commercial
mortgage-backed securities (CMBS) climbed to $11.6 billion in 2010, compared with the $3.0 billion issued in 2009. Sentiment in the markets has shifted, with more lenders trying to complete transactions.

REIT Market

The U.S. REIT market continued to improve in 2010. The FTSE NAREIT Equity REIT Index, which tracks the performance of U.S. equity REITs and is published jointly by the FTSE Group and the National
Association of Real Estate Investment Trusts (NAREIT), posted its second straight year of 28% total returns. REITs continued to strengthen their balance sheets, raising a near-record amount of capital, according to NAREIT.

Property Markets

Despite high unemployment and modest economic growth, the commercial property markets seem to have stabilized. Vacancy rates in the office, retail and warehouse sectors remain at or near their highest
levels in the three decades for which data is readily available, according to CB Richard Ellis Econometric Advisors (CB Richard Ellis), a Boston-based real estate research firm. However, much of the space that was under construction when the
downturn began has been delivered, and tenant demand is starting to increase. Notably, property types with relatively short lease durations (apartments and hotels) have seen broad improvements in performance, with occupancy rates and rents moving
higher in select markets.

Hotels:Demand for hotel rooms rose in the second half of 2010 as leisure and
business travelers returned in growing numbers, according to Smith Travel Research, a leading provider of lodging industry data. Although average hotel occupancy remained below the peak levels in 2007 and room rates have shown gradual increases,
both metrics are moving in a positive direction. Hotel transaction volume is recovering, and capital for hotels is once again available for transactions in certain markets.

Office:With the exception of a few major markets where conditions are already improving, offices are at the bottom of the cycle. While vacancy rates are in the high teens in most markets,
the national average improved slightly in the fourth quarter of 2010. According to CB Richard Ellis, the U.S. office vacancy rate decreased by 20 basis points (or 0.20 percentage points) in the fourth quarter, falling to 16.4%. Absorption will lag
job creation, which means demand for space will be limited until job growth increases substantially from current levels.

Retail:Vacancy rates in the retail segment continued to climb in 2010, reaching their highest levels since the early
1990s, according to CB Richard Ellis. The deterioration of fundamentals slowed in recent months, however, as consumer spending began to improve. However, shopping centers face competition from online retailers and challenges stemming from ongoing
troubles among local merchants and national chains, such as A&P, Blockbuster and Borders.

Apartment: Robust
tenant demand for apartments prompted national vacancy rates to decline in 2010. According to New York-based real estate research firm Reis, healthy absorption last year served to reduce the U.S. vacancy rate to 6.6% by year-end 2010, a 150 basis
point drop from a year earlier. The improvement is due to the release of pent-up demand that built up during the recession, the increase in jobs, the decline in the homeownership rate, and the expanding population of 20-29 year olds, who make up the
prime renter demographic.

Industrial: Demand for warehouse space increased in the second half of 2010, focused
on the largest national logistics hubs, while little new supply has been added. Recent increases in global trade, retail sales and manufacturing output are all good signs for the sector. However, before the segment recovers, the overhang of excess
capacity  not just vacant space, but the underutilization of currently occupied warehouse stock  must be absorbed.



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Item 1A. Risk Factors

You should carefully consider the following risks. These risks could materially affect our business, results of operations or financial
condition, or cause our actual results to differ materially from those expected or those expressed in any forward looking statements made by or on behalf of the Company. These risks are not exclusive, and additional risks to which we are subject
include, but are not limited to, the factors mentioned under Forward-Looking Statements above and the risks of our business described elsewhere in this Annual Report on Form 10-K.

Our business and results of operations were materially adversely affected by the adverse conditions in the financial markets and
adverse economic conditions generally that began in the second half of 2007 and continued into 2009. Our business, results of operations and financial condition may be adversely affected, possibly materially, if these conditions recur or
deteriorate.

Due to the economic environment, the global fixed-income markets experienced both extreme volatility and
limited market liquidity conditions, which affected a broad range of asset classes and sectors. These events had and, to the extent they persist or recur, may have an adverse effect on us. Our revenues are likely to decline in such circumstances,
the cost of meeting our obligations to our customers may increase, and our profit margins could erode. In addition, in the event of a prolonged or severe economic downturn, we could incur significant losses in our investment portfolio.

The demand for our products could be adversely affected in an economic downturn characterized by higher unemployment, lower family
income, lower consumer spending, lower corporate earnings and lower business investment. We also may experience a higher incidence of claims and lapses or surrenders of policies. Our policyholders may choose to defer or stop paying insurance
premiums. We cannot predict definitively whether or when such actions, which could impact our business, results of operations, cash flows and financial condition, may occur.

The enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act will subject us to substantial additional federal regulation and we cannot predict the effect on our business, results of
operations, cash flows or financial condition.

On July 21, 2010, President Obama signed into law the Dodd-Frank Wall
Street Reform and Consumer Protection Act (Dodd-Frank), which effects comprehensive changes to the regulation of financial services in the United States and subjects Prudential Financial, Inc. (Prudential Financial) to substantial
additional federal regulation. Dodd-Frank directs existing and newly-created government agencies and bodies to promulgate regulations implementing the law, a process anticipated to occur over the next few years. We cannot predict with any certainty
the requirements of the regulations ultimately adopted or how Dodd-Frank and such regulations will affect the financial markets generally, impact our business, credit or financial strength ratings, results of operations, new securities law
requirements, cash flows or financial condition or advise or require Prudential Financial to hold or raise additional capital, impose additional risk management requirements or impose new requirements for the rapid and orderly dissolution of
Prudential Financial .

Changes in U.S. federal income tax law could make some of Prudentials products less
attractive to consumers and increase its tax costs.

Current U.S. federal income tax laws generally permit certain holders
to defer taxation on the build-up of value of annuities and life insurance products until payments are actually made to the policyholder or other beneficiary and to exclude from taxation the death benefit paid under a life insurance contract.
Congress from time to time considers legislation that could make Prudentials products less attractive to consumers, including legislation that would reduce or eliminate the benefit of this deferral on some annuities and insurance products, as
well as other types of changes that could reduce or eliminate the attractiveness of annuities and life insurance products to consumers, such as repeal of the estate tax.

For example, the estate tax was completely eliminated for 2010, but modified carryover basis rules applied for property acquired from decedents dying in that year. The estate tax has been reinstated
through 2012 with a $5 million individual exemption, a 35% maximum rate and step-up in basis rules for property acquired from a decedent. Estates of decedents who died in 2010 can choose between the rules that were in effect in 2010 or the new
rules. It is unclear what Congress will do with respect to the estate tax after 2012. This uncertainty makes estate planning difficult and may impact sales of Prudentials products. Congress, as well as state and local governments, also
considers from time to time legislation that could increase the amount of taxes payable by Prudential.

On February 14,
2011 the Obama Administration released the General Explanations of the Administrations Revenue Proposals or Revenue Proposals. Although the Administration has not released proposed statutory language, the Revenue Proposals includes
proposals which if enacted, would affect the taxation of life insurance companies and certain life insurance products.



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There is generally uncertainty regarding U.S. taxes both for individuals and corporations in light of the fact that many tax provisions recently enacted or extended will sunset by the end of
2012. In addition, the recommendations made by the Presidents bipartisan National Commission on Fiscal Responsibility and Reform and other deficit reduction panels suggest the need to reform the U.S. Tax Code. In addition, Congress plans to
hold a number of hearings during 2011 devoted to tax reform. It is unclear whether or when Congress may take up overall tax reform and what would be the impact of reform on Prudential and its products. However even in the absence of overall tax
reform the large federal deficit, as well as the budget constraints faced by many states and localities, increases the likelihood that Congress and state and local governments will raise revenue by enacting legislation increasing the taxes paid by
individuals and corporations. This can be accomplished either by raising rates or otherwise changing the tax rules. While higher tax rates increase the benefits of tax deferral on the buildup of value of annuities and life insurance, making
Prudentials products more attractive to consumers, legislation that reduces or eliminates deferral would have a potential negative effect on its products.

The products Prudential sells have different tax characteristics, in some cases generating tax deductions. The level of profitability of certain of its products are significantly dependent on these
characteristics and its ability to continue to generate taxable income, which are taken into consideration when pricing products and are a component of Prudentials capital management strategies. Accordingly, a change in tax law,
Prudentials ability to generate taxable income, or other factors impacting the availability of the tax characteristics generated by its products, could impact product pricing and returns or require Prudential to reduce the sales of these
products or implement other actions that could be disruptive to its business.

The companies offering the Contracts and the
Partnership are heavily regulated and changes in regulation may reduce our profitability.

Our business is subject to
comprehensive regulation and supervision. The purpose of this regulation is primarily to protect our customers. Many of the laws and regulations to which we are subject, are regularly re-examined, and existing or future laws and regulations may
become more restrictive or otherwise adversely affect our operations. The financial market dislocations we have experienced have produced, and are expected to continue to produce, extensive changes in existing laws and regulations, and regulatory
frameworks, applicable to our business.

We are subject to the rules and regulations of the Securities and Exchange Commission
(SEC) relating to public reporting and disclosure, accounting and financial reporting, and corporate governance matters. The Sarbanes-Oxley Act of 2002 and rules and regulations adopted in furtherance of that Act have substantially
increased our requirements in these and other areas. Changes in accounting requirements could have an impact on our reported results of operations and our reported financial position.

Insurance regulators, as well as industry participants, have begun to implement significant changes in the way in which statutory
reserves and statutory capital are determined particularly for products with embedded options and guarantees, and are considering further potentially significant changes in these requirements. Regulatory capital requirements based on scenario
testing have already gone into effect for variable annuity products, and new reserving requirements for these products were implemented as of the end of 2009. The timing and extent of further changes to the statutory reporting framework are
uncertain.

Compliance with applicable laws and regulations is time consuming and personnel-intensive, and changes in these
laws and regulations may materially increase our direct and indirect compliance and other expenses of doing business, thus having a material adverse effect on our financial condition or results of operations.

Adverse capital market conditions have in the past, and could in the future, significantly affect our ability to meet liquidity needs
and our access to capital and our cost of capital.

Adverse capital market conditions have affected and may affect in the
future the availability and cost of borrowed funds and could impact our ability to refinance existing borrowings, thereby ultimately impacting our ability to support or grow our business. We need liquidity to pay our operating expenses, interest on
our debt and replace certain maturing debt obligations. Without sufficient liquidity, we could be forced to curtail certain of our operations, and our business could suffer. The principal sources of our liquidity are insurance premiums, annuity
considerations, deposit funds and cash flow from our investment portfolio and assets, consisting mainly of cash or assets that are readily convertible into cash.

In the normal course of business, the Partnership enters into loan agreements with certain lenders to finance its real estate investment transactions. Unfavorable economic conditions could increase
related borrowing costs, limit access to the capital markets or result in a decision by lenders not to extend credit to the Partnership. There is no guarantee that the Partnerships borrowing arrangements or ability to obtain leverage will
continue to be available, or if available, will be available on terms and conditions acceptable to the Partnership. Further, these loan agreements contain, among other conditions, events of default and various covenants and representations. In the
normal course of business, the Partnership may be in the process of renegotiating terms for loans outstanding that have passed their maturity dates. At December 31, 2010, the Partnership had no outstanding matured loans.



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A decline in market value of the Partnerships assets may also have particular adverse
consequences in instances where the Partnership borrowed money based on the fair value of specific assets. A decrease in market value of these assets may result in the lender requiring the Partnership to post additional collateral or otherwise repay
these loans.

In the event the Partnerships current investment obligations are not refinanced or extended when they
become due and/or the Partnership is required to repay such borrowings and obligations, management anticipates that the repayment of these obligations, will be provided by operating cash flow, new debt refinancing, and real estate investment sales.

Market fluctuations and general economic, market and political conditions may adversely affect our business and
profitability.

Even under relatively more favorable market conditions, our investment returns and our access to and cost
of financing, are sensitive to fixed income, equity, real estate and other market fluctuations and general economic, market and political conditions. These fluctuations and conditions could adversely affect our results of operations, financial
position and liquidity, including in the following respects:



| |  | All real estate investments are subject to varying degrees of risk. The yields available from investments depend on the amounts of income generated
and expenses incurred. If investment properties do not generate revenues sufficient to meet operating expenses, including debt service and capital expenditures, cash flow will be adversely affected.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The revenues and value of a particular real estate investment may be adversely affected by a number of factors, including, but not limited to: the
cyclical nature of the real estate market, availability of credit and debt, general national economic conditions, local economic conditions, local real estate conditions, and fluctuations in operating costs, including real estate taxes and
utilities. Certain significant expenditures associated with each equity investment, such as mortgage payments, real estate taxes, insurance and maintenance costs, are generally not reduced when circumstances cause a reduction in income from the
investment. If a property is mortgaged to secure payment of indebtedness, and if the mortgaged property is unable to produce enough revenue to cover its mortgage or other debt payments, a loss could be sustained as a result of foreclosure on the
property or the exercise of other remedies by the lender. In addition, a propertys revenues and real estate value may also be affected by such factors as potential liability under applicable federal, state and local laws and regulations, which
may vary widely depending upon location, including tax laws, environmental laws, Americans with Disabilities Act accessibility requirements, and rent stabilization laws.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The dramatic deterioration in the capital markets and increasing weakness in the overall economy may adversely affect all
sectors of the real estate market and may lead to declines in property values. Adverse capital market conditions could impact the liquidity of our investments, affecting their value and potentially resulting in higher realized and/or unrealized
losses. These events may have an adverse affect on our investment results.



| |  | The estimated fair value of real estate and real estate related assets is determined through an appraisal process. There continues to be significant
disruptions in the global capital, credit and real estate markets. These disruptions have led to, among other things, a significant decline in the volume of transaction activity, in the fair value of many real estate and real estate related
investments, and a significant contraction in short-term and long-term debt and equity funding sources. The decline in liquidity and prices of real estate and real estate related investments, as well as the availability of observable transaction
data and inputs, may have made it more difficult to determine the fair value of such investments. As a result, these estimated fair 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 and could be material to the financial statements.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Regardless of market conditions, certain investments we hold, including the properties in the Account, are relatively
illiquid. If we needed to sell these investments, we may have difficulty in selling them for acceptable prices.



| |  | Disruptions, uncertainty or volatility in the financial markets may limit our access to capital required to operate our business. These market
conditions may limit our ability to replace, in a timely manner, maturing obligations and access the capital necessary to replace assets withdrawn by customers.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Market conditions could also impact our ability to fund foreseen and unforeseen cash and collateral requirements, potentially inhibiting our ability
to perform under our counterparty obligations, support business initiatives and increasing realized losses.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

A change in market conditions, including prolonged periods of high inflation, could cause a change in consumer sentiment adversely affecting persistency of our life insurance and annuity products,
including those offering the Account as an investment option.



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The occurrence of natural or man-made disasters could adversely affect our results of
operations and financial condition.

The occurrence of natural disasters, including hurricanes, floods, earthquakes,
tornadoes, fires, explosions, pandemic disease and man-made disasters, including acts of terrorism and military actions, could adversely affect our results of operations or financial condition, including in the following respects:



| |  |  | Catastrophic loss of life due to natural or man-made disasters could cause us to pay benefits at higher levels and/or materially earlier than
anticipated and could lead to unexpected changes in persistency rates.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | A natural or man-made disaster could result in losses in our investment portfolio or the failure of our counterparties to perform, or cause
significant volatility in financial markets.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | A terrorist attack affecting financial institutions in the United States or elsewhere could negatively impact the financial services industry in
general and our business operations, investment portfolio and profitability in particular. As previously reported, in August 2004, the U.S. Department of Homeland Security identified our Newark, New Jersey facilities, along with those of several
other financial institutions in New York and Washington, D.C., as possible targets of a terrorist attack.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Pandemic disease, caused by a virus such as H5N1, the avian flu virus, or H1N1, the swine flu virus, could have a severe
adverse effect on our business. The potential impact of such a pandemic on our results of operations and financial position is highly speculative, and would depend on numerous factors, including: in the case of the avian flu virus, the probability
of the virus mutating to a form that can be passed easily from human to human; the effectiveness of vaccines and the rate of contagion; the regions of the world most affected; the effectiveness of treatment for the infected population; the rates of
mortality and morbidity among various segments of the insured versus the uninsured population; the collectability of reinsurance; the possible macroeconomic effects of a pandemic on the Companys asset portfolio; the effect on lapses and
surrenders of existing policies, as well as sales of new policies; and many other variables.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

There can be no assurance that our business continuation plans and insurance coverages would be effective in mitigating
any negative effects on our operations or profitability in the event of a terrorist attack or other disaster.

Climate change, and its regulation, may affect the value of investments, including real estate investments we hold or
manage for others. Our current evaluation is that the near term effects of climate change and climate change regulation on the Company are not material, but we cannot predict the long term impacts on us from climate change or its regulation.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

Not Applicable.

Item 3. Legal Proceedings

None.



8



---

PART II

Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

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 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; therefore a discussion of market information
is not relevant.

As of December 31, 2010, approximately 27,003 contract owners of record held investments in the Real
Property Account.

Item 6. Selected Financial Data

Prudential Variable Contract Real Property Partnership Results of Operations and Financial Position for the General Partners
Controlling Interest are summarized as follows:

RESULTS OF OPERATIONS:



|                                                                   |  |                                 |             |  |      |   |             |                         |  |   |             |   |  |      |             |  |  |   |             | 
|------------------------------------------------------------------ |  | ------------------------------- | ----------- |  | ---- | - | ----------- | ----------------------- |  | - | ----------- | - |  | ---- | ----------- |  |  | - | ----------- | 
|                                                                   |  | Item 6. Selected Financial Data |            
|                                                                   | 
|                                                                   |  | Year Ended December 31,         |            
|                                                                   |  |                                 |             |  |     
|                                                                   |  | 2010                            |             |  | 2009 |   |             | 2008                    |  |   | 2007        |   |  | 2006 |            
|RESULTS OF OPERATIONS:                                             |  |                                 |             |  |      |   |             |                         |  |   |             |   |  |      |             |  |  |   |             | 
|                                                                   |  |                                 |             |  |     
|Total Investment Income                                            |  | $                               | 24,928,302  |  |      | $ | 26,678,405  |                         |  | $ | 32,124,390  |   |  | $    | 31,700,063  |  |  | $ | 28,623,487  | 
|                                                                   |  |                                 |             |  |      |   |             |                         |  |   |             |   |  |      |             |  |  |   |             | 
|                                                                   |  |                                 |             |  |     
|Net Investment Income                                              |  | $                               | 7,969,409   |  |      | $ | 7,250,690   |                         |  | $ | 11,138,184  |   |  | $    | 12,663,580  |  |  | $ | 11,161,728  | 
|                                                                   |  |                                 |             |  |     
|Net Realized and Unrealized Gain (Loss) on Real Estate Investments |  |                                 | 7,354,272   |  |      |   | (45,984,726 | )                       |  |   | (44,233,635 | ) |  |      | 5,453,595   |  |  |   | 18,352,005  | 
|                                                                   |  |                                 |             |  |      |   |             |                         |  |   |             |   |  |      |             |  |  |   |             | 
|                                                                   |  |                                 |             |  |     
|Net Increase in Net Assets                                         |  |                                 |             |  |      |   |             |                         |  |   |             |   |  |      |             |  |  |   |             | 
|Resulting From Operations                                          |  | $                               | 15,323,681  |  |      | $ | (38,734,036 | )                       |  | $ | (33,095,451 | ) |  | $    | 18,117,175  |  |  | $ | 29,513,733  | 
|                                                                   |  |                                 |             |  |      |   |             |                         |  |   |             |   |  |      |             |  |  |   |             | 
|                                                                   |  |                                 |             |  |     
|FINANCIAL POSITION:                                                |  |                                 |             |  |      |   |             |                         |  |   |             |   |  |      |             |  |  |   |             | 
|                                                                   |  |                                 |            
|                                                                   |  |                                 |             |  |      |   |             | Year Ended December 31, | 
|                                                                   |  |                                 |             |  |     
|                                                                   |  | 2010                            |             |  | 2009 |   |             | 2008                    |  |   | 2007        |   |  | 2006 |            
|                                                                   |  |                                 |             |  |     
|Total Assets                                                       |  | $                               | 202,789,389 |  |      | $ | 204,296,658 |                         |  | $ | 263,665,273 |   |  | $    | 290,166,898 |  |  | $ | 272,136,819 | 
|                                                                   |  |                                 |             |  |      |   |             |                         |  |   |             |   |  |      |             |  |  |   |             | 
|                                                                   |  |                                 |             |  |     
|Long Term Lease Obligation                                         |  | $                               | -           |  |      | $ | -           |                         |  | $ | -           |   |  | $    | -           |  |  | $ | -           | 
|                                                                   |  |                                 |             |  |      |   |             |                         |  |   |             |   |  |      |             |  |  |   |             | 
|                                                                   |  |                                 |             |  |     
|Investment Level Debt                                              |  | $                               | 30,565,616  |  |      | $ | 30,824,899  |                         |  | $ | 40,047,827  |   |  | $    | 32,121,712  |  |  | $ | 32,710,488  | 
|                                                                   |  |                                 |             |  |      |   |             |                         |  |   |             |   |  |      |             |  |  |   |             | 



9



---

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

All of the assets of the Real Property Account, or the Account are invested in the
Partnership. Accordingly, the liquidity and capital resources and results of operations for the Account are contingent upon those of the Partnership. Therefore, this managements discussion and analysis addresses these items at the Partnership
level. The partners in the Partnership are Prudential, Pruco Life Insurance Company, and Pruco Life Insurance Company of New Jersey, or collectively, the Partners.

The following discussion and analysis of the liquidity and capital resources and results of operations of the Partnership should be read in conjunction with the audited Consolidated Financial Statements
of the Account and the Partnership and the related Notes included in this filing.

(a) Liquidity and Capital Resources

As of December 31, 2010, the Partnerships liquid assets, consisting of cash and cash equivalents, were approximately $28.9
million, an increase of approximately $4.4 million from $24.5 million at December 31, 2009. The increase was primarily due to the sale of an apartment property in Atlanta, Georgia and cash flows generated from the Partnerships operating
activities. Partially offsetting the increase were distributions to the Partners and the funding of capital expenditures to existing properties. Sources of liquidity included net cash flow from property operations, sales proceeds, and interest from
short-term investments. The Partnership uses cash for its real estate investment activities and for its distributions to its partners. As of December 31, 2010, approximately 14.2% of the Partnerships total assets consisted of cash and
cash equivalents.

The Partnership did not have any acquisitions for the year ended December 31, 2010. The Partnership
exercised a one-year extension option on a $15.5 million loan at the retail property in Ocean City, Maryland on April 1, 2010. During the year ended December 31, 2010, the Partnership made distributions to the Partners totaling $17.5
million.

Dispositions for the year ended December 31, 2010 included the sale of one asset. On September 29, 2010,
the Partnership sold the apartment property in Atlanta, Georgia, resulting in net proceeds of $17.0 million to the Partnership.

During the year ended December 31, 2010, the Partnership spent approximately $3.4 million on capital improvements to various
existing properties. Approximately $1.6 million was associated with tenant improvements, leasing expenses, and interior upgrades at the office property in Brentwood, Tennessee; approximately $0.3 million funded tenant improvements, leasing expenses,
and exterior upgrades at the retail property in Ocean City, Maryland; approximately $0.2 million were spent in association with clubhouse renovation and sale preparation at the property in Atlanta, Georgia; and approximately $0.3 million contributed
to a roof replacement at the office property in Brentwood, Tennessee. The remaining $1.0 million was associated with minor capital improvements and leasing costs associated with leasing expenses related to other properties in the Partnership.



10



---

(b) Results of Operations

The following is a comparison of the Partnerships results of operations for the years ended December 31, 2010, and 2009.

Net investment income overview

The Partnerships net investment
income attributable to the general partners controlling interest for the year ended December 31, 2010 was approximately $8.0 million, an increase of approximately $0.7 million from the prior year. The increase in net investment income
attributable to the general partners controlling interest was due to increases of approximately $0.4 million, $0.3 million, and $0.1 million in the apartment, retail, and hotel sectors net investment income attributable to the general
partners controlling interest, respectfully, during the year ended December 31, 2010 from the prior year. Additionally, there was an approximately $0.2 million less losses in other income. Partially offsetting these increases was a
decrease of approximately $0.4 million in the office sectors net investment income attributable to the general partners controlling interest from the prior year. The components of this net investment income attributable to the general
partners controlling interest are discussed below by investment type.

