##### 



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-K
 (Mark One)þANNUAL
    REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2007ORoTRANSITION
    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
 o þ
 o þ
 þ o
 o
  Large Accelerated
filer o
    
    Accelerated filer o
    
    Non-accelerated
filer þ
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ
 DOCUMENTS INCORPORATED BY REFERENCE




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THE
PRUDENTIAL VARIABLE CONTRACTREAL
PROPERTY ACCOUNT
(Registrant)
 INDEX
 Item
    
    
    
    PageNo.
    
    
    
    No.Cover Page
Index
    
    
    2Forward-Looking Statement Disclosure
    
    
    3PART I1.
    
    Business
    
    
    41A.
    
    Risk Factors
    
    
    61B.
    
    Unresolved Staff Comments
    
    
    62.
    
    Properties
    
    
    63.
    
    Legal Proceedings
    
    
    64.
    
    Submission of Matters to a Vote of Security Holders
    
    
    6PART II5.
    
    Market for Registrants Common Equity, Related
Stockholder Matters and Issuer Purchases of Equity
Securities
    
    
    76.
    
    Selected Financial Data
    
    
    77.
    
    Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    87A.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    168.
    
    Financial Statements and Supplementary Data
    
    
    179.
    
    Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
    
    
    179A.
    
    Controls and Procedures
    
    
    179B.
    
    Other Information
    
    
    17PART III10.
    
    Directors, Executive Officers and Corporate Governance
    
    
    1811.
    
    Executive Compensation
    
    
    1912.
    
    Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters
    
    
    1913.
    
    Certain Relationships and Related Transactions, and
Director Independence
    
    
    2014.
    
    Principal Accountant Fees and Services
    
    
    20PART IV15.
    
    Exhibits and Financial Statement Schedules
    
    
    21Exhibit Index
    
    
    21Signatures
    
    
    23
 2




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##### 





Forward-Looking Statement Disclosure
  3




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##### 





PART I
 Item 1. Business
 4




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MARKET CONDITIONS
  Debt Market
  Public Real Estate Securities
  Property Markets
 Office
 Industrial
 Residential
 Retail
 5




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Hotel
 Item 1A. Risk Factors
    Item 1B. Unresolved Staff Comments
  Item 2. Properties
  Item 3. Legal Proceedings
  Item 4. Submission of Matters to a Vote of Security Holders
 6




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##### 





PART II
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
   Item 6. Selected Financial Data
  RESULTS OF OPERATIONS:
 Year Ended December 31,2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Total Investment Income
    
    $
    31,700,063
    
    
    $
    28,623,487
    
    
    $
    28,644,271
    
    
    $
    29,076,163
    
    
    $
    27,060,494Net Investment Income
    
    $
    12,663,580
    
    
    $
    11,161,728
    
    
    $
    9,219,171
    
    
    $
    7,799,606
    
    
    $
    10,613,409Net Realized and
Unrealized Gain (Loss) on
Real Estate Investments
    
    
    5,453,595
    
    
    
    18,352,005
    
    
    
    15,460,619
    
    
    
    3,280,394
    
    
    
    (6,467,364
    )Net Increase in Net Assets
Resulting From Operations
    
    $
    18,117,175
    
    
    $
    29,513,733
    
    
    $
    24,679,790
    
    
    $
    11,080,000
    
    
    $
    4,146,045
 FINANCIAL POSITION:
 Year Ended December 31,2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Total Assets
    
    $
    290,166,898
    
    
    $
    272,136,819
    
    
    $
    246,015,115
    
    
    $
    240,575,611
    
    
    $
    235,627,852Long Term Lease Obligation
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Investment Level Debt
    
    $
    32,121,712
    
    
    $
    32,710,488
    
    
    $
    33,195,607
    
    
    $
    43,773,767
    
    
    $
    43,934,494
 7




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##### 





Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
   (a) Liquidity and Capital Resources
 8




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(b) Results of Operations
  Net Investment Income Overview
  Valuation Overview
 9




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##### 





Twelve Months EndedDecember 31,2007
    
    
    2006Net Investment Income:Office properties
    
    $
    3,945,096
    
    
    $
    3,407,082Apartment properties
    
    
    2,119,681
    
    
    
    1,059,134Retail properties
    
    
    6,998,954
    
    
    
    6,128,671Industrial property
    
    
    49,279
    
    
    
    773,668Hotel property
    
    
    1,343,200
    
    
    
    1,288,716Land
    
    
    
    
    
    
    (36,582
    )Other (including interest income,
investment mgt fee, etc.)
    
    
    (1,792,630
    )
    
    
    (1,458,961
    )Total Net Investment Income
    
    $
    12,663,580
    
    
    $
    11,161,728Net Realized Gain (Loss) on Real
Estate Investments:Apartment properties
    
    
    
    
    
    
    70,689Retail properties
    
    
    323,649
    
    
    
    Land
    
    
    
    
    
    
    (2,919
    )Industrial property
    
    
    345,832
    
    
    
    Total Net Realized Gain (Loss)
on Real Estate Investments
    
    
    669,481
    
    
    
    67,770Net Unrealized Gain (Loss) on Real
Estate Investments:Office properties
    
    
    1,967,086
    
    
    
    2,514,348Apartment properties
    
    
    3,123,154
    
    
    
    3,588,692Retail properties
    
    
    (2,716,050
    )
    
    
    6,265,806Industrial property
    
    
    
    
    
    
    2,132,560Hotel property
    
    
    2,409,924
    
    
    
    3,782,829Total Net Unrealized Gain (Loss)
on Real Estate Investments
    
    
    4,784,114
    
    
    
    18,284,235Net Realized and Unrealized Gain
(Loss) on Real Estate
Investments
    
    $
    5,453,595
    
    
    $
    18,352,005
 10




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##### 





OFFICE PROPERTIES
 Net Investment
    
    
    Net Investment
    
    
    Unrealized
    
    
    UnrealizedIncome/(Loss)
    
    
    Income/(Loss)
    
    
    Gain/(Loss)
    
    
    Gain/(Loss)
    
    
    Occupancy
    
    
    OccupancyYear
Ended December 31,
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006PropertyLisle, IL
    
    $
    650,916
    
    
    $
    376,939
    
    
    $
    804,870
    
    
    $
    (644,356
    )
    
    
    67%
    
    
    
    38%Brentwood, TN
    
    
    1,153,443
    
    
    
    1,084,255
    
    
    
    9,918
    
    
    
    69,832
    
    
    
    100%
    
    
    
    100%Oakbrook Terrace, IL (1)
    
    
    
    
    
    
    1,323
    
    
    
    
    
    
    
    
    
    
    
    N/A
    
    
    
    N/ABeaverton, OR
    
    
    1,093,305
    
    
    
    940,713
    
    
    
    990,238
    
    
    
    1,888,872
    
    
    
    88%
    
    
    
    79%Brentwood, TN
    
    
    1,047,432
    
    
    
    1,003,852
    
    
    
    162,060
    
    
    
    1,200,000
    
    
    
    100%
    
    
    
    100%$
    3,945,096
    
    
    $
    3,407,082
    
    
    $
    1,967,086
    
    
    $
    2,514,348
 
 (1)
    
    The Oakbrook Terrace, Illinois office property was sold on June 8, 2005 but
certain post-closing adjustments were recognized in the year ended December 31, 2006. Net Investment Income
  Unrealized Gain/(Loss)
  11




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APARTMENT PROPERTIES
 Realized /Net Investment
    
    
    Net Investment
    
    
    Unrealized
    
    
    UnrealizedIncome/(Loss)
    
    
    Income/(Loss)
    
    
    Gain/(Loss)
    
    
    Gain/(Loss)
    
    
    Occupancy
    
    
    OccupancyYear
Ended December 31,
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006PropertyAtlanta, GA
    
    $
    447,290
    
    
    $
    505,136
    
    
    $
    (530,277
    )
    
    $
    2,507,734
    
    
    
    92%
    
    
    
    90%Raleigh, NC
    
    
    613,122
    
    
    
    589,289
    
    
    
    (687,270
    )
    
    
    1,080,958
    
    
    
    94%
    
    
    
    92%Jacksonville, FL (1)
    
    
    17,342
    
    
    
    (25,126
    )
    
    
    
    
    
    
    70,520
    
    
    
    N/A
    
    
    
    N/AGresham/Salem, OR (2)
    
    
    
    
    
    
    (10,165
    )
    
    
    
    
    
    
    169
    
    
    
    N/A
    
    
    
    N/AAustin, TX (3)
    
    
    860,746
    
    
    
    
    
    
    
    4,376,151
    
    
    
    
    
    
    
    92%
    
    
    
    N/ACharlotte,
NC (4)
    
    
    181,181
    
    
    
    
    
    
    
    (35,450
    )
    
    
    
    
    
    
    87%
    
    
    
    N/A$
    2,119,681
    
    
    $
    1,059,134
    
    
    $
    3,123,154
    
    
    $
    3,659,381
 
 (1)
    
    The Jacksonville, Florida apartment property was sold on November 30, 2005 but
certain post-closing adjustments were recognized during the year ended December 31, 2007 and 2006.(2)
    
    The Gresham, Oregon and Salem, Oregon apartment properties were sold on August 10,
2005 and March 10, 2005, respectively, but certain post-closing adjustments were recognized during
the year ended December 31, 2006.(3)
    
    Net investment income for the year ended December 31, 2007 reflects partial
period results for the Austin, Texas apartment property that was acquired on May 8, 2007.(4)
    
