<PAGE>

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

                                    FORM 10-K

(Mark One)

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

FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999

                                       OR

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


COMMISSION FILE NUMBER 33-20083



                   THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

                                  IN RESPECT OF

             THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY ACCOUNT
             ------------------------------------------------------
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


            NEW JERSEY                                22-1211670
-------------------------------            ---------------------------------
(STATE OR OTHER JURISDICTION OF            (IRS EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)




                 751 BROAD STREET, NEWARK, NEW JERSEY 07102-2992
               ---------------------------------------------------
               (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

                                 (800) 778-2255
              ----------------------------------------------------
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)


     INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS.                        YES  X   NO
                                                                     ---    ---


<PAGE>

                        THE PRUDENTIAL VARIABLE CONTRACT
                              REAL PROPERTY ACCOUNT
                                  (REGISTRANT)

                                      INDEX
ITEM                                                                        PAGE
 NO.                                                                         NO.
----                                                                        ----
         COVER PAGE

         INDEX                                                                 2

PART I

   1.    BUSINESS                                                              3

   2.    PROPERTIES                                                            5

   3.    LEGAL PROCEEDINGS                                                     5

   4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                   5

PART II

   5.    MARKET FOR THE REGISTRANT'S INTERESTS AND RELATED SECURITY HOLDER
         MATTERS                                                               6

   6.    SELECTED FINANCIAL DATA                                               6

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

   7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK           16

   8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                          16

   9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
          AND FINANCIAL DISCLOSURE                                            16

PART III

   10.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                   17

   11.   EXECUTIVE COMPENSATION                                               20

   12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT       20

   13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                       20

PART IV

   14.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K     21

         EXHIBIT INDEX                                                        21

         SIGNATURES                                                           23


                                       2
<PAGE>

                                     PART I
ITEM 1. BUSINESS

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

The assets of the Real Property Account are invested in The Prudential Variable
Contract Real Property Partnership (the "Partnership"). The Partners in the
Partnership are The Prudential Insurance Company of America, Pruco Life
Insurance Company, and Pruco Life Insurance Company of New Jersey (collectively,
the "Partners"). The Partnership, a general partnership organized under New
Jersey law on April 29, 1988, was formed through agreement among the Partners,
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 Partners reserve discretion to increase
this amount to meet partnership liquidity requirements. The remainder of the
Partnership's assets are invested in other types of real estate-related
investments, including real estate investment trusts.

         Office Properties - The Partnership owns office properties in Lisle and
         Oakbrook Terrace, Illinois; Morristown, New Jersey; Brentwood,
         Tennessee; and Beaverton, Oregon. Total square footage owned is
         approximately 577,000 of which 96% or 553,000 square feet are leased
         between 1 and 10 years.

         Apartment Complexes - The Partnership owns apartment complexes in
         Atlanta, Georgia and Raleigh, North Carolina. There are a total of 490
         apartment units available of which 97% or 475 units are leased. Lease
         terms range from monthly to one year. In addition, on September 17,
         1999, the Partnership invested in an apartment complex located in
         Jacksonville, FL. This joint venture investment has a total of 458
         units available of which 408 units or 89% are occupied. Lease terms
         range from monthly to one year.

         Retail Property - The Partnership owns a shopping center in Roswell,
         Georgia. The property is located approximately 22 miles north of
         downtown Atlanta on a 30 acre site. The square footage is approximately
         297,000 of which 97% or 288,000 square feet is leased between 1 and 10
         years. On September 30, 1999 the Partnership invested in a retail
         portfolio located in the Kansas City, KS and Kansas City, MO areas.
         This joint venture investment has approximately 476,000 of net rentable
         square feet of which 90% or 427,000 square feet is leased between 1 and
         20 years.

         Industrial Properties - The Partnership owns warehouses and
         distribution centers in Bolingbrook, Illinois; Aurora, Colorado; and
         Salt Lake City, Utah. Total square footage owned is approximately
         685,000 of which 72% or 494,238 square feet are leased between 2 and 10
         years.

                                       3
<PAGE>


         Investment in Real Estate Trust - The Partnership owns 386,208 shares
         of ProLogis REIT. ProLogis is a self administered and self-managed
         equity real estate investment trust engaged in owning, operating,
         marketing and leasing high quality, industrial distribution facilities
         throughout North America and Europe, and developing master-planned
         distribution parks and corporate distribution facilities. The
         Partnership also owns smaller individual investments in various other
         REIT stocks.

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 will be invested
in any two investments, no more than 80% of the assets will be invested in any
three investments, and no more than 90% of the assets will be invested in any
four investments. To comply with 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.

REAL ESTATE MARKET

1999 was a year of stability for the U.S. real estate market. Throughout the
year, most areas witnessed only slight declines in conditions, as new supply
remained in check and demand continued to increase.

OFFICE MARKET

The office market is still healthy. Construction has continued, but demand has
almost kept up pace. Downtown markets look particularly healthy. Suburban areas
present more risk.

Preliminary data from CB Richard Ellis / Torto Wheaton Research (TWR) indicates
that the year end 1999 national average office vacancy rate was 9.8%, up from a
low 9% as of year end 1998. The average downtown vacancy rate was 8.4% and the
suburban rate reached 10.4% as of year end 1999.

APARTMENT MARKET

The U.S. apartment market remains close to a state of equilibrium. Demand has
been solid, and supply has stayed in check. Average vacancy rates are still low,
with only submarket-specific evidence of potential overbuilding. F.W. Dodge
reported year end 1999 occupancy was 93.0%, in-line with 1997 and 1998.
Indicative of the overall stability of the market, apartment occupancy has
remained between 92.5% and 93.2% since 1990. The outlook for the foreseeable
future remains equally solid.

Investment capital continued to flow into the sector in 1999, but there is
evidence that underwriting has become slightly more conservative. Growth in
rents has slowed, thus reducing the upward pressure on prices. In general,
underlying assumptions about future conditions that are imbedded in purchase
prices today look fairly reasonable. Rising mortgage rates negatively impact
housing affordability and should generally favor the rental markets and the
apartment sector.

RETAIL MARKET

Amid much concern over the impact of e-commerce on traditional retailers, the
retail sector enjoyed a strong year in 1999. Retail sales growth soared to a
fifteen-year high. U.S. retail sales for the year rose 8.9%, the biggest annual
increase since 1984. This strong annual growth was capped by a sales growth
surge of 1.25% in December.

As far as retail real estate is concerned, the sector remains relatively weak
compared with other property types. The growth in sales price per square foot
remained flat to modest in 1999, and rent growth was less that half of 1998's
estimate. Retail will remain a challenging sector in 2000 as new construction,
or rather a lack of demolition, continues to plague the outlook for retail
property.


                                       4
<PAGE>

INDUSTRIAL MARKET

The industrial real estate sector appears to have peaked. Average availability
has begun to tick upward. CB Richard Ellis/Torto Wheaton Research (TWR) estimate
that approximately 173 million square feet of industrial space was completed in
the U.S. during 1999, up substantially from the 123 million which came on line
during 1998. The pipeline for delivery of new product in 2000 indicates the rate
of construction will decline. Projections indicate that around 150 million
square feet of new space will become available during the next year.

TWR estimates that the overall vacancy rate for industrial space as of year end
1999 was 8.2%, up from a low of 6.9% reached one year prior. The firm projects
that industrial vacancy will continue to trend slowly upward in 2000, rising
about 0.3 percentage points.

PUBLIC REAL ESTATE SECURITIES

1999 represented another disappointing year for the REIT market. For the second
consecutive year REIT share prices declined, with the Morgan Stanley REIT Index
ending the year 4.6% lower than its 12/31/98 level. This was in sharp contrast
to the S&P 500 and NASDAQ which gained 19.5% and 85.6% respectively. REIT shares
traded at steep discounts to NAV, approaching 20% overall, and earnings
multiples reached historically low levels. While there were occasional glimmers
of hope throughout the year, fueled in part by Warren Buffet's forays into the
market, momentum could not be sustained. Outflows from REIT mutual funds topped
$1.3 billion for the year with the 12/31/99 value of all REIT mutual funds
equaling $7.75 billion, nearly 16% below 1998 and 35% below the 1997 value.

The CMBS market proved remarkably resilient after the market collapsed in the
fall of 1998. While substantially below the record setting level of $78.3
billion in 1998, total issuance for 1999 was $67.3 billion, with approximately
one-fourth of the year's production being registered in the last three months.


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



ITEM 2.  PROPERTIES

Not Applicable.

ITEM 3.  LEGAL PROCEEDINGS

None.

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

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



                                       5
<PAGE>

                                     PART II


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

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

As of March 24, 2000, there were approximately 45,020 contract owners of record
investing in the Real Property Account.



ITEM 6.  SELECTED FINANCIAL DATA

Selected financial data of the Real Property Partnership:
<TABLE>
<CAPTION>
                                                                           Year Ended December 31,
                                   -------------------------------------------------------------------------------------------------
                                        1999               1998                 1997                1996              1995
                                   -----------------  ----------------- ---------------------  ------------------ ------------------
<S>                                <C>                <C>               <C>                    <C>                <C>
RESULTS OF OPERATIONS:

Net investment income                  $ 13,279,589       $ 15,833,513          $ 13,789,747        $ 15,419,518       $ 14,720,271
Net realized and unrealized gain
  (loss) on investment in                (7,217,046)         4,795,111             8,485,232          (4,784,583)           661,623
Partnership
                                   -----------------  ----------------- ---------------------  ------------------ ------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS              $  6,062,543       $ 20,628,624          $ 22,274,979        $ 10,634,935       $ 15,381,894
                                   =================  ================= =====================  ================== ==================


FINANCIAL POSITION:

                                                                          December 31,
                                   -------------------------------------------------------------------------------------------------
                                        1999               1998                 1997                1996              1995
                                   -----------------  ----------------- ---------------------  ------------------ ------------------

Total Assets                          $ 225,142,653      $ 244,249,272         $ 222,745,135       $ 204,156,040      $ 196,993,758
                                   =================  ================= =====================  ================== ==================

Long-Term Lease Obligation                      $ 0                $ 0                   $ 0         $ 4,072,677        $ 3,882,421
                                   =================  ================= =====================  ================== ==================
</TABLE>



                                       6
<PAGE>

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


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

The following analysis of the liquidity and capital resources and results of
operations of the Partnership should be read in conjunction with the Financial
Statements and the related Notes to the Financial Statements included elsewhere
herein.


(a)  LIQUIDITY AND CAPITAL RESOURCES


As of December 31, 1999, the Partnership's liquid assets consisting of cash,
cash equivalents and marketable securities were $16.8 million, a decrease of
$56.7 million from December 31, 1998. This decrease was due primarily to
distributions to Partners of $30 million on February 2, 1999 and $6 million on
December 23, 1999. In addition, the acquisition of two additional real estate
investments in September 1999 required funding of approximately $12.6 million.
Sources of liquidity include net cash flow from property operations, interest
from short-term investments, and dividends from REIT shares.

The Partnership's investment policy allows up to 30% investment in cash and
short-term obligations, although the Partnership generally holds approximately
10% of its assets in cash or liquid instruments. At December 31, 1999, 7% of the
Partnership's assets consisted of cash, cash equivalents and marketable
securities.

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 returned
to Prudential on an ongoing basis from contract owners' net contributions and
other available cash. The amount of the commitment is reduced by $10 million for
every $100 million in current value net assets of the Partnership. Thus, with
$225 million in net assets, the commitment has been automatically reduced to $80
million. As of December 31, 1999, Prudential's equity interest in the
Partnership under this commitment was $45 million. Prudential does not intend to
make any contributions during the 2000 fiscal year and will begin to phase out
this commitment over the next several years.

As discussed previously, the Partners made $36 million in withdrawals during
1999 from excess cash. Additional withdrawals may be made by the Partners during
2000 based upon the percentage of assets invested in short-term obligations,
taking into consideration anticipated cash needs of the Partnership including
potential property acquisitions, property dispositions and capital expenditures.
Management anticipates that its current liquid assets and ongoing cash flow from
operations will satisfy the Partnership's needs over the next twelve months and
the foreseeable future.

During 1999, the Partnership spent $2.6 million in capital expenditures for
tenant alterations and improvements. The majority of the capital expenditures
was associated with leasing activity at the industrial property located in
Aurora, CO and the office complex located in Morristown, NJ.


                                       7
<PAGE>

(b) RESULTS OF OPERATIONS

The following is a brief discussion of the Partnership's results of operations
for the years ended December 31, 1999, 1998, and 1997.

1999 VS. 1998

The following table presents a comparison of the Partnership's sources of net
investment income, and realized and unrealized gains or losses by investment
type, for the twelve months ended December 31, 1999 and December 31, 1998.

<TABLE>
<CAPTION>
                                                 TWELVE MONTHS ENDED DECEMBER 31,
                                                    1999                1998
                                               -------------        -------------
<S>                                               <C>                 <C>
 NET INVESTMENT INCOME:

  Office properties                              $7,133,356          $ 7,269,613
  Apartment complexes                             2,556,743            4,493,384
  Retail property                                 2,676,387            2,702,234
  Industrial properties                             894,258            1,325,320
  Income from interest in properties                 98,375               33,462
  Dividend income from real
   estate investment trust                        1,221,843              669,100
  Other (including interest income,
   investment mgt fee, etc.)                     (1,301,373)            (659,600)
                                               -------------        -------------
  TOTAL NET INVESTMENT INCOME                   $13,279,589          $15,833,513
                                               =============        =============

  UNREALIZED GAIN (LOSS) ON INVESTMENTS:

  Office properties                             ($3,267,264)          $3,034,542
  Apartment complexes                               607,234              657,012
  Retail property                                (1,770,462)          (1,312,296)
  Industrial properties                             209,503              333,630
  Interest in properties                           (680,870)                  -
  Real estate investment trust                   (2,282,044)            (969,156)

 REALIZED GAIN (LOSS) ON INVESTMENTS

  Apartment complexes                                    -             1,730,042
  Industrial properties                              (1,485)           1,229,799
  Interest in properties                             45,126               91,538
  Real estate investment trust                      (76,784)                  -

 TOTAL REALIZED AND UNREALIZED (LOSS)          -------------        -------------
 GAIN ON INVESTMENTS                            ($7,217,046)          $4,795,111
                                               =============        =============
</TABLE>
The Partnership's net investment income for 1999 was $13.3 million, a decrease
of $2.5 million from the prior year.