Valuation overview

The Partnership recorded a net recognized gain attributable to the general partners controlling interests of approximately $2.3
million for the year ended December 31, 2010, compared with a net recognized loss attributable to the general partners controlling interest of approximately $4.3 million for the prior year. The Partnership recorded a net unrealized gain
attributable to the general partners controlling interest of approximately $5.0 million for the year ended December 31, 2010, compared with a net unrealized loss attributable to the general partners controlling interest of
approximately $41.7 million for the prior year. The net unrealized gain attributable to the general partners controlling interest of approximately $5.0 million for the year ended December 31, 2010 was primarily attributable to valuation
increases in the apartment and retail sectors investments of approximately $5.6 million and $1.6 million, respectively. This increase was partially offset by a net unrealized decrease attributable to the general partners controlling
interests of approximately $2.1 million and $0.1 million in the office and hotel sectors investments, respectively. The components of these valuation losses are discussed below by investment type.



11



---

The following table presents a comparison of the Partnerships sources of net
investment income attributable to the general partners controlling interest, and realized and unrealized gain or (loss) attributable to the general partners controlling interests or losses attributable to the general partners
controlling interests by investment type for the years ended December 31, 2010 and 2009.



|                                                                     |  |                                  |             |  |      |   |               | 
|-------------------------------------------------------------------- |  | -------------------------------- | ----------- |  | ---- | - | ------------- | 
|                                                                     |  | Twelve Months Ended December 31, |            
|                                                                     |  | 2010                             |             |  | 2009 |  
|Net Investment Income:                                               |  |                                  |             |  |      |   |               | 
|                                                                     |  |                                 
|Office properties                                                    |  | $                                | 2,116,649   |  |      | $ | 2,463,010     | 
|Apartment properties                                                 |  |                                  | 3,100,230   |  |      |   | 2,674,979     | 
|Retail properties                                                    |  |                                  | 4,702,107   |  |      |   | 4,425,357     | 
|Hotel property                                                       |  |                                  | 751,058     |  |      |   | 620,724       | 
|Other (including interest income, investment mgt fee, etc.)          |  |                                  | (2,700,635) |  |      |   | (2,933,380)   | 
|                                                                     |  |                                  |             |  |      |   |               | 
|Total Net Investment Income                                          |  | $                                | 7,969,409   |  |      | $ | 7,250,690     | 
|                                                                     |  |                                  |             |  |      |   |               | 
|                                                                     |  |                                 
|Net Recognized Gain (Loss) on Real Estate Investments:               |  |                                  |             |  |      |   |               | 
|                                                                     |  |                                 
|Apartment Properties                                                 |  | $                                | 2,326,187   |  |      | $ | -             | 
|Retail properties                                                    |  |                                  | -           |  |      |   | (4,254,196)   | 
|                                                                     |  |                                  |             |  |      |   |               | 
|Net Recognized Gain (Loss) on Real Estate Investments                |  | $                                | 2,326,187   |  |      | $ | (4,254,196)   | 
|                                                                     |  |                                 
|Net Unrealized Gain (Loss) on Real Estate Investments:               |  |                                  |             |  |      |   |               | 
|                                                                     |  |                                 
|Office properties                                                    |  | $                                | (2,121,258) |  |      | $ | (15,609,886)  | 
|Apartment properties                                                 |  |                                  | 5,621,737   |  |      |   | (9,659,969)   | 
|Retail properties                                                    |  |                                  | 1,590,868   |  |      |   | (12,728,430)  | 
|Industrial property                                                  |  |                                  | -           |  |      |   | -             | 
|Hotel property                                                       |  |                                  | (63,262)    |  |      |   | (3,732,245)   | 
|                                                                     |  |                                  |             |  |      |   |               | 
|                                                                     |  |                                 
|Net Unrealized Gain (Loss) on Real Estate Investments                |  | $                                | 5,028,085   |  |      | $ | (41,730,530)  | 
|                                                                     |  |                                  |             |  |      |   |               | 
|                                                                     |  |                                 
|Net Recognized and Unrealized Gain (Loss) on Real Estate Investments |  | $                                | 7,354,272   |  |      |   | ($45,984,726) | 
|                                                                     |  |                                  |             |  |      |   |               | 



12



---

OFFICE PROPERTIES



|                       |  |                                 |           |   |                                 |   |           |                            |  |   |                           |   |  |                        |              |  |                          |  |      |  |  |  |      | 
|---------------------- |  | ------------------------------- | --------- | - | ------------------------------- | - | --------- | -------------------------- |  | - | ------------------------- | - |  | ---------------------- | ------------ |  | ------------------------ |  | ---- |  |  |  | ---- | 
|Year EndedDecember 31, |  | Net InvestmentIncome/(Loss)2010 |           |   | Net InvestmentIncome/(Loss)2009 |   |           | Unrealized
Gain/(Loss)2010 |  |   | UnrealizedGain/(Loss)2009 |   |  | Occupancyas of12/31/10 |              |  | Occupancy
as of
12/31/09 | 
|Property               |  |                                 |           |   |                                 |   |           |                            |  |   |                           |   |  |                        |              |  |                          |  |      |  |  |  |      | 
|Lisle, IL              |  | $                               | 322,148   |   |                                 | $ | 44,274    |                            |  | $ | 346,730                   |   |  | $                      | (3,809,684)  |  |                          |  | 48%  |  |  |  | 48%  | 
|Brentwood, TN          |  |                                 | (144,332  | ) |                                 |   | 149,890   |                            |  |   | 133,512                   |   |  |                        | (6,012,154)  |  |                          |  | 78%  |  |  |  | 70%  | 
|Beaverton, OR          |  |                                 | 798,157   |   |                                 |   | 1,178,698 |                            |  |   | (2,111,499                | ) |  |                        | (2,612,641)  |  |                          |  | 88%  |  |  |  | 88%  | 
|Brentwood, TN          |  |                                 | 1,140,676 |   |                                 |   | 1,090,148 |                            |  |   | (490,001                  | ) |  |                        | (3,175,407)  |  |                          |  | 100% |  |  |  | 100% | 
|                       |  |                                 |           |   |                                 |   |           |                            |  |   |                           |  
|                       |  | $                               | 2,116,649 |   |                                 | $ | 2,463,010 |                            |  | $ | (2,121,258                | ) |  | $                      | (15,609,886) |  |                          |  |      |  |  |  |      | 
|                       |  |                                 |           |   |                                 |   |           |                            |  |   |                           |  

Net investment income

Net investment income attributable to the general partners controlling interest for the Partnerships office properties was
approximately $2.1 million for the year ended December 31, 2010, a decrease of approximately $0.4 million from the prior year. The decrease in net investment income attributable to the general partners controlling interest for the year
ended December 31, 2010 was primarily the result of (a) a $0.3 million decrease at one of the properties in Brentwood, Tennessee due to free rent given to the largest existing tenant; and (b) a $0.4 million decrease at the property in
Beaverton, Oregon due to the loss of the buildings largest tenant along with free rent given to a replacement tenant. These decreases were partially offset by an increase of $0.3 million in net investment income attributable to the general
partners controlling interest at the property in Lisle, Illinois due to increased average occupancy and a full year of rental payments from a new tenant.

Unrealized gain /(loss)

The office properties owned by the Partnership
recorded a net unrealized loss attributable to the general partners controlling interest of approximately $2.1 million during the year ended December 31, 2010, compared with a net unrealized loss attributable to the general partners
controlling interest of approximately $15.6 million for the prior year. The net unrealized loss attributable to the general partners controlling interest of approximately $2.1 million for the year ended December 31, 2010 was primarily due
to net unrealized losses attributable to the general partners controlling interest of approximately $2.1 million and $0.5 million at the properties in Beaverton, Oregon and Brentwood, Tennessee, respectively. The decrease at the property in
Beaverton, Oregon was primarily attributable to the loss of a full floor tenant, in addition to the lease expiration of another full floor tenant in 2012, causing investment rates to increase. The decrease at the property in Brentwood, Tennessee was
due to the upcoming lease expiration of the buildings only tenant. These decreases were partially offset by net unrealized gains attributable to the general partners controlling interest of $0.3 million and $0.1 million at the properties
in Lisle, Illinois and Brentwood, Tennessee due to improved tenant mixes.



13



---

APARTMENT PROPERTIES



|                       |  |                                 |           |  |                                 |   |           |                                        |  |   |                            |  |  |                        |             |  |                        |  |     |  |  |  |     | 
|---------------------- |  | ------------------------------- | --------- |  | ------------------------------- | - | --------- | -------------------------------------- |  | - | -------------------------- |  |  | ---------------------- | ----------- |  | ---------------------- |  | --- |  |  |  | --- | 
|Year EndedDecember 31, |  | Net InvestmentIncome/(Loss)2010 |           |  | Net InvestmentIncome/(Loss)2009 |   |           | Recognized
& UnrealizedGain/(Loss)2010 |  |   | Unrealized
Gain/(Loss)2009 |  |  | Occupancyas of12/31/10 |             |  | Occupancyas of12/31/09 | 
|Property               |  |                                 |           |  |                                 |   |           |                                        |  |   |                            |  |  |                        |             |  |                        |  |     |  |  |  |     | 
|Atlanta, GA(1)         |  | $                               | 537,772   |  |                                 | $ | 512,311   |                                        |  | $ | 2,326,187                  |  |  | $                      | (1,999,912) |  |                        |  | NA  |  |  |  | 92% | 
|Raleigh, NC            |  |                                 | 834,480   |  |                                 |   | 332,684   |                                        |  |   | 2,263,884                  |  |  |                        | (1,679,426) |  |                        |  | 97% |  |  |  | 93% | 
|Austin, TX             |  |                                 | 1,168,585 |  |                                 |   | 1,260,713 |                                        |  |   | 2,461,614                  |  |  |                        | (4,083,628) |  |                        |  | 95% |  |  |  | 95% | 
|Charlotte, NC          |  |                                 | 559,393   |  |                                 |   | 569,271   |                                        |  |   | 896,239                    |  |  |                        | (1,897,003) |  |                        |  | 96% |  |  |  | 91% | 
|                       |  |                                 |           |  |                                 |   |           |                                        |  |   |                            | 
|                       |  | $                               | 3,100,230 |  |                                 | $ | 2,674,979 |                                        |  | $ | 7,947,924                  |  |  | $                      | (9,659,969) |  |                        |  |     |  |  |  |     | 
|                       |  |                                 |           |  |                                 |   |           |                                        |  |   |                            | 



|(1) | The Atlanta, Georgia property was sold on September 29, 2010, which
is reflected as a recognized gain/(loss).
|--- | -------------------------------------------------------------------------------------------------------------

Net investment income

Net investment income attributable to the general partners controlling interest for the Partnerships apartment properties was
approximately $3.1 million for the year ended December 31, 2010, an increase of approximately $0.4 million from the prior year. The increase in net investment income attributable to the general partners controlling interest for the year
ended December 31, 2010 was primarily due to expense saving measures and favorable interest rates The increase in net investment income attributable to the general partners controlling interest for the year ended December 31, 2010
was primarily due to expense saving measures and favorable interest rates resulting in lower interest expenses on the variable rate loan at the property in Raleigh, North Carolina.

Recognized & Unrealized gain/(loss)

The apartment properties owned by the Partnership recorded a net recognized and unrealized gain attributable to the general partners controlling interest of approximately $7.9 million for the year
ended December 31, 2010, compared with a net recognized and unrealized loss attributable to the general partners controlling interest of approximately $9.7 million for the prior year. The net recognized and unrealized gain attributable to
the general partners controlling interest for the year ended December 31, 2010 was primarily due to (a) decreased investment rates and more aggressive market leasing assumptions across the apartment sector that caused each property
to increase in value; and (b) a recognized gain upon the sale of the property in Atlanta, Georgia on September 29, 2010.



14



---

RETAIL PROPERTIES



|                       |  |                                 |           |  |                                  |   |           |                            |  |   |                                       |   |  |                         |              |  |                         |  |      |  |  |  |      | 
|---------------------- |  | ------------------------------- | --------- |  | -------------------------------- | - | --------- | -------------------------- |  | - | ------------------------------------- | - |  | ----------------------- | ------------ |  | ----------------------- |  | ---- |  |  |  | ---- | 
|Year EndedDecember 31, |  | Net
InvestmentIncome/(Loss)2010 |           |  | Net
InvestmentIncome/(Loss)
2009 |   |           | Unrealized
Gain/(Loss)2010 |  |   | Recognized &UnrealizedGain/(Loss)2009 |   |  | Occupancy
as of12/31/10 |              |  | Occupancy
as of12/31/09 | 
|Property               |  |                                 |           |  |                                  |   |           |                            |  |   |                                       |   |  |                         |              |  |                         |  |      |  |  |  |      | 
|Roswell,
GA(1)         |  | $                               | -         |  |                                  | $ | 136,726   |                            |  | $ | -                                     |   |  | $                       | (4,452,106)  |  |                         |  | N/A  |  |  |  | N/A  | 
|Kansas City,
KS(2)     |  |                                 | -         |  |                                  |   | 21,094    |                            |  |   | -                                     |   |  |                         | -            |  |                         |  | N/A  |  |  |  | N/A  | 
|Hampton, VA            |  |                                 | 995,211   |  |                                  |   | 967,392   |                            |  |   | (2,360,694                            | ) |  |                         | (4,825,583)  |  |                         |  | 94%  |  |  |  | 89%  | 
|Ocean City, MD         |  |                                 | 1,181,188 |  |                                  |   | 1,113,478 |                            |  |   | 526,367                               |   |  |                         | (2,121,292)  |  |                         |  | 98%  |  |  |  | 96%  | 
|Westminster, MD        |  |                                 | 1,288,695 |  |                                  |   | 1,214,240 |                            |  |   | 676,440                               |   |  |                         | (3,800,156)  |  |                         |  | 100% |  |  |  | 100% | 
|Dunn,
NC(3)            |  |                                 | 232,760   |  |                                  |   | (101,433  | )                          |  |   | 129,655                               |   |  |                         | (116,789)    |  |                         |  | 35%  |  |  |  | 36%  | 
|CARS Preferred Equity  |  |                                 | 1,004,253 |  |                                  |   | 1,073,860 |                            |  |   | 2,619,100                             |   |  |                         | (1,666,700)  |  |                         |  | N/A  |  |  |  | N/A  | 
|                       |  |                                 |           |  |                                  |   |           |                            |  |   |                                       |  
|                       |  | $                               | 4,702,107 |  |                                  | $ | 4,425,357 |                            |  | $ | 1,590,868                             |   |  | $                       | (16,982,626) |  |                         |  |      |  |  |  |      | 
|                       |  |                                 |           |  |                                  |   |           |                            |  |   |                                       |  



|(1) | The Roswell, Georgia retail property was sold on May 1, 2009, which
is reflected as a recognized gain/(loss).
|--- | -------------------------------------------------------------------------------------------------------------

|(2) | The Kansas City, Kansas retail property was sold on June 29, 2007
but certain post-closing adjustments were recognized during the year ended December 31, 2009.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | A portion of the Dunn, North Carolina retail property was sold on
November 12, 2009, which is reflected as a recognized gain/(loss).
|--- | ------------------------------------------------------------------------------------------------------------------------------------

Net investment income

Net investment income attributable to the general partners controlling interest for the Partnerships retail
properties was approximately $4.7 million for the year ended December 31, 2010, an increase of approximately $0.3 million from the prior year. The increase was primarily due to a one-time occurrence related to bad debt expense at the retail
property in Dunn, North Carolina that reduced its net investment income attributable to the general partners controlling interest during the prior year. Partially offsetting this increase was the loss of operating income from the Roswell,
Georgia retail property sold on May 1, 2009.

Unrealized gain /(loss)

The retail properties owned by the Partnership recorded a net unrealized gain attributable to the general partners controlling
interest of approximately $1.6 million for the year ended December 31, 2010, compared with a net recognized and unrealized loss attributable to the general partners controlling interest of approximately $17.0 million for the prior year.
The net unrealized gain attributable to the general partners controlling interest for the year ended December 31, 2010 was primarily due to (a) an increased valuation of the Capital Automotive Real Estate Services, or
CARS, preferred equity investment based on a reduction in the expected remaining term of the investment, resulting in an increased present value of principal repayment, as well as decreased risk and applied market investment rate; and
(b) decreased investment rates and more aggressive market leasing assumptions at the properties in Ocean City, Maryland and Westminster, Maryland based on improving property fundamentals and national consumption, which caused each property to
increase in value. This gain was partially offset by the unrealized loss attributable to the general partners controlling interest at the property in Hampton, Virginia due to tenant weakness reflected by declining sales and inferior credit at
the center and conservative market leasing assumptions including decreased projected market rents, lower renewal probability, and slower space absorption generating a valuation decline.



15



---

HOTEL PROPERTY



|                       |  |                                 |         |  |                                 |   |         |                           |  |   |                           |   |  |                      |            |   |                       |  |     |  |  |  |     | 
|---------------------- |  | ------------------------------- | ------- |  | ------------------------------- | - | ------- | ------------------------- |  | - | ------------------------- | - |  | -------------------- | ---------- | - | --------------------- |  | --- |  |  |  | --- | 
|Year EndedDecember 31, |  | Net InvestmentIncome/(Loss)2010 |         |  | Net InvestmentIncome/(Loss)2009 |   |         | UnrealizedGain/(Loss)2010 |  |   | UnrealizedGain/(Loss)2009 |   |  | AverageOccupancy2010 |            |   | Average
Occupancy2009 | 
|Property               |  |                                 |         |  |                                 |   |         |                           |  |   |                           |   |  |                      |            |   |                       |  |     |  |  |  |     | 
|Lake Oswego, OR        |  | $                               | 751,058 |  |                                 | $ | 620,724 |                           |  | $ | (63,262                   | ) |  | $                    | (3,732,245 | ) |                       |  | 59% |  |  |  | 61% | 

Net investment
income

Net investment income attributable to the general partners controlling interest for the Partnerships
hotel property was approximately $0.8 million for the year ended December 31, 2010, reflecting an increase of approximately $0.1 million from the prior year due to improved cost savings in operations and increased average daily room rate as a
result of the strengthening hospitality market driven by increased business and vacation travel.

Unrealized gain /(loss)

The hotel property owned by the Partnership recorded an unrealized loss attributable to the general partners
controlling interest of approximately $0.1 million for the year ended December 31, 2010, compared with an unrealized loss attributable to the general partners controlling interest of approximately $3.7 million for the prior year. The
unrealized loss attributable to the general partners controlling interest for the year ended December 31, 2010 reflects a valuation decline due to increased projected stabilization period and decreased stabilized market occupancy
assumptions.

Other

Other net investment loss decreased approximately $0.2 million during the year ended December 31, 2010 from the prior year. Other net investment loss includes investment management fees and portfolio
level expenses offset by interest income from short-term investments.



16



---

(c) Inflation

A majority of the Partnerships leases with its commercial tenants provide for recoveries of expenses based upon the tenants proportionate share of, and/or increases in, real estate taxes and
certain operating costs, which may partially reduce the Partnerships exposure to increases in operating costs resulting from inflation.

Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, or U.S. GAAP, requires the application of accounting
policies that often involve a significant degree of judgment. Management reviews critical estimates and assumptions on an ongoing basis. If management determines, as a result of its consideration of facts and circumstances, that modifications in
assumptions and estimates are appropriate, results of operations and financial position as reported in the unaudited Consolidated Financial Statements of the Account and the Partnership may change significantly.

The following sections discuss those critical accounting policies applied in preparing the unaudited Consolidated Financial Statements of
the Account and the Partnership that are most dependent on the application of estimates and assumptions.

Accounting Pronouncements Adopted

See Note 2C to our Consolidated Financial Statements for a discussion of recently adopted accounting pronouncements.

Valuation of Investments

Real Estate Investments - Real estate investments are carried at fair value. Properties owned are initially recorded at the
purchase price plus closing costs. Development costs and major renovations are capitalized as a component of cost, and routine maintenance and repairs are charged to expense as incurred. Real estate costs include the cost of acquired property,
including all the tangible and intangible assets. Tangible assets include the value of all land, building and tenant improvements at the time of acquisition. Intangible assets include the value of any above and below market leases, in-place leases,
and tenant relationships at the time of acquisition.

In general fair value estimates are based upon property appraisal
reports prepared by independent real estate appraisers (members of the Appraisal Institute or an equivalent organization) within a reasonable amount of time following acquisition of the real estate and no less frequently than annually thereafter.
The Chief Real Estate Appraiser of PIM, which is an indirectly owned subsidiary of Prudential Financial, Inc., is responsible for assuring that the valuation process provides independent and reasonable property fair value estimates. An unaffiliated
third party has been appointed by PIM to assist the Chief Real Estate Appraiser in maintaining and monitoring the independence and the accuracy of the appraisal process. The fair value of real estate investments does not reflect the transaction sale
costs, which may be incurred upon disposition of the real estate investments.

The purpose of an appraisal is to estimate the
fair value of real estate as of a specific date. In accordance with FASB authoritative guidance on fair value measurements and disclosures, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. The estimate of fair value is based on the conventional approaches to value, all of which require the exercise of subjective judgment. The three approaches are: (1) current cost
of reproducing the real estate less deterioration and functional and economic obsolescence; (2) discounting a series of income streams and reversion at a specific yield or by directly capitalizing a single year income estimate by an appropriate
factor; and (3) value indicated by recent sales of comparable real estate in the market. Key inputs and assumptions include rental income and expense amounts, related rental income and expense growth rates, discount rates and capitalization
rates. In the reconciliation of these three approaches, the independent appraiser uses one or a combination of them, to determine the approximated value for the type of real estate in the market.

In general, the input values used in the appraisal process are unobservable, therefore unless indicated otherwise; real estate
investments are classified as Level 3 (see Note 4 for detail) under the FASB authoritative guidance for fair value measurements.

Unconsolidated real estate partnerships and preferred equity investments are carried at fair value and are generally valued at the Partnerships equity in net assets as reflected in the
partnerships financial statements with properties valued as described above. Under the equity method, the investment is initially recorded at the original investment amount, plus or minus additional amounts invested or distributed, and is
subsequently adjusted for the Partnerships share of undistributed earnings or losses, including unrealized appreciation and depreciation, from the partnership.

As described above, the estimated fair value of real estate and real estate related assets is generally 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 . These variances could be material to the financial statements.
Although the estimated market values represent subjective estimates, management believes these estimated market values are reasonable approximations of market prices and the aggregate estimated value of investments in real estate is fairly presented
as of December 31, 2010 and 2009.



17



---

Other Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the
audited Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.



|Item 7A. | Quantitative and Qualitative Disclosures about Market Risk
|-------- | ----------------------------------------------------------

Interest Rate Risk  The general partners controlling interest exposure to market rate risk for changes in interest
rates relates to approximately 36.02% of its investment portfolio as of December 31, 2010, which consists primarily of short-term commercial paper and fixed and variable interest rate debt. The Partnership does not use derivative financial
instruments. As a matter of policy, the Partnership places its investments with high quality debt security issuers, limits the amount of credit exposure to any one issuer, limits duration by restricting the term, and holds investments to maturity
except under unusual circumstances.

