================================================================================
                                  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, 2003
                          -----------------

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

INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE  PRECEDING 12 MONTHS (OR FOR SUCH  SHORTER  PERIOD THAT THE  REGISTRANT  WAS
REQUIRED  TO FILE  SUCH  REPORTS),  AND  (2) HAS  BEEN  SUBJECT  TO SUCH  FILING
REQUIREMENTS FOR THE PAST 75 DAYS.                            YES |X| NO | |
--------------------------------------------------------------------------------
INDICATE  BY CHECK MARK  WHETHER  THE  REGISTRANT  IS AN  ACCELERATED  FILER (AS
DEFINED IN RULE 12b-2 OF THE EXCHANGE ACT).                   YES | | NO |X|
--------------------------------------------------------------------------------

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<PAGE>

                          PRUCO LIFE VARIABLE CONTRACT
                              REAL PROPERTY ACCOUNT
                                  (REGISTRANT)

                                      INDEX
                                      -----


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

       INDEX                                                                  2

       FORWARD-LOOKING STATEMENT DISCLOSURE                                   3

PART I

   1.  BUSINESS                                                               4

   2.  PROPERTIES                                                             6

   3.  LEGAL PROCEEDINGS                                                      6

   4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                    6

PART II

   5.  MARKET FOR THE REGISTRANT'S INTERESTS AND RELATED SECURITY
       HOLDER MATTERS                                                         7

   6.  SELECTED FINANCIAL DATA                                                7

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

   7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK            17

   8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                           18

   9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
       AND FINANCIAL DISCLOSURE                                              18

   9A. CONTROLS AND PROCEDURES                                               18

PART III

   10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                    19

   11. EXECUTIVE COMPENSATION                                                20

   12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT        20

   13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                        20

   14. PRINCIPAL ACCOUNTANT FEES AND SERVICES                                20

PART IV

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

       EXHIBIT INDEX                                                         21

       SIGNATURES                                                            23


                                       2
<PAGE>

FORWARD-LOOKING STATEMENT DISCLOSURE

Certain of the statements included in this Annual Report on Form 10-K, including
but not  limited  to  those  in the  Management's  Discussion  and  Analysis  of
Financial  Condition  and  Results  of  Operations,  constitute  forward-looking
statements within the meaning of the U.S. Private  Securities  Litigation Reform
Act of 1995.  Words such as "expects,"  "believes,"  "anticipates,"  "includes,"
"plans," "assumes,"  "estimates,"  "projects," "intends",  or variations of such
words  are  generally  part  of  forward-looking   statements.   Forward-looking
statements  are made based on  management's  current  expectations  and  beliefs
concerning  future  developments  and their  potential  effects  upon Pruco Life
Insurance  Company  ("the  Company") or the Pruco Life  Variable  Contract  Real
Property Account (the "Real Property  Account").  There can be no assurance that
future  developments  affecting the Company or the Real Property Account will be
those  anticipated by  management.  These  forward-looking  statements are not a
guarantee of future performance and involve risks and  uncertainties,  and there
are  certain  important  factors  that  could  cause  actual  results to differ,
possibly   materially,   from  expectations  or  estimates   reflected  in  such
forward-looking  statements,  including  without  limitation:  general economic,
market and political conditions, including the performance of financial markets,
interest rate  fluctuations  and the continuing  negative  impact of the current
economic  environment;  various domestic or international  military or terrorist
activities  or  conflicts;  economic  conditions  in local  markets in which the
properties  in  the  Real  Property  Account  are  located;  volatility  in  the
securities  markets;  reestimates of our reserves for future policy benefits and
claims; changes in our assumptions related to deferred policy acquisition costs;
our exposure to contingent  liabilities;  catastrophe losses;  investment losses
and defaults; changes in our claims-paying or credit ratings; competition in our
product lines and for personnel; fluctuations in foreign currency exchange rates
and foreign  securities  markets;  risks to our  international  operations;  the
impact of  changing  regulation  or  accounting  practices;  adverse  litigation
results;  and changes in tax law. The Company  does not intend,  and is under no
obligation to, update any particular  forward-looking statement included in this
document.

                                       3
<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  an  agreement  among  The  Prudential   Insurance  Company  of  America
("Prudential"),  Pruco Life Insurance Company,  and Pruco Life Insurance Company
of New  Jersey,  to  provide a means for  assets  allocated  to the real  estate
investment  option under certain  variable life  insurance and variable  annuity
contracts  issued by the  respective  companies  to be invested in a  commingled
pool.

The Partnership has an investment policy of investing at least 65% of its assets
in direct ownership interests in income-producing  real estate and participating
mortgage loans. The largest portion of these real estate  investments are direct
ownership interests in  income-producing  real estate, such as office buildings,
shopping centers, hotels,  apartments,  or industrial properties.  Approximately
10% of the Partnership's assets are generally held in cash or invested in liquid
instruments and securities  although the Partners reserve discretion to increase
this amount to meet  partnership  liquidity  requirements.  The remainder of the
Partnership's  assets  may be  invested  in other  types of real  estate-related
investments, including real estate investment trusts.

      Office  Properties--The  Partnership  owns office  properties in Lisle and
      Oakbrook Terrace, Illinois;  Brentwood,  Tennessee; and Beaverton, Oregon.
      Total  square  footage  owned is  approximately  465,000  of which  48% or
      224,000 square feet are leased between 1 and 10 years.

      Apartment Complexes--The  Partnership owns apartment complexes in Atlanta,
      Georgia and Raleigh,  North  Carolina.  There are a total of 490 apartment
      units  available  of which 92% or 451 units are leased.  Leases range from
      month to month to one year.  In  addition,  on  September  17,  1999,  the
      Partnership  invested in an  apartment  complex  located in  Jacksonville,
      Florida.  This joint venture investment has a total of 458 units available
      of which 415 units or 91% are occupied.  Leases range from  month-to-month
      to one year. Also, on February 15, 2001, the Partnership  invested in four
      apartment  complexes located in Gresham/Salem,  Oregon. This joint venture
      investment  has a total of 493 units  available  of which 445 units or 90%
      are occupied. Leases range from month-to-month to one year.

      Retail  Property--The  Partnership  owns a  shopping  center  in  Roswell,
      Georgia. The property is located  approximately 22 miles north of downtown
      Atlanta on a 30-acre site. The square footage is approximately  314,000 of
      which 76% or 240,000 square feet is leased for between 1 and 20 years.  On
      September 30, 1999, the Partnership invested in a retail portfolio located
      in the  Kansas  City,  Kansas  and  Missouri  areas.  This  joint  venture
      investment has approximately  488,000 of net rentable square feet of which
      83% or 404,000  square feet is leased for  between 1 and 20 years.  On May
      17,  2001,  the  Partnership  invested in a retail  center  located in the
      Hampton, Virginia. This joint venture investment has approximately 175,000
      of net  rentable  square feet of which 100% is leased for between 1 and 20
      years. On November 27, 2002, the  Partnership  invested in a retail center
      located in the Ocean City,  Maryland.  This joint venture  investment  has
      approximately  186,000 of net rentable square feet of which 100% is leased
      for between 1 and 30 years.

      Industrial  Properties--The   Partnership  owns  a  warehouse/distribution
      center in Aurora,  Colorado.  Total square footage owned is  approximately
      278,000 of which 70% or 194,000  square  feet are leased for between 1 and
      10 years. The  Partnership's  Bolingbrook,  Illinois  property,  which had
      approximately  225,000  square feet,  was sold on September 12, 2002.  The
      Partnership's  Salt Lake  City,  Utah  property,  which had  approximately
      183,000 square feet, was sold on January 28, 2003.

      Hotel Property--On  December 10, 2003, the Partnership invested in a hotel
      located in the Portland,  Oregon area.  This joint venture  investment has
      approximately 161 rooms.

                                       4
<PAGE>

      Investment in Real Estate  Trust--The  Partnership  liquidated  its entire
      investment in REIT shares during December 2001.

The Partnership's  investments are maintained so as to meet the  diversification
requirements set forth in Treasury Regulations issued pursuant to Section 817(h)
of the  Internal  Revenue  Code  relating to the  investments  of variable  life
insurance and variable annuity separate accounts. Section 817(h) requires, among
other  things,  that the  partnership  will have no more than 55% of the  assets
invested in any one investment,  no more than 70% of the assets will be invested
in any two  investments,  no more than 80% of the assets will be invested in any
three  investments,  and no more than 90% of the assets  will be invested in any
four  investments.  To comply with  requirements  of the State of  Arizona,  the
Partnership  will  limit  additional  investments  in any one  parcel or related
parcels to an amount not exceeding 10% of the  Partnership's  gross assets as of
the prior fiscal year.

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

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

REAL ESTATE MARKET OVERVIEW

Real estate  property  market  fundamentals  continued  to  deteriorate  in most
sectors and markets  last year.  However,  real  estate  investment  performance
remained  strong due to low interest  rates and robust  capital  flows,  both of
which helped to further reduce capitalization rates.

For example,  strong performances  continued in the fourth quarter among private
institutional  real estate  investment,  as measured by the National  Council of
Real Estate Investment Fiduciaries ("NCREIF") index, and public equity REITs, as
measured by the National Association of Real Estate Investment Trusts ("NAREIT")
Equity REIT  Index.  The NCREIF  index had a 2.76%  total  return in 4th Quarter
2003, up noticeably from the 1.97% return in 3rd Quarter 2003. For the year, the
NCREIF index  returned  9.00%.  The NAREIT  Equity REIT Index  improved 50 basis
points during 4th Quarter 2003, when it returned 10.0%. For the year, the NAREIT
index returned 37.1%.  Rising interest rates or diminished  investor interest in
this asset class  could cause  investment  performance  to suffer,  particularly
given the deterioration in other market fundamentals noted above.

OFFICE MARKET

In 3rd and 4th Quarter  2003,  the office  market  showed signs of  improvement.
Torto Wheaton,  a commercial  real estate  research firm,  reported that the 4th
Quarter 2003 average  vacancy rate declined 10 basis points to 16.8%,  following
vacancy decline in the 3rd Quarter, although average vacancy still increased for
the year. Downtown  and suburban  markets both saw 10 basis points  vacancy rate
declines, to 13.9% for downtown markets and 18.5% for suburban markets.

After a drop in total return  during the  previous  quarter,  the NCREIF  office
subindex  increased by 0.38% to 1.63% in 4th Quarter 2003.  The total return was
comprised of a 1.96% income  return and a 0.32% decline in property  value.  The
Central Business District and suburban office subtypes both enjoyed improvements
in return during the quarter.  Central  Business  District  properties  returned
1.79% in 4th Quarter 2003, up from 1.56% in the prior  quarter,  while  suburban
properties improved from 1.05% to 1.53%, over the same period.

APARTMENT MARKET

After  showing some  improvement  in the third  quarter,  the  apartment  market
declined in 4th Quarter  2003.  Slight  negative  absorption  during the quarter
reversed  the  positive  trend from the  previous  two  quarters  and pushed the
vacancy rate from 6.6% to 6.9%. Real Estate Information Standard ("REIS") states
that seasonality as well as weak job growth are the two most likely explanations
for the fourth quarter  performance.  Still, asking rents increased 0.5% for the
quarter and 1.4% for all of 2003.