    Net investment income for the year ended December 31, 2007 reflects partial period
results for the Charlotte, North Carolina apartment property that was acquired on
September 6, 2007. Net Investment Income
  Total Realized and Unrealized Gain/(Loss)
  12




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##### 





RETAIL PROPERTIES
 Realized /Net Investment
    
    
    Net Investment
    
    
    Unrealized
    
    
    UnrealizedIncome/(Loss)
    
    
    Income/(Loss)
    
    
    Gain/(Loss)
    
    
    Gain/(Loss)
    
    
    Occupancy
    
    
    OccupancyYear
Ended December 31,
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006PropertyRoswell, GA
    
    $
    2,072,194
    
    
    $
    2,096,974
    
    
    $
    (3,807,895
    )
    
    $
    1,071,439
    
    
    
    82%
    
    
    
    93%Kansas City, KS; MO (1)
    
    
    158,664
    
    
    
    (34,810
    )
    
    
    323,649
    
    
    
    (164,205
    )
    
    
    N/A
    
    
    
    90%Hampton, VA
    
    
    1,299,715
    
    
    
    1,307,686
    
    
    
    492,521
    
    
    
    (107,277
    )
    
    
    100%
    
    
    
    100%Ocean City, MD
    
    
    702,556
    
    
    
    746,520
    
    
    
    (122,583
    )
    
    
    79,619
    
    
    
    67%
    
    
    
    92%Westminster, MD (2)
    
    
    1,576,148
    
    
    
    908,788
    
    
    
    69,981
    
    
    
    5,386,230
    
    
    
    100%
    
    
    
    98%Dunn, NC (3)
    
    
    215,118
    
    
    
    
    
    
    
    651,926
    
    
    
    
    
    
    
    90%
    
    
    
    N/ACARS Preferred Equity (4)
    
    
    974,559
    
    
    
    979,151
    
    
    
    
    
    
    
    
    
    
    
    N/A
    
    
    
    N/AWestminster, MD (5)
    
    
    
    
    
    
    124,362
    
    
    
    
    
    
    
    
    
    
    
    N/A
    
    
    
    N/A$
    6,998,954
    
    
    $
    6,128,671
    
    
    $
    (2,392,401
    )
    
    $
    6,265,806
 
 (1)
    
    Net investment income (loss) for the year ended December 31, 2007
reflects partial period results for the remaining retail property in Kansas City,
Kansas that was sold on June 29, 2007. Net investment income for the year
ended December 31, 2006 reflects results for all four retail properties located
in Kansas City, Kansas and Kansas City, Missouri, prior to the sale of three
out of the four centers on May 15, 2006.(2)
    
    Net investment income for the year ended December 31, 2006 reflects
partial period results for the
Westminster,
    Maryland retail property that was acquired on June 13, 2006.(3)
    
    Net investment income for the year ended December 31, 2007 reflects
partial period results for the Dunn, North Carolina retail property that was
acquired on August 17, 2007.(4)
    
    Net investment income for the year ended December 31, 2006 reflects
partial period results for the second funding of the Partnerships preferred
equity investment, which occurred on February 14, 2006.(5)
    
    Mortgage Loan Receivable (mortgage paid in full on March 3, 2006). Net Investment Income
  Total Realized and Unrealized Gain/(Loss)
  13




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##### 





INDUSTRIAL PROPERTY
 Net Investment
    
    
    Net Investment
    
    
    Realized
    
    
    UnrealizedIncome/(Loss)
    
    
    Income/(Loss)
    
    
    Gain/(Loss)
    
    
    Gain/(Loss)
    
    
    Occupancy
    
    
    OccupancyYear Ended December 31,
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006PropertyAurora, CO (1)
    
    $
    49,279
    
    
    $
    773,668
    
    
    $
    345,832
    
    
    $
    2,132,560
    
    
    
    N/A
    
    
    
    85%
 
 (1)
    
    Net investment income (loss) for the year ended December 31, 2007 reflects partial
period results for the Aurora, Colorado industrial property  that was sold on February 7,
2007. Net Investment Income
  Unrealized Gain/(Loss)
  HOTEL PROPERTY
 Net Investment
    
    
    Net Investment
    
    
    Unrealized
    
    
    UnrealizedIncome/(Loss)
    
    
    Income/(Loss)
    
    
    Gain/(Loss)
    
    
    Gain/(Loss)
    
    
    Occupancy
    
    
    OccupancyYear Ended December 31,
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006PropertyLake Oswego, OR
    
    $
    1,343,200
    
    
    $
    1,288,716
    
    
    $
    2,409,924
    
    
    $
    3,782,829
    
    
    
    76%
    
    
    
    80%
 Net Investment Income
  Unrealized Gain/(Loss)
  14




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##### 





Other
  (c) Inflation
  Critical Accounting Policies
   Valuation
of Investments
 Real Estate Investments
     15




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##### 





Other Estimates
  Item 7A. Quantitative and Qualitative Disclosures About Market Risk
 Interest Rate Risk 
  Estimated Market Value
    
    AverageMaturity
    
    (in $ millions)
    
    Interest RateCash and Cash equivalents
    
    
    0-3 months
    
    
    $
    18.2
    
    
    
    4.64
    %
   Debt (in $thousands),
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Estimatedincluding current portion
    
    2008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    Thereafter
    
    
    Total
    
    
    Fair ValueWeighted Average Fixed Interest Rate
    
    
    5.35%
    
    
    
    5.74%
    
    
    
    6.75%
    
    
    
    6.75%
    
    
    
    6.75%
    
    
    
    6.75%
    
    
    
    6.14%Fixed Rate
    
    $
    16,090
    
    
    $
    9,277
    
    
    $
    565
    
    
    $
    604
    
    
    $
    646
    
    
    $
    4,940
    
    
    $
    32,122
    
    
    $
    32,262Variable Rate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total Mortgage Loans Payable
    
    $
    16,090
    
    
    $
    9,277
    
    
    $
    565
    
    
    $
    604
    
    
    $
    646
    
    
    $
    4,940
    
    
    $
    32,122
    
    
    $
    32,262
  16




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##### 





Item 8. Financial Statements and Supplementary Data
  Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  Item 9A. Controls and Procedures
  Item 9B. Other Information
  17




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##### 





PART III
 Item 10. Directors, Executive Officers and Corporate Governance
 THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
 DIRECTORS
 FREDERIC K. BECKER
 GORDON M. BETHUNE   
 W. GASTON CAPERTON, III   
 GILBERT F. CASELLAS
 JAMES G. CULLEN
 WILLIAM H. GRAY, III
 MARK B. GRIER
 JON F. HANSON
 CONSTANCE J. HORNER
 KARL J. KRAPEK
 CHRISTINE A. POON
 ARTHUR F. RYAN
 JOHN R. STRANGFELD, JR.
 JAMES A. UNRUH
 18




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##### 





THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
 PRINCIPAL OFFICERS **
 SUSAN
L. BLOUNT
 RICHARD J. CARBONE
 BERNARD J. JACOB
 KATHLEEN M. GIBSON
 ROBERT C. GOLDEN
 MARK B. GRIER
 ARTHUR F. RYAN
 JOHN R. STRANGFELD, JR.
 PETER B. SAYRE
 SHARON C. TAYLOR
 **
 Code of Ethics
 www.investor.prudential.com www.investor.prudential.com
   Item 11. Executive Compensation
  Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
  19




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##### 





Item 13. Certain Relationships and Related Transactions, and Director Independence
   Item 14. Principal Accountant Fees and Services
  20




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##### 





PART IV
 Item 15. Exhibits and Financial Statement Schedules
 (a)
    
    The following documents are filed as part of this report:
 1.
    
    Financial Statements
  2.
    
    Financial Statement Schedules
     3.
    
    Documents Incorporated by Reference
  4.
    
    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, 2007. The Registrant will furnish a copy of any Exhibit listed
below to any security holder of the Registrant who requests it upon payment of a fee of 15
cents per page. All Exhibits are either contained in this Annual Report on Form 10-K or are
incorporated by reference as indicated below.
 3.1
    
    Amended Charter of The Prudential Insurance Company of America, filed as Exhibit
(3A) in Post-Effective Amendment No. 18 to Form S-1, Registration Statement No.
33-20083-01, filed April 14, 2005, and incorporated herein by reference.3.2
    
    Amended By-Laws of The Prudential Insurance Company of America, filed as Exhibit
(3B) in Post-Effective Amendment No. 29 to Form N-6, Registration Statement No.
33-20000, filed April 21, 2006, and incorporated herein by reference.3.3
    
    Resolution of the Board of Directors establishing The Prudential Variable Contract
Real Property Account, filed as Exhibit (3C) 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.4.1
    
    Revised Individual Variable Annuity Contract filed as Exhibit (4A)(
i) 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.4.2
    
    Discovery Plus Contract, filed as Exhibit (4A)(ii) 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.4.3
    
    Custom VAL (previously named Adjustable Premium VAL) Life Insurance Contracts with
fixed death benefit, filed as Exhibit (4C)(i) in Post-Effective Amendment No. 19
to Form S-6, Registration Statement No. 33-20000, filed April 28, 1997,
and incorporated herein by reference.4.4
    
    Custom VAL (previously named Adjustable Premium VAL) Life Insurance Contracts with
variable death benefit, filed as Exhibit (4C)(ii) in Post-Effective Amendment No.
19 to Form S-6, Registration Statement No. 33-20000, filed April 28,
1997, and incorporated herein by reference.4.5
    