The table below presents the amounts and related weighted interest rates of the
Partnerships cash equivalents and short-term investments at December 31, 2010:



|                          |  |            |  |                                  |           |  |                      |  |       | 
|------------------------- |  | ---------- |  | -------------------------------- | --------- |  | -------------------- |  | ----- | 
|                          |  | Maturity   |  | Estimated Market Value(millions) |           |  | AverageInterest Rate | 
|Cash and Cash equivalents |  | 0-3 months |  |                                  | $    28.9 |  |                      |  | 1.42% | 

The table below
discloses the Partnerships debt as of December 31, 2010. The fair value of the Partnerships long-term debt is affected by changes in market interest rates. The following table presents principal cash flows based upon maturity dates
of the debt obligations and the related weighted-average interest rates by expected maturity dates for the debt.



|                                                                  |  |      |         |  |      |  |       |      |  |  |        |  |  |      |       |  |            |  |       |       |  |  |                     |  |  |  |         |  |  |  |         | 
|----------------------------------------------------------------- |  | ---- | ------- |  | ---- |  | ----- | ---- |  |  | ------ |  |  | ---- | ----- |  | ---------- |  | ----- | ----- |  |  | ------------------- |  |  |  | ------- |  |  |  | ------- | 
|Investment level debt (in $ thousands),
including current portion |  | 2011 |         |  | 2012 |  |       | 2013 |  |  | 2014   |  |  | 2015 |       |  | Thereafter |  |       | Total |  |  | EstimatedFair Value | 
|                                                                  |  |      |         |  |      |  |       |     
|Weighted Average Fixed Interest Rate                              |  |      | 6.75%   |  |      |  | 6.75% |      |  |  | 6.75%  |  |  |      | 6.75% |  |            |  | 6.75% |       |  |  | 6.75%               |  |  |  | 6.75%   |  |  |  |         | 
|Fixed Rate                                                        |  |      | $604    |  |      |  | $646  |      |  |  | $691   |  |  |      | $740  |  |            |  | $791  |       |  |  | $2,719              |  |  |  | $6,191  |  |  |  | $6,280  | 
|Variable Rate                                                     |  |      | $15,385 |  |      |  | -     |      |  |  | $9,000 |  |  |      | -     |  |            |  | -     |       |  |  | -                   |  |  |  | $24,385 |  |  |  | $24,341 | 
|Premium/(Discount) on Investment Level Debt                       |  |      | ($10)   |  |      |  | -     |      |  |  | -      |  |  |      | -     |  |            |  | -     |       |  |  | -                   |  |  |  | ($10)   |  |  |  | -       | 
|                                                                  |  |      |         | 
|Total Investment Level Debt                                       |  |      | $15,979 |  |      |  | $646  |      |  |  | $9,691 |  |  |      | $740  |  |            |  | $791  |       |  |  | $2,719              |  |  |  | $30,566 |  |  |  | $30,621 | 
|                                                                  |  |      |         | 

The Partnership is exposed to market risk from tenants. While the Partnership has not experienced any
significant credit losses, in the event of significant increases in interest rates and/or an economic downturn, tenant delinquencies could increase and result in losses to the Partnership and the Account that could adversely affect its operating
results and liquidity.



18



---

Item 8. Financial Statements and Supplementary Data

The financial statements and supplementary data are listed in the accompanying Index to the Financial Statements and Supplementary Data on
F-1.

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

None.

Item 9A. Controls and Procedures

Managements Annual Report on Internal Control Over Financial Reporting and
the report of the Companys independent registered public accounting firm on the effectiveness of internal control over financial reporting as of December 31, 2010 are included on Page F-2 of this Annual Report on Form 10-K.

In order to ensure that the information we must disclose in our filings with the SEC is recorded, processed, summarized, and reported on
a timely basis, the Companys management, including our Chief Executive Officer and Chief Financial Officer, have reviewed and evaluated the effectiveness of our disclosure controls and procedures, as defined in Exchange Act Rules 13a-15(e) and
15d-15(e), under the Securities Exchange Act of 1934, as amended as of December 31, 2010. Based on such evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of December 31, 2010, our disclosure
controls and procedures were effective in timely alerting them to material information relating to us required to be included in our periodic SEC filings. There has been no change in our internal control over financial reporting during the year
ended December 31, 2010, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

None.



19



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PART III

Item 10. Directors, Executive Officers and Corporate Governance

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

DIRECTORS

THOMAS J. BALTIMORE, JR. -- Director (current term expires June, 2011). Co-Founder and President, RLJ Development, LLC.
Mr. Baltimore is also director of Duke Realty Corporation and Integra LifeSciences Holding Corporation. Age 47.

GORDON M. BETHUNE -- Director (current term expires June, 2011). Member, Compensation Committee. Member, Corporate Governance and
Business Ethics Committee. Former Chairman and Chief Executive Officer Continental Airlines, Inc., Retired. Mr. Bethune is also a director of Honeywell International, Inc. and Sprint Nextel Corporation. Age 69.

W. GASTON CAPERTON, III--Director (current term expires June, 2011).Member, Finance and Dividends Committee.
Member, Investment Committee. President, The College Board. Governor Caperton is also a director of Energy Corporation of America and Owens Corning. Age 71.

GILBERT F. CASELLAS -- Director (current term expires June, 2011). Member, Audit Committee. Vice President, Corporate Responsibility, Dell Inc. Mr. Casellas is also a director of The
Swarthmore Group, Inc. Age 58.

JAMES G. CULLEN -- Director (current term expires June, 2011). Chairman, Compensation
Committee; Member, Audit Committee; Member, Executive Committee. Retired President and Chief Operating Officer, Bell Atlantic Corporation. Mr. Cullen is also a director of Agilient Technologies, Inc., Johnson & Johnson, and NeuStar,
Inc. Age 68.

WILLIAM H. GRAY, III -- Director (current term expires June, 2011). Chairman, Corporate Governance and
Business Ethics Committee; Member, Executive Committee. Retired. Mr. Gray is the Co- Chairman of Gray Loeffler, LLC, formerly The Amani Group, LLC. Mr. Gray is also a director of Dell Inc., JP Morgan Chase & Co. and Pfizer, Inc.
Age 69.

MARK B. GRIER -- Director (current term expires June, 2011). Vice Chairman, Prudential. Age 58.

JON F. HANSON -- Director (current term expires June, 2011). Chairman, Executive Committee; Chairman, Finance and Dividends
Committee; Chairman, Investment Committee. Chairman of The Hampshire Companies. Mr. Hanson is also a director of James E. Hanson Management Company, HealthSouth Corp., Pascack Community Bank, and Yankee Global Enterprises. Age 74.

CONSTANCE J. HORNER -- Director (current term expires June, 2011). Member, Compensation Committee; Member, Corporate Governance
and Business Ethics Committee. Former Assistant to the President of the United States. Ms. Horner is also a director of Ingersoll-Rand Company, Ltd., and Pfizer, Inc. Age 69.

MARTINA T. HUND-MEJEAN -- Director (current term expires June, 2011). Ms Mejean is currently the Chief Financial Officer of
MasterCard, Incorporated. Age 50.

KARL J. KRAPEK -- Director (current term expires June, 2011). Member, Finance and
Dividends Committee. Member, Investment Committee. Retired President and Chief Operating Officer, United Technologies Corporation. Mr. Krapek is also a director of Connecticut Bank & Trust Company, Visteon Corporation and Northrop
Grunman Corporation. Age 62.

CHRISTINE A. POON -- Director (current term expires June, 2011). Member, Finance and
Dividends Committee. Member, Investment Committee. Dean of Fisher College of Business, The Ohio State University. Ms. Poon is also a director of Koninklijke Phillips Electronics NV. Age 58.

JOHN R. STRANGFELD -- Director (current term expires June, 2011). Chairman, Chief Executive Officer and President, Prudential. Age
57.

JAMES A. UNRUH -- Director (current term expires June, 2011). Member, Audit Committee. Founding Principal, Alerion
Capital Group, LLC. Mr. Unruh is also a director of CSG Systems International, Inc. (CSG), Tenet Healthcare Corporation, and Qwest Communications International, Inc. Age 69.



20



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THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

PRINCIPAL OFFICERS **

EDWARD P. BAIRD--Executive Vice President and Chief Operating Officer, International Businesses, Prudential. Age 62.

SUSAN L. BLOUNT--Senior Vice President and General Counsel, Prudential. Age 53.

RICHARD J. CARBONE--Executive Vice President and Chief Financial Officer, Prudential. Age 63.

HELEN GALT--Senior Vice President, Company Actuary, Chief Risk Officer, Prudential. Age 63.

MARK B. GRIER--Vice Chairman, Prudential. Age 58.

CHARLES F.
LOWREY--Executive Vice President and Chief Operating Officer U.S. Businesses, Prudential. Age 53.

JOHN R.
STRANGFELD--Chairman, Chief Executive Officer and President, Prudential. Age 57.

SHARON C. TAYLOR--Senior Vice
President, Human Resources and Chair of The Prudential Foundation, Prudential. Age 56.

**Principal officers of The
Prudential Insurance Company of America hold comparable positions with Prudential Financial, Inc.



21



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Code of Ethics

We have adopted a code of business conduct and ethics, known as Making the Right Choices, which applies to our Chief Executive Officer, Chief Financial Officer and Principal Accounting
Officer, as well as to our directors and other employees. Making the Right Choices is posted on Prudential Financials website at www.investor.prudential.com. Our code of business conduct and ethics, any amendments and any waiver granted
to any of our directors or executive officers are available free of charge on our website at www.investor.prudential.com.

In addition, we have adopted Corporate Governance Guidelines, which we refer to as our Corporate Governance Principles and Practices. Our Corporate Governance Principles and Practices are
available free of charge on our website at www.investor.prudential.com.

The Audit Committee of the Company consists of four
members of its Board of Directors, who, in the business judgment of the Board of Directors, are independent within the meaning of SEC rules. In addition, the Board of Directors has determined that at least one member of the Audit Committee,
Mr. Unruh, has the requisite experience to be designated an audit committee financial expert as that term is defined by rules of the SEC. Specifically, Mr. Unruh has accounting and financial management expertise, which he gained through
his experience as Senior Vice President, Finance, of a New York Stock Exchange listed company, as well as experience in financial management positions in other organizations and other similar positions.

Additional information called for by this item is hereby incorporated by reference to the section entitled Item 1: Election of
Directors, Compliance with Section 16(a) of the Exchange Act, Corporate Governance, Committees of the Board of DirectorsAudit Committee and Report of the Audit Committee (except to the
extent that portions of such report are permitted by SEC rules not to be so incorporated) in Prudential Financials definitive proxy statement for the Annual Meeting of Shareholders to be held on May 10, 2011, to be filed with the SEC
pursuant to Regulation 14A within 120 days after the year ended December 31, 2010.

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 and Related
Stockholder Matters

Not applicable.

Item 13. Certain Relationships and Related Transactions, and Director Independence

See Related Transactions in Note 11 of Notes to Financial Statements of the Partnership.

The Registrant is an indirect wholly-owned subsidiary of Prudential, which, in turn, is an indirect, wholly-owned subsidiary of Prudential Financial, Inc. All Directors and Executive Officers of the
Registrant are employees and officers of Prudential.

Item 14. Principal Accounting Fees and Services

The Audit Committee of the Board of Directors of Prudential Financial, Inc. has appointed PricewaterhouseCoopers LLP as
the independent registered public accounting firm of Prudential Financial, Inc. and certain of its domestic and international subsidiaries, including the Registrant. The Audit Committee has established a policy requiring its pre-approval of all
audit and permissible non-audit services provided by the independent auditor. The specific information called for by this item is hereby incorporated by reference to the section entitled Item 2  Ratification of the Appointment of
Independent Auditors in the definitive proxy statement of Prudential Financial, Inc. for the Annual Meeting of Shareholders to be held on May 10, 2011, to be filed with the SEC pursuant to Regulation 14A within 120 days after the year
ended December 31, 2010.



22



---

PART IV

Item 15. Exhibits and Financial Statement Schedules



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



| | 1. | Financial Statements
| | -- | --------------------

See the Index to Financial Statements and Supplementary Data on page F-1.



| | 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:

Schedule III. Real Estate Owned: Properties

See the Index to Financial Statements and Supplementary Data on page F-1.



| | 3. | Documents Incorporated by Reference
| | -- | -----------------------------------

See the following list of exhibits.



| | 4. | Exhibits
| | -- | --------

See the following list of exhibits.



|(b) | None.
|--- | -----



|(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, 2010. 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 Articles of Incorporation of Pruco Life Insurance Company of New Jersey filed as Exhibit 1.A.(6)(a) in Post Effective Amendment No. 26 to
Form S-6, Registration Statement No. 2-89780, filed April 28, 1997, and incorporated herein by reference.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3.2 | Certificate of Amendment of the Articles of Incorporation of Pruco Life Insurance Company of New Jersey, filed as Exhibit (3B) in Post-Effective
Amendment No. to Form S-6, Registration Statement No.12 to Form S-1, Registration No. 33-20018, filed April 16, 1999,, and incorporated herein by reference.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3.3 | Amended By-Laws of Pruco Life Insurance Company of New Jersey, filed as Exhibit 1.A.(6)(c) to Form S-6, Registration Statement No. 333-85117, filed
August 13, 1999, and incorporated herein by reference.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3.4 | Resolution of the Board of Directors establishing the Pruco Life of New Jersey Variable Contract Real Property Account, filed as Exhibit (3C) in
Post-Effective Amendment No. 9 to Form S-1, Registration Statement No. 33-20018, filed April 9, 1997, and incorporated herein by reference.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4.1 | Variable Life Insurance Contract filed as Exhibit 1.A.(5) in Post-Effective Amendment No. 24 to Form s-6, Registration Statement No. 2-81243, filed
April 29, 1997, and incorporated herein by reference.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4.2 | Revised Variable Appreciable Life Insurance Contract with fixed death benefit, filed as Exhibit 1.A.(5)(c) in Post-Effective Amendment No. 26 to
Form S-6, Registration Statement No. 2-89780, filed April 28,1997, and incorporated herein by reference.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4.3 | Revised Variable Appreciable Life Insurance Contract with variable death benefit, filed as Exhibit 1.A.(5)(d) in Post-Effective Amendment No. 26 to
Form S-6, Registration Statement No. 2-89780, filed April 28, 1997, and incorporated herein by reference.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4.4 | Single Premium Variable Annuity Contract, filed as Exhibit (4C) in Post-Effective Amendment No. 9 to Form S-1, Registration Statement No. 33-20018,
filed April 9, 1997, and incorporated herein by reference.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4.5 | Flexible Premium Variable Life Insurance Contract, filed as Exhibit (4D) in Post-Effective Amendment No. 9 to Form S-1, Registration Statement No.
33-20018, filed April 9, 1997, and incorporated herein by reference.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 9. | None.
| | -- | -----



| | 10.1 | Investment Management Agreement between Prudential Investment Management, Inc. and The Prudential Variable Contract Real Property Partnership, filed
in Post-Effective Amendment No. 16 to Form S-1, Registration Statement No. 33-20083-01, filed April 10, 2003, and incorporated herein by reference.
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



23



---

| | 10.2 | Administrative Service Agreement among PIM, Prudential Insurance Company of America, Pruco Life Insurance Company, and Pruco Life Insurance Company
of New Jersey, filed as Exhibit (10B) in Post-Effective Amendment No. 17 to Form S-1, Registration Statement No. 33-20083-01, filed April 14, 2004, and incorporated herein by reference.
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.3 | Partnership Agreement of The Prudential Variable Contract Real Property Partnership filed as Exhibit (10C) in Post-Effective Amendment No. 9 to Form
S-1, Registration Statement No. 33-20083-01, filed April 9, 1997, and incorporated herein by reference.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 11. | Not applicable.
| | --- | ---------------



| | 12. | Not applicable.
| | --- | ---------------



| | 16. | None.
| | --- | -----



| | 18. | None.
| | --- | -----



| | 22. | Not applicable.
| | --- | ---------------



| | 23. | None.
| | --- | -----



| | 24. | Powers of Attorney are filed herewith.
| | --- | --------------------------------------



| | 31.1 | Section 302 Certification of Chief Executive Officer.
| | ---- | -----------------------------------------------------



| | 31.2 | Section 302 Certification of Chief Accounting Officer.
| | ---- | ------------------------------------------------------



| | 32.1 | Section 906 Certification of Chief Executive Officer.
| | ---- | -----------------------------------------------------



| | 32.2 | Section 906 Certification of Chief Accounting Officer.
| | ---- | ------------------------------------------------------



24



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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, 2011 |  | By: |  | /s/ Richard J. Carbone                                                                                                        
|                     |  |     |  | Richard J. Carbone Executive Vice President and Chief Financial Officer (Authorized Signatory and
Principal Financial Officer)

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          
|                       |  |                                                
|/s/ John R. Strangfeld |  | Chief Executive Officer, President and Director |  | March 25, 2011
|John R. Strangfeld     |  |                                                 |  |               
|                       |  |                                                
|/s/ Richard J. Carbone |  | Chief Financial Officer                         |  | March 25, 2011
|Richard J. Carbone     |  |                                                 |  |               
|                       |  |                                                
|/s/ Peter Sayre        |  | Senior Vice President and Controller            |  | March 25, 2011
|Peter Sayre            |  | (Principal Accounting Officer)                  |  |               



25



---

|                             |  |          |  |               
|---------------------------- |  | -------- |  | --------------
|                             |  | Title    |  | Date          
|                             |  |         
|/s/ Thomas J. Baltimore, Jr. |  | Director |  | March 25, 2011
|Thomas J. Baltimore, Jr.     |  |          |  |               
|                             |  |         
|/s/ Gordon M. Bethune        |  | Director |  | March 25, 2011
|Gordon M. Bethune            |  |          |  |               
|                             |  |         
|/s/ W. Gaston Caperton, III  |  | Director |  | March 25, 2011
|W. Gaston Caperton, III      |  |          |  |               
|                             |  |         
|/s/ Gilbert F. Casellas      |  | Director |  | March 25, 2011
|Gilbert F. Casellas          |  |          |  |               
|                             |  |         
|/s/ James G. Cullen          |  | Director |  | March 25, 2011
|James G. Cullen              |  |          |  |               
|                             |  |         
|/s/ William H. Gray, III     |  | Director |  | March 25, 2011
|William H. Gray, III         |  |          |  |               
|                             |  |         
|/s/ Mark B. Grier            |  | Director |  | March 25, 2011
|Mark B. Grier                |  |          |  |               
|                             |  |         
|/s/ Jon F. Hanson            |  | Director |  | March 25, 2011
|Jon F. Hanson                |  |          |  |               
|                             |  |         
|/s/ Constance J. Horner      |  | Director |  | March 25, 2011
|Constance J. Horner          |  |          |  |               
|                             |  |         
|/s/ Martina T. Hund-Mejean   |  | Director |  | March 25, 2011
|Martina T. Hund-Mejean       |  |          |  |               
|                             |  |         
|/s/ Karl J. Krapek           |  | Director |  | March 25, 2011
|Karl J. Krapek               |  |          |  |               
|                             |  |         
|/s/ Christine A. Poon        |  | Director |  | March 25, 2011
|Christine A. Poon            |  |          |  |               
|                             |  |         
|/s/ John R. Strangfeld       |  | Director |  | March 25, 2011
|John R. Strangfeld           |  |          |  |               
|                             |  |         
|/s/ James A. Unruh           |  | Director |  | March 25, 2011
|James A. Unruh               |  |          |  |               



By: *

/s/ Thomas C. CastanoThomas C. Castano (Attorney-in-Fact)




26



---

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY ACCOUNT

(Registrant)

INDEX



|   |  |                                                                                                 |  |     
|-- |  | ----------------------------------------------------------------------------------------------- |  | ----
|A. |  | THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY ACCOUNT                                          |  |     
|   |  |                                                                                                
|   |  | Financial Statements:                                                                           |  |     
|   |  |                                                                                                
|   |  | Managements Annual Report on Internal Control Over Financial Reporting                         |  | F-2 
|   |  |                                                                                                
|   |  | Report of Independent Registered Public Accounting Firm                                         |  | F-3 
|   |  |                                                                                                
|   |  | Statements of Net Assets  December 31, 2010 and 2009                                           |  | F-4 
|   |  |                                                                                                
|   |  | Statements of Operations  Years Ended December 31, 2010, 2009 and 2008                         |  | F-4 
|   |  |                                                                                                
|   |  | Statements of Changes in Net Assets  Years Ended December 31, 2010, 2009 and 2008              |  | F-4 
|   |  |                                                                                                
|   |  | Notes to Financial Statements                                                                   |  | F-5 
|   |  |                                                                                                
|B. |  | THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP                                      |  |     
|   |  |                                                                                                
|   |  | Financial Statements:                                                                           |  |     
|   |  |                                                                                                
|   |  | Report of Independent Registered Public Accounting Firm                                         |  | F-14
|   |  |                                                                                                
|   |  | Report of Independent Registered Public Accounting Firm on Financial Statement Schedules        |  | F-15
|   |  |                                                                                                
|   |  | Consolidated Statements of Assets and Liabilities  December 31, 2010 and 2009                  |  | F-16
|   |  |                                                                                                
|   |  | Consolidated Statements of Operations  Years Ended December 31, 2010, 2009 and 2008            |  | F-17
|   |  |                                                                                                
|   |  | Consolidated Statements of Changes in Net Assets  Years Ended December 31, 2010, 2009 and 2008 |  | F-18
|   |  |                                                                                                
|   |  | Consolidated Statements of Cash Flows  Years Ended December 31, 2010, 2009 and 2008            |  | F-19
|   |  |                                                                                                
|   |  | Consolidated Schedule of Investments  December 31, 2010 and 2009                               |  | F-20
|   |  |                                                                                                
|   |  | Notes to Financial Statements                                                                   |  | F-22
|   |  |                                                                                                
|   |  | Financial Statement Schedules:                                                                  |  |     
|   |  |                                                                                                
|   |  | For the period ended December 31, 2010                                                          |  |     
|   |  |                                                                                                
|   |  | Schedule III  Real Estate Owned: Properties                                                    |  | F-34

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-1



---

Managements Annual Report on Internal Control Over
Financial Reporting

Management of Prudential is responsible for establishing and maintaining adequate internal control
over financial reporting. Management conducted an assessment of the effectiveness, as of December 31, 2010, of the Companys internal control over financial reporting, based on the framework established inInternal Control 
Integrated Framework Issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on our assessment under that framework, management concluded that the Companys internal control over financial reporting was
effective as of December 31, 2010.

Our internal control over financial reporting is a process designed by or under the
supervision of our principal executive and principal financial officers to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. Our internal control over financial reporting includes policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and
dispositions of assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures
are being made only in accordance with authorizations of management and the directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
Companys assets that could have a material effect on our financial statements.

Because of its inherent limitations,
internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions,
or that the degree of compliance with the policies or procedures may deteriorate.

This annual report does not include an
attestation report of the Companys registered public accounting firm, PricewaterhouseCoopers LLP, regarding internal control over financial reporting. Managements report was not subject to attestation by the Companys registered
public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only managements report in this annual report.