The performance of private investment in the apartment sector remained virtually
unchanged  during the most recent quarter,  as  appreciation  and income returns
were flat. The NCREIF apartment  subindex  returned 2.04% in the fourth quarter,
up slightly from the 2.03% in the previous quarter.  Appreciation declined by 30
basis points

                                       5
<PAGE>

to 0.20%,  while income increased from 1.49% to 1.54%.  Garden-style  apartments
were again the top subtype performer,  with a 2.13% return,  followed closely by
high-rise apartments,  with a 2.06% return.  Low-rise apartments were the lowest
subtype  performer,  with a decline from a 1.89% return in 3rd Quarter 2003 to a
0.33% loss in 4th Quarter 2003.

RETAIL MARKET

     Retail  continued  to be the only  property  sector where both space market
fundamentals and investment  performance were relatively balanced during the 4th
Quarter.  Retail vacancy rates  increased only modestly as new supply and demand
grew at similar rates.  According to Property and Portfolio  Research ("PPR"), a
commercial real estate  research firm, the average  national retail vacancy rate
increased  to 12.7% in the third  quarter last year from 12.5% in 2002 and 12.1%
in 2001.

After seeing  returns drop in 3rd Quarter  2003,  private  investment  in retail
properties returned in the most recent quarter. The NCREIF retail subindex had a
6.29% total return during 4th Quarter 2003, a 3.25%  improvement  over the prior
quarter due almost entirely to a large jump in appreciation. Regional malls were
the best performing subtype with an 8.40% total return, followed by neighborhood
centers (6.67%),  super-regional  malls (6.44%),  community  centers (4.68%) and
power centers (3.30%).

INDUSTRIAL MARKET

Conditions in the  industrial  market  continued to decline.  According to Torto
Wheaton,  during 4th Quarter 2003, the average  national  availability  rate for
industrial properties increased 10 basis points from 11.6% to 11.7%. This is the
12th  consecutive  quarter  of  overall  availability  increases  and the  sixth
consecutive  since the market surpassed its previous high  availability  rate of
10.7%.

According to NCREIF,  although  fundamentals  continued to deteriorate,  private
investment in industrial  properties  increased for the second straight quarter,
from 2.26% to 2.35%.  The increase  occurred  despite a drop in income return to
1.98% from 2.06%.  Appreciation  increased  0.18% to 0.38%.  Each  subtype  made
gains, all from appreciation  increases,  as opposed to income gains. Flex space
returned 2.32%, up from 2.11%, Office/Showroom/Manufacturing increased 1.11%, up
from 0.90%, R&D registered a 2.02% return, up from 1.57%, and warehouse stood at
2.40%, up from 2.36%.

HOTEL MARKET

According  to Smith Travel Research, a commercial real estate research firm, the
hotel sector began to show improvement. During 4th Quarter 2003, hotel occupancy
increased 2.8% to 55.2% on a year-over-year basis.  Further,  average room rates
increased 0.8% to $82.48, and revenue per available room increased 3.6% over the
same period. On a year-to-date basis through December,  economy-class hotels are
the only class to see a decrease in  occupancy  (1.1%) from the  previous  year.
Other  categories  such as upper upscale (0.3%) upscale (0.8%) and  independents
(0.7%) all saw increases in occupancy during the same period.

Private  hotel  investment  abated in 4th Quarter  2003,  after two  consecutive
quarters of strong growth. The NCREIF hotel subindex had a 0.37% total return in
the most  recent  quarter,  down from 2.50% in 3rd Quarter  2003,  making it the
worst  performing  subindex.  The  majority  of the decline was due to a drop in
appreciation return, which went from a positive 0.47% to a negative 1.35% during
the quarter. Income also fell but by a much smaller margin than appreciation.

ITEM 2.   PROPERTIES

Not Applicable.

ITEM 3.   LEGAL PROCEEDINGS

None.

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

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

                                       6
<PAGE>

                                     PART II

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

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

As of December 31, 2003,  there were  approximately  29,526  contract  owners of
record investing in the Real Property Account.

ITEM 6.   SELECTED FINANCIAL DATA FOR THE PARTNERSHIP

<TABLE>
<CAPTION>
                                                                    YEAR ENDED DECEMBER 31,
                                         ------------------------------------------------------------------------------
                                             2003             2002            2001            2000            1999
                                             ----             ----            ----            ----            ----
<S>                                      <C>             <C>             <C>             <C>              <C>
RESULTS OF OPERATIONS:
Total Investment Income..............    $ 27,060,494    $ 27,077,048    $ 27,480,593    $ 26,387,938     $ 24,835,049
                                         ============    ============    ============    ============     ============
Net Investment Income................    $ 10,613,409    $ 10,864,043    $ 12,350,306    $ 13,638,117     $ 13,279,589
Net Realized and Unrealized (Loss)
Gain on Investment in Partnership....      (6,467,364)     (8,517,663)     (2,547,749)      4,487,022       (7,217,046)
                                         ------------    ------------    ------------    ------------     ------------
Net Increase in Net Assets
Resulting From Operations............    $  4,146,045    $  2,346,380    $  9,802,557    $ 18,125,139     $  6,062,543
                                         ============    ============    ============    ============     ============

<CAPTION>
FINANCIAL POSITION:

                                                                    YEAR ENDED DECEMBER 31,
                                         ------------------------------------------------------------------------------
                                             2003             2002            2001            2000            1999
                                             ----             ----            ----            ----            ----
<S>                                      <C>             <C>             <C>             <C>              <C>
Total Assets.........................    $235,627,852    $229,720,113    $234,594,652    $221,512,296     $225,142,653
                                         ============    ============    ============    ============     ============
Mortgage Loan Payable................    $ 43,934,494    $ 35,699,108    $ 28,994,521    $ 10,092,355     $ 10,184,662
                                         ============    ============    ============    ============     ============

</TABLE>

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

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

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

(a) LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 2003, the Partnership's  liquid assets consisting of cash and
cash  equivalents  were $18.9  million,  an increase of $0.3  million from $18.6
million at December 31, 2002. The change in the Partnership's  cash position was
primarily  due to an increase  in net cash flows from  operating  and  financing
activities,  property  acquisitions and  dispositions,  and distributions to the
Partners.

The  Partnership's  investment  policy  allows up to 30%  investment in cash and
short-term  obligations,  although the Partnership generally holds approximately
10% of its assets in cash and short-term  obligations.  At December 31, 2003 and
2002,  8.02% and 8.1% of the  Partnership's  total assets  consisted of cash and
short-term obligations, respectively.

                                       7
<PAGE>

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  were  utilized for property  acquisitions,  and could be
returned  to  Prudential  on an ongoing  basis  from the  contract  owners'  net
contributions  and other available cash. This commitment  terminated on December
31,  2002.  During the period  that this  commitment  was in effect,  Prudential
funded $44 million.

The Partnership  made $6.9 million in distributions to the Partners during 2003,
and $16.1 million in distributions during 2002. Distributions may be made to the
Partners  during 2004 based upon the percentage of assets invested in short-term
obligations, taking into consideration anticipated cash needs of the Partnership
including  potential property  acquisitions,  property  dispositions and capital
expenditures.  Management anticipates that its current liquid assets and ongoing
cash flow from  operations  will satisfy the  Partnership's  needs over the next
twelve months and the foreseeable future.

On December 10,  2003,  the  Partnership  acquired a  controlling  interest in a
161-room hotel located in Portland,  Oregon for $8.0 million. In April 2003, the
Partnership  also bought out its minority  partner's  interest in a consolidated
retail investment located in Hampton, VA for approximately $2.0 million.

During  2003,  the  Partnership  spent  approximately  $5.4  million  in capital
expenditures  on  wholly  owned  and  consolidated  joint  venture   properties.
Approximately $3.2 million of that amount was associated with the development of
the retail center  located in Ocean City,  Maryland.  The remaining $2.2 million
balance was primarily  associated with  renovations and leasing related costs at
the apartment  complexes  located in  Jacksonville,  Florida and  Gresham/Salem,
Oregon,  the  industrial  building  located  in  Aurora,  Colorado,  the  office
buildings located in Oakbrook  Terrace,  Illinois and Lisle,  Illinois,  and the
retail center located in Roswell,  Georgia.  The Partnership  also increased its
investment  in  real  estate  partnerships  by  approximately  $1.3  million  in
connection with the redevelopment and expansion of the retail centers located in
Kansas City, Missouri.

On January 28, 2003, the  Partnership  sold the industrial  property  located in
Salt Lake City, UT for $5.8 million.  On April 23, 2003,  the  Partnership  also
sold one of the  retail  centers  located  in  Kansas  City,  Missouri  for $2.6
million.

(b) RESULTS OF OPERATIONS

The following is a brief year-to-date comparison of the Partnership's results of
operations for the periods ended December 31, 2003, 2002, and 2001.

2003 VS. 2002

The following  table  presents a  year-to-date  comparison of the  Partnership's
sources of net investment income, and realized and unrealized gains or losses by
investment type.

<TABLE>
<CAPTION>

                                                                                   TWELVE MONTHS ENDED DECEMBER 31,
                                                                                      2003                    2002
                                                                                   -----------             -----------
<S>                                                                                <C>                     <C>
NET INVESTMENT INCOME:

Office properties......................................................            $ 2,039,750             $ 4,837,432
Apartment complexes....................................................              3,361,638               3,089,744
Retail properties......................................................              6,638,838               3,888,641
Industrial properties..................................................                993,962               1,429,036
Other (including interest income,
investment mgt fee, etc.)..............................................             (2,420,779)             (2,380,810)
                                                                                   -----------             -----------
TOTAL NET INVESTMENT INCOME............................................            $10,613,409             $10,864,043
                                                                                   ===========             ===========
NET UNREALIZED GAIN (LOSS) ON REAL ESTATE INVESTMENTS:

Office properties......................................................            $(5,776,072)            $(6,785,006)
Apartment complexes....................................................               (141,845)               (856,188)
Retail properties......................................................               (455,340)             (1,447,574)
Industrial properties..................................................               (560,168)                177,573
                                                                                   -----------             -----------
TOTAL NET UNREALIZED GAIN (LOSS) ON
  REAL ESTATE INVESTMENTS..............................................            $(6,933,425)            $(8,911,195)
                                                                                   ===========             ===========

</TABLE>

                                       8
<PAGE>

<TABLE>
<CAPTION>

                                                                                   TWELVE MONTHS ENDED DECEMBER 31,
                                                                                     2003                     2002
                                                                                  -----------              -----------
<S>                                                                                    <C>                     <C>
NET REALIZED GAIN (LOSS) ON REAL ESTATE INVESTMENTS:
Industrial properties..................................................                466,061                 395,110
Real estate investment trust...........................................                     --                  (1,578)
                                                                                   -----------             -----------
TOTAL NET REALIZED GAIN (LOSS) ON REAL ESTATE INVESTMENTS..............                466,061                 393,532
                                                                                   -----------             -----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
  REAL ESTATE INVESTMENTS..............................................            $(6,467,364)            $(8,517,663)
                                                                                   ===========             ===========

</TABLE>

NET INVESTMENT INCOME OVERVIEW

The Partnership's net investment income for the twelve months ended December 31,
2003 was $10.6  million,  a decrease of $0.3  million  from $10.9  million  when
compared to the  corresponding  period in 2002. The decrease is primarily due to
increased  vacancy within the office  portfolio and the loss of income resulting
from  the  sales  of the  industrial  properties  in  Bolingbrook,  Illinois  in
September  2002 and Salt Lake  City,  Utah in  January  2003.  Offsetting  these
decreases  is the $1.9  million  lease  termination  fee  received at the retail
center located in Roswell, Georgia.

