<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, 1997

                                          OR

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



Commission file number 33-86780




                             PRUCO LIFE INSURANCE COMPANY

                                    in respect of


                 PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT
                 ---------------------------------------------------
                (Exact name of Registrant as specified in its charter)



           Arizona                              22-1944557
-------------------------------      ---------------------------------
(State or other jurisdiction of      (IRS Employer Identification No.)
 incorporation or organization)






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


                                    (800) 445-4571
                 ----------------------------------------------------
                 (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>

                  PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT
                                    (Registrant)

                                        INDEX

Item No.                                                                Page No.
--------                                                                --------

               Cover Page


               Index                                                        2


PART I

   1.          Business                                                     3

   2.          Properties                                                   4

   3.          Legal Proceedings                                            5


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

PART II

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

   6.          Selected Financial Data                                      6


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

   8.          Financial Statements and Supplementary Data                 15


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

PART III


  10.          Directors and Executive Officers of Pruco Life              16

  11.          Executive Compensation                                      17

  12.          Security Ownership of Certain Beneficial Owners
                  and Management                                           17

  13.          Certain Relationships and Related Transactions              18

PART IV


  14.          Exhibits, Financial Statement Schedules and Reports
                  on Form 8-K                                              19

               Exhibit Index                                               19


               Signatures                                                  22


                                         2
<PAGE>



                                        PART I

ITEM 1. BUSINESS

Pruco Life Variable Contract Real Property Account (the "Real Property
Account"), the Registrant, was established on August 27, 1986 and commenced
business September 5, 1986.  Pursuant to Arizona law, the Real Property Account
was established as a separate investment account of Pruco Life Insurance Company
("Pruco Life").  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 Pruco Life.


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

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


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

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


                                          3
<PAGE>

ITEM 2.  PROPERTIES

The Partnership owns the following properties as of December 31, 1997.

OFFICE FACILITY IN LISLE, ILLINOIS
The property is a four-story office building on 5.6 acres of land.  It was
constructed in 1985 and contains approximately 102,000 square feet of leasable
space. The facility is located at 750 Warrenville Road in the Corporetum Office
Park in Lisle, Illinois, 25 miles west of downtown Chicago.  At December 31,
1997 the property was 37% leased.

APARTMENT COMPLEX IN ATLANTA, GEORGIA
Brookwood Valley Apartments is a garden apartment complex located approximately
3 miles north of downtown Atlanta.  It consists of eight three-story buildings
containing a total of 240 units.  Construction of the 7.1 acre site was
completed in 1987.  At December 31, 1997 the property was 99% leased.

WAREHOUSE FACILITY IN POMONA, CALIFORNIA
The Partnership owns six industrial buildings on approximately 28 acres in
Pomona, California.  The site is approximately 30 miles east of downtown Los
Angeles.  The buildings were constructed between 1982 and 1984 and contain
approximately 531,000 square feet of leasable space.  The property was 100%
leased at December 31, 1997.   The land, previously a ground lease, was
purchased in 1997.

SHOPPING CENTER IN ROSWELL, GEORGIA
King's Market shopping center was constructed in 1988.  It is located
approximately 22 miles north of downtown Atlanta on a 30 acre site.  It contains
approximately 300,000 square feet of rentable space.  At December 31, 1997 it
was 96% leased.

OFFICE FACILITY IN MORRISTOWN, NEW JERSEY
This four-story suburban office building was constructed in 1981 and contains
83,000 rentable square feet.  It is located on a 5.1 acre site, approximately 30
miles west of New York City.  At December 31, 1997 it was 99% leased.

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


APARTMENT COMPLEX IN FARMINGTON HILLS, MICHIGAN
Indian Creek Apartments consists of fifteen two-story buildings containing 156
two-bedroom and 40 one- bedroom units.  It was constructed in 1988 and is
located approximately 20 miles northwest of Detroit.  At December 31, 1997, the
property was 93% leased.

APARTMENT COMPLEX IN RALEIGH, NC
Dunhill Trace  consists of fourteen two and three story apartment buildings.  It
was constructed and acquired in June, 1995 and  located on a 16.2 acre site in
Northwest  Raleigh, NC. At December 31, 1997 it was 91% leased.

OFFICE FACILITY IN NASHVILLE, TN
Westpark is a 97,000 square foot office center located in suburban Nashville,
Tennessee.  The property was constructed in 1982.  At December 31, 1997 the
building was 100% leased.


                                          4

<PAGE>

OFFICE FACILITY IN OAKBROOK TERRACE, ILLINOIS
Oakbrook Terrace Corporate Center is a 123,000 square foot building located in a
western suburb of Oakbrook Terrace, Illinois.   At December 31, 1997 the
property is 100% leased.

OFFICE FACILITY IN BEAVERTON, OREGON
This three story office building was completed in 1995.  It contains
approximately 72,000 square feet of rentable space.  The building is located on
a 3.89 acre land parcel in Beaverton, Oregon.  At December 31, 1997 the building
was 100% leased.

WAREHOUSE CENTER IN SALT LAKE CITY, UTAH
This one story warehouse-distribution facility was completed in 1997.  It
contains approximately 182,500 square feet of rentable space.  The building is
located on a 9.605 acre land parcel in Salt Lake City, Utah.  At December 31,
1997 the building was vacant.

DISTRIBUTION CENTER IN AURORA, COLORADO
This industrial complex consists of two separate buildings completed in 1997.
It contains approximately 278,000 square feet of rentable space.  The building
is located on an approximate 16 acre land parcel in Aurora, Colorado.  At
December 31, 1997 the building was vacant.

OFFICE FACILITY IN BRENTWOOD, TENNESSEE
This two story office facility was completed in 1987.  It contains approximately
97,000 square feet of rentable space.  The building is located on a 6.96 acre
land parcel in Brentwood, Tennessee.  At December 31, 1997 the building was 100%
leased.


ITEM 3.  LEGAL PROCEEDINGS

None.

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

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


                                         5
<PAGE>

                                       PART II


ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
         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 6, 1998, there were approximately 46,461 Contract Owners of record
investing in the Real Property Account.


ITEM 6.  SELECTED FINANCIAL DATA

Information about contract unit values may be found in Note 4 to the Financial
Statements on page F-7.
<TABLE>
<CAPTION>
                                                                     Year Ended December 31,
                                           ------------------------------------------------------------------------
                                                1997           1996           1995           1994           1993
                                                ----           ----           ----           ----           ----
<S>                                        <C>            <C>            <C>            <C>            <C>
RESULTS OF OPERATIONS:
Net Investment Income                      $  6,335,138   $  7,161,502   $  6,931,412   $  6,157,628   $  6,322,556
Net Gain/(Loss) on Investment
   in Partnership                          $  4,232,158   $ (2,396,724)  $    320,146   $    647,693   $ (1,225,978)
                                           ------------   ------------   ------------   ------------   ------------

Net Increase/(Decrease) in Net Assets
   Resulting From Operations               $ 10,567,296   $  4,764,778   $  7,251,558   $  6,805,321   $  5,096,578
                                           ------------   ------------   ------------   ------------   ------------
                                           ------------   ------------   ------------   ------------   ------------
</TABLE>

FINANCIAL POSITION:

<TABLE>
<CAPTION>
                                                                     Year Ended December 31,
                                           ------------------------------------------------------------------------
                                                1997           1996           1995           1994           1993
                                                ----           ----           ----           ----           ----
<S>                                        <C>            <C>            <C>            <C>            <C>
Total Assets                               $109,495,293   $ 98,385,259   $ 96,064,928   $ 91,251,939   $ 91,890,088
                                           ------------   ------------   ------------   ------------   ------------
                                           ------------   ------------   ------------   ------------   ------------
</TABLE>



                                          6
<PAGE>

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

All of the assets of Pruco Life Variable Contract Real Property Account ("the
Account") are invested in the 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").

(a) LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 1997, the Partnership's liquid assets consisting of cash,
cash equivalents and marketable securities (excluding the Partnership's shares
in Meridian Industrial Trust REIT) were $26,851,981.  This is  a decrease of
$18,312,867 from $45,164,848 at December 31, 1996.  The decrease is due
primarily to the acquisition of five real estate investments in 1997 totaling
$37,417,479.   This decrease was partially offset by: (1) the sale of the
Partnership's interest in a portfolio of industrial properties located in
Jacksonville, FL for net proceeds of $6,272,330, (2) operations of the
Partnership's properties, and (3) interest income received from the
Partnership's short term investments.  Sources of liquidity include net cash
flow from property operations, interest from  short term investments, and
dividends on REIT shares.

Prudential has committed to fund up to $100 million to enable the Partnership to
acquire real estate investments.  Contributions to the Partnership under this
commitment are utilized for property acquisitions, and returned  to Prudential
on an ongoing basis  from Contract owners' net contributions.  The amount of the
commitment is reduced by $10 million for every $100 million in current value net
assets of the Partnership.  The amount available for future investment is
approximately $47 million as of December 31, 1997.

The Partnership will generally invest 10-15% of its assets in cash and
short-term obligations to maintain liquidity; however, its investment policy
allows up to 30% investment in cash and short term obligations.  At December 31,
1997, 12.06% of the Partnership's assets consisted of cash, cash equivalents and
marketable securities (excluding REIT shares).

The Partners made no withdrawals in 1997.  Withdrawals may be made during 1998
based upon the percentage of assets invested in short term obligations.  The
withdrawals should also take into consideration anticipated cash  needs of the
Partnership including potential property acquisitions, property dispositions and
capital expenditures.    Management anticipates that current liquid assets and
ongoing cash flows from operations will satisfy the Partnership's needs over the
next twelve months and the foreseeable future.

In 1997, the Partnership made acquisitions aggregating $37,417,479 consisting of
the following: an industrial building in Salt Lake City, UT for $5,388,134; an
industrial complex in Aurora, CO for $8,540,585; land under an existing
industrial complex already owned by the Partnership in Pomona, CA for
$4,000,000; an office building in Brentwood, TN for $9,488,755; and 506,894
shares of Meridian Industrial REIT for $10,000,005.  These acquisitions were
funded entirely by the Partnership's cash reserves.

During 1997, the Partnership made $1,311,864 in capital expenditures for tenant
alterations, leasing commissions, land improvements and building improvements.
The most significant transaction was $378,959 for tenant alterations and leasing
commissions at the office property located in Lisle, IL,
which related to a new lease signed with Pitney Bowes.  Other significant
capital expenditures


                                          7
<PAGE>

included tenant alterations and leasing commissions throughout the properties
owned by the Partnership.  The office property located in Brentwood, TN
accounted for $212,983 of the total tenant alterations and leasing commissions.
Approximately $104,000 was for tenant alterations and leasing commissions
related to a new lease with Service Experts.