March 25, 2011



F-2



---

Report of Independent Registered Public Accounting Firm

To the Contract Owners of

The Prudential Variable Contract Real Property Account

and the Board of Directors
of

The Prudential Insurance Company of America

In our opinion, the accompanying statements of net assets and the related statements of operations and of changes in net assets present fairly, in all material respects, the financial position of The
Prudential Variable Contract Real Property Account at December 31, 2010 and 2009, and the results of its operations and the changes in its net assets for each of the three years in the period ended December 31, 2010, in conformity with
accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the management of The Prudential Insurance Company of America. Our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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, assessing the
accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.



|                                 
|---------------------------------
|/s/ PricewaterhouseCoopers LLP   
|New York, New York
March 25, 2011



F-3



---

FINANCIAL STATEMENTS OF

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY ACCOUNT

STATEMENTS OF NET ASSETS

December 31, 2010 and 2009



|                                                                                               |  |      |            |   |      |   |             |      |  |   |             |  
|---------------------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ----------- | ---- |  | - | ----------- | -
|                                                                                               |  | 2010 |            |   | 2009 |   |             |      | 
|ASSETS                                                                                         |  |      |            |   |      |   |             |      |  |   |             |  
|Investment in The Prudential Variable Contract Real Property Partnership                       |  | $    | 67,547,308 |   |      | $ | 67,962,819  |      |  |   |             |  
|                                                                                               |  |      |            |   |      |   |             |      |  |   |             |  
|Net Assets                                                                                     |  | $    | 67,547,308 |   |      | $ | 67,962,819  |      |  |   |             |  
|                                                                                               |  |      |            |   |      |   |             |      |  |   |             |  
|                                                                                               |  |      |           
|NET ASSETS,representing:                                                                       |  |      |            |   |      |   |             |      |  |   |             |  
|Equity of contract owners                                                                      |  | $    | 49,828,295 |   |      | $ | 46,512,086  |      |  |   |             |  
|Equity of The Prudential Insurance Company of America                                          |  |      | 17,719,013 |   |      |   | 21,450,733  |      |  |   |             |  
|                                                                                               |  |      |            |   |      |   |             |      |  |   |             |  
|                                                                                               |  | $    | 67,547,308 |   |      | $ | 67,962,819  |      |  |   |             |  
|                                                                                               |  |      |            |   |      |   |             |      |  |   |             |  
|Units outstanding                                                                              |  |      | 32,309,315 |   |      |   | 35,427,235  |      |  |   |             |  
|                                                                                               |  |      |            |   |      |   |             |      |  |   |             |  
|                                                                                               |  |      |           
|Portfolio shares held                                                                          |  |      | 2,380,253  |   |      |   | 2,626,531   |      |  |   |             |  
|Portfolio net asset value per share                                                            |  | $    | 28.38      |   |      | $ | 25.88       |      |  |   |             |  
|                                                                                               |  |      |           
|STATEMENTS OF OPERATIONS                                                                       |  |      |            |   |      |   |             |      |  |   |             |  
|For the years ended December 31, 2010, 2009 and 2008                                           |  |      |            |   |      |   |             |      |  |   |             |  
|                                                                                               |  | 2010 |            |   | 2009 |   |             | 2008 | 
|INVESTMENT INCOME                                                                              |  |      |            |   |      |   |             |      |  |   |             |  
|Net investment income from Partnership operations                                              |  | $    | 3,247,867  |   |      | $ | 2,944,237   |      |  | $ | 4,518,355   |  
|                                                                                               |  |      |            |   |      |   |             |      |  |   |             |  
|EXPENSES                                                                                       |  |      |            |   |      |   |             |      |  |   |             |  
|Charges to contract owners for assuming mortality risk and expense risk and for administration |  |      | 373,002    |   |      |   | 397,527     |      |  |   | 556,142     |  
|                                                                                               |  |      |            |   |      |   |             |      |  |   |             |  
|NET INVESTMENT INCOME                                                                          |  |      | 2,874,865  |   |      |   | 2,546,710   |      |  |   | 3,962,213   |  
|                                                                                               |  |      |            |   |      |   |             |      |  |   |             |  
|                                                                                               |  |      |           
|NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS                                         |  |      |            |   |      |   |             |      |  |   |             |  
|Net change in unrealized gain (loss) on investments in Partnership                             |  |      | 2,053,474  |   |      |   | (16,935,039 | )    |  |   | (17,943,973 | )
|Net realized gain (loss) on sale of investments allocated from the Partnership                 |  |      | 948,018    |   |      |   | (1,727,472  | )    |  |   | 0           |  
|                                                                                               |  |      |            |   |      |   |             |      |  |   |             |  
|NET GAIN (LOSS) ON INVESTMENTS                                                                 |  |      | 3,001,492  |   |      |   | (18,662,511 | )    |  |   | (17,943,973 | )
|                                                                                               |  |      |            |   |      |   |             |      |  |   |             |  
|NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS                                |  | $    | 5,876,357  |   |      | $ | (16,115,801 | )    |  | $ | (13,981,760 | )
|                                                                                               |  |      |            |   |      |   |             |      |  |   |             |  
|                                                                                               |  |      |           
|STATEMENTS OF CHANGES IN NET ASSETS                                                            |  |      |            |   |      |   |             |      |  |   |             |  
|For the years ended December 31, 2010, 2009 and 2008                                           |  |      |            |   |      |   |             |      |  |   |             |  
|                                                                                               |  | 2010 |            |   | 2009 |   |             | 2008 | 
|OPERATIONS                                                                                     |  |      |            |   |      |   |             |      |  |   |             |  
|Net investment income                                                                          |  | $    | 2,874,865  |   |      | $ | 2,546,710   |      |  | $ | 3,962,213   |  
|Net change in unrealized gain (loss) on investments in Partnership                             |  |      | 2,053,474  |   |      |   | (16,935,039 | )    |  |   | (17,943,973 | )
|Net realized gain (loss) on sale of investments allocated from the Partnership                 |  |      | 948,018    |   |      |   | (1,727,472  | )    |  |   | 0           |  
|                                                                                               |  |      |            |   |      |   |             |      |  |   |             |  
|NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS                                |  |      | 5,876,357  |   |      |   | (16,115,801 | )    |  |   | (13,981,760 | )
|                                                                                               |  |      |            |   |      |   |             |      |  |   |             |  
|CAPITAL TRANSACTIONS                                                                           |  |      |            |   |      |   |             |      |  |   |             |  
|Net withdrawals by contract owners                                                             |  |      | (746,156   | ) |      |   | (2,288,861  | )    |  |   | (2,238,147  | )
|Net contributions (withdrawals) by The Prudential Insurance Company of America                 |  |      | (5,545,712 | ) |      |   | (419,494    | )    |  |   | 2,794,289   |  
|                                                                                               |  |      |            |   |      |   |             |      |  |   |             |  
|NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS                      |  |      | (6,291,868 | ) |      |   | (2,708,355  | )    |  |   | 556,142     |  
|                                                                                               |  |      |            |   |      |   |             |      |  |   |             |  
|TOTAL INCREASE (DECREASE) IN NET ASSETS                                                        |  |      | (415,511   | ) |      |   | (18,824,156 | )    |  |   | (13,425,618 | )
|                                                                                               |  |      |           
|NET ASSETS                                                                                     |  |      |            |   |      |   |             |      |  |   |             |  
|Beginning of period                                                                            |  |      | 67,962,819 |   |      |   | 86,786,975  |      |  |   | 100,212,593 |  
|                                                                                               |  |      |            |   |      |   |             |      |  |   |             |  
|End of period                                                                                  |  | $    | 67,547,308 |   |      | $ | 67,962,819  |      |  | $ | 86,786,975  |  
|                                                                                               |  |      |            |   |      |   |             |      |  |   |             |  

The accompanying notes are an integral part of these financial statements.



F-4



---

NOTES TO THE FINANCIAL STATEMENTS OF

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY ACCOUNT

December 31, 2010

Note 1: General

The Prudential Variable Contract Real Property Account (the Account) was established on November 20, 1986 by resolution
of the Board of Directors of The Prudential Insurance Company of America (Prudential or the Company), which is an indirect wholly-owned subsidiary of Prudential Financial, Inc. (PFI) as a separate investment
account pursuant to New Jersey law and is registered under the Securities Act of 1933, as amended. The assets of the Account are segregated from Prudentials other assets. The Account is used to fund benefits under certain variable life
insurance and variable annuity contracts issued by Prudential. These products are Variable Appreciable Life (PVAL and PVAL $100,000+ Face Value), Discovery Plus (PDISCO+), and Variable Investment Plan (VIP).

The assets of the Account are invested in The Prudential Variable Contract Real Property Partnership (the
Partnership). The Partnership is the investment vehicle for assets allocated to the real estate investment option under certain variable life insurance and variable annuity contracts. The Account, along with the Pruco Life Variable
Contract Real Property Account and the Pruco Life of New Jersey Variable Contract Real Property Account, are the sole investors in the Partnership. These financial statements should be read in conjunction with the financial statements of 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 and Pronouncements

A. Basis of Accounting

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

In December 2007, the Financial Accounting Standards Board (FASB) revised authoritative guidance for business combinations,
which expands the definition of a business and redefines the acquisition date in a merger and acquisition transaction. It significantly modifies the existing guidance for business combinations, including changes to acquisition related contingent
consideration, preacquisition contingencies, non controlling interest, restructuring costs, in-process R&D, goodwill and partial acquisition. This guidance is effective for acquisitions closing after the first annual reporting period beginning
after December 15, 2008. The Account adopted this guidance effective January 1, 2009. The Accounts adoption has no effect on the Accounts financial position and results of operations, but may have an effect on the accounting
for future business combinations.

In December 2007, FASB revised the accounting, presentation and disclosure for
noncontrolling interests in consolidated financial statements. This revised guidance will change the accounting for minority interests, which will be recharacterized as noncontrolling interests and classified by the parent company as a component of
equity. This guidance is effective for fiscal years beginning on or after December 15, 2008, with early adoption prohibited. Upon adoption, the guidance requires retroactive adoption of the presentation and disclosure requirements for existing
minority interests and prospective adoption for all other requirements. The adoption of this guidance has no effect on the Accounts financial position and results of operations.

In June 2009, the FASB launched its Accounting Standards Codification (the Codification), as the sole source of authoritative U.S.
GAAP to be applied by nongovernmental entities. The Codification generally does not change the existing rules of U.S. GAAP but rather makes it easier to find and research U.S. GAAP applicable to a particular transaction or specific accounting issue.
The Codification is a new structure which takes accounting pronouncements and organizes them by approximately ninety accounting topics and aggregates them in four common accounting areas. Topics within each category are further broken down into
subtopics, sections and paragraphs. Accounting standards that are included in the Codification will be considered authoritative whereas those that are not included will be deemed non-authoritative. As a result, there are two levels of U.S. GAAP,
authoritative and non-authoritative. The Codification is effective for financial statements that cover the interim and annual periods ending after September 15, 2009 and has impacted the way the Account references U.S. GAAP accounting standards
in the financial statements.

In August 2009, the FASB issued updated guidance for the fair value measurement of liabilities.
This guidance includes techniques for measuring fair value when a quoted price in an active market for the identical liability is not available and clarifies that restrictions preventing the transfer of a liability should not be considered as a
separate input or adjustment in the measurement of its fair value. This guidance is effective for the first reporting period (including interim periods) beginning after issuance. The Accounts adoption of this guidance effective
December 31, 2009 did not have a material effect on the Accounts consolidated financial position, results of operations or financial statement disclosures.



F-5



---

NOTES TO THE FINANCIAL STATEMENTS OF

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY ACCOUNT

December 31, 2010



Note 2: Summary of Significant Accounting Policies and Pronouncements (continued)

In January 2010, the FASB issued updated guidance that requires new fair value disclosures for significant transfers between Level 1 and 2
measurement categories and separate presentation of purchases, issuances, and settlements within the roll forward of Level 3 activity. Also, this updated fair value guidance clarifies the disclosure requirements about level of disaggregation and
valuation techniques and inputs. This guidance is effective for interim and annual reporting periods beginning after December 15, 2009, except disclosures about purchases, sales, issuances, and settlements in the roll forward of Level 3
activity, which is effective for interim and annual reporting periods beginning after December 15, 2010. The Account adopted effective portions of this guidance on January 1, 2010. The required disclosures are provided in Note 10.

B. Investment in Partnership Interest

The investment in the Partnership is based on the Accounts proportionate interest of the Partnerships fair value. At December 31, 2010 and December 31, 2009 the Accounts
interest in the Partnership was 40.9% or 2,380,253 shares and 40.6% or 2,626,531 shares, respectively. Properties owned by the Partnership are illiquid and based on estimated fair value as discussed in the notes to the Partnerships audited
financial statements.

C. Income Recognition

Net investment income and realized and unrealized gains and losses are recognized daily for the Partnership. Amounts are based upon the Accounts proportionate interest in the Partnership.

D. Equity of The Prudential Insurance Company of America

Prudential maintains a position in the Account for liquidity purposes, including unit purchases and redemptions, Partnership share transactions, and expense processing. The position does not affect
contract owners accounts or the related unit values.

Note 3: Taxes

Prudential is taxed as a life insurance company, as defined by the Internal Revenue Code. The results of operations of the
Account form a part of PFIs consolidated federal tax return. Under current federal law, no federal income taxes are payable by the Account. As such, no provision for the tax liability has been recorded in these financial statements.



F-6



---

NOTES TO THE FINANCIAL STATEMENTS OF

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY ACCOUNT

December 31, 2010



Note 4: Net Withdrawals by Contract Owners

Net contract owner withdrawals for the real estate investment option in Prudentials variable insurance and variable annuity products
for the years ended December 31, 2010, 2009 and 2008 were as follows:

2010:



|                                                              |  |                  |          |   |                                    |   |            |       |  |   |            |  
|------------------------------------------------------------- |  | ---------------- | -------- | - | ---------------------------------- | - | ---------- | ----- |  | - | ---------- | -
|                                                              |  | VIP &    PDISCO+ |          |   | PVAL & PVAL    $100,000+
facevalue |   |            | TOTAL | 
|Contract Owner Net Payments:                                  |  | $                | 3,729    |   |                                    | $ | 3,232,631  |       |  | $ | 3,236,360  |  
|Policy Loans:                                                 |  |                  | 0        |   |                                    |   | (1,108,792 | )     |  |   | (1,108,792 | )
|Policy Loan Repayments and Interest:                          |  |                  | 0        |   |                                    |   | 1,228,010  |       |  |   | 1,228,010  |  
|Surrenders, Withdrawals, and Death Benefits:                  |  |                  | (234,971 | ) |                                    |   | (2,079,278 | )     |  |   | (2,314,249 | )
|Net Transfers From/To Other Subaccounts or Fixed Rate Option: |  |                  | 91,019   |   |                                    |   | 14,972     |       |  |   | 105,991    |  
|Administrative and Other Charges:                             |  |                  | (971     | ) |                                    |   | (1,892,505 | )     |  |   | (1,893,476 | )
|                                                              |  |                  |          |   |                                    |   |            |       |  |   |            |  
|Net Withdrawals by Contract Owners                            |  | $                | (141,194 | ) |                                    | $ | (604,962   | )     |  | $ | (746,156   | )
|                                                              |  |                  |          |   |                                    |   |            |       |  |   |            |  

2009:



|                                                              |  |                  |          |   |                                    |   |            |       |  |   |            |  
|------------------------------------------------------------- |  | ---------------- | -------- | - | ---------------------------------- | - | ---------- | ----- |  | - | ---------- | -
|                                                              |  | VIP &    PDISCO+ |          |   | PVAL & PVAL    $100,000+
facevalue |   |            | TOTAL | 
|Contract Owner Net Payments:                                  |  | $                | 5,049    |   |                                    | $ | 4,280,805  |       |  | $ | 4,285,854  |  
|Policy Loans:                                                 |  |                  | 0        |   |                                    |   | (1,180,434 | )     |  |   | (1,180,434 | )
|Policy Loan Repayments and Interest:                          |  |                  | 0        |   |                                    |   | 1,983,523  |       |  |   | 1,983,523  |  
|Surrenders, Withdrawals, and Death Benefits:                  |  |                  | (162,757 | ) |                                    |   | (4,254,726 | )     |  |   | (4,417,483 | )
|Net Transfers From/To Other Subaccounts or Fixed Rate Option: |  |                  | (59,037  | ) |                                    |   | (584,477   | )     |  |   | (643,514   | )
|Administrative and Other Charges:                             |  |                  | (1,247   | ) |                                    |   | (2,315,560 | )     |  |   | (2,316,807 | )
|                                                              |  |                  |          |   |                                    |   |            |       |  |   |            |  
|Net Withdrawals by Contract Owners                            |  | $                | (217,992 | ) |                                    | $ | (2,070,869 | )     |  | $ | (2,288,861 | )
|                                                              |  |                  |          |   |                                    |   |            |       |  |   |            |  

2008:



|                                                              |  |                  |          |   |                                    |   |            |       |  |   |            |  
|------------------------------------------------------------- |  | ---------------- | -------- | - | ---------------------------------- | - | ---------- | ----- |  | - | ---------- | -
|                                                              |  | VIP &    PDISCO+ |          |   | PVAL & PVAL    $100,000+
facevalue |   |            | TOTAL | 
|Contract Owner Net Payments:                                  |  | $                | 6,963    |   |                                    | $ | 4,528,338  |       |  | $ | 4,535,301  |  
|Policy Loans:                                                 |  |                  | 0        |   |                                    |   | (1,868,168 | )     |  |   | (1,868,168 | )
|Policy Loan Repayments and Interest:                          |  |                  | 0        |   |                                    |   | 1,370,568  |       |  |   | 1,370,568  |  
|Surrenders, Withdrawals, and Death Benefits:                  |  |                  | (492,456 | ) |                                    |   | (3,690,570 | )     |  |   | (4,183,026 | )
|Net Transfers From/To Other Subaccounts or Fixed Rate Option: |  |                  | 34,626   |   |                                    |   | 665,582    |       |  |   | 700,208    |  
|Administrative and Other Charges:                             |  |                  | (1,282   | ) |                                    |   | (2,791,748 | )     |  |   | (2,793,030 | )
|                                                              |  |                  |          |   |                                    |   |            |       |  |   |            |  
|Net Withdrawals by Contract Owners                            |  | $                | (452,149 | ) |                                    | $ | (1,785,998 | )     |  | $ | (2,238,147 | )
|                                                              |  |                  |          |   |                                    |   |            |       |  |   |            |  



F-7



---

NOTES TO THE FINANCIAL STATEMENTS OF

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY ACCOUNT

December 31, 2010



Note 5: Partnership Distributions

For the year ended December 31, 2010, the Partnership made distributions of $10 million on October 27thand $7.5 million on May 3rd. The Prudential Variable Contract Real Property Accounts share
of these distributions were $3.8 and $2.9 million respectively. For the year ended December 31, 2009, the Partnership made a distribution of $8 million. The Prudential Variable Contract Real Property Accounts share of this distribution
was $3.1 million

Note 6: Unit Activity

Transactions in units for the years ended December 31, 2010, 2009 and 2008 were as follows:

2010:



|                       |  |  |            |   |  |                               |         |  |         |     |  |  |          |   |  |                         |            |   |  |  |            |  
|---------------------- |  |  | ---------- | - |  | ----------------------------- | ------- |  | ------- | --- |  |  | -------- | - |  | ----------------------- | ---------- | - |  |  | ---------- | -
|                       |  |  |            |   |  |                               | PDISCO+ |  |         | VIP |  |  | PVAL     |   |  | PVAL$100,000+face value |           
|Company Contributions: |  |  | 1,147,987  |   |  | Contract Owner Contributions: |         |  | 50,917  |     |  |  | 27,588   |   |  |                         | 1,399,699  |   |  |  | 1,188,851  |  
|Company Redemptions:   |  |  | (3,892,356 | ) |  | Contract Owner Redemptions:   |         |  | (42,766 | )   |  |  | (113,360 | ) |  |                         | (1,512,819 | ) |  |  | (1,371,662 | )

2009:



|                       |  |  |            |   |  |                               |         |  |         |     |  |  |         |   |  |                         |            |   |  |  |            |  
|---------------------- |  |  | ---------- | - |  | ----------------------------- | ------- |  | ------- | --- |  |  | ------- | - |  | ----------------------- | ---------- | - |  |  | ---------- | -
|                       |  |  |            |   |  |                               | PDISCO+ |  |         | VIP |  |  | PVAL    |   |  | PVAL$100,000+face value |           
|Company Contributions: |  |  | 1,721,880  |   |  | Contract Owner Contributions: |         |  | 0       |     |  |  | 11,091  |   |  |                         | 1,616,780  |   |  |  | 1,415,151  |  
|Company Redemptions:   |  |  | (1,922,174 | ) |  | Contract Owner Redemptions:   |         |  | (55,944 | )   |  |  | (70,120 | ) |  |                         | (2,166,348 | ) |  |  | (1,826,761 | )

2008:



|                       |  |  |           |   |  |                               |         |  |          |     |  |  |         |   |  |                         |            |   |  |  |            |  
|---------------------- |  |  | --------- | - |  | ----------------------------- | ------- |  | -------- | --- |  |  | ------- | - |  | ----------------------- | ---------- | - |  |  | ---------- | -
|                       |  |  |           |   |  |                               | PDISCO+ |  |          | VIP |  |  | PVAL    |   |  | PVAL$100,000+face value |           
|Company Contributions: |  |  | 1,542,396 |   |  | Contract Owner Contributions: |         |  | 16,953   |     |  |  | 40,638  |   |  |                         | 1,259,052  |   |  |  | 1,220,472  |  
|Company Redemptions:   |  |  | (395,329  | ) |  | Contract Owner Redemptions:   |         |  | (134,494 | )   |  |  | (99,015 | ) |  |                         | (1,694,232 | ) |  |  | (1,448,853 | )

Note 7: Purchases and Sales of
Investments

The aggregate costs of purchases and proceeds from sales of investments in the Partnership for the years ended
December 31, 2010, 2009 and 2008 were as follows:



|           |  |                  |           |  |                  |   |           |                  |  |   |   | 
|---------- |  | ---------------- | --------- |  | ---------------- | - | --------- | ---------------- |  | - | - | 
|           |  | December 31,2010 |           |  | December 31,2009 |   |           | December 31,2008 | 
|Purchases: |  | $                | 0         |  |                  | $ | 0         |                  |  | $ | 0 | 
|Sales:     |  | $                | 6,664,870 |  |                  | $ | 3,105,882 |                  |  | $ | 0 | 



F-8



---

NOTES TO THE FINANCIAL STATEMENTS OF

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY ACCOUNT

December 31, 2010



Note 8: Financial Highlights

Prudential sells a number of variable annuity and variable life insurance products. These products have unique combinations of features
and fees that are charged against the contract owners account balance. Differences in the fee structures result in a variety of unit values, expense ratios and total returns.

The following table was developed by determining which products offered by Prudential have the lowest and highest total expense ratio.
The summary may not reflect the minimum and maximum contract charges offered by the Company as contract owners may not have selected all available and applicable products as discussed in Note 1. The table reflects contract owner units only.



|                  |  |                |        |  |                            |   |                    |                     |  |   |                            |  |  |                                  |       |  |                                  |  |                |  |  |  |                    | 
|----------------- |  | -------------- | ------ |  | -------------------------- | - | ------------------ | ------------------- |  | - | -------------------------- |  |  | -------------------------------- | ----- |  | -------------------------------- |  | -------------- |  |  |  | ------------------ | 
|                  |  | At year ended  |        |  | For year ended             |  
|                  |  |                |        | 
|                  |  | Units 
(000s) |        |  | Unit Value

Lowest-Highest |   |                    | Net Assets
 (000s) |  |   | Investment    IncomeRatio* |  |  | Expense Ratio **
 Lowest-Highest |       |  | Total Return ***

Lowest-Highest | 
|December 31, 2010 |  |                | 23,654 |  |                            | $ | 1.94643 to 2.19385 |                     |  | $ | 49,828                     |  |  |                                  | 4.79% |  |                                  |  | 0.60% to 1.20% |  |  |  | 8.37% to 9.02%     | 
|December 31,
2009 |  |                | 24,028 |  |                            | $ | 1.79607 to 2.01231 |                     |  | $ | 46,512                     |  |  |                                  | 3.98% |  |                                  |  | 0.60% to 1.20% |  |  |  | -19.22% to -18.74% | 
|December 31,
2008 |  |                | 25,104 |  |                            | $ | 2.22351 to 2.47629 |                     |  | $ | 59,903                     |  |  |                                  | 4.55% |  |                                  |  | 0.60% to 1.20% |  |  |  | -14.43% to -13.92% | 
|December 31,
2007 |  |                | 25,943 |  |                            | $ | 2.59836 to 2.87660 |                     |  | $ | 72,012                     |  |  |                                  | 5.28% |  |                                  |  | 0.60% to 1.20% |  |  |  | 6.63% to 7.27%     | 
|December 31,
2006 |  |                | 26,281 |  |                            | $ | 2.43678 to 2.68168 |                     |  | $ | 68,091                     |  |  |                                  | 5.1%  |  |                                  |  | 0.60% to 1.20% |  |  |  | 13.11% to 13.78%   | 

The table above
reflects information for units held by contract owners. Prudential also maintains a position in the Real Property Account, to provide for property acquisitions and capital expenditure funding needs. Prudential held 8,655,211, 11,399,580, 11,599,873,
10,452,719 and 9,807,865 units representing $17,719,013, $21,450,733, $26,884,019, $28,200,465, and $24,772,123 of net assets as of December 31, 2010, 2009, 2008, 2007 and 2006, respectively. Charges for mortality risk, expense risk and
administrative expenses are used by Prudential to purchase additional units in its account resulting in no impact to its net assets.



|* | This amount represents the proportionate share of the net investment income from the underlying Partnership divided by the total average assets of
the Account. This ratio excludes those expenses, such as mortality risk, expense risk and administrative charges that result in direct reductions in the unit values.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|** | These ratios represent the annualized contract expenses of the separate account, consisting primarily of mortality and expense charges, for each
period indicated. The ratios include only those expenses that result in a direct reduction to unit values. Charges made directly to contract owner accounts through the redemption of units and expenses of the underlying Partnership are excluded.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|*** | These amounts represent the total return for the periods indicated, including changes in the value of the underlying Partnership, and reflect
deductions for all items included in the expense ratio. The total return does not include any expense assessed through the redemption of units; inclusion of these expenses in the calculation would result in a reduction in the total return presented.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Charges and Expenses

A. Mortality Risk and Expense Risk Charges

Mortality risk and expense risk
charges are determined daily using an effective annual rate of 1.2%, 0.9%, 0.6% and 1.2% for PDISCO+, PVAL, PVAL $100,000 + face value and VIP, respectively (for PDISCO+, the 1.2% includes a 0.20% administrative charge). Mortality risk is the risk
that life insurance contract owners may not live as long as estimated or annuitants may live longer than estimated and expense risk is the risk that the cost of issuing and administering the policies may exceed related charges by Prudential. The
mortality risk and expense risk charges are assessed through reduction in unit values.