                                       8
<PAGE>

This was primarily the result of the sales of an industrial property in Pomona,
CA and an apartment complex in Farmington Hills, MI, offset by the acquisition
of an apartment complex in Jacksonville, FL. These transactions generated a
reduction of $3.0 million in real estate revenues but only $400,000 in expenses.
As a result, investment income decreased while investment expenses remained
relatively flat.

Revenue from real estate properties was $21.8 million in 1999, a decrease of
$2.8 million, or 11.3%, from $24.6 million in 1998 mainly as a result of the
sales of the industrial property and apartment complex discussed previously.

Income from interest in properties increased $64,913, or 194.0%, from $33,462 in
1998 to $98,375 in 1999 primarily as a result of the Partnership investing in a
retail portfolio located in Kansas City, KS and Kansas City, MO.

On March 30, 1999, the Partnership converted 506,894 shares of Meridian REIT to
557,583 shares of ProLogis REIT, with a fair value of $10.9 million, and cash of
$1.0 million (or total fair value of $11.9 million) as a result of ProLogis'
acquisition of Meridian Industrial Trust. The conversion resulted in a realized
gain of $401,713. Dividend income from real estate investment trusts amounted to
$1.2 million for the year ended December 31, 1999, an increase of $0.6 million,
or 82.6%, compared to the corresponding period in 1998. This increase was
primarily due to an increase in the amount invested in REIT stocks.

Administrative expenses increased $283,714, or 14.5%, during 1999. This increase
was primarily due to the acquisition of the apartment complex located in
Jacksonville, FL coupled with higher expense levels experienced by the Westpark
office property located in Brentwood, TN.

Interest expense increased $145,418, or 100%, in 1999 as a result of the
Partnership's investment in the apartment complex located in Jacksonville, FL,
which was acquired subject to $10.2 million in debt.

Minority interest in consolidated partnership increased $33,746, or 100%, as a
result of the Partnership's joint venture investment in the apartment complex
located in Jacksonville, FL.


OFFICE PROPERTIES

Net investment income from property operations for the office sector decreased
approximately $136,000, or 2%, for the year ended December 31, 1999 when
compared to the corresponding period in 1998.

The six office properties owned by the Partnership experienced a net unrealized
loss of approximately $3.3 million during 1999 compared to a net unrealized gain
of $3.0 million in 1998. The largest share of this net unrealized loss was due
to the office property located in Oakbrook Terrace, IL. This $1.6 million value
decrease was due to changes in anticipated costs associated with assumed
re-leasing of the facility which were used in valuing the property. The
Beaverton, OR office property also experienced a net unrealized loss of
approximately $0.8 million. This decline in value was due to a change in
discounted cash flow assumptions resulting from the large amount of Class "A"
space under construction in the local market. In addition, a lower renewal
probability in determining the valuation of the property was utilized for a
major tenant expected to be vacating their space upon expiration. The Lisle, IL
office property also experienced a net unrealized loss of approximately $0.7
million primarily due to capital expenditures on the property that were not
reflected as an increase in market value.

The office complex located in Morristown, NJ is expected to be marketed for sale
during 2000.

Occupancy at the Beaverton, OR, Oakbrook Terrace, IL, and one of the Brentwood,
TN properties remained unchanged from December 31, 1998 at 100%. Occupancy at
the Morristown, NJ property increased from 86% at December 31, 1998 to 100% at
December 31, 1999 while occupancy at the Lisle, IL office property decreased
from 96% at December 31, 1998 to 88% at December 31, 1999. Occupancy at the
other Brentwood, TN property owned by the Partnership decreased from 100% at
December 31, 1998 to 95% at December 31, 1999. As of December 31, 1999 all
vacant spaces were being marketed.


                                       9
<PAGE>

APARTMENT COMPLEXES

Net investment income from property operations for the apartment sector was $2.6
million in 1999, a decrease of $1.9 million, or 43.1%, when compared to 1998.
This decrease was primarily due to the sale of the apartment complex located in
Farmington Hills, MI in 1998.

The apartment complexes owned by the Partnership experienced a net unrealized
gain of $0.6 million for both years ended December 31, 1999 and 1998. The net
realized gain of $1.7 million experienced in 1998 was due to the Farmington
Hill, MI apartment complex which was sold on October 8, 1998 for $16.9 million.

On September 17, 1999, the Partnership invested in an apartment complex located
in Jacksonville, FL, This joint venture investment required the Partnership to
contribute $7.5 million and the partner to contribute $0.4 million. There is
$10.2 million in debt on this garden apartment complex.

The occupancy at the Atlanta, GA complex increased from 96% at December 31, 1998
to 98% at December 31, 1999. Occupancy at the apartment complex in Raleigh, NC
decreased from 93% at December 31, 1998 to 92% at December 31, 1999. Occupancy
at the Jacksonville, FL apartment complex was 89% at December 31, 1999. As of
December 31, 1999, all available vacant spaces were being marketed.

RETAIL PROPERTY

Net investment income for the Partnership's retail property located in Roswell,
GA was approximately $2.7 million for the twelve months ended December 31, 1999
and 1998.

The retail property experienced a net unrealized loss of $1.8 million and $1.3
million in 1999 and 1998, respectively. The decrease in value in 1999 was
attributable to a declining position of the property in the market, while the
decrease in 1998 was a reflection of lower rents. The complex is no longer being
actively marketed for sale.

On September 30, 1999, the Partnership invested in a retail portfolio located in
the Kansas City, KS and Kansas City, MO area. This joint venture investment
required the Partnership to contribute $5.1 million to the investment and the
partner to contribute $1.7 million. There is $21.0 million in debt on this
retail portfolio. During the twelve months ended December 31, 1999, income from
interest in this investment amounted to $98,375. This investment experienced a
net unrealized loss in 1999 of $0.6 million primarily due to capital
expenditures on the property that were not reflected as an increase in market
value.

Occupancy at the shopping center located in Roswell, GA decreased from 98% at
December 31, 1998 to 97% at December 31, 1999. The retail portfolio located in
Kansas City, KS and Kansas City, MO had an average occupancy of 90% at December
31, 1999. As of December 31, 1999, all vacant spaces were being marketed.

INDUSTRIAL PROPERTIES

Net investment income from property operations for the industrial properties
decreased from $1.3 million in 1998 to $0.9 million in 1999. The majority of
this 32.5% decrease was a result of the sale of Pomona Industrial Park,
including the land, offset by an increase in net investment income for the
industrial properties located in Aurora, CO and Salt Lake City, UT due to
increased occupancy.

The three industrial properties owned by the Partnership experienced a net
unrealized gain of approximately $210,000 and $334,000 in 1999 and 1998,
respectively. The majority of the increase for 1999 was attributable to the
Aurora, CO industrial property due to improved market conditions, higher market
rental rates, and the absorption of vacant space. The Pomona, CA property was
sold on December 17, 1998 for $21.4 million and resulted in a realized gain of
$1.2 million.

The occupancy at the Bolingbrook, IL property was 100% at December 31, 1999 and
1998. The occupancy at the Salt Lake City, Utah property increased to 34% at
December 31, 1999 from 0% at December 31, 1998. The Aurora, CO property's
occupancy rate increased from 46% at December 31, 1998 to 75% at December 31,
1999. As of


                                       10
<PAGE>

December 31, 1999, all vacant spaces were being marketed.

REAL ESTATE INVESTMENT TRUST

During 1999, the Partnership recognized a realized gain of $401,713 from the
conversion of 506,894 shares of Meridian REIT to 557,583 shares of ProLogis
REIT. This was offset by a realized loss of $478,497 primarily as a result of
the sale of 171,375 ProLogis REIT shares and other investments in REIT stocks.

Management continued applying a 3% discount to the market value of the ProLogis
REIT shares through June 29, 1999 because of a restriction which limits the
number of shares that can be publicly traded during any six month period. The
application of the 3% discount was discontinued on June 30, 1999 because this
restriction no longer applied.

OTHER

Other net investment income decreased $0.6 million during 1999 when compared to
the corresponding period in 1998. Other net investment income includes interest
income from short-term investments, investment management fees, and expenses not
related to property activities.


1998 VS. 1997


The following table presents a comparison of the Partnership's sources of net
investment income, and realized and unrealized gains or losses by investment
type, for the twelve months ended December 31, 1998 and December 31, 1997.

<TABLE>
<CAPTION>
                                                 YEAR ENDED DECEMBER 31,
                                               1998                  1997
                                         ------------------   -------------------
<S>                                      <C>                  <C>
NET INVESTMENT INCOME:

Office properties                              $ 7,269,613           $ 5,499,107
Apartment complexes                              4,493,384             3,891,465
Retail property                                  2,702,234             2,856,357
Industrial properties                            1,325,320             2,138,111
Income from interest in properties                  33,462               435,296
Dividend income from real
  estate investment trust                          669,100               158,184
Other (including interest income,
  Investment management fee, etc.)                (659,600)           (1,188,773)
                                         ------------------   -------------------
TOTAL NET INVESTMENT INCOME                   $ 15,833,513          $ 13,789,747
                                         ==================   ===================
</TABLE>


                                       11
<PAGE>

<TABLE>
<CAPTION>
                                                YEAR ENDED DECEMBER 31,
                                              1998                  1997
                                        ------------------   -------------------
<S>                                     <C>                  <C>
REALIZED AND UNREALIZED GAIN(LOSS)
  ON INVESTMENTS:

Office properties                             $ 3,034,542           $ 1,897,749
Apartment complexes                             2,387,054             1,053,061
Retail property                                (1,312,296)            1,109,099
Industrial properties                           1,563,429             1,616,942
Interest in properties                             91,538               284,581
Real estate investment trust                     (969,156)            2,523,800
                                        ------------------   -------------------
TOTAL REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS                         $ 4,795,111           $ 8,485,232
                                        ==================   ===================
</TABLE>

The Partnership's net investment income for 1998 was $15.8 million, an increase
of $2.0 million from the prior year. This increase was primarily the result of
increased revenues from real estate and improvements partially offset by
increased operating expenses.

Revenue from real estate and improvements was $24.6 million in 1998, an increase
of $3.0 million, or 13.9%, from 1997. This increase was primarily due to higher
occupancy at the Lisle, IL office building and the Aurora, CO distribution
center coupled with increased rental rates on other properties.

Interest on short-term investments decreased $0.4 million from 1997. This was
primarily due to lower average cash and cash equivalent balances during 1998
compared to the prior year. Cash and cash equivalents through the third quarter
of 1998 averaged approximately $30 million, but increased significantly in the
last quarter of 1998 due to the sales of two properties in Pomona, CA and
Farmington Hills, MI.

Property operating expenses increased $0.8 million, or 23.5%, from 1997. This
increase was due primarily to a full year's operating costs (i.e. electricity,
repair and maintenance, water, etc.) for one of the Brentwood, TN properties,
which was acquired in late 1997 in addition to operating expenses incurred by
the Partnership on vacant properties.

Administrative expenses decreased $0.3 million or 16.1%. This decrease was due
primarily to a reduction in legal expenses.

There was no interest expense during 1998 due to the Partnership exercise of its
purchase option under the capital lease obligation.


OFFICE PROPERTIES

In 1998, net investment income from property operations for the office
properties increased $1.8 million, or 32.2%, from prior year. The increase was
primarily due to a full year's net investment income for one of the Brentwood,
TN properties which was acquired in late 1997, as well as the leasing of vacant
space in the Lisle, IL office property.

Office properties experienced a net unrealized gain of $3.0 million in 1998 due
to improving office market conditions in most of the geographical areas where
the Partnership has office properties, particularly, the Oakbrook Terrace, IL
office property in suburban Chicago.


                                       12
<PAGE>

Occupancy at the Beaverton, OR; Oakbrook Terrace, IL; and Brentwood, TN
properties remained at 100% as of December 31, 1998 while occupancy at the
Lisle, IL office property increased from 37% to 96% at December 31, 1998.
Occupancy at the Morristown, NJ property decreased from 99% to 86%.


APARTMENT COMPLEXES

Net investment income from property operations for the apartment complexes
increased $0.6 million, or 15.5%, from 1997. The majority of this increase was
due to increased rental rates at the Atlanta, GA apartment complex.

Holdings in the Partnership's two apartment complexes experienced a net
unrealized gain of $0.6 million during 1998. The Atlanta, GA property was the
largest contributor to the gain as it appreciated $0.4 million. The gain was
attributable to increased rental rates at the property. The Raleigh, NC property
experienced a net unrealized gain of $0.2 million due to increased occupancy
rates. The Farmington Hills, MI property was sold on October 7, 1998 for a price
of $16.9 million, which resulted in a realized gain of $1.7 million.

At the end of December 31, 1998, occupancy at the Atlanta, GA and Raleigh, NC
apartment complex was 96% and 93%, respectively.


RETAIL PROPERTY

In 1998, the retail center experienced a net unrealized loss of $1.3 million, a
reflection of lower rents. Occupancy at the shopping center was 98% at December
31, 1998, which is an increase of 2% from the prior year.


INDUSTRIAL PROPERTIES

Net investment income from property operations for the industrial properties
decreased $0.8 million, or 38.0%, from 1997. The decrease was attributable to
the sale of Pomona Industrial Park, which accounted for 82% of the decrease.

The three industrial properties experienced a net unrealized gain of $0.3
million during 1998. The Pomona, CA property was sold on December 17, 1998 for
$21.4 million, which resulted in a realized gain of $1.2 million.

Occupancy at the Bolingbrook, IL property remained unchanged at 100%. Occupancy
at the Salt Lake City, UT and Aurora, CO property increased to 33.6% and 46%,
respectively from prior year.


REAL ESTATE INVESTMENT TRUST

On September 24, 1997 the Partnership acquired 506,894 shares of Meridian
Industrial REIT. Dividend income from the REIT increased $0.5 million from 1997.

The Partnership held 506,894 shares of Meridian Industrial REIT throughout 1998.
As of December 31, 1998, these REIT shares experienced an unrealized loss of
$1.0 million. The Valuation Unit of Prudential applies a 3% discount to the
market value of the REIT shares. This discount is applied because of the
restriction which limits the number of shares that can be publicly traded during
any six month period to 30% of the total shares originally acquired.



OTHER

Other net investment loss, which includes interest income from short-term
investments, investment management fees,


                                       13
<PAGE>

and expenses not related to property activities narrowed by $0.5 million. The
improved result was due to increased investment management fee in addition to a
reduction in administrative expenses.