Equity  in income of real  estate  partnership  was $0.6  million  for 2003,  an
increase of $0.3 million from $0.3 million in 2002.  This  increase is due to an
increase in revenue  associated  with  expansion of the existing  grocery  store
anchor that was completed during the second quarter.

Interest on short-term investments decreased approximately $0.2 million or 38.1%
for the twelve months ended  December 31, 2003 due  primarily to lower  interest
rates.

Interest  expense  increased $0.6 million,  or 28.5%,  in 2003 compared to 2002.
This  increase  was  primarily  due to the  Partnership's  assumption  of a $7.4
million  mortgage  loan in  conjunction  with the  acquisition  of a controlling
interest in a retail center located in Ocean City, Maryland in late 2002 and the
financing of an $8.8 million note placed on the apartment  investment located in
Raleigh, North Carolina on June 27, 2003.

Minority interest expense decreased $0.1 million,  or 37.0%, in 2003 compared to
2002.  This  decrease  was  primarily  due to the  Partnership's  buyout  of its
minority partner's interest in the retail center located in Hampton, Virginia on
April 15, 2003.

VALUATION OVERVIEW

The Partnership experienced a net unrealized loss of $6.9 million for the twelve
months ended December 31, 2003 compared to a net unrealized loss of $8.9 million
during the corresponding period in 2002. The unrealized losses during the twelve
months of 2003 were experienced in the office, industrial, retail, and apartment
sectors.  The office portfolio recorded an unrealized loss totaling $5.8 million
primarily  due to  decreases in  occupancy  coupled with soft market  conditions
which have resulted in  reductions in market rental rates and increased  leasing
costs.  The industrial  property in Aurora,  Colorado  experienced an unrealized
loss of $0.6  million for the twelve  months of 2003 due to  decreases in market
rental rates and capital expenditures at the property that were not reflected as
an increase in market value. The retail sector experienced a net unrealized loss
of $0.5 million primarily due to the lease  termination at the Roswell,  Georgia
retail center and capital expenditures that were not reflected as an increase in
market value at the retail center  located in Kansas City,  Kansas and Missouri.
Offsetting  these  losses  in the  retail  sector  was the gain in value  due to
strengthening  market  fundamentals,  renovation and re-leasing efforts, and the
authorization  of the pre-leased  expansion at the center located in Ocean City,
Maryland.  The apartment  sector also  experienced  an  unrealized  loss of $0.1
million due to the apartment  portfolio  located in Gresham/Salem,  Oregon.  The
decrease is a result of projected increases in operating expenses.

                                        9
<PAGE>

OFFICE PORTFOLIO

<TABLE>
<CAPTION>

                                      NET          NET
                                  INVESTMENT    INVESTMENT     UNREALIZED    UNREALIZED
                                    INCOME        INCOME       GAIN/(LOSS)   GAIN/(LOSS)     OCCUPANCY      OCCUPANCY
PROPERTY                           12/31/03      12/31/02       12/31/03      12/31/02       12/31/03       12/31/02
YEAR TO DATE                       --------      --------       --------      ---------      --------       --------
------------
<S>                               <C>            <C>           <C>           <C>                 <C>           <C>
Lisle, IL                         $  709,818     $1,471,120    $(1,910,862)  $  (634,358)        47%           100%
Brentwood, TN                        714,837        623,256       (515,685)   (1,320,126)        79%            78%
Oakbrook Terrace, IL                 102,262      1,167,132     (1,528,934)   (3,335,782)        42%            27%
Beaverton, OR                        930,822      1,134,257       (800,000)      (89,123)        81%           100%
Brentwood, TN                       (417,989)       385,450     (1,020,591)   (1,405,617)         0%             0%
Morristown, NJ                            --         56,217             --            --          Sold October 2000
                                  -------------------------------------------------------
                                  $2,039,750     $4,837,432    $(5,776,072)  $(6,785,006)
                                  -------------------------------------------------------

</TABLE>

NET INVESTMENT INCOME

Net investment  income from property  operations for the office sector decreased
approximately  $2.8 million,  or 57.8%, for the twelve months ended December 31,
2003  when  compared  to the  corresponding  period  in  2002  primarily  due to
increased vacancy and weak market fundamentals.

UNREALIZED GAIN/LOSS

The five office properties owned by the Partnership experienced a net unrealized
loss of approximately  $5.8 million during the twelve months of 2003. The losses
were  primarily due to decreased  occupancy,  lower market rents,  and increased
lease up costs.

The five office properties owned by the Partnership experienced a net unrealized
loss of  approximately  $6.8  million  during  the  twelve  months of 2002.  The
decrease in values was  primarily  due to a reduction  in market  rental  rates,
softening  market  conditions,  and a  decrease  in  occupancy  due  to  various
near-term lease expirations, and the move-out of the single tenant occupying all
of the space at one of the buildings in Brentwood, Tennessee.

As of December 31, 2003 all vacant spaces were being marketed.

APARTMENT COMPLEXES

<TABLE>
<CAPTION>

                                      NET          NET
                                  INVESTMENT    INVESTMENT     UNREALIZED    UNREALIZED
                                    INCOME        INCOME       GAIN/(LOSS)   GAIN/(LOSS)     OCCUPANCY      OCCUPANCY
PROPERTY                           12/31/03      12/31/02       12/31/03      12/31/02       12/31/03       12/31/02
YEAR TO DATE                      ----------    -----------    ------------  -----------     ---------      ----------
------------
<S>                               <C>            <C>           <C>           <C>                 <C>            <C>
Atlanta, GA                       $  819,908     $  741,358    $  (588,553)  $(1,248,243)        91%            90%
Raleigh, NC                          738,292        921,263         95,512       691,840         93%            88%
Jacksonville, FL                   1,096,620        830,489      1,419,362      (208,115)        91%            90%
Gresham/Salem, OR                    706,818        596,634     (1,068,166)      (91,670)        90%            92%
                                  -------------------------------------------------------
                                  $3,361,638     $3,089,744    $  (141,845)  $  (856,188)
                                  -------------------------------------------------------

</TABLE>

NET INVESTMENT INCOME

Net investment income from property operations for the apartment sector was $3.4
million for the twelve  months  ended  December  31,  2003,  an increase of $0.3
million,  or 8.8%,  when  compared  to the  corresponding  period  in 2002.  The
increases were mainly due to the effect of a reclassification,  which took place
in 2003, of 2002 repairs and maintenance  expenses to building  improvements for
the apartment complex located in Gresham/Salem, Oregon and increased operational
efficiencies and occupancy  throughout the year at the apartment complex located
in Jacksonville, Florida during 2003.

                                       10
<PAGE>

UNREALIZED GAIN/LOSS

The apartment  complexes owned by the  Partnership  experienced a net unrealized
loss of $0.1 million for the twelve months ended December 31, 2003 compared to a
net  unrealized  loss of $0.9 million for the twelve  months ended  December 31,
2002.  The  unrealized  loss for 2003 was mainly  attributable  to the apartment
complex located in  Gresham/Salem,  Oregon and the apartment  complex located in
Atlanta,  Georgia due to an increase in projected operating expenses and capital
expenditures,  respectively.  Offsetting this loss is the unrealized gain at the
apartment complex located in Jacksonville, Florida due to market rent increases.

The apartment  complexes owned by the  Partnership  experienced a net unrealized
loss of $0.9  million for the twelve  months  ended  December  31,  2002.  These
unrealized losses were due to softening market  conditions,  which have resulted
in  lower  short-term   occupancy  and  income  projections,   increased  rental
concessions, and increases in operating expense levels.

As of December 31, 2003, all available vacant units were being marketed.

RETAIL PROPERTIES

<TABLE>
<CAPTION>

                                      NET          NET
                                  INVESTMENT    INVESTMENT     UNREALIZED    UNREALIZED
                                    INCOME        INCOME       GAIN/(LOSS)   GAIN/(LOSS)     OCCUPANCY      OCCUPANCY
PROPERTY                           12/31/03      12/31/02       12/31/03      12/31/02       12/31/03       12/31/02
YEAR TO DATE                      ----------    -----------    -----------   ------------    ---------      ---------
------------
<S>                               <C>            <C>           <C>           <C>                 <C>            <C>
Roswell, GA                       $4,403,743     $2,773,770    $(1,571,423)  $(1,738,842)        76%            93%
Kansas City, KS; MO                  560,660        276,206       (934,885)     (638,838)        83%            87%
Hampton, VA                        1,077,627        757,239        570,136       917,041        100%           100%
Ocean City, MD*                      596,808         81,426      1,480,832        13,065        100%            99%
                                  -------------------------------------------------------
                                  $6,638,838     $3,888,641    $  (455,340)  $(1,447,574)
                                  -------------------------------------------------------

</TABLE>

* Center purchased in November 2002

NET INVESTMENT INCOME

Net investment income for the Partnership's  retail properties was approximately
$6.6 million for the twelve months ended  December 31, 2003, an increase of $2.8
million,  or 70.7%,  when  compared to the  corresponding  period in 2002.  This
increase was primarily due to a $1.9 million lease  termination  fee received at
the retail center located in Roswell, Georgia, and the Partnership's acquisition
of a controlling  interest in a retail center located in Ocean City, Maryland in
late 2002.  Also on April 15, 2003 the  Partnership  acquired its joint  venture
partner's membership interest in the retail center located in Hampton, Virginia,
thus entitling the Partnership to all of the net investment  income generated by
the investment commencing on the buyout date and going forward.

UNREALIZED GAIN/LOSS

The retail properties  experienced a net unrealized loss of $0.5 million for the
twelve months ended December 31, 2003. The Roswell,  Georgia retail center had a
decrease in value resulting from the lease termination as previously  discussed.
The Kansas City, Kansas and Missouri retail center  experienced a net unrealized
loss  primarily  due to capital  expenditures,  which were not  reflected  as an
increase in market value.  Offsetting  these losses was the gain in value due to
strengthening  market  fundamentals,  renovation and re-leasing efforts, and the
authorization  of the pre-leased  expansion at the center located in Ocean City,
Maryland.

The retail properties  experienced a net unrealized loss of $1.4 million for the
twelve months ended December 31, 2002.  This was primarily  attributable  to the
center  located in Roswell,  Georgia due to  increased  risk that a major tenant
would not renew its lease,  coupled with a deterioration  in the market position
of the  property  and lower  market  rents.  Also the  Kansas  City,  Kansas and
Missouri  retail  center  experienced  a net  unrealized  loss  primarily due to
capital  expenditures  that were not  reflected as an increase in market  value.
Partially  offsetting  these losses,  the retail center  located in Hampton,  VA
experienced  an unrealized  gain due to the addition of 20,000  rentable  square
feet and an increase in occupancy.

As of December 31, 2003, all vacant spaces were being marketed.