    Variable Appreciable Life Insurance Contracts with fixed death benefit, filed as
Exhibit (4B)(i) in Post Effective Amendment No. 19 to Form S-6, Registration
Statement No. 33-20000, filed April 28, 1997, and incorporated herein by
reference.
 21




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##### 





4.6
    
    Variable Appreciable Life Insurance Contracts with variable death benefit, filed as
(4B)(ii) in Post Effective Amendment No. 19 to Form S-6, Registration Statement
No. 33-20000, filed April 28, 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.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 herewith31.1
    
    Section 302 Certification of the Chief Executive Officer.31.2
    
    Section 302 Certification of the Chief Financial Officer.32.1
    
    Section 906 Certification of the Chief Executive Officer.32.2
    
    Section 906 Certification of the Chief Financial Officer.
 22




---



##### 





SIGNATURES
  THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
in respect of  The Prudential Variable Contract Real Property Account  (Registrant)
  Date: March 21,
    2008

By:

/s/ Richard J. CarboneRichard J. Carbone
    Executive Vice President  Signature
    
    Title
    
    Date/s/ John R. Strangfeld

John R. Strangfeld
    
    Chief Executive Officer,
President and Director
    
    March 21, 2008/s/ Richard J. Carbone

Richard J. Carbone
    
    Chief Financial Officer
    
    March 21, 2008/s/ Peter Sayre

Peter Sayre
    
    Senior Vice President and
Controller
(Principal Accounting Officer)
    
    March 21, 2008
 23




---



##### 





Signature
    
    Title
    
    Date* /s/ Frederic K. Becker

Frederic K. Becker
    
    Director
    
    March 21, 2008* /s/ Gordon M. Bethune

Gordon M. Bethune
    
Director
    
    March 21, 2008* /s/ W. Gaston Caperton, III

W. Gaston Caperton, III
    
Director
    
    March 21, 2008* /s/ Gilbert F. Casellas

Gilbert F. Casellas
    
Director
    
    March 21, 2008* /s/ James G. Cullen

James G. Cullen
    
Director
    
    March 21, 2008* /s/ William H. Gray, III

William H. Gray, III
    
Director
    
    March 21, 2008* /s/ Mark B. Grier

Mark B. Grier
    
Director
    
    March 21, 2008* /s/ Jon F. Hanson

Jon F. Hanson
    
Director
    
    March 21, 2008* /s/ Constance J. Horner

Constance J. Horner
    
Director
    
    March 21, 2008* /s/ Karl J. Krapek

Karl J. Krapek
    
Director
    
    March 21, 2008* /s/ Christine A. Poon

Christine A. Poon
    
Director
    
    March 21, 2008* /s/ Arthur F. Ryan

Arthur F. Ryan
    
Director
    
    March 21, 2008* /s/ John R. Strangfeld

John R. Strangfeld
    
Director
    
    March 21, 2008* /s/ James A. Unruh
    
Director
    
    March 21, 2008James A. Unruh
   By:*   Thomas C. Castano
 (Attorney-in-Fact)
 24




---



##### 





THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY ACCOUNT  (Registrant)
 INDEX
 PageA.
    
    THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY ACCOUNTFinancial Statements:Managements Annual Report on Internal Control Over Financial Reporting
    

    F-2Report of Independent Registered Public Accounting Firm
    

    F-3Statements of Net Assets    December 31, 2007 and 2006
    

    F-4Statements of Operations    Years Ended December 31, 2007, 2006 and 2005
    

    F-4Statements of Changes in Net Assets    Years Ended December 31, 2007, 2006 and 2005
    

    F-4Notes to Financial Statements
    

    F-5B.
    
    THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIPFinancial Statements:Report of Independent Registered Public Accounting Firm
    

    F-10Report of Independent Registered Public Accounting Firm on Financial Statement Schedules
    

    F-11Consolidated Statements of Assets and Liabilities    December 31, 2007 and 2006
    

    F-12Consolidated Statements of Operations    Years Ended December 31, 2007, 2006 and 2005
    

    F-13Consolidated
Statements of Changes in Net Assets    Years Ended
December 31, 2007, 2006 and 2005
    

    F-14Consolidated Statements of Cash Flows    Years Ended December 31, 2007, 2006 and 2005
    

    F-15Consolidated Schedule of Investments    December 31, 2007 and 2006
    

    F-16Notes to Financial Statements
    

    F-18Financial Statement Schedules:For the period ended December 31, 2007Schedule III    Real Estate Owned: Properties
    

    F-27Schedule IV
 Mortgage Loans on Real Estate
    

    F-28
 F-1




---



##### 





Managements Annual Report on Internal Control Over Financial Reporting
 Internal Control
 Integrated Framework
    March 21, 2008
 F-2




---



##### 





Report of Independent Registered Public Accounting Firm
 F-3




---



##### 





FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY ACCOUNT
 STATEMENTS OF NET ASSETS
 2007
    
    
    2006ASSETSInvestment in The Prudential Variable Contract Real Property Partnership
    
    $
    100,212,593
    
    
    $
    92,863,117Net Assets
    
    $
    100,212,593
    
    
    $
    92,863,117NET ASSETS, representing:Equity of contract owners
    
    $
    72,012,128
    
    
    $
    68,090,994Equity of The Prudential Insurance Company of America
    
    
    28,200,465
    
    
    
    24,772,123$
    100,212,593
    
    
    $
    92,863,117Units outstanding
    
    
    36,396,005
    
    
    
    36,089,056Portfolio shares held
    
    
    2,741,864
    
    
    
    2,741,864Portfolio net asset value per share
    
    $
    36.55
    
    
    $
    33.87STATEMENTS OF OPERATIONS
For the years ended December 31, 2007, 2006 and 20052007
    
    
    
    2006
    
    
    
    2005INVESTMENT INCOMENet investment income from Partnership operations
    
    $
    5,137,153
    
    
    $
    4,526,160
    
    
    $
    3,737,105EXPENSESCharges to contract owners for assuming mortality risk and expense risk
    
    
    563,608
    
    
    
    509,687
    
    
    
    460,468NET INVESTMENT INCOME
    
    
    4,573,545
    
    
    
    4,016,473
    
    
    
    3,276,637NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTSNet change in unrealized gain (loss) on investments in Partnership
    
    
    1,940,739
    
    
    
    7,413,826
    
    
    
    3,745,793Net realized gain (loss) on sale of investments allocated from the Partnership
    
    
    271,584
    
    
    
    27,482
    
    
    
    2,520,876NET GAIN (LOSS) ON INVESTMENTS
    
    
    2,212,323
    
    
    
    7,441,308
    
    
    
    6,266,669NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS
    
    $
    6,785,868
    
    
    $
    11,457,781
    
    
    $
    9,543,306STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 2007, 2006 and 20052007
    
    
    
    2006
    
    
    
    2005OPERATIONSNet investment income
    
    $
    4,573,545
    
    
    $
    4,016,473
    
    
    $
    3,276,637Net change in unrealized gain (loss) on investments in Partnership
    
    
    1,940,739
    
    
    
    7,413,826
    
    
    
    3,745,793Net realized gain (loss) on sale of investments allocated from the Partnership
    
    
    271,584
    
    
    
    27,482
    
    
    
    2,520,876NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS
    
    
    6,785,868
    
    
    
    11,457,781
    
    
    
    9,543,306CAPITAL TRANSACTIONSNet contributions (withdrawals) by contract owners
    
    
    (904,047
    )
    
    
    (865,224
    )
    
    
    (841,882
    )Net contributions (withdrawals) by The Prudential Insurance Company of America
    
    
    1,467,655
    
    
    
    (1,006,825
    )
    
    
    (1,113,369
    )NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS
    
    
    563,608
    
    
    
    (1,872,049
    )
    
    
    (1,955,251
    )TOTAL INCREASE (DECREASE) IN NET ASSETS
    
    
    7,349,476
    
    
    
    9,585,732
    
    
    
    7,588,055NET ASSETSBeginning of period
    
    
    92,863,117
    
    
    
    83,277,385
    
    
    
    75,689,330End of period
    
    $
    100,212,593
    
    
    $
    92,863,117
    
    
    $
    83,277,385
 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, 2007
 Note 1:    General
    Note 2:    Summary of Significant Accounting Policies and Pronouncements
 A.  Basis of Accounting
     B.  Investment in Partnership Interest
   C.  Income Recognition
 F-5




---



##### 





NOTES TO THE FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY ACCOUNT
December 31, 2007
 D.  Equity of The Prudential Insurance Company of America
  Note 3:    Taxes
  Note 4:    Net Withdrawals by Contract Owners
  PVAL & PVALVIP &
    
    
    $100,000+ face2007:
    
    PDISCO+
    
    
    value
    
    
    TOTALContract Owner Net Payments:
    
    $
    8,130
    
    
    $
    3,775,341
    
    
    $
    3,783,471Policy Loans:
    
    
    0
    
    
    
    (1,455,672
    )
    
    
    (1,455,672
    )Policy Loan Repayments and Interest:
    
    
    0
    
    
    
    1,242,605
    
    
    
    1,242,605Surrenders, Withdrawals, and Death Benefits:
    
    
    (357,459
    )
    
    
    (2,555,663
    )
    
    
    (2,913,122
    )Net Transfers From/To Other Subaccounts or Fixed Rate Option:
    
    
    65,033
    
    
    
    1,060,820
    
    
    
    1,125,853Administrative and Other Charges:
    