Budgeted capital expenditures for 1998 are approximately $8.5 million.  Of this
amount, $7.3 million is budgeted for tenant improvements and leasing
commissions.  Four of the Partnership's properties account for the majority of
these leasing related capital expenditures.  The Lisle, IL office property is
budgeted to expend $3.2 million in leasing related capital expenditures.  This
property, which was previously leased in its entirety to a single tenant, is
expected to require $2.8 million in tenant improvements, and $0.5 million in
leasing commissions to re-establish 100% occupancy.  At the Salt Lake City, UT
industrial property, management anticipates $1.0 million of capital to be
expended in its effort to lease the currently vacant property.  Of the total
capital to be expended at this property,  $0.8 million is projected for tenant
improvements and $0.2 million is anticipated for leasing commissions.  At the
Aurora, CO industrial property, management anticipates spending  $1.7 million in
its effort to lease this vacant property.  Of the total capital to be expended
$1.4 million is projected for tenant improvements and $0.3 million is
anticipated for leasing commissions.  Management anticipates expending $0.9
million for leasing related capital expenditures at the Morristown, NJ office
building.  It is anticipated that Smith Barney, a major tenant in the building,
will vacate their offices.  To secure a new tenant, $0.5 million in tenant
improvements, and $0.4 million in leasing commissions will be necessary.  All of
these projected expenditures relate to prospective leases and are based upon
reasonable costs.  The actual amount of such expenditures will depend upon the
number of new leases signed, the actual needs of the particular construction or
repair, and the timing of lease executions.

Other major capital projects planned for 1998 include the following:
reconstruction of the lobby and common areas at the Lisle, IL office building
($0.6 million); refurbishment and upgrading the heating ventilation and air
conditioning system at this same property ($0.2 million); residing and painting
the exterior on the Atlanta, GA residential community ($0.1 million); and
reconfiguration of the traffic flow in and around the Atlanta, GA retail
property ($0.1 million).

(b)  RESULTS OF OPERATIONS

The following is a brief  comparison of the Partnership's results of operations
for the years ended December 31, 1997, 1996 and 1995.

1997 VS. 1996

The Partnership's
net investment income for 1997 was $13,789,747, a decrease of
$1,629,771 from net investment income of $15,419,518 in 1996.   This decrease is
the result of the factors discussed below.

Income from property operations, including income from interest in properties,
was $14,651,366 in 1997, a decrease of  $1,410,043  from $16,061,406 in 1996.
This decrease, in income, was primarily due to the results of sales of  two
portfolio properties, and an increased vacancy in a third property.  Decrease in
income for $1,646,337 resulted from the sales of the Flint, MI office park, and
the Azusa, CA industrial center; while an increased vacancy in the Lisle, IL
office property accounted for another $673,119.  The effects of the decrease in
income from these properties were partially offset by $342,829 due to the
acquisitions of a new office property in Brentwood, TN and 506,894 REIT shares.

Rent from properties was $21,582,968 in 1997, a decrease of $1,216,726  from
$22,799,694 in 1996.



                                          8

<PAGE>

The majority of this decrease is attributable to properties held for a full year
in 1996 and sold during 1997.  Also contributing to the decrease was a decrease
in rent collected at the Lisle, IL office property which became 100% vacant in
the fourth quarter.

Income from interest in properties relates to the Partnership's 50%
co-investment in several warehouse properties (the Unit warehouses).  Income
from this source decreased from $606,558 in 1996 to $435,296 in 1997, for a
total decrease of $171,262.  The primary reason for the decrease was due to the
sale of the Partnership's interest in these properties on September 30, 1997.

Dividend income from real estate investment trusts totaled $158,154.  The
506,894 shares of Meridian Industrial REIT were acquired on September 24, 1997.

Administrative expenses on the Statement of Operations includes property
operations and the administration of the Partnership.  Property administrative
expenses  in 1997 were $2,009,449, an increase of $355,564 from $1,653,885 in
1996.  This increase was primarily due to the acquisition of three new
properties, plus a full year of administrative expenses for a property acquired
at the end of 1996.

Property operating expenses for 1997 were $3,296,350, an increase of  $391,730
from $2,904,620 in 1996.  In 1997, this increase was primarily due to a full
year ownership of the office property in Beaverton, OR and expenses incurred for
new acquisitions, including the industrial buildings in Salt Lake City, UT and
Aurora, CO. These three properties contributed $274,530 to the increased
operating expenses.  The acquisition of the office building in Brentwood, TN
contributed $103,234.

Real estate taxes for 1997 were $2,208,972, a decrease of $158,432 from
$2,367,404 in 1996.  This decrease was primarily due to the sale of the office
building located in Flint, MI in December 1996,  which resulted in a decrease of
$162,701; and the sale of the industrial property in Asuza, CA in April 1996,
which resulted in a decrease of $51,149.  These decreases were partially offset
by increased real estate taxes at the office property in Oakbrook Terrace, IL of
$50,513, and an increase of $40,908 at the industrial property in Bolingbrook,
IL.

Administrative expense related to the Partnership was $316,705 in 1997, an
increase of $105,157 from $211,548 in 1996.

The investment management fee for 1997 was $2,640,470, an increase of $146,241
from the 1996 management fee of $2,494,229.  This fee is computed at 1.25% of
gross assets which were significantly higher in 1997 than 1996.

The following is a comparison of the Partnership's property results of
operations and realized and unrealized gains or losses, by investment type, for
the twelve months ended December 31, 1997 and December 31, 1996.

OFFICE PROPERTIES

Net investment income from property operations for the office properties in 1997
was $5,329,310. This was a decrease of $488,187 (8.4%) from $5,817,497 in 1996.
The decrease was primarily due to the sale of an office building in Flint, MI
which accounts for $1,001,711 of the decrease; and lowered rental income at the
Lisle, IL office property which accounts for $673,119 of the decrease.  These
factors are offset by owning an office building in Beaverton, OR for a full year
($833,643), and the acquisition of the second office property in Brentwood, TN
($194,851).  For office properties held for the comparable period, net
investment income increased by $318,674 (6.5%) from $4,877,349 in
1996, to $5,196,023 in 1997.


                                          9

<PAGE>

The office properties owned by the Partnership experienced a net unrealized gain
of $1,897,749 in 1997.  The largest net unrealized gain was attributable to the
office property in Oakbrook Terrace, IL and was due to the improving office
market conditions in suburban Chicago.  The Morristown, NJ and the Brentwood, TN
office properties also experienced net unrealized gains of $557,241 and
$576,381, respectively.   Unrealized losses of $28,285 at the Summit Building in
Beaverton, OR , and  $13,602 at the Lisle, IL office property offset these
gains.


The Partnership acquired a second office property in Brentwood, TN.  The 97,378
square foot suburban office building was acquired on September 15, 1997 for
$9,488,755.  This property was 100% occupied at the time of acquisition.


Occupancy at the Beaverton, OR, Oakbrook Terrace, IL and Brentwood, TN
properties remained unchanged from December 31, 1996 at 100% .  Occupancy at the
Morristown, NJ property increased from 93% to 100%, while occupancy dropped from
100% at the Lisle, IL office property at December 31, 1996 to 37% at year end
1997.  As of December 31, 1997, all vacant spaces are being marketed.

APARTMENT COMPLEXES

Net investment income from apartment property operations was $3,888,263 in 1997,
a decrease of $37,487 from $3,925,750 in 1996.

The three apartment communities owned by the Partnership experienced a net
unrealized gain of $1,053,061 during 1997.  The Atlanta, GA property was the
largest contributor to the gain as it appreciated $1,392,186.  This gain was
attributable to increased rental rates and occupancy.  The Farmington Hills, MI
property also had a net unrealized gain of $80,839 due to increased rental
rates.  The Raleigh, NC community had a net unrealized loss of $328,481 due to
the appraisal assumptions concerning above market rentals expiring and
subsequently renewing at lower market rates.

Weighted average occupancy at the Partnership's residential communities
increased from 93.1%, as of December 31, 1996, to 94.3% as of December 31, 1997.
The occupancy at the Atlanta, GA and Farmington Hills, MI communities improved
from 93% and 89%, respectively, as of  December 31, 1996 to 99% and 93%,
respectively,  at year end 1997.  The occupancy at the Raleigh, NC community
slipped from 97%  at the end of 1996 to 91% as of December 31, 1997.

RETAIL PROPERTIES

Net investment income for the Partnership's retail properties decreased to
$2,758,995 in 1997, from $3,129,390 in 1996.  This decrease was primarily due to
decreased occupancy at the shopping center earlier in the year.  Revenues
decreased by $299,474 and expenses increased by $70,920 from the prior year.

The retail center had an unrealized gain of $1,109,099.  This was a result of
changes in the assumed capital needs of the property, and the leasing of vacant
spaces in the third and fourth quarters which stabilized future cash flows and
brought occupancy back up to 96%.

The shopping center was 96% occupied as of December 31, 1997, unchanged from the
prior year.    Currently, there are three vacant suites.  All vacant spaces are
being marketed.


                                          10

<PAGE>


INDUSTRIAL PROPERTIES


Net investment income from industrial property operations was $2,526,820 in
1997, a decrease of $661,949  from $3,188,769 in 1996.  The primary reason for
the decline was the sale of the industrial complex in Azusa, CA, in April 1996,
which accounted for $644,625 of the decrease.  The sale of the Partnership's
investment in the Jacksonville, FL industrial properties, in September 1997,
also contributed to the decline in net investment income. For properties held
for comparable periods in 1996 and 1997, net investment income increased from
$1,941,812 to $2,042,184, respectively.

The Partnership acquired three industrial properties in 1997.  The first
acquisition was a 182,500 square foot building in Salt Lake City, UT for
$5,388,134.  The second acquisition was a two building 277,500 square foot
facility in Aurora, CO for $8,540,585.  As of December 31, 1997, both properties
were vacant.  The third acquisition was land under the Partnership's existing
Pomona CA, industrial complex.  The Partnership acquired the land under a
purchase option for $4,000,000.

The industrial properties (including the recently purchased land) had $1,901,523
of net unrealized appreciation in 1997.  The largest single gain of $1,740,917
was attributable to the purchase of the land under the Pomona, CA property.  The
Salt Lake City, UT and Aurora, CO properties experienced $38,133 and $140,585
negative net appreciation as a result of softer market conditions.

As of December 31, 1997, occupancy at the Partnership's Pomona, CA and
Bolingbrook, IL, industrial properties remained unchanged from December 31, 1996
at 100%.  As of December 31, 1997, both the Salt Lake City, UT and Aurora, CO
properties were 100% vacant.  As of December 31, 1997, all vacant spaces were
being marketed.

The partnership sold its interest in the Jacksonville, FL warehouses for net
sales proceeds of $6.3 million, resulting in a gain of $284,581.