                                       11
<PAGE>

INDUSTRIAL PROPERTIES

<TABLE>
<CAPTION>

                                     NET           NET         UNREALIZED/   UNREALIZED/
                                  INVESTMENT    INVESTMENT      REALIZED      REALIZED
                                    INCOME        INCOME       GAIN/(LOSS)   GAIN/(LOSS)    OCCUPANCY    OCCUPANCY
PROPERTY                           12/31/03      12/31/02       12/31/03      12/31/02      12/31/03     12/31/02
YEAR TO DATE                      ----------    ----------     -----------   -----------    ---------    ---------
------------
<S>                                 <C>          <C>             <C>            <C>             <C>          <C>
Aurora, CO                          $687,743     $  709,270      $(560,168)     $493,793        70%          75%
Bolingbrook, IL                         (146)       241,623             --       395,110       Sold September 2002
Salt Lake City, UT                   306,365        478,143        466,061      (316,220)       Sold January 2003
                                  ------------------------------------------------------
                                    $993,962     $1,429,036      $ (94,107)     $572,683
                                  ------------------------------------------------------

</TABLE>

NET INVESTMENT INCOME

Net investment  income from property  operations  for the industrial  properties
decreased  from $1.4 million for the twelve  months  ended  December 31, 2002 to
$1.0 million for the corresponding  period ended December 31, 2003. The majority
of this  decrease  was due to the sale of the  industrial  property  located  in
Bolingbrook,  Illinois  during  the  third  quarter  of 2002 and the sale of the
industrial  property located in Salt Lake City, Utah during the first quarter of
2003.

UNREALIZED GAIN/LOSS

The Aurora,  Colorado industrial property owned by the Partnership experienced a
net unrealized  loss of  approximately  $0.6 million for the twelve months ended
December  31,  2003  compared to a net  unrealized  gain of  approximately  $0.5
million for the twelve  months  ended  December 31, 2002.  The  unrealized  loss
experienced in 2003 is due to soft market conditions and capital expenditures at
the property that were not reflected as an increase in market value.

The  two  industrial  properties  owned  by the  Partnership  experienced  a net
unrealized  gain of  approximately  $0.2  million  for the twelve  months  ended
December 31, 2002. The majority of the unrealized gain in 2002 was  attributable
to an increase in market rents.  Offsetting  this  unrealized  gain was the Salt
Lake City, UT facility,  which  experienced a net unrealized loss due to capital
expenditures  at the property  that were not  reflected as an increase in market
value and softening market conditions.

As of December 31, 2003, all vacant spaces were being marketed.

REALIZED GAIN

On January 28, 2003 the industrial  property located in Salt Lake City, Utah was
sold for a realized gain of $0.5 million.

On September 12, 2002 the industrial  property located in Bolingbrook,  Illinois
was sold for a realized gain of $0.4 million.

OTHER

Other net  investment  income  decreased  $0.04 million during the twelve months
ended December 31, 2003 compared to the corresponding  period in 2002. Other net
investment  income  includes   interest  income  from  short-term   investments,
investment management fees, and portfolio level expenses.

2002 VS. 2001

The following  table  presents a  year-to-date  comparison of the  Partnership's
sources of net investment income, and realized and unrealized gains or losses by
investment type.

                                       12
<PAGE>

<TABLE>
<CAPTION>
                                                                                     TWELVE MONTHS ENDED DECEMBER 31,
                                                                                      2002                    2001
                                                                                   -----------             -----------
<S>                                                                                <C>                     <C>
NET INVESTMENT INCOME:

Office properties......................................................            $ 4,837,432             $ 4,766,035
Apartment complexes....................................................              3,089,744               3,735,912
Retail property........................................................              3,612,435               2,950,333
Industrial properties..................................................              1,429,036                 545,003
Equity in income of real estate partnership............................                276,206                 686,801
Dividend income from real estate investment trust......................                     --               2,157,647
Other (including interest income, investment mgt fee, etc.)............             (2,380,810)             (2,491,425)
                                                                                   -----------             -----------
TOTAL NET INVESTMENT INCOME............................................            $10,864,043             $12,350,306
                                                                                   ===========             ===========

NET UNREALIZED LOSS ON REAL ESTATE INVESTMENTS:

Office properties......................................................            $(6,785,006)            $  (777,380)
Apartment complexes....................................................               (856,188)                415,417
Retail property........................................................               (808,736)                (94,504)
Industrial properties..................................................                177,573              (2,105,641)
Interest in real estate partnership....................................               (638,838)                226,024
                                                                                   -----------             -----------
TOTAL NET UNREALIZED LOSS ON REAL ESTATE INVESTMENTS...................             (8,911,195)             (2,336,084)
                                                                                   ===========             ===========

<CAPTION>

                                                                                     TWELVE MONTHS ENDED DECEMBER 31,
                                                                                      2002                    2001
                                                                                   -----------             -----------
<S>                                                                                    <C>                    <C>
NET REALIZED GAIN (LOSS) ON REAL ESTATE INVESTMENTS:

Industrial properties..................................................                395,110                      --
Real estate investment trust...........................................                 (1,578)               (211,665)
                                                                                   -----------             -----------
TOTAL NET REALIZED GAIN (LOSS) ON REAL ESTATE INVESTMENTS..............                393,532                (211,665)
                                                                                   -----------             -----------
NET REALIZED AND UNREALIZED LOSS ON
  REAL ESTATE INVESTMENTS..............................................            $(8,517,663)            $(2,547,749)
                                                                                   ===========             ===========

</TABLE>

The Partnership's net investment income for the year ended December 31, 2002 was
$10.9  million,  a decrease of $1.5 million from $12.4  million when compared to
the  corresponding  period  in  2001.  The  Partnership's   liquidation  of  its
investment  in REIT  stocks  during the fourth  quarter of 2001  resulted  in no
dividend  income being received in 2002.  Additionally,  the occupancy at one of
the  Brentwood,  TN properties had decreased to 0% in 2002 from 100% in 2001 due
to the move-out of the single tenant.

Equity in income of real  estate  partnership  was $0.3  million  for the twelve
months of 2002, a decrease of $0.4 million,  or 59.8%,  from $0.7 million in the
corresponding  period in 2001.  This  decrease  is due to a decrease  in revenue
associated  with  expansion of the existing  grocery store anchor that commenced
during the fourth quarter of 2001. It is anticipated that upon completion,  both
occupancy and rental rates will increase.

Dividend income from real estate investment trusts decreased  approximately $2.2
million,  or  100.0%,   during  the  twelve  months  of  2002  compared  to  the
corresponding  period in 2001.  These  decreases  were due to the  Partnership's
liquidation of its investment in REIT stocks during the fourth quarter of 2001.

Interest on short-term investments increased approximately $0.2 million or 53.6%
for the year ended  December  31,  2002 due  primarily  to higher  average  cash
balance when compared to the corresponding period in 2001.

Administrative expense increased $0.8 million, or 32.8%, in the twelve months of
2002  compared  to the  corresponding  period  in  2001.  These  increases  were
primarily  due to the  Partnership's  acquisition  of a portfolio  of  apartment
complexes  located in Gresham and Salem,  OR in 2001, a retail center located in
Hampton,  Virginia in 2001, and a retail center located in Ocean City,  Maryland
in 2002.

Interest expense increased $0.2 million,  or 12.0%, in the twelve months of 2002
compared to the corresponding period in 2001. This increase was primarily due to
the Partnership's assumption of a $9.0 million and a $10.3 million mortgage loan
in conjunction with the acquisition of a controlling  interest in a portfolio of
apart-

                                       13
<PAGE>

ment complexes located in Gresham and Salem,  Oregon and a retail center located
in Hampton, Virginia in 2001. There was also the additional assumption of a $7.4
million  mortgage  loan in  conjunction  with the  acquisition  of a controlling
interest in a retail center located in Ocean City, Maryland in 2002.

The  Partnership  experienced a net unrealized loss of $8.9 million for the year
ended December 31, 2002 compared to a net unrealized loss of $2.3 million during
the  corresponding  period  in 2001.  The  unrealized  losses  during  2002 were
experienced in the office,  apartment and retail sectors.  The office properties
recorded an  unrealized  loss of $6.8  million  primarily  due to the  buildings
located in Brentwood,  Tennessee and Oakbrook Terrace, Illinois, where softening
market  conditions  have  resulted  in  reductions  in market  rental  rates and
increased  leasing  costs.  In total,  the apartment  complexes in the portfolio
experienced  unrealized  losses  totaling  $0.9 million for the twelve months of
2002.  Weaker  demand  caused by higher  rates of  unemployment  and a favorable
interest  rate  environment  for  homebuyers  has  resulted in lower  short-term
occupancy  and income  projections.  The retail  sector also  experienced  a net
unrealized  loss of $0.8  million  primarily  due to  uncertainty  about a lease
renewal by a major tenant.

OFFICE PROPERTIES

Net investment  income from property  operations for the office sector increased
approximately  $0.1 million,  or 1.5%, for the year ended December 31, 2002 when
compared to the corresponding period in 2001.

The five office properties owned by the Partnership experienced a net unrealized
loss of  approximately  $6.8  million  during  the  twelve  months of 2002.  The
Oakbrook  Terrace,  Illinois  property  experienced  a net  unrealized  loss  of
approximately  $3.3 million primarily due to softening market conditions and the
lease expiration of a major tenant. One of the Brentwood,  Tennessee  properties
experienced a net unrealized loss of approximately $1.4 million primarily due to
the move-out of the single tenant at the property in July 2002. Though occupancy
increased  by 4%, the other  Brentwood,  Tennessee  property  experienced  a net
unrealized loss of approximately  $1.3 million primarily due to softening market
conditions.  The Lisle,  Illinois property  experienced a net unrealized loss of
approximately  $0.6  million  primarily  due to  impending  tenant  rollover and
softening market  conditions.  The office property located in Beaverton,  Oregon
experienced an unrealized loss of approximately $0.1 million due to lower market
rental rates and the near-term lease expiration of one of the tenants.

The five office properties owned by the Partnership experienced a net unrealized
loss of approximately  $0.8 million during the twelve months of 2001. One of the
Brentwood,   Tennessee   properties   experienced  a  net  unrealized   loss  of
approximately  $0.7  million  primarily  due to  the  near-term  expiration  and
expected  move-out  of the  single  tenant at the  property  in July  2002.  The
Beaverton,  Oregon and the Lisle,  Illinois office properties  experienced a net
unrealized loss of  approximately  $0.4 million and $0.2 million,  respectively,
primarily due to softening market conditions. Offsetting these unrealized losses
was an  unrealized  gain of  approximately  $0.6 million at the office  property
located in Oakbrook Terrace,  Illinois. This unrealized gain was attributable to
the signing of two new leases, which brought the leased area from 55% to 79%.

Occupancy at one of the Brentwood,  Tennessee office  properties  increased from
74% at December  31,  2001 to 78% at December  31,  2002.  The other  Brentwood,
Tennessee  office  property  decreased  from 100% at December  31, 2001 to 0% at
December 31, 2002. Occupancy at the Lisle, Illinois and Beaverton, Oregon office
properties  remained unchanged at 100% at December 31, 2001 and 2002.  Occupancy
at the Oakbrook Terrace, Illinois office decreased from 79% at December 31, 2001
to 27% at December  31,  2002.  As of December  31, 2002 all vacant  spaces were
being marketed.

APARTMENT COMPLEXES

Net investment income from property operations for the apartment sector was $3.1
million for the year ended  December 31, 2002,  a decrease of $0.6  million,  or
17.3%, when compared to the  corresponding  period in 2001. These decreases were
primarily  due to a  decrease  in  average  occupancy  at the  Atlanta,  Georgia
apartment complex.  Average occupancy for the Atlanta, Georgia apartment complex
was 90% and 83% for the years ended  December  31, 2001 and 2002,  respectively.
Additionally,  rental concessions were made with a goal attracting and retaining
occupants, thus resulting in lower revenue at all the apartment complexes.