    
    (1,274
    )
    
    
    (2,685,908
    )
    
    
    (2,687,182
    )Net Withdrawals by Contract Owners
    
    $
    (285,570
    )
    
    $
    (618,477
    )
    
    $
    (904,047
    )
 PVAL & PVALVIP &
    
    
    $100,000+ face2006:
    
    PDISCO+
    
    
    value
    
    
    TOTALContract Owner Net Payments:
    
    $
    7,765
    
    
    $
    3,832,194
    
    
    $
    3,839,959Policy Loans:
    
    
    0
    
    
    
    (1,337,252
    )
    
    
    (1,337,252
    )Policy Loan Repayments and Interest:
    
    
    0
    
    
    
    1,216,739
    
    
    
    1,216,739Surrenders, Withdrawals, and Death Benefits:
    
    
    (611,189
    )
    
    
    (2,485,769
    )
    
    
    (3,096,958
    )Net Transfers From/To Other Subaccounts or Fixed Rate Option:
    
    
    134,505
    
    
    
    1,152,025
    
    
    
    1,286,530Administrative and Other Charges:
    
    
    (1,390
    )
    
    
    (2,772,852
    )
    
    
    (2,774,242
    )Net Withdrawals by Contract Owners
    
    $
    (470,309
    )
    
    $
    (394,915
    )
    
    $
    (865,224
    )
 PVAL & PVALVIP &
    
    
    $100,000+ face2005:
    
    PDISCO+
    
    
    value
    
    
    TOTALContract Owner Net Payments:
    
    $
    12,796
    
    
    $
    3,991,805
    
    
    $
    4,004,601Policy Loans:
    
    
    0
    
    
    
    (1,160,988
    )
    
    
    (1,160,988
    )Policy Loan Repayments and Interest:
    
    
    0
    
    
    
    1,194,065
    
    
    
    1,194,065Surrenders, Withdrawals, and Death Benefits:
    
    
    (554,301
    )
    
    
    (2,603,294
    )
    
    
    (3,157,595
    )Net Transfers From/To Other Subaccounts or Fixed Rate Option:
    
    
    22,921
    
    
    
    1,033,843
    
    
    
    1,056,764Administrative and Other Charges:
    
    
    (1,695
    )
    
    
    (2,777,034
    )
    
    
    (2,778,729
    )Net Withdrawals by Contract Owners
    
    $
    (520,279
    )
    
    $
    (321,603
    )
    
    $
    (841,882
    )
 F-6




---



##### 





NOTES TO THE FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY ACCOUNT
December 31, 2007
 Note 5: Unit Activity
  PVAL$100,000+2007:
    
    
    
    
    
    
    
    PDISCO+
    
    VIP
    
    PVAL
    
    face valueCompany Contributions:
    
    
    1,339,992
    
    
    Contract Owner Contributions:
    
    
    34,347
    
    
    
    40,647
    
    
    
    1,174,449
    
    
    
    1,549,695Company Redemptions:
    
    
    (695,138
    )
    
    Contract Owner Redemptions:
    
    
    (81,964
    )
    
    
    (104,016
    )
    
    
    (1,536,359
    )
    
    
    (1,414,704
    )PVAL$100,000+2006:
    
    
    
    
    
    
    
    PDISCO+
    
    VIP
    
    PVAL
    
    face valueCompany Contributions:
    
    
    1,289,694
    
    
    Contract Owner Contributions:
    
    
    61,105
    
    
    
    42,871
    
    
    
    1,371,500
    
    
    
    1,814,985Company Redemptions:
    
    
    (1,567,945
    )
    
    Contract Owner Redemptions:
    
    
    (208,442
    )
    
    
    (97,978
    )
    
    
    (1,589,371
    )
    
    
    (1,776,915
    )PVAL$100,000+2005:
    
    
    
    
    
    
    
    PDISCO+
    
    VIP
    
    PVAL
    
    face valueCompany Contributions:
    
    
    1,373,623
    
    
    Contract Owner Contributions:
    
    
    51,235
    
    
    
    66,652
    
    
    
    1,592,159
    
    
    
    1,430,019Company Redemptions:
    
    
    (1,709,303
    )
    
    Contract Owner Redemptions:
    
    
    (224,793
    )
    
    
    (145,446
    )
    
    
    (1,756,695
    )
    
    
    (1,422,819
    )
 Note 6: Purchases and Sales of Investments
  December 31, 2007
    
    
    December 31, 2006
    
    
    December 31, 2005Purchases:
    
    $
    0
    
    
    $
    0
    
    
    $
    0Sales:
    
    $
    0
    
    
    $
    (2,381,736
    )
    
    $
    (2,415,719
    )
 F-7




---



##### 





NOTES TO THE FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY ACCOUNT
December 31, 2007
 Note 7: Financial Highlights
   At year ended
    
    
    For year endedUnits
    
    
    Unit Value
    
    
    Net Assets
    
    
    Investment
    
    
    Expense Ratio **
    
    Total Return ***(000s)
    
    
    Lowest- Highest
    
    
    (000s)
    
    
    Income Ratio *
    
    
    Lowest-Highest
    
    Lowest-HighestDecember 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
    
    
    
    5.10
    %
    
    0.60% to 1.20%
    
    13.11% to 13.78%December 31, 2005
    
    
    26,664
    
    
    $
    2.15433 to $2.35694
    
    
    $
    60,797
    
    
    
    4.64
    %
    
    0.60% to 1.20%
    
    11.82% to 12.48%December 31, 2004
    
    
    27,073
    
    
    $
    1.92668 to $2.09540
    
    
    $
    54,956
    
    
    
    4.15
    %
    
    0.60% to 1.20%
    
    4.81% to 5.43%December 31, 2003
    
    
    27,766
    
    
    $
    1.83832 to $1.98753
    
    
    $
    53,574
    
    
    
    5.77
    %
    
    0.60% to 1.20%
    
    1.03% to 1.63%
   
  *
    
    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
  B. Cost of Insurance and Other Related Charges
  F-8




---



##### 





NOTES TO THE FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY ACCOUNT
December 31, 2007
 C. Deferred Sales Charge
   D. Partial Withdrawal Charge
  E. Annual Maintenance Charge
  Note 8: Related Party
  F-9




---



##### 





Report of Independent Registered Public Accounting Firm
 
  
 F-10




---



##### 





Report of Independent Registered Public Accounting Firm on
Financial Statement Schedules
 
   
 F-11




---



##### 





THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
  December 31, 2007
    
    
    December 31, 2006ASSETSREAL ESTATE INVESTMENTS   At estimated market value:Real estate and improvements
(cost: 12/31/2007   $233,233,775; 12/31/2006 -$199,124,056)
    
    $
    251,161,712
    
    
    $
    214,444,568Real estate partnerships and preferred equity investments (cost:
12/31/2007   $14,523,934; 12/31/2006   $22,334,823)
    
    
    14,523,934
    
    
    
    17,941,039Other real estate investments (cost: 12/31/2007   $3,232,341;
12/31/2006   $2,857,851)
    
    
    3,232,341
    
    
    
    2,857,851Total real estate investments
    
    $
    268,917,987
    
    
    $
    235,243,458CASH AND CASH EQUIVALENTS
    
    
    18,215,871
    
    
    
    33,399,532OTHER ASSETS, NET
    
    
    3,033,040
    
    
    
    3,493,829Total assets
    
    $
    290,166,898
    
    
    $
    272,136,819LIABILITIES & PARTNERS EQUITYINVESTMENT LEVEL DEBT
    
    $
    32,121,712
    
    
    $
    32,710,488ACCOUNTS PAYABLE AND ACCRUED EXPENSES
    
    
    2,184,812
    
    
    
    3,091,930DUE TO AFFILIATES
    
    
    901,371
    
    
    
    789,889OTHER LIABILITIES
    
    
    920,454
    
    
    
    876,487MINORITY INTEREST
    
    
    7,004,790
    
    
    
    5,751,441Total liabilities
    
    
    43,133,139
    
    
    
    43,220,235COMMITMENTS AND CONTINGENCIESPARTNERS EQUITY
    
    
    247,033,759
    
    
    
    228,916,584Total liabilities and partners equity
    
    $
    290,166,898
    
    
    $
    272,136,819NUMBER OF SHARES OUTSTANDING AT END OF PERIOD
    
    
    6,758,960
    
    
    
    6,758,960SHARE VALUE AT END OF PERIOD
    
    $
    36.55
    
    
    $
    33.87
 The accompanying notes are an integral part of these consolidated financial statements.
 F-12




---



##### 





THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS
 Year Ended December 31,2007
    
    
    2006
    
    
    2005INVESTMENT INCOME:Revenue from real estate and improvements
    
    $
    28,720,477
    
    
    $
    25,460,860
    
    
    $
    27,087,813Equity in income of real estate partnerships
    
    
    1,136,936
    
    
    
    962,208
    
    
    
    252,618Interest and equity income on mortgage
and other loans receivable
    
    
    
    
    
    
    125,510
    
    
    
    281,134Income from other real estate investments
    
    
    374,491
    
    
    
    219,564
    
    
    
    Interest on short-term investments
    
    
    1,468,159
    
    
    
    1,855,345
    
    
    
    1,022,706Total investment income
    
    
    31,700,063
    
    
    
    28,623,487
    
    
    
    28,644,271INVESTMENT EXPENSES:Operating
    
    
    6,954,999
    
    
    
    6,355,543
    
    
    