The Partnership also acquired 506,894 shares of Meridian Industrial Trust for
$10,000,005 on September 24, 1997.  Meridian is a self administered and
self-managed equity real estate investment trust engaged in owning, operating,
and leasing high quality, modern industrial properties nationwide.  As of
December 31, 1997, these shares experienced a $2,523,800 net unrealized gain and
generated $147,978 in net investment income. These shares were purchased in a
private transaction at a favorable, below-market price.

1996 VS. 1995

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

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

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



                                          11

<PAGE>


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

Income from interest in properties relates to the Partnership's 50%
co-investment in several warehouses (the Unit warehouses).  Income from this
source decreased approximately $31,624 (4.9%) from $638,183 in 1995 to $606,558
in 1996. The reduction is the result of GATX vacating a portion of its space in
October and the space not being re-leased.

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

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

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

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

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

The following is a brief comparison of the Partnership's property results of
operations and realized and unrealized gains or losses, by investment type, for
the twelve months ended December 31, 1996 and December 31, 1995.

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


                                          12


<PAGE>



approximately $75,000 offset by the apartments' net unrealized gains of
approximately $1,210,000.

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

OFFICE PROPERTIES

The Lisle, IL office had an unrealized loss of approximately $1,700,000 (14.7%
of its year-end 1995 value). This was caused by R.R. Donnelley (sole-tenant) not
renewing its lease, which expired September 1997, and the anticipated expenses
that would be incurred in order to re-lease the building in 1997. The Morristown
property experienced an unrealized gain of approximately $409,000 (4.3% of its
December 31, 1995 value), due to improved market conditions in the Northern NJ
market. The Nashville office experienced an unrealized gain of approximately
$166,000. The increase represented 1.9% of its year-end 1995 value.  The rise in
value reflects the expectations of continued high occupancy and the potential
for higher rental rates in the future.  The Oakbrook Terrace office building had
an increase of $565,000 (4.5% of its December 31, 1995 value).  This was the
result of two tenant rent increases that occurred in 1996.

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

APARTMENT COMPLEXES

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

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

RETAIL PROPERTIES

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


                                          13

<PAGE>


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

INDUSTRIAL PROPERTIES

The Bolingbrook warehouse had the largest unrealized loss of this property type,
approximately $300,000 (4.1% of its year-end 1995 value).  Gillette, a tenant of
the entire property, indicated that they needed additional space and will
relocate at the expiration of their lease in 2000. The Pomona property had an
unrealized gain of approximately $175,000 (1.0% of its year-end 1995 value), as
a result of signing leases that maintained the property occupancy at 100%.  The
market values of the four Unit warehouses, in which the Partnership owns a 50%
interest at the end of 1996, had an unrealized gain of approximately $50,000
(0.9% of their December 31, 1995 value).

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

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


                                          14
<PAGE>

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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


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

None.


                                          15
<PAGE>

                                       PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF PRUCO LIFE

<TABLE>
<CAPTION>

Name                          Position                                     Age
----                          --------                                     ---
<S>                           <C>                                          <C>
James J. Avery, Jr.           Chairman of the Board
                                and Director                               46

I. Edward Price               Vice Chairman of the Board
                                and Director                               55

Esther H. Milnes              President and Director                       47

James Drozanowski             Senior Vice President                        55

Frank Marino                  Senior Vice President                        53

Edward A. Minogue             Senior Vice President                        55

Hwei-Chung Shao               Senior Vice President and
                                and Chief Actuary                          43

Karen L. Shapiro              Senior Vice President                        42

James M. Schlomann            Vice President, Comptroller
                                and Chief Accounting Officer               49


William M. Bethke             Director                                     50

Ira J. Kleinman               Director                                     50

Mendel M. Melzer              Director                                     37

Kiyofumi Sakaguchi            Director                                     54
</TABLE>

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


James J. Avery, Jr., age 46 was elected Chairman of the Board of Directors of
the Company on June 27, 1997.  Mr. Avery joined The Prudential Insurance Company
of America in 1988 and has served as the Senior Vice President, CFO and Chief
Actuary for The Prudential Individual Insurance Group since 1997.

I. Edward Price, age 55, has been Senior Vice President and Actuary of
Prudential Individual Insurance since 1995.  From 1994 to 1995, he was Chief
Executive Officer of Prudential International Insurance.  From 1993 to 1994, he
was President of Prudential International Insurance.  Prior to 1993, he was
Senior Vice President and Company Actuary of Prudential.

Esther H. Milnes, age 47, has been Vice President and Actuary of Prudential
Individual Insurance Group since 1996.  From 1993 to 1995, she was Senior Vice
President and Chief Actuary of Prudential Insurance and Financial Services.
Prior to 1993, she was Vice President and Associate Actuary of Prudential.

James C. Drozanowski, age 55, has been Vice President and Operations Executive,
Prudential Individual Insurance Group since 1996;  1995 to 1996:  President and
Chief Executive Officer of Chase Manhattan Bank; 1993 to 1995: Vice President,
North America Customer Services, Chase Manhattan Bank; prior to 1993,
Operations Executive, Global Securities Services, Chase Manhattan Bank.


                                          16

<PAGE>

Frank P. Marino, age 53, has been Vice President, Policyowner Relations
Department, Prudential Individual Insurance Group since 1996; prior to 1996,
Senior Vice President, Prudential Mutual Fund Services.

Edward A. Minogue, age 55, was elected a Senior Vice President of the Company on
September 1, 1997.  Mr. Minogue has been a Vice President of The Prudential
Insurance Company of America since July, 1997.  Prior to 1997, Mr. Minogue was a
director of Merrill Lynch, Pierce & Smith, Inc.

Hwei-Chung Shao, age 43, has been Vice President and Associate Actuary,
Prudential.

Karen L. Shapiro, age 42, has been Vice President, Prudential Individual
Insurance Group since 1996; Vice President and Associate General Counsel,
Prudential Securities Incorporated 1993 to 1996; prior to 1993, Senior Associate
with Shaw, Pittman, Potts and Trowbridge.

James M. Schlomann, age 49, joined The Prudential in August of 1997 and was
elected the Vice President, Comptroller and Chief Accounting Officer of the
Company effective November 18, 1997.  He was a Senior Executive Vice President
and Chief Financial Officer of US LIFE Corp. from 1993 to 1997.  Prior to 1993,
Mr. Schlomann was a Senior Vice President and Comptroller of Frank B. Hall &
Co., Inc.

William M. Bethke, age 50, has been President, Prudential Capital Markets Group
since 1992.

Ira J. Kleinman, age 50, has been Chief Marketing and Product Development
Officer of Prudential Individual Insurance Group since 1995.  From 1993 to 1995,
he was President of Prudential Select.  From 1992 to 1993, he was Senior Vice
President of Prudential.  Prior to 1992, he was Vice President of Prudential.

Mendel A. Melzer, age 37, has been Chief Investment Officer, Mutual Funds and
Annuities, Prudential Investments since 1996; 1995 to 1996:  Chief Financial
Officer of the Money Management Group of Prudential; 1993 to 1995:  Senior Vice
President and Chief Financial Officer of Prudential Preferred Financial
Services; prior to 1993,  Managing Director, Prudential Investment Corporation.

Kiyofumi Sakaguchi, age 54, has been President, Prudential International
Insurance Group since 1995; 1994 to 1995:  Chairman and Chief Executive Officer,
The Prudential Life Insurance Co., Ltd.; prior to 1994, President and Chief
Executive Officer, Asia Pacific Region-Prudential International Insurance, and
President, The Prudential Life Insurance Co., Ltd.


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.


                                          17
<PAGE>

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Pursuant to an investment management agreement, Prudential charges the
Partnership a daily investment management fee at an annual rate of 1.25% of the
average daily gross asset valuation of the Partnership.  For the years ended
December 31, 1997, 1996 and 1995 management fees incurred by the Partnership
were $2,640,470; $2,494,229; and $2,341,878, respectively.

The Partnership also reimburses Prudential for certain administrative services
rendered by Prudential.  The amounts incurred for the years ended December 31,
1997, 1996 and 1995 were $115,346; $116,818; and $123,919, respectively, and are
classified as administrative expenses in the Statements of Operations.

The Partnership owns a 50% interest in four warehouse/distribution buildings in
Jacksonville, Florida (the Unit warehouses).  The remaining 50% interest is
owned by Prudential and one of its subsidiaries. In September 1997, the Unit
warehouses were sold as part of an industrial package for cash of $12,544,659.
The partnership's share of the proceeds was $6,272,329.

The Partnership has contracted with PREMISYS Real Estate Services, Inc.
(PREMISYS), an affiliate of Prudential, sold by Prudential in 1997, to provide
property management services at the Unit warehouses.  The property management
fee earned by PREMISYS, incurred by the Partnership and Prudential for the years
ended December 31, 1997, 1996 and 1995 was $32,175; $36,000; and $31,360,
respectively.


                                          18
<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 Statement on pages F-1 and F-2.

     2.   Financial Statement Schedules

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

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

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

     3.   Documents Incorporated by Reference

          See the following list of exhibits.

     4.   Exhibits

          See the following list of exhibits.

(b)  Reports on Form 8-K.

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

(c)  The following is a list of Exhibits to the Registrant's Annual Report on
     Form 10-K for the fiscal year ended December 31, 1997.  The Registrant will
     furnish a copy of any Exhibit listed below to any security holder of the
     Registrant who requests it upon payment of a fee of 15 cents per page.  All
     Exhibits are either contained in this Annual Report on Form 10-K or are
     incorporated by reference as indicated below.

     3.1  Amended Articles of Incorporation of Pruco Life Insurance Company
          filed as Exhibit 1.A.(6)(a) to Form N-8B-2, File No. 2-80513, filed
          November 22, 1982, and incorporated herein by reference.

     3.2  Amended By-Laws of Pruco Life Insurance Company, filed as Exhibit
          1.A.(6)(b) to Post-Effective Amendment No. 13 to Form S-6, File No. 2-
          89558, filed March 2, 1989, and incorporated herein by reference.

     3.3  Resolution of the Board of Directors establishing the Pruco Life
          Variable Contract Real Property Account, filed as Exhibit (3C) to Form
          S-1, Registration Statement No. 33-8698, filed September 12, 1986, and
          incorporated herein by reference.

                                       19
<PAGE>


     4.1  Variable Life Insurance Contract, filed as Exhibit 1.A.(5)(a) to Pre-
          Effective Amendment No. 1 to Form S-6, Registration Statement No. 2-
          80513, filed February 17, 1983, and incorporated herein by reference.

     4.2  Revised Variable Appreciable Life Insurance Contract with fixed death
          benefit, filed as Exhibit 1.A(5)(f) to Post-Effective Amendment No. 5
          to Form S-6, Registration Statement No. 2-89558, filed July 10, 1986,
          and incorporated herein by reference.