F-9



---

NOTES TO THE FINANCIAL STATEMENTS OF

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY ACCOUNT

December 31, 2010



B. Cost of Insurance and Other Related Charges

Contract owner contributions are subject to certain deductions prior to being invested in the Account. The deductions for PVAL and PVAL
$100,000 + face value are (1) state premium taxes; (2) sales charges, up to 0.50%, which are deducted in order to compensate Prudential for the cost of selling the contract and (3) transaction costs which are deducted from each
premium payment to cover premium collection and processing costs. Contracts are subject to charges on each basic premium for assuming a guaranteed minimum death benefit risk. This charge compensates Prudential for the risk that an insured may die at
a time when the death benefit exceeds the benefit that would have been payable in the absence of a minimum guarantee. These charges are assessed through the redemption of units.

C. Deferred Sales Charge

A deferred sales charge, applicable to PVAL and
PVAL $100,000 + Face Value, and not to exceed 50% of the first years primary annual premium for PVAL contracts, is imposed upon surrenders of certain variable life insurance contracts to compensate Prudential for sales and other marketing
expenses. The amount of any sales charge will depend on the number of years that have elapsed since the contract was issued. No sales charge will be imposed after the tenth year of the contract. No sales charge will be imposed on death benefits.

Also a deferred sales charge is imposed upon the withdrawals of certain purchase payments to compensate Prudential for sales
and other marketing expenses for PDISCO+ and VIP. The amount of any sales charge will depend on the amount withdrawn and the number of contract years that have elapsed since the contract owner or annuitant made the purchase payments deemed to be
withdrawn. As the amount of time that has elapsed since a given purchase payment made increases, the sales charge applicable to that purchase payment generally decreases. No sales charge is made against the withdrawal of investment income. No sales
charge is imposed upon death benefit payments or upon transfers made between subaccounts. This deferred sales charge is assessed through the redemption of units.

D. Partial Withdrawal Charge

A charge is imposed by Prudential on partial
withdrawals of the cash surrender value for PVAL and PVAL $100,000 + face value. A charge equal to the lesser of $15 or 2% will be made in connection with each partial withdrawal of the cash surrender value of a contract. This charge is assessed
through the redemption of units.

E. Annual Maintenance Charge

An annual maintenance charge, applicable to PDISCO+ and VIP, of $30 will be deducted if and only if the contract fund is less than $10,000 on a contract anniversary or at the time a full withdrawal is
effected, including a withdrawal to effect an annuity. The charge is made by reducing accumulation units credited to a contract owners account.

Note 9: Related Party

Prudential and its affiliates perform various
services on behalf of the Partnership in which the Account invests and may receive fees for the services performed. These services include, among other things, shareholder communications, preparation, postage, fund transfer agency and various other
record keeping and customer service functions.



F-10



---

NOTES TO THE FINANCIAL STATEMENTS OF

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY ACCOUNT

December 31, 2010



Note 10: Fair Value Disclosure

FASB guidance on fair value measurements and disclosures establishes a framework for measuring fair value that includes a hierarchy used
to classify the inputs used in fair value. The hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three levels. The level in the fair value hierarchy within which the fair value measurement falls is determined
based on the lowest level input that is significant to the fair value measurement. The levels of the fair value hierarchy are as follows:

Level 1  Fair value is based on unadjusted quoted prices in active markets that are accessible to the Company for identical assets or liabilities. These generally provide the most reliable evidence
and should be used to measure fair value whenever available.

Level 2  Fair value is based on inputs, other than Level 1
inputs, that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability through corroboration with observable market data.

Level 3  Fair value is based on significant unobservable inputs for the asset or liability. These inputs reflect the Companys
own assumptions about the assumptions that market participants would use in pricing the asset or liability.

The investment in
the Partnership is based on the Accounts proportionate interest of the Partnerships fair value which approximates the Partnerships net asset value. Properties owned by the Partnership are illiquid and based on estimated fair value
from property appraisal reports prepared by independent real estate appraisers as discussed in the notes to the Partnerships audited financial statements.

The purpose of an appraisal is to estimate the fair value of real estate as of a specific date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date.

The estimate of fair value is based on the
conventional approaches to value, all of which require the exercise of subjective judgment. The three approaches are: (1) current cost of reproducing the real estate less deterioration and functional and economic obsolescence;
(2) discounting a series of income streams and reversion at a specific yield or by directly capitalizing a single year income estimate by an appropriate factor; and (3) value indicated by recent sales of comparable real estate in the
market. In the reconciliation of these three approaches, the one most heavily relied upon is the one then recognized as the most appropriate by the independent appraiser for the type of real estate in the market.



F-11



---

NOTES TO THE FINANCIAL STATEMENTS OF

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY ACCOUNT

December 31, 2010



In general, the input values used in the appraisal process are unobservable, therefore
unless indicated otherwise; the underlying investments in the Partnership are classified as Level 3 under the fair value hierarchy. The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in
those securities.

Table 1 below summarizes the assets measured at fair value on a recurring basis and their respective
position in the fair value hierarchy.

Table 1:



|                                                                         |  |                                                                 |        |  |                                                             |   |   |                                             |  |   |                                         |  |  |   |        | 
|------------------------------------------------------------------------ |  | --------------------------------------------------------------- | ------ |  | ----------------------------------------------------------- | - | - | ------------------------------------------- |  | - | --------------------------------------- |  |  | - | ------ | 
|                                                                         |  | ($ in 000s)
Fair Value Measurements at December 31, 2010 using |       
|Assets:                                                                  |  | AmountsMeasured at
FairValue 12/31/2010                         |        |  | Quoted Prices inActive Markets forIdentical Assets(Level 1) |   |   | Significant OtherObservableInputs (Level 2) |  |   | SignificantUnobservable Inputs(Level 3) | 
|                                                                         |  |                                                                 |        | 
|                                                                         |  |                                                                 |        | 
|Investment in The Prudential Variable
Contract Real Property Partnership |  | $                                                               | 67,547 |  |                                                             | $ | - |                                             |  | $ | -                                       |  |  | $ | 67,547 | 
|                                                                         |  |                                                                 |        | 
|Total Assets                                                             |  | $                                                               | 67,547 |  |                                                             | $ | - |                                             |  | $ | -                                       |  |  | $ | 67,547 | 
|                                                                         |  |                                                                 |        | 
|                                                                         | 
|                                                                         |  | ($ in 000s)                                                    |       
|                                                                         | 
|                                                                         |  | Fair Value Measurements at December 31, 2009
using              |       
|Assets:                                                                  |  | AmountsMeasured at FairValue 12/31/2009                         |        |  | Quoted Prices inActive Markets forIdentical Assets(Level 1) |   |   | Significant OtherObservableInputs (Level 2) |  |   | SignificantUnobservable Inputs(Level 3) | 
|                                                                         |  |                                                                 |        | 
|                                                                         |  |                                                                 |        | 
|Investment in The Prudential Variable
Contract Real Property Partnership |  | $                                                               | 67,963 |  |                                                             | $ | - |                                             |  | $ | -                                       |  |  | $ | 67,963 | 
|                                                                         |  |                                                                 |        | 
|Total Assets                                                             |  | $                                                               | 67,963 |  |                                                             | $ | - |                                             |  | $ | -                                       |  |  | $ | 67,963 | 
|                                                                         |  |                                                                 |        | 



F-12



---

Table 2 below provides a reconciliation of the beginning and ending balances for all assets
measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the twelve month period ended December 31, 2010 and December 31, 2009.

Table 2:



|                                                                                                                                                                                                                 |  |                                                                                                 |              |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------- | ------------ | -
|                                                                                                                                                                                                                 |  | ($ in 000s)                                                                                    |             
|                                                                                                                                                                                                                 |  | Fair Value Measurements                                                                         |             
|                                                                                                                                                                                                                 | 
|                                                                                                                                                                                                                 |  | Fair Value MeasurementsUsing SignificantUnobservable
Inputs for the year endedDecember 31, 2010 |             
|                                                                                                                                                                                                                 |  | (Level 3)                                                                                       |             
|                                                                                                                                                                                                                 | 
|Beginning balance @ 01/01/10                                                                                                                                                                                     |  | $                                                                                               | 67,963       |  
|                                                                                                                                                                                                                 | 
|Total gains or losses (realized/unrealized) included in earnings (or changes in net assets) from Partnership operations                                                                                          |  | $                                                                                               | 3,001        |  
|Net Investment Income from Partnership operations                                                                                                                                                                |  | $                                                                                               | 3,248        |  
|Acquisition/Additions                                                                                                                                                                                            |  |                                                                                                 | -            |  
|Equity Income                                                                                                                                                                                                    |  |                                                                                                 | -            |  
|Contributions                                                                                                                                                                                                    |  |                                                                                                 | -            |  
|Disposition/Settlements                                                                                                                                                                                          |  | $                                                                                               | (6,665)      |  
|Equity losses                                                                                                                                                                                                    |  |                                                                                                 | -            |  
|Distributions                                                                                                                                                                                                    |  |                                                                                                 | -            |  
|                                                                                                                                                                                                                 |  |                                                                                                 |              |  
|Ending balance @ 12/31/10                                                                                                                                                                                        |  | $                                                                                               | 67,547       |  
|                                                                                                                                                                                                                 |  |                                                                                                 |              |  
|                                                                                                                                                                                                                 | 
|The amount of total gains or losses for the period included in earnings
(or changes in net assets) attributable to the change in unrealized gains
or losses relating to assets still held at the reporting date. |  |                                                                                                 |              |  
|                                                                                                                                                                                                                 |  |                                                                                                 |              |  
|                                                                                                                                                                                                                 |  | $                                                                                               | 2,053        |  
|                                                                                                                                                                                                                 |  |                                                                                                 |              |  
|                                                                                                                                                                                                                 | 
|Table 2:                                                                                                                                                                                                         |  |                                                                                                 |              |  
|                                                                                                                                                                                                                 | 
|                                                                                                                                                                                                                 |  |                                                                                                 | ($ in 000s) |  
|                                                                                                                                                                                                                 | 
|                                                                                                                                                                                                                 |  | Fair Value MeasurementsUsing SignificantUnobservable
Inputs for the year endedDecember 31, 2009 |             
|                                                                                                                                                                                                                 |  | (Level 3)                                                                                       |             
|                                                                                                                                                                                                                 |  |                                                                                                 |              |  
|                                                                                                                                                                                                                 | 
|Beginning balance @ 01/01/09                                                                                                                                                                                     |  | $                                                                                               | 86,787       |  
|                                                                                                                                                                                                                 | 
|Total gains or losses (realized/unrealized) included in earnings (or changes in net assets) from Partnership operations                                                                                          |  | $                                                                                               | (18,663)     |  
|Net Investment Income from Partnership operations                                                                                                                                                                |  | $                                                                                               | 2,944        |  
|Acquisition/Additions                                                                                                                                                                                            |  |                                                                                                 | -            |  
|Equity Income                                                                                                                                                                                                    |  |                                                                                                 | -            |  
|Contributions                                                                                                                                                                                                    |  |                                                                                                 | -            |  
|Disposition/Settlements                                                                                                                                                                                          |  | $                                                                                               | (3,106)      |  
|Equity losses                                                                                                                                                                                                    |  |                                                                                                 | -            |  
|Distributions                                                                                                                                                                                                    |  |                                                                                                 | -            |  
|                                                                                                                                                                                                                 |  |                                                                                                 |              |  
|Ending balance @ 12/31/09                                                                                                                                                                                        |  | $                                                                                               | 67,963       |  
|                                                                                                                                                                                                                 |  |                                                                                                 |              |  
|                                                                                                                                                                                                                 | 
|The amount of total gains or losses for the period included in earnings
(or changes in net assets) attributable to the change in unrealized gains
or losses relating to assets still held at the reporting date. |  |                                                                                                 |              |  
|                                                                                                                                                                                                                 |  |                                                                                                 |              |  
|                                                                                                                                                                                                                 |  | $                                                                                               | (16,935      | )
|                                                                                                                                                                                                                 |  |                                                                                                 |              |  



F-13



---

Report of Independent Registered Public Accounting Firm

To the Partners of

The
Prudential Variable Contract Real Property Partnership:

In our opinion, the accompanying consolidated statements of assets
and liabilities, including the consolidated schedules of investments, and the related consolidated statements of operations, of changes in net assets and of cash flows present fairly, in all material respects, the financial position of The
Prudential Variable Contract Real Property Partnership (the Partnership) at December 31, 2010 and 2009, and the results of its operations, the changes in net assets and its cash flows for each of the three years in the period ended
December 31, 2010 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the management of The Prudential Insurance Company of America. Our
responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audits 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 audits provide a reasonable basis for our opinion.

As discussed in Note 2C to the consolidated financial statements, the Partnership changed its accounting, presentation and
disclosure for non-controlling interests in consolidated subsidiaries in 2009.

/s/ PricewaterhouseCoopers LLP

New York, New York

March 4, 2011



F-14



---

Report of Independent Registered Public Accounting Firm on

Financial Statement Schedules

To the Partners of

The Prudential Variable Contract Real Property Partnership:

Our audits of the consolidated financial statements referred to in our report dated March 4, 2011 appearing in this Annual Report on
Form 10-K also included an audit of the financial statement schedules listed in Item 15(a)(2) of this Form 10-K. In our opinion, these financial statement schedules present fairly, in all material respects, the information set forth therein
when read in conjunction with the related consolidated financial statements.

/s/ PricewaterhouseCoopers LLP

New York, New York

March 4, 2011



F-15



---

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES



|                                                                                                                     |  |                   |             |  |                   |   |             | 
|-------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ----------- |  | ----------------- | - | ----------- | 
|                                                                                                                     |  | December 31, 2010 |             |  | December 31, 2009 |  
|                                                                                                                     |  |                   |             | 
|ASSETS                                                                                                               |  |                   |             |  |                   |   |             | 
|                                                                                                                     |  |                  
|REAL ESTATE INVESTMENTS - At estimated fair value:                                                                   |  |                   |             |  |                   |   |             | 
|Real estate and improvements
(cost: 12/31/2010 - $194,140,941; 12/31/2009 -$211,091,543)                             |  | $                 | 158,900,000 |  |                   | $ | 167,100,000 | 
|Real estate partnerships and preferred equity investments (cost:
12/31/2010 - $14,166,536; 12/31/2009 - $14,238,698) |  |                   | 12,591,448  |  |                   |   | 10,044,510  | 
|                                                                                                                     |  |                   |             |  |                   |   |             | 
|                                                                                                                     |  |                  
|Total real estate investments                                                                                        |  |                   | 171,491,448 |  |                   |   | 177,144,510 | 
|                                                                                                                     |  |                  
|CASH AND CASH EQUIVALENTS                                                                                            |  |                   | 28,881,784  |  |                   |   | 24,522,159  | 
|                                                                                                                     |  |                  
|OTHER ASSETS, NET                                                                                                    |  |                   | 2,416,157   |  |                   |   | 2,629,989   | 
|                                                                                                                     |  |                   |             |  |                   |   |             | 
|                                                                                                                     |  |                  
|Total assets                                                                                                         |  | $                 | 202,789,389 |  |                   | $ | 204,296,658 | 
|                                                                                                                     |  |                   |             |  |                   |   |             | 
|                                                                                                                     |  |                  
|LIABILITIES & PARTNERS EQUITY                                                                                       |  |                   |             |  |                   |   |             | 
|                                                                                                                     |  |                  
|INVESTMENT LEVEL DEBT (net of unamortized discount: 12/31/10 $10,237; 12/31/09 $1,830)                               |  | $                 | 30,565,616  |  |                   | $ | 30,824,899  | 
|                                                                                                                     |  |                  
|ACCOUNTS PAYABLE AND ACCRUED EXPENSES                                                                                |  |                   | 2,870,545   |  |                   |   | 2,541,198   | 
|                                                                                                                     |  |                  
|DUE TO AFFILIATES                                                                                                    |  |                   | 597,136     |  |                   |   | 603,101     | 
|                                                                                                                     |  |                  
|OTHER LIABILITIES                                                                                                    |  |                   | 1,028,318   |  |                   |   | 1,025,279   | 
|                                                                                                                     |  |                   |             |  |                   |   |             | 
|                                                                                                                     |  |                  
|Total liabilities                                                                                                    |  |                   | 35,061,615  |  |                   |   | 34,994,477  | 
|                                                                                                                     |  |                   |             |  |                   |   |             | 
|                                                                                                                     |  |                  
|COMMITMENTS AND CONTINGENCIES                                                                                        |  |                   |             |  |                   |   |             | 
|                                                                                                                     |  |                  
|NET ASSETS, REPRESENTING PARTNERS EQUITY:                                                                           |  |                   |             |  |                   |   |             | 
|                                                                                                                     |  |                  
|GENERAL PARTNERS CONTROLLING INTEREST                                                                               |  |                   | 165,027,953 |  |                   |   | 167,204,272 | 
|                                                                                                                     |  |                  
|NONCONTROLLING INTEREST                                                                                              |  |                   | 2,699,821   |  |                   |   | 2,097,909   | 
|                                                                                                                     |  |                   |             |  |                   |   |             | 
|                                                                                                                     |  |                  
|                                                                                                                     |  |                   | 167,727,774 |  |                   |   | 169,302,181 | 
|                                                                                                                     |  |                   |             |  |                   |   |             | 
|                                                                                                                     |  |                  
|Total liabilities and partners equity                                                                               |  | $                 | 202,789,389 |  |                   | $ | 204,296,658 | 
|                                                                                                                     |  |                   |             |  |                   |   |             | 
|                                                                                                                     |  |                  
|NUMBER OF SHARES OUTSTANDING AT END OF PERIOD                                                                        |  |                   | 5,815,305   |  |                   |   | 6,461,874   | 
|                                                                                                                     |  |                   |             |  |                   |   |             | 
|                                                                                                                     |  |                  
|SHARE VALUE AT END OF PERIOD                                                                                         |  | $                 | 28.38       |  |                   | $ | 25.88       | 
|                                                                                                                     |  |                   |             |  |                   |   |             | 

The accompanying notes are an integral part of these consolidated financial statements.



F-16



---

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

CONSOLIDATED STATEMENTS OF OPERATIONS



|                                                                                                                       |  |                         |             |  |      |   |              |      |  |   |              | 
|---------------------------------------------------------------------------------------------------------------------- |  | ----------------------- | ----------- |  | ---- | - | ------------ | ---- |  | - | ------------ | 
|                                                                                                                       |  | Year Ended December 31, |            
|                                                                                                                       |  |                         |             | 
|                                                                                                                       |  | 2010                    |             |  | 2009 |   |              | 2008 | 
|                                                                                                                       |  |                         |             |  |      |   |              |      |  |   |              | 
|                                                                                                                       |  |                         |            
|INVESTMENT INCOME:                                                                                                     |  |                         |             |  |      |   |              |      |  |   |              | 
|Revenue from real estate and improvements                                                                              |  | $                       | 23,887,391  |  |      | $ | 25,607,535   |      |  | $ | 30,723,626   | 
|Equity in income of real estate partnerships                                                                           |  |                         | 1,010,274   |  |      |   | 1,031,368    |      |  |   | 994,333      | 
|Interest on short-term investments                                                                                     |  |                         | 30,637      |  |      |   | 39,502       |      |  |   | 406,431      | 
|                                                                                                                       |  |                         |             |  |      |   |              |      |  |   |              | 
|                                                                                                                       |  |                         |            
|Total investment income                                                                                                |  |                         | 24,928,302  |  |      |   | 26,678,405   |      |  |   | 32,124,390   | 
|                                                                                                                       |  |                         |             |  |      |   |              |      |  |   |              | 
|                                                                                                                       |  |                         |            
|INVESTMENT EXPENSES:                                                                                                   |  |                         |             |  |      |   |              |      |  |   |              | 
|Operating                                                                                                              |  |                         | 6,247,020   |  |      |   | 6,791,045    |      |  |   | 7,193,577    | 
|Investment management fee                                                                                              |  |                         | 2,315,378   |  |      |   | 2,607,256    |      |  |   | 3,447,030    | 
|Real estate taxes                                                                                                      |  |                         | 2,386,515   |  |      |   | 2,747,956    |      |  |   | 2,957,947    | 
|Administrative                                                                                                         |  |                         | 4,619,659   |  |      |   | 4,882,308    |      |  |   | 5,927,773    | 
|Interest expense                                                                                                       |  |                         | 988,594     |  |      |   | 1,682,562    |      |  |   | 1,970,462    | 
|                                                                                                                       |  |                         |             |  |      |   |              |      |  |   |              | 
|                                                                                                                       |  |                         |            
|Total investment expenses                                                                                              |  |                         | 16,557,166  |  |      |   | 18,711,127   |      |  |   | 21,496,789   | 
|                                                                                                                       |  |                         |             |  |      |   |              |      |  |   |              | 
|                                                                                                                       |  |                         |            
|NET INVESTMENT INCOME                                                                                                  |  |                         | 8,371,136   |  |      |   | 7,967,278    |      |  |   | 10,627,601   | 
|                                                                                                                       |  |                         |             |  |      |   |              |      |  |   |              | 
|                                                                                                                       |  |                         |            
|REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:                                                                    |  |                         |             |  |      |   |              |      |  |   |              | 
|Net proceeds from real estate investments sold                                                                         |  |                         | 16,981,750  |  |      |   | 10,008,560   |      |  |   | -            | 
|Less: Cost of real estate investments sold                                                                             |  |                         | 20,366,393  |  |      |   | 38,102,511   |      |  |   | -            | 
|                                                                                                                       |  |                         |             |  |      |   |              |      |  |   |              | 
|Gain (loss) realized from real estate investments sold                                                                 |  |                         | (3,384,643) |  |      |   | (28,093,951) |      |  |   | -            | 
|                                                                                                                       |  |                         |            
|Less: Reversal of prior periods unrealized gain (loss) on real estate investments sold                                |  |                         | (5,710,830) |  |      |   | (23,870,681) |      |  |   | -            | 
|                                                                                                                       |  |                         |             |  |      |   |              |      |  |   |              | 
|                                                                                                                       |  |                         |            
|Net gain (loss) recognized on real estate investments sold                                                             |  |                         | 2,326,187   |  |      |   | (4,223,270)  |      |  |   | -            | 
|                                                                                                                       |  |                         |             |  |      |   |              |      |  |   |              | 
|                                                                                                                       |  |                         |            
|Change in unrealized gain (loss) on real estate investments held                                                       |  |                         | 5,707,392   |  |      |   | (44,916,708) |      |  |   | (45,661,694) | 
|                                                                                                                       |  |                         |             |  |      |   |              |      |  |   |              | 
|                                                                                                                       |  |                         |            
|NET REALIZED AND UNREALIZED GAIN (LOSS)                                                                                |  |                         | 8,033,579   |  |      |   | (49,139,978) |      |  |   | (45,661,694) | 
|                                                                                                                       |  |                         |             |  |      |   |              |      |  |   |              | 
|                                                                                                                       |  |                         |            
|INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS                                                            |  | $                       | 16,404,715  |  |      | $ | (41,172,700) |      |  | $ | (35,034,093) | 
|                                                                                                                       |  |                         |             |  |      |   |              |      |  |   |              | 
|                                                                                                                       |  |                         |            
|Amounts attributable to noncontrolling interest:                                                                       |  |                         |             |  |      |   |              |      |  |   |              | 
|Net investment income (loss) attributable to noncontrolling interest                                                   |  |                         | 401,727     |  |      |   | 716,588      |      |  |   | (510,583)    | 
|Net recognized gain (loss) attributable to noncontrolling interest                                                     |  |                         | -           |  |      |   | 30,926       |      |  |   | -            | 
|Net unrealized gain (loss) attributable to noncontrolling interest                                                     |  |                         | 679,307     |  |      |   | (3,186,178)  |      |  |   | (1,428,059)  | 
|                                                                                                                       |  |                         |             |  |      |   |              |      |  |   |              | 
|Net increase (decrease) in net assets resulting from operations attributable to the noncontrolling interest            |  | $                       | 1,081,034   |  |      | $ | (2,438,664)  |      |  | $ | (1,938,642)  | 
|                                                                                                                       |  |                         |             |  |      |   |              |      |  |   |              | 
|                                                                                                                       |  |                         |            
|Amounts attributable to general partners controlling interest:                                                        |  |                         |             |  |      |   |              |      |  |   |              | 
|Net investment income attributable to general partners controlling interest                                           |  |                         | 7,969,409   |  |      |   | 7,250,690    |      |  |   | 11,138,184   | 
|Net recognized gain (loss) attributable to general partners controlling interest                                      |  |                         | 2,326,187   |  |      |   | (4,254,196)  |      |  |   | -            | 
|Net unrealized gain (loss) attributable to general partners controlling interest                                      |  |                         | 5,028,085   |  |      |   | (41,730,530) |      |  |   | (44,233,635) | 
|                                                                                                                       |  |                         |             |  |      |   |              |      |  |   |              | 
|Net increase (decrease) in net assets resulting from operations attributable to general partners controlling interest |  | $                       | 15,323,681  |  |      | $ | (38,734,036) |      |  | $ | (33,095,451) | 
|                                                                                                                       |  |                         |             |  |      |   |              |      |  |   |              | 

The accompanying notes are an integral part of these consolidated financial statements.