                                       14
<PAGE>

(c)  PER SHARE INFORMATION

Following is an analysis of the Partnership's net investment income and net
realized and unrealized gain (loss) on investments, presented on a per share
basis:
<TABLE>
<CAPTION>

                                                            01/01/99       01/01/98    01/01/97
                                                               to             to          to
                                                            12/31/99       12/31/98    12/31/97
                                                            --------       --------    --------
  <S>                                                       <C>            <C>         <C>
  Revenue from real estate and improvements                  $ 2.16         $ 2.07      $ 1.82
  Equity in income of real estate partnership                $ 0.01         $ 0.00 *    $ 0.04
  Dividend income from real estate investment trusts         $ 0.12         $ 0.06      $ 0.01
  Interest on short-term investments                         $ 0.17         $ 0.16      $ 0.20
                                                             ------         ------      ------

  TOTAL INVESTMENT INCOME                                    $ 2.46         $ 2.29      $ 2.07
                                                             ------         ------      ------

  Investment management fee                                  $ 0.27         $ 0.25      $ 0.22
  Real estate taxes                                          $ 0.26         $ 0.20      $ 0.19
  Administrative expense                                     $ 0.22         $ 0.17      $ 0.20
  Operating expense                                          $ 0.38         $ 0.34      $ 0.28
  Interest expense                                           $ 0.02         $ 0.00      $ 0.02
  Minority interest in consolidated partnership              $ 0.00 *       $ 0.00      $ 0.00
                                                             ------         ------      ------

  TOTAL INVESTMENT EXPENSES                                  $ 1.15         $ 0.96      $ 0.91
                                                             ------         ------      ------

  NET INVESTMENT INCOME                                      $ 1.31         $ 1.33      $ 1.16
                                                             ------         ------      ------

  Net realized gain (loss) on real estate investments
     sold or converted                                      ($ 0.00) *      $ 0.26      $ 0.03
                                                             ------         ------      ------

  Change in unrealized gain (loss) on real
    estate investments                                      ($ 0.72)        $ 0.15      $ 0.69
  Minority interest in unrealized gain (loss)
    on investments                                          ($ 0.00) *      $ 0.00      $ 0.00
                                                             ------         ------      ------

  Net unrealized gain (loss) on real estate investments     ($ 0.72)        $ 0.15      $ 0.69
                                                             ------         ------      ------

  NET REALIZED AND UNREALIZED
     GAIN (LOSS) ON INVESTMENTS                             ($ 0.72)        $ 0.41      $ 0.72
                                                             ======         ======      ======
  Net change in share value                                  $ 0.59         $ 1.74      $ 1.88

  Share value at beginning of period                         $20.27         $18.53      $16.65
                                                             ------         ------      ------

  Share value at end of period                              $ 20.86         $20.27      $18.53
                                                             ======         ======      ======

  Ratio of expenses to average net assets                      5.33%          4.99%       5.16%

  Ratio of net investment income to average net assets         6.12%          6.97%       6.66%

  Number of shares outstanding at end of period (000's)      10,079         11,848      11,848
</TABLE>

ALL CALCULATIONS ARE BASED ON AVERAGE MONTH-END SHARES OUTSTANDING WHERE
APPLICABLE.

* Per Share amount less than $0.01 (rounded)


                                       15
<PAGE>

(d)  INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS

Certain of the statements contained in Management's Discussion and Analysis may
be considered forward-looking statements. Words such as "expects," "believes,"
"anticipates," "intends," "plans," or variations of such words are generally
part of forward-looking statements. Forward-looking statements are made based
upon management's current expectations and beliefs concerning future
developments and their potential effects upon the Partnership. There can be no
assurance that future developments affecting the Partnership will be those
anticipated by management. There are certain important factors that could cause
actual results to differ materially from estimates or expectations reflected in
such forward-looking statements including without limitation, changes in general
economic conditions, including the performance of financial markets and interest
rates; market acceptance of new products and distribution channels; competitive,
regulatory or tax changes that affect the cost or demand for the Partnership's
products; and adverse litigation results. While the Partnership reassesses
material trends and uncertainties affecting its financial position and results
of operations, it does not intend to review or revise any particular
forward-looking statement referenced in this Management's Discussion and
Analysis in light of future events. The information referred to above should be
considered by readers when reviewing any forward-looking statements contained in
this Management's Discussion and Analysis.


ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Account and the Partnership are not subject to significant exposure to
market rate risk for changes in interest rates because the Partnership's
financial instruments consist primarily of short-term fixed rate commercial
paper and neither the Account nor the Partnership use derivative financial
instruments. Further, by 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 rare circumstances.


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.



                                       16
<PAGE>

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

            DIRECTORS OF THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

FRANKLIN E. AGNEW--Director since 1994 (current term expires April, 2005).
Member, Committee on Finance & Dividends; Member, Corporate Governance
Committee. Business consultant since 1987. Chief Financial Officer, H.J. Heinz
from 1971 to 1986. Mr. Agnew is also a director of Erie Plastics Corporation.
Age 65. Address: 600 Grant Street, Suite 660, Pittsburgh, PA 15219.

FREDERIC K. BECKER--Director since 1994 (current term expires April, 2005).
Member, Auditing Committee; Member, Corporate Governance Committee. President,
Wilentz Goldman and Spitzer, P.A. (law firm) since 1989, with firm since 1960.
Age 64. Address: 90 Woodbridge Center Drive, Woodbridge, NJ 07095.

GILBERT F. CASELLAS--Director since 1998 (current term expires April, 2003).
Member, Compensation Committee. President and Chief Operating Officer, The
Swarthmore Group, Inc. since 1999. Partner, McConnell Valdes, LLP in 1998.
Chairman, U.S. Equal Employment Opportunity Commission from 1994 to 1998. Age
47. Address: 1646 West Chester Pike, Suite 3, West Chester, PA 19382.

JAMES G. CULLEN--Director since 1994 (current term expires April, 2001). Member,
Compensation Committee; Member, Committee on Business Ethics. President & Chief
Operating Officer, Bell Atlantic Corporation, since 1998. President & Chief
Executive Officer, Telecom Group, Bell Atlantic Corporation, from 1997 to 1998.
Vice Chairman, Bell Atlantic Corporation from 1995 to 1997. President, Bell
Atlantic Corporation from 1993 to 1995. Mr. Cullen is also a director of Bell
Atlantic Corporation and Johnson & Johnson. Age 57. Address: 1310 North Court
House Road, 11th Floor, Alexandria, VA 22201.

CAROLYNE K. DAVIS--Director since 1989 (current term expires April, 2001).
Member, Committee on Business Ethics; Member, Compensation Committee.
Independent Health Care Advisor since 1997. Health Care Advisor, Ernst & Young,
LLP from 1985 to 1997. Dr. Davis is also a director of Beckman Coulter
Instruments, Inc., Merck & Co., Inc., Minimed Incorporated, Science Applications
International Corporation, and Beverley Enterprises. Age 68. Address: 751 Broad
Street, 21st Floor, Newark, NJ 07102-3777.

ROGER A. ENRICO--Director since 1994 (current term expires April, 2002). Member,
Committees on Nominations & Corporate Governance; Member, Compensation
Committee. Chairman and Chief Executive Officer, PepsiCo, Inc. since 1996. Mr.
Enrico originally joined PepsiCo, Inc. in 1971. Mr. Enrico is also a director of
A.H. Belo Corporation, Target Corporation, and Electronic Data Systems. Age 55.
Address: 700 Anderson Hill Road, Purchase, NY 10577.

ALLAN D. GILMOUR--Director since 1995 (current term expires April, 2003).
Member, Investment Committee; Member, Committee on Finance & Dividends. Retired
since 1995. Vice Chairman, Ford Motor Company, from 1993 to 1995. Mr. Gilmour
originally joined Ford in 1960. Mr. Gilmour is also a director of Whirlpool
Corporation, MediaOne Group, Inc., The Dow Chemical Company and DTE Energy
Company. Age 65. Address: 751 Broad Street, 21st Floor, Newark, NJ 07102-3777.

WILLIAM H. GRAY III--Director since 1991 (current term expires April, 2004).
Chairman, Committees on Nominations & Corporate Governance. Member, Executive
Committee; Member, Committee on Business Ethics. President and Chief Executive
Officer, The College Fund/UNCF since 1991. Mr. Gray served in Congress from 1979
to 1991. Mr. Gray is also a director of Chase Manhattan Corporation, Chase
Manhattan Bank, Municipal Bond Investors Assurance Corporation, Rockwell
International Corporation, Warner-Lambert Company, CBS Corporation, Electronic
Data Systems, and Ezgov.com, Inc. Age 58. Address: 8260 Willow Oaks Corp. Drive,
Fairfax,VA 22031-4511.


JON F. HANSON--Director since 1991 (current term expires April, 2003). Member,
Investment Committee;


                                       17
<PAGE>

Member, Committee on Business Ethics. Chairman, Hampshire Management Company
since 1976. Mr. Hanson is also a director of James E. Hanson Management Company,
Neumann Distributors, Inc., United Water Resources, and Consolidated Delivery
and Logistics. Age 63. Address: 235 Moore Street, Suite 200, Hackensack, NJ
07601.

GLEN H. HINER--Director since 1997 (current term expires April, 2001). Member,
Compensation Committee. Chairman and Chief Executive Officer, Owens Corning
since 1992. Senior Vice President and Group Executive, Plastics Group, General
Electric Company from 1983 to 1991. Mr. Hiner is also a director of Dana
Corporation, Owens Corning, and Kohler, Co. Age 65. Address: One Owens Corning
Parkway, Toledo, OH 43659.

CONSTANCE J. HORNER--Director since 1994 (current term expires April, 2002).
Member, Auditing Committee; Member, Committees on Nominations & Corporate
Governance. Guest Scholar, The Brookings Institution since 1993. Ms. Horner is
also a director of Foster Wheeler Corporation, Ingersoll-Rand Company, and
Pfizer, Inc. Age 58. Address: 1775 Massachusetts Ave., N.W. Washington, D.C.
20036-2188.

GAYNOR N. KELLEY--Director since 1997 (current term expires April, 2001).
Member, Auditing Committee. Retired since 1996. Chairman and Chief Executive
Officer, The Perkin Elmer Corporation from 1990 to 1996. Mr. Kelley is also a
director of Hercules Incorporated and Alliant Techsystems. Age 68. Address: 751
Broad Street, 21st Floor, Newark, NJ 07102-3777.

BURTON G. MALKIEL--Director since 1978 (current term expires April, 2002).
Chairman, Investment Committee; Member, Executive Committee; Member, Committee
on Finance & Dividends. Professor of Economics, Princeton University, since
1988. Dr. Malkiel is also a director of Banco Bilbao Vizcaya Gestinova, Baker
Fentress & Company, The Jeffrey Company, Select Sector SPDR Trusts, and Vanguard
Group, Inc. Age 67. Address: Princeton University, Department of Economics, 110
Fisher Hall, Prospect Avenue, Princeton, NJ 08544-1021.

ARTHUR F. RYAN--Chairman of the Board Chief Executive Officer and President of
Prudential since 1994. President and Chief Operating Officer, Chase Manhattan
Bank from 1990 to 1994, with Chase since 1972. Age 57. Address: 751 Broad
Street, Newark, NJ 07102-3777.

IDA F.S. SCHMERTZ--Director since 1997 (current term expires April, 2004).
Member, Audit Committee. Principal, Investment Strategies International since
1994. Age 65. Address: 751 Broad Street, 21st Floor, Newark, NJ 07102-3777.

CHARLES R. SITTER--Director since 1995 (current term expires April, 2003).
Member, Committee on Finance & Dividend; Member, Investment Committee. Retired
since 1996. President, Exxon Corporation from 1993 to 1996. Mr. Sitter began his
career with Exxon in 1957. Age 69. Address: 5959 Las Colinas Boulevard, Irving,
TX 75039-2298.

DONALD L. STAHELI--Director since 1995 (current term expires April, 2003).
Member, Compensation Committee; Member, Auditing Committee. Retired since 1996.
Chairman and Chief Executive Officer, Continental Grain Company from 1994 to
1997. President and Chief Executive Officer, Continental Grain Company from 1988
to 1994. Age 68 Address: 47 East South Temple, #501, Salt Lake City, UT 84150.

RICHARD M. THOMSON--Director since 1976 (current term expires April, 2004).
Chairman, Executive Committee; Chairman, Compensation Committee. Retired since
1998. Chairman of the Board, The Toronto-Dominion Bank from 1997 to 1998.
Chairman and Chief Executive Officer from 1978 to 1997. Mr. Thomson is also a
director of CGC, Inc., INCO, Limited, S.C. Johnson & Son, Inc., The Thomson
Corporation, Canadian Occidental Petroleum Ltd., The Toronto-Dominion Bank,
Ontario Power Generation, Inc., Canada Pension Plan Investment Board, and
TrizecHahn Corporation. Age 66. Address: P.O. Box 1, Toronto-Dominion Centre,
Toronto, Ontario, M5K 1A2, Canada.


JAMES A. UNRUH--Director since 1996 (current term expires April, 2004). Member,
Committees on Nominations & Corporate Governance; Member, Investment Committee.
Founding Member, Alerion Capital Group, LLC since 1998. Chairman and Chief
Executive Officer, Unisys Corporation, from 1990 to 1997. Mr. Unruh is also a
director


                                       18
<PAGE>

of Moss Software, Inc. Age 59. Address: 751 Broad Street, 21st Floor, Newark, NJ
07102-3777.

P. ROY VAGELOS, M.D.--Director since 1989 (current term expires April, 2001).
Chairman, Auditing Committee; Member, Executive Committee; Member, Committees on
Nominations & Corporate Governance. Chairman, Regeneron Pharmaceuticals since
1995. Chairman, Advanced Medicines, Inc. since 1997. Chairman, Chief Executive
Officer and President, Merck & Co., Inc. from 1986 to 1995. Dr. Vagelos
originally joined Merck in 1975. Dr. Vagelos is also a director of The Estee
Lauder Companies, Inc. and PepsiCo., Inc. Age 70. Address: One Crossroads Drive,
Building A, 3rd Floor, Bedminster, NJ 07921.