     4.3  Revised Variable Appreciable Life Insurance Contract with variable
          death benefit, filed as Exhibit 1.A(5)(g) to Post-Effective Amendment
          No. 5 to Form S-6, Registration Statement No. 2-89558, filed July 10,
          1986, and incorporated herein by reference.

     4.4  Single Premium Variable Annuity Contract, filed as Exhibit 4(i) to
          Form N-4, Registration Statement No. 2-99616, filed August 13, 1985,
          and incorporated herein by reference.

     4.5  Flexible Premium Variable Life Insurance Contract, filed as Exhibit
          1.A.(5) to Form S-6, Registration Statement No. 2-99260, filed July
          29, 1985, 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 Post-Effective Amendment No. 4
          to Form S-1, Registration Statement No. 33-8698, 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 Post-Effective
          Amendment No. 4 to Form S-1, Registration Statement No. 33-8698, 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.

                                       20
<PAGE>

     24.  Powers of Attorney:  James J. Avery, Edward A. Minogue, and James M.
          Schlomann.

     27.  Not applicable.

     28.  None.


                                       21

<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.

                             PRUCO LIFE INSURANCE COMPANY
                                    in respect of
                                 Pruco Life Variable
                            CONTRACT REAL PROPERTY ACCOUNT
                                     (Registrant)


Date:  March 31, 1998                   By: /s/
     --------------------                  -----------------------
                                             Esther H. Milnes
                                             President


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


Signature                                 Title                       Date
---------                                 -----                       ----

*                                  Chairman of the Board         March 31, 1998
------------------------------     and Director
James J. Avery

*                                  Vice Chairman of the Board    March 31, 1998
------------------------------     and Director
I. Edward Price

/s/                                President and Director        March 31, 1998
------------------------------
Esther H. Milnes

/s/                                Vice President, Comptroller   March 31, 1998
------------------------------     and Chief Accounting Officer
James M. Schlomann

*                                  Director                      March 31, 1998
------------------------------
William Bethke

*                                  Director                      March 31, 1998
------------------------------
Ira J. Kleinman

*                                  Director                      March 31, 1998
------------------------------
Mendel A. Melzer

*                                  Director                      March 31, 1998
------------------------------
Kiyofumi Sakaguchi

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


                                          22
<PAGE>

                  PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT
                                     (Registrant)

                                        INDEX

                                                                            Page
                                                                            ----

A.   PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT

     Report of Independent Accountants                                       F-3

     Financial Statements:

          Statements of Net Assets - December 31, 1997 and 1996              F-5

          Statements of Operations and Changes In Net Assets -
          Years Ended December 31, 1997, 1996 and 1995                       F-5

          Notes to the Financial Statements                                  F-6

B.   THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

     Report of Independent Accountants                                       F-9

     1. Financial Statements:

          Statements of Assets and Liabilities - December 31, 1997
          and 1996                                                          F-11

          Statements of Operations - Years Ended December 31, 1997,
          1996 and 1995                                                     F-12

          Statements of Changes in Net Assets - Years Ended
          December 31, 1997, 1996 and 1995                                  F-13

          Statements of Cash Flows - Years Ended December 31, 1997,
          1996 and 1995                                                     F-14

          Schedule of Investments - December 31, 1997 and 1996              F-15

          Notes to the Financial Statements                                 F-18


                                         F-1
<PAGE>

                  PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT
                                     (REGISTRANT)

                                        INDEX

                                                                            Page
                                                                            ----

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

     2. Financial Statement Schedules:

          Real Estate Owned:  Properties                                    F-23

          Real Estate Owned:  Interest in Properties                        F-24

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


                                         F-2
<PAGE>

                         REPORT OF INDEPENDENT ACCOUNTANTS


To the Contract Owners of the
Pruco Life Variable Contract Real Property Account
and the Board of Directors of
Pruco Life Insurance Company


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 Pruco Life Variable Contract Real
Property Account at December 31, 1997 and 1996, and the results of its
operations and the changes in its net assets for the years then ended in
conformity with generally accepted accounting principles.  These financial
statements are the responsibility of Pruco Life Insurance Company'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 generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement.  An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation.  We believe that our audits, which included
confirmation of shares owned in The Prudential Variable Contract Real Property
Partnership at December 31, 1997 and 1996, provide a reasonable basis for the
opinion expressed above.


PRICE WATERHOUSE LLP
New York, New York
March 20, 1998



                                        F-3

<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Partners of
Pruco Life Variable Contract Real Property Account
Newark, New Jersey

We have audited the accompanying statements of operations and changes in net
assets of Pruco Life Variable Contract Real Property Account ("Real Property
Account") for the year ended December 31, 1995.  These financial statements are
the responsibility of the Real Property Account's management.  Our
responsibility is to express an opinion on these financial statements based on
our audit.

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

In our opinion, such financial statements present fairly, in all material
respects, the results of operations and changes in net assets of Pruco Life
Variable Contract Real Property Account for the year ended December 31, 1995, in
conformity with generally accepted accounting principles.


Deloitte & Touche LLP
Parsippany, New Jersey
March 1, 1996


                                         F-4

<PAGE>

                               FINANCIAL STATEMENTS OF
                  PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT

                               STATEMENTS OF NET ASSETS




<TABLE>
<CAPTION>
                                                                    DECEMBER 31, 1997   DECEMBER 31, 1996
                                                                    -----------------   -----------------
<S>                                                                 <C>                 <C>
Investment in shares of The Prudential Variable Contract
  Real Property Partnership (Note 3)                                $     109,495,293   $      98,385,259
                                                                    -----------------   -----------------
                                                                    -----------------   -----------------

NET ASSETS,  representing:
Equity of Contract Owners (Note 4)                                  $      86,228,329   $      86,185,085
Equity of Pruco Life Insurance Company                                     23,266,964          12,200,174
                                                                    -----------------   -----------------
                                                                    $     109,495,293   $      98,385,259
                                                                    -----------------   -----------------
                                                                    -----------------   -----------------
</TABLE>


               STATEMENTS OF OPERATIONS AND CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
                                                                                      YEAR ENDED DECEMBER 31,
                                                                    ---------------------------------------------------------
                                                                          1997                1996                 1995
                                                                    -----------------   -----------------   -----------------
<S>                                                                 <C>                 <C>                 <C>
INVESTMENT INCOME:

Net Investment Income from Partnership Operations                   $       6,877,876   $       7,717,055   $       7,492,843

EXPENSES:

Charges to Contract Owners for Assuming Mortality Risk and
   Expense Risk and for Administration (Note 5)                               542,738             555,553             561,431
                                                                    -----------------   -----------------   -----------------

NET INVESTMENT INCOME                                                       6,335,138           7,161,502           6,931,412
                                                                    -----------------   -----------------   -----------------

Net Change in Unrealized Gain (Loss) on Investments in Partnership          4,079,515          (1,609,406)            320,146
Net Realized Gain (Loss) on Sale of Investments in Partnership                152,643            (787,318)                  0
                                                                    -----------------   -----------------   -----------------

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS                       10,567,296           4,764,778           7,251,558
                                                                    -----------------   -----------------   -----------------

CAPITAL TRANSACTIONS:

Net Withdrawals by Contract Owners (Note 7)                                (8,564,665)         (6,242,414)         (5,278,643)

Net Contributions by Pruco Life Insurance Company                           9,107,403           3,797,967           2,840,074
                                                                    -----------------   -----------------   -----------------

NET INCREASE/(DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL TRANSACTIONS                                           542,738          (2,444,447)         (2,438,569)
                                                                    -----------------   -----------------   -----------------


TOTAL INCREASE/(DECREASE) IN NET ASSETS                                    11,110,034           2,320,331           4,812,989

NET ASSETS:
Beginning of year                                                          98,385,259          96,064,928          91,251,939
                                                                    -----------------   -----------------   -----------------
End of year                                                         $     109,495,293   $      98,385,259   $      96,064,928
                                                                    -----------------   -----------------   -----------------
                                                                    -----------------   -----------------   -----------------
</TABLE>



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


                                         F-5
<PAGE>


                      NOTES TO THE FINANCIAL STATEMENTS OF
               PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT
                      For the Year Ended December 31, 1997


NOTE 1:   GENERAL

Pruco Life Variable Contract Real Property Account (the "Real Property Account")
was established on August 27, 1986 and commenced business September 5, 1986.
Pursuant to Arizona law, the Real Property Account was established as a separate
investment account of Pruco Life Insurance Company ("Pruco Life"), a wholly-
owned subsidiary of The Prudential Insurance Company of America ("Prudential").
The assets of the Real Property Account are segregated from Pruco Life's other
assets.  The Real Property Account is used to fund benefits under certain
variable life insurance and variable annuity contracts issued by Pruco Life.
These products are Variable Appreciable Life Insurance ("VAL"), Variable Life
Insurance ("VLI"), Discovery Life  ("SPVA"), and Discovery Life Plus ("SPVL").

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

A.   BASIS OF ACCOUNTING

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

B.   INVESTMENT IN PARTNERSHIP INTEREST

The investment in the Partnership is based on the Real Property Account's
proportionate interest of the Partnership's market value.  At December 31, 1997
and 1996 the Real Property Account's interest in the Partnership was 49.9% or
5,909,534 shares.

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 PRUCO LIFE INSURANCE COMPANY

Pruco Life 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


                                       F-6

<PAGE>


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.


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

The investment in the Partnership, the number of shares held by the Account in
the Partnership, the Partnership share value and the aggregate cost of
investments in the Accounts' shares held at December 31, 1997 and 1996 were as
follows:

<TABLE>
<CAPTION>
                                  1997           1996
                                  ----           ----
<S>                           <C>            <C>
INVESTMENT:                   $109,495,293   $98,385,259
SHARE VALUE:                     $18.52861     $16.64859
SHARES OUTSTANDING:              5,909,534     5,909,534
COST:                          $63,772,990   $63,772,990
</TABLE>

NOTE 4:  CONTRACT OWNER UNIT INFORMATION

Outstanding Contract owner units, unit values and total value of Contract owner
equity at December 31, 1997 and 1996 were as follows:


<TABLE>
<CAPTION>

1997:
                                  VAL             VLI            SPVA          SPVL          TOTAL
                                  ---             ---            ----          ----          -----
<S>                          <C>             <C>            <C>           <C>           <C>
CONTRACT OWNER
 UNITS OUTSTANDING:           43,201,206      2,762,300        744,092      3,231,823     49,939,421
UNIT VALUE:                     $1.73358       $1.78248       $1.61267       $1.61267
CONTRACT OWNER EQUITY:       $74,892,746     $4,923,744     $1,199,975     $5,211,864    $86,228,329
</TABLE>

<TABLE>
<CAPTION>

1996:
                                  VAL             VLI            SPVA          SPVL          TOTAL
                                  ---             ---            ----          ----          -----
<S>                           <C>              <C>            <C>            <C>          <C>
CONTRACT OWNER
 UNITS OUTSTANDING:           47,536,835      2,921,917      1,156,632      3,613,319     55,228,703
UNIT VALUE:                     $1.56700       $1.60720       $1.46726       $1.46726
CONTRACT OWNER EQUITY:       $74,490,221     $4,696,105     $1,697,080     $5,301,679    $86,185,085
</TABLE>



NOTE 5:  CHARGES AND EXPENSES

A.   MORTALITY RISK AND EXPENSE RISK CHARGES

Mortality risk and expense charges are determined daily using an effective
annual rate of  0.6%, 0.35%, 0.9% and 0.9% for VAL, VLI, SPVA and SPVL,
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 the estimated expenses.  For the years ended December 31, 1997 and 1996
the amount of these charges paid to Pruco Life was $519,417 and $530,117,
respectively.