F-17



---

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS



|                                                                       |  |                                      |             |   |                         |   |           |       |  |   |                                      |   |  |                         |             |   |       |   |            |                                      |  |   |                         |   |  |       |             |   |  |   |            |   |  |   |             |  
|---------------------------------------------------------------------- |  | ------------------------------------ | ----------- | - | ----------------------- | - | --------- | ----- |  | - | ------------------------------------ | - |  | ----------------------- | ----------- | - | ----- | - | ---------- | ------------------------------------ |  | - | ----------------------- | - |  | ----- | ----------- | - |  | - | ---------- | - |  | - | ----------- | -
|                                                                       |  | Year Ended December 31,              |            
|                                                                       |  |                                      |             |  
|                                                                       |  |                                      |             |   | 2010                    |   |           |       |  |   |                                      |   |  | 2009                    |             |   |       |   |            |                                      |  |   | 2008                    |   |  |       |            
|                                                                       |  |                                      |             |  
|                                                                       |  | GeneralPartners
ControllingInterest |             |   | Noncontrolling Interest |   |           | Total |  |   | GeneralPartners
ControllingInterest |   |  | Noncontrolling Interest |             |   | Total |   |            | GeneralPartners
ControllingInterest |  |   | Noncontrolling Interest |   |  | Total |            
|INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS:           |  |                                      |             |   |                         |   |           |       |  |   |                                      |   |  |                         |             |   |       |   |            |                                      |  |   |                         |   |  |       |             |   |  |   |            |   |  |   |             |  
|Net investment income (loss)                                           |  | $                                    | 7,969,409   |   |                         | $ | 401,727   |       |  | $ | 8,371,136                            |   |  | $                       | 7,250,690   |   |       | $ | 716,588    |                                      |  | $ | 7,967,278               |   |  | $     | 11,138,184  |   |  | $ | (510,583   | ) |  | $ | 10,627,601  |  
|Net realized and unrealized gain (loss) from real estate investments   |  |                                      | 7,354,272   |   |                         |   | 679,307   |       |  |   | 8,033,579                            |   |  |                         | (45,984,726 | ) |       |   | (3,155,252 | )                                    |  |   | (49,139,978             | ) |  |       | (44,233,635 | ) |  |   | (1,428,059 | ) |  |   | (45,661,694 | )
|                                                                       |  |                                      |             |   |                         |   |           |       |  |   |                                      |   |  |                         |             |   |       |   |            |                                      |  |   |                         |   |  |       |             |   |  |   |            |   |  |   |             |  
|                                                                       |  |                                      |             |   |                         |   |           |       | 
|Increase (decrease) in net assets resulting from operations            |  |                                      | 15,323,681  |   |                         |   | 1,081,034 |       |  |   | 16,404,715                           |   |  |                         | (38,734,036 | ) |       |   | (2,438,664 | )                                    |  |   | (41,172,700             | ) |  |       | (33,095,451 | ) |  |   | (1,938,642 | ) |  |   | (35,034,093 | )
|                                                                       |  |                                      |             |   |                         |   |           |       |  |   |                                      |   |  |                         |             |   |       |   |            |                                      |  |   |                         |   |  |       |             |   |  |   |            |   |  |   |             |  
|                                                                       |  |                                      |             |   |                         |   |           |       | 
|INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS: |  |                                      |             |   |                         |   |           |       |  |   |                                      |   |  |                         |             |   |       |   |            |                                      |  |   |                         |   |  |       |             |   |  |   |            |   |  |   |             |  
|Withdrawals                                                            |  |                                      | (17,500,000 | ) |                         |   | -         |       |  |   | (17,500,000                          | ) |  |                         | (8,000,000  | ) |       |   | -          |                                      |  |   | (8,000,000              | ) |  |       | -           |   |  |   | -          |   |  |   | -           |  
|Contributions from noncontrolling interest                             |  |                                      | -           |   |                         |   | -         |       |  |   | -                                    |   |  |                         | -           |   |       |   | 15,000     |                                      |  |   | 15,000                  |   |  |       | -           |   |  |   | 80,000     |   |  |   | 80,000      |  
|Distributions to noncontrolling interest                               |  |                                      | -           |   |                         |   | (479,122  | )     |  |   | (479,122                             | ) |  |                         | -           |   |       |   | (402,690   | )                                    |  |   | (402,690                | ) |  |       | -           |   |  |   | (221,885   | ) |  |   | (221,885    | )
|                                                                       |  |                                      |             |   |                         |   |           |       |  |   |                                      |   |  |                         |             |   |       |   |            |                                      |  |   |                         |   |  |       |             |   |  |   |            |   |  |   |             |  
|                                                                       |  |                                      |             |   |                         |   |           |       | 
|Increase (decrease) in net assets resulting from capital transactions  |  |                                      | (17,500,000 | ) |                         |   | (479,122  | )     |  |   | (17,979,122                          | ) |  |                         | (8,000,000  | ) |       |   | (387,690   | )                                    |  |   | (8,387,690              | ) |  |       | -           |   |  |   | (141,885   | ) |  |   | (141,885    | )
|                                                                       |  |                                      |             |   |                         |   |           |       |  |   |                                      |   |  |                         |             |   |       |   |            |                                      |  |   |                         |   |  |       |             |   |  |   |            |   |  |   |             |  
|                                                                       |  |                                      |             |   |                         |   |           |       | 
|INCREASE (DECREASE) IN NET ASSETS                                      |  |                                      | (2,176,319  | ) |                         |   | 601,912   |       |  |   | (1,574,407                           | ) |  |                         | (46,734,036 | ) |       |   | (2,826,354 | )                                    |  |   | (49,560,390             | ) |  |       | (33,095,451 | ) |  |   | (2,080,527 | ) |  |   | (35,175,978 | )
|                                                                       |  |                                      |             |   |                         |   |           |       | 
|NET ASSETS - Beginning of period                                       |  |                                      | 167,204,272 |   |                         |   | 2,097,909 |       |  |   | 169,302,181                          |   |  |                         | 213,938,308 |   |       |   | 4,924,263  |                                      |  |   | 218,862,571             |   |  |       | 247,033,759 |   |  |   | 7,004,790  |   |  |   | 254,038,549 |  
|                                                                       |  |                                      |             |   |                         |   |           |       |  |   |                                      |   |  |                         |             |   |       |   |            |                                      |  |   |                         |   |  |       |             |   |  |   |            |   |  |   |             |  
|                                                                       |  |                                      |             |   |                         |   |           |       | 
|NET ASSETS - End of period                                             |  | $                                    | 165,027,953 |   |                         | $ | 2,699,821 |       |  | $ | 167,727,774                          |   |  | $                       | 167,204,272 |   |       | $ | 2,097,909  |                                      |  | $ | 169,302,181             |   |  | $     | 213,938,308 |   |  | $ | 4,924,263  |   |  | $ | 218,862,571 |  
|                                                                       |  |                                      |             |   |                         |   |           |      

The accompanying notes are an integral part of these consolidated financial statements.



F-18



---

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

CONSOLIDATED STATEMENTS OF CASH FLOWS



|                                                                                                                      |  |                         |              |  |      |   |              |      |  |   |              | 
|--------------------------------------------------------------------------------------------------------------------- |  | ----------------------- | ------------ |  | ---- | - | ------------ | ---- |  | - | ------------ | 
|                                                                                                                      |  | Year Ended December 31, |             
|                                                                                                                      |  |                         |              | 
|                                                                                                                      |  | 2010                    |              |  | 2009 |   |              | 2008 | 
|                                                                                                                      |  |                         |              |  |      |   |              |      |  |   |              | 
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                                                 |  |                         |              |  |      |   |              |      |  |   |              | 
|Net increase (decrease) in net assets from operations                                                                 |  | $                       | 16,404,715   |  |      | $ | (41,172,700) |      |  | $ | (35,034,093) | 
|Adjustments to reconcile net increase (decrease) in net assets to net cash provided by (used in) operating activities |  |                         |              |  |      |   |              |      |  |   |              | 
|Net realized and unrealized loss (gain)                                                                               |  |                         | (8,033,579)  |  |      |   | 49,139,978   |      |  |   | 45,661,694   | 
|Amortization of discount on investment level debt                                                                     |  |                         | (8,407)      |  |      |   | 24,650       |      |  |   | -            | 
|Amortization of deferred financing costs                                                                              |  |                         | 43,970       |  |      |   | 63,888       |      |  |   | 94,554       | 
|Distributions in excess of (less than) equity in income of real estate partnerships operations                       |  |                         | 72,163       |  |      |   | 85,506       |      |  |   | 199,730      | 
|Bad debt expense                                                                                                      |  |                         | 123,552      |  |      |   | 94,787       |      |  |   | 1,139,238    | 
|(Increase) decrease in:                                                                                               |  |                         |              |  |      |   |              |      |  |   |              | 
|Other assets                                                                                                          |  |                         | 46,309       |  |      |   | 147,375      |      |  |   | (1,136,791)  | 
|Increase (decrease) in:                                                                                               |  |                         |              |  |      |   |              |      |  |   |              | 
|Accounts payable and accrued expenses                                                                                 |  |                         | (515,246)    |  |      |   | (383,740)    |      |  |   | 740,126      | 
|Due to affiliates                                                                                                     |  |                         | (5,965)      |  |      |   | (248,494)    |      |  |   | (49,776)     | 
|Other liabilities                                                                                                     |  |                         | 3,039        |  |      |   | 46,937       |      |  |   | 57,888       | 
|                                                                                                                      |  |                         |              |  |      |   |              |      |  |   |              | 
|                                                                                                                      |  |                         |             
|Net cash flows provided by (used in) operating activities                                                             |  |                         | 8,130,551    |  |      |   | 7,798,187    |      |  |   | 11,672,570   | 
|                                                                                                                      |  |                         |              |  |      |   |              |      |  |   |              | 
|                                                                                                                      |  |                         |             
|CASH FLOWS PROVIDED FOR INVESTING ACTIVITIES:                                                                         |  |                         |              |  |      |   |              |      |  |   |              | 
|Net proceeds from real estate investments sold                                                                        |  |                         | 16,981,750   |  |      |   | 10,008,560   |      |  |   | -            | 
|Additions to real estate and improvements                                                                             |  |                         | (2,522,678)  |  |      |   | (3,385,840)  |      |  |   | (9,936,151)  | 
|                                                                                                                      |  |                         |              |  |      |   |              |      |  |   |              | 
|                                                                                                                      |  |                         |             
|Net cash flows provided by (used in) investing activities                                                             |  |                         | 14,459,072   |  |      |   | 6,622,720    |      |  |   | (9,936,151)  | 
|                                                                                                                      |  |                         |              |  |      |   |              |      |  |   |              | 
|                                                                                                                      |  |                         |             
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                                                 |  |                         |              |  |      |   |              |      |  |   |              | 
|Withdrawals                                                                                                           |  |                         | (17,500,000) |  |      |   | (8,000,000)  |      |  |   | -            | 
|Proceeds from investment level debt                                                                                   |  |                         | 429,328      |  |      |   | -            |      |  |   | 24,016,161   | 
|Principal payments on investment level debt                                                                           |  |                         | (680,204)    |  |      |   | (9,247,578)  |      |  |   | (16,090,046) | 
|Contributions from noncontrolling interest                                                                            |  |                         | -            |  |      |   | 15,000       |      |  |   | 80,000       | 
|Distributions to noncontrolling interest                                                                              |  |                         | (479,122)    |  |      |   | (402,690)    |      |  |   | (221,885)    | 
|                                                                                                                      |  |                         |              |  |      |   |              |      |  |   |              | 
|                                                                                                                      |  |                         |             
|Net cash flows provided by (used in) financing activities                                                             |  |                         | (18,229,998) |  |      |   | (17,635,268) |      |  |   | 7,784,230    | 
|                                                                                                                      |  |                         |              |  |      |   |              |      |  |   |              | 
|                                                                                                                      |  |                         |             
|NET CHANGE IN CASH AND CASH EQUIVALENTS                                                                               |  |                         | 4,359,625    |  |      |   | (3,214,361)  |      |  |   | 9,520,649    | 
|                                                                                                                      |  |                         |             
|CASH AND CASH EQUIVALENTS - Beginning of period                                                                       |  |                         | 24,522,159   |  |      |   | 27,736,520   |      |  |   | 18,215,871   | 
|                                                                                                                      |  |                         |              |  |      |   |              |      |  |   |              | 
|                                                                                                                      |  |                         |             
|CASH AND CASH EQUIVALENTS - End of period                                                                             |  | $                       | 28,881,784   |  |      | $ | 24,522,159   |      |  | $ | 27,736,520   | 
|                                                                                                                      |  |                         |              |  |      |   |              |      |  |   |              | 

The accompanying notes are an integral part of these consolidated financial statements.



F-19



---

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

CONSOLIDATED SCHEDULES OF INVESTMENTS



|                                                                                                       |  |                   |      |                             |  |                                |             |  |                   |   |             |                   |  |   |             |  |  |                |             |  |  |   |            | 
|------------------------------------------------------------------------------------------------------ |  | ----------------- | ---- | --------------------------- |  | ------------------------------ | ----------- |  | ----------------- | - | ----------- | ----------------- |  | - | ----------- |  |  | -------------- | ----------- |  |  | - | ---------- | 
|                                                                                                       |  |                   |      |                             |  | 2010 Total RentableSquare Feet |             |  |                   |   |             |                   |  |   |             |  |  |                |            
|                                                                                                       |  |                   |      |                             |  | Unless Otherwise               |             |  | December 31, 2010 |   |             | December 31, 2009 | 
|                                                                                                       |  |                   |      |                             |  |                                |             |  |                   |   |             |                   |  |   |             | 
|                                                                                                       |  | December 31, 2010 |      |                             |  | Indicated                      |             |  |                   |   |             | Estimated Fair    |  |   |             |  |  | Estimated Fair |            
|Property Name                                                                                          |  | Ownership         |      | City, State                 |  | (Unaudited)                    |             |  | Cost              |   |             | Value             |  |   | Cost        |  |  | Value          |            
|                                                                                                       |  |                   |      |                             | 
|                                                                                                       |  |                   |      |                             |  |                                |            
|OFFICES                                                                                                |  |                   |      |                             |  |                                |             |  |                   |   |             |                   |  |   |             |  |  |                |             |  |  |   |            | 
|750 Warrenville                                                                                        |  | WO                |      | Lisle, IL                   |  |                                | 103,193     |  |                   | $ | 26,339,685  |                   |  | $ | 7,200,000   |  |  | $              | 26,186,415  |  |  | $ | 6,700,000  | 
|Summit @ Cornell Oaks                                                                                  |  | WO                |      | Beaverton , OR              |  |                                | 72,109      |  |                   |   | 12,937,126  |                   |  |   | 6,700,000   |  |  |                | 12,625,626  |  |  |   | 8,500,000  | 
|Westpark                                                                                               |  | WO                |      | Brentwood, TN               |  |                                | 97,199      |  |                   |   | 14,585,669  |                   |  |   | 10,400,000  |  |  |                | 13,019,181  |  |  |   | 8,700,000  | 
|Financial Plaza                                                                                        |  | WO                |      | Brentwood, TN               |  |                                | 98,049      |  |                   |   | 12,854,615  |                   |  |   | 9,500,000   |  |  |                | 12,564,614  |  |  |   | 9,700,000  | 
|                                                                                                       | 
|                                                                                                       |  |                   |      | Offices % as of 12/31/10    |  |                                | 21%         |  |                   |   | 66,717,095  |                   |  |   | 33,800,000  |  |  |                | 64,395,836  |  |  |   | 33,600,000 | 
|                                                                                                       |  |                   |      |                             |  |                                |            
|APARTMENTS                                                                                             |  |                   |      |                             |  |                                |             |  |                   |   |             |                   |  |   |             |  |  |                |             |  |  |   |            | 
|                                                                                                       |  |                   |      |                             |  |                                |            
|Brookwood Apartments                                                                                   |  | SOLD              |      | Atlanta, GA                 |  |                                | Sold        |  |                   |   | -           |                   |  |   | -           |  |  |                | 20,210,830  |  |  |   | 14,500,000 | 
|Dunhill Trace Apartments                                                                               |  | WO                |      | Raleigh, NC                 |  |                                | 250 Units   |  |                   |   | 16,649,083  |                   |  |   | 17,400,000  |  |  |                | 16,512,970  |  |  |   | 15,000,000 | 
|Broadstone Crossing                                                                                    |  | WO                |      | Austin, TX                  |  |                                | 225 Units   |  |                   |   | 22,854,377  |                   |  |   | 23,500,000  |  |  |                | 22,815,992  |  |  |   | 21,000,000 | 
|The Reserve At Waterford Lakes                                                                         |  | WO                |      | Charlotte, NC               |  |                                | 140 Units   |  |                   |   | 13,850,701  |                   |  |   | 10,200,000  |  |  |                | 13,746,940  |  |  |   | 9,200,000  | 
|                                                                                                       | 
|                                                                                                       |  |                   |      | Apartments % as of 12/31/10 |  |                                | 31%         |  |                   |   | 53,354,161  |                   |  |   | 51,100,000  |  |  |                | 73,286,732  |  |  |   | 59,700,000 | 
|                                                                                                       |  |                   |      |                             |  |                                |            
|RETAIL                                                                                                 |  |                   |      |                             |  |                                |             |  |                   |   |             |                   |  |   |             |  |  |                |             |  |  |   |            | 
|Hampton Towne Center                                                                                   |  | WO                |      | Hampton, VA                 |  |                                | 174,540     |  |                   |   | 18,197,093  |                   |  |   | 16,300,000  |  |  |                | 18,136,399  |  |  |   | 18,600,000 | 
|White Marlin Mall                                                                                      |  | CJV               |      | Ocean City, MD              |  |                                | 197,098     |  |                   |   | 23,707,485  |                   |  |   | 26,200,000  |  |  |                | 23,311,878  |  |  |   | 24,600,000 | 
|Westminster Crossing East, LLC                                                                         |  | CJV               |      | Westminster, MD             |  |                                | 89,890      |  |                   |   | 15,068,438  |                   |  |   | 14,600,000  |  |  |                | 15,044,877  |  |  |   | 13,900,000 | 
|CARS Preferred Equity                                                                                  |  | PE                |      | Various                     |  |                                | N/A         |  |                   |   | 14,166,536  |                   |  |   | 12,591,448  |  |  |                | 14,238,698  |  |  |   | 10,044,510 | 
|Harnett Crossing                                                                                       |  | WO                |      | Dunn, NC                    |  |                                | 193,325     |  |                   |   | 6,239,696   |                   |  |   | 3,300,000   |  |  |                | -           |  |  |   | -          | 
|Harnett Crossing                                                                                       |  | CJV               |      | Dunn, NC                    |  |                                | NA          |  |                   |   | -           |                   |  |   | -           |  |  |                | 6,237,926   |  |  |   | 3,200,000  | 
|                                                                                                       | 
|                                                                                                       |  |                   |      | Retail % as of 12/31/10     |  |                                | 44%         |  |                   |   | 77,379,248  |                   |  |   | 72,991,448  |  |  |                | 76,969,778  |  |  |   | 70,344,510 | 
|                                                                                                       |  |                   |      |                             |  |                                |            
|HOTEL                                                                                                  |  |                   |      |                             |  |                                |             |  |                   |   |             |                   |  |   |             |  |  |                |             |  |  |   |            | 
|Portland Crown Plaza                                                                                   |  | CJV               |      | Lake Oswego, OR             |  |                                | 161 Rooms   |  |                   |   | 10,856,973  |                   |  |   | 13,600,000  |  |  |                | 10,677,895  |  |  |   | 13,500,000 | 
|                                                                                                       | 
|                                                                                                       |  |                   |      | Hotel % as of 12/31/10      |  |                                | 8%          |  |                   |   | 10,856,973  |                   |  |   | 13,600,000  |  |  |                | 10,677,895  |  |  |   | 13,500,000 | 
|                                                                                                       |  |                   |      |                             | 
|Total Real Estate Investments as a Percentage of General Partners Controlling Interest as of
12/31/10 |  |                   | 104% |                             |  | $                              | 208,307,477 |  |                   | $ | 171,491,448 |                   |  | $ | 225,330,241 |  |  | $              | 177,144,510 | 
|                                                                                                       |  |                   |      |                             |  |                                |             |  |                   |   |             |                   |  |   |             |  |  |                |             |  |  |   |            | 

WO - Wholly Owned Investment

CJV -
Consolidated Joint Venture

EJV - Joint Venture Investment accounted for under the equity method

PE - Preferred equity investments

The accompanying notes are an integral part of these
consolidated financial statements.



F-20



---

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

CONSOLIDATED SCHEDULE OF INVESTMENTS



|                                                                                 |  |             |            |  |               |  |              |                   |  |   |                   |  |  |      |            |       |            |   |            |  |  |   |            | 
|-------------------------------------------------------------------------------- |  | ----------- | ---------- |  | ------------- |  | ------------ | ----------------- |  | - | ----------------- |  |  | ---- | ---------- | ----- | ---------- | - | ---------- |  |  | - | ---------- | 
|                                                                                 |  |             |            |  |               |  |              | December 31, 2010 |  |   | December 31, 2009 | 
|                                                                                 |  |             |            |  |               |  |              |                   |  |   |                   |  |  |      |            |      
|                                                                                 |  |             |            |  |               |  |              |                   |  |   | Estimated         |  |  |      |            |       | Estimated  |  
|                                                                                 |  | Face Amount |            |  | Maturity Date |  |              | Cost              |  |   | Fair Value        |  |  | Cost |            |       | Fair Value |  
|                                                                                 |  |             |            |  |               |  |              |                   |  |   |                   |  |  |      |            |       |            |   |            |  |  |   |            | 
|CASH AND CASH EQUIVALENTS - Percentage of General Partners Controlling Interest |  |             |            |  |               |  |              | 17.5%             |  |   |                   |  |  |      |            | 14.7% |           
|                                                                                 |  |             |            |  |               | 
|Investments in Prudential Investment Liquidity Pool:                             |  |             |            |  |               |  |              |                   |  |   |                   |  |  |      |            |       |            |   |            |  |  |   |            | 
|Federal Home Loan Bank, 0 coupon bond                                            |  | $           | 8,181,000  |  |               |  | January 2011 |                   |  | $ | 8,181,000         |  |  | $    | 8,181,000  |       |            | $ | 2,999,184  |  |  | $ | 2,999,184  | 
|Federal Home Loan Bank, 0 coupon bond                                            |  |             | 5,000,000  |  |               |  | January 2011 |                   |  |   | 4,999,740         |  |  |      | 4,999,740  |       |            |   | 9,997,769  |  |  |   | 9,997,769  | 
|Federal Home Loan Bank, 0 coupon bond                                            |  |             | 4,677,000  |  |               |  | January 2011 |                   |  |   | 4,676,891         |  |  |      | 4,676,891  |       |            |   | 2,999,267  |  |  |   | 2,999,267  | 
|Federal Home Loan Bank, 0 coupon bond                                            |  |             | 10,000,000 |  |               |  | March 2011   |                   |  |   | 9,997,022         |  |  |      | 9,997,022  |       |            |   | 1,999,660  |  |  |   | 1,999,660  | 
|                                                                                 |  |             |            |  |               |  |              |                   |  |   |                   |  |  |      |            |       |            |   |            |  |  |   |            | 
|                                                                                 |  |             |            |  |               | 
|Total Cash Equivalents                                                           |  |             |            |  |               |  |              |                   |  |   | 27,854,653        |  |  |      | 27,854,653 |       |            |   | 17,995,880 |  |  |   | 17,995,880 | 
|                                                                                 |  |             |            |  |               | 
|Cash                                                                             |  |             |            |  |               |  |              |                   |  |   | 1,027,131         |  |  |      | 1,027,131  |       |            |   | 6,526,279  |  |  |   | 6,526,279  | 
|                                                                                 |  |             |            |  |               |  |              |                   |  |   |                   |  |  |      |            |       |            |   |            |  |  |   |            | 
|                                                                                 |  |             |            |  |               | 
|Total Cash and Cash Equivalents                                                  |  |             |            |  |               |  |              |                   |  | $ | 28,881,784        |  |  | $    | 28,881,784 |       |            | $ | 24,522,159 |  |  | $ | 24,522,159 | 
|                                                                                 |  |             |            |  |               |  |              |                   |  |   |                   |  |  |      |            |       |            |   |            |  |  |   |            | 

The accompanying notes are an integral part of these consolidated financial statements.



