##### 



UNITED STATES
    SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
  FORM 10-K
  (Mark One)þ

ANNUAL REPORT PURSUANT TO
    SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE
    ACT OF 1934For the fiscal year ended
    December 31, 2006ORo

TRANSITION REPORT PURSUANT TO
    SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934   Commission file Number
    033-08698
  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
    incorporation or organization)


(IRS Employer Identification No.
)   213 Washington Street, Newark, New Jersey
    07102-2992
 (Address of principal executive
    offices) (Zip Code)
 (973) 802-6000
 (Registrants telephone
    number, including area code)
  SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE
    ACT: NONE
  SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE
    ACT: NONE
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
 o o þ
  Rule 12b-2 o þ
  DOCUMENTS INCORPORATED BY REFERENCE
  FORM 10-K




---



##### 



PRUCO
    LIFE VARIABLE CONTRACT
    REAL PROPERTY ACCOUNT
    (Registrant)
    INDEX
  Item



PageNo.



No.Cover PageIndex


2Forward-Looking
    Statement Disclosure


3PART I1.

Business


41A.

Risk
    Factors


61B.

Unresolved Staff
    Comments


62.

Properties


63.

Legal
    Proceedings


64.

Submission of
    Matters to a Vote of Security Holders


6PART II5.

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


76.

Selected Financial
    Data


77.

Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations


77A.

Quantitative and
    Qualitative Disclosures About Market Risk


148.

Financial
    Statements and Supplementary Data


159.

Changes in and
    Disagreements with Accountants on Accounting and Financial
    Disclosure


159A.

Controls and
    Procedures


159B.

Other
    Information


15PART III10.

Directors,
    Executive Officers and Corporate Governance


1611.

Executive
    Compensation


1712.

Security Ownership
    of Certain Beneficial Owners and Management and Related
    Stockholder Matters


1713.

Certain
    Relationships and Related Transactions, and Director
    Independence


1714.

Principal
    Accounting Fees and Services


17PART IV15.

Exhibits, Financial
    Statement Schedules


18Exhibit Index


18Signatures


20  2




---



##### 



Forward-Looking
    Statement Disclosure  Form 10-K,
 3




---



##### 



PART I  Item 1.
    Business                       4




---



##### 



MARKET
    CONDITIONS
    Debt
    Market
  year-to-date
  Public
    Real Estate Securities
    Property
    Markets
  Office
  Industrial
  Residential
 5




---



##### 



Retail
  Hotel
  Item 1A.
    Risk
    Factors  Form 10-K.
     Item 1B. Unresolved
    Staff Comments    Item 2.
    Properties    Item 3.
    Legal
    Proceedings    Item 4.
    Submission
    of Matters to a Vote of Security Holders   6




---



##### 



PART II Item 5. Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities      Item 6.
    Selected
    Financial Data  RESULTS
    OF OPERATIONS:
  Year Ended December 31,2006


2005


2004


2003


2002


2001


2000Total Investment Income

$
28,623,487


$
28,644,271


$
29,076,163


$
27,060,494


$
27,077,048


$
27,480,593


$
26,387,938Net Investment Income

$
11,161,728


$
9,219,171


$
7,799,606


$
10,613,409


$
10,864,043


$
12,350,306


$
13,638,117Net Realized and Unrealized Gain
    (Loss) on Real Estate Investments


18,352,005



15,460,619



3,280,394



(6,467,364
)


(8,517,663
)


(2,547,749
)


4,487,022Net Increase in Net Assets
    Resulting From Operations

$
29,513,733


$
24,679,790


$
11,080,000


$
4,146,045


$
2,346,380


$
9,802,557


$
18,125,139   FINANCIAL
    POSITION:
  Year Ended December 31,2006


2005


2004


2003


2002


2001


2000Total Assets

$
272,136,819


$
246,015,115


$
240,575,611


$
235,627,852


$
229,720,113


$
234,594,652


$
221,512,296Long Term Lease Obligation

$
0


$
0


$
0


$
0


$
0


$
0


$
0Investment Level Debt

$
32,710,488


$
33,195,607


$
43,773,767


$
43,934,494


$
35,699,108


$
28,994,521


$
10,092,355   Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations      (a)
    Liquidity
    and Capital Resources   7




---



##### 



(b)
    Results
    of Operations    Net
    Investment Income Overview
    Valuation
    Overview
  and/or
 8




---



##### 



Twelve Months Ended December 31,2006


2005Net Investment
    Income:Office properties

$
3,407,082


$
3,100,955Apartment complexes


1,059,134



1,952,155Retail properties


6,128,671



4,402,792Industrial property


773,668



574,977Hotel property


1,288,716



1,086,783Land


(36,582
)


Other (including interest income,
    investment mgt fee, 
    portfolio level expenses etc.)


(1,458,961
)


(1,898,491
)Total Net Investment
    Income

$
11,161,728


$
9,219,171Net Realized Gain (Loss) on
    Real Estate Investments:Apartment Complex


70,689



4,446,010Office Building






1,174,380Land


(2,919
)


598,432Total Net Realized Gain (Loss)
    on Real Estate Investments


67,770



6,218,822Net Unrealized Gain (Loss)
    on Real Estate Investments:Office properties


2,514,348



3,298,783Apartment complexes


3,588,692



516,658Retail properties


6,265,806



3,011,793Industrial property


2,132,560



1,369,434Hotel property


3,782,829



1,045,129Total Net Unrealized Gain
    (Loss) on Real Estate Investments


18,284,235



9,241,797Net Realized and Unrealized
    Gain (Loss) on Real Estate Investments

$
18,352,005


$
15,460,619   OFFICE
    PROPERTIES
  Realized/Net Investment


Net Investment


Unrealized


UnrealizedIncome/(Loss)


Income/(Loss)


Gain/(Loss)


Gain/(Loss)


Occupancy


OccupancyYear Ended December 31,

2006


2005


2006


2005


2006


2005PropertyLisle, IL

$
376,939


$
313,356


$
(644,356
)

$
(98,837
)


38%



38%Brentwood, TN


1,084,255



984,017



69,832



1,254,008



100%



93%Oakbrook Terrace, IL (1)


1,323



203,313







1,174,380



N/A



N/ABeaverton, OR


940,713



851,182



1,888,872



809,842



79%



78%Brentwood, TN (2)


1,003,852



749,087



1,200,000



1,333,767



100%



100%$
3,407,082


$
3,100,955


$
2,514,348


$
4,473,160     (1)
    
    The Oakbrook Terrace, Illinois office property was sold on
    June 8, 2005 but certain post-closing adjustments were
    recognized in the year ended December 31, 2006.(2)
    
    Net Investment Income for the year ended December 31, 2005
    reflects a partial period rent abatement that was provided to
    the tenant as part of the lease. 9




---



##### 



Net
    Investment Income
    Total
    Realized and Unrealized Gain/(Loss)
    APARTMENT
    COMPLEXES
  Realized/


Realized/Net Investment


Net Investment


Unrealized


UnrealizedIncome/(Loss)


Income/(Loss)


Gain/(Loss)


Gain/(Loss)


Occupancy


OccupancyYear Ended December 31,

2006


2005


2006


2005


2006


2005PropertyAtlanta, GA

$
505,136


$
123,570


$
2,507,734


$
(597,672
)


90%



91%Raleigh, NC


589,289



678,498



1,080,958



1,114,329



92%



93%Jacksonville, FL (1)


(25,126
)


902,707



70,520



4,283,549



N/A



N/AGresham/Salem, OR (1)


(10,165
)


247,380



169



162,462



N/A



N/A$
1,059,134


$
1,952,155


$
3,659,381


$
4,962,668     (1)
    
    The Salem, Oregon, Gresham, Oregon and Jacksonville, Florida
    apartment properties were sold on March 10, 2005,
    August 10, 2005 and November 30, 2005, respectively,
    but certain post-closing adjustments were recognized in the year
    ended December 31, 2006.  Net
    Investment Income
    Total
    Realized and Unrealized Gain/(Loss)
   10




---



##### 



RETAIL
    PROPERTIES
  Net Investment


Net Investment


Unrealized


UnrealizedIncome/(Loss)


Income/(Loss)


Gain/(Loss)


Gain/(Loss)


Occupancy


OccupancyYear Ended December 31,

2006


2005


2006


2005


2006


2005PropertyRoswell, GA

$
2,096,974


$
1,767,394


$
1,071,439


$
1,652,340



93%



94%Kansas City, KS; MO (1)


(34,810
)


195,927



(164,205
)


(5,069,318
)


90%



81%Hampton, VA


1,307,686



1,272,509



(107,277
)


5,096,161



100%



100%Ocean City, MD


746,520



871,644



79,619



1,332,610



92%



85%Westminster, MD (2)


908,788







5,386,230







98%



N/AWestminster, MD (3)


124,362



278,799











N/A



N/AWestminster, MD (4)






(5,704
)










N/A



N/ACARS Preferred Equity (5)


979,151



22,223











N/A



N/A$
6,128,671


$
4,402,792


$
6,265,806


$
3,011,793     (1)
    
    Net investment income (loss) for the year ended
    December 31, 2006 reflects partial period results for the
    three out of four Kansas City, Kansas and Kansas City, Missouri
    retail properties that were sold on May 15, 2006. Occupancy
    for the year ended December 31, 2006 reflects remaining
    retail property in Kansas City, Kansas.(2)
    
    Net investment income for the year ended December 31, 2006
    reflects partial period results for the Westminster, Maryland
    retail property that was acquired on June 13, 2006.(3)
    
    Mortgage Loan Receivable (mortgage paid in full on March 3,
    2006).(4)
    
    Classified as Other Real Estate Investment (mortgage paid in
    full September 13, 2004).(5)
    
    Net investment income for the year ended December 31, 2006
    reflects partial period results for the second funding of the
    Partnerships preferred equity investment, which occurred
    on February 14, 2006.  Net
    Investment Income
    Unrealized
    Gain/(Loss)
   11




---



##### 



INDUSTRIAL
    PROPERTY
  Net Investment


Net Investment


Unrealized


UnrealizedYear Ended December 31,

Income/(Loss)