                                       F-7
<PAGE>


B. ADMINISTRATIVE CHARGES

Administrative charges are determined daily using an effective annual rate of
0.35% for SPVA and SPVL.  Administrative charges include costs associated with
issuing the Contract, establishing and maintaining records, and providing
reports to Contract owners.  For the years ended December 31, 1997 and 1996 the
amount of these charges paid to Pruco Life was $23,321 and $25,436,
respectively.

NOTE 6:   TAXES

Pruco Life is taxed as a "life insurance company" as defined by the Internal
Revenue Code and the operations of the Real Property Account form a part of
Pruco Life'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 tax liability has been recorded in these financial statements.

NOTE 7:   NET WITHDRAWALS BY CONTRACT OWNERS

Contract owner activity for the Pruco Life products for the year ended December
31, 1997, was as follows:


<TABLE>
<CAPTION>

                                                VAL             VLI           SPVA           SPVL          TOTAL
                                                ---             ---           ----           ----          -----
<S>                                       <C>             <C>            <C>            <C>            <C>
CONTRACT OWNER NET PAYMENTS:              $   7,135,438      $ 547,314      $    (363)      $  2,354   $  7,684,743
POLICY LOANS:                                (2,744,920)      (127,090)             0       (133,268)    (3,005,278)
POLICY LOAN REPAYMENTS AND INTEREST:          2,059,190         78,708              0        120,176      2,258,074
SURRENDERS, WITHDRAWALS, AND DEATH
  BENEFITS:                                  (4,877,439)      (403,603)      (563,563)      (345,999)    (6,190,604)
ADMINISTRATIVE AND OTHER CHARGES:            (4,187,469)      (195,020)             0        (35,677)    (4,418,166)
NET TRANSFERS FROM/TO OTHER
    SUBACCOUNTS OR FIXED RATE OPTIONS:       (4,465,593)      (170,032)       (73,121)      (184,688)    (4,893,434)
                                             -----------      ---------       --------      ---------    -----------
NET WITHDRAWALS                           $  (7,080,793)  $   (269,723)    $ (637,047)     $(577,102)   $(8,564,665)
                                          --------------  -------------    -----------     ----------   ------------
                                          --------------  -------------    -----------     ----------   ------------
</TABLE>


NOTE 8:  UNIT ACTIVITY

Transactions in units for the years ended December 31, 1997 and 1996 were as
follows:

<TABLE>
<CAPTION>


1997:
                                                VAL             VLI           SPVA           SPVL
                                                ---             ---           ----           ----
<S>                                     <C>               <C>            <C>              <C>
CONTRACT OWNER CONTRIBUTIONS:             5,838,667.266    382,652.262      3,449.116      109,431.697
CONTRACT OWNER REDEMPTIONS:             (10,155,002.145)  (542,172.570)  (415,988.975)    (490,928.090)
</TABLE>

<TABLE>
<CAPTION>

1996:
                                                VAL             VLI           SPVA           SPVL
                                                ---             ---           ----           ----
<S>                                     <C>               <C>            <C>              <C>
CONTRACT OWNER CONTRIBUTIONS:             8,645,307.336    458,122.783         38.930      206,238.829
CONTRACT OWNER REDEMPTIONS:             (12,105,073.163)  (505,821.944)  (242,465.876)    (596,341.418)
</TABLE>

NOTE 9:   PURCHASES AND SALES OF INVESTMENTS

There were no purchases or sales of investments in the Partnership during the
year ended December 31, 1997. For the year ended December 31, 1996, the
aggregate costs of purchases and sales of investments in the Partnership were
$0 and $3,000,000, respectively.

                                       F-8

<PAGE>

                          REPORT OF INDEPENDENT ACCOUNTANTS

February 20, 1998

To the Partners of Prudential
Variable Contract Real Property Partnership

In our opinion, the financial statements listed in the accompanying index
present fairly, in all material respects, the financial position of Prudential
Variable Contract Real Property Partnership (the "Partnership") at December 31,
1997 and 1996, and the results of its operations and its cash flows for the
years then ended, in conformity with generally accepted accounting principles.
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 generally accepted auditing
standards 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.




Price Waterhouse LLP
New York, New York


                                       F-9

<PAGE>


INDEPENDENT AUDITORS' REPORT


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

We have audited the accompanying statements of operations, changes in net assets
and cash flows of the Prudential Variable Contract Real Property Partnership
(the "Partnership") for the year ended December 31, 1995 and the per share data
and ratios for each of the three years in the period ended December 31, 1995.
These financial statements and the per share data and ratios are the
responsibility of the Partnership's management.  Our responsibility is to
express an opinion on these financial statements and the per share data and
ratios based on our audits.

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

In our opinion, such financial statements and per share data and ratios present
fairly, in all material respects, the results of operations, changes in net
assets and cash flows of The Prudential Variable Contract Real Property
Partnership for the year ended December 31, 1995 and the per share data and
ratios for each of the three years in the period ended December 31, 1995, in
conformity with generally accepted accounting principles.




Deloitte & Touche LLP
Parsippany, New Jersey
March 1, 1996




                                         F-10

<PAGE>

              THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                         STATEMENTS OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>

                                                                         DECEMBER 31, 1997  DECEMBER 31, 1996
                                                                         -----------------  -----------------
ASSETS
<S>                                                                      <C>                <C>
REAL ESTATE INVESTMENTS - At estimated market value:
  Real estate and improvements
  (cost:  12/31/97 -- $201,670,248; 12/31/96 -- $177,082,291)                 $181,317,624       $151,074,276
  Interest in properties at estimated market value
  (cost:12/31/97--$0; 12/31/96--$6,133,157)                                              0          5,850,000
  Real estate investment trust (cost:  12/31/97 -- $10,000,005;
   12/31/96 -- $0)                                                              12,523,805                  0
                                                                         -----------------  -----------------

         Total real estate investments                                         193,841,429        156,924,276

MARKETABLE SECURITIES - At estimated market value
   (cost:  12/31/97 -- $13,939,000; 12/31/96 -- $24,345,000)                    13,971,421         24,426,644

CASH AND CASH EQUIVALENTS                                                       12,880,560         20,738,204

DIVIDEND RECEIVABLE                                                                146,999                  0

ACCRUED INVESTMENT INCOME AND OTHER ASSETS
   (net of allowance for uncollectible accounts:  12/31/97 --
   $68,000; 12/31/96 -- $56,000)                                                 1,904,726          2,066,916
                                                                         -----------------  -----------------

         Total assets                                                         $222,745,135       $204,156,040
                                                                         -----------------  -----------------
                                                                         -----------------  -----------------

LIABILITIES AND PARTNERS' EQUITY

OBLIGATION UNDER CAPITAL LEASE                                                           0         $4,072,677

ACCOUNTS PAYABLE AND ACCRUED EXPENSES                                           $1,842,027          1,640,360

DUE TO AFFILIATES                                                                  832,922            719,200

OTHER LIABILITIES                                                                  538,413            467,009
                                                                         -----------------  -----------------

         Total liabilities                                                       3,213,362          6,899,246
                                                                         -----------------  -----------------

PARTNERS' EQUITY                                                               219,531,773       197,256,794
                                                                         -----------------  -----------------

TOTAL LIABILITIES AND PARTNERS' EQUITY                                        $222,745,135      $204,156,040
                                                                         -----------------  -----------------
                                                                         -----------------  -----------------

NUMBER OF SHARES OUTSTANDING AT END OF PERIOD                                   11,848,275         11,848,275
                                                                         -----------------  -----------------
                                                                         -----------------  -----------------

SHARE VALUE AT END OF PERIOD                                                        $18.53             $16.65
                                                                         -----------------  -----------------
                                                                         -----------------  -----------------
</TABLE>


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


                                        F-11

<PAGE>

            THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                             STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>

                                                                                            YEAR ENDED DECEMBER 31,
                                                                             ---------------------------------------------------
                                                                                    1997            1996               1995
                                                                             -------------      -------------      -------------
<S>                                                                          <C>                <C>                <C>
INVESTMENT INCOME:
 Revenues from real estate and improvements                                    $21,582,968        $22,799,694        $19,827,044
 Income from interest in properties                                                435,296            606,558            638,183
 Dividend income from real estate investment trusts                                158,184                  0                  0
 Interest on short-term investments                                              2,305,364          2,134,386          2,660,865
                                                                             -------------      -------------      -------------

         Total investment income                                                24,481,812         25,540,638         23,126,092
                                                                             -------------      -------------      -------------
EXPENSES:
 Investment management fee                                                       2,640,470          2,494,229          2,341,878
 Real estate taxes                                                               2,208,972          2,367,404          1,938,090
 Administrative expense                                                          2,326,155          1,865,433          1,795,092
 Operating expense                                                               3,296,350          2,904,620          1,870,183
 Interest expense                                                                  220,118            489,434            460,578
                                                                             -------------      -------------      -------------

         Total investment expenses                                              10,692,065         10,121,120          8,405,821
                                                                             -------------      -------------      -------------

NET INVESTMENT INCOME                                                           13,789,747         15,419,518         14,720,271
                                                                             -------------      -------------      -------------

REALIZED AND UNREALIZED GAIN (LOSS) ON
  INVESTMENTS:
 Net proceeds from real estate investments
   sold                                                                          6,297,422         20,497,789                  0
 Less:  Cost of real estate investments sold                                     6,274,539         26,610,932                  0
        Realization of prior years' unrealized
        gain on real estate investments sold                                      (283,157)        (4,539,996)                 0
                                                                             -------------      -------------      -------------
 Net gain (loss) realized on real estate
             investments sold                                                      306,040         (1,573,147)                 0
                                                                             -------------      -------------      -------------

 Change in unrealized gain (loss) on real estate
  investments                                                                    8,179,192         (3,211,436)           661,623
                                                                             -------------      -------------      -------------