                                       14
<PAGE>

The apartment  complexes owned by the  Partnership  experienced a net unrealized
loss of $0.9  million for the year ended  December  31,  2002  compared to a net
unrealized  gain of $0.4 million for the year ended  December  31, 2001.  Of the
unrealized  loss  experienced  in the twelve  months of 2002,  $1.3  million was
experienced  at  the  apartment  complex  located  in  Atlanta,   Georgia.  This
unrealized loss was due to softening market  conditions.  The apartment  complex
located in Jacksonville,  Florida experienced an unrealized loss of $0.2 million
due to slightly higher expense  estimates and softening market  conditions.  The
apartment  portfolio  located in Gresham/Salem,  Oregon,  also experienced a net
unrealized loss of $0.1 million  primarily due to increases in operating expense
levels and softening market  conditions.  Offsetting these losses, the apartment
complex  located in Raleigh,  North Carolina  experienced an unrealized  gain of
$0.7 million due to a reduced  estimate of rent  concessions  and a reduction in
certain operating expenses.

The apartment  complexes owned by the  Partnership  experienced a net unrealized
gain of $0.4 million for the twelve months ended December 31, 2001. The majority
of the  unrealized  gain  experienced  in 2001 was primarily due to the Atlanta,
Georgia  apartment complex that experienced an increase in value of $0.9 million
due to  sub-metering  of the  apartments  for water  usage and lower real estate
taxes than previously  estimated.  The apartment  complex  portfolio  located in
Gresham and Salem,  Oregon also experienced an increase in value of $0.4 million
due to the completion of capital  improvements and a reduction of administrative
expense  estimates.  Offsetting these unrealized gains was the apartment complex
located in Raleigh,  North Carolina,  which experienced a net unrealized loss of
$0.5  million  due  to  a  decrease  in  occupancy.  The  apartment  complex  in
Jacksonville,  Florida also  experienced a decrease in value of $0.4 million due
to higher replacement  reserve expenses,  higher operating expense  projections,
and slightly lower market rent estimates.

Occupancy at the Atlanta,  Georgia  complex  increased  from 83% at December 31,
2001 to 90% at December 31,  2002.  Occupancy  at the  Raleigh,  North  Carolina
complex  increased  from 82% at December  31, 2001 to 88% at December  31, 2002.
Occupancy at the apartment  complex in Jacksonville,  Florida increased from 88%
at December 31, 2001 to 90% at December  31, 2002.  Occupancy at the Gresham and
Salem, Oregon apartment complexes decreased from 93% at December 31, 2001 to 92%
at December 31, 2002. As of December 31, 2002,  all available  vacant units were
being marketed.

RETAIL PROPERTIES

Net investment income for the Partnership's  retail properties was approximately
$3.6  million for the year ended  December  31,  2002,  and  approximately  $2.9
million for the year ended December 31, 2001.  The increase in the  year-to-date
net  investment  income for the retail  sector is primarily  due to the May 2001
acquisition of the retail center  located in Hampton,  Virginia and the November
2002 acquisition of the retail center located in Ocean City, Maryland.

The retail properties  experienced a net unrealized loss of $0.8 million for the
year ended December 31, 2002 and a net  unrealized  loss of $0.1 million for the
year ended  December 31, 2001.  The retail  center  located in Roswell,  Georgia
experienced a net unrealized  loss of $1.7 million for the twelve months of 2002
due to the risk that a major  tenant  would not renew its  lease,  coupled  with
lower market rents. Partially offsetting this loss, the retail center located in
Hampton,  Virginia  experienced  an  unrealized  gain of $0.9 million due to the
addition of 20,000 rentable square feet and an increase in occupancy.

The retail properties  experienced a net unrealized loss of $0.1 million for the
twelve months ended  December 31, 2001.  The retail  center  located in Roswell,
Georgia  experienced  a loss of $0.6 million for 2001 due to  increased  capital
expenditures and a slight drop in occupancy. Offsetting this unrealized loss was
an unrealized  gain of $0.5 million  resulting  from the market value  appraisal
received on the newly acquired retail center located in Hampton, Virginia.

Occupancy at the retail center in Hampton,  Virginia remained  unchanged at 100%
at December  31, 2001 and 2002.  Occupancy  at the  shopping  center  located in
Roswell,  Georgia increased from 92% at December 31, 2001 to 93% at December 31,
2002. Occupancy at the retail center in Ocean City, Maryland was 99% at December
31, 2002. As of December 31, 2002, all vacant spaces were being marketed.

                                       15
<PAGE>

INDUSTRIAL PROPERTIES

Net investment  income from property  operations  for the industrial  properties
increased from $0.5 million for year ended December 31, 2001 to $1.4 million for
the corresponding  period ended December 31, 2002. The majority of this increase
was due to higher revenues at the properties  located in  Bolingbrook,  Illinois
and Salt Lake City, Utah. On September 12, 2002 the industrial  property located
in Bolingbrook,  Illinois was sold for a realized gain of $0.4 million.  Average
occupancy for the Bolingbrook,  Illinois industrial property was 24% and 79% for
the year ended  December  31, 2001 and nine months  ended  September  30,  2002,
respectively.

The industrial properties owned by the Partnership  experienced a net unrealized
gain of approximately $0.2 million for the year ended December 31, 2002 compared
to a net unrealized loss of approximately  $2.1 million in 2001. The majority of
the unrealized gain in 2002 was attributable to the Aurora,  Colorado industrial
property.  This gain of  approximately  $0.5  million  was due to an increase in
market  rents.  Offsetting  this  unrealized  gain was the Salt Lake City,  Utah
facility, which experienced a net unrealized loss of $0.3 million due to capital
expenditures  at the property  that were not  reflected as an increase in market
value and softening market conditions.

The three  industrial  properties  owned by the  Partnership  experienced  a net
unrealized  loss of  approximately  $2.1  million  for the twelve  months  ended
December 31, 2001. The majority of the unrealized loss in 2001 was  attributable
to the Salt Lake City, Utah industrial property. This loss of approximately $1.3
million  was due to a  decrease  in  market  rents.  The  Bolingbrook,  Illinois
facility  experienced  a loss of $0.9  million due to a decrease in rental rates
and softening market conditions.

The occupancy at the Salt Lake City, Utah property remained  unchanged at 77% at
December  31, 2001 and 2002.  The Aurora,  Colorado  property's  occupancy  rate
remained  unchanged  at 75% at December  31, 2001 and 2002.  As of December  31,
2002, all vacant spaces were being marketed.

EQUITY IN INCOME OF REAL ESTATE PARTNERSHIP

During the year ended December 31, 2002,  income from the investment  located in
Kansas City, Kansas and Missouri  amounted to $0.3 million,  a decrease of 59.8%
from $0.7 million at December 31, 2001. The decrease in the year-to-date  equity
in income of real estate  partnership is due to a decrease in revenue associated
with expansion of the existing  grocery store anchor that  commenced  during the
fourth quarter 2001. It is anticipated that upon completion,  both occupancy and
rental rates will increase.

The equity  investment  experienced a net unrealized  loss of $0.6 million and a
net  unrealized  gain of $0.2 million for the years ended  December 31, 2002 and
2001,  respectively.  The  unrealized  loss of $0.6  million  for the year ended
December 31, 2002 was  primarily  due to  renovations  from the expansion of the
existing  grocery  store anchor that have not been  reflected  yet in the market
value of the property. The unrealized gain of $0.2 million for the twelve months
ended  December 31, 2001 was primarily due to the addition of a tenant that will
provide a substantial amount of income to the center in rent and the addition of
new space to house this tenant.

The retail portfolio  located in Kansas City, Kansas and Missouri had an average
occupancy of 90% at December 31,  2001,  which  decreased to 87% at December 31,
2002. As of December 31, 2002, all vacant spaces were being marketed.

REAL ESTATE INVESTMENT TRUSTS

The  Partnership's  investment in REITS was  liquidated at the end of the fourth
quarter of 2001.

During the twelve months ended  December 31, 2001, the  Partnership's  remaining
investment  in REITS  recognized a realized loss of $0.2 million due to the sale
of the Partnership's remaining investment in REITs.

OTHER

Other net  investment  income  increased  $0.1  million  during the year of 2002
compared  to the  corresponding  period  in 2001.  Other net  investment  income
includes  interest income from  short-term  investments,  investment  management
fees, and expenses not related to property  activities.  The increase in 2002 is
primarily  due to an  increase in interest  income from  short-term  investments
offset by a decrease in management fees due to the Partnership's  liquidation of
its entire investment in REIT shares.

                                       16
<PAGE>

(c) INFLATION

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

CRITICAL ACCOUNTING POLICIES

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

The following sections discuss critical accounting policies applied in preparing
our financial statements that are most dependent on the application of estimates
and assumptions.

VALUATION OF INVESTMENTS

REAL  ESTATE  INVESTMENTS--The  Partnership's  investments  in real  estate  are
initially valued at their purchase price.  Thereafter,  real estate  investments
are  reported at their  estimated  market  values based upon  appraisal  reports
prepared  by  independent  real  estate  appraisers  (members  of the  Appraisal
Institute or an  equivalent  organization)  within a  reasonable  amount of time
following  acquisition of the real estate and no less  frequently  than annually
thereafter.  The Chief Real Estate Appraiser of Prudential Investment Management
is  responsible  to assure that the  valuation  process  provides  objective and
accurate market value estimates.

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  for a fair sale,  with the buyer and seller  each  acting
prudently,  knowledgeably,  and for self interest,  and assuming that neither is
under undue duress.

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

As described  above,  the estimated  market value of real estate and real estate
related  assets is  determined  through an appraisal  process.  These  estimated
market  values may vary  significantly  from the prices at which the real estate
investments  would sell since market prices of real estate  investments can only
be determined by  negotiation  between a willing buyer and seller.  Although the
estimated  market values represent  subjective  estimates,  management  believes
these estimated market values are reasonable approximations of market prices and
the  aggregate  value of  investments  in real estate is fairly  presented as of
December 31, 2003 and December 31, 2002.

OTHER ESTIMATES

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  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.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk. The  Partnership's  exposure to market rate risk for changes
in interest rates relates to about 34.59% of its investment portfolio consisting
primarily  of  short-term  fixed rate  commercial  paper and fixed and  variable
interest  rate  debt.  The  Partnership   does  not  use  derivative   financial
instruments. By policy, the Partnership places its investments with high quality
debt security  issuers,  limits the amount of credit exposure to any one issuer,
limits  duration by  restricting  the term,  and holds  investments  to maturity
except under rare circumstances.

                                       17
<PAGE>

The table below presents the amounts and related weighted  interest rates of the
Partnership's cash equivalents and short-term investments at December 31, 2003:

                                                               ESTIMATED MARKET
                                                    VALUE          AVERAGE
                                   MATURITY    (IN $ MILLIONS)  INTEREST RATE
                                ------------------------------------------------
Cash equivalents...........       0-3 months        $18.9           0.94%

The table below discloses the  Partnership's  fixed rate debt as of December 31,
2003. All of the Partnership's  long-term debt bears interest at fixed rates and
therefore the fair value of these  instruments  is affected by changes in market
interest rates. On October 9, 2003 the Partnership  refinanced its variable rate
debt to a fixed rate of 4.34%. The following table presents principal cash flows
(in thousands) based upon maturity dates of the debt obligations and the related
weighted-average  interest  rates by expected  maturity dates for the fixed rate
debt.