Income/(Loss)


Gain/(Loss)


Gain/(Loss)


Occupancy


Occupancy2006


2005


2006


2005


2006


2005PropertyAurora, CO

$
773,668


$
574,977


$
2,132,560


$
1,369,434



85
%


78
%   Net
    Investment Income
    Unrealized
    Gain/(Loss)
    HOTEL
    PROPERTY
  Net Investment


Net Investment


Unrealized


UnrealizedIncome/(Loss)


Income/(Loss)


Gain/(Loss)


Gain/(Loss)


Occupancy


OccupancyYear Ended December 31,

2006


2005


2006


2005


2006


2005PropertyLake Oswego, OR

$
1,288,716


$
1,086,783


$
3,782,829


$
1,045,129



80
%


80
%   Net
    Investment Income
    Unrealized
    Gain/(Loss)
    LAND
   12




---



##### 



OTHER
    (c) Inflation
  and/or
  Critical
    Accounting Policies
      Valuation
    of Investments
       13




---



##### 



Other
    Estimates
    Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk      Estimated Market Value


AverageMaturity


(in $ millions)


Interest RateCash and Cash equivalents


0-3 months


$
33.4



5.57
%     Debt (in $ thousands),






















Estimatedincluding current portion

2007


2008


2009


2010


2011


Thereafter


Total


Fair ValueAverage Fixed Interest Rate


5.35
%


5.74
%


6.75
%


6.75
%


6.75
%


6.75
%


6.50
%Fixed Rate

$
588


$
16,090


$
9,277


$
565


$
604


$
5,586


$
32,710


$
32,876Variable Rate






























Total Mortgage LoansPayable

$
588


$
16,090


$
9,277


$
565


$
604


$
5,586


$
32,710


$
32,876   and/or
 14




---



##### 



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



In order to ensure that the information we must disclose in our
    filings with the Securities and Exchange Commission, or
    SEC, is recorded, processed, summarized, and
    reported on a timely basis, the Companys management,
    including our Chief Executive Officer and Chief Financial
    Officer, have reviewed and evaluated the effectiveness of our
    disclosure controls and procedures, as defined in Exchange Act
    Rules 13a-15(e)
    and
    15d-15(e),
    under the Securities Exchange Act of 1934, as amended, as of
    December 31, 2006. Based on such evaluation, the Chief
    Executive Officer and Chief Financial Officer have concluded
    that, as of December 31, 2006, our disclosure controls and
    procedures were effective in timely alerting them to material
    information relating to us required to be included in our
    periodic SEC filings. There has been no change in our internal
    control over financial reporting, as defined in Exchange Act
    Rules 13a-15(e)
    and
    15d-15(e),
    during the year ended December 31, 2006, that has
    materially affected, or is reasonably likely to materially
    affect, our internal control over financial reporting. Item 9B. Other
    Information



None.

15




---



##### 



PART III  Item 10.
    Directors,
    Executive Officers and Corporate Governance  JAMES J. AVERY, JR., Vice Chairman and
    Director
  HELEN M. GALT, Director (Chief Actuary effective
    March 20, 2007)
  BERNARD J. JACOB, Treasurer and
    Director
  RONALD P. JOELSON, Director
  DAVID R. ODENATH, JR., Director
  SCOTT D. KAPLAN, Chief Executive Officer President and Director
  TUCKER I. MARR, Chief Financial Officer and Chief
    Accounting Officer
  THOMAS C. CASTANO, Chief Legal Officer and
    Secretary
  JAMES M. OCONNOR, Senior Vice President and
    Actuary
  SHIRLEY H. SHAO, Senior Vice President and Chief
    Actuary (until March 20, 2007)
  KENT D. SLUYTER, Senior Vice President
  KENNETH S. SOLON, Senior Vice
    President
  07102-2992.
  Code of
    Ethics
     16




---



##### 



Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters    Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence      Item 14.
    Principal
    Accounting Fees and Services   17




---



##### 



PART IV  Item 15.
    Exhibits,
    Financial Statement Schedules  (a)
    The following documents are filed as part of this report:  1.
    Financial Statements    2.
    Financial Statement Schedules  Form 10-K:
        3.
    Documents Incorporated by Reference    4.
    Exhibits      (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, 2006. 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 by Exhibit 1.A.(6)(a)
    in
    Form S-6,
    Registration
    No. 333-07451,
    filed July 2,1996, and incorporated herein by reference.3
.2

Amended By-Laws of Pruco Life
    Insurance Company, filed by Exhibit to
    Form 10-Q,
    Registration
    No. 033-37587,
    filed August 15, 1997, 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) in Post-Effective
    Amendment No. 3to
    Form S-1,
    Registration Statement
    No. 33-86780,
    filed April 9, 1997, and incorporated herein by reference.4
.1

Variable Life Insurance Contract,
    filed as Exhibit 1.A.(5)(a) to Post-Effective Amendment
    No. 24 to
    Form S-6,
    Registration Statement
    No. 2-80513,
    filed April 30, 1997, and incorporated herein by reference.4
.2

Revised Variable Appreciable Life
    Insurance Contract with fixed death benefit, filed as
    Exhibit 1.A.(5)(f) in Post-Effective Amendment No. 26
    to
    Form S-6,
    Registration Statement
    No. 2-89558,
    filed April 29, 1997, and incorporated herein by reference.4
.3

Revised Variable Appreciable Life
    Insurance Contract with variable death benefit, filed as
    Exhibit 1.A.(5)(g) in Post-Effective Amendment No. 26
    to
    Form S-6,
    Registration Statement
    No. 2-89558,
    filed April 29, 1997, and incorporated herein by reference.4
.4

Single Premium Variable Annuity
    Contract, filed as Exhibit (4C) in Post-Effective Amendment
    No. 3 to
    Form S-1,
    Registration Statement
    No. 33-86780,
    filed April 9, 1997, and incorporated herein by reference.4
.5

Flexible Premium Variable Life
    Insurance Contract, filed as Exhibit (4D) in Post-Effective
    Amendment No. 3 to
    Form S-1,
    Registration Statement
    No. 33-86780,
    filed April 9, 1997, and incorporated herein by reference. 18




---



##### 



9
.

None.10
.1

Investment Management Agreement
    between Prudential Investment Management, Inc. and The
    Prudential 10.2 Variable Contract Real Property Partnership,
    filed as Exhibit (10A) in Post-Effective Amendment
    No. 16 to
    Form S-1,
    Registration Statement
    No. 33-20083-01,
    filed April 10, 2003, and incorporated herein by reference.10
.2

Administrative Service Agreement
    among PIM,Prudential Insurance Company of America , Pruco Life
    Insurance Company, and Pruco Life Insurance Company of New
    Jersey, filed as Exhibit (10B) in Post-Effective Amendment
    No. 17 to
    Form S-1,
    Registration Statement
    No. 33-20083-01,
    filed April 12, 2004, and incorporated herein by reference.10
.3

Partnership Agreement of The
    Prudential Variable Contract Real Property Partnership, filed as
    Exhibit (10C) in Post-Effective Amendment No. 9 to
    Form S-1,
    Registration Statement
    No. 33-20083-01,
    filed April 9, 1997, and incorporated herein by reference.11
.

Not applicable.12
.

Not applicable.16
.

None.18
.

None.22
.

Not applicable.23
.

None.24
.

Powers of Attorney are filed
    herewith.31
.1

Section 302 Certification of
    Chief Executive Officer.31
.2

Section 302 Certification of
    Chief Accounting Officer.32
.1

Section 906 Certification of
    Chief Executive Officer.32
.2

Section 906 Certification of
    Chief Accounting Officer.  19




---



##### 



SIGNATURES    PRUCO
    LIFE INSURANCE COMPANY
    in respect of
    Pruco Life Variable
    Contract Real Property Account
  Date: March 23, 2007



By:  /s/  Scott
    D. KaplanScott
    D. Kaplan
    President and Director
    (Principal Executive Officer)Date: March 23, 2007



By:  /s/  Tucker
    I. MarrTucker
    I. Marr
    Chief Accounting Officer
    (Principal Accounting and Financial Officer)     Signature

Title

Date*James
    J. Avery, Jr.James
    J. Avery, Jr.

Director

March 23, 2007*Helen
    M. GaltHelen
    M. Galt

Director

March 23, 2007*Bernard
    J. JacobBernard
    J. Jacob

Director

March 23, 2007*Ronald
    P. JoelsonRonald
    P. Joelson

Director

March 23, 2007*David
    R.
    Odenath, Jr.David
    R. Odenath, Jr.

Director

March 23, 2007   *By:
    /s/  Thomas
    C. Castano (Attorney-in-Fact)
 20




---



##### 



PRUCO LIFE
    VARIABLE CONTRACT REAL PROPERTY ACCOUNT
    (Registrant)
    INDEX
  PageA.  PRUCO LIFE
    VARIABLE CONTRACT REAL PROPERTY ACCOUNTFinancial Statements:Report of
    Independent Registered Public Accounting Firm


F-2Statements of Net
    Assets  December 31, 2006 and 2005


F-3Statements of
    Operations  Years Ended December 31, 2006, 2005,
    2004


F-3Statements of
    Changes in Net Assets  Years Ended December 31,
    2006, 2005, 2004


F-3Notes to Financial
    Statements


F-4B.  THE PRUDENTIAL
    VARIABLE CONTRACT REAL PROPERTY PARTNERSHIPFinancial Statements:Report of
    Independent Registered Public Accounting Firm


F-9Report of
    Independent Registered Public Accounting Firm on Financial
    Statement Schedules


F-10Consolidated
    Statements of Assets and Liabilities 
    December 31, 2006 and 2005


F-11Consolidated
    Statements of Operations  Years Ended
    December 31, 2006, 2005 and 2004


F-12Consolidated
    Statements of Changes in Net Assets  Years Ended
    December 31, 2006, 2005 and 2004


F-13Consolidated
    Statements of Cash Flows  Years Ended
    December 31, 2006, 2005 and 2004