NET REALIZED AND UNREALIZED GAIN
 (LOSS) ON INVESTMENTS                                                           8,485,232         (4,784,583)           661,623
                                                                             -------------      -------------      -------------

NET INCREASE IN NET ASSETS RESULTING
 FROM OPERATIONS                                                               $22,274,979        $10,634,935       $15,381,894
                                                                             -------------      -------------      -------------
                                                                             -------------      -------------      -------------
</TABLE>


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


                                      F-12
<PAGE>

          THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                      STATEMENTS OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
                                                                                           YEAR ENDED DECEMBER 31,
                                                                             ---------------------------------------------------
                                                                                   1997              1996                1995
                                                                             -------------      -------------      -------------
<S>                                                                          <C>                <C>                <C>
NET INCREASE IN NET ASSETS RESULTING
 FROM OPERATIONS:
 Net investment income                                                         $13,789,747        $15,419,518        $14,720,271
 Net gain (loss) realized on real estate
   investments sold                                                                306,040         (1,573,147)                 0
 Net unrealized gain (loss)  from real estate
   investments                                                                   8,179,192         (3,211,436)           661,623
                                                                             -------------      -------------      -------------


         Net increase in net assets resulting from
           operations                                                           22,274,979         10,634,935         15,381,894
                                                                             -------------      -------------      -------------

NET DECREASE IN NET ASSETS RESULTING
 FROM CAPITAL TRANSACTIONS:
Withdrawals by partners
    (Shares: 1997 -- 0;  1996 -- 188,409;
     1995 -- 204,350)                                                                    0         (3,000,000)        (3,000,000)
                                                                             -------------      -------------      -------------
         Net decrease in net assets resulting from
          capital transactions                                                           0         (3,000,000)        (3,000,000)
                                                                             -------------      -------------      -------------

NET INCREASE IN NET ASSETS                                                      22,274,979          7,634,935         12,381,894

NET ASSETS -  Beginning of year                                                197,256,794        189,621,859        177,239,965
                                                                             -------------      -------------      -------------

NET ASSETS -  End of year                                                     $219,531,773       $197,256,794       $189,621,859
                                                                             -------------      -------------      -------------
                                                                             -------------      -------------      -------------
</TABLE>


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


                                     F-13
<PAGE>

         THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                          STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                                           YEAR ENDED DECEMBER 31,
                                                                             ---------------------------------------------------
                                                                                  1997                1996               1995
                                                                             -------------      -------------      -------------
<S>                                                                          <C>                <C>                <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
Net increase in net assets resulting from operations                           $22,274,979        $10,634,935        $15,381,894
Adjustments to reconcile net increase in net assets
   resulting from operations to net cash provided by
   operating activities:
     Net realized and unrealized (gain) loss on
        investments                                                             (8,485,232)         4,784,583           (661,623)
      (Increase) decrease in:
         Dividend receivable                                                      (146,999)                 0                  0
         Accrued investment income and other assets                                162,190           (323,611)           474,790
      (Decrease) increase in:
         Obligation under capital lease                                            (72,677)           190,256             77,585
         Accounts payable and accrued expenses                                     201,667           (502,254)         1,337,548
         Due to affiliates                                                         113,722             36,405             58,589
         Other liabilities                                                          71,404           (197,060)            18,156
                                                                             -------------      -------------      -------------

  Net cash flows from operating activities                                      14,119,054         14,623,254         16,686,939
                                                                             -------------      -------------      -------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Net proceeds from real estate investments
    sold                                                                         6,297,422         20,497,789                  0
  Acquisition of real estate property                                          (23,417,474)       (10,713,722)       (36,774,343)
  Acquisition of real estate investment trust                                  (10,000,005)                 0                  0
  Improvements and additional costs on prior purchases:
    Additions to real estate owned                                              (1,311,864)          (997,893)        (1,050,197)
    Additions to real estate partnerships                                                0                  0            (24,415)
  Sale (purchase) of marketable securities                                      10,455,223        (13,894,489)         5,292,044
                                                                             -------------      -------------      -------------

  Net cash flows from investing activities                                     (17,976,698)        (5,108,315)       (32,556,911)
                                                                             -------------      -------------      -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
 Withdrawals by partners                                                                 0         (3,000,000)        (3,000,000)
 Principal payments on capital lease obligation                                 (4,000,000)                 0                  0
                                                                             -------------      -------------      -------------

  Net cash flows from financing activities                                      (4,000,000)        (3,000,000)        (3,000,000)
                                                                             -------------      -------------      -------------
NET CHANGE IN CASH AND CASH
  EQUIVALENTS                                                                   (7,857,644)         6,514,939        (18,869,972)

CASH AND CASH EQUIVALENTS - Beginning of year                                   20,738,204         14,223,265         33,093,237
                                                                             -------------      -------------      -------------

CASH AND CASH EQUIVALENTS - End of year                                        $12,880,560        $20,738,204        $14,223,265
                                                                             -------------      -------------      -------------
                                                                             -------------      -------------      -------------

SUPPLEMENTAL INFORMATION:
  Cash paid during the year for interest                                          $220,118           $376,450           $376,450
                                                                             -------------      -------------      -------------
                                                                             -------------      -------------      -------------
</TABLE>

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


                                     F-14
<PAGE>


           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                             SCHEDULE OF INVESTMENTS

<TABLE>
<CAPTION>
                                                                 DECEMBER 31,1997                     DECEMBER 31, 1996
                                                          --------------------------------      --------------------------------
                                                                                ESTIMATED                             ESTIMATED
                                                                                  MARKET                                MARKET
                                                               COST                VALUE              COST               VALUE
                                                          ----------------------------------------------------------------------
REAL ESTATE AND IMPROVEMENTS (PERCENT OF NET ASSETS)                                82.6%                                 76.6%
Location                 Description
--------------------------------------------------------------------------------------------------------------------------------
<S>                      <C>                              <C>                <C>                <C>                <C>
Lisle, IL                Office Building                    $17,916,983        $10,278,959        $17,524,421         $9,900,000
Atlanta, GA              Garden Apartments                   15,446,293         15,100,000         15,396,738         13,707,814
Pomona, CA               Warehouse                           23,637,049         19,504,612         23,456,751         17,553,849
Roswell, GA              Retail Shopping Center              31,858,198         29,547,042         31,754,073         28,333,818
Morristown, NJ           Office Building                     18,931,914         10,805,918         18,797,224         10,113,986
Bolingbrook, IL          Warehouse                            8,948,028          7,100,000          8,948,028          7,100,000
Farmington Hills, MI     Garden Apartments                   13,641,971         14,805,258         13,623,952         14,706,400
Raleigh, NC              Garden Apartments                   15,804,860         16,525,751         15,762,951         16,854,252
Nashville, TN            Office Building                      8,613,828          9,611,329          8,379,326          8,800,436
Oakbrook Terrace, IL     Office Complex                      12,725,366         14,100,000         12,725,105         13,290,000
Beaverton, OR            Office Complex                      10,728,285         10,700,000         10,713,722         10,713,721
Salt Lake City, UT       Industrial Building                  5,388,134          5,350,000                  0                  0
Aurora, CO               Industrial Building                  8,540,585          8,400,000                  0                  0
Brentwood, TN            Office Complex                       9,488,755          9,488,755                  0                  0
                                                          ----------------------------------------------------------------------
                                                           $201,670,248       $181,317,624       $177,082,291       $151,074,276
                                                          ----------------------------------------------------------------------
                                                          ----------------------------------------------------------------------
<CAPTION>

INTEREST IN PROPERTIES (PERCENT OF NET ASSETS)                                        0.0%                                  3.0%
Location                 Description
--------------------------------------------------------------------------------------------------------------------------------
Jacksonville, FL         Warehouse/Distribution                      $0                 $0         $1,317,453         $1,225,000
Jacksonville, FL         Warehouse/Distribution                       0                  0          1,002,448          1,000,000
Jacksonville, FL         Warehouse/Distribution                       0                  0          1,442,894          1,325,000
Jacksonville, FL         Warehouse/Distribution                       0                  0          2,370,362          2,300,000
                                                          -------------       ------------       ------------       ------------
                                                                     $0                 $0         $6,133,157         $5,850,000
                                                          -------------       ------------       ------------       ------------
                                                          -------------       ------------       ------------       ------------

REAL ESTATE TRUST (PERCENT OF NET ASSETS)                                             5.7%                                  0.0%


--------------------------------------------------------------------------------------------------------------------------------
Meridian REIT Shares (506,894 shares)                       $10,000,005        $12,523,805                 $0                 $0
                                                          -------------       ------------       ------------       ------------
                                                          -------------       ------------       ------------       ------------

<CAPTION>
                                                                 DECEMBER 31,1997                     DECEMBER 31, 1996
                                                          --------------------------------      --------------------------------
                                                                                ESTIMATED                             ESTIMATED
                                                                FACE              MARKET               FACE             MARKET
                                                               AMOUNT              VALUE              AMOUNT             VALUE
                                                          ----------------------------------------------------------------------
<S>                                                       <C>                 <C>               <C>                 <C>
MARKETABLE SECURITIES (PERCENT OF NET ASSETS)                                         6.4%                                 12.4%
(See pages F-14 to F-15 for details)
Description
--------------------------------------------------------------------------------------------------------------------------------
Marketable Securities                                       $13,939,000        $13,971,421        $24,345,000        $24,426,644
                                                          -------------       ------------       ------------       ------------
                                                          -------------       ------------       ------------       ------------

CASH AND CASH EQUIVALENTS (PERCENT OF NET ASSETS)                                     5.9%                                 10.5%
(See pages F-14 to F-15 for details)
Description
--------------------------------------------------------------------------------------------------------------------------------
Commercial Paper and Cash                                   $12,918,158        $12,880,560        $20,804,826        $20,738,204
                                                          -------------       ------------       ------------       ------------
                                                          -------------       ------------       ------------       ------------
</TABLE>

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


                                          F-15
<PAGE>

               THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                                 SCHEDULE OF INVESTMENTS

<TABLE>
<CAPTION>
                                                                                     DECEMBER 31, 1997
                                                                              -------------------------------
                                                                                  FACE             ESTIMATED
                                                                                 AMOUNT          MARKET VALUE
                                                                              ------------       ------------
<S>                                                                           <C>                <C>
MARKETABLE SECURITIES (PERCENT OF NET ASSETS)                                                            6.4%