<TABLE>
<CAPTION>

DEBT (IN $ THOUSANDS),                                                                                      ESTIMATED
INCLUDING CURRENT PORTION            2004      2005      2006       2007     2008    THEREAFTER    TOTAL    FAIR VALUE
-------------------------            ----      ----      ----       ----     ----    ----------    -----    ----------
<S>                                  <C>       <C>        <C>       <C>        <C>        <C>         <C>     <C>
Average Fixed Interest Rate......    5.85%     5.83%      5.28%     5.26%      5.04%      6.75%       7.52%
Fixed Rate.......................    $719      $774     $8,479      $588    $26,091     $7,284     $43,935    $42,869
                                    ----------------------------------------------------------------------------------
Total Mortgage Loans Payable.....    $719      $774     $8,479      $588    $26,091     $7,284     $43,935    $42,869
                                    ----------------------------------------------------------------------------------

</TABLE>

The  Partnership is exposed to market risk from tenants.  While the  Partnership
has not experienced any significant credit losses, in the event of a significant
rising  interest rate  environment  and/or  economic  downturn,  defaults  could
increase and result in losses to the  Partnership,  which would adversely affect
its operating results and liquidity.

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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

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

None.

ITEM 9A.  CONTROLS AND PROCEDURES

In order to ensure that the information we must disclose in our filings with the
Securities  and Exchange  Commission  is recorded,  processed,  summarized,  and
reported on a timely basis,  the Company's  management,  including our President
and Chief Accounting  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), as of December 31, 2003. Based on such evaluation,  the
President and Chief  Accounting  Officer have concluded that, as of December 31,
2003, our disclosure  controls and procedures  were effective in timely alerting
them to  material  information  relating  to us  required  to be included in our
periodic  SEC  filings.  There has been no change in our  internal  control over
financial reporting during the year ended December 31, 2003, that has materially
affected,  or is reasonably  likely to materially  affect,  our internal control
over financial reporting.

                                       18
<PAGE>

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

<TABLE>
<CAPTION>

NAME                                           POSITION                                                           AGE
-----                                          --------                                                          -----
<S>                                            <C>                                                                <C>
Vivian L. Banta                                Chairman of the Board                                              53
James J. Avery, Jr.                            Vice Chairman of the Board and Director                            52
Andrew J. Mako                                 President and Director                                             47
Richard J. Carbone                             Director                                                           56
Helen M. Galt                                  Director                                                           56
Ronald P. Joelson                              Director                                                           45
David R. Odenath, Jr.                          Director                                                           47
C. Edward Chaplin                              Senior Vice President and Treasurer                                47
Shirley H. Shao                                Senior Vice President and Chief Actuary                            49
William J. Eckert, IV                          Vice President and Chief Accounting Officer                        41
Clifford E. Kirsch                             Chief Legal Officer and Secretary                                  44
Thomas F. Higgins                              Senior Vice President                                              50
Esther H. Milnes                               Senior Vice President                                              53
James M. O'Connor                              Senior Vice President                                              48
Melody C. McDaid                               Senior Vice President                                              54

</TABLE>

VIVIAN L. BANTA is Chairman of the Board of Directors  of the  Company.  She was
President of the Company through  February 11, 2003. She has been Executive Vice
President of the Prudential Insurance Division since 2000. From 1998 to 1999 she
was a Consultant for Individual Financial Services.

JAMES J. AVERY,  JR. is Vice  Chairman of the Board of Directors of the Company.
Mr. Avery has been President, Prudential Insurance Division since 1998.

ANDREW J. MAKO is President and Director of the Company as of February 12, 2003.
Mr. Mako has been Vice President,  Finance,  Prudential Insurance Division since
1999.  From 1996 to 1998,  he was Vice  President  for the Business  Performance
Management Group of Prudential.

RICHARD J. CARBONE has been Senior Vice President and Chief Financial Officer of
Prudential since 1997.

HELEN M. GALT has been a Company Actuary for Prudential since 1993.

RONALD P. JOELSON has been Senior Vice President,  Prudential  Asset,  Liability
and  Risk  Management  since  1999.  From  1996 to  1999,  he was  President  of
Guaranteed Products, Prudential Institutional.

DAVID R. ODENATH,  JR. has been  President,  Annuities  since 2003. From 1999 to
2003, he was President of Prudential Investments. Prior to joining Prudential in
1999,  Mr.  Odenath  was Senior  Vice  President  and  Director of Sales for the
Investment Consulting Group at Paine Webber.

C. EDWARD  CHAPLIN has been Senior Vice  President  and  Treasurer of Prudential
since 2000. Prior to 2000, he was Vice President and Treasurer of Prudential.

SHIRLEY H. SHAO has been Vice President and Associate Actuary,  Prudential since
1996.

WILLIAM J. ECKERT,  IV, was elected Vice President and Chief Accounting  Officer
of the  Company in June 2000.  Mr.  Eckert has been Vice  President,  Prudential
Insurance Division Controllers since May 1995.

CLIFFORD  E. KIRSCH has been Chief Legal  Officer and  Secretary  of the Company
since 1995. Mr. Kirsch joined Prudential Insurance Company of America in 1995 as
Chief Counsel, Variable Products.

THOMAS F. HIGGINS has been Vice President of Annuity  Services in the Prudential
Insurance Division since 1999. From 1998 to 1999 he was Vice President of Mutual
Funds, Prudential Individual Financial Services.

ESTHER H. MILNES has been Vice President and Chief Actuary, Prudential Insurance
Division  since 1999.  From 1996 to 1999 she was Vice  President  and Actuary of
Prudential U.S. Consumer Group.

JAMES M.  O'CONNOR is Senior Vice  President  and Actuary for the  Company.  Mr.
O'Connor has been Vice President,  Guaranteed  Products since 2001. From 1998 to
2000 he was Corporate Vice President of Guaranteed Products.

                                       19
<PAGE>

MELODY C. MCDAID is Senior Vice President.  She has been Vice President and Site
Executive, Prudential Financial Services Customer Service Office since 1995.

The  business  address  of all  directors  and  officers  of  Pruco  Life is 213
Washington  Street,  Newark,  New Jersey  07102-2992.  Pruco Life  directors and
officers are elected annually.

CODE OF ETHICS

We have adopted a policy,  known as Making the Right  Choices,  which applies to
our chief executive officer, chief financial officer and our controller, as well
as to our directors.  Making the Right Choices contains a code of ethics,  which
is posted on our website at www.investor.prudential.com. Our code of ethics, any
amendments  and any  waiver  under  our  code of  ethics  granted  to any of our
directors or executive  officers will be available free of charge on our website
at www.investor.prudential.com.

ITEM 11.  EXECUTIVE COMPENSATION

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

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Not applicable.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

See  Related  Transactions  in note 7 of Notes to  Financial  Statements  of the
Partnership on page F-20.

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

The Audit  Committee  of the Board of  Directors of  Prudential  Financial  (the
"Audit Committee") has appointed  PricewaterhouseCoopers  LLP as the independent
auditors of Prudential  Financial and certain of its domestic and  international
subsidiaries,  including  the Company.  The Audit  Committee  has  established a
policy  requiring  its  pre-approval  of all  audit  and  permissible  non-audit
services provided by the independent  auditor.  The specific  information called
for by this item is hereby  incorporated by reference from the section  entitled
"Item 2 - Ratification of the Appointment of Independent Auditors" in Prudential
Financial's definitive proxy statement for the Annual Meeting of Shareholders to
be held on June 8, 2004, to be filed with the Securities and Exchange Commission
pursuant to  Regulation  14A within 120 days after the year ended  December  31,
2003.

                                       20
<PAGE>

                                     PART IV

ITEM 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

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

       1.     Financial Statements

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

       2.     Financial Statement Schedules

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

              Schedule III. Real Estate Owned: Properties

              Schedule III. Real Estate Owned: Interest in Properties

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

       3.     Documents Incorporated by Reference

              See the following list of exhibits.

       4.     Exhibits

              See the following list of exhibits.

(b)    None.

(c)    The following is a list of Exhibits to the Registrant's  Annual Report on
       Form 10-K for the fiscal year ended  December  31, 2003.  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.

       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.

                                       21
<PAGE>

       10.1   Investment  Management  Agreement  between  Prudential  Investment
              Management,   Inc.  and  The  Prudential  Variable  Contract  Real
              Property Partnership,  filed as 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   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.

       16.    None.

       18.    None.

       22.    Not applicable.

       23.    None.

       24.    Filed herewith as Exhibit 24.

       31.1   Certification of President required pursuant to Exchange Act Rules
              13a-15(e) and 15d-15(e), as adopted pursuant to Section 302 of the
              Sarbanes-Oxley Act of 2002.

       31.2   Certification  of Chief Accounting  Officer  required  pursuant to
              Exchange Act Rules 13a-15(e) and 15d-15(e), as adopted pursuant to
              Section 302 of the Sarbanes-Oxley Act of 2002.

       32.1   Certification of President required pursuant to 18 U.S.C.  Section
              1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
              of 2002.

       32.2   Certification of Chief Accounting  Officer required pursuant to 18
              U.S.C.  Section  1350,  as adopted  pursuant to Section 906 of the
              Sarbanes-Oxley Act of 2002.

                                       22
<PAGE>

                                   SIGNATURES

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

                          PRUCO LIFE INSURANCE COMPANY
                                  IN RESPECT OF
               PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT
               --------------------------------------------------
                                  (REGISTRANT)

Date:        March 29, 2004                   By:  /s/ Andrew J. Mako
         ----------------------                    -------------------------
                                                   Andrew J. Mako
                                                   President and Director

Date:        March 29, 2004                   By:  /s/ William J. Eckert, IV
         ----------------------                    -------------------------
                                                   William J. Eckert, IV
                                                   Chief Accounting Officer


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

<TABLE>
<CAPTION>

SIGNATURE                                         TITLE                            DATE
---------                                         -----                            ----
<S>                                         <C>                                <C>
*                                           Director                           March 29, 2004
-----------------------------
James J. Avery, Jr.

*                                           Chairman and Director              March 29, 2004
-----------------------------
Vivian L. Banta

*                                           Director                           March 29, 2004
-----------------------------
Richard J. Carbone

*                                           Director                           March 29, 2004
-----------------------------
Helen M. Galt

*                                           Director                           March 29, 2004
-----------------------------
Ronald P. Joelson

*                                           Director                           March 29, 2004
-----------------------------
David R. Odenath, Jr.