F-21



---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

For Years Ended December 31, 2010, 2009, and 2008

Note 1: Organization

On April 29, 1988, The Prudential Variable
Contract Real Property Partnership (the Partnership), a general partnership organized under New Jersey law, was formed through an agreement among The 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 general partners in the Partnership are Prudential, Pruco Life and Pruco Life of New Jersey (collectively the General
Partners). The General Partners may make additional daily cash contributions to or withdrawals from the Partnership in accordance with the provisions of the Partnership Agreement.

The Partnerships policy is to invest at least 65% of its assets in direct ownership interests in income-producing real estate and
participating mortgage loans.

The per share net asset value of the Partnerships shares is determined daily, consistent
with the Partnership Agreement. On each day during which the New York Stock Exchange is open for business, the net asset value of the Partnership is estimated using the estimated fair value of its assets, principally as described in Notes 2A, 2B, 2C
and 2D below, reduced by any liabilities of the Partnership. The periodic adjustments to property values described in Notes 2A, 2B, 2C and 2D below and other adjustments to previous estimates are made on a prospective basis. There can be no
assurance that all such adjustments to estimates will be made timely.

Shares of the Partnership are held by The 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) and may be purchased and sold at the then
current per share net asset value of the Partnerships net assets. Per share net asset value is calculated by dividing the net assets of the Partnership as determined above by the number of shares outstanding. A contract owner participates in
the Partnership through interests in the Real Property Accounts.

PREI ® is the real estate advisory unit of Prudential
Investment Management, Inc. (PIM), which is an indirectly owned subsidiary of Prudential Financial Inc. (PFI). PREI provides investment advisory services to the Partnerships General Partners pursuant to the terms of the
Advisory Agreement as described in Note 10.

Note 2: Summary of Significant Accounting Policies



| | A. | Basis of Presentation - The accompanying consolidated financial statements of The Partnership included herein have been prepared in
accordance with the requirements of Form 10-K and accounting principles generally accepted in the United States of America that are applicable to real estate investment companies. In the opinion of management, all adjustments (consisting only of
normal recurring adjustments) considered necessary for a fair statement have been included. The Partnership has evaluated subsequent events through March 4, 2011, the date these financial statements were available to be issued.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | B. | Managements Use of Estimates in the Financial Statements - The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from
those estimates.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-22



---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

For Years Ended December 31, 2010, 2009, and 2008



Note 2: Summary of Significant Accounting Policies (continued)



| | C. | Accounting Pronouncements Adopted -In December 2007, FASB revised authoritative guidance for business combinations, which expands the
definition of a business and redefines the acquisition date in a merger and acquisition transaction. It significantly modifies the existing guidance for business combinations, including changes to acquisition related contingent consideration,
preacquisition contingencies, noncontrolling interest, restructuring costs, in-process R&D, goodwill and partial acquisition. This guidance is effective for acquisitions closing after the first annual reporting period beginning after
December 15, 2008. The Partnerships adoption of this guidance effective January 1, 2009 did not have a material effect on the Partnerships consolidated financial position or results of operations.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In December 2007, FASB revised the accounting, presentation and disclosure for noncontrolling interests in consolidated
financial statements. This revised guidance requires noncontrolling interests to be reported as a separate component of equity. It also changes the allocation of losses and accounting in step acquisitions. The provisions in this revision should be
applied prospectively except for the presentation and disclosure requirements, which are required retrospectively for all periods presented. After the initial adoption, any retained noncontrolling equity investment as a result of a deconsolidation
must be measured at fair value at the date of the deconsolidation. This guidance is effective for the annual periods beginning after December 15, 2008. Pursuant to the Partnerships adoption on January 1, 2009 of the revised guidance,
the Partnership is presenting its noncontrolling interests as equity for all periods presented in the financial statements. Noncontrolling interests, previously reported as a liability, are now required to be reported as a separate component of
equity on the balance sheet. In addition, net investment income (loss) attributable to the noncontrolling interest, which was previously reported as an expense and reflected within Net Investment Income is now reported as a separate amount below
Increase (decrease) in Net Assets Resulting from Operations, and totaled ($0.5) million for the year ended December 31, 2008.

In May 2009, the FASB issued authoritative guidance for subsequent events. Subsequent events are events that occur after balance sheet date but before financial statements are issued or are available to
be issued. This guidance addresses the accounting for and disclosure of subsequent events not addressed in other applicable Generally Accepted Accounting Principles (U.S. GAAP), including disclosure of the date through which subsequent
events have been evaluated. This guidance is effective for interim or annual periods ending after June 15, 2009. The Partnerships adoption of this guidance effective with the interim period ending June 30, 2009 did not have a
material effect on the Partnerships consolidated financial position or results of operations. The required disclosure of the date through which subsequent events have been evaluated is provided in Note 2A.

In July 2009, the FASB launched its Accounting Standards Codification (the Codification), as the sole source
of authoritative U.S. GAAP to be applied by nongovernmental entities. The Codification generally does not change the existing rules of U.S. GAAP but rather makes it easier to find and research U.S. GAAP applicable to a particular transaction or
specific accounting issue. The Codification is a new structure which takes accounting pronouncements and organizes them by approximately ninety accounting topics and aggregates them in four common accounting areas. Topics within each category are
further broken down into subtopics, sections and paragraphs. Accounting standards that are included in the Codification will be considered authoritative whereas those that are not included will be deemed non-authoritative. As a result, there are two
levels of U.S. GAAP, authoritative and non-authoritative. The Codification is effective for financial statements that cover the interim and annual periods ending after September 15, 2009 and impacts the way the Partnership references U.S. GAAP
accounting standards in the financial statements.



F-23



---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

For Years Ended December 31, 2010, 2009, and 2008



|Note 2: | Summary of Significant Accounting Policies (continued)
|------- | ------------------------------------------------------



| | C. | Accounting Pronouncements Adopted (continued)
| | -- | ---------------------------------------------



In January 2010, the FASB issued updated guidance that requires new
fair value disclosures for significant transfers between Level 1 and 2 measurement categories and separate presentation of purchases, issuances, and settlements within the roll forward of Level 3 activity. Also, this updated fair value guidance
clarifies the disclosure requirements about level of disaggregation and valuation techniques and inputs. This guidance is effective for interim and annual reporting periods beginning after December 15, 2009, except disclosures about purchases,
sales, issuances, and settlements in the roll forward of Level 3 activity, which is effective for interim and annual reporting periods beginning after December 15, 2010. The Partnership adopted effective portions of this guidance on
January 1, 2010. The required disclosures are provided in Note 4.



| | D. | Real Estate Investments - Real estate investments are carried at fair value. Properties owned are initially recorded at the purchase price
plus closing costs. Development costs and major renovations are capitalized as a component of cost, and routine maintenance and repairs are charged to expense as incurred. Real estate costs include the cost of acquired property, including all the
tangible and intangible assets. Tangible assets include the value of all land, building and tenant improvements at the time of acquisition. Intangible assets include the value of any above and below market leases, in-place leases, and tenant
relationships at the time of acquisition.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In general fair value estimates are based upon
property appraisal reports prepared by independent real estate appraisers (members of the Appraisal Institute or an equivalent organization) within a reasonable amount of time following acquisition of the real estate and no less frequently than
annually thereafter. The Chief Real Estate Appraiser of PIM, which is an indirectly owned subsidiary of PFI, is responsible to assure that the valuation process provides independent and reasonable property fair value estimates. An unaffiliated third
party been appointed by PIM to assist the Chief Real Estate Appraiser in maintaining and monitoring the independence and the accuracy of the appraisal process. The fair value of real estate investments does not reflect the transaction costs
including those which may be incurred upon disposition of the real estate investments.

The purpose of an
appraisal is to estimate the fair value of real estate as of a specific date. In accordance with FASB authoritative guidance on fair value measurements and disclosures, fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at the measurement date. The estimate of fair value is based on the conventional approaches to value, all of which require the exercise of subjective judgment. The three
approaches are: (1) current cost of reproducing the real estate less deterioration and functional and economic obsolescence; (2) discounting a series of income streams and reversion at a specific yield or by directly capitalizing a single
year income estimate by an appropriate factor; and (3) value indicated by recent sales of comparable real estate in the market. Key inputs and assumptions include rental income and expense amounts, related rental income and expense growth
rates, discount rates and capitalization rates. In the reconciliation of these three approaches, the independent appraiser uses one or a combination of them, to come up with the approximated value for the type of real estate in the market.

In general, the input values used in the appraisal process are unobservable, therefore unless indicated
otherwise; real estate investments are classified as Level 3 (see Note 4 for detail) under the FASB authoritative guidance for fair value measurements.

Unconsolidated real estate partnerships and preferred equity investment are carried at fair value and are generally valued at the Partnerships equity in net assets as reflected in the
partnerships financial statements with properties valued as described above. Under the equity method, the investment is initially recorded at the original investment amount, plus or minus additional amounts invested or distributed, and is
subsequently adjusted for the Partnerships share of undistributed earnings or losses, including unrealized appreciation and depreciation, from the partnership.



F-24



---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

For Years Ended December 31, 2010, 2009, and 2008



|Note 2: | Summary of Significant Accounting Policies (continued)
|------- | ------------------------------------------------------



| | D. | Real Estate Investments (continued)
| | -- | -----------------------------------



As described above, the estimated fair value of real estate and real
estate related assets is generally 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. These variances could be material to the financial statements. Although the estimated market values represent subjective estimates, management believes these estimated market values
are reasonable approximations of market prices and the aggregate estimated value of investments in real estate is fairly presented as of December 31, 2010 and 2009.



| | E. | Cash and Cash Equivalents Cash and cash equivalent are comprised of all short-term investments and investments in money market funds
with a maximum maturity of three months. Cash equivalents consist of investments in the Prudential Investment Liquidity Pool offered and managed by an affiliate of PFI and are accounted for at fair value.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | F. | Other Assets Restricted cash of $94,030 and $115,711 was maintained by the wholly owned and consolidated properties at
December 31, 2010 and 2009, respectively, for tenant security deposits and is included in Other Assets on the Consolidated Statements of Assets and Liabilities. Other assets also include tenant receivables and are net of allowance for
uncollectible accounts of $134,422 and $1,083,235 at December 31, 2010 and 2009, respectively.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | G. | Investment Level Debt  Investment level debt includes mortgage loans payable on wholly owned properties and consolidated partnerships
and is stated at the principal amount of the obligations outstanding. At times the Partnership may assume debt in connection with the purchase of real estate.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | H. | Revenue and Expense Recognition - Revenue from real estate is recognized when earned in accordance with the terms of the respective leases.
Operating expenses are recognized as incurred. Revenue from certain real estate investments is net of all or a portion of related real estate expenses, as lease arrangements vary as to responsibility for payment of these expenses between tenants and
the Partnership. Since real estate investments are stated at estimated fair value, net income is not reduced by depreciation or amortization expense. Interest expenses are accrued periodically based on the contractual interest rate and terms of the
loans, which approximates the effective interest method. Interest expenses are included in Net Investment Income in the Consolidated Statement of Operations.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | I. | Equity in Income of Real Estate Partnerships - Equity in income of real estate partnerships represents the Partnerships share of the
current years partnership income as provided for under the terms of the partnership agreements. As is the case with real estate investments, partnerships net income are not reduced by depreciation or amortization expense. Frequency of
distribution of income is determined by formal agreements or by the executive committee of the partnership. Any cash in excess of the amount of income generated from the underlying joint venture is treated as a return of the Partnerships
equity investment.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | J. | 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 General Partners in the Partnership. The Partnership may be subject to state and local taxes in jurisdictions in which it operates.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-25



---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

For Years Ended December 31, 2010, 2009, and 2008



Note 3: Disclosure of Supplemental Cash Flow Information and Non-Cash Investing and Financing
Activity

Cash paid for interest during the years ended December 31, 2010, 2009, and 2008, was $944,623, $1,618,673,
and $1,878,870, respectively.

Note 4: Fair Value Measurements

FASB authoritative guidance on fair value measurements and disclosures establishes a fair value measurement framework, provides a single definition of fair value and requires expanded disclosure
summarizing fair value measurements. This guidance provides a three-level hierarchy based on the inputs used in the valuation process. The level in the fair values hierarchy within which the fair value measurement falls is determined based on the
lowest level input that is significant to the fair value measurement. The levels of the fair value hierarchy are as follows;

Level 1  Fair value is based on unadjusted quoted prices in active markets that are accessible to the entity for identical assets
or liabilities. These generally provide the most reliable evidence and should be used to measure fair value whenever available.

Level 2  Fair value is based on inputs, other than Level 1 inputs, that are observable for the asset or liability, either directly
or indirectly, for substantially the full term of the asset or liability through corroboration with observable market data.

Level 3  Fair value is based on significant unobservable inputs for the asset or liability. These inputs reflect the entitys
own assumptions about how market participants would price the asset or liability.

For items classified as Level 3, a
reconciliation of the beginning and ending balances, as shown in table 2 below, is also required.

During the year ended
December 31, 2010 and 2009, there were no transfers between Level 1 and Level 2.

Please refer to Note 2D for discussion
of valuation methodology.



F-26



---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

For Years Ended December 31, 2010, 2009, and 2008



Note 4: Fair Value Measurements (continued)



Table 1 below summarizes the assets measured at fair value on a recurring basis and
their respective position in the fair value hierarchy.

Table 1



|                                                          |  |                 |         |  |                                                    |   |         |                                                             |  |   |                                            |  |  |                                                 |   |  |  |   |         | 
|--------------------------------------------------------- |  | --------------- | ------- |  | -------------------------------------------------- | - | ------- | ----------------------------------------------------------- |  | - | ------------------------------------------ |  |  | ----------------------------------------------- | - |  |  | - | ------- | 
|                                                          |  |                 |         |  | (in 000s)                                         |  
|                                                          |  |                 |         |  | Fair value measurements at December 31, 2010 using |  
|Assets:                                                   |  | Cost at12/31/10 |         |  | Amountsmeasured atfair value12/31/2010             |   |         | Quoted pricesin active
markets foridentical assets(level 1) |  |   | Significantotherobservableinputs (level 2) |  |  | Significant    unobservable    inputs (level 3) |  
|                                                          |  |                 |         | 
|                                                          |  |                 |         |  |                                                   
|Real estate and improvements                              |  | $               | 194,141 |  |                                                    | $ | 158,900 |                                                             |  | $ | -                                          |  |  | $                                               | - |  |  | $ | 158,900 | 
|Real estate partnerships and
preferred equity investments |  |                 | 14,166  |  |                                                    |   | 12,591  |                                                             |  |   | -                                          |  |  |                                                 | - |  |  |   | 12,591  | 
|                                                          |  |                 |         | 
|Total                                                     |  | $               | 208,307 |  |                                                    | $ | 171,491 |                                                             |  | $ | -                                          |  |  | $                                               | - |  |  | $ | 171,491 | 
|                                                          |  |                 |         | 
|                                                          |  |                
|                                                          |  |                 |         |  | (in 000s)                                         |  
|                                                          |  |                 |         |  | Fair value measurements at December 31, 2009 using |  
|Assets:                                                   |  | Cost at12/31/09 |         |  | Amounts measured atfair value12/31/2009            |   |         | Quoted pricesin active
markets foridentical assets(level 1) |  |   | Significantotherobservableinputs (level 2) |  |  | Significantunobservableinputs (level 3)         |  
|                                                          |  |                 |         | 
|                                                          |  |                 |         |  |                                                   
|Real estate and improvements                              |  | $               | 211,092 |  |                                                    | $ | 167,100 |                                                             |  | $ | -                                          |  |  | $                                               | - |  |  | $ | 167,100 | 
|Real estate partnerships and
preferred equity investments |  |                 | 14,239  |  |                                                    |   | 10,045  |                                                             |  |   | -                                          |  |  |                                                 | - |  |  |   | 10,045  | 
|                                                          |  |                 |         | 
|Total                                                     |  | $               | 225,331 |  |                                                    | $ | 177,145 |                                                             |  | $ | -                                          |  |  | $                                               | - |  |  | $ | 177,145 | 
|                                                          |  |                 |         | 



F-27



---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

For Years Ended December 31, 2010, 2009, and 2008



Note 4: Fair Value Measurements (continued)



Table 2 below provides a reconciliation of the beginning and ending balances for all
assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the period ended December 31, 2010 and December 31, 2009.

Table 2

(in 000s)

Fair value measurements using significant unobservable inputs

(Level 3)



|                                                                                                     |  |                             |          |  |                                                         |   |         |       |  |   |          | 
|---------------------------------------------------------------------------------------------------- |  | --------------------------- | -------- |  | ------------------------------------------------------- | - | ------- | ----- |  | - | -------- | 
|                                                                                                     |  | Real estate andimprovements |          |  | Real estate partnerships andpreferred equityinvestments |   |         | Total | 
|                                                                                                     |  |                             |          | 
|Beginning balance @ 1/1/10                                                                           |  | $                           | 167,100  |  |                                                         | $ | 10,045  |       |  | $ | 177,145  | 
|                                                                                                     |  |                             |         
|Net gains (losses) realized/unrealized included in earnings (or changes in net assets)               |  |                             | 5,415    |  |                                                         |   | 2,619   |       |  |   | 8,034    | 
|Equity income (losses)/interest income                                                               |  |                             | -        |  |                                                         |   | 1,010   |       |  |   | 1,010    | 
|Acquisitions, issuances and contributions                                                            |  |                             | 3,367    |  |                                                         |   | -       |       |  |   | 3,367    | 
|Disposition, settlements and distributions                                                           |  |                             | (16,982) |  |                                                         |   | (1,083) |       |  |   | (18,065) | 
|                                                                                                     |  |                             |          | 
|Ending balance @ 12/31/10                                                                            |  | $                           | 158,900  |  |                                                         | $ | 12,591  |       |  | $ | 171,491  | 
|                                                                                                     |  |                             |          | 
|                                                                                                     |  |                             |         
|Unrealized gains (losses) for the period relating to level 3 assets still held at the reporting date |  | $                           | 3,088    |  |                                                         | $ | 2,619   |       |  | $ | 5,707    | 
|                                                                                                     |  |                             |          | 
|                                                                                                    
|(in 000s)                                                                                           | 
|Fair value measurements using significant unobservable inputs                                        | 
|(Level 3)                                                                                            | 
|                                                                                                     |  |                             |         
|                                                                                                     |  | Real estate andimprovements |          |  | Real estatepartnerships andpreferred equityinvestments  |   |         | Total | 
|                                                                                                     |  |                             |          | 
|Beginning balance @ 1/1/09                                                                           |  | $                           | 221,196  |  |                                                         | $ | 11,797  |       |  | $ | 232,993  | 
|                                                                                                     |  |                             |         
|Net gains (losses) realized/unrealized included in earnings (or changes in net assets)               |  |                             | (47,473) |  |                                                         |   | (1,667) |       |  |   | (49,140) | 
|Equity income (losses)/interest income                                                               |  |                             | -        |  |                                                         |   | 1,031   |       |  |   | 1,031    | 
|Acquisitions, issuances and contributions                                                            |  |                             | 3,386    |  |                                                         |   | -       |       |  |   | 3,386    | 
|Disposition, settlements and distributions                                                           |  |                             | (10,009) |  |                                                         |   | (1,116) |       |  |   | (11,125) | 
|                                                                                                     |  |                             |          | 
|Ending balance @ 12/31/09                                                                            |  | $                           | 167,100  |  |                                                         | $ | 10,045  |       |  | $ | 177,145  | 
|                                                                                                     |  |                             |          | 
|                                                                                                     |  |                             |         
|Unrealized gains (losses) for the period relating to level 3 assets still held at the reporting date |  | $                           | (43,250) |  |                                                         | $ | (1,667) |       |  | $ | (44,917) | 
|                                                                                                     |  |                             |          | 



F-28



---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

For Years Ended December 31, 2010, 2009, and 2008



Note 5: Investment Level Debt

Investment level debt includes mortgage loans payable as summarized below (in 000s):



|                                                                 |  |                                    |        |  |                                                                    |   |                |                                    |  |   |                    |  |               |            |  |         |      |  |  |        
|---------------------------------------------------------------- |  | ---------------------------------- | ------ |  | ------------------------------------------------------------------ | - | -------------- | ---------------------------------- |  | - | ------------------ |  | ------------- | ---------- |  | ------- | ---- |  |  | -------
|                                                                 |  | As of 12/31/10                     |        |  | As of 12/31/09                                                     |   | As of 12/31/10
|                                                                 |  | 100% Principal Balance Outstanding |        |  | (Unaudited) Partnerships Share of
Principal Balance Outstanding 1 |   |                | 100% Principal Balance Outstanding |  |   | Interest
Rate 2, 3 |  | Maturity
Date |            |  | Terms 4
|                                                                
|Mortgages of Wholly Owned Properties & Consolidated Partnerships
|Hampton, VA                                                      |  | $                                  | 6,191  |  |                                                                    | $ | 6,191          |                                    |  | $ | 6,756              |  |               | 6.75%      |  |         | 2018 |  |  | PP, P&I
|Ocean City, MD                                                   |  |                                    | 15,385 |  |                                                                    |   | 12,280         |                                    |  |   | 15,071             |  |               | Libor +225 |  |         | 2011 |  |  | I      
|Raleigh, NC                                                      |  |                                    | 9,000  |  |                                                                    |   | 9,000          |                                    |  |   | 9,000              |  |               | DMBS +142  |  |         | 2013 |  |  | I      
|Unamortized Premium (Discount)                                   |  |                                    | (10)   |  |                                                                    |   | (10)           |                                    |  |   | (2)                |  |               |            |  |         |      |  |  |        
|                                                                 |  |                                    |        |  |                                                                    |   |                |                                    |  |   |                    |  |               |            |  |        
|Total                                                            |  | $                                  | 30,566 |  |                                                                    | $ | 27,461         |                                    |  | $ | 30,825             |  |               |            |  |         |      |  |  |        
|                                                                 |  |                                    |        |  |                                                                    |   |                |                                    |  |   |                    |  |               |            |  |        



|1. | Represents the Partnerships interest in the loan based upon the estimated percentage of net assets which would be distributed to the
Partnership if the partnership were liquidated at December 31, 2010. It does not represent the Partnerships legal obligation.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2. | The Partnerships weighted average interest rate was 3.68 % and 3.63% at December 31, 2010 and 2009, respectively. The weighted
average interest rates were calculated using the Partnerships annualized interest expense for each loan (derived using the same percentage as that in (1) above) divided by the Partnerships share of total debt.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. | At December 31, 2010, the 30 day LIBOR is 0.30281% and the DMBS is 1.69%.
|-- | -------------------------------------------------------------------------

|4. | Loan Terms PP=Prepayment penalties applicable to loan, I=Interest only, P&I=Principal and Interest
|-- | --------------------------------------------------------------------------------------------------



F-29



---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

For Years Ended December 31, 2010, 2009, and 2008



Note 5: Investment Level Debt (continued)



As of December 31, 2010 principal amounts of mortgage loans payable on wholly owned
properties and consolidated partnerships are payable as follows:

|                                                         |  |            |        | 
|-------------------------------------------------------- |  | ---------- | ------ | 
|Year Ending
December 31,                                 |  | (in 000s) |       
|2011                                                     |  |            | 15,989 | 
|2012                                                     |  |            | 646    | 
|2013                                                     |  |            | 9,691  | 
|2014                                                     |  |            | 740    | 
|2015                                                     |  |            | 791    | 
|Thereafter                                               |  |            | 2,719  | 
|                                                         |  |            |        | 
|Total Principal Balance Outstanding                      |  | $          | 30,576 | 
|Premium (Discount)                                       |  |            | (10)   | 
|                                                         |  |            |        | 
|Principal Balance Outstanding, net of premium (discount) |  | $          | 30,566 | 
|                                                         |  |            |        | 

The mortgage loans payable of wholly owned properties and consolidated partnerships are secured by real
estate investments with an estimated fair value of $59.9 million.