International Lease Finance Corp., 5.92%, January 15, 1998                        $500,000           $499,083
Smith Barney Holding Inc., 5.70%, January 28, 1998                               1,304,000          1,285,475
Suntrust Banks, 8.875%, February 1, 1998                                         1,500,000          1,517,880
Chase Manhattan Bank, 5.75%, February 10, 1998                                   2,000,000          2,000,000
Beneficial Corp., 9.125%, February 15, 1998                                        700,000            705,948
Citicorp, 10.15%, February 15, 1998                                                200,000            207,324
General Motors Acceptance Corp., 5.9%, February 19, 1998                           985,000            994,545
General Motors Acceptance Corp., 5.9875%, February 23, 1998                      1,300,000          1,299,363
American General Finance Corp., 7.25%, March 1, 1998                               500,000            507,880
Commercial Credit Co., 5.7%, March 1, 1998                                         375,000            375,199
Associates Corp. of North America, 7.3%, March 15, 1998                            400,000            406,635
International Lease Finance Corp., 5.75%, March 15, 1998                           400,000            399,940
Morgan Guaranty Trust Co., 5.85%, March 16, 1998                                   500,000            499,855
Royal Bank of Canada, 5.91%, June 17, 1998                                       2,000,000          1,998,853
FCC National Bank, 5.75281%, July 2, 1998                                        1,025,000          1,024,202
General Mills Inc., 5.38%, July 8, 1998                                            250,000            249,238
                                                                              ------------       ------------

TOTAL MARKETABLE SECURITIES                                                    $13,939,000        $13,971,421
                                                                              ------------       ------------
                                                                              ------------       ------------

CASH AND CASH EQUIVALENTS (PERCENT OF NET ASSETS)                                                        5.9%

Barnett Bank, Inc., 6.70%, January 2, 1998                                      $1,235,000         $1,234,540
American Greetings Corp., 6.26%, January 5, 1998                                 1,250,000          1,247,179
Xerox Capital, 5.85%, January 6, 1998                                            1,000,000            995,775
Nike Inc., 6.10%, January 8, 1998                                                1,215,000          1,213,353
Paccar Financial Corp., 5.85%, January 9, 1998                                   1,000,000            996,100
Pitney Bowes Credit Corp., 6.00%, January 13, 1998                                 750,000            747,375
Merrill Lynch & Co., Inc. 5.85%, January 15, 1998                                1,000,000            994,313
Bank of Montreal, 5.90%, January 16, 1998                                        1,000,000          1,000,000
Countrywide Home Loan, Inc., 5.85%, January 22, 1998                             1,000,000            993,175
General Electric Capital Corp., 5.74%, February 9, 1998                          1,000,000            990,593
                                                                              ------------       ------------

TOTAL CASH EQUIVALENTS                                                          10,450,000         10,412,402

CASH                                                                             2,468,158          2,468,158
                                                                              ------------       ------------

TOTAL CASH AND CASH EQUIVALENTS                                                $12,918,158        $12,880,560
                                                                              ------------       ------------
                                                                              ------------       ------------
</TABLE>

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


                                       F-16
<PAGE>

              THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                             SCHEDULE OF INVESTMENTS

<TABLE>
<CAPTION>
                                                                                    DECEMBER 31, 1996
                                                                           ----------------------------------
                                                                                FACE              ESTIMATED
                                                                               AMOUNT           MARKET VALUE
                                                                           ---------------     --------------
<S>                                                                        <C>                 <C>
MARKETABLE SECURITIES (PERCENT OF NET ASSETS)                                                           12.4%

PNC Bank, 5.48%, January 6, 1997                                                $2,200,000         $2,199,643
Wells Fargo, 5.54%, January 28, 1997                                             2,300,000          2,300,446
Sears Roebuck Acceptance Corp, 7.48%, February 19, 1997                            100,000            102,187
General Motors Acceptance Corp, 5.88%, February 27, 1997                           105,000            107,143
Sears Roebuck Acceptance Corp,7.72%, February 27, 1997                             800,000            812,000
Dean Witter Discover & Co., 5.75%, March 6,1997                                    500,000            500,387
General Motors Acceptance Corp, 5.74%, March 18, 1997                            1,200,000          1,201,344
Sears Discover Credit Corp, 7.81%, March 18, 1997                                1,150,000          1,164,548
American Home Products, 6.88%, April 15, 1997                                    2,000,000          2,019,323
Ford Motor Credit, 5.90%, May 5, 1997                                            1,400,000          1,405,337
Ford Motor Credit, 5.90%, May 5, 1997                                              350,000            350,875
Ford Motor Credit, 9.15%, May 7, 1997                                              500,000            515,010
Key Bank NA, 5.58%, May 14, 1997                                                   900,000            899,130
American Express Centurion Bank, 5.58%, June 10, 1997                            2,300,000          2,299,862
Associates Corp of North America, 7.05%, June 30, 1997                             600,000            604,766
Bank One Columbus, 5.58%, July 1, 1997                                           1,110,000          1,108,812
Associates Corp of North America, 5.88%, August 15, 1997                         1,230,000          1,230,744
Key Bank of New York, 4.82%, September 4, 1997                                   1,300,000          1,298,740
Bank One Milwaukee, NA, 5.26%, October 8, 1997                                   1,000,000          1,002,870
Morgan Guaranty Trust Co., 5.38%, November 14, 1997                              1,000,000            999,271
Norwest Financial Inc., 6.50%, November 15, 1997                                   300,000            302,286
Norwest Corp., 5.55%, November 21, 1997                                          2,000,000          2,001,922
                                                                           ---------------     --------------

TOTAL MARKETABLE SECURITIES                                                    $24,345,000        $24,426,644
                                                                           ---------------     --------------
                                                                           ---------------     --------------


CASH AND CASH EQUIVALENTS (PERCENT OF NET ASSETS)                                                       10.5%

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

CASH                                                                             1,524,826          1,524,826
                                                                           ---------------     --------------

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

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


                                  F-17

<PAGE>

                           NOTES TO FINANCIAL STATEMENTS OF
                PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
                   FOR YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

GENERAL

On April 29, 1988, Prudential Variable Contract Real Property Partnership (the
"Partnership"), a general partnership organized under New Jersey law, was formed
through an agreement among Prudential Insurance Company of America
("Prudential"), Pruco Life Insurance Company ("Pruco Life"), and Pruco Life
Insurance Company of New Jersey ("Pruco Life of New Jersey").  The Partnership
was established as a means by which assets allocated to the real estate
investment option under certain variable life insurance and variable annuity
contracts issued by the respective companies could be invested in a commingled
pool.  The partners in the Partnership are Prudential,  Pruco Life and Pruco
Life of New Jersey.


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

The Partnership's investments are valued on a daily basis, consistent with the
Partnership Agreement.  On each day during which the New York Stock Exchange is
open for business, the net assets of the Partnership are valued using the
estimated market value of its investments as described in Notes 1A and 1B below,
plus an estimate of net investment income from operations reduced by any
liabilities of the Partnership.

The periodic adjustments to property values described in Notes 1A and 1B below
and the corrections of previous estimates of net investment income are made on a
prospective basis. There can be no assurance that all such adjustments and
estimates will be made timely.

Shares of the Partnership are sold to Prudential Variable Contract Real Property
Account, Pruco Life Variable Contract Real Property Account and Pruco Life of
New Jersey Variable Contract Real Property Account (the "Real Property
Accounts") at the current share value of the Partnership's net assets.  Share
value is calculated by dividing the estimated market value of net assets of the
Partnership as determined below by the number of shares outstanding.  A Contract
owner participates in the Partnership through interests in the Real Property
Accounts.

NOTE 1:   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     A:   Real Estate Owned and Interest in Properties - The Partnership's
          investments in real estate owned and interests in properties are
          initially valued at their purchase price.  Thereafter, real estate
          investments are reported at their estimated market values based upon
          appraisal reports prepared by independent real estate appraisers
          (members of the Appraisal Institute) which are ordinarily obtained on
          an annual basis.  The property valuations are reviewed internally at
          least every three months and adjusted if there has been a change in
          the value of the property since the last valuation.

          The Chief Appraiser of Prudential Insurance Company Comptroller's
          Department 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; reviews and provides comments on a sample of external


                                         F-18

<PAGE>

          and internal appraisals; assists in developing policies and procedures
          and assists in the evaluation of the performance and competency of
          external appraisers.  The real estate valuations are reviewed
          quarterly by the Valuation Unit and adjusted if there has been any
          significant changes in circumstances related to the real estate  since
          the most recent independent appraisal.

          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.

          As described above, the estimated market value of real estate and real
          estate related assets are 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, 1997 and 1996.

     B:   Investments in Real Estate Investment Trusts - Shares of real estate
          investment trusts (REITs) are generally valued at their quoted market
          price at December 31, 1997.  These values may be discounted for
          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
          Valuations Unit.

     C:   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, as lease
          arrangements vary as to responsibility for payment of these expenses
          between tenants and the Partnership.  Since real estate is stated at
          estimated market value, net income is not reduced by depreciation
          expense.  Dividend income is accrued at the ex-dividend date.

     D:   Cash and Cash Equivalents - For purposes of the statement of cash
          flows, all short-term investments with a maximum maturity of three
          months and investments in money market funds with a maximum weighted
          average maturity of three months are considered to be cash


                                         F-19

<PAGE>


          equivalents.  Cash equivalents are carried at market value.  Cash of
          $128,089 and $144,314 at December 31, 1997 and 1996, respectively, was
          maintained by the properties for tenant security deposits and is
          included in Other Assets on the Statements of Assets and Liabilities.


     E:   Marketable Securities - Marketable securities are highly liquid
          investments with maturities of more than three months when purchased
          and are carried at market value.

     F:   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.

     G:   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.


NOTE 2:  OBLIGATION UNDER CAPITAL LEASE

The Partnership maintained an interest in a leasehold estate consisting of six
one-story industrial warehouse buildings located in Pomona, California.  In
conjunction with this interest, the Partnership assumed assignment of a ground
lease agreement expiring in November 2078 with no renewal options.  The annual
ground lease payments after November 1994, and for each 10 year increment
thereafter, were subject to increase 50% of the increase in the Consumer Price
Index during the previous period.  In 1995, the annual ground lease payment
increased by $126,450 to $376,450.  The ground lease contained a purchase option
that exercisable from November 1994 to November 1997 at a fixed price of
$4,000,000.  In August 1997, the Partnership exercised this purchase option.

NOTE 3:  LEASING ACTIVITY

The Partnership leases space to tenants under various operating lease
agreements.  These agreements, without giving effect to renewal options, have
expiration dates ranging from 1997 to 2010.  At December 31, 1997, the aggregate
future minimum base rental payments under non-cancelable operating lease by year
are:

<TABLE>
<CAPTION>
          Year Ending
          December 31,                               (000's)
          ------------                            ------------
          <S>                                     <C>
               1998                                 $ 12,877
               1999                                   11,857
               2000                                   10,221
               2001                                    8,669
               2002                                    6,834
               Thereafter                             11,916
                                                    --------
               Total                                $ 62,374
                                                    --------
                                                    --------
</TABLE>


                                         F-20

<PAGE>

NOTE 4:  COMMITMENT FROM PARTNER

On January 9, 1990, Prudential committed to fund up to $100 million to enable
the Partnership to take advantage of opportunities to acquire attractive real
property investments whose cost is greater than the Partnership's then available
cash.  Contributions to the Partnership under this commitment are utilized for
property acquisitions and returned to Prudential on an ongoing basis from
Contract owners' net contributions. Also, the amount of the commitment  is
reduced by $10 million for every $100 million in estimated market value net
assets of the Partnership.  The amount available under this commitment for
property purchases as of December 31, 1997 is approximately $47 million.