    7,420,509Investment management fee
    
    
    3,380,090
    
    
    
    3,075,176
    
    
    
    2,845,519Real estate taxes
    
    
    2,466,704
    
    
    
    2,069,169
    
    
    
    2,382,626Administrative
    
    
    4,056,557
    
    
    
    3,923,413
    
    
    
    4,438,482Interest expense
    
    
    2,019,937
    
    
    
    1,814,686
    
    
    
    2,173,789Minority interest
    
    
    158,196
    
    
    
    223,772
    
    
    
    164,175Total investment expenses
    
    
    19,036,483
    
    
    
    17,461,759
    
    
    
    19,425,100NET INVESTMENT INCOME
    
    
    12,663,580
    
    
    
    11,161,728
    
    
    
    9,219,171REALIZED AND UNREALIZED GAIN (LOSS) ON REAL ESTATE
INVESTMENTS:Net proceeds from real estate investments sold
    
    
    18,353,122
    
    
    
    67,770
    
    
    
    55,054,217Less: Cost of real estate investments sold
    
    
    19,063,985
    
    
    
    
    
    
    
    47,015,948Realization of prior years unrealized
gain (loss) on real estate investments sold
    
    
    (1,380,344
    )
    
    
    
    
    
    
    (655,341
    )Minority interest in realized gain (loss) on real estate
investments sold
    
    
    
    
    
    
    
    
    
    
    2,474,788NET GAIN (LOSS) REALIZED ON REAL ESTATE INVESTMENTS SOLD
    
    
    669,481
    
    
    
    67,770
    
    
    
    6,218,822Change in unrealized gain (loss) on real estate investments
    
    
    5,620,864
    
    
    
    20,294,808
    
    
    
    10,475,654Less: Minority interest in unrealized gain (loss) on real estate investments
    
    
    836,750
    
    
    
    2,010,573
    
    
    
    1,233,857Net unrealized gain (loss) on real estate investments
    
    
    4,784,114
    
    
    
    18,284,235
    
    
    
    9,241,797NET REALIZED AND UNREALIZED GAIN (LOSS)
ON REAL ESTATE INVESTMENTS
    
    
    5,453,595
    
    
    
    18,352,005
    
    
    
    15,460,619INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS
    
    $
    18,117,175
    
    
    $
    29,513,733
    
    
    $
    24,679,790
 The accompanying notes are an integral part of these consolidated financial statements.
 F-13




---



##### 





THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
 Year Ended December 31,2007
    
    
    2006
    
    
    2005INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS:Net investment income
    
    $
    12,663,580
    
    
    $
    11,161,728
    
    
    $
    9,219,171Net gain (loss) realized on real estate
investments sold
    
    
    669,481
    
    
    
    67,770
    
    
    
    6,218,822Net unrealized gain (loss) from real estate
investments
    
    
    4,784,114
    
    
    
    18,284,235
    
    
    
    9,241,797Increase (decrease) in net assets
resulting from operations
    
    
    18,117,175
    
    
    
    29,513,733
    
    
    
    24,679,790INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CAPITAL TRANSACTIONS:Withdrawals
(2007- 0; 2006 -182,671; and
2005 -198,677 shares, respectively)
    
    
    
    
    
    
    (6,000,000
    )
    
    
    (6,000,000
    )Increase (decrease) in net assets
resulting from capital transactions
    
    
    
    
    
    
    (6,000,000
    )
    
    
    (6,000,000
    )INCREASE (DECREASE) IN NET ASSETS
    
    
    18,117,175
    
    
    
    23,513,733
    
    
    
    18,679,790NET ASSETS
  Beginning of period
    
    
    228,916,584
    
    
    
    205,402,851
    
    
    
    186,723,061NET ASSETS
  End of period
    
    $
    247,033,759
    
    
    $
    228,916,584
    
    
    $
    205,402,851
 The accompanying notes are an integral part of these consolidated financial statements.
 F-14




---



##### 





THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
 Year Ended December 31,2007
    
    
    2006
    
    
    2005CASH FLOWS FROM OPERATING ACTIVITIES:Net increase in net assets from operations
    
    $
    18,117,175
    
    
    $
    29,513,733
    
    
    $
    24,679,790Adjustments to reconcile net increase in net assets
to net cash from operating activitiesNet realized and unrealized loss (gain)
    
    
    (5,453,595
    )
    
    
    (18,352,005
    )
    
    
    (15,460,619
    )Amortization of deferred financing costs
    
    
    193,594
    
    
    
    
    
    
    
    (34,620
    )Distributions in excess of (less than) equity in income
of real estate partnerships operations
    
    
    35,287
    
    
    
    (87,396
    )
    
    
    (148,668
    )Minority interest in consolidated partnerships
    
    
    158,196
    
    
    
    223,772
    
    
    
    164,175Bad debt expense
    
    
    101,185
    
    
    
    (239,380
    )
    
    
    240,176(Increase) decrease in accrued interest included in
other real estate investments
    
    
    (374,491
    )
    
    
    (219,564
    )
    
    
    (Increase) decrease in:Other assets
    
    
    166,010
    
    
    
    37,951
    
    
    
    2,815,778Increase (decrease) in:Accounts payable and accrued expenses
    
    
    (907,118
    )
    
    
    546,878
    
    
    
    (550,954
    )Due to affiliates
    
    
    111,482
    
    
    
    28,963
    
    
    
    39,507Other liabilities
    
    
    43,967
    
    
    
    404,151
    
    
    
    (150,564
    )Net cash flows from (used in) operating activities
    
    
    12,191,692
    
    
    
    11,857,103
    
    
    
    11,594,001CASH FLOWS FROM INVESTING ACTIVITIES:Net proceeds from real estate investments sold
    
    
    18,353,122
    
    
    
    67,770
    
    
    
    41,676,816Acquisition of real estate and improvements
    
    
    (42,218,143
    )
    
    
    (12,159,443
    )
    
    
    Additions to real estate and improvements
    
    
    (3,179,960
    )
    
    
    (3,197,470
    )
    
    
    (6,198,211
    )Contributions to real estate partnerships
    
    
    
    
    
    
    (7,289,487
    )
    
    
    (7,142,900
    )Return of investment in real estate partnerships
    
    
    
    
    
    
    3,620,455
    
    
    
    Origination of mortgage loan receivable
    
    
    
    
    
    
    
    
    
    
    (2,945,709
    )Collection of mortgage loan receivable
    
    
    
    
    
    
    4,277,769
    
    
    
    Origination of other real estate investments
    
    
    
    
    
    
    (2,638,287
    )
    
    
    Net cash flows from (used in) investing activities
    
    
    (27,044,981
    )
    
    
    (17,318,693
    )
    
    
    25,389,996CASH FLOWS FROM FINANCING ACTIVITIES:Withdrawals
    
    
    
    
    
    
    (6,000,000
    )
    
    
    (6,000,000
    )Principal payments on investment level debt
    
    
    (588,776
    )
    
    
    (485,119
    )
    
    
    (853,525
    )Contributions to minority interest partners
    
    
    294,143
    
    
    
    
    
    
    
    Distributions to minority interest partners
    
    
    (35,739
    )
    
    
    (121,244
    )
    
    
    (2,220,169
    )Net cash flows from (used in) financing activities
    
    
    (330,372
    )
    
    
    (6,606,363
    )
    
    
    (9,073,694
    )NET CHANGE IN CASH AND CASH
EQUIVALENTS
    
    
    (15,183,661
    )
    
    
    (12,067,953
    )
    
    
    27,910,303CASH AND CASH
EQUIVALENTS  Beginning of period
    
    
    33,399,532
    
    
    
    45,467,485
    
    
    
    17,557,182CASH AND CASH
EQUIVALENTS  End of period
    
    $
    18,215,871
    
    
    $
    33,399,532
    
    
    $
    45,467,485
 The accompanying notes are an integral part of these consolidated financial statements.
 F-15




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##### 





THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
 CONSOLIDATED SCHEDULE OF INVESTMENTS
 2007 Total RentableSquare Feet
    
    
    December 31,Unless Otherwise
    
    
    2007
    
    
    2006December 31, 2007
    
    
    
    Indicated
    
    
    
    
    
    
    Estimated
    
    
    
    
    
    
    EstimatedProperty Name
    
    Ownership
    
    City, State
    
    (Unaudited)
    
    
    Cost
    
    
    Market Value
    
    
    Cost
    
    
    Market ValueOFFICES750 Warrenville
    
    WO
    
    Lisle, IL
    
    
    103,193
    
    
    $
    24,512,521
    
    
    $
    11,500,000
    
    
    $
    24,517,391
    
    
    $
    10,700,000Summit @ Cornell Oaks
    
    WO
    
    Beaverton , OR
    
    
    72,109
    
    
    
    12,401,252
    
    
    
    13,800,000
    
    
    
    12,091,490
    
    
    
    12,500,000Westpark
    
    WO
    
    Nashville, TN
    
    
    97,199
    
    
    
    11,323,885
    
    
    
    13,100,000
    
    
    
    11,033,804
    
    
    
    12,800,000Financial Plaza
    
    WO
    
    Brentwood, TN
    
    
    98,049
    
    
    
    12,371,092
    
    
    
    13,700,000
    
    
    
    12,333,152
    
    
    
    13,500,000Offices % as of 12/31/07
    
    
    21%
    
    
    
    60,608,750
    
    
    
    52,100,000
    
    
    
    59,975,837
    
    
    