STANLEY C. VAN NESS--Director since 1990 (current term expires April, 2002).
Chairman, Committee on Business Ethics; Member, Executive Committee; Member,
Auditing Committee. Partner, Herbert, Van Ness, Cayci & Goodell (law firm) since
1998. Counselor at Law, Picco Herbert Kennedy (law firm) from 1990 to 1998. Mr.
Van Ness is also a director of Jersey Central Power & Light Company. Age 66.
Address: 22 Chambers Street, Princeton, NJ 08542.

PAUL A. VOLCKER--Director since 1988 (current term expires April, 2004).
Chairman, Committee on Finance & Dividends; Member, Executive Committee; Member,
Committee on Nominations & Corporate Governance. Consultant since 1997. Chairman
and Chief Executive Officer, Wolfensohn & Co., Inc. 1995 to 1996. Chairman,
James D. Wolfensohn, Inc. 1988 to 1995. Mr. Volcker is also a director of
Nestle, S.A,. and as well as a Member of the Board of Overseers of TIAA-CREF.
Age 72. Address: 610 Fifth Avenue, Suite 420, New York, NY 10020.

JOSEPH H. WILLIAMS--Director since 1994 (current term expires April, 2002).
Member, Committee on Finance & Dividends; Member, Investment Committee.
Director, The Williams Companies since 1979. Chairman & Chief Executive Officer,
The Williams Companies from 1979 to 1993. Mr. Williams is also a director of The
Orvis Company, and AEA Investors, Inc. Age 66. Address: One Williams Center,
Tulsa, OK 74172.


        PRINCIPAL OFFICERS OF THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

ARTHUR F. RYAN--Chairman of the Board, Chief Executive Officer, and President
since 1994; prior to 1994, President and Chief Operating Officer, Chase
Manhattan Corporation. Age 57.

MICHELE S. DARLING--Executive Vice President, Corporate Governance and Human
Resources since 2000; Executive Vice President, Human Resources from 1997 to
2000; prior to 1997, Executive Vice President, Human Resources, Canadian
Imperial Bank of Commerce. Age 46.

ROBERT C. GOLDEN--Executive Vice President, Operations and Systems since 1997;
prior to 1997, Executive Vice President, Prudential Securities. Age 53.

MARK B. GRIER--Executive Vice President, Financial Management since 2000;
Executive Vice President, Corporate Governance from 1998 to 2000; Executive
Vice President, Financial Management from 1997 to 1998; Chief Financial Officer
from 1995 to 1997; prior to 1995, Executive Vice President, Chase Manhattan
Corporation. Age 47.

JEAN D. HAMILTON--Executive Vice President, Prudential Institutional since 1998;
President, Diversified Group since 1995 to 1998; prior to 1995, President,
Prudential Capital Group. Age 53.



RODGER A. LAWSON--Executive Vice President, International Investments & Global
Marketing Communications since 1998; Executive Vice President, Marketing and
Planning from 1996 to 1998; President and CEO, Van Eck Global, from 1994 to
1996; prior to 1994, President and CEO, Global Private Banking, Bankers Trust
Company. Age 53.


                                       19
<PAGE>

KIYOFUMI SAKAGUCHI--Executive Vice President, International Insurance since
1998; President, International Insurance Group from 1995 to 1998; prior to 1995,
Chairman and CEO, The Prudential Life Insurance Co., Ltd., Japan. Age 57.

JOHN R. STRANGFELD--Executive Vice President, Global Asset Management since
1998; Chief Executive Officer, Private Asset Management Group (PAMG) from 1996
to 1998; President, PAMG, from 1994 to 1996; prior to 1994, Senior Managing
Director. Age 46.

VIVIAN BANTA--Executive Vice President, Individual Financial Services since
2000; Consultant, Individual Financial Services from 1998 to 1999; Consultant,
Morgan Stanley from 1997 to 1998; Executive Vice President, Global Investor
Service, The Chase Manhattan Bank from 1991 to 1997. Age 49.

RICHARD J. CARBONE--Senior Vice President and Chief Financial Officer since
1997; Controller, Salomon Brothers, from 1995 to 1997; prior to 1995,
Controller, Bankers Trust. Age 52.

ANTHONY S. PISZEL--Senior Vice President and Controller since 2000; Vice
President and Controller from 1998 to 2000. Vice President, Enterprise Financial
Management from 1997 to 1998; prior to 1997, Chief Financial Officer, Individual
Insurance Group. Age 45.

SUSAN J. BLOUNT--Vice President and Secretary since 1995; prior to 1995,
Assistant General Counsel. Age 42.

C. EDWARD CHAPLIN--Vice President and Treasurer since 1995; prior to 1995,
Managing Director and Assistant Treasurer. Age 43.

ITEM 11.  EXECUTIVE COMPENSATION

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


ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Not applicable.


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

See Related Transactions in note 7 of Notes to Financial Statements of the
Partnership on page F-22.



                                       20
<PAGE>

                                     PART IV

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

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

        1.     Financial Statements

               See the Index to Financial Statements 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
               Schedule III.  Real Estate Owned: Interest in 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, 1999. The Registrant
        will furnish a copy of any Exhibit listed below to any security holder
        of the Registrant who requests it upon payment of a fee of 15 cents per
        page. All Exhibits are either contained in this Annual Report on Form
        10-K or are incorporated by reference as indicated below.

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

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

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

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

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

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

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


                                       21
<PAGE>

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

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

        9.     None.

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

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

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

        11.    Not applicable.

        12.    Not applicable.

        13.    None.

        18.    None.

        21.    Not applicable.

        22.    Not applicable.

        23.    None.

        24.    Power of Attorney: F. Agnew, F. Becker, J. Cullen, C. Davis, R.
               Enrico, A. Gilmour, W. Gray III, J. Hanson, G. Hiner, C. Horner,
               G. Kelley, B. Malkiel, A. Ryan, I. Schmertz, C. Sitter, D.
               Staheli, R. Thomson, J. Unruh, P. Vagelos, S. Van Ness, P.
               Volcker, J. Williams, incorporated by reference to
               Post-Effective Amendment No. 10 to Form S-1, Registration No.
               33-20083, filed April 9, 1998 on behalf of The Prudential
               Variable Contract Real Property Account. G. Casellas incorporate
               by reference to Form S-6, Registration No. 333-64957, filed
               September 30, 1998 on behalf of The Prudential Variable
               Appreciable Account. R. Carbone incorporated by reference to
               Post-Effective Amendment No. 3 to Form N-4, Registration No.
               333-23271, filed October 16, 1998 on behalf of The Prudential
               Discovery Select Group Variable Contract Account.

        27.    Not applicable.



                                       22
<PAGE>

                                   SIGNATURES


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


                   THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
                                  IN RESPECT OF
             THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY ACCOUNT
             ------------------------------------------------------
                                  (REGISTRANT)


Date:         March 29, 2000                 By: /s/
        ----------------------                   -------------------------
                                                       Esther H. Milnes
                                                       Vice President


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


SIGNATURE                                    TITLE
DATE

*___________________       Chairman and Chief Executive Officer   March 29, 2000
Arthur F. Ryan

*___________________       Chief Financial Officer                March 29, 2000
Richard Carbone




                                                     *BY: /s/
                                                         -----------------
                                                      THOMAS C. CASTANO
                                                      (ATTORNEY-IN-FACT)




                                       23
<PAGE>

SIGNATURE                                 TITLE                         DATE


*_________________________              Director                  March 29, 2000
Franklin E. Agnew

*_________________________              Director                  March 29, 2000
Frederic K. Becker

*_________________________              Director                  March 29, 2000
Gilbert F. Casellas

*_________________________              Director                  March 29, 2000
James G. Cullen

*_________________________              Director                  March 29, 2000
Carolyne K. Davis

*_________________________              Director                  March 29, 2000
Roger A. Enrico

*_________________________              Director                  March 29, 2000
Allan D. Gilmour

*_________________________              Director                  March 29, 2000
William H. Gray, III

*_________________________              Director                  March 29, 2000
Jon F. Hanson

*_________________________              Director                  March 29, 2000
Glen H. Hiner, Jr.

*_________________________              Director                  March 29, 2000
Constance J. Horner

*_________________________              Director                  March 29, 2000
Gaynor N. Kelley

*_________________________              Director                  March 29, 2000
Burton G. Malkiel



                                BY:* /s/
                                   ---------------------
                                THOMAS C. CASTANO
                                (ATTORNEY-IN-FACT)



                                       24
<PAGE>

SIGNATURE                                TITLE                      DATE

*_________________________             Director               March 29, 2000
Ida F. S. Schmertz

*_________________________             Director               March 29, 2000
Charles R. Sitter

*_________________________             Director               March 29, 2000
Donald L. Staheli

*_________________________             Director               March 29, 2000
Richard M. Thomson

*_________________________             Director               March 29, 2000
James A. Unruh

*_________________________             Director               March 29, 2000
P. Roy Vagelos, M.D.

*_________________________             Director               March 29, 2000
Stanley C. Van Ness

*_________________________             Director               March 29, 2000
Paul A. Volcker

*_________________________             Director               March 29, 2000
Joseph H. Williams


                                                     *BY: /s/
                                                         -------------------
                                                      THOMAS C. CASTANO
                                                      (ATTORNEY-IN-FACT)


                                       25
<PAGE>

             THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY ACCOUNT
                                  (REGISTRANT)

                                      INDEX


<TABLE>

                                                                                                               PAGE
<S>                                                                                                            <C>
     A.   THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY ACCOUNT

          Financial Statements:

              Report of Independent Accountants                                                                 F-2

              Statements of Net Assets - December 31, 1999 and 1998                                             F-3

              Statements of Operations  - Years Ended December 31, 1999, 1998, 1997                             F-3

              Statements of Changes in Net Assets - Years Ended December 31, 1999, 1998, 1997                   F-3

              Notes to Financial Statements                                                                     F-4

     B.   THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

          Financial Statements:

              Report of Independent Accountants                                                                 F-9

              Report of Independent Accountants on Financial Statement Schedules                               F-10

              Statements of Assets and Liabilities - December 31, 1999 and 1998                                F-11

              Statements of Operations - Years Ended December 31, 1999, 1998 and 1997                          F-12

              Statements of Changes in Net Assets - Years Ended December 31, 1999, 1998 and 1997               F-13

              Statements of Cash Flows - Years Ended December 31, 1999, 1998 and 1997                          F-14

              Schedule of Investments - December 31, 1999 and 1998                                             F-15

              Notes to Financial Statements                                                                    F-18

          Financial Statement Schedules:

              For the period ended December 31, 1999

              Schedule III - Real Estate Owned: Properties                                                     F-23

              Schedule III - Real Estate Owned: Interest in Properties                                         F-24
</TABLE>

     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
<PAGE>

                        REPORT OF INDEPENDENT ACCOUNTANTS


         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 changes in net assets present
         fairly, in all material respects, the financial position of The
         Prudential Variable Contract Real Property Account at December 31, 1999
         and 1998, and the results of its operations and the changes in its net
         assets for the three years in the period ended December 31, 1999, in
         conformity with accounting principles generally accepted in the United
         States. These financial statements are the responsibility of The
         Prudential Insurance Company of America's management; 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 auditing standards generally accepted in
         the United States, which require that we plan and perform the audit to
         obtain reasonable assurance about whether the financial statements are
         free of material misstatement. An audit includes examining, on a test
         basis, evidence supporting the amounts and disclosures in the financial
         statements, assessing the accounting principles used and significant
         estimates made by management, and evaluating the overall financial
         statement presentation. We believe that our audits, which included
         confirmation of shares owned in The Prudential Variable Contract Real
         Property Partnership at December 31, 1999 and 1998, provide a
         reasonable basis for the opinion expressed above.


         PricewaterhouseCoopers LLP
         New York, New York
         March 17, 2000


                                      F-2
<PAGE>

             THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY ACCOUNT

STATEMENTS OF NET ASSETS
December 31, 1999 and 1998
<TABLE>
<CAPTION>
                                                                              1999                1998
                                                                      ------------------  -------------------
<S>                                                                   <C>                 <C>
ASSETS
  Investment in The Prudential Variable Contract
    Real Property Partnership (Note 3)                                $      83,423,562   $      111,115,968
                                                                      ------------------  -------------------
  Net Assets                                                          $      83,423,562   $      111,115,968
                                                                      ==================  ===================

NET ASSETS, representing:
  Equity of contract owners (Note 4)                                  $      55,398,590   $       60,232,750
  Equity of The Prudential Insurance Company of America (Note 2D)            28,024,972           50,883,218
                                                                      ------------------  -------------------
                                                                      $      83,423,562   $      111,115,968
                                                                      ==================  ===================

STATEMENTS OF OPERATIONS
For the years ended December 31, 1999, 1998 and 1997
<CAPTION>
                                                                             1999                 1998                1997
                                                                      ------------------  -------------------  ------------------
<S>                                                                   <C>                 <C>                  <C>
INVESTMENT INCOME
Net investment income from Partnership operations                     $       5,209,408   $        7,324,915   $       6,361,101
                                                                      ------------------  -------------------  ------------------

EXPENSES
Charges to contract owners for assuming mortality risk and
     expense risk and for administration (Note 5)                               470,772              492,841             480,620
                                                                      ------------------  -------------------  ------------------
NET INVESTMENT INCOME                                                         4,738,636            6,832,074           5,880,481
                                                                      ------------------  -------------------  ------------------

NET REALIZED AND UNREALIZED GAIN
  (LOSS) ON INVESTMENTS
Net change in unrealized gain (loss) on investments in Partnership           (2,888,812)             806,156           3,772,996
Realized gain (loss) on sale of investments in Partnership                      (13,002)           1,411,632             141,173
                                                                      ------------------  -------------------  ------------------
NET GAIN (LOSS) ON INVESTMENTS                                               (2,901,814)           2,217,788           3,914,169
                                                                      ------------------  -------------------  ------------------

NET INCREASE IN NET ASSETS
  RESULTING FROM OPERATIONS                                           $       1,836,822   $        9,049,862   $       9,794,650
                                                                      ==================  ===================  ==================

STATEMENTS OF CHANGES IN NET ASSETS For the years ended
  December 31, 1999, 1998 and 1997
<CAPTION>
                                                                               1999               1998                 1997
                                                                      ------------------  -------------------  ------------------
<S>                                                                   <C>                 <C>                  <C>
OPERATIONS
Net investment income                                                 $       4,738,636   $        6,832,074   $       5,880,481
Net change in unrealized gain (loss) on investments in Partnership           (2,888,812)             806,156           3,772,996
Net realized gain (loss) on sale of investments in Partnership                  (13,002)           1,411,632             141,173
                                                                      ------------------  -------------------  ------------------

NET INCREASE IN NET ASSETS
  RESULTING FROM OPERATIONS                                                   1,836,822            9,049,862           9,794,650
                                                                      ------------------  -------------------  ------------------

CAPITAL TRANSACTIONS
Net withdrawals by contract owners (Note 7)                                  (6,004,411)          (3,853,980)         (3,343,849)
Net contributions (withdrawals) by The Prudential Insurance Company
  of America                                                                (23,524,817)           4,651,822           3,824,469
                                                                      ------------------  -------------------  ------------------

NET INCREASE (DECREASE) IN NET ASSETS
  RESULTING FROM CAPITAL TRANSACTIONS                                       (29,529,228)             797,842             480,620
                                                                      ------------------  -------------------  ------------------

TOTAL INCREASE (DECREASE) IN NET ASSETS                                     (27,692,406)           9,847,704          10,275,270

NET ASSETS:
  Beginning of year                                                         111,115,968          101,268,264          90,992,994
                                                                      ------------------  -------------------  ------------------
  End of year                                                         $      83,423,562   $      111,115,968   $     101,268,264
                                                                      ==================  ===================  ==================
</TABLE>


                                      F-3
<PAGE>

                      NOTES TO THE FINANCIAL STATEMENTS OF
             THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY ACCOUNT
                                DECEMBER 31, 1999


NOTE 1:    GENERAL

The Prudential Variable Contract Real Property Account ("Real Property Account")
was established on November 20, 1986 by resolution of the Board of Directors of
The Prudential Insurance Company of America ("Prudential"), as a separate
investment account pursuant to New Jersey law. The assets of the Real Property
Account are segregated from Prudential's other assets. The Real Property Account
is used to fund benefits under certain variable life insurance and variable
annuity contracts issued by Prudential. These products are Variable Appreciable
Life ("PVAL" and "PVAL $100,000+ face value"), Discovery Plus ("PDISCO+"), and
Variable Investment Plan ("VIP").