</TABLE>


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

                                       23
<PAGE>

               PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT
                                  (REGISTRANT)

                                      INDEX

<TABLE>
<CAPTION>

                                                                                                                 PAGE
                                                                                                                 ----
<S>                                                                                                               <C>
A.   PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT

     Financial Statements:

         Report of Independent Auditors.......................................................................    F-2

         Statements of Net Assets--December 31, 2003 and 2002.................................................    F-3

         Statements of Operations--Years Ended December 31, 2003, 2002, 2001..................................    F-3

         Statements of Changes in Net Assets--Years Ended December 31, 2003, 2002, 2001.......................    F-3

         Notes to Financial Statements........................................................................    F-4

B.   THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

     Financial Statements:

         Report of Independent Auditors.......................................................................    F-8

         Report of Independent Auditors on Financial Statement Schedules......................................    F-9

         Statements of Assets and Liabilities--December 31, 2003 and 2002.....................................   F-10

         Statements of Operations--Years Ended December 31, 2003, 2002 and 2001...............................   F-11

         Statements of Changes in Net Assets--Years Ended December 31, 2003, 2002 and 2001....................   F-12

         Statements of Cash Flows--Years Ended December 31, 2003, 2002 and 2001...............................   F-13

         Schedule of Investments--December 31, 2003 and 2002..................................................   F-14

         Notes to Financial Statements........................................................................   F-16

     Financial Statement Schedules:

         For the period ended December 31, 2003

         Schedule III--Real Estate Owned: Properties..........................................................   F-22

         Schedule III--Real Estate Owned: Interest in Properties..............................................   F-23

</TABLE>

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

                                      F-1
<PAGE>

                         REPORT OF INDEPENDENT AUDITORS



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,  2003  and  2002,  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,  2003,  in  conformity  with  accounting  principles
generally accepted in the United States of America.  These financial  statements
are the  responsibility  of the management of the 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 auditing  standards  generally  accepted in the United States of
America,  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 at December  31, 2003 with The
Prudential  Variable  Contract Real Property  Partnership,  provide a reasonable
basis for our opinion.

PricewaterhouseCoopers LLP
New York, New York
March 26, 2004

                                      F-2
<PAGE>

                             FINANCIAL STATEMENTS OF

               PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT

STATEMENTS OF NET ASSETS
December 31, 2003 and 2002

<TABLE>
<CAPTION>

                                                                          2003             2002
                                                                      ------------      -----------
<S>                                                                   <C>               <C>
ASSETS
   Investment in The Prudential Variable Contract
      Real Property Partnership ..............................        $100,148,190      $101,048,531
                                                                      ------------      ------------
   Net Assets.................................................        $100,148,190      $101,048,531
                                                                      ============      ============
NET ASSETS, representing:
   Equity of contract owners .................................        $ 74,406,535      $ 75,909,090
   Equity of Pruco Life Insurance Company ....................          25,741,655        25,139,441
                                                                      ------------      ------------
                                                                      $100,148,190      $101,048,531
                                                                      ============      ============
Units outstanding.............................................          45,311,604        46,460,669
                                                                      ============      ============
Portfolio shares held.........................................           4,061,676         4,190,321
Portfolio net asset value per share...........................             $ 24.66           $ 24.11

</TABLE>


STATEMENTS OF OPERATIONS
For the years ended December 31, 2003, 2002 and 2001

<TABLE>
<CAPTION>
                                                                                       2003              2002               2001
                                                                                    -----------       -----------       -----------
<S>                                                                                 <C>               <C>               <C>
INVESTMENT INCOME
Net investment income from Partnership operations ............................      $ 5,820,059       $ 5,952,587       $ 6,766,150
                                                                                    -----------       -----------       -----------
EXPENSES
Charges to contract owners for assuming mortality risk and
   expense risk and for administration .......................................          457,425           474,986           486,471
                                                                                    -----------       -----------       -----------
NET INVESTMENT INCOME ........................................................        5,362,634         5,477,601         6,279,679
                                                                                    -----------       -----------       -----------
NET REALIZED AND UNREALIZED GAIN
   (LOSS) ON INVESTMENTS
Net change in unrealized gain (loss) on investments in Partnership ...........       (3,803,218)       (4,882,490)       (1,302,684)
Realized gain (loss) on sale of investments in Partnership ...................          255,573           215,623          (115,961)
                                                                                    -----------       -----------       -----------
NET GAIN (LOSS) ON INVESTMENTS ...............................................       (3,547,645)       (4,666,867)       (1,418,645)
                                                                                    -----------       -----------       -----------
NET INCREASE IN NET ASSETS
   RESULTING FROM OPERATIONS .................................................      $ 1,814,989       $   810,734       $ 4,861,034
                                                                                    ===========       ===========       ===========

</TABLE>

<TABLE>
<CAPTION>

STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 2003,  2002 and 2001

                                                                                     2003              2002               2001
                                                                                -------------      -------------      --------------
<S>                                                                                 <C>               <C>               <C>
OPERATIONS
Net investment income .....................................................     $   5,362,634      $   5,477,601      $   6,279,679
Net change in unrealized gain (loss) on investments in Partnership ........        (3,803,218)        (4,882,490)        (1,302,684)
Net realized gain (loss) on sale of investments in Partnership ............           255,573            215,623           (115,961)
                                                                                -------------      -------------      -------------
NET INCREASE IN NET ASSETS
   RESULTING FROM OPERATIONS ..............................................         1,814,989            810,734          4,861,034
                                                                                -------------      -------------      -------------
CAPITAL TRANSACTIONS
Net withdrawals by contract owners ........................................        (2,684,776)        (2,895,970)        (3,384,921)
Net withdrawals by Pruco Life Insurance Company ...........................           (30,554)        (5,423,612)        (5,445,898)
                                                                                -------------      -------------      -------------
NET DECREASE IN NET ASSETS
   RESULTING FROM CAPITAL TRANSACTIONS ....................................        (2,715,330)        (8,319,582)        (8,830,819)
                                                                                -------------      -------------      -------------
TOTAL DECREASE IN NET ASSETS ..............................................          (900,341)        (7,508,848)        (3,969,785)
NET ASSETS
   Beginning of year ......................................................       101,048,531        108,557,379        112,527,164
                                                                                -------------      -------------      -------------
   End of year ............................................................     $ 100,148,190      $ 101,048,531      $ 108,557,379
                                                                                =============      =============      =============

</TABLE>

   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

                                      F-3
<PAGE>

                      NOTES TO THE FINANCIAL STATEMENTS OF
               PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT
                                DECEMBER 31, 2003

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"), a wholly-owned subsidiary of Prudential Financial, Inc. ("PFI").
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 Appreciable  Life ("VAL"),  Variable Life ("VLI"),  Discovery
Plus ("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
estate  investment  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. 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

A.   BASIS OF ACCOUNTING

The accompanying financial statements are prepared in conformity with accounting
principles  generally  accepted in the United  States of America  ("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, 2003
and 2002 the Real Property  Account's  interest in the  Partnership was 55.1% or
4,061,676 shares and 54.8% or 4,190,321 shares respectively.

C.   INCOME RECOGNITION

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

D.   EQUITY OF 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  purchases  and  redemptions,
Partnership share transactions,  and expense  processing.  The position does not
have an effect on the contract owner's account or the related unit value.

                                      F-4
<PAGE>


NOTE 3:   TAXES

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

NOTE 4:   NET WITHDRAWALS BY CONTRACT OWNERS

Contract  owner activity for the real estate  investment  option in Pruco Life's
variable  insurance and variable  annuity  products for the years ended December
31, 2003, 2002 and 2001 were as follows:


<TABLE>
<CAPTION>
2003:
-----
                                             VAL              VLI            SPVA             SPVL              TOTAL
                                         -----------      -----------      --------         ---------        -----------
<S>                                      <C>              <C>              <C>              <C>              <C>
Contract Owner Net Payments:             $ 3,953,704      $   313,893      $      0         $     (20)       $ 4,267,577
Policy Loans:                             (1,526,557)          40,619             0           (63,800)        (1,549,738)
Policy Loan Repayments and Interest:       2,575,253           62,011             0           192,676          2,829,940
Surrenders, Withdrawals, and
  Death Benefits:                         (4,391,603)        (334,013)      (59,897)         (355,196)        (5,140,709)
Net Transfers To Other Subaccounts
  or Fixed Rate Option:                     (146,809)          10,628       (10,000)              439           (145,742)
Administrative and Other Charges:         (2,742,221)        (178,603)            0           (25,280)        (2,946,104)
                                         -----------      -----------      --------         ---------        -----------
NET WITHDRAWALS BY CONTRACT OWNERS       $(2,278,233)     $   (85,465)     $(69,897)        $(251,181)       $(2,684,776)
                                         ===========      ===========      ========         =========        ===========

2002:
-----

<CAPTION>
                                             VAL              VLI            SPVA             SPVL              TOTAL
                                         -----------      -----------      --------         ---------        -----------
<S>                                      <C>              <C>              <C>              <C>              <C>
Contract Owner Net Payments:             $ 4,401,046      $   330,648      $      0         $     310        $ 4,732,004
Policy Loans:                             (1,591,647)          (5,015)            0           (56,057)        (1,652,719)
Policy Loan Repayments and Interest:       2,046,010           58,158             0           125,801          2,229,969
Surrenders, Withdrawals, and
  Death Benefits:                         (4,311,328)        (325,555)      (64,882)         (322,558)        (5,024,323)
Net Transfers To Other Subaccounts
  or Fixed Rate Option:                      (41,683)          (8,788)       27,098           (67,553)           (90,926)
Administrative and Other Charges:         (2,879,240)        (183,223)            0           (27,512)        (3,089,975)
                                         -----------      -----------      --------         ---------        -----------
NET WITHDRAWALS BY CONTRACT OWNERS       $(2,376,842)     $  (133,775)     $(37,784)        $(347,569)       $(2,895,970)
                                         ===========      ===========      ========         =========        ===========

2001:
-----

<CAPTION>
                                             VAL              VLI            SPVA             SPVL              TOTAL
                                         -----------      -----------      --------         ---------        -----------
<S>                                      <C>              <C>              <C>              <C>              <C>
Contract Owner Net Payments:             $ 4,273,765      $   380,615      $    (13)        $  (1,874)       $ 4,652,493
Policy Loans:                             (1,856,054)         (86,464)            0           (78,500)        (2,021,018)
Policy Loan Repayments and Interest:       1,881,095           63,019             0           176,382          2,120,496
Surrenders, Withdrawals, and
  Death Benefits:                         (3,953,623)        (285,065)      (34,082)         (341,668)        (4,614,438)
Net Transfers To Other Subaccounts
  or Fixed Rate Option:                     (492,261)         (17,950)      (19,027)           56,745           (472,493)
Administrative and Other Charges:         (2,837,147)        (183,877)            0           (28,937)        (3,049,961)
                                         -----------      -----------      --------         ---------        -----------
NET WITHDRAWALS BY CONTRACT OWNERS       $(2,984,225)     $  (129,722)     $(53,122)        $(217,852)       $(3,384,921)
                                         ===========      ===========      ========         =========        ===========
</TABLE>

                                      F-5
<PAGE>


NOTE 5:   UNIT ACTIVITY

Transactions  in units for the years ended December 31, 2003, 2002 and 2001 were
as follows:


<TABLE>
<CAPTION>
2003:
-----
                                                                              VAL          VLI         SPVA         SPVL
                                                                          ----------     --------     -------     --------
<S>                       <C>                                             <C>            <C>          <C>         <C>
Company Contributions:     1,814,298     Contract Owner Contributions:     3,017,473      178,515           0       93,841
Company Redemptions:      (1,721,856)    Contract Owner Redemptions:      (4,057,783)    (216,005)    (35,600)    (221,948)

2002:
-----

<CAPTION>
                                                                              VAL          VLI         SPVA         SPVL
                                                                          ----------     --------     -------     --------
<S>                       <C>                                             <C>            <C>          <C>         <C>
Company Contributions:     1,898,876     Contract Owner Contributions:     2,978,887      181,776          81       76,633
Company Redemptions:      (4,334,318)    Contract Owner Redemptions:      (4,071,866)    (240,790)    (19,328)    (253,050)

2001:
-----

<CAPTION>
                                                                              VAL          VLI         SPVA         SPVL
                                                                          ----------     --------     -------     --------
<S>                       <C>                                             <C>            <C>          <C>         <C>
Company Contributions:     1,963,552     Contract Owner Contributions:     2,853,710      202,651           0      121,966
Company Redemptions:      (4,396,929)    Contract Owner Redemptions:      (4,247,981)    (261,094)    (27,100)    (233,493)
</TABLE>

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,  2003,  2002 and 2001  were as
follows:

                       DECEMBER 31, 2003   DECEMBER 31, 2002   DECEMBER 31, 2001
                       -----------------   -----------------   -----------------
PURCHASES:                $         0         $         0         $         0
SALES:                    $(3,172,755)        $(8,794,568)        $(9,317,290)

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.