    49,500,000APARTMENTSBrookwood Apartments
    
    WO
    
    Atlanta, GA
    
    
    240 Units
    
    
    
    19,548,293
    
    
    
    20,200,000
    
    
    
    18,918,016
    
    
    
    20,100,000Dunhill Trace Apartments
    
    WO
    
    Raleigh, NC
    
    
250 Units
    
    
    
    16,375,037
    
    
    
    19,800,000
    
    
    
    16,287,767
    
    
    
    20,400,000Broadstone Crossing
    
    WO
    
    Austin, TX
    
    
225 Units
    
    
    
    22,723,849
    
    
    
    27,100,000
    
    
    
    
    
    
    
    The Reserve At Waterford Lakes
    
    WO
    
    Charlotte, NC
    
    
140 Units
    
    
    
    13,535,450
    
    
    
    13,500,000
    
    
    
    
    
    
    
    Apartments % as of 12/31/07
    
    
    33%
    
    
    
    72,182,629
    
    
    
    80,600,000
    
    
    
    35,205,783
    
    
    
    40,500,000RETAILKings Market
    
    WO
    
    Rosewell, GA
    
    
    314,358
    
    
    
    37,883,222
    
    
    
    24,700,000
    
    
    
    37,775,326
    
    
    
    28,400,000Hampton Towne Center
    
    WO
    
    Hampton, VA
    
    
    174,540
    
    
    
    18,050,090
    
    
    
    26,500,000
    
    
    
    18,042,611
    
    
    
    26,000,000White Marlin Mall
    
    CJV
    
    Ocean City, MD
    
    
    186,016
    
    
    
    17,016,325
    
    
    
    23,900,000
    
    
    
    15,538,779
    
    
    
    22,900,000Westminster Crossing East, LLC
    
    CJV
    
    Westminster, MD
    
    
    89,890
    
    
    
    12,405,500
    
    
    
    17,861,712
    
    
    
    12,358,340
    
    
    
    17,744,568Kansas City Portfolio
    
    EJV
    
    Kansas City, KS; MO
    
    
    487,660
    
    
    
    140,911
    
    
    
    140,911
    
    
    
    7,816,531
    
    
    
    3,422,747CARS Preferred Equity
    
    PE
    
    Various
    
    
    N/A
    
    
    
    14,383,023
    
    
    
    14,383,023
    
    
    
    14,518,292
    
    
    
    14,518,292Harnett Crossing
    
    CJV
    
    Dunn, NC
    
    
    193,235
    
    
    
    5,958,844
    
    
    
    7,200,000
    
    
    
    
    
    
    
    Retail % as of 12/31/07
    
    
    47%
    
    
    
    105,837,915
    
    
    
    114,685,646
    
    
    
    106,049,879
    
    
    
    112,985,607INDUSTRIALSmith Road
    
    WO
    
    Aurora, CO
    
    
    277,930
    
    
    
    
    
    
    
    
    
    
    
    11,286,560
    
    
    
    14,300,000Industrial % as of 12/31/07
    
    
    0%
    
    
    
    
    
    
    
    
    
    
    
    11,286,560
    
    
    
    14,300,000HOTELPortland Crown Plaza
    
    CJV
    
    Portland, OR
    
    
161 Rooms
    
    
    
    9,128,415
    
    
    
    18,300,000
    
    
    
    8,940,820
    
    
    
    15,100,000Hotel % as of 12/31/07
    
    
    7%
    
    
    
    9,128,415
    
    
    
    18,300,000
    
    
    
    8,940,820
    
    
    
    15,100,000OTHER REAL ESTATE INVESTMENTSWestminster East
    
    Eloan
    
    Westminster, MD
    
    
    
    
    
    
    3,232,341
    
    
    
    3,232,341
    
    
    
    2,857,851
    
    
    
    2,857,851Other Real Estate Investments % as of 12/31/07
    
    
    1%
    
    
    
    3,232,341
    
    
    
    3,232,341
    
    
    
    2,857,851
    
    
    
    2,857,851Total Real Estate Investments as a
Percentage of Net Assets as of
12/31/07
    
    
    
    
    
    
    109%
    
    
    $
    250,990,050
    
    
    $
    268,917,987
    
    
    $
    224,316,730
    
    
    $
    235,243,458
 
 The accompanying notes are an integral part of these consolidated financial statements.
 F-16




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##### 





THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIPCONSOLIDATED SCHEDULE OF INVESTMENTS
 December 31, 2007
    
    
    December 31, 2006Estimated
    
    
    
    
    
    
    EstimatedFace Amount
    
    
    Cost
    
    
    Market Value
    
    
    Cost
    
    
    Market ValueCASH AND
CASH EQUIVALENTS  Percentage
of Net Assets
    
    
    
    
    
    
    
    
    
    
    7.4
    %
    
    
    
    
    
    
    14.6
    %Federal Home Loan Bank, 0 coupon bond,
January   , 2008
    
    $
    2,065,813
    
    
    $
    2,065,813
    
    
    $
    2,065,813
    
    
    $
    7,245,028
    
    
    $
    7,245,028Federal Home Loan Bank, 0 coupon bond,
January   , 2008
    
    
    4,998,313
    
    
    
    4,998,313
    
    
    
    4,998,313
    
    
    
    24,914,167
    
    
    
    24,914,167Federal Home Loan Bank, 0 coupon bond,
January   , 2008
    
    
    9,997,633
    
    
    
    9,997,633
    
    
    
    9,997,633
    
    
    
    
    
    
    
    Total Cash Equivalents
    
    
    
    
    
    
    17,061,759
    
    
    
    17,061,759
    
    
    
    32,159,195
    
    
    
    32,159,195Cash
    
    
    
    
    
    
    1,154,112
    
    
    
    1,154,112
    
    
    
    1,240,337
    
    
    
    1,240,337Total Cash and Cash Equivalents
    
    
    
    
    
    $
    18,215,871
    
    
    $
    18,215,871
    
    
    $
    33,399,532
    
    
    $
    33,399,532
 The accompanying notes are an integral part of these consolidated financial statements.
 F-17




---



##### 





NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF  THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP  For Years Ended December 31, 2007, 2006, and 2005
 Note 1:    Organization
     ®
 Note 2:    Summary of Significant Accounting Policies
 A:
    
    Basis of Presentation The accompanying consolidated financial statements of the
Partnership have been presented on the market value basis of accounting in conformity
with accounting principles generally accepted in the United States of America. The
consolidated financial statements of Partnership include wholly owned entities, and those
real estate partnerships in which the Partnership has a controlling interest. All
significant inter-company balances and transactions have been eliminated in
consolidation.
 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-18




---



##### 





NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF  THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP  For Years Ended December 31, 2007, 2006, and 2005
 Note 2:    Summary of Significant Accounting Policies (continued)
 C:
    
    Real Estate Investments Real estate investments are shown at estimated market
value in accordance with the terms of the Partnerships contracts. 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. Market 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 is responsible to assure
that the valuation process provides independent and reasonable property market value
estimates. An unaffiliated third party appraisal firm 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. Unless a property is currently held for sale, the
market value of real estate investments does not reflect the transaction sale costs,
which may be incurred upon disposition of the real estate investments.Unconsolidated real estate partnerships are 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 underlying entity.Land and development properties held for future development is carried at acquisition
cost including soft costs incurred prior to development.The Partnership periodically enters into forward contracts to acquire, for a fixed
price, real estate investments to be constructed in accordance with predetermined plans
and specifications or those achieve a certain level of leasing. Where conditions
precedent to funding have been met by its development partners, and the Partnerships
commitment to fund is firm, the amount of any unrealized gain or loss is recognized
based upon the difference between the estimated investments market value as described
above and the Partnerships funding obligation. The funding obligation and related
assets are recorded in the consolidated financial statements. As of December 31, 2007
and 2006, no such funding obligation existed.As described above, the estimated market value of real estate and real estate related
assets is determined through an appraisal process. These estimated market values may
vary significantly from the prices at which the real estate investments would sell,
since market prices of real estate investments can only be determined by negotiation
between a willing buyer and seller and could be material to the consolidated 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, 2007 and 2006.D:
    
    Other Real Estate Investments Other real estate investments include short term
notes receivable, which are valued at the amount due and approximate market value.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 market
value.F:
    
    Other Assets Restricted cash of $186,736 and $167,311 was maintained by the
wholly owned and consolidated properties at December 31, 2007 and 2006, 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 $39,764 and $211,058 at December 31, 2007 and
2006, respectively.
 F-19




---



##### 





NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF  THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP  For Years Ended December 31, 2007, 2006, and 2005
 Note 2:    Summary of Significant Accounting Policies (continued)
 G:
    
    Investment Level Debt Investment level debt 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. For debt assumed, the Partnership allocates
a portion of the purchase price to the below/above market debt and amortizes the
premium/discount over the remaining life of the debt.H:
    
    Deferred Financing Costs Included in Other Assets are deferred financing costs
amounting to $36,072 and $309,894 which are net of accumulated amortization of $273,822
and $80,227 as of December 31, 2007 and 2006, respectively, and which are being amortized
over the term of the related obligation.I:
    
    Revenue Recognition Revenue from real estate is recognized when earned in
accordance with the terms of the respective leases. 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 is stated at estimated market value, net income is not
reduced by depreciation or amortization expense.J:
    
    Equity in Income of Real Estate Partnership Equity in income from real estate
partnership operations 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 wholly owned real estate, partnership net income is 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.K:
    