F-14Consolidated
    Schedule of Investments  December 31, 2006 and
    2005


F-15Notes to Financial
    Statements


F-17Financial Statement Schedules:For the period
    ended December 31, 2006Schedule III 
    Real Estate Owned: Properties


F-27Schedule
    IV  Mortgage Loans on Real Estate


F-28   All other schedules
    are omitted because they are not applicable, or because the
    required information is included in the financial statements or
    notes thereto.
 F-1




---



##### 



Report of
    Independent Registered Public Accounting Firm  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 of changes in net assets present fairly, in
    all material respects, the financial position of Pruco Life
    Variable Contract Real Property Account at December 31,
    2006 and 2005, and the results of its operations and the changes
    in its net assets for each of the three years in the period
    ended December 31, 2006, in conformity with accounting
    principles generally accepted in the United States of America.
    These financial statements are the responsibility of the
    management of Pruco Life Insurance Company; our responsibility
    is to express an opinion on these financial statements based on
    our audits. We conducted our audits of these financial
    statements in accordance with the standards of the Public
    Company Accounting Oversight Board (United States). Those
    standards require that we plan and perform the audit to obtain
    reasonable assurance about whether the financial statements are
    free of material misstatement. An audit includes examining, on a
    test basis, evidence supporting the amounts and disclosures in
    the financial statements, assessing the accounting principles
    used and significant estimates made by management, and
    evaluating the overall financial statement presentation. We
    believe that our audits, which included confirmation of shares
    at December 31, 2006 with The Prudential Variable Contract
    Real Property Partnership, provide a reasonable basis for our
    opinion.
  PricewaterhouseCoopers
    LLP
 New York, New York
 March 20, 2007
 F-2




---



##### 



FINANCIAL
    STATEMENTS OF
    PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT
 STATEMENTS OF NET
    ASSETSDecember 31,
    2006 and 2005  2006


2005ASSETSInvestment in The Prudential
    Variable Contract Real Property Partnership

$
126,078,281


$
113,200,507Net Assets

$
126,078,281


$
113,200,507NET ASSETS,
    representing:Equity of contract owners

$
90,093,068


$
81,885,275Equity of Pruco Life Insurance
    Company


35,985,213



31,315,232$
126,078,281


$
113,200,507Units outstanding


42,285,911



43,195,848Portfolio shares held


3,722,570



3,825,616Portfolio net asset value per share

$
33.87


$
29.59   STATEMENTS OF
    OPERATIONSFor the
    years ended December 31, 2006, 2005 and 2004  2006


2005


2004INVESTMENT INCOMENet investment income from
    Partnership operations

$
6,150,138


$
5,082,863


$
4,300,288EXPENSESCharges to contract owners for
    assuming mortality risk and expense risk and for administration


520,933



476,464



459,525NET INVESTMENT INCOME


5,629,205



4,606,399



3,840,763NET REALIZED AND UNREALIZED GAIN
    (LOSS) ON INVESTMENTSNet change in unrealized gain
    (loss) on investments in Partnership


10,075,522



5,096,823



854,775Net realized gain (loss) on sale of
    investments in Partnership


37,341



3,428,662



953,830NET GAIN (LOSS) ON
    INVESTMENTS


10,112,863



8,525,485



1,808,605NET INCREASE (DECREASE) IN NET
    ASSETS RESULTING FROM OPERATIONS

$
15,742,068


$
13,131,884


$
5,649,368   STATEMENTS OF
    CHANGES IN NET ASSETS
    For the years ended December 31, 2006, 2005 and
    2004  2006


2005


2004OPERATIONSNet investment income

$
5,629,205


$
4,606,399


$
3,840,763Net change in unrealized gain
    (loss) on investments in Partnership


10,075,522



5,096,823



854,775Net realized gain (loss) on sale of
    investments in Partnership


37,341



3,428,662



953,830NET INCREASE (DECREASE) IN NET
    ASSETS RESULTING FROM OPERATIONS


15,742,068



13,131,884



5,649,368CAPITAL TRANSACTIONSNet contributions (withdrawals) by
    contract owners


(2,886,469
)


(2,333,786
)


(3,348,681
)Net contributions (withdrawals) by
    Pruco Life Insurance Company


22,175



(548,374
)


501,906NET INCREASE (DECREASE) IN NET
    ASSETS RESULTING FROM CAPITAL TRANSACTIONS


(2,864,294
)


(2,882,160
)


(2,846,775
)TOTAL INCREASE (DECREASE) IN NET
    ASSETS


12,877,774



10,249,724



2,802,593NET ASSETSBeginning of period


113,200,507



102,950,783



100,148,190End of period

$
126,078,281


$
113,200,507


$
102,950,783   The
    accompanying notes are an integral part of these financial
    statements.
 F-3




---



##### 



NOTES TO THE
    FINANCIAL STATEMENTS OF
    PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT
    December 31, 2006
  Note 1:
    General  Pruco Life Variable
    Contract Real Property Account (the Account) was
    established on August 27, 1986 and commenced business
    September 5, 1986. Pursuant to Arizona law, the 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), an indirect wholly-owned subsidiary of
    Prudential Financial, Inc.(PFI) and is registered
    under the Securities Act of 1933, as amended. The assets of the
    Account are segregated from Pruco Lifes other assets. The
    Account is used to fund benefits under certain variable life
    insurance and variable annuity contracts issued by Pruco Life.
    These products are Appreciable Life (VAL), Variable
    Life (VLI), Discovery Plus (SPVA), and
    Discovery Life Plus (SPVL).
  The assets of the
    Account are invested in The Prudential Variable Contract Real
    Property Partnership (the Partnership). The
    Partnership is the investment vehicle for assets allocated to
    the real estate investment option under certain variable life
    insurance and annuity contracts. The 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. These financial
    statements should be read in conjunction with the financial
    statements of the Partnership.
  The Partnership has
    a policy of investing at least 65% of its assets in direct
    ownership interests in income-producing real estate and
    participating mortgage loans.
  Note 2:
    Summary of
    Significant Accounting Policies and Pronouncements  A. Basis of
    Accounting
  The accompanying
    financial statements are prepared in conformity with
    U.S. GAAP. The preparation of the financial statements in
    conformity with U.S. GAAP requires management to make
    estimates and assumptions that affect the reported amounts and
    disclosures. Actual results could differ from those estimates.
  In September 2006,
    the staff of the U.S. Securities and Exchange Commission,
    or SEC, issued Staff Accounting Bulletin, or
    SAB, No. 108, Considering the Effects of
    Prior Year Misstatements when Quantifying Misstatements in
    Current Year Financial Statements. The interpretations in
    this SAB express the staffs views regarding the process of
    quantifying financial statement misstatements. Specifically, the
    SEC staff believes that registrants must quantify the impact on
    current period financial statements of correcting all
    misstatements, including both those occurring in the current
    period and the effect of reversing those that have accumulated
    from prior periods. This SAB should be applied beginning with
    the first fiscal year ending after November 15, 2006, with
    early adoption encouraged. Since the Accounts method for
    quantifying financial statement misstatements already considers
    those occurring in the current period and the effect of
    reversing those that have accumulated from prior periods, the
    adoption of SAB No. 108 should have no effect to the
    financial position and result of operations of the Account.
  B.
    Investment in
    Partnership Interest  The investment in
    the Partnership is based on the Accounts proportionate
    interest of the Partnerships market value. At
    December 31, 2006 and 2005 the Accounts interest in
    the Partnership was 55.1% or 3,722,570 shares and 55.1% or
    3,825,616 shares respectively.
  C.
    Income
    Recognition  Net investment
    income and realized and unrealized gains and losses are
    recognized daily. Amounts are based upon the Accounts
    proportionate interest in the Partnership.
  D.
    Equity of Pruco
    Life Insurance Company  Pruco Life maintains
    a position in the Account for property liquidity purposes,
    including unit purchases and redemptions, Partnership share
    transactions, and expense processing. The position does not have
    an effect on the contract owners accounts or the related
    unit values.
  Note 3:
    Taxes  Pruco Life is taxed
    as a life insurance company, as defined by the
    Internal Revenue Code. The results of operations of the Account
    form a part of PFIs consolidated federal tax return. Under
    current federal law, no federal income taxes are payable by the
    Account. As such, no provision for the tax liability has been
    recorded in these financial statements.
 F-4




---



##### 



NOTES TO THE
    FINANCIAL STATEMENTS OF
    PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT
    December 31, 2006
  Note 4:
    Net Withdrawals
    by Contract Owners  Net contract owner
    withdrawals for the real estate investment option in Pruco
    Lifes variable insurance and variable annuity products for
    the years ended December 31, 2006, 2005 and 2004 were as
    follows:
 2006:

VAL


VLI


SPVA


SPVL


TOTALContract Owner Net Payments:

$
3,284,594


$
283,122


$
(9
)

$
(5,308
)

$
3,562,399Policy Loans:


(1,463,946
)


(84,509
)


0



(52,833
)


(1,601,288
)Policy Loan Repayments and Interest:


1,545,182



127,997



0



149,233



1,822,412Surrenders, Withdrawals, and Death
    Benefits:


(3,153,786
)


(303,089
)


(57,246
)


(403,139
)


(3,917,260
)Net Transfers To Other Subaccounts
    or Fixed Rate Option:


(102,416
)


(37,252
)


(3,408
)


50,193



(92,883
)Administrative and Other Charges:


(2,450,224
)


(185,612
)


0



(24,013
)


(2,659,849
)Net Withdrawals by Contract
    Owners

$
(2,340,596
)

$
(199,343
)

$
(60,663
)

$
(285,867
)

$
(2,886,469
)   2005:

VAL


VLI


SPVA


SPVL


TOTALContract Owner Net Payments:

$
3,479,291


$
280,783


$
(3
)

$
2,705


$
3,757,366Policy Loans:


(1,420,648
)


(114,443
)


0



(51,315
)


(1,586,406
)Policy Loan Repayments and Interest:


1,617,102



135,706



0



136,594



1,889,402Surrenders, Withdrawals, and Death
    Benefits:


(2,962,740
)


(208,936
)


(119,238
)


(443,597
)


(3,734,511
)Net Transfers To Other Subaccounts
    or Fixed Rate Option:


(7,738
)


(15,129
)


(4,039
)


16,985



(9,921
)Administrative and Other Charges:


(2,450,927
)


(175,561
)


0



(23,228
)


(2,649,716
)Net Withdrawals by Contract
    Owners

$
(1,745,660
)

$
(97,580
)

$
(123,280
)

$
(367,266
)

$
(2,333,786
)   2004:

VAL


VLI


SPVA


SPVL


TOTALContract Owner Net Payments:

$
3,685,937


$
308,369


$
0


$
(1,462
)

$
3,992,844Policy Loans:


(1,421,764
)


(19,257
)


0



(78,985
)


(1,520,006
)Policy Loan Repayments and Interest:


1,914,867



52,629



0



100,458



2,067,954Surrenders, Withdrawals, and Death
    Benefits:


(4,228,414
)


(259,110
)


(34,417
)


(226,819
)


(4,748,760
)Net Transfers To Other Subaccounts
    or Fixed Rate Option:


(368,082
)


(16,751
)


0



(44,349
)


(429,182
)Administrative and Other Charges:


(2,514,926
)


(172,118
)


0



(24,487
)


(2,711,531
)Net Withdrawals by Contract
    Owners

$
(2,932,382
)

$
(106,238
)

$
(34,417
)

$
(275,644
)

$
(3,348,681
)  F-5




---



##### 



NOTES TO THE
    FINANCIAL STATEMENTS OF
    PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT
    December 31, 2006
  Note 5:
    Unit
    Activity  Transactions in
    units for the years ended December 31, 2006, 2005 and 2004
    were as follows:
  2006:







VAL


VLI


SPVA


SPVLCompany Contributions:


1,461,314



Contract Owner Contributions:



1,874,121



127,794



0



82,726Company Redemptions:


(1,336,821
)


Contract Owner Redemptions:



(2,700,887
)


(194,930
)


(25,052
)


(198,202
)   2005:







VAL


VLI


SPVA


SPVLCompany Contributions:


1,403,519



Contract Owner Contributions:



2,144,323



142,550



1,350



92,006Company Redemptions:


(1,435,211
)


Contract Owner Redemptions:



(2,841,794
)


(178,595
)


(56,870
)


(260,949
)   2004:







VAL


VLI


SPVA


SPVLCompany Contributions:


1,980,971



Contract Owner Contributions:



2,465,812



155,094



0



55,305Company Redemptions:


(1,628,682
)


Contract Owner Redemptions:



(3,748,285
)


(199,651
)


(16,953
)


(189,696
)   Note 6:
    Purchases and
    Sales of Investments  The aggregate costs
    of purchases and proceeds from sales of investments in the
    Partnership for the years ended December 31, 2006, 2005 and
    2004 were as follows:
  December 31, 2006


December 31, 2005


December 31, 2004Purchases:

$
0


$
0


$
0Sales:

$
(3,385,228
)

$
(3,358,625
)

$
(3,306,299
)   Note 7:
    Financial
    Highlights  Pruco Life Insurance
    Company (the Company or Prudential)
    sells a number of variable annuity and variable life insurance
    products. These products have unique combinations of features
    and fees that are charged against the contract owners
    account balance. Differences in the fee structures result in a
    variety of unit values, expense ratios and total returns.
 F-6




---



##### 



NOTES TO THE
    FINANCIAL STATEMENTS OF
    PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT
    December 31, 2006
   The following table
    was developed by determining which products offered by Pruco
    Life have the lowest and highest total expense ratio. The
    summary may not reflect the minimum and maximum contract charges
    offered by the Company as contract owners may not have selected
    all available and applicable contract options as discussed in
    Note 1. The table reflects contract owner units only.
  At year ended


For year endedUnits


Unit Value


Net Assets


Investment


Expense Ratio**

Total Return***(000s)


Lowest- Highest


(000s)


Income Ratio*


Lowest-Highest

Lowest-HighestDecember 31, 2006


30,059


$
2.63621 to $3.15740


$
90,093



5.10
%

0.35% to 1.25%

13.05% to 14.06December 31, 2005


31,094


$
2.33181 to $2.76817


$
81,886



4.64
%

0.35% to 1.25%

11.76% to 12.76%December 31, 2004


32,051


$
2.08645 to $2.45484


$
74,999



4.15
%

0.35% to 1.25%

4.74% to 5.68%December 31, 2003


33,530


$
1.99197 to $2.32279


$
74,407



5.77
%

0.35% to 1.25%

0.98% to 1.89%December 31, 2002


34,771


$
1.97263 to $2.27966


$
75,909



5.59
%

0.35% to 1.25%

−0.03% to 0.87%   The table above
    reflects information for units held by contract owners. Pruco
    Life also maintains a position in the Real Property Account, to
    provide for property acquisitions and capital expenditure
    funding needs. Pruco Life held 12,226,968, 12,102,475,
    12,134,074, 11,781,786 and 11,689,343 units representing
    $35,985,213, $31,315,232, $27,951,903, $25,741,655 and
    $25,139,441 of net assets as of December 31, 2006, 2005,
    2004, 2003 and 2002, respectively. Charges for mortality risk,
    expense risk and administrative expenses are used by Pruco Life
    to purchase additional units in its account resulting in no
    impact to its net assets.
    *
    
    This
    amount represents the proportionate share of the net investment
    income from the underlying Partnership divided by the total
    average assets of the Account. This ratio excludes those
    expenses, such as mortality and expense charges, that result in
    direct reductions in the unit values.**
    
    These
    ratios represent the annualized contract expenses of the
    separate account, consisting primarily of mortality and expense
    charges, for each period indicated. The ratios include only
    those expenses that result in a direct reduction to unit values.
    Charges made directly to contract owner accounts through the
    redemption of units and expenses of the underlying Partnership
    are excluded.***
    
    These
    amounts represent the total return for the periods indicated,
    including changes in the value of the underlying Partnership,
    and reflect deductions for all items included in the expense
    ratio. The total return does not include any expense assessed
    through the redemption of units; inclusion of these expenses in
    the calculation would result in a reduction in the total return
    presented.  Charges and
    Expenses
  A.
    Mortality Risk
    and Expense Risk Charges  Mortality risk and
    expense risk charges are determined daily using an effective
    annual rate of 0.6%, 0.35%, 0.9% and 0.9% for VAL, VLI, SPVA and
    SPVL, respectively. Mortality risk is the risk that life
    insurance contract owners may not live as long as estimated or
    annuitants may live longer than estimated and expense risk is
    the risk that the cost of issuing and administering the policies
    may exceed related charges by Pruco Life. The mortality risk and
    expense risk charges are assessed through reduction in unit
    values.
  B.
    Administrative
    Charges  Administrative
    charges are determined daily using an effective annual rate of
    0.35% applied daily against the net assets representing equity
    of contract owners held in each subaccount for SPVA and SPVL.
    Administrative charges include costs associated with issuing the
    contract, establishing and maintaining records, and providing
    reports to contract owners. The administrative charge is
    assessed through reduction in unit values.
 F-7




---



##### 



NOTES TO THE
    FINANCIAL STATEMENTS OF
    PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT
    December 31, 2006
   C.
    Cost of Insurance
    and Other Related Charges  Contract owner
    contributions are subject to certain deductions prior to being
    invested in the Real Property Account. The deductions for VAL
    and VLI are (1) state premium taxes; (2) sales
    charges, not to exceed 5% for VAL and 9% for VLI, which are
    deducted in order to compensate Pruco Life for the cost of
    selling the contract and (3) transaction costs, applicable
    to VAL, which are deducted from each premium payment to cover
    premium collection and processing costs. Contracts are subject
    to charges on each basic premium for assuming a guaranteed
    minimum death benefit risk. This charge compensates Pruco Life
    for the risk that an insured may die at a time when the death
    benefit exceeds the benefit that would have been payable in the
    absence of a minimum guarantee. These charges are assessed
    through the redemption of units.
  D.
    Deferred Sales
    Charge  A deferred sales
    charge is imposed upon the surrender of certain variable life
    insurance contracts to compensate Pruco Life for sales and other
    marketing expenses. The amount of any sales charge will depend
    on the number of years that have elapsed since the contract was
    issued but will not exceed 45% of one scheduled annual premium
    for VAL contracts and 9% of the initial premium payment for
    SPVL. No sales charge will be imposed after the sixth and tenth
    year of the contract for SPVL and VAL, respectively. No sales
    charge will be imposed on death benefits. This deferred sales
    charge is assessed through the redemption of units.
  E.
    Partial
    Withdrawal Charge  A charge is imposed
    by Pruco Life on partial withdrawals of the cash surrender value
    for VAL. A charge equal to the lesser of $15 or 2% will be made
    in connection with each partial withdrawal of the cash surrender
    value of a contract. This charge is assessed through the
    redemption of units.
  Note 8:
    Related
    Party  Prudential and its
    affiliates perform various services on behalf of the Partnership
    in which the Account invests and may receive fees for the
    services performed. These services include, among other things,
    shareholder communications, preparation, postage, fund transfer
    agency and various other record keeping and customer service
    functions.
 F-8




---



##### 



Report of
    Independent Registered Public Accounting Firm  To the Partners of
    The Prudential
    Variable Contract Real Property Partnership:
  In our opinion, the
    accompanying consolidated statements of assets and liabilities,
    including the consolidated schedule of real estate investments,
    and the related consolidated statements of operations, of
    changes in net assets and of cash flows present fairly, in all
    material respects, the financial position of The Prudential
    Variable Contract Real Property Partnership (the
    Partnership) at December 31, 2006 and 2005, and
    the results of its operations and its cash flows for each of the
    three years in the period ended December 31, 2006 in
    conformity with accounting principles generally accepted in the
    United States of America. These financial statements are the
    responsibility of the management of The Prudential Insurance
    Company of America. Our responsibility is to express an opinion
    on these financial statements based on our audits. We conducted
    our audits of these statements in accordance with the standards
    of the Public Company Accounting Oversight Board (United
    States). Those standards require that we plan and perform the
    audits to obtain reasonable assurance about whether the
    financial statements are free of material misstatement. An audit
    includes examining, on a test basis, evidence supporting the
    amounts and disclosures in the financial statements, assessing
    the accounting principles used and significant estimates made by
    management, and evaluating the overall financial statement
    presentation. We believe that our audits provide a reasonable
    basis for our opinion.
  PricewaterhouseCoopers
    LLP
 New York, New York
 February 15,
    2007
 F-9