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

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


NOTE 2:    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A.       BASIS OF ACCOUNTING

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

B.       INVESTMENT IN PARTNERSHIP INTEREST

The investment in the Partnership is based on the Real Property Account's
proportionate interest of the Partnership's market value. At December 31, 1999
and 1998 the Real Property Account's interest in the Partnership was 39.7% or
3,999,656 shares and 46.2% or 5,481,889 shares respectively.

C.       INCOME RECOGNITION

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

D.       EQUITY OF THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

Prudential maintains a position in the Real Property Account for property
acquisitions and capital expenditure funding needs. The position is also
utilized for liquidity purposes including unit purchases and redemptions,
Partnership share transactions, and expense processing. The position does not
have an effect on the contract owner's account or the related unit value.


                                      F-4
<PAGE>

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

The number of shares (rounded) by the Real Property Account in the Partnership,
the Partnership net asset value per share (rounded) and the aggregate cost of
investments in the Real Property Accounts' shares held at December 31, 1999 and
1998 were as follows:

<TABLE>
<CAPTION>
                                               DECEMBER 31, 1999    DECEMBER 31, 1998
                                               ------------ ----    ------------ ----
<S>                                            <C>                  <C>
 NUMBER OF SHARES (ROUNDED):                    3,999,656               5,481,889
 NET ASSET VALUE PER SHARE (ROUNDED):            $20.86                   $20.27
 COST:                                         $34,095,895             $64,095,895
</TABLE>



NOTE 4:      CONTRACT OWNER UNIT INFORMATION
Outstanding contract owner units, unit values and total value of contract owner
equity at December 31, 1999 and December 31, 1998 by product, were as follows:

<TABLE>
<CAPTION>
1999:                                                                                        PVAL $100,000 +
----                                       PDISCO+             VIP              PVAL            FACE VALUE       TOTAL
                                           -------             ---              ----          -----------        -----
<S>                                      <C>               <C>               <C>              <C>             <C>
CONTRACT OWNER UNITS OUTSTANDING:         1,995,047         1,615,727         12,132,067       17,168,176
UNIT VALUE:                              $  1.63083        $  1.63083        $   1.72201      $   1.66695
                                         ----------        ----------        -----------      -----------
TOTAL CONTRACT OWNER EQUITY:             $3,253,583        $2,634,976        $20,891,540      $28,618,491     $55,398,590
                                         ==========        ==========        ===========      ===========     ===========
</TABLE>

<TABLE>
<CAPTION>
1998:                                                                                        PVAL $100,000 +
----                                       PDISCO+             VIP              PVAL           FACE VALUE        TOTAL
                                           -------             ---              ----          -----------        -----
<S>                                      <C>               <C>               <C>              <C>             <C>
CONTRACT OWNER UNITS OUTSTANDING:         2,873,789         2,011,903         13,216,595       18,444,838
UNIT VALUE:                              $  1.60383        $  1.60383        $   1.68343      $   1.63448
                                         ----------        ----------        -----------      -----------
TOTAL CONTRACT OWNER EQUITY:             $4,609,069        $3,226,750        $22,249,213      $30,147,718     $60,232,750
                                         ==========        ==========        ===========      ===========     ===========
</TABLE>


NOTE 5:      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 1.0%, 0.6%, 0.9% and 1.2% for PDISCO+, PVAL, PVAL $100,000 + face
value, and VIP, respectively. Mortality risk is that life insurance contract
owners may not live as long as estimated or annuitants may live longer than
estimated and expense risk is that the cost of issuing and administering the
policies may exceed related charges by Prudential.

B.       ADMINISTRATIVE CHARGES

Administrative charges are determined daily using an effective annual rate of
0.2% applied daily against the net assets representing equity of PDISCO+
contract owners held in each subaccount. Administrative charges include costs
associated with issuing the contract, establishing and maintaining records, and
providing reports to contract owners.

C.       COST OF INSURANCE AND OTHER RELATED CHARGES

Contract owner contributions are subject to certain deductions prior to being
invested in the Real Property Account. The deductions for PVAL and PVAL $100,000
+ face value are (1) state premium taxes; (2) sales charges 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 also subject to monthly charges
for the costs of administering the contract to compensate Prudential for the
guaranteed minimum death benefit risk.


                                      F-5
<PAGE>

D.   DEFERRED SALES CHARGE

A deferred sales charge, applicable to PVAL and PVAL $100,000 + face value, is
imposed upon the surrender 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. No sales
charge is made against the withdrawal of investment income. A reduced sales
charge is imposed in connection with the withdrawal of a purchase payment to
effect an annuity if three or more contract years have elapsed since the
contract date, unless the annuity effected is an annuity certain. No sales
charge is imposed upon death benefit payments or upon transfers made between
subaccounts.

E.   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.

F.   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 6:    TAXES

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



NOTE 7:    NET  WITHDRAWALS BY CONTRACT OWNERS


Contract owner activity for the real estate investment option in Prudential's
variable insurance and variable annuity products for the years ended December
31, 1999, 1998 and 1997 were as follows:


<TABLE>
<CAPTION>
1999:                                                                                   PVAL & PVAL
----                                              PDISCO+             VIP          $100,000 + FACE VALUE        TOTAL
                                                  -------             ---          ---------------------        -----
<S>                                           <C>              <C>               <C>                      <C>
Contract Owner Net Payments:                  $      9,535      $    15,687            $   4,396,224        $  4,421,446
Policy Loans:                                            0                0               (1,809,781)         (1,809,781)
Policy Loan Repayments and Interest:                     0                0                1,465,114           1,465,114
Surrenders, Withdrawals, and Death Benefits:    (1,121,210)        (549,361)              (2,894,300)         (4,564,871)
Net Transfers To Other Subaccounts
    or Fixed Rate Option:                         (304,042)        (103,565)              (1,593,233)         (2,000,840)
Administrative and Other Charges:                   (1,000)          (3,837)              (3,510,642)         (3,515,479)
                                              ------------      -----------            -------------        ------------
NET WITHDRAWALS BY CONTRACT OWNERS            $ (1,416,717)     $  (641,076)           $  (3,946,618)       $ (6,004,411)
                                              ============      ===========            =============        ============

                                      F-6
<PAGE>

<CAPTION>
1998:                                                                                   PVAL & PVAL
----                                              PDISCO+             VIP          $100,000 + FACE VALUE        TOTAL
                                                  -------             ---          ---------------------        -----
<S>                                             <C>              <C>               <C>                      <C>
Contract Owner Net Payments:                   $    34,192      $    64,722            $   7,093,241       $   7,192,155
Policy Loans:                                            0                0               (1,904,723)         (1,904,723)
Policy Loan Repayments and Interest:                     0                0                1,227,793           1,227,793
Surrenders, Withdrawals, and Death Benefits:      (488,508)      (1,009,902)              (3,536,617)         (5,035,027)
Net Transfers From (To) Other Subaccounts
    or Fixed Rate Option:                          159,601          (12,601)              (1,618,529)         (1,471,529)
Administrative and Other Charges:                      (16)          (3,869)              (3,858,764)         (3,862,649)
                                               -----------      -----------            -------------       -------------
NET WITHDRAWALS BY CONTRACT OWNERS             $  (294,731)     $  (961,650)           $  (2,597,599)      $  (3,853,980)
                                               ===========      ===========            =============       =============

<CAPTION>
1997:                                                                                   PVAL & PVAL
----                                              PDISCO+             VIP           $100,000 + FACE VALUE        TOTAL
                                                  -------             ---           ---------------------        -----
<S>                                             <C>              <C>               <C>                      <C>
Contract Owner Net Payments:                   $   351,456     $    347,300         $      8,463,594       $   9,162,350
Policy Loans:                                            0                0               (1,932,364)         (1,932,364)
Policy Loan Repayments and Interest:                     0                0                  975,817             975,817
Surrenders, Withdrawals, and Death Benefits:      (726,927)        (714,252)              (3,808,846)         (5,250,025)
Net Transfers From (To) Other Subaccounts
    or Fixed Rate Option:                           87,144         (194,348)              (1,816,066)         (1,923,270)
Administrative and Other Charges:                      (20)          (3,847)              (4,372,490)         (4,376,357)
                                               -----------      -----------            -------------       -------------
NET WITHDRAWALS BY CONTRACT OWNERS             $  (288,347)    $   (565,147)        $     (2,490,355)      $  (3,343,849)
                                               ===========      ===========            =============       =============
</TABLE>

NOTE 8:  UNIT ACTIVITY

Transactions in units for the years ended December 31, 1999, 1998, 1997 were as
follows:
<TABLE>
<CAPTION>
1999:                                                                                            PVAL $100,000 +
----                                          PDISCO+             VIP              PVAL             FACE VALUE
                                              -------             ---              ----             ----------
<S>                                         <C>              <C>               <C>               <C>
Contract Owner Contributions:                  50,450           31,056           1,515,288          1,972,941
Contract Owner Redemptions:                  (929,192)        (427,232)         (2,599,816)        (3,249,603)

<CAPTION>
1998:                                                                                             PVAL $100,000+
----                                          PDISCO+             VIP              PVAL             FACE VALUE
                                              -------             ---              ----             ----------
<S>                                         <C>               <C>              <C>               <C>
Contract Owner Contributions:                 613,206           186,504          2,480,913           3,131,058
Contract Owner Redemptions:                  (802,674)         (817,519)        (3,103,092)         (4,155,819)

<CAPTION>
1997:                                                                                             PVAL $100,000 +
----                                          PDISCO+             VIP              PVAL             FACE VALUE
                                              -------             ---              ----             ----------
<S>                                         <C>               <C>              <C>               <C>
Contract Owner Contributions:                 644,374           373,838          3,039,579            3,893,900
Contract Owner Redemptions:                  (846,753)         (773,203)        (3,692,270)          (4,965,990)
</TABLE>


NOTE 9:  PURCHASES AND SALES OF INVESTMENTS


                                      F-7
<PAGE>

The aggregate costs of purchases and proceeds from sales of investments in the
Partnership for the year ended December 31, 1999 were as follows:

                  Purchases:  $  0
                  Sales:      $  (30,000,000)



                                      F-8
<PAGE>

                        REPORT OF INDEPENDENT ACCOUNTANTS


To the Partners of Prudential
Variable Contract Real Property Partnership:

In our opinion, the accompanying consolidated statements of assets and
liabilities, including the schedule 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 Prudential Variable
Contract Real Property Partnership (the "Partnership") at December 31, 1999 and
1998, and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 1999 in conformity with accounting
principles generally accepted in the United States. 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 auditing standards generally accepted in the United States,
which 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 the opinion expressed above.



PricewaterhouseCoopers LLP
New York, New York
February 17, 2000




                                      F-9
<PAGE>

                      REPORT OF INDEPENDENT ACCOUNTANTS ON

                          FINANCIAL STATEMENT SCHEDULES


To the Partners of Prudential
Variable Contract Real Property Partnership:

Our audit of the consolidated financial statements referred to in our report
dated February 17, 2000 also included an audit of the accompanying financial
statement schedules. 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.