NOTE 5:  RELATED PARTY 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, 1997, 1996 and 1995 management fees incurred by the Partnership
were $2,640,470; $2,494,229;  and $2,341,878, respectively.

The Partnership also reimburses Prudential for certain administrative services
rendered by Prudential.  The amounts incurred for the years ended December 31,
1997, 1996 and 1995 were $115,346; $116,818; and $123,919, respectively, and are
classified as administrative expenses in the statements of operations.

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 $12,544,659.
The partnership's share of the proceeds was $6,272,329.

The Partnership has contracted with PREMISYS Real Estate Services, Inc.
(PREMISYS), an affiliate of Prudential, sold by Prudential in 1997, to provide
property management services at the Unit warehouses.  The property management
fee earned by PREMISYS, incurred by the Partnership and Prudential for the years
ended December 31, 1997, 1996 and 1995 was $32,175; $36,000; and  $31,360,
respectively.


                                         F-21
<PAGE>

Per Share Information (For a share outstanding throughout the period)

<TABLE>
<CAPTION>

                                                                   01/01/97           01/01/96           01/01/95
                                                                      to                 to                 to
                                                                   12/31/97           12/31/96           12/31/95
                                                                   --------           --------           --------
<S>                                                                <C>                <C>                <C>
Rent from properties                                               $  1.8216          $  1.9173          $  1.6387
Income from interest in properties                                 $  0.0367          $  0.0510          $  0.0527
Dividend income from real estate investment trusts                 $  0.0134          $  0.0000          $  0.0000
Interest from short-term investments                               $  0.1946          $  0.1795          $  0.2199
                                                                   ---------          ---------          ---------

INVESTMENT INCOME                                                  $  2.0663          $  2.1478          $  1.9113
                                                                   ---------          ---------          ---------
                                                                   ---------          ---------          ---------

Investment management fee                                          $  0.2229          $  0.2097          $  0.1936
Real estate tax expense                                            $  0.1864          $  0.1991          $  0.1602
Administrative expenses                                            $  0.1963          $  0.1569          $  0.1484
Operating expenses                                                 $  0.2782          $  0.2442          $  0.1546
Interest expense                                                   $  0.0186          $  0.0412          $  0.0381
                                                                   ---------          ---------          ---------
EXPENSES                                                           $  0.9024          $  0.8511          $  0.6949
                                                                   ---------          ---------          ---------
                                                                   ---------          ---------          ---------

NET INVESTMENT INCOME                                              $  1.1639          $  1.2967          $  1.2164
                                                                   ---------          ---------          ---------
                                                                   ---------          ---------          ---------


Net realized gain/(loss) on investments sold                       $  0.0258         ($  0.1323)         $  0.0000
Net unrealized gain/(loss) on investments                          $  0.6903         ($  0.2695)         $  0.0581
                                                                   ---------          ---------          ---------

NET REALIZED AND UNREALIZED
GAIN/(LOSS) ON INVESTMENTS                                         $  0.7162         ($  0.4018)         $  0.0581
                                                                   ---------          ---------          ---------

Net increase/(decrease) in share value                             $  1.8800          $  0.8949          $  1.2745

Share Value at beginning of period                                 $ 16.6486          $ 15.7537          $ 14.4792
                                                                   ---------          ---------          ---------
Share Value at end of period                                       $ 18.5286          $ 16.6486          $ 15.7537
                                                                   ---------          ---------          ---------
                                                                   ---------          ---------          ---------

Ratio of expenses to average net assets                               5.16%              5.26%              4.62%

Ratio of net investment income to
 average net assets                                                   6.66%              8.01%              8.08%

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

</TABLE>

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



                                     F-22

<PAGE>

         THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
               SCHEDULE III - REAL ESTATE OWNED:  PROPERTIES
                             DECEMBER 31, 1997

<TABLE>
<CAPTION>

                           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        393,102      1,780,000

Garden Apartments
Atlanta, GA             None          3,631,212     11,168,904        646,177 (b)  3,631,212

Warehouse
Pomona, CA              None          3,412,636     19,091,210      1,133,203      3,463,515

Retail Shopping Center
Roswell, GA             None          9,454,622     21,513,677        889,899      9,462,951

Office Building
Morristown, NJ          None          2,868,660     12,958,451      3,104,803      2,868,660

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

Garden Apartments
Farmington Hills, MI    None          1,550,000     11,744,571        347,400      1,583,320

Garden Apartments
Raleigh, NC             None          1,623,146     14,135,553         46,160      1,623,146

Office Building
Nashville, TN           None          1,797,000      6,588,451        228,377      1,797,327

Office Park
Oakbrook Terrace, IL    None          1,313,310     11,316,883         95,173      1,313,821

Office Building
Beaverton, OR           None            816,415      9,897,307         14,563        816,415

Industrial Building
Salt Lake City, UT      None            582,457      4,805,676              0        582,457

Industrial Building
Aurora, CO              None          1,338,175      7,202,411              0      1,338,175

Office Complex
Brentwood, TN           None          2,425,000      7,063,755              0      2,425,000
                                   ------------    -----------     ----------    -----------
                                     33,965,832    160,533,248      7,171,168     34,059,198
                                   ------------    -----------     ----------    -----------
                                   ------------    -----------     ----------    -----------

<CAPTION>

                                       Gross Amount at Which
                                       Carried at Close of Year
                        ---------------------------------------------------------
                         Building &                      Year of         Date
 Description            Improvements  Total(a)(b)(c)  Construction     Acquired
 -----------            ------------  --------------  ------------    ---------
<S>                     <C>            <C>            <C>             <C>
Properties:

Office Building
Lisle, IL                 16,136,983     17,916,983       1985        Apr., 1988

Garden Apartments
Atlanta, GA               11,815,081     15,446,293       1987        Apr., 1988

Warehouse
Pomona, CA                20,173,534     23,637,049       1984        Apr., 1988

Retail Shopping Center
Roswell, GA               22,395,247     31,858,198       1988        Jan., 1989

Office Building
Morristown, NJ            16,063,254     18,931,914       1981        Aug., 1988

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

Garden Apartments
Farmington Hills, MI      12,058,651     13,641,971       1988        Jan., 1990

Garden Apartments
Raleigh, NC               14,181,713     15,804,859       1995        Jun., 1995

Office Building
Nashville, TN              6,816,501      8,613,828       1982        Oct., 1995

Office Park
Oakbrook Terrace, IL      11,411,545     12,725,366       1988        Dec., 1995

Office Building
Beaverton, OR              9,911,870     10,728,285       1995        Dec., 1996

Industrial Building
Salt Lake City, UT         4,805,676      5,388,133       1997        Jul., 1997

Industrial Building
Aurora, CO                 7,202,411      8,540,586       1997       Sept., 1997

Office Complex
Brentwood, TN              7,063,755      9,488,755       1987        Oct., 1997
                        ------------   ------------
                         167,611,050    201,670,248
                        ------------   ------------
                        ------------   ------------
</TABLE>
<TABLE>
<CAPTION>
                                       1997           1996           1995
                                    ------------    -----------    -----------
<S>                                 <C>             <C>            <C>
(a)   Balance at beginning of year   177,082,291    191,981,608    154,157,068
       Additions:
        Acquisitions                  23,417,474     10,713,722     36,774,343
        Improvements, etc.             1,170,483        550,050      1,050,197
       Deletions:
        Sale                                        (26,163,089)             0
                                    ------------    -----------    -----------
       Balance at end of year        201,670,248    177,082,291    191,981,608
                                    ------------    -----------    -----------
                                    ------------    -----------    -----------
</TABLE>

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


                                   F-23

<PAGE>

        THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
        SCHEDULE III - REAL ESTATE OWNED:  INTEREST IN PROPERTIES
                            DECEMBER 31, 1997

<TABLE>
<CAPTION>

                          Initial Costs to the Partnership          Costs
                        --------------------------------------   Capitalized
                                                   Building &    Subsequent to
   Description          Encumbrances    Land      Improvements    Acquisition         Land
   -----------          ------------    ----      ------------   -------------      ---------
<S>                     <C>           <C>         <C>            <C>              <C>
Interest in properties:

Warehouse/Distribution
Jacksonville, FL        None           $231,119     $1,073,849        $12,485       $231,119

Warehouse/Distribution
Jacksonville, FL        None            176,256        818,935          7,257        176,256

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

Warehouse/Distribution
Jacksonville, FL        None            415,548      1,930,761         24,053        415,548
                                     ----------     ----------     ----------     ----------
                                     $1,078,468     $5,010,880        $43,809     $1,078,468
                                     ----------     ----------     ----------     ----------
                                     ----------     ----------     ----------     ----------
<CAPTION>

                                         Gross Amount at Which
                                         Carried at Close of Year
                         ----------------------------------------------------------------------
                           Building &        1997                         Year of     Date
  Description             Improvements      Sales         Total (a)    Construction Acquired
  -----------            -------------    ------------    ---------    ------------ -----------
<S>                      <C>              <C>             <C>          <C>          <C>
Interest in properties:

Warehouse/Distribution
Jacksonville, FL            $1,086,334     (1,317,453)            $0       1988     Jan., 1990

Warehouse/Distribution
Jacksonville, FL               826,192     (1,002,448)             0       1986     Jan., 1990

Warehouse/Distribution
Jacksonville, FL             1,187,349     (1,442,894)             0       1982     Jan., 1990

Warehouse/Distribution
Jacksonville, FL             1,954,814     (2,370,362)             0       1979     Jan., 1990
                         -------------    ------------    ---------
                            $5,054,689    ($6,133,157)            $0
                         -------------    ------------    ---------
                         -------------    ------------    ---------
</TABLE>
<TABLE>
<CAPTION>
                                       1997           1996           1995
                                   ----------     ----------     ----------
<S>                                <C>            <C>            <C>
    Balance at beginning of year   $6,133,157     $6,133,157     $6,108,742
     Additions:
      Acquisitions                          0              0         24,415
      Improvements, etc.                    0              0              0
     Deletions:
      Sale                         (6,133,157)             0              0
                                   ----------     ----------     ----------
     Balance at end of year                $0     $6,133,157     $6,133,157
                                   ----------     ----------     ----------
                                   ----------     ----------     ----------
</TABLE>
(a) All of these industrial properties were sold at 9/30/97


                                   F-24