---



##### 



Report of
    Independent Registered Public Accounting Firm on
    Financial Statement Schedules  To the Partners of
    The Prudentia
    Variable Contract Real Property Partnership:
  Our audits of the
    consolidated financial statements referred to in our report
    dated February 15, 2007 appearing in this Annual Report on
    Form 10-K
    also included an audit of the financial statement schedules
    listed in Item 15(a)(2) of this
    Form 10-K.
    In our opinion, these financial statement schedules present
    fairly, in all material respects, the information set forth
    therein when read in conjunction with the related consolidated
    financial statements.
  PricewaterhouseCoopers
    LLP
 New York, New York
 February 15,
    2007
 F-10




---



##### 



THE PRUDENTIAL
    VARIABLE CONTRACT REAL PROPERTY PARTNERSHIPCONSOLIDATED STATEMENTS OF ASSETS AND
    LIABILITIES
  December 31, 2006


December 31, 2005ASSETSREAL ESTATE INVESTMENTS 
    At estimated market value:Real estate and improvements 
    (cost:
    12/31/2006 
    $199,124,056;
    12/31/2005 
    $183,767,148)

$
214,444,568


$
178,628,645Real estate partnerships and
    preferred equity investments (cost:12/31/2006 
    $22,334,823;
    12/31/2005 
    $18,578,394)


17,941,039



14,348,816Mortgage and other loans receivable
    (cost:
    12/31/2006 
    $0;12/31/2005 
    $4,277,769)






4,277,769Other real estate investments
    (cost:
    12/31/2006 
    $2,857,851;
    12/31/2005 
    $0)


2,857,851



Total real estate investments


235,243,458



197,255,230CASH AND CASH EQUIVALENTS


33,399,532



45,467,485OTHER ASSETS, NET


3,493,829



3,292,400Total assets

$
272,136,819


$
246,015,115LIABILITIES &
    PARTNERS EQUITYINVESTMENT LEVEL DEBT

$
32,710,488


$
33,195,607ACCOUNTS PAYABLE AND ACCRUED
    EXPENSES


3,091,930



2,545,052DUE TO AFFILIATES


789,889



760,926OTHER LIABILITIES


876,487



472,336MINORITY INTEREST


5,751,441



3,638,343Total liabilities


43,220,235



40,612,264COMMITMENTS AND CONTINGENCIESPARTNERS EQUITY


228,916,584



205,402,851Total liabilities and
    partners equity

$
272,136,819


$
246,015,115NUMBER OF SHARES OUTSTANDING
    AT END OF PERIOD


6,758,960



6,941,631SHARE VALUE AT END OF PERIOD

$
33.87


$
29.59   The
    accompanying notes are an integral part of these consolidated
    financial statements.
 F-11




---



##### 



THE PRUDENTIAL
    VARIABLE CONTRACT REAL PROPERTY PARTNERSHIPCONSOLIDATED STATEMENTS OF OPERATIONS
  Year Ended December 31,2006


2005


2004INVESTMENT INCOME:Revenue from real estate and
    improvements

$
25,460,860


$
27,087,813


$
27,810,539Equity in income of real estate
    partnerships


962,208



252,618



629,190Interest and equity income on
    mortgage and other loans receivable


125,510



281,134



138,296Income from other real estate
    investments


219,564







246,764Interest on short-term investments


1,855,345



1,022,706



251,374Total investment income


28,623,487



28,644,271



29,076,163INVESTMENT EXPENSES:Operating


6,355,543



7,420,509



7,545,335Investment management fee


3,075,176



2,845,519



2,666,103Real estate taxes


2,069,169



2,382,626



2,687,018Administrative


3,923,413



4,438,482



5,243,944Interest expense


1,814,686



2,173,789



2,910,841Minority interest


223,772



164,175



223,316Total investment expenses


17,461,759



19,425,100



21,276,557NET INVESTMENT INCOME


11,161,728



9,219,171



7,799,606REALIZED AND UNREALIZED GAIN (LOSS)
    ON REAL ESTATE INVESTMENTS:Net proceeds from real estate
    investments sold


67,770



55,054,217



7,105,000Less: Cost of real estate
    investments sold






47,015,948



7,307,410Realization of prior years
    unrealized gain (loss) on real estate investments sold






(655,341
)


(1,932,410
)Minority interest in realized gain
    (loss) on real estate investments sold






2,474,788



NET GAIN (LOSS) REALIZED ON REAL
    ESTATE INVESTMENTS SOLD


67,770



6,218,822



1,730,000Change in unrealized gain (loss) on
    real estate investments


20,294,808



10,475,654



2,457,887Less: Minority interest in
    unrealized gain (loss) on real estate investments


2,010,573



1,233,857



907,493Net unrealized gain (loss) on real
    estate investments


18,284,235



9,241,797



1,550,394NET REALIZED AND UNREALIZED GAIN
    (LOSS) ON REAL ESTATE INVESTMENTS


18,352,005



15,460,619



3,280,394INCREASE (DECREASE) IN NET ASSETS
    RESULTING FROM OPERATIONS

$
29,513,733


$
24,679,790


$
11,080,000   The
    accompanying notes are an integral part of these consolidated
    financial statements.
 F-12




---



##### 



THE PRUDENTIAL
    VARIABLE CONTRACT REAL PROPERTY PARTNERSHIPCONSOLIDATED STATEMENTS OF CHANGES IN NET
   ASSETS
  Year Ended December 31,2006


2005


2004INCREASE (DECREASE) IN NET ASSETS
    RESULTING FROM OPERATIONS:Net investment income

$
11,161,728


$
9,219,171


$
7,799,606Net gain (loss) realized on real
    estate investments sold


67,770



6,218,822



1,730,000Net unrealized gain (loss) from
    real estate investments


18,284,235



9,241,797



1,550,394Increase (decrease) in net assets
    resulting from operations


29,513,733



24,679,790



11,080,000INCREASE (DECREASE) IN NET ASSETS
    RESULTING FROM CAPITAL TRANSACTIONS:Withdrawals
    (2006-182,671;
    2005-198,677;
    and
    2004-226,527 shares,
    respectively)


(6,000,000
)


(6,000,000
)


(6,000,000
)Increase (decrease) in net assets
    resulting from capital transactions


(6,000,000
)


(6,000,000
)


(6,000,000
)INCREASE (DECREASE) IN NET ASSETS


23,513,733



18,679,790



5,080,000NET ASSETS   Beginning
    of period


205,402,851



186,723,061



181,643,061NET ASSETS   End of
    period

$
228,916,584


$
205,402,851


$
186,723,061   The
    accompanying notes are an integral part of these consolidated
    financial statements.
 F-13




---



##### 



THE PRUDENTIAL
    VARIABLE CONTRACT REAL PROPERTY PARTNERSHIPCONSOLIDATED STATEMENTS OF CASH FLOWS
  Year Ended December 31,2006


2005


2004CASH FLOWS FROM OPERATING
    ACTIVITIES:Net increase in net assets from
    operations

$
29,513,733


$
24,679,790


$
11,080,000Adjustments to reconcile net
    increase in net assets to net cash from operating activitiesNet realized and unrealized loss
    (gain)


(18,352,005
)


(15,460,619
)


(3,280,394
)Amortization of deferred financing
    costs






(34,620
)


(108,232
)Distributions in excess of (less
    than) equity in income of real estate partnership operations


(87,396
)


(148,668
)


(209,678
)Minority interest in consolidated
    partnerships


223,772



164,175



223,316Bad debt expense


(239,380
)


240,176



459,103(Increase) Decrease in accrued
    interest included in other real estate investments


(219,564
)






(Increase) decrease in:Other assets


37,951



2,815,778



(304,747
)Increase (decrease) in:Accounts payable and accrued
    expenses


546,878



(550,954
)


97,254Due to affiliates


28,963



39,507



(296,513
)Other liabilities


404,151



(150,564
)


(324,210
)Net cash flows from (used in)
    operating activities


11,857,103



11,594,001



7,335,899CASH FLOWS FROM INVESTING
    ACTIVITIES:Net proceeds from real estate
    investments sold


67,770



41,676,816



7,105,000Acquisition of real estate and
    improvements


(12,159,443
)






Additions to real estate and
    improvements


(3,197,470
)


(6,198,211
)


(7,746,015
)Contributions to real estate
    partnerships


(7,289,487
)


(7,142,900
)


(467,875
)Return of investment in real estate
    partnerships


3,620,455







Origination of mortgage loan
    receivable






(2,945,709
)


(1,332,060
)Collection of mortgage loan
    receivable


4,277,769







4,975,000Origination of other real estate
    investments


(2,638,287
)






(4,475,000
)Net cash flows from (used in)
    investing activities


(17,318,693
)


25,389,996



(1,940,950
)CASH FLOWS FROM FINANCING
    ACTIVITIES:Withdrawals


(6,000,000
)


(6,000,000
)


(6,000,000
)Proceeds from investment level debt










8,750,000Principal payments on investment
    level debt


(485,119
)


(853,525
)


(8,910,727
)Distributions to minority interest
    partners


(121,244
)


(2,220,169
)


(578,854
)Net cash flows from (used in)
    financing activities


(6,606,363
)


(9,073,694
)


(6,739,581
)NET CHANGE IN CASH AND CASH
    EQUIVALENTS


(12,067,953
)


27,910,303



(1,344,632
)CASH AND CASH
    EQUIVALENTS  Beginning of period


45,467,485



17,557,182



18,901,814CASH AND CASH
    EQUIVALENTS  End of period

$
33,399,532


$
45,467,485


$
17,557,182Cash paid for interest

$
1,806,320


$
2,324,397


$
2,595,651   The
    accompanying notes are an integral part of these consolidated
    financial statements.
 F-14