Based on borrowing rates available to the Partnership at
December 31, 2010 for loans with similar terms and average maturities, the Partnerships mortgages on wholly owned properties and consolidated partnerships have an estimated fair value of approximately $31 million, and a carrying value of $31
million. Different assumptions or changes in future market conditions could significantly affect estimated fair value.

Note 6: Financing,
Covenant, and Repayment Risks

In the normal course of business, the Partnership enters into loan agreements with certain
lenders to finance its real estate investment transactions. Unfavorable economic conditions could increase related borrowing costs, limit access to the capital markets or result in a decision by lenders not to extend credit to the Partnership. There
is no guarantee that the Partnerships borrowing arrangements or ability to obtain leverage will continue to be available, or if available, will be available on terms and conditions acceptable to the Partnership. Further, these loan agreements
contain, among other conditions, events of default and various covenants and representations. In the normal course of business, the Partnership may be in the process of renegotiating terms for loans outstanding that have passed their maturity dates.
At December 31, 2010 the Partnership had no outstanding matured loans.

A decline in market value of the Partnerships
assets may also have particular adverse consequences in instances where the Partnership borrowed money based on the fair value of specific assets. A decrease in market value of these assets may result in the lender requiring the Partnership to post
additional collateral or otherwise repay these loans.

In the event the Partnerships current investment obligations are
not refinanced or extended when they become due and/or the Partnership is required to repay such borrowings and obligations, management anticipates that the repayment of these obligations will be provided by operating cash flow, new debt
refinancing, and real estate investment sales.



F-30



---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

For Years Ended December 31, 2010, 2009, and 2008



Note 7: Concentration of Risk on Real Estate Investments

Concentration of risk on real estate investments represents the risk associated with investments that are concentrated in certain
geographic regions and industries. The Partnership mitigates this risk by diversifying its investments in various regions and different types of real estate investments. Please refer to the Schedule of Investments for the Partnerships
diversification on the types of real estate investments.

At December 31, 2010, the Partnership had real estate
investments located throughout the United States. The diversification of the Partnerships holdings based on the estimated fair values and established NCREIF regions is as follows:



|                   |  |                                        |         |  |          |  |         | 
|------------------ |  | -------------------------------------- | ------- |  | -------- |  | ------- | 
|Region             |  | Estimated Fair Value        (in 000s) |         |  | Region % | 
|                   |  |                                        |         |  |          |  |         | 
|East North Central |  | $                                      | 9,276   |  |          |  | 5.41%   | 
|Mideast            |  |                                        | 90,675  |  |          |  | 52.87%  | 
|Mountain           |  |                                        | 1,505   |  |          |  | 0.88%   | 
|Northeast          |  |                                        | 259     |  |          |  | 0.15%   | 
|Pacific            |  |                                        | 21,341  |  |          |  | 12.44%  | 
|Southeast          |  |                                        | 21,982  |  |          |  | 12.82%  | 
|Southwest          |  |                                        | 26,419  |  |          |  | 15.41%  | 
|West North Central |  |                                        | 34      |  |          |  | 0.02%   | 
|                   |  |                                        |         |  |          |  |         | 
|                   |  |                                       
|Total              |  | $                                      | 171,491 |  |          |  | 100.00% | 
|                   |  |                                        |         |  |          |  |         | 

The allocations above are based on (1) 100% of the estimated fair value of wholly-owned properties and
consolidated joint ventures, and (2) the estimated fair value of the Partnerships preferred equity investment.

Note 8: 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 January 1, 2011 to December 31, 2025. At December 31, 2010, the aggregate future minimum base rental payments under non-cancelable operating leases for wholly owned
and consolidated joint venture properties by year are as follows (excluding apartment activities):



|                         |  |            |        | 
|------------------------ |  | ---------- | ------ | 
|Year Ending
December 31, |  | (in 000s) |       
|                         |  |            |        | 
|2011                     |  | $          | 10,845 | 
|2012                     |  |            | 8,965  | 
|2013                     |  |            | 7,508  | 
|2014                     |  |            | 6,731  | 
|2015                     |  |            | 5,301  | 
|Thereafter               |  |            | 14,008 | 
|                         |  |            |        | 
|                         | 
|Total                    |  | $          | 53,358 | 
|                         |  |            |        | 



F-31



---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

For Years Ended December 31, 2010, 2009, and 2008



Note 9: Commitments and Contingencies

In 1986, Prudential committed to fund up to $100 million to enable the Partnership to acquire real estate investments. Contributions to
the Partnership under this commitment have been utilized for property acquisitions, and were to be returned to Prudential on an ongoing basis from contract owners net contributions and other available cash. The amount of the commitment has
been reduced by $10 million for every $100 million in current value net assets of the Partnership. As of December 31, 2010, the cost basis of the General Partners equity was $44.2 million. Prudential terminated this commitment on
December 31, 2002.

The Partnership is subject to various legal proceedings and claims arising in the ordinary course of
business. These matters are generally covered by insurance. In the opinion of Partnerships management, the outcome of such matters will not have a significant effect on the financial position of the Partnership.

Note 10: Related Party Transactions

Pursuant to an investment management agreement, PIM 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, 2010, 2009, and 2008 management fees incurred by the Partnership were $2.3 million, $2.6 million, and $3.4 million for each of the years, respectively. The Partnership also reimburses PIM for certain administrative
services rendered by PIM. The amounts incurred for the years ended December 31, 2010, 2009, and 2008 were $53,630, $53,630, and $53,630; respectively, and are classified as administrative expenses in the Consolidated Statements of Operations.

During the years ended December 31, 2010, 2009, and 2008, the Partnership made the following distributions to the
General Partners:



|                        |  |  |  |  |  |         |        | 
|----------------------- |  |  |  |  |  | ------- | ------ | 
|Year Ended December 31, |  |  |  |  |  | (000s) |       
|2010                    |  |  |  |  |  | $       | 17,500 | 
|2009                    |  |  |  |  |  | $       | 8,000  | 
|2008                    |  |  |  |  |  | $       | -      | 



F-32



---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

For Years Ended December 31, 2010, 2009, and 2008



Note 11: Financial Highlights



|                                                                                                                       |  |                                                                                                                                           |        |                                          |  |   |         |  |  |      |         |  |      |   |        |      |  |   |        |  |  | 
|---------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------- | ------ | ---------------------------------------- |  | - | ------- |  |  | ---- | ------- |  | ---- | - | ------ | ---- |  | - | ------ |  |  | 
|                                                                                                                       |  |                                                                                                                                           |        | For The Twelve Months Ended December 31, | 
|                                                                                                                       |  |                                                                                                                                           |        | 2010                                     |  |   | 2009    |  |  | 2008 |         |  | 2007 |   |        | 2006 | 
|Per Share (Unit) Operating Performance:                                                                                |  |                                                                                                                                           |        |                                          |  |   |         |  |  |      |         |  |      |   |        |      |  |   |        | 
|Net Asset Value attributable to general partners controlling interest, beginning of period                            |  | $                                                                                                                                         | 25.88  |                                          |  | $ | 31.65   |  |  | $    | 36.55   |  |      | $ | 33.87  |      |  | $ | 29.59  | 
|Income From Investment Operations:                                                                                     |  |                                                                                                                                           |        |                                          |  |   |         |  |  |      |         |  |      |   |        |      |  |   |        | 
|Net investment income attributable to general partners controlling interest, before management fee                    |  |                                                                                                                                           | 1.66   |                                          |  |   | 1.49    |  |  |      | 2.15    |  |      |   | 2.37   |      |  |   | 2.07   | 
|Investment Management fee attributable to general partners controlling interest                                       |  |                                                                                                                                           | (0.35) |                                          |  |   | (0.39)  |  |  |      | (0.51)  |  |      |   | (0.50) |      |  |   | (0.45) | 
|Net realized and unrealized gain (loss) on investments attributable to general partners controlling
interest          |  |                                                                                                                                           | 1.19   |                                          |  |   | (6.87)  |  |  |      | (6.54)  |  |      |   | 0.81   |      |  |   | 2.66   | 
|                                                                                                                       |  |                                                                                                                                           |        |                                          |  |   |         |  |  |      |         |  |      |   |        |      |  |   |        |  |  | 
|Net Increase (decrease) in Net Assets Resulting from Operations attributable to general partners controlling
interest |  |                                                                                                                                           | 2.50   |                                          |  |   | (5.77)  |  |  |      | (4.90)  |  |      |   | 2.68   |      |  |   | 4.28   | 
|                                                                                                                       |  |                                                                                                                                           |        |                                          |  |   |         |  |  |      |         |  |      |   |        |      |  |   |        |  |  | 
|                                                                                                                       |  |                                                                                                                                           |        |                                          | 
|Net Asset Value attributable to general partners controlling interest, end of period                                  |  | $                                                                                                                                         | 28.38  |                                          |  | $ | 25.88   |  |  | $    | 31.65   |  |      | $ | 36.55  |      |  | $ | 33.87  | 
|                                                                                                                       |  |                                                                                                                                           |        |                                          |  |   |         |  |  |      |         |  |      |   |        |      |  |   |        |  |  | 
|                                                                                                                       |  |                                                                                                                                           |        |                                          | 
|Total Return attributable to general partners controlling interest, before Management Fee:                            |  |                                                                                                                                           | 10.96% |                                          |  |   | -17.04% |  |  |      | -12.14% |  |      |   | 9.44%  |      |  |   | 16.03% | 
|Total Return attributable to general partners controlling interest, after Management
Fee (a):                         |  |                                                                                                                                           | 9.59%  |                                          |  |   | -18.24% |  |  |      | -13.40% |  |      |   | 7.91%  |      |  |   | 14.46% | 
|Ratios/Supplemental Data:                                                                                              |  |                                                                                                                                           |        |                                          |  |   |         |  |  |      |         |  |      |   |        |      |  |   |        | 
|Net Assets attributable to general partners controlling interest, end of period (in millions)                         |  | $                                                                                                                                         | 165    |                                          |  | $ | 167     |  |  | $    | 214     |  |      | $ | 247    |      |  | $ | 229    | 
|Ratios to average net assets for the period ended (b):                                                                 |  |                                                                                                                                           |        |                                          |  |   |         |  |  |      |         |  |      |   |        |      |  |   |        | 
|Total Portfolio Level Expenses                                                                                         |  |                                                                                                                                           | 1.63%  |                                          |  |   | 1.60%   |  |  |      | 1.44%   |  |      |   | 1.55%  |      |  |   | 1.51%  | 
|Net Investment Income, before Management Fee                                                                           |  |                                                                                                                                           | 6.15%  |                                          |  |   | 5.29%   |  |  |      | 5.87%   |  |      |   | 6.76%  |      |  |   | 6.58%  | 
|                                                                                                                       |  |                                                                                                                                           |        |                                          |  |  
|(a)                                                                                                                    |  | Total Return, after management fee is calculated by geometrically linking quarterly returns which are calculated using the formula below: |        |                                          |  |   |         |  |  |      |         |  |      |   |        |      |  |   |        |  |  | 
|                                                                                                                       |  |                                                                                                                                           |        |                                          |  |  
|                                                                                                                       |  | Net Investment Income + Net Realized and Unrealized Gains/(Losses)                                                                        |        |                                          |  |   |         |  |  |      |         |  |      |   |        |      |  |   |        |  |  | 
|                                                                                                                       |  | Beg. Net Asset Value + Time Weighted Contributions - Time Weighted Distributions                                                          |       
|                                                                                                                       |  |                                                                                                                                           |        |                                          |  |  
|(b)                                                                                                                    |  | Average net assets are based on beginning of quarter net assets.                                                                          |        |                                          |  |   |         |  |  |      |         |  |      |   |        |      |  |   |        |  |  | 



F-33



---

|                                       |     |  |  |                                                    |            |  |      |              |  |      |                                  |              |                                                            |                                           |      |  |             |             |                                      |  |            |                        |  |     |           |  |            |       |  |  |                     |  |  |               |              |  |  |  |             |     |  |  |      |  |  |           
|-------------------------------------- | --- |  |  | -------------------------------------------------- | ---------- |  | ---- | ------------ |  | ---- | -------------------------------- | ------------ | ---------------------------------------------------------- | ----------------------------------------- | ---- |  | ----------- | ----------- | ------------------------------------ |  | ---------- | ---------------------- |  | --- | --------- |  | ---------- | ----- |  |  | ------------------- |  |  | ------------- | ------------ |  |  |  | ----------- | --- |  |  | ---- |  |  | ----------
|                                       |     |  |  |                                                    |            |  |      |              |  |      |                                  |              | THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP |                                           |      | 
|                                       |     |  |  |                                                    |            |  |      |              |  |      |                                  |              | SCHEDULE III - REAL ESTATE OWNED: PROPERTIES               |                                           |      | 
|                                       |     |  |  |                                                    |            |  |      |              |  |      | DECEMBER 31, 2010                |              |                                                            |                                          
|                                       |     |  |  |                                                    |            |  |      |             
|                                       |     |  |  |                                                    |            |  |      |              |  |      | Initial Costs to the Partnership |              |                                                            | CostsCapitalizedSubsequent 
toAcquisition |      |  |             |             | Gross Amount at Costat Close of Year
|Description                            |     |  |  | Encumbrancesat 12/31/10                            |            |  |      |              |  |      | Land                             |              |                                                            | Building &Improvements                    |      |  |             |             | Land                                 |  |            | Building &Improvements |  |     | 2010Sales |  |            | Total |  |  | Year ofConstruction |  |  | Date
Acquired
|                                       |     |  |  |                                                    |            |  |      |              |  |      |                                  |              |                                                            |                                          
|Properties:                            |     |  |  |                                                    |            |  |      |              |  |      |                                  |              |                                                            |                                           |      |  |             |             |                                      |  |            |                        |  |     |           |  |            |       |  |  |                     |  |  |               |              |  |  |  |             |     |  |  |      |  |  |           
|                                       |     |  |  |                                                    |            |  |      |              |  |      |                                  |              |                                                            |                                          
|Office Building Lisle, IL              |     |  |  |                                                    | None       |  |      |              |  |      |                                  |              | 1,780,000                                                  |                                           |      |  | 15,743,881  |             |                                      |  | 8,815,803  |                        |  |     |           |  | 1,949,206  |       |  |  | 24,390,478          |  |  |               |              |  |  |  | 26,339,685  |     |  |  | 1985 |  |  | Apr., 1988
|                                       |     |  |  |                                                    |            |  |      |              |  |      |                                  |              |                                                            |                                          
|Garden Apartments Atlanta, GA          |     |  |  |                                                    | -          |  |      |              |  |      |                                  |              | 3,631,212                                                  |                                           |      |  | 11,168,904  |             |                                      |  | 5,566,277  |                        |  | (b) |           |  | 5,190,227  |       |  |  | 15,176,166          |  |  |               | (20,366,393) |  |  |  | -           |     |  |  | 1987 |  |  | Apr., 1988
|                                       |     |  |  |                                                    |            |  |      |              |  |      |                                  |              |                                                            |                                          
|Garden Apartments Raleigh, NC          |     |  |  |                                                    | 8,989,762  |  |      | (c)          |  |      |                                  |              | 1,623,146                                                  |                                           |      |  | 14,135,553  |             |                                      |  | 890,383    |                        |  |     |           |  | 1,785,632  |       |  |  | 14,863,450          |  |  |               |              |  |  |  | 16,649,083  |     |  |  | 1995 |  |  | Jun., 1995
|                                       |     |  |  |                                                    |            |  |      |              |  |      |                                  |              |                                                            |                                          
|Hotel Lake Oswego, OR                  |     |  |  |                                                    | -          |  |      |              |  |      |                                  |              | 1,500,000                                                  |                                           |      |  | 6,508,729   |             |                                      |  | 2,848,244  |                        |  |     |           |  | 1,500,000  |       |  |  | 9,356,973           |  |  |               |              |  |  |  | 10,856,973  |     |  |  | 1989 |  |  | Dec., 2003
|                                       |     |  |  |                                                    |            |  |      |              |  |      |                                  |              |                                                            |                                          
|Office Building Brentwood, TN          |     |  |  |                                                    | None       |  |      |              |  |      |                                  |              | 1,797,000                                                  |                                           |      |  | 6,588,451   |             |                                      |  | 6,200,218  |                        |  |     |           |  | 1,855,339  |       |  |  | 12,730,330          |  |  |               |              |  |  |  | 14,585,669  |     |  |  | 1982 |  |  | Oct., 1995
|                                       |     |  |  |                                                    |            |  |      |              |  |      |                                  |              |                                                            |                                          
|Office Building Beaverton, OR          |     |  |  |                                                    | None       |  |      |              |  |      |                                  |              | 816,415                                                    |                                           |      |  | 9,897,307   |             |                                      |  | 2,223,404  |                        |  |     |           |  | 845,887    |       |  |  | 12,091,239          |  |  |               |              |  |  |  | 12,937,126  |     |  |  | 1995 |  |  | Dec., 1996
|                                       |     |  |  |                                                    |            |  |      |              |  |      |                                  |              |                                                            |                                          
|Office Complex Brentwood, TN           |     |  |  |                                                    | None       |  |      |              |  |      |                                  |              | 2,425,000                                                  |                                           |      |  | 7,063,755   |             |                                      |  | 3,365,861  |                        |  |     |           |  | 2,463,601  |       |  |  | 10,391,015          |  |  |               |              |  |  |  | 12,854,615  |     |  |  | 1987 |  |  | Oct., 1997
|                                       |     |  |  |                                                    |            |  |      |              |  |      |                                  |              |                                                            |                                          
|Retail Shopping Center Hampton, VA     |     |  |  |                                                    | 6,191,147  |  |      |              |  |      |                                  |              | 2,339,100                                                  |                                           |      |  | 12,767,956  |             |                                      |  | 3,090,037  |                        |  |     |           |  | 4,839,418  |       |  |  | 13,357,675          |  |  |               |              |  |  |  | 18,197,093  |     |  |  | 1998 |  |  | May, 2001 
|                                       |     |  |  |                                                    |            |  |      |              |  |      |                                  |              |                                                            |                                          
|Retail Shopping Center Westminster, MD |     |  |  |                                                    | -          |  |      |              |  |      |                                  |              | 3,031,735                                                  |                                           |      |  | 9,326,605   |             |                                      |  | 2,710,098  |                        |  |     |           |  | 3,031,735  |       |  |  | 12,036,703          |  |  |               |              |  |  |  | 15,068,438  |     |  |  | 2005 |  |  | June, 2006
|                                       |     |  |  |                                                    |            |  |      |              |  |      |                                  |              |                                                            |                                          
|Retail Shopping Center Ocean City,
MD  |     |  |  |                                                    | 15,384,707 |  |      |              |  |      |                                  |              | 1,517,099                                                  |                                           |      |  | 8,495,039   |             |                                      |  | 13,695,347 |                        |  |     |           |  | 1,517,099  |       |  |  | 22,190,386          |  |  |               |              |  |  |  | 23,707,485  |     |  |  | 1986 |  |  | Nov., 2002
|                                       |     |  |  |                                                    |            |  |      |              |  |      |                                  |              |                                                            |                                          
|Garden Apartments Austin, TX           |     |  |  |                                                    | -          |  |      |              |  |      |                                  |              | 2,577,097                                                  |                                           |      |  | 20,125,169  |             |                                      |  | 152,112    |                        |  |     |           |  | 2,577,097  |       |  |  | 20,277,281          |  |  |               |              |  |  |  | 22,854,378  |     |  |  | 2007 |  |  | May, 2007 
|                                       |     |  |  |                                                    |            |  |      |              |  |      |                                  |              |                                                            |                                          
|Retail Shopping Center Dunn,
NC        |     |  |  |                                                    | None       |  |      |              |  |      |                                  |              | 586,500                                                    |                                           |      |  | 5,372,344   |             |                                      |  | 280,852    |                        |  |     |           |  | 385,559    |       |  |  | 5,854,137           |  |  |               | -            |  |  |  | 6,239,696   |     |  |  | 1984 |  |  | Aug., 2007
|                                       |     |  |  |                                                    |            |  |      |              |  |      |                                  |              |                                                            |                                          
|Garden Apartments Charlotte,
NC        |     |  |  |                                                    | -          |  |      |              |  |      |                                  |              | 1,350,000                                                  |                                           |      |  | 12,184,750  |             |                                      |  | 315,951    |                        |  |     |           |  | 1,355,125  |       |  |  | 12,495,576          |  |  |               |              |  |  |  | 13,850,701  |     |  |  | 1998 |  |  | Sep., 2007
|                                       |     |  |  |                                                    |            |  |      |              |  |      |                                  |              |                                                            |                                           |      |  |             |             |                                      |  |            |                        |  |     |           |  |            |       |  |  |                     |  |  |               |              |  |  |  |             |     |  |  |      |  |  |           
|                                       |     |  |  |                                                    | 30,565,616 |  |      |              |  |      |                                  |              | 24,974,304                                                 |                                           |      |  | 139,378,443 |             |                                      |  | 50,154,587 |                        |  |     |           |  | 29,295,925 |       |  |  | 185,211,409         |  |  |               | (20,366,393) |  |  |  | 194,140,941 | (a) |  |  |      |  |  |           
|                                       |     |  |  |                                                    |            |  |      |              |  |      |                                  |              |                                                            |                                           |      |  |             |             |                                      |  |            |                        |  |     |           |  |            |       |  |  |                     |  |  |               |              |  |  |  |             |     |  |  |      |  |  |           
|                                       |     |  |  |                                                    |            |  |     
|                                       |     |  |  |                                                    |            |  | 2010 |              |  | 2009 |                                  |              |                                                            |                                           | 2008 |  |             |            
|                                       | (a) |  |  | Balance at beginning of year                       |            |  |      | 211,091,543  |  |      |                                  | 245,808,214  |                                                            |                                           |      |  |             | 236,466,116 |                                      | 
|                                       |     |  |  | Additions:                                         |            |  |      |              |  |      |                                  |              |                                                            |                                           |      |  |             |             |                                      | 
|                                       |     |  |  | Acquisitions                                       |            |  |      | -            |  |      |                                  | -            |                                                            |                                           |      |  |             | -           |                                      | 
|                                       |     |  |  | Improvements, etc.                                 |            |  |      | 3,415,791    |  |      |                                  | 3,385,840    |                                                            |                                           |      |  |             | 9,936,151   |                                      | 
|                                       |     |  |  | Deletions:                                         |            |  |      |              |  |      |                                  |              |                                                            |                                           |      |  |             |             |                                      | 
|                                       |     |  |  | Sale                                               |            |  |      | (20,366,393) |  |      |                                  | (38,102,511) |                                                            |                                           |      |  |             | -           |                                      | 
|                                       |     |  |  | Write off of uncollectibleinterest receivable      |            |  |      | -            |  |      |                                  | -            |                                                            |                                           |      |  |             | (594,053)   |                                      | 
|                                       |     |  |  |                                                    |            |  |      |              |  |      |                                  |              |                                                            |                                           |      |  |             |             |                                      |  |            |                        |  |     |           |  |            |      
|                                       |     |  |  | Balance at end of year                             |            |  |      | 194,140,941  |  |      |                                  | 211,091,543  |                                                            |                                           |      |  |             | 245,808,214 |                                      | 
|                                       |     |  |  |                                                    |            |  |      |              |  |      |                                  |              |                                                            |                                           |      |  |             |             |                                      |  |            |                        |  |     |           |  |            |      
|                                       | (b) |  |  | Net of $1,000,000 settlementreceived from lawsuit. |            |  |      |              |  |      |                                  |              |                                                            |                                           |      |  |             |             |                                      | 
|                                       | (c) |  |  | Net of an unamortized discountof $10,237           |            |  |      |              |  |      |                                  |              |                                                            |                                           |      |  |             |             |                                      | 



F-34