PricewaterhouseCoopers LLP
New York, New York
February 17, 2000




                                      F-10
<PAGE>

           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
                                                                                DECEMBER 31, 1999          DECEMBER 31, 1998
                                                                             ------------------------   ------------------------
  <S>                                                                        <C>                        <C>
    ASSETS

    REAL ESTATE INVESTMENTS - At estimated market value:
      Real estate and improvements
       (cost:  12/31/99 -- $190,007,568; 12/31/98 -- $170,045,055)                      $171,154,516               $155,374,462
      Real estate partnership (cost plus equity in undistributed
       earnings:  12/31/99 -- $5,187,126; 12/31/98 -- $0)                                  4,506,257                          0
      Real estate investment trusts (cost:  12/31/99 -- $32,535,158;
       12/31/98 -- $10,000,005)                                                           29,727,085                 11,554,649
                                                                             ------------------------   ------------------------

             Total real estate investments                                               205,387,858                166,929,111

    MARKETABLE SECURITIES - At estimated market value
       (cost: 12/31/99 -- $2,805,493; 12/31/98 -- $14,967,236)                             2,797,008                 14,950,525

    CASH AND CASH EQUIVALENTS                                                             13,972,669                 58,578,848

    DIVIDEND RECEIVABLE                                                                      131,542                    167,275

    OTHER ASSETS (net of allowance for uncollectible
      accounts:  12/31/99 -- $179,000; 12/31/98 -- $66,000)                                2,853,576                  3,623,513
                                                                             ------------------------   ------------------------

             Total assets                                                                225,142,653                244,249,272
                                                                             ------------------------   ------------------------

    LIABILITIES

    MORTGAGE LOAN PAYABLE                                                                 10,184,662                          0

    ACCOUNTS PAYABLE AND ACCRUED EXPENSES                                                  2,967,614                  1,985,400

    DUE TO AFFILIATES                                                                        869,477                  1,598,535

    OTHER LIABILITIES                                                                        525,892                    504,940

    MINORITY INTEREST                                                                        372,068                          0
                                                                             ------------------------   ------------------------

             Total liabilities                                                            14,919,713                  4,088,875
                                                                             ------------------------   ------------------------

             Partners' equity                                                            210,222,940                240,160,397
                                                                             ------------------------   ------------------------

    TOTAL LIABILITIES AND PARTNERS' EQUITY                                              $225,142,653               $244,249,272
                                                                             ========================   ========================

    NUMBER OF SHARES OUTSTANDING AT END OF PERIOD                                         10,078,921                 11,848,275
                                                                             ========================   ========================

    SHARE VALUE AT END OF PERIOD                                                              $20.86                     $20.27
                                                                             ========================   ========================
</TABLE>


                      SEE NOTES TO FINANCIAL STATEMENTS


                                      F-11
<PAGE>

           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                                  YEAR ENDED DECEMBER 31,
                                                            --------------------------------------------------------------------
                                                                    1999                   1998                    1997
                                                            ---------------------  ----------------------  ---------------------
<S>                                                         <C>                    <C>                     <C>
INVESTMENT INCOME:
 Revenue from real estate and improvements                           $21,807,346             $24,572,642            $21,582,968
 Equity in income of real estate partnership                              98,375                  33,462                435,296
 Dividend income from real estate investment trusts                    1,221,843                 669,100                158,184
 Interest on short-term investments                                    1,707,485               1,888,348              2,305,364
                                                            ---------------------  ----------------------  ---------------------

         Total investment income                                      24,835,049              27,163,552             24,481,812
                                                            ---------------------  ----------------------  ---------------------

EXPENSES:
 Investment managment fee                                              2,730,713               2,900,445              2,640,470
 Real estate taxes                                                     2,616,553               2,406,624              2,208,972
 Administrative                                                        2,234,949               1,951,235              2,326,155
 Operating                                                             3,794,081               4,071,735              3,296,350
 Interest                                                                145,418                       0                220,118
 Minority interest in consolidated partnership                            33,746                       0                      0
                                                            ---------------------  ----------------------  ---------------------

         Total investment expenses                                    11,555,460              11,330,039             10,692,065
                                                            ---------------------  ----------------------  ---------------------

NET INVESTMENT INCOME                                                 13,279,589              15,833,513             13,789,747
                                                            ---------------------  ----------------------  ---------------------

REALIZED AND UNREALIZED (LOSS) GAIN
  ON INVESTMENTS
 Net proceeds from real estate investments
   sold or converted                                                  21,649,562              37,443,762              6,297,422
 Less:  Cost of real estate investments sold
           or converted                                               19,602,032              37,361,533              6,274,539
           Realization of prior periods' unrealized
            gain (loss) on real estate investments
            sold or converted                                          2,080,673              (2,969,150)              (283,157)
                                                            ---------------------  ----------------------  ---------------------

 Net (loss) gain realized on real estate
             investments sold or converted                               (33,143)              3,051,379                306,040
                                                            ---------------------  ----------------------  ---------------------


 Change in unrealized (loss) gain on real estate
  investments                                                         (7,145,372)              1,743,732              8,179,192
 Minority interest in unrealized gain on investments                     (38,531)                      0                      0
                                                            ---------------------  ----------------------  ---------------------

 Net unrealized (loss) gain on real estate investments                (7,183,903)              1,743,732              8,179,192
                                                            ---------------------  ----------------------  ---------------------

NET REALIZED AND UNREALIZED (LOSS)
 GAIN ON INVESTMENTS                                                  (7,217,046)              4,795,111              8,485,232
                                                            ---------------------  ----------------------  ---------------------

NET INCREASE IN NET ASSETS RESULTING
 FROM OPERATIONS                                                      $6,062,543             $20,628,624            $22,274,979
                                                            =====================  ======================  =====================
</TABLE>


                        SEE NOTES TO FINANCIAL STATEMENTS


                                      F-12
<PAGE>

           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
                                                                             YEAR ENDED DECEMBER 31,
                                                      -----------------------------------------------------------------------
                                                              1999                     1998                     1997
                                                      ---------------------    ---------------------    ---------------------
<S>                                                   <C>                      <C>                      <C>
NET INCREASE IN NET ASSETS RESULTING
 FROM OPERATIONS:
 Net investment income                                         $13,279,589              $15,833,513              $13,789,747
 Net (loss) gain realized on real estate
   investments sold                                                (33,143)               3,051,379                  306,040
 Net unrealized (loss) gain from real estate
   investments                                                  (7,183,903)               1,743,732                8,179,192
                                                      ---------------------    ---------------------    ---------------------

         Net increase in net assets resulting from
           operations                                            6,062,543               20,628,624               22,274,979
                                                      ---------------------    ---------------------    ---------------------

NET DECREASE IN NET ASSETS RESULTING
 FROM CAPITAL TRANSACTIONS:
Withdrawals by partners
  (1999 -- 1,769,354, 1998 -- 0, and 1997 -- 0
    shares, respectively)                                      (36,000,000)                       0                        0
                                                      ---------------------    ---------------------    ---------------------

         Net decrease in net assets resulting from
          capital transactions                                 (36,000,000)                       0                        0
                                                      ---------------------    ---------------------    ---------------------

NET INCREASE IN NET ASSETS                                     (29,937,457)              20,628,624               22,274,979

NET ASSETS -  Beginning of year                                240,160,397              219,531,773              197,256,794
                                                      ---------------------    ---------------------    ---------------------

NET ASSETS -  End of year                                     $210,222,940             $240,160,397             $219,531,773
                                                      =====================    =====================    =====================
</TABLE>


                        SEE NOTES TO FINANCIAL STATEMENTS

                                      F-13
<PAGE>

           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                 YEAR ENDED DECEMBER 31,
                                                              --------------------------------------------------------------
                                                                    1999                  1998                  1997
                                                              ------------------    ------------------    ------------------
<S>                                                           <C>                   <C>                   <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net increase in net assets resulting from operations                 $6,062,543           $20,628,624           $22,274,979
Adjustments to reconcile net increase in net assets
   resulting from operations to net cash provided by
   operating activities:
     Net realized and unrealized loss (gain) on
        investments                                                   7,217,046            (4,795,111)           (8,485,232)
     Equity in income of real estate partnership's
        operations in excess of distributions                           (98,376)                    0                     0
     Minority interest from operating activities                         33,746                     0                     0
     Bad debt expense                                                   124,059                28,264                99,929
      Decrease (increase) in:
         Dividend receivable                                             35,733               (20,276)             (146,999)
         Other assets                                                   645,878            (1,704,926)               20,136
      (Decrease) increase in:
         Obligation under capital lease                                       0                     0               (72,677)
         Accounts payable and accrued expenses                          982,214               143,373               201,667
         Due to affiliates                                             (729,058)              765,613               113,722
         Other liabilities                                               20,952               (33,473)               71,404
                                                              ------------------    ------------------    ------------------

  Net cash flows from operating activities                           14,294,737            15,012,088            14,076,929
                                                              ------------------    ------------------    ------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Net proceeds from real estate investments sold                     10,706,996            37,443,762             6,297,422
  Acquisition of real estate property                                (7,200,743)                    0           (23,417,474)
  Acquisition of real estate  partnership                            (5,088,750)                    0                     0
  Acquisition of real estate investment trust                       (31,239,744)                    0           (10,000,005)
  Improvements and additional costs on prior purchases:
    Additions to real estate owned                                   (2,516,645)           (5,736,333)           (1,311,864)
  Sale (purchase) of marketable securities, net                      12,153,517            (1,021,229)           10,497,348
                                                              ------------------    ------------------    ------------------

  Net cash flows from investing activities                          (23,185,369)           30,686,200           (17,934,573)
                                                              ------------------    ------------------    ------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
 Withdrawals by partners                                            (36,000,000)                    0                     0
 Principal payments on mortgage loans payable                           (15,338)                    0                     0
 Distributions to minority interest partners                            (93,425)                    0                     0
 Contributions from minority interest partners                          393,216                     0                     0
 Principal payments on capital lease obligation                               0                     0            (4,000,000)
                                                              ------------------    ------------------    ------------------

  Net cash flows from financing activities                          (35,715,547)                    0            (4,000,000)
                                                              ------------------    ------------------    ------------------

NET CHANGE IN CASH AND CASH
  EQUIVALENTS                                                       (44,606,179)           45,698,288            (7,857,644)

CASH AND CASH EQUIVALENTS - Beginning of year                        58,578,848            12,880,560            20,738,204
                                                              ------------------    ------------------    ------------------

CASH AND CASH EQUIVALENTS - End of year                             $13,972,669           $58,578,848           $12,880,560
                                                              ==================    ==================    ==================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
 INFORMATION:
  Cash paid during the year for interest                               $145,418                    $0              $220,118
                                                              ==================    ==================    ==================

SUPPLEMENTAL DISCLOSURE OF NON-CASH
 INVESTING ACTIVITY:
  Assumption of Mortgage Loan Payable                               $10,200,000                    $0                    $0
                                                              ==================    ==================    ==================
</TABLE>

                        SEE NOTES TO FINANCIAL STATEMENTS


                                      F-14
<PAGE>

           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                             SCHEDULE OF INVESTMENTS
<TABLE>
<CAPTION>
                                                                          DECEMBER 31,1999                DECEMBER 31,1998
                                                             ------------------------------------ --------------------------------
                                                                                  ESTIMATED                        ESTIMATED
                                                                   COST          MARKET VALUE       COST          MARKET VALUE
                                                             ---------------------------------------------------------------------
REAL ESTATE AND IMPROVEMENTS (PERCENT OF NET ASSETS)                                       81.4%                            64.7%
Location                  Description
----------------------------------------------------------------------------------------------------------------------------------
<S>                       <C>                                <C>                 <C>                <C>           <C>
Lisle, IL                 Office Building                         $22,075,782        $13,895,122    $21,634,707       $14,123,742
Atlanta, GA               Garden Apartments                        15,646,846         16,104,268     15,601,495        15,651,216
Roswell, GA               Retail Shopping Center                   32,394,853         27,000,939     32,272,627        28,649,176
Morristown, NJ            Office Building                          20,116,694         12,337,499     19,409,490        11,596,138
Bolingbrook, IL           Warehouse                                 8,948,028          7,000,000      8,948,028         7,000,000
Raleigh, NC               Garden Apartments                        15,833,928         17,004,623     15,822,682        16,804,570
Nashville, TN             Office Building                           8,509,908         10,000,000      8,448,026        10,152,399
Oakbrook Terrace, IL      Office Complex                           12,945,366         14,200,000     12,945,366        15,750,000
Beaverton, OR             Office Complex                           10,768,811         10,400,866     10,728,618        11,200,000
Salt Lake City, UT        Industrial Building                       5,640,709          5,703,419      5,388,134         5,450,000
Aurora, CO                Industrial Building                      10,119,072         10,520,780      9,304,171         9,497,221
Brentwood, TN             Office Complex                            9,606,828          9,537,000      9,541,711         9,500,000
Jacksonville, FL          Garden Apartments                        17,400,743         17,450,000              0                 0
                                                             ---------------------------------------------------------------------
                                                                 $190,007,568       $171,154,516   $170,045,055      $155,374,462
                                                             =====================================================================

REAL ESTATE PARTNERSHIPS (PERCENT OF NET ASSETS)                                            2.1%
Location                  Description
----------------------------------------------------------------------------------------------------------------------------------

Kansas City, KS; MO       Retail Shopping Center                   $5,187,126         $4,506,257             $0                $0
                                                             =====================================================================

REAL ESTATE INVESTMENT TRUSTS (PERCENT OF NET ASSETS)                                      14.1%                             4.8%
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
<S>                                                          <C>                 <C>                <C>           <C>
Prologis REIT Shares (386,208 shares)                              $7,579,332         $7,434,504              -                 -
AMB Property Corp (42,100 shares)                                     933,851            839,369              -                 -
Alexandria Real Est Equities (30,800 shares)                          874,221            979,825              -                 -
Apartment Inv & Mgmt Co - Class A (16,500 shares)                     672,953            656,906              -                 -
Centerpoint Properties Corp (16,200 shares)                           544,308            581,175              -                 -
Cousins Properties (24,800 shares)                                    890,459            841,650              -                 -
Equity Office Properties Trust (32,400 shares)                        901,571            797,850              -                 -
Equity Residential Property Trust (13,100 shares)                     623,573            559,206              -                 -
Excel Legacy Corp (322,300 shares)                                  1,479,431          1,067,619              -                 -
Franchise Finance Cp Amer (25,500 shares)                             620,027            610,406              -                 -
General Growth Properties (13,600 shares)                             512,353            380,800              -                 -
Intrawest Corporation (76,100 shares)                               1,258,575          1,317,481              -                 -
MeriStar Hotels & Resorts Inc. (239,100 shares)                       875,818            851,794              -                 -
Mission West Properties (116,800 shares)                              938,124            905,200              -                 -
Philips International Realty (63,700 shares)                        1,052,331          1,047,069              -                 -
Prime Hospitality Corp. (112,500 shares)                            1,320,524            991,406              -                 -
Public Storage (45,100 shares)                                      1,269,884          1,023,206              -                 -
Reckson Service Industries (18,200 shares)                            221,041          1,135,225              -                 -
Reckson Assoc Realty Corp (52,200 shares)                           1,299,227          1,070,100              -                 -
Spieker Properties (12,000 shares)                                    426,078            437,250              -                 -
Starwood Hotels and Resorts (87,200 shares)                         3,027,806          2,049,200              -                 -
Sun Communities Inc. (16,700 shares)                                  606,047            537,531              -                 -
Vornado Realty Trust (51,800 shares)                                1,930,911          1,683,500              -                 -
Sun International Hotels Ltd (30,900 shares)                        1,116,266            598,688              -                 -
Boardwalk Equities, Inc. (146,800 shares)                           1,560,447          1,330,125              -                 -
Meridian REIT Shares (506,894 shares)                                       -                  -     10,000,005        11,554,649
                                                             ---------------------------------------------------------------------
                                                                  $32,535,158        $29,727,085    $10,000,005       $11,554,649
                                                             =====================================================================

MARKETABLE SECURITIES (PERCENT OF NET ASSETS)                                               1.3%                             6.2%
Description (See next page for details)
----------------------------------------------------------------------------------------------------------------------------------
TOTAL MARKETABLE SECURITIES                                        $2,805,493         $2,797,008    $14,967,236       $14,950,525
                                                             =====================================================================

CASH AND CASH EQUIVALENTS (PERCENT OF NET ASSETS)                                           6.6%                            24.4%
Description (See next page for details)
----------------------------------------------------------------------------------------------------------------------------------
TOTAL CASH AND CASH EQUIVALENTS                                   $13,972,669        $13,972,669    $58,578,848       $58,578,848
                                                             =====================================================================
</TABLE>

*  Real estate partnership accounted for by the consolidated method.