---



##### 



THE PRUDENTIAL
    VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
    CONSOLIDATED SCHEDULE OF INVESTMENTS
  December 31,2006 Total Rentable

2006


2005Square Feet




Estimated





EstimatedDecember 31, 2006




Unless Otherwise




Market Value





Market ValueProperty Name

Ownership


City, State

Indicated (Unaudited)

Cost





CostREAL ESTATE INVESTMENTS
    OFFICES750 Warrenville


wo


Lisle, IL


103,193


$
24,517,391


$
10,700,000


$
23,173,035


$
10,000,000Summit @ Cornell Oaks


wo


Beaverton, OR


72,109



12,091,490



12,500,000



12,046,574



10,566,213Westpark


wo


Nashville, TN


97,199



11,033,804



12,800,000



10,903,925



12,600,290Financial Plaza


wo


Brentwood, TN


98,049



12,333,152



13,500,000



12,333,151



12,300,000Offices % as of
    l2/31/06


22
%


59,975,837



49,500,000



58,456,685



45,466,503APARTMENTSBrookwood Apartments


wo


Atlanta, GA


240 Units



18,918,016



20,100,000



18,481,376



17,155,625Dunhill Trace Apartments


wo


Raleigh, NC


250 Units



16,287,767



20,400,000



16,170,782



19,202,057Apartments % of 12/31/06


18
%


35,205,783



40,500,000



34,652,158



36,357,682RETAILKings Market


wo


Rosewell, GA


314,358



37,775,326



28,400,000



37,646,731



27,199,960Hampton Towne Center


wo


Hampton, VA


174,540



18,042,611



26,000,000



18,035,334



26,100,000White Marlin Mall


CJV


Ocean City, MD


186,016



15,538,779



22,900,000



15,328,836



21,500,000Westminster Crossing East, LLC


CJV


Westminster, MD


89,890



12,358,340



17,744,568Kansas City Portfolio


EJV


Kansas City, KSMO


487,660



7,816,531



3,422,747



11,413,171



7,183,593CARS Preferred Equity


PE


Various


N/A



14,518,292



14,518,292



7,165,223



7,165,223Retail % as of 12/31/06


49
%


106,049,879



112,985,607



89,589,295



89,148,776INDUSTRIALSmith Road


wo


Aurora, CO


277,930



11,286,560



14,300,000



10,823,619



11,704,500Industrial % as of 12/31/06


6
%


11,286,560



14,300,000



10,823,619



11,704,500HOTELPortland Crown Plaza


CJV


Portland, OR


161 Rooms



8,940,820



15,100,000



8,823,785



10,300,000Hotel % as of 12/31/06


7
%


8,940,820



15,100,000



8,823,785



10,300,000MORTGAGE AND OTHER LOANS
    RECEIVABLEWestminster West


Eloan


Westminster, MD














4,277,769



4,277,769Mortgage and Other Loans 
    Receivable % as of 12/31/06


0
%










4,277,769



4,277,769OTHER REAL ESTATE
    INVESTMENTSWestminster East


Eloan


Westminster, MD






2,857,851



2,857,851







Other Real Estate Investments % as
    of 12/31/06

1%


2,857,851



2,857,851







Total Real Estate Investments as
    a Percentage of Net Assets of 12/31/06


103
%


224,316,730



235,243,458



206,623,311



197,255,230  WO 
    Wholly Owned Investment
 CJV 
    Consolidated Joint Venture
 EJV 
    Joint Venture Investment accounted for under the equity method
 PE 
    Preferred equity investments accounted for under the equity
    method
 Eloan 
    Mezzanine loan accounted for under the equity method
  The
    accompanying notes are an integral part of these consolidated
    financial statements.
 F-15




---



##### 



THE PRUDENTIAL
    VARIABLE CONTRACT REAL PROPERTY PARTNERSHIPCONSOLIDATED SCHEDULE OF
    INVESTMENTS
  December 31, 2006


December 31, 2005Estimated





EstimatedFace Amount


Cost


Market Value


Cost


Market ValueCASH AND CASH
    EQUIVALENTS  Percentage of Net Assets










14.6
%






22.1
%Federal Home Loan Bank, 1.75%,
    January 3, 2006

$
488,000


$



$



$
487,908


$
487,908Federal Home Loan Bank, 0
    coupon bond, January 02, 2007


7,246,000



7,245,028



7,245,028



44,033,621



44,033,621Federal Home Loan Bank, 0
    coupon bond, January 25, 2007


25,000,000



24,914,167



24,914,167







Total Cash Equivalents






32,159,195



32,159,195



44,521,529



44,521,529Cash






1,240,337



1,240,337



945,956



945,956Total Cash and Cash
    Equivalents





$
33,399,532


$
33,399,532


$
45,467,485


$
45,467,485   The
    accompanying notes are an integral part of these consolidated
    financial statements.
 F-16




---



##### 



NOTES TO THE
    CONSOLIDATED FINANCIAL STATEMENTS OF
    THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
    For Years Ended December 31, 2006, 2005, and 2004  Note 1:
    Organization  On April 29,
    1988, The Prudential Variable Contract Real Property Partnership
    (the Partnership), a general partnership organized
    under New Jersey law, was formed through an agreement among The
    Prudential Insurance Company of America
    (Prudential), Pruco Life Insurance Company
    (Pruco Life), and Pruco Life Insurance Company of
    New Jersey (Pruco Life of New Jersey). The
    Partnership was established as a means by which assets allocated
    to the real estate investment option under certain variable life
    insurance and variable annuity contracts issued by the
    respective companies could be invested in a commingled pool. The
    partners in the Partnership are Prudential, Pruco Life and Pruco
    Life of New Jersey.
  The
    Partnerships policy is to invest at least 65% of its
    assets in direct ownership interests in income-producing real
    estate and participating mortgage loans.
  The estimated market
    value of the Partnerships shares is determined daily,
    consistent with the Partnership Agreement. On each day during
    which the New York Stock Exchange is open for business, the net
    asset value of the Partnership is estimated using the estimated
    market value of its assets, principally as described in
    Notes 2A, 2B and 2C below, reduced by any liabilities of
    the Partnership. The periodic adjustments to property values
    described in Notes 2A, 2B and 2C below and other
    adjustments to previous estimates are made on a prospective
    basis. There can be no assurance that all such adjustments to
    estimates will be made timely.
  Shares of the
    Partnership are held by The Prudential Variable Contract Real
    Property Account, Pruco Life Variable Contract Real Property
    Account and Pruco Life of New Jersey Variable Contract Real
    Property Account (the Real Property Accounts) and
    may be purchased and sold at the then current share value of the
    Partnerships net assets. Share value is calculated by
    dividing the estimated market value of net assets of the
    Partnership as determined above by the number of shares
    outstanding. A contract owner participates in the Partnership
    through interests in the Real Property Accounts.
  PREI
    tm is the real estate advisory unit of Prudential Investment
    Management, Inc. (PIM), which is an indirectly owned
    subsidiary of Prudential Financial, Inc. (PFI). PREI
    tm provides investment advisory services to the Partnerships
    partners pursuant to the terms of the Advisory Agreement as
    described in Note 10.
  Note 2:
    Summary of
    Significant Accounting Policies  A:
    Basis of
    Presentation
    The accompanying consolidated financial statements of the
    Partnership have been presented on the market value basis of
    accounting in conformity with accounting principles generally
    accepted in the United States of America. The consolidated
    financial statements of Partnership include wholly owned
    entities, and those real estate partnerships in which the
    Partnership has a controlling interest. All significant
    inter-company balances and transactions have been eliminated in
    consolidation.B:
    Managements
    Use of Estimates in the Financial
    Statements
    The preparation of financial statements in conformity with
    accounting principles generally accepted in the United States of
    America requires management to make estimates and assumptions
    that affect the amounts reported in the consolidated financial
    statements and accompanying notes. Actual results could differ
    from those estimates. F-17




---



##### 



NOTES TO THE
    CONSOLIDATED FINANCIAL STATEMENTS OF
    THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
    For Years Ended December 31, 2006, 2005, and 2004
  Note 2:
    Summary of
    Significant Accounting Policies (continued)   C:
    Real Estate
    Investments
    Real estate investments are shown at estimated market value in
    accordance with the terms of the Partnerships contracts.
    Properties owned are initially recorded at the purchase price
    plus closing costs. Development costs and major renovations are
    capitalized as a component of cost, and routine maintenance and
    repairs are charged to expense as incurred. Real estate costs
    include the cost of acquired property, including all the
    tangible and intangible assets. Tangible assets include the
    value of all land, building and tenant improvements at the time
    of acquisition. Intangible assets include the value of any above
    and below market leases, in-place leases, and tenant
    relationships at the time of acquisition. Market value estimates
    are based upon property appraisal reports prepared by
    independent real estate appraisers (members of the Appraisal
    Institute or an equivalent organization) within a reasonable
    amount of time following acquisition of the real estate and no
    less frequently than annually thereafter. The Chief Real Estate
    Appraiser of PIM is responsible to assure that the valuation
    process provides independent and reasonable property market
    value estimates. American Appraisal Associates (the
    Appraisal Management Firm), an entity not affiliated
    with PIM, has been appointed by PIM to assist the Chief Real
    Estate Appraiser in maintaining and monitoring the independence
    and the accuracy of the appraisal process. Unless a property is
    currently held for sale, the market value of real estate
    investments does not reflect the transaction sale costs, which
    may be incurred upon disposition of the real estate investments.  Unconsolidated real
    estate partnerships are valued at the Partnerships equity
    in net assets as reflected in the partnerships financial
    statements with properties valued as described above. Under the
    equity method, the investment is initially recorded at the
    original investment amount, plus or minus additional amounts
    invested or distributed, and is subsequently adjusted for the
    Partnerships share of undistributed earnings or losses,
    including unrealized appreciation and depreciation, from the
    underlying entity.
  Land and development
    properties held for future development is carried at acquisition
    cost including soft costs incurred prior to development.
  The Partnership
    periodically enters into forward contracts to acquire, for a
    fixed price, real estate investments to be constructed in
    accordance with predetermined plans and specifications or those
    achieve a certain level of leasing. Where conditions precedent
    to funding have been met by its development partners, and the
    Partnerships commitment to fund is firm, the amount of any
    unrealized gain or loss is recognized based upon the difference
    between the estimated investments market value as
    described above and the Partnerships funding obligation.
    The funding obligation and related assets are recorded in the
    consolidated financial statements. As of December 31, 2006
    and 2005, no such funding obligation existed.
  As described above,
    the estimated market value of real estate and real estate
    related assets is determined through an appraisal process. These
    estimated market values may vary significantly from the prices
    at which the real estate investments would sell, since market
    prices of real estate investments can only be determined by
    negotiation between a willing buyer and seller and could be
    material to the consolidated financial statements. Although the
    estimated market values represent subjective estimates,
    management believes these estimated market values are reasonable
    approximations of market prices
 F-18