    Federal Income Taxes The Partnership is not a taxable entity under the
provisions of the Internal Revenue Code. The income and capital gains and losses of the
Partnership are attributed, for federal income tax purposes, to the Partners in the
Partnership. The Partnership may be subject to state and local taxes in jurisdictions in
which it operates.L:
    
    New Accounting Pronouncements FASB Interpretation No. 46, Consolidation of
Variable Interest Entities (FIN 46), was issued in January 2003. In December 2003,
FASB issued a revised interpretation of FIN 46 (FIN 46-R) that supersedes FIN 46. FIN
46-R defers the effective date for applying the provisions of FIN46 for those companies
currently accounting for their investments in accordance with the AICPA Audit and
Accounting Guide, Audits of Investment Companies (the Audit Guide). The FASB is
currently considering modifying FIN 46-R to provide an exception for companies that apply
the Audit Guide. The Partnership is awaiting the final determination from the FASB in
order to evaluate the extent in which, if any, its equity investments may need to be
consolidated as a result of this FIN 46-R.In September 2006, the staff of the U.S. Securities and Exchange Commission, or SEC,
issued Staff Accounting Bulletin, or SAB, No. 108, Considering the Effects of Prior
Year Misstatements when Quantifying Misstatements in Current Year Financial Statements.
The interpretations in this SAB express the staffs views regarding the process of
quantifying financial statement misstatements. Specifically, the SEC staff believes
that registrants must quantify the impact on current period financial statements of
correcting all misstatements, including both those occurring in the current period and
the effect of reversing those that have accumulated from prior periods. This SAB must
be applied beginning with the first fiscal year ending after November 15, 2006, with
early adoption encouraged. Since the Partnerships method for quantifying financial
statement misstatements already considers those occurring in the current period and the
effect of reversing those that have accumulated from prior periods, the adoption of SAB
No. 108 had no effect on the financial position and result of operations of the
Partnership.The Partnership adopted FASB Interpretation No. 48 (FIN 48), Accounting for
Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109 as of January
1, 2007. This interpretation prescribes a comprehensive model for how a partnership
should recognize, measure, present, and disclose in its financial statements uncertain
tax positions that the partnership has taken or expects to take on a tax return. The
adoption of FIN 48 had no effect to the financial position and result of operations of
the Partnership.
 F-20




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##### 





NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF  THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP  For Years Ended December 31, 2007, 2006, and 2005
 Note 2:    Summary of Significant Accounting Policies (continued)
 L:
    
    New Accounting Pronouncements (continued)In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. This statement
defines fair value, establishes a framework for measuring fair value in generally accepted
accounting principles, and requires additional disclosures about fair value measurements. This
statement does not require any new fair value measurements, but the application of this
statement could change current practices in determining fair value.In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets
and Financial Liabilities, including an amendment of FASB Statement No. 115. This statement
provides partnerships with an option to report selected financial assets and liabilities at
fair value.SFAS No. 157 and SFAS No. 159 are effective for fiscal years beginning after November 15, 2007
with early adoption permitted. The Partnership plans to adopt this guidance effective January
1, 2008. The Partnership is currently assessing the impact of SFAS 157 and SFAS 159 on the
Partnerships consolidated financial position and results of operations.In June 2007, the Accounting Standards Executive Committee issued Statement of Position 07-1,
Clarification of the Scope of the Audit and Accounting Guide Investment Companies and
Accounting by Parent Companies and Equity Method Investors for Investments in Investment
Companies (SOP 07-1). SOP 07-1 provides guidance for determining whether an entity is
within the scope of the AICPA Audit and Accounting Guide Investment Companies (the Audit
Guide). SOP 07-1 was originally determined to be effective for fiscal years beginning on or
after December 15, 2007, however, on February 6, 2008, FASB issued a final Staff Position
indefinitely deferring the effective date and prohibiting early adoption of SOP 07-1 while
addressing implementation issues.
 Note 3:    Disclosure of Supplemental Cash Flow Information and Non-Cash Investing and Financing
Activity
 F-21




---



##### 





NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF  THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP  For Years Ended December 31, 2007, 2006, and 2005
 Note 4:    Real Estate Partnership and Preferred Equity Investments
  December
31,2007
    
    
    2006Partnership Assets and LiabilitiesReal estate at estimated market value
    
    $
    14,383
    
    
    $
    22,018Other assets
    
    
    452
    
    
    
    453Total assets
    
    
    14,835
    
    
    
    22,471Investment level debt
    
    
    
    
    
    
    2,978Other liabilities
    
    
    242
    
    
    
    253Total liabilities
    
    
    242
    
    
    
    3,231Net assets
    
    $
    14,593
    
    
    $
    19,240Partnerships share of net assets
    
    $
    14,524
    
    
    $
    17,941
  Year
Ended December 31,2007
    
    
    2006
    
    
    2005Partnership OperationsRental revenue
    
    $
    1,598
    
    
    $
    3,364
    
    
    $
    4,115Total revenue
    
    
    1,598
    
    
    
    3,364
    
    
    
    4,115Real estate expenses and taxes
    
    
    235
    
    
    
    1,017
    
    
    
    2,326Interest Expense
    
    
    134
    
    
    
    1,396
    
    
    
    1,477Total Expenses
    
    
    369
    
    
    
    2,413
    
    
    
    3,803Net Investment Income
    
    $
    1,229
    
    
    $
    951
    
    
    $
    312Partnerships equity in income of real estate partnerships
    
    $
    1,137
    
    
    $
    962
    
    
    $
    253 F-22




---



##### 





NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
For Years Ended December 31, 2007, 2006, and 2005
 Note 5:    Investment Level Debt
  As of 12/31/07
    
    
    As of 12/31/06
    
    
    As of 12/31/07Partnerships100% Principal
    
    
    Share of
    
    
    100% PrincipalBalance
    
    
    Principal Balance
    
    
    Balance
    
    
    Interest
    
    
    MaturityOutstanding
    
    

Outstanding(1)
    
    
    Outstanding
    
    

Rate(2)
    
    
    Date
    
    

Terms(3)(Unaudited)Mortgages of Wholly Owned Properties & Consolidated PartnershipsHampton, VA
    
    $
    7,778
    
    
    $
    7,778
    
    
    $
    8,239
    
    
    
    6.75
    %
    
    
    2018
    
    
    
    PP, P&IOcean City, MD
    
    
    6,847
    
    
    
    4,991
    
    
    
    6,973
    
    
    
    7.24
    %
    
    
    2008
    
    

    
    PP, P&IRaleigh, NC
    
    
    8,750
    
    
    
    8,750
    
    
    
    8,750
    
    
    
    3.09
    %
    
    
    2008
    
    

    
    PP, IAtlanta, GA
    
    
    8,747
    
    
    
    8,747
    
    
    
    8,748
    
    
    
    4.90
    %
    
    
    2009
    
    

    
    PP, P&ITotal
    
    $
    32,122
    
    
    $
    30,266
    
    
    $
    32,710Mortgages on Equity PartnershipsKansas City,
MO  Cherokee Hill
    
    $
    
    
    
    $
    
    
    
    $
    2,978
    
    
    
    
    
    
    
    
    
    
    PP, P&ITotal
    
    $
    
    
    
    $
    
    
    
    $
    2,978
 
 (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, 2007. It does not represent the Partnerships legal obligation.(2)
    
    The Partnerships weighted average interest rate was 6.14% at December 31, 2007 and 2006, 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)
    
    Loan Terms PP=Prepayment penalties applicable to loan, I=Interest only, P&I=Principal and Interest   Year
Ending December 31,
    

(in
000s)2008
    
    $
    16,0902009
    
    
    9,2772010
    
    
    5652011
    
    
    6042012
    
    
    646Thereafter
    
    
    4,940Total
    
    $
    32,122
   F-23




---



##### 





NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
For Years Ended December 31, 2007, 2006, and 2005
 Note 6:    Concentration of Risk on Real Estate Investments
  EstimatedRegion
    

Market Value
    
    

Region %(in 000s)East North Central
    
    $
    13,871
    
    
    
    5.16
    %Mideast
    
    
    115,050
    
    
    
    42.78
    %Mountain
    
    
    1,719
    
    
    
    0.64
    %Northeast
    
    
    296
    
    
    
    0.11
    %Pacific
    
    
    33,290
    
    
    
    12.38
    %Southeast
    
    
    74,078
    
    
    
    27.54
    %Southwest
    
    
    30,434
    
    
    
    11.32
    %West North Central
    
    
    180
    
    
    
    0.07
    %Total
    
    $
    268,918
    
    
    
    100.00
    %
  Note 7:    Leasing Activity
  Year
Ending December 31,
    
    (in 000s)2008
    
    $
    13,8252009
    
    
    11,1232010
    
    
    9,8312011
    
    
    7,5742012
    
    
    5,309Thereafter
    
    
    21,082Total
    
    $
    68,744
 F-24




---



##### 





NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
For Years Ended December 31, 2007, 2006, and 2005
 Note 8:    Commitments and Contingencies
   Note 9:    Other Related Party Transactions
   Year Ended December 31,
    

(000s)2007
    
    $
    2006
    
    $
    6,0002005
    
    $
    6,000
 F-25




---



##### 





NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
For Years Ended December 31, 2007, 2006, and 2005
 Note 10:    Financial Highlights
 2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Per Share(Unit) Operating Performance:Net Asset Value, beginning of period
    
    $
    33.87
    
    
    $
    29.59
    
    
    $
    26.15
    
    
    $
    24.66
    
    
    $
    24.11Income From Investment Operations:Investment income, before management fee
    