                        SEE NOTES TO FINANCIAL STATEMENTS


                                      F-15
<PAGE>

           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                             SCHEDULE OF INVESTMENTS
<TABLE>
<CAPTION>
                                                                                       DECEMBER 31, 1999
                                                               ---------------------------------------------------------------
                                                                                                              NET ESTIMATED
                                                                  FACE AMOUNT              COST               MARKET VALUE
                                                               -------------------   ------------------     ------------------
<S>                                                            <C>                   <C>                    <C>
MARKETABLE SECURITIES (PERCENT OF NET ASSETS)                                                                            1.3%

J.P. Morgan and Co., Inc., 5.96%, March 13, 2000                        $ 995,000              980,010              $ 980,010
Ford Motor Credit Co., 7.50%, April 6, 2000                               150,000              151,779                150,654
CIT Group Inc., 6.80%, April 17, 2000                                     500,000              503,765                501,487
Associates Corp of North America, 6.71%, June 1, 2000                   1,160,000            1,169,939              1,164,857
                                                               -------------------   ------------------     ------------------

TOTAL MARKETABLE SECURITIES                                           $ 2,805,000          $ 2,805,493            $ 2,797,008
                                                               ===================   ==================     ==================

CASH AND CASH EQUIVALENTS (PERCENT OF NET ASSETS)                                                                        6.6%

Duke Energy Corp., 5.00%, January 3, 2000                                 550,000              549,771                549,771
Bell Atlantic Financial Services, 5.20%, January 7, 2000                  672,000              671,321                671,321
Household Finance Corp, 5.93%, January 18, 2000                           990,000              983,314                983,314
Ford Motor Credit Co., 6.00%, January 21, 2000                            847,000              840,789                840,789
American Express Cr. Corp., 6.02%, January 26, 2000                       999,000              990,981                990,981
Procter & Gamble Co., 6.00%, January 26, 2000                             200,000              197,867                197,867
Goldman Sachs Group L.P., 6.43%, January 31, 2000                       1,000,000              991,963                991,963
Countrywide Home Loans, 6.00%, February 3, 2000                           990,000              980,595                980,595
Merrill Lynch & Co., Inc., 5.98%, February 3, 2000                        990,000              980,626                980,626
Unifunding Inc., 6.05%, February 3, 2000                                  900,000              892,135                892,135
Metlife Funding Inc., 5.90%, February 4, 2000                             841,000              832,730                832,730
General Electric Cap Corp., 5.95%, February 10 2000                       350,000              346,182                346,182
GTE Funding, Inc., 6.10%, February 10, 2000                             1,000,000              990,681                990,681
E.I. Du Pont De Nemours & Co. Inc., 6.00%,  February 11, 2000             250,000              246,667                246,667
General Electric Capital Corp., 5.92% March 1, 2000                       406,000              400,258                400,258
                                                               -------------------   ------------------     ------------------

TOTAL CASH EQUIVALENTS                                                 10,985,000           10,895,880             10,895,880

CASH                                                                    3,076,789            3,076,789              3,076,789
                                                               -------------------   ------------------     ------------------

TOTAL CASH AND CASH EQUIVALENTS                                       $14,061,789          $13,972,669            $13,972,669
                                                               ===================   ==================     ==================
</TABLE>



                        SEE NOTES TO FINANCIAL STATEMENTS


                                      F-16
<PAGE>

           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                             SCHEDULE OF INVESTMENTS
<TABLE>
<CAPTION>
                                                                                         DECEMBER 31, 1998
                                                                  ---------------------------------------------------------------
                                                                                                                 NET ESTIMATED
                                                                     FACE AMOUNT               COST              MARKET VALUE
                                                                  -------------------    ------------------    ------------------
<S>                                                               <C>                    <C>                   <C>
MARKETABLE SECURITIES (PERCENT OF NET ASSETS)                                                                               6.2%

General Motors Acceptance Corp., 5.26%, January 26, 1999                    $830,000              $817,556              $817,556
American Express Credit Corp., 7.375%, February 1, 1999                      325,000               329,342               325,418
Canadian Imperial Bank of Commerce, 5.55%, February 10, 1999               1,000,000               999,520               999,947
Federal National Mortgage Assoc., 5.33%, February 12, 1999                   100,000                99,703                99,703
Salomon Smith Barney Holdings, Inc., 5.38%, February 16, 1999              1,720,000             1,695,137             1,695,397
General Motors Acceptance Corp., 5.29%,   February 17, 1999                  650,000               641,501               641,501
Chrysler Financial Company LLC , 5.26%, February 22, 1999                  2,400,000             2,365,700             2,365,700
International Lease Finance Corp. 7.50% March 1, 1999                        500,000               508,250               501,367
Federal Home Loan Mortgage Corp., 5.505%, March 12, 1999                   1,000,000             1,000,856             1,000,630
General Motors Acceptance Corp., 6.04%, March 19, 1999                     1,000,000             1,003,480             1,000,707
Merrill Lynch & CO., Inc. 5.23%, March 19, 1999                            1,790,000             1,758,820             1,758,820
Canadian Wheat Board, 5.14%, April 1, 1999                                 2,000,000             1,962,406             1,962,406
International Lease Finance Corp., 6.625%,  April 1, 1999                    375,000               377,419               375,721
CIT Group Holdings, Inc, 6.375%, May 21, 1999                                400,000               402,120               400,873
Federal National Mortgage Assoc., 6.07%, July 1, 1999                      1,000,000             1,005,426             1,004,779
                                                                  -------------------    ------------------    ------------------

TOTAL MARKETABLE SECURITIES                                              $15,090,000           $14,967,236           $14,950,525
                                                                  ===================    ==================    ==================

CASH AND CASH EQUIVALENTS (PERCENT OF NET ASSETS)                                                                          24.4%

Countrywide Home Loans, 5.403%, January 4, 1999                           $1,000,000              $999,400              $999,400
Fortune Brands Inc. 5.05%, January 4, 1999                                 3,463,000             3,461,057             3,461,057
Xerox Capital (Europe) PLC  5.303%, January 4, 1999                        3,483,000             3,480,949             3,480,949
Federal National Mortgage Assoc, 5.77%, January 5, 1999                   10,401,000            10,000,000            10,000,000
Ford Motor Credit Co, 5.454%, January 5, 1999                                500,000               499,622               499,622
Pioneer Hi-BRED International, 5.665%, January 7, 1999                     1,000,000               997,332               997,332
Ford Motor Credit Co., 6.11%, January 8, 1999                                167,000               166,717               166,717
Deere & Co., 5.372 %,  January 13, 1999                                    2,520,000             2,509,514             2,509,514
E.I. Du Pont De Nemours & Co., Inc. 5.277%, January 13, 1999                 648,000               644,598               644,598
Household Finance Corp., 5.356 %, January 13, 1999                           175,000               174,119               174,119
Household Finance Corp., 5.355% , January 15, 1999                         2,343,000             2,331,899             2,331,899
Potomac Electric Power Co., 5.569%, January 15, 1999                       3,122,000             3,110,930             3,110,930
Chrysler Financial Corp., 5.537%, January 25, 1999                         1,164,000             1,158,121             1,158,121
Eastman Kodak Co., 5.232%, January 26, 1999                                2,518,000             2,502,360             2,502,360
Cigna Corp., 5.559%, January 27, 1999                                      1,819,000             1,809,220             1,809,220
Cigna Group Holdings, Inc.  5.334%, January 27, 1999                       1,851,000             1,835,496             1,835,496
Countrywide Home Loan, Inc. 5.506%, January 27, 1999                       1,342,000             1,333,028             1,333,028
Countrywide Home Loan, Inc. 5.587%, January 27, 1999                       1,177,000             1,169,197             1,169,197
General RE Corp., 5.187% , January 29, 1999                                  542,000               538,046               538,046
PNC Funding Corp. 5.728%, January 29, 1999                                 2,500,000             2,487,729             2,487,729
GTE Funding, Inc, Inc,  5.211%, February 1, 1999                           2,526,000             2,506,048             2,506,048
Norwest Financial, Inc. 5.536%, February 3, 1999                           3,563,000             3,539,593             3,539,593
CIGNA Corp., 5.233%, February 4, 1999                                      1,745,000             1,730,660             1,730,660
General Electric Capital Corp. 5.537%, February 4, 1999                    3,563,000             3,539,049             3,539,049
Associates First Capital Corp., 5.241%, February 8, 1999                   2,519,000             2,498,988             2,498,988
GTE Funding, Inc., 5.304%, February 11, 1999                               1,000,000               993,413               993,413
                                                                  -------------------    ------------------    ------------------

TOTAL CASH EQUIVALENTS                                                    56,651,000            56,017,086            56,017,086

CASH                                                                       2,561,762             2,561,762             2,561,762
                                                                  -------------------    ------------------    ------------------

TOTAL CASH AND CASH EQUIVALENTS                                          $59,212,762           $58,578,848           $58,578,848
                                                                  ===================    ==================    ==================
</TABLE>


                        SEE NOTES TO FINANCIAL STATEMENTS


                                      F-17
<PAGE>

                        NOTES TO FINANCIAL STATEMENTS OF
           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
                FOR YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997

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 partners in the Partnership are Prudential, Pruco Life and Pruco Life
of New Jersey.

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 estimated market 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 market value of its assets, principally as
described in Notes 2A and 2B below, reduced by any liabilities of the
Partnership. The periodic adjustments to property values described in Notes 2A
and 2B 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 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 share value of the
Partnership's net assets. Share value is calculated by dividing the estimated
market value of net assets of the Partnership as determined above by the number
of shares outstanding. A Contract owner participates in the Partnership through
interests in the Real Property Accounts.

NOTE 2:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         A:       BASIS OF PRESENTATION - It is the Partnership's policy to
                  consolidate those real estate partnerships in which it has a
                  controlling financial interest. All significant intercompany
                  balances and transactions have been eliminated in the
                  consolidation.

         B:       REAL ESTATE INVESTMENTS - The Partnership's investments in
                  real estate are initially valued at their purchase price.
                  Thereafter, real estate investments are reported at their
                  estimated market values based upon appraisal reports prepared
                  by independent real estate appraisers (members of the
                  Appraisal Institute 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 Appraiser of Prudential Insurance Company's Valuation
                  Unit (Valuation Unit) is responsible to assure that the
                  valuation process provides independent and accurate market
                  value estimates. In the interest of maintaining and monitoring
                  the independence and accuracy of the appraisal process, the
                  Comptroller of Prudential has appointed a third party firm to
                  act as the Appraisal Management Firm. The Appraisal Management
                  Firm, among other responsibilities, approves the selection and
                  scheduling of external appraisals; engages all external
                  appraisers; reviews and provides comments on all external
                  appraisals; prepares all quarterly update appraisals; assists
                  in developing policies and procedures and assists in the
                  evaluation of the performance and competency of external
                  appraisers.


                                      F-18
<PAGE>

                  The purpose of an appraisal is to estimate the market value of
                  real estate as of a specific date. Market value has been
                  defined as the most probable price for which the appraised
                  real estate will sell in a competitive market under all
                  conditions requisite to fair sale, with the buyer and seller
                  each acting prudently, knowledgeably, and for self interest,
                  and assuming that neither is under undue duress.

                  The estimate of market value generally is a correlation of
                  three approaches, all of which require the exercise of
                  subjective judgment. The three approaches are: (1) current
                  cost of reproducing the real estate less deterioration and
                  functional and economic obsolescence; (2) discounting of a
                  series of income streams and reversion at a specified yield or
                  by directly capitalizing a single year income estimate by an
                  appropriate factor; and (3) value indicated by recent sales of
                  comparable properties in the market space. 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.

                  Real estate partnerships are valued at the Partnership's
                  equity in net assets as reflected in the partnership's
                  financial statements with properties valued as described
                  above.

                  The market value of real estate and real estate partnerships
                  does not reflect transaction costs which may be incurred at
                  disposition.

                  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. Although the estimated market values
                  represent subjective estimates, management believes these
                  estimated market values are reasonable approximations of
                  market prices and the aggregate value of investments in real
                  estate is fairly presented as of December 31, 1999 and 1998.

         C:       INVESTMENT IN REAL ESTATE INVESTMENT TRUSTS - Shares of real
                  estate investment trusts (REITs) are generally valued at their
                  quoted market price. These values may be adjusted for
                  discounts resulting from restrictions, if any, on the future
                  sale of these shares, such as lockout periods or limitations
                  on the number of shares which may be sold in a given time
                  period. Any such discounts are determined by the Valuation
                  Unit. On March 30, 1999, the Partnership converted 506,894
                  shares of Meridian REIT to 557,583 shares of ProLogis REIT,
                  fair value of $10,942,566, and cash of $1,013,796 (or total
                  fair value of $11,956,362) as a result of ProLogis'
                  acquisition of Meridian. Management continued applying a 3%
                  discount to the market value of the ProLogis REIT shares
                  through June 29, 1999 because of the restriction which limits
                  the number of shares that can be publicly traded during any
                  six month period to 30% of the total shares originally
                  acquired. The application of the 3% discount was discontinued
                  on June 30, 1999 because this restriction no longer applied.