---



##### 



NOTES TO THE
    CONSOLIDATED FINANCIAL STATEMENTS OF
    THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
    For Years Ended December 31, 2006, 2005, and 2004
  Note 2:
    Summary of
    Significant Accounting Policies (continued)  and the aggregate
    estimated value of investments in real estate is fairly
    presented as of December 31, 2006 and 2005.
  D:
    Other Real Estate
    Investments
    Other real estate investments include short term notes
    receivable, which are valued at the amount due and approximate
    market value.  E:
    Cash and Cash
    Equivalents
    Cash and cash equivalent are comprised of all short-term
    investments and investments in money market funds with a maximum
    maturity of three months. Cash equivalents consist of
    investments in the Prudential Investment Liquidity Pool offered
    and managed by an affiliate of PFI and are accounted for at
    market value.F:
    Other
    Assets
    Cash of $167,311 and $156,268 was maintained by the wholly owned
    and consolidated properties at December 31, 2006 and 2005,
    respectively, for tenant security deposits and is included in
    Other Assets on the Consolidated Statements of Assets and
    Liabilities. Other assets also include tenant receivables and
    are net of allowance for uncollectible accounts of $211,058 and
    $51,162 at December 31, 2006 and 2005, respectively.  G:
    Investment
    Level Debt
    Investment level debt is stated at the principal amount of the
    obligations outstanding. At times the Partnership may assume
    debt in connection with the purchase of real estate. For debt
    assumed, the Partnership allocates a portion of the purchase
    price to the below/above market debt and amortizes the
    premium/discount over the remaining life of the debt.  H:
    Deferred
    Financing
    Costs
    Included in Other Assets are deferred financing costs amounting
    to $309,894 and $246,495 which are net of accumulated
    amortization of $80,227 and $80,227 as of December 31, 2006
    and 2005, respectively, and which are being amortized over the
    term of the related obligation.  I:
    Revenue
    Recognition
    Revenue from real estate is recognized when earned in accordance
    with the terms of the respective leases. Revenue from certain
    real estate investments is net of all or a portion of related
    real estate expenses, as lease arrangements vary as to
    responsibility for payment of these expenses between tenants and
    the Partnership. Since real estate is stated at estimated market
    value, net income is not reduced by depreciation or amortization
    expense.  J:
    Equity in Income
    of Real Estate
    Partnership
    Equity in income from real estate partnership operations
    represents the Partnerships share of the current
    years partnership income as provided for under the terms
    of the partnership agreements. As is the case with wholly owned
    real estate, partnership net income is not reduced by
    depreciation or amortization expense. Frequency of distribution
    of income is determined by formal agreements or by the executive
    committee of the partnership.  K:
    Federal Income
    Taxes
    The Partnership is not a taxable entity under the provisions of
    the Internal Revenue Code. The income and capital gains and
    losses of the Partnership are attributed, for federal income tax
    purposes, to the Partners in the Partnership. The Partnership
    may be subject to state and local taxes in jurisdictions in
    which it operates.  L:
    New Accounting
    Pronouncements
    FASB Interpretation No. 46, Consolidation of Variable
    Interest Entities, (FIN 46) was issued in
    January 2003. In December 2003, FASB issued a revised
    interpretation of FIN 46
    (FIN 46-R),
    which supersedes FIN 46. F-19




---



##### 



NOTES TO THE
    CONSOLIDATED FINANCIAL STATEMENTS OF
    THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
    For Years Ended December 31, 2006, 2005, and 2004
  Note 2:
    Summary of
    Significant Accounting Policies (continued)   FIN 46-R FIN 46-R FIN 46-R.
    Note 3:
    Disclosure of
    Supplemental Cash Flow Information and Non-Cash Investing and
    Financing Activity  Cash paid for
    interest during the years ended December 31, 2006, 2005,
    and 2004, was $1,806,320, $2,324,397, and $2,595,651,
    respectively.
  During the fourth
    quarter of 2005, a minority interest partner bought out the
    Accounts investment in a consolidated real estate
    partnership resulting in net proceeds of $15.9 million.
    This transaction resulted in the assumption of a mortgage loan
    by the partner of approximately $10.0 million and a
    reduction of the partners minority interest of
    $3.7 million.
 F-20




---



##### 



NOTES TO THE
    CONSOLIDATED FINANCIAL STATEMENTS OF
    THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
    For Years Ended December 31, 2006, 2005, and 2004
   Note 4:
    Real Estate
    Partnership and Preferred Equity Investments  Real estate
    partnerships and preferred equity investments are valued at the
    Partnerships equity in net assets as reflected by the
    partnerships financial statements with properties valued
    as indicated in Note 2C above. The Partnerships
    combined financial position and results of operations are
    summarized as follows (in 000s):
  December 31,2006


2005Partnership Assets and LiabilitiesReal estate at estimated market
    value

$
22,018


$
34,365Other assets


453



1,384Total assets


22,471



35,749Investment level debt


2,978



18,272Other liabilities


253



551Total liabilities


3,231



18,823Net assets

$
19,240


$
16,926Partnerships share of net
    assets

$
17,941


$
14,349   Year Ended December 31,2006


2005


2004Partnership OperationsRental revenue

$
3,364


$
4,115


$
3,125Other revenue










1,710Total revenue


3,364



4,115



4,835Real estate expenses and taxes


1,017



2,326



2,481Interest Expense


1,396



1,477



1,500Total Expenses


2,413



3,803



3,981Net Investment Income

$
951


$
312


$
854Partnerships equity in income
    of real estate partnerships

$
962


$
253


$
629  F-21




---



##### 



NOTES TO THE
    CONSOLIDATED FINANCIAL STATEMENTS OF
    THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
    For Years Ended December 31, 2006, 2005, and 2004
  Note 5:
    Investment
    Level Debt  Debt includes
    mortgage loans payable as summarized below (in 000s):
  As of
    12/31/06


As of
    12/31/05


As of
    12/31/06(Unaudited)PartnershipsShare of100% Principal


Principal


100% PrincipalBalance


Balance


Balance


Interest


MaturityOutstanding


Outstanding (1)


Outstanding


Rate (2)


Date


Terms (3)Mortgages of Wholly Owned
    Properties & Consolidated PartnershipsHampton, VA

$
8,239


$
8,239


$
8,671



6.75
%


2018



PP, P&IOcean City, MD


6,973



5,181



7,026



7.24
%


2008



PP, P&IRaleigh, NC


8,750



8,750



8,750



3.09
%


2008



PP, IAtlanta, GA


8,748



8,748



8,749



4.90
%


2009



PP, P&ITotal

$
32,710


$
30,918


$
33,196Mortgages on Equity PartnershipsKansas City, MO 
    Cherokee Hill

$
2,978


$
2,156


$
3,032



7.79
%


2007



PP, P&IKansas City, MO  Ten
    Quivira










6,575Kansas City, MO- Ten Quivira Parcel










946Kansas City, KS 
    Devonshire










2,108Kansas City, MO  Brywood
    Center










5,611Total

$
2,978


$
2,156


$
18,272     (1)
    
    Represents the Partnerships
    interest in the loan based upon the estimated percentage of net
    assets which would be distributed to the Partnership if the
    partnership were liquidated at December 31, 2006. It does
    not represent the Partnerships legal obligation.(2)
    
    The Partnerships weighted
    average interest rate was 6.14% at December 31, 2006 and
    2005. The weighted average interest rates were calculated using
    the Partnerships annualized interest expense for each loan
    (derived using the same percentage as that in (1) above)
    divided by the Partnerships share of total debt.(3)
    
    Loan Terms PP=Prepayment penalties
    applicable to loan, I=Interest only, P&I=Principal and
    Interest  As of
    December 31, 2006, mortgage loans payable on wholly owned
    properties and consolidated partnerships are payable as follows:
  Year Ending December 31,

(in 000s)2007

$
5882008


16,0902009


9,2772010


5652011


604Thereafter


5,586Total

$
32,710   The mortgage loans
    payable on wholly owned properties and consolidated partnerships
    are secured by real estate investments with an estimated market
    value of $89.4 million.
 F-22




---



##### 



NOTES TO THE
    CONSOLIDATED FINANCIAL STATEMENTS OF
    THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
    For Years Ended December 31, 2006, 2005, and 2004
  Note 5:
    Investment
    Level Debt (continued)   As of
    December 31, 2006, principal amounts of mortgage loans
    payable on the equity partnerships are payable as follows:
  100% Loan Balance


(Unaudited) Partnerships ShareYear Ending December 31,

(in 000s)


(in 000s)2007

$
2,978


$
2,156Total

$
2,978


$
2,156   Based on borrowing
    rates available to the Partnership at December 31, 2006 for
    loans with similar terms and average maturities, the
    Partnerships mortgages on wholly owned properties and
    consolidated partnerships have an estimated fair value of
    approximately $33 million, and a carrying value of
    $33 million. The Partnerships mortgage loan payable
    on the equity partnership has an estimated fair value of
    approximately $3 million and a carrying value of
    $3 million. Different assumptions or changes in future
    market conditions could significantly affect estimated fair
    value.
  Note 6:
    Purchase
    Commitment Obligations  Purchase commitments
    includes forward commitments without conditions waived,
    commitments to purchase real estate
    and/or fund
    additional expenditures on previously acquired properties and
    loan take out agreements. Certain purchases of real estate are
    contingent on a developer building the real estate according to
    plans and specifications outlined in the pre-sale agreement or
    the property achieving a certain level of leasing. It is
    anticipated that funding will be provided by operating cash
    flow, real estate investment sales and deposits from the
    Partnership.
  As of
    December 31, 2006, the Partnership had the following
    outstanding purchase commitments:
  CommitmentsProperty Type