    
    2.37
    
    
    
    2.07
    
    
    
    1.67
    
    
    
    1.44
    
    
    
    1.71Investment Management fee
    
    
    (0.50
    )
    
    
    (0.45
    )
    
    
    (0.40
    )
    
    
    (0.36
    )
    
    
    (0.33
    )Net realized and unrealized gain (loss) on investments
    
    
    0.81
    
    
    
    2.66
    
    
    
    2.17
    
    
    
    0.41
    
    
    
    (0.83
    )Net Increase in Net Assets Resulting from Operations
    
    
    2.68
    
    
    
    4.28
    
    
    
    3.44
    
    
    
    1.49
    
    
    
    0.55Net Asset Value, end of period
    
    $
    36.55
    
    
    $
    33.87
    
    
    $
    29.59
    
    
    $
    26.15
    
    
    $
    24.66Total Return, before Management Fee (a):
    
    
    9.44
    %
    
    
    16.03
    %
    
    
    14.76
    %
    
    
    7.61
    %
    
    
    3.63
    %Ratios/Supplemental Data:Net Assets, end of period (in millions)
    
    $
    247
    
    
    $
    229
    
    
    $
    205
    
    
    $
    187
    
    
    $
    182Ratios to average net assets for the year ended (b):Total Portfolio Level Expenses
    
    
    1.55
    %
    
    
    1.51
    %
    
    
    1.46
    %
    
    
    1.43
    %
    
    
    1.35
    %Investment Income before Management Fee
    
    
    6.76
    %
    
    
    6.58
    %
    
    
    4.89
    %
    
    
    5.76
    %
    
    
    7.12
    %
 
 (a)
    
    Total Return, before 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-26




---



##### 





THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
 SCHEDULE III  REAL ESTATE OWNED: PROPERTIES
DECEMBER 31, 2007
 Costs
    
    
    Gross Amount at WhichInitial Costs to the Partnership
    
    
    Capitalized
    
    
    Carried at Close of YearEncumbrances
    
    
    
    
    
    
    Building &
    
    
    Subsequent to
    
    
    
    
    
    
    Building &
    
    
    2007
    
    
    
    
    
    
    Year of
    
    
    DateDescription
    
    at 12/31/07
    
    
    Land
    
    
    Improvements
    
    
    Acquisition
    
    
    Land
    
    
    Improvements
    
    
    Sales
    
    
    Total
    
    
    Construction
    
    
    AcquiredProperties:Office
Building 
Lisle, IL
    
    None
    
    
    1,780,000
    
    
    
    15,743,881
    
    
    
    6,988,640
    
    
    
    1,949,206
    
    
    
    22,563,315
    
    
    
    
    
    
    
    24,512,521
    
    
    
    1985
    
    
    Apr., 1988Garden Apartments 
Atlanta, GA
    
    
    8,747,000
    
    
    
    3,631,212
    
    
    
    11,168,904
    
    
    
    4,748,177
    (b)
    
    
    4,937,369
    
    
    
    14,610,924
    
    
    
    
    
    
    
    19,548,293
    
    
    
    1987
    
    
    Apr., 1988Retail Shopping
Center 
Roswell, GA
    
    None
    
    
    9,454,622
    
    
    
    21,513,677
    
    
    
    6,914,923
    
    
    
    11,135,593
    
    
    
    26,747,629
    
    
    
    
    
    
    
    37,883,222
    
    
    
    1988
    
    
    Jan., 1989Garden Apartments 
Raleigh, NC
    
    
    8,750,000
    
    
    
    1,623,146
    
    
    
    14,135,553
    
    
    
    616,338
    
    
    
    1,773,244
    
    
    
    14,601,793
    
    
    
    
    
    
    
    16,375,037
    
    
    
    1995
    
    
    Jun., 1995Hotel 
Portland, OR
    
    
    
    
    
    
    1,500,000
    
    
    
    6,508,729
    
    
    
    1,119,686
    
    
    
    1,500,000
    
    
    
    7,628,415
    
    
    
    
    
    
    
    9,128,415
    
    
    
    1989
    
    
    Dec., 2003Office Building 
Nashville, TN
    
    None
    
    
    1,797,000
    
    
    
    6,588,451
    
    
    
    2,938,434
    
    
    
    1,855,339
    
    
    
    9,468,546
    
    
    
    
    
    
    
    11,323,885
    
    
    
    1982
    
    
    Oct., 1995Office Building 
Beaverton, OR
    
    None
    
    
    816,415
    
    
    
    9,897,307
    
    
    
    1,687,530
    
    
    
    845,887
    
    
    
    11,555,365
    
    
    
    
    
    
    
    12,401,252
    
    
    
    1995
    
    
    Dec., 1996Industrial Building 
Aurora, CO
    
    None
    
    
    1,338,175
    
    
    
    7,202,411
    
    
    
    2,747,794
    
    
    
    1,415,159
    
    
    
    9,873,221
    
    
    
    (11,288,380
    )
    
    
    
    
    
    
    1997
    
    
    Sep., 1997Office Complex 
Brentwood, TN
    
    None
    
    
    2,425,000
    
    
    
    7,063,755
    
    
    
    2,882,337
    
    
    
    2,463,601
    
    
    
    9,907,491
    
    
    
    
    
    
    
    12,371,092
    
    
    
    1987
    
    
    Oct., 1997Retail Shopping
Center 
Hampton, VA
    
    
    7,777,948
    
    
    
    2,339,100
    
    
    
    12,767,956
    
    
    
    2,943,034
    
    
    
    4,839,418
    
    
    
    13,210,672
    
    
    
    
    
    
    
    18,050,090
    
    
    
    1998
    
    
    May, 2001Retail Shopping Center 
Westminster, MD
    
    
    
    
    
    
    3,031,735
    
    
    
    9,326,605
    
    
    
    47,160
    
    
    
    3,031,735
    
    
    
    9,373,765
    
    
    
    
    
    
    
    12,405,500
    
    
    
    2005
    
    
    June, 2006Retail Shopping Center 
Ocean City, MD
    
    
    6,846,764
    
    
    
    1,517,099
    
    
    
    8,495,039
    
    
    
    7,004,187
    
    
    
    1,517,099
    
    
    
    15,499,226
    
    
    
    
    
    
    
    17,016,325
    
    
    
    1986
    
    
    Nov., 2002Garden Apartments 
Austin, TX
    
    
    
    
    
    
    2,577,097
    
    
    
    20,125,169
    
    
    
    21,583
    
    
    
    2,577,097
    
    
    
    20,146,752
    
    
    
    
    
    
    
    22,723,849
    
    
    
    2007
    
    
    May, 2007Retail Shopping Center 
Dunn, NC
    
    None
    
    
    586,500
    
    
    
    5,372,344
    
    
    
    
    
    
    
    586,500
    
    
    
    5,372,344
    
    
    
    
    
    
    
    5,958,844
    
    
    
    1984
    
    
    Aug., 2007Garden Apartments 
Charlotte, NC
    
    
    
    
    
    
    1,350,000
    
    
    
    12,184,750
    
    
    
    700
    
    
    
    1,350,000
    
    
    
    12,185,450
    
    
    
    
    
    
    
    13,535,450
    
    
    
    1998
    
    
    Sep., 200732,121,712
    
    
    
    35,767,101
    
    
    
    168,094,531
    
    
    
    40,660,523
    
    
    
    41,777,247
    
    
    
    202,744,908
    
    
    
    (11,288,380
    )
    
    
    233,233,775
 2007
    
    
    2006
    
    
    2005(a)
    
    Balance at beginning of year
    
    
    199,124,056
    
    
    
    183,767,148
    
    
    
    224,584,885Additions:Acquistions
    
    
    42,195,860
    
    
    
    12,358,340
    
    
    
    Improvements, etc.
    
    
    3,202,239
    
    
    
    2,998,568
    
    
    
    6,187,973Conversions from JV to WO
    
    
    
    
    
    
    
    
    
    
    Deletions:Sale
    
    
    (11,288,380
    )
    
    
    
    
    
    
    (47,005,710
    )Balance at end of year
    
    
    233,233,775
    
    
    
    199,124,056
    
    
    
    183,767,148(b)
    
    Net of
$1,000,000 settlement received from lawsuit.
 F-27




---



##### 





THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
 SCHEDULE IV  MORTGAGE LOANS ON REAL ESTATE
DECEMBER 31, 2007
 Principal amountof LoansFace
    
    
    Carrying
    
    
    Subject toPeriodic
    
    
    
    
    
    
    Amount
    
    
    Amount
    
    
    DelinquentInterest
    
    
    Final Maturity
    
    
    payment
    
    
    Prior
    
    
    of
    
    
    of
    
    
    Principal orDescription
    
    Rate
    
    
    Date
    
    
    Terms
    
    
    Liens
    
    
    Mortgages
    
    
    Mortgages
    
    
    InterestLoans Receivables:Westminster, MD
    
    
    10.00
    %
    
    
    3/3/2006
    *
    
    I only
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 2007
    
    
    2006Balance at beginning of year
    
    
    
    
    
    
    4,277,769Additions during the period:New Mortgage loansOther  drawdown on loanOther  accrued interestDeductions during the period:Cost of real estate soldForeclosuresCost of mortgages sold
    
    
    
    
    
    
    (4,277,769
    )Amortization of premiumOther  accrued interest paymentBalance at end of year
 
 *
    
    I is Interest only
 F-28