         D:       REVENUE RECOGNITION - Rent from real estate is recognized when
                  billed. Revenue from certain real estate investments is net of
                  all or a portion of related real estate expenses and taxes.
                  Since real estate is stated at estimated market value, net
                  income is not reduced by depreciation and amortization
                  expense. Dividend income is accrued at the ex-dividend date.

         E:       EQUITY IN INCOME OF REAL ESTATE PARTNERSHIPS - 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 committees of the partnerships.


                                      F-19
<PAGE>

         F:       MORTGAGE LOAN PAYABLE - Mortgage loan payable is stated at the
                  principal amount of the obligation outstanding.

         G:       CASH AND CASH EQUIVALENTS - For purposes of the Statement of
                  Cash Flows, all short-term investments with an original
                  maturity of three months or less are considered to be cash
                  equivalents.

                  Cash of $72,861 and $114,745 at December 31, 1999 and 1998,
                  respectively, was maintained by the properties for tenant
                  security deposits and is included in Other Assets on the
                  Statements of Assets and Liabilities.

         H:       MARKETABLE SECURITIES - Marketable securities are highly
                  liquid investments with maturities of more than three months
                  when purchased and are carried at estimated market value.

         I:       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.

         J:       MANAGEMENT'S USE OF ESTIMATES IN THE FINANCIAL STATEMENTS -
                  The preparation of financial statements in conformity with
                  generally accepted accounting principles requires management
                  to make estimates and assumptions that affect the reported
                  amounts of assets and liabilities at the date of the financial
                  statements and the reported amounts of revenues and expenses
                  during the reporting period. Actual results could differ from
                  those estimates.


                                      F-20
<PAGE>

NOTE 3:  REAL ESTATE PARTNERSHIP

Real estate partnership is valued at the Partnership's equity in net assets as
reflected by the partnership's financial statements with properties valued as
indicated above. The partnership's financial position at December 31, 1999 and
1998, and results from operations for the years then ended are summarized as
follows:

<TABLE>
<CAPTION>
                                                                  December 31,
                                                            1999               1998
                                                       ---------------------------------
<S>                                                    <C>               <C>
Partnership Assets and Liabilities
    Real Estate at estimated market value               $26,350,000                 $0
    Other Assets                                          1,685,059                  0
                                                        -----------        -----------
    Total Assets                                         28,035,059                  0
                                                        -----------        -----------
    Mortgage loans payable                               20,889,782                  0
    Other Liabilities                                     1,250,146                  0
                                                        -----------        -----------
    Total Liabilities                                    22,139,928                  0
                                                        -----------        -----------
    Net Assets                                           $5,895,131                 $0
                                                        ===========        ===========
Partnership's Share of Net Assets                        $4,506,257                 $0
                                                        ===========        ===========
<CAPTION>
                                                                  December 31,
                                                            1999               1998
                                                       ---------------------------------
<S>                                                    <C>               <C>
Partnership Operations
    Rental Revenue                                       $926,283            $33,462
    Other Revenue                                               0                  0
                                                        ---------           --------
    Total Revenue                                         926,283             33,462
                                                        ---------           --------
    Real Estate Expenses and Taxes                        795,115                  0
                                                        ---------           --------
    Net Investment Income                                $131,168            $33,462
                                                        =========           ========
Partnership's Share of Net Investment Income              $98,375            $33,462
                                                        =========           ========

</TABLE>

NOTE 4: DEBT

The mortgage loan has a variable interest rate which is adjusted annually. The
rate is equal to the 6-month Treasury rate plus 1.565%. It is subject to a
maximum of 11.345% and a minimum of 2.345%. The change from year to year may not
be more than 2%. At December 31, 1999, the rate was 6.845%.

As of December 31, 1999, the mortgage loan payable was payable as follows:

<TABLE>
<CAPTION>
                  Year Ending
                  December 31,                             (000's)
                  ------------                           ------------
                  <S>                                    <C>
                      2000                                 $    96
                      2001                                     105
                      2002                                     112
                      2003                                     120
                      2004                                     127
                      Thereafter                             9,625
                                                          --------
                      Total                               $ 10,185
                                                          ========
</TABLE>

The mortgage payable is secured by a real estate investment with an estimated
market value of $17,450,000.


                                      F-21
<PAGE>

NOTE 5:  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 2000 to 2009. At December 31, 1999, the aggregate
future minimum base rental payments under non-cancelable operating leases by
year and in the aggregate are as follows (excluding apartment leases):

<TABLE>
<CAPTION>
                  Year Ending
                  December 31,                             (000's)
                  ------------                           ------------
                  <S>                                    <C>
                       2000                               $ 11,918
                       2001                                 10,543
                       2002                                  8,984
                       2003                                  5,718
                       2004                                  3,687
                       Thereafter                           10,186
                                                            ------
                       Total                              $ 51,036
                                                          ========
</TABLE>

NOTE 6:  COMMITMENT FROM PARTNER

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 are utilized for property acquisitions, and returned to
Prudential on an ongoing basis from Contract owners' net contributions and other
available cash. The amount of the commitment is reduced by $10 million for every
$100 million in current value net assets of the Partnership. Thus, with $225
million in net assets, the commitment has been automatically reduced to $80
million. As of December 31, 1999, Prudential's equity interest in the
Partnership under this commitment was $45 million. Prudential does not intend to
make any contributions during the 2000 fiscal year and will begin to phase out
this commitment over the next several years.


NOTE 7:  RELATED TRANSACTIONS

Pursuant to an investment management agreement, Prudential charges the
Partnership a daily investment management fee at an annual rate of 1.25% of the
average daily gross asset valuation of the Partnership. For the years ended
December 31, 1999, 1998 and 1997 management fees incurred by the Partnership
were $2.7 million; $2.9 million; and $2.6 million, respectively.

The Partnership also reimburses Prudential for certain administrative services
rendered by Prudential. The amounts incurred for the years ended December 31,
1999, 1998 and 1997 were $116,463; $116,128; and $115,346, respectively, and are
classified as administrative expenses in the Statements of Operations.

On February 1, 1999, Prudential and its partners withdrew $30 million from the
Partnership. On December 23, 1999, Prudential and its partners withdrew $6
million from the Partnership.

The Partnership owned a 50% interest in four warehouse/distribution buildings in
Jacksonville, Florida (the Unit warehouses). The remaining 50% interest was
owned by Prudential and one of its subsidiaries. In September 1997, the Unit
warehouses were sold as part of an industrial package for cash of $12.5 million.
The partnership's share of the proceeds was $6.3 million.


                                      F-22
<PAGE>

<TABLE>
<CAPTION>
                                                                       SCHD III

                                               THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
                                                     SCHEDULE III - REAL ESTATE OWNED: PROPERTIES
                                                                   DECEMBER 31, 1999
                                  ---------------------------------------------------------------------------------


                                            INITIAL COSTS TO THE PARTNERSHIP
                       -------------------------------------------------------------------          COSTS            ---------------
                                                                                                 CAPITALIZED
                                                                           BUILDING &           SUBSEQUENT TO
        DESCRIPTION        ENCUMBRANCES               LAND                IMPROVEMENTS           ACQUISITION              LAND
---------------------------------------------    ------------------     ------------------    ------------------     ---------------
<S>                        <C>                   <C>                    <C>                   <C>                    <C>
Properties:

Office Building
Lisle, IL                      None                      1,780,000             15,743,881             4,551,901           1,780,000

Garden Apartments
Atlanta, GA                    None                      3,631,212             11,168,904               846,730 (b)       3,631,212

Retail Shopping Center
Roswell, GA                    None                      9,454,622             21,513,677             1,426,554           9,500,725

Office Building
Morristown, NJ                 None                      2,868,660             12,958,451             4,289,583           2,868,660

Office/Warehouse
Bolingbrook, IL                None                      1,373,199              7,302,518               272,311           1,373,199

Garden Apartments
Raleigh, NC                    None                      1,623,146             14,135,553                75,229           1,623,146

Office Building
Nashville, TN                  None                      1,797,000              6,588,451               124,457           1,797,377

Office Park
Oakbrook Terrace, IL           None                      1,313,310             11,316,883               315,173           1,313,821

Office Building
Beaverton, OR                  None                        816,415              9,897,307                55,089             844,751

Industrial Building
Salt Lake City, UT             None                        582,457              4,805,676               252,576             594,780

Industrial Building
Aurora, CO                     None                      1,338,175              7,202,411             1,578,486           1,415,159

Office Complex
Brentwood, TN                  None                      2,425,000              7,063,755               118,073           2,453,117

                                                 ------------------     ------------------    ------------------     ---------------
                                                        29,003,196            129,697,467            13,906,162          29,195,947
                                                 ==================     ==================    ==================     ===============

<CAPTION>
                                                                              1999                  1998                  1997
                                                                        ------------------    ------------------     ---------------
<S>                                                                     <C>                   <C>                    <C>
(a)                    Balance at beginning of year                           170,045,055           201,670,248         177,082,291
                         Additions:
                          Acquisitions                                                  0                     0          23,417,474
                          Improvements, etc.                                    2,561,770             5,827,888           1,170,483
                         Deletions:
                          Sale                                                          0           (37,453,081)                  0

                                                                        ------------------    ------------------     ---------------
                       Balance at end of year                                 172,606,825           170,045,055         201,670,248
                                                                        ==================    ==================     ===============

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

<CAPTION>
                                                                       SCHD III

                                               THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
                                                     SCHEDULE III - REAL ESTATE OWNED: PROPERTIES
                                                                   DECEMBER 31, 1999
                                  ---------------------------------------------------------------------------------
                                                                   GROSS AMOUNT AT
                                                                    WHICH CARRIED
                                                                   AT CLOSE OF YEAR
                       ---------------------------------------------------------------------------------------------
                              BUILDING &           1999                                   YEAR OF          DATE
        DESCRIPTION          IMPROVEMENTS          SALES       TOTAL (a)(b)(c)         CONSTRUCTION      ACQUIRED
-----------------------    ------------------     --------   ---------------------    ---------------- -------------
<S>                        <C>                    <C>        <C>                      <C>              <C>
Properties:

Office Building
Lisle, IL                         20,295,782                           22,075,782          1985         Apr., 1988

Garden Apartments
Atlanta, GA                       12,015,634                           15,646,846          1987         Apr., 1988

Retail Shopping Center
Roswell, GA                       22,894,128                           32,394,853          1988         Jan., 1989

Office Building
Morristown, NJ                    17,248,034                           20,116,694          1981         Aug., 1988

Office/Warehouse
Bolingbrook, IL                    7,574,829                            8,948,028          1989         Feb., 1990

Garden Apartments
Raleigh, NC                       14,210,782                           15,833,928          1995         Jun., 1995

Office Building
Nashville, TN                      6,712,531                            8,509,908          1982         Oct., 1995

Office Park
Oakbrook Terrace, IL              11,631,545                           12,945,366          1988         Dec., 1995

Office Building
Beaverton, OR                      9,924,060                           10,768,811          1995         Dec., 1996

Industrial Building
Salt Lake City, UT                 5,045,929                            5,640,709          1997         Jul., 1997

Industrial Building
Aurora, CO                         8,703,913                           10,119,072          1997         Sep., 1997

Office Complex
Brentwood, TN                      7,153,711                            9,606,828          1987         Oct., 1997

                           ------------------     --------   ---------------------
                                 143,410,878            0             172,606,825
                           ==================     ========   =====================
</TABLE>


                                      F-23
<PAGE>

<TABLE>
<CAPTION>
                                                                   THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
                                                                    SCHEDULE III - REAL ESTATE OWNED: INTEREST IN PROPERTIES
                                                                                      DECEMBER 31, 1999
                                                            ------------------------------------------------------------------------


                                                              INITIAL COSTS TO THE PARTNERSHIP
                                                            ----------------------------------         COSTS         ---------------
                                                                                                    CAPITALIZED
                                    ENCUMBRANCES                               BUILDING &          SUBSEQUENT TO
          DESCRIPTION                AT 12/31/99                LAND          IMPROVEMENTS          ACQUISITION           LAND
----------------------------    ----------------------      -------------   ------------------   ------------------   -------------
<S>                             <C>                         <C>             <C>                  <C>                  <C>
Interest in Properties:

Garden Apartments
Jacksonville, FL                           10,184,662          2,750,000           14,650,743                    0       2,750,000

Retail Shopping Center
Kansas City MO and KS       *              15,968,149          5,710,916           15,211,504              232,855       5,710,916


                                ----------------------      -------------   ------------------   ------------------   -------------
                                           26,152,811          8,460,916           29,862,247              232,855       8,460,916
                                ======================      =============   ==================   ==================   =============
<CAPTION>
                                                      THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
                                                       SCHEDULE III - REAL ESTATE OWNED: INTEREST IN PROPERTIES
                                                                         DECEMBER 31, 1999
                                --------------------------------------------------------------------------------------------------
                                                                        GROSS AMOUNT AT
                                                                         WHICH CARRIED
                                                                        AT CLOSE OF YEAR
                                --------------------------------------------------------------------------------------------------

                                     BUILDING &          1999                                   YEAR OF               DATE
          Description               IMPROVEMENTS         SALES        TOTAL (a)(b)(c)         CONSTRUCTION          ACQUIRED
----------------------------    ---------------------  ----------   --------------------- -------------------  --------------------
<S>                             <C>                    <C>          <C>                   <C>                  <C>
Interest in Properties:

Garden Apartments
Jacksonville, FL                          14,650,743                          17,400,743          1973             Sept., 1999

Retail Shopping Center
Kansas City MO and KS       *             15,444,359                          21,155,275    Various Ranging        Sept., 1999
                                                                                             From 1972-1992

                                ---------------------  ----------   ---------------------
                                          30,095,102           0              38,556,018
                                =====================  ==========   =====================

<CAPTION>
                                                                                  1999                 1998               1997
                                                                            ------------------   ------------------   -------------
<S>                                                                         <C>                  <C>                  <C>
(a)                             Balance at beginning of year                                0                    0       6,133,157
                                  Additions:
                                   Acquisitions                                    38,556,018                    0               0
                                   Improvements, etc.                                       0                    0               0
                                  Deletions:
                                   Sale                                                     0                    0      (6,133,157)

                                Encumbrances on Joint Ventures
                                  accounted for by the equity method              (15,968,149)                   0               0

                                                                            ------------------   ------------------   -------------
                                Balance at end of year                             22,587,869                    0               0
                                                                            ==================   ==================   =============

</TABLE>


* Partnership interest accounted for by the equity method.


                                      F-24