(000s)Apartments

$
20,805Total

$
20,805   F-23




---



##### 



NOTES TO THE
    CONSOLIDATED FINANCIAL STATEMENTS OF
    THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
    For Years Ended December 31, 2006, 2005, and 2004
  Note 7:
    Concentration of
    Risk on Real Estate Investments  At December 31,
    2006, the Partnership had real estate investments located
    throughout the United States. The diversification of the
    Partnerships holdings based on the estimated market values
    and established NCREIF regions is as follows:
  EstimatedMarket ValueRegion

(in 000s)


Region %East North Central


$
13,093



5.57
%Mideast



92,987



39.53
%Mountain



16,036



6.82
%Northeast



299



0.13
%Pacific



28,801



12.24
%Southeast



77,200



32.82
%Southwest



3,365



1.43
%West North Central



3,462



1.47
%Total


$
235,243



100.00
%   The allocations on
    the previous page are based on (1) 100% of the estimated
    market value of wholly-owned properties and consolidated joint
    ventures and mortgage and other loans receivable, and
    (2) the estimated market value of the Partnerships
    net equity in non-consolidated ventures.
  Note 8:
    Leasing
    Activity  The Partnership
    leases space to tenants under various operating lease
    agreements. These agreements, without giving effect to renewal
    options, have expiration dates ranging from 2007 to 2025. At
    December 31, 2006, the aggregate future minimum base rental
    payments under non-cancelable operating leases for wholly owned
    and consolidated joint venture properties by year are as follows:
  Year Ending December 31,

(in 000s)2007

$
14,1592008


13,1322009


10,2252010


8,7502011


6,479Thereafter


26,014Total

$
78,759   Note 9:
    Commitments and
    Contingencies  In 1986, Prudential
    committed to fund up to $100 million to enable the
    Partnership to acquire real estate investments. Contributions to
    the Partnership under this commitment have been utilized for
    property acquisitions, and were to be returned to Prudential on
    an ongoing basis from contract owners net contributions
    and other available cash. The amount of the commitment has been
    reduced by $10 million for every $100 million in
    current value net assets of the Partnership. As of
    December 31, 2006, the cost basis of Prudentials
    equity interest in the Partnership under this commitment (held
    through the Real Property Accounts) was $44.2 million.
    Prudential terminated this commitment on December 31, 2002.
 F-24




---



##### 



NOTES TO THE
    CONSOLIDATED FINANCIAL STATEMENTS OF
    THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
    For Years Ended December 31, 2006, 2005, and 2004
  Note 9:
    Commitments and
    Contingencies (continued)   The Partnership is
    subject to various legal proceedings and claims arising in the
    ordinary course of business. These matters are generally covered
    by insurance. In the opinion of Prudentials management,
    the outcome of such matters will not have a significant effect
    on the financial position of the Partnership.
  Note 10:
    Other Related
    Party Transactions  Pursuant to an
    investment management agreement, PIM charges the Partnership a
    daily investment management fee at an annual rate of 1.25% of
    the average daily gross asset valuation of the Partnership. For
    the years ended December 31, 2006, 2005 and 2004 management
    fees incurred by the Partnership were $3.1 million,
    $2.8 million, and $2.7 million, for each of the years,
    respectively.
  The Partnership also
    reimburses PIM for certain administrative services rendered by
    PIM. The amounts incurred for the years ended December 31,
    2006, 2005 and 2004 were $146,930; $123,630; and $141,130,
    respectively, and are classified as administrative expenses in
    the Consolidated Statements of Operations.
  During the years
    ended December 31, 2006, 2005 and 2004, the Partnership
    made the following distributions to the Partners:
  Year Ended December 31,

(000s)2006

$
6,0002005

$
6,0002004

$
6,000   F-25




---



##### 



NOTES TO THE
    CONSOLIDATED FINANCIAL STATEMENTS OF
    THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
    For Years Ended December 31, 2006, 2005, and 2004
   Note 11:
    Financial
    Highlights  For the Year Ended December 31,2006


2005


2004


2003


2002Per Share(Unit) Operating
    Performance:Net Asset Value, beginning of period

$
29.59


$
26.15


$
24.66


$
24.11


$
23.82Income From Investment
    Operations:Investment income, before
    management fee


2.07



1.67



1.44



1.71



1.63Investment Management fee


(0.45
)


(0.40
)


(0.36
)


(0.33
)


(0.30
)Net realized and unrealized gain
    (loss) on investments


2.66



2.17



0.41



(0.83
)


(1.04
)Net Increase in Net Assets
    Resulting from Operations


4.28



3.44



1.49



0.55



0.29Net Asset Value, end of
    period

$
33.87


$
29.59


$
26.15


$
24.66


$
24.11Total Return, before Management
    Fee(a):


16.03
%


14.76
%


7.61
%


3.63
%


2.52
%Ratios/Supplemental
    Data:Net Assets, end of period (in
    millions)

$
229


$
205


$
187


$
182


$
184Ratios to average net assets(b):Total Portfolio Level Expenses


1.51
%


1.46
%


1.43
%


1.35
%


1.28
%Investment Income before Management
    Fee


6.58
%


4.89
%


5.76
%


7.12
%


6.85
%    (a) Total
    Return, before management fee is calculated by geometrically
    linking quarterly returns which are calculated using the formula
    below:
  Net
    Investment Income + Net Realized and Unrealized
    Gains/(Losses)                    Beg.
    Net Asset Value + Time Weighted Contributions  Time
    Weighted Distributions
  (b) Average net
    assets are based on beginning of quarter net assets.
  Note 12:
    Subsequent
    Events  On February 7,
    2007, the Partnership sold Smith Road, a wholly owned property,
    to an unrelated party for a cash selling price of $15,000,000
    and realized net proceeds of $14,649,241 after selling costs.
    The sale resulted in a gain of $349,110.
 F-26




---



##### 



THE PRUDENTIAL
    VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
 SCHEDULE III 
    REAL ESTATE OWNED: PROPERTIES
    DECEMBER 31, 2006
  Costs


Gross Amount at
    WhichInitial Costs to
    the Partnership


Capitalized


Carried at Close
    of YearEncumbrances





Building &


Subsequent to





Building &





Year of


DateDescription

at
    12/31/06


Land


Improvements


Acquisition


Land


Improvements


Total


Construction


AcquiredProperties:Office Building
    Lisle, IL


None



1,780,000



15,743,881



6,993,510



1,949,206



22,568,185



24,517,391



1985



Apr., 1988Garden Apartments
    Atlanta, GA


8,748,000



3,631,212



11,168,904



4,117,900
(b)


4,902,385



14,015,631



18,918,016



1987



Apr., 1988Retail Shopping Center
    Roswell, GA


None



9,454,622



21,513,677



6,807,027



11,135,593



26,639,733



37,775,326



1988



Jan., 1989Garden Apartments Raleigh, NC


8,750,000



1,623,146



14,135,553



529,068



1,715,699



14,572,068



16,287,767



1995



Jun., 1995Hotel Portland, OR






1,500,000



6,508,729



932,091



1,500,000



7,440,820



8,940,820



1989



Dec., 2003Office Building Nashville, TN


None



1,797,000



6,588,451



2,648,353



1,855,339



9,178,465



11,033,804



1982



Oct., 1995Office Building
    Beaverton, OR


None



816,415



9,897,307



1,377,768



845,887



11,245,603



12,091,490



1995



Dec., 1996Industrial Building 
    Aurora, CO


None



1,338,175



7,202,411



2,745,974



1,415,159



9,871,401



11,286,560



1997



Sep., 1997Office Complex
    Brentwood, TN


None



2,425,000



7,063,755



2,844,397



2,463,601



9,869,551



12,333,152



1987



Oct., 1997Retail Shopping Center
    Hampton, VA


8,239,566



2,339,100



12,767,956



2,935,555



4,839,418



13,203,193



18,042,611



1998



May, 2001Retail Shopping Center
Westminster, MD






3,031,735



9,326,605



(0
)


3,031,735



9,326,605



12,358,340



2005



June, 2006Retail Shopping Center
Ocean City, MD


6,972,922



1,517,099



8,495,039



5,526,641



1,517,099



14,021,680



15,538,779



1986



Nov., 200232,710,488



31,253,504



130,412,268



37,458,284



37,171,121



161,952,935



199,124,056   2006


2005


2004(a)

Balance at beginning of year


183,767,148



224,584,885



223,943,870Additions:Acquistions


12,358,340







Improvements,
    etc.


2,998,568



6,187,973



7,502,358Conversions
    from JV to WO










Deletions:Sale






(47,005,710
)


(6,861,343
)Balance at end of year


199,124,056



183,767,148



224,584,885(b)

Net of $1,000,000 settlement
    received
    from lawsuit.  F-27




---



##### 



MORTGAGE LOAN
    RECEIVABLE
    THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIPSCHEDULE IV  MORTGAGE LOANS ON
    REAL ESTATE
    DECEMBER 31, 2006
  Principal amountof LoansFace





Subject toPeriodic





Amount


Carrying Amount


DelinquentInterest


Final Maturity


payment


Prior


of


of


Principal orDescription

Rate


Date


Terms


Liens


Mortgages


Mortgages


InterestLoans Receivables:Westminster, MD


10.00
%


3/3/2006
*


I only



























   2006


2005Balance at beginning of year


4,277,769



1,332,060Additions during the period:New Mortgage loansOther  drawdown on loan






2,752,035Other  accrued interest






493,674Deductions during the period:Cost of real estate sold
    ForeclosuresCost of mortgages sold


(4,277,769
)Amortization of premiumOther  accrued interest
    payment






(300,000
)Balance at end of year






4,277,769   *
    
    I is Interest Only F-28