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.

<TABLE>
<CAPTION>
                                   AT YEAR ENDED                                  FOR THE YEAR ENDED
                     -----------------------------------------     -------------------------------------------------
                                                                                       EXPENSE             TOTAL
                      UNITS        UNIT VALUE        NET ASSETS     INVESTMENT         RATIO**           RETURN***
                     (000'S)     LOWEST-HIGHEST        (000'S)     INCOME RATIO*   LOWEST-HIGHEST     LOWEST-HIGHEST
                     -------     --------------        -------     -------------   --------------     --------------
<S>                  <C>      <C>                      <C>             <C>         <C>                <C>
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%
December 31, 2001    36,119   $1.97316 to $2.26011     $78,352         5.95%       0.35% to 1.25%     3.50% to 4.42%
</TABLE>

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
11,781,786,   11,689,343  and   14,124,785   units   representing   $25,741,655,
$25,139,441  and  $30,205,210  of net assets as of December 31,  2003,  2002 and
2001, 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.

                                      F-6
<PAGE>


** 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,  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
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.

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, are deducted from each
premium payment to cover premium collection and processing costs.  Contracts are
also subject to monthly charges for the costs of  administering  the contract to
compensate  Pruco Life the guaranteed  minimum death benefit risk. 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% for VAL and
9% 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.  A 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. A 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-7
<PAGE>


                         REPORT OF INDEPENDENT AUDITORS

To the Partners of The Prudential
Variable Contract Real Property Partnership:

In  our  opinion,  the  accompanying   consolidated  statements  of  assets  and
liabilities, including the schedules of real estate investments, and the related
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,
2003 and 2002,  and the results of its operations and its cash flows for each of
the three  years in the  period  ended  December  31,  2003 in  conformity  with
accounting principles generally accepted in the United States of America.  These
financial  statements are the responsibility of The Prudential Insurance Company
of  America;  our  responsibility  is to express  an opinion on these  financial
statements  based on our audits.  We conducted our audits of these statements in
accordance with auditing  standards  generally  accepted in the United States of
America,  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 provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
New York, New York
February 17, 2004

                                      F-8
<PAGE>


                        REPORT OF INDEPENDENT AUDITORS ON
                          FINANCIAL STATEMENT SCHEDULES

To the Partners of The Prudential
Variable Contract Real Property Partnership:

Our audits of the consolidated  financial  statements  referred to in our report
dated  February  17,  2004  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
March 17, 2004

                                      F-9
<PAGE>


           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
                                                                            YEAR ENDED DECEMBER 31,
                                                                         ----------------------------
                                                                             2003            2002
                                                                         ------------    ------------
<S>                                                                      <C>             <C>
ASSETS

REAL ESTATE INVESTMENTS-- At estimated market value:
   Real estate and improvements (cost: 12/31/2003 -- $223,943,870;
      12/31/2002 -- $215,592,277) ...................................    $201,144,866    $196,631,183
   Real estate partnership (cost: 12/31/2003 -- $10,609,273;
      12/31/2002 -- $9,931,394) .....................................       8,721,319       8,978,324
   Other real estate investments (cost: 12/31/2003 -- $500,000;
      12/31/2002 -- $0) .............................................         500,000              --
                                                                         ------------    ------------
      Total real estate investments .................................     210,366,185     205,609,507
CASH AND CASH EQUIVALENTS ...........................................      18,901,814      18,591,149
OTHER ASSETS, NET ...................................................       6,359,853       5,519,457
                                                                         ------------    ------------
      Total assets ..................................................    $235,627,852    $229,720,113
                                                                         ============    ============
LIABILITIES

MORTGAGE LOANS PAYABLE ..............................................      43,934,494      35,699,108
ACCOUNTS PAYABLE AND ACCRUED EXPENSES ...............................       2,998,752       3,092,098
DUE TO AFFILIATES ...................................................       1,017,932         907,503
OTHER LIABILITIES ...................................................         947,110         911,245
MINORITY INTEREST ...................................................       5,086,503       4,756,653
                                                                         ------------    ------------
      Total liabilities .............................................      53,984,791      45,366,607
                                                                         ------------    ------------
COMMITMENTS AND CONTINGENCIES
PARTNERS' EQUITY ....................................................     181,643,061     184,353,506
                                                                         ------------    ------------
      Total liabilities and partners' equity ........................    $235,627,852    $229,720,113
                                                                         ============    ============
NUMBER OF SHARES OUTSTANDING AT END OF PERIOD .......................       7,366,835       7,644,848
                                                                         ============    ============
SHARE VALUE AT END OF PERIOD ........................................          $24.66          $24.11
                                                                         ============    ============

     THE  ACCOMPANYING  NOTES ARE AN INTEGRAL  PART OF THESE  CONSOLIDATED  FINANCIAL STATEMENTS.
</TABLE>

                                      F-10
<PAGE>


           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                                    YEAR ENDED DECEMBER 31,
                                                                      --------------------------------------------------
                                                                          2003               2002               2001
                                                                      ------------       ------------       ------------
<S>                                                                   <C>                <C>                <C>
INVESTMENT INCOME:
  Revenue from real estate and improvements ......................    $ 26,217,891       $ 26,345,500       $ 24,339,631
  Equity in income of real estate partnership ....................         560,660            276,209            686,801
  Dividend income ................................................              --                 --          2,157,647
  Interest on short-term investments .............................         281,943            455,339            296,514
                                                                      ------------       ------------       ------------
    Total investment income ......................................      27,060,494         27,077,048         27,480,593
                                                                      ------------       ------------       ------------
INVESTMENT EXPENSES:
  Operating ......................................................       5,116,001          5,261,674          5,328,004
  Investment management fee ......................................       2,493,957          2,486,639          2,694,130
  Real estate taxes ..............................................       2,590,600          2,824,719          2,652,956
  Administrative .................................................       3,496,973          3,345,192          2,518,644
  Interest expense ...............................................       2,557,294          1,989,473          1,776,701
  Minority interest ..............................................         192,260            305,308            159,852
                                                                      ------------       ------------       ------------
    Total investment expenses ....................................      16,447,085         16,213,005         15,130,287
                                                                      ------------       ------------       ------------
NET INVESTMENT INCOME ............................................      10,613,409         10,864,043         12,350,306
                                                                      ------------       ------------       ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON REAL ESTATE
  INVESTMENTS:

  Net proceeds from real estate investments sold .................       5,689,488          6,282,075         53,417,000
  Less: Cost of real estate investments sold .....................       6,620,263          9,101,381         50,300,836
    Realization of prior years' unrealized
    gain (loss) on real estate investments sold ..................      (1,396,836)        (3,212,838)         3,327,829
                                                                      ------------       ------------       ------------
  Net gain (loss) realized on real estate
    investments sold .............................................         466,061            393,532           (211,665)
                                                                      ------------       ------------       ------------
  Change in unrealized gain (loss) on real estate investments ....      (6,169,630)        (8,739,488)        (2,311,404)
  Less: Minority interest in unrealized gain (loss) on
    real estate investments ......................................         763,795            171,707             24,680
                                                                      ------------       ------------       ------------
  Net unrealized gain (loss) on real estate investments ..........      (6,933,425)        (8,911,195)        (2,336,084)
                                                                      ------------       ------------       ------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
  ON REAL ESTATE INVESTMENTS .....................................      (6,467,364)        (8,517,663)        (2,547,749)
                                                                      ------------       ------------       ------------
INCREASE (DECREASE) IN NET ASSETS RESULTING
  FROM OPERATIONS ................................................    $  4,146,045       $  2,346,380       $  9,802,557
                                                                      ============       ============       ============

              THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>

                                      F-11
<PAGE>


           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
                                                                                   YEAR ENDED DECEMBER 31,
                                                                      --------------------------------------------------
                                                                          2003               2002               2001
                                                                      ------------       ------------       ------------
<S>                                                                   <C>                <C>                <C>
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS:
  Net investment income ..........................................    $ 10,613,409       $ 10,864,043       $ 12,350,306
  Net gain (loss) realized on real estate investments sold .......         466,061            393,532           (211,665)
  Net unrealized gain (loss) from real estate investments ........      (6,933,425)        (8,911,195)        (2,336,084)
                                                                      ------------       ------------       ------------
  Increase (decrease) in net assets resulting from operations ....       4,146,045          2,346,380          9,802,557
                                                                      ------------       ------------       ------------
INCREASE (DECREASE) IN NET ASSETS RESULTING
  FROM CAPITAL TRANSACTIONS:
Withdrawals by partners
  (2003 -- 278,014; 2002 -- 672,622; and
    2001 -- 758,443 shares, respectively) ........................      (6,856,490)       (16,143,510)       (18,000,000)
                                                                      ------------       ------------       ------------
      Increase (decrease) in net assets
        resulting from capital transactions ......................      (6,856,490)       (16,143,510)       (18,000,000)
                                                                      ------------       ------------       ------------
INCREASE (DECREASE) IN NET ASSETS ................................      (2,710,445)       (13,797,130)        (8,197,443)
NET ASSETS -- Beginning of period ................................     184,353,506        198,150,636        206,348,079
                                                                      ------------       ------------       ------------
NET ASSETS -- End of period ......................................    $181,643,061       $184,353,506       $198,150,636
                                                                      ============       ============       ============

               THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>

                                      F-12
<PAGE>


           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                   YEAR ENDED DECEMBER 31,
                                                                      --------------------------------------------------
                                                                          2003               2002               2001
                                                                      ------------       ------------       ------------
<S>                                                                   <C>                <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net increase in net assets from operations .......................    $  4,146,045       $  2,346,380       $  9,802,557
Adjustments to reconcile net increase in net assets
  to net cash from operating activities
    Net realized and unrealized loss (gain) on
      real estate investments ....................................       6,467,364          8,517,663          2,547,749
    Amortization of deferred financing costs .....................        (523,586)          (189,826)                --
    Distributions in excess of (less than) equity in income
      of real estate partnership operations ......................         648,193            (53,459)          (686,801)
    Minority interest in consolidated partnerships ...............         192,260            305,308            159,852
    Bad debt expense .............................................         185,844            184,242            108,358
    (Increase) decrease in:
      Dividend receivable ........................................              --             20,802            213,886
      Other assets ...............................................        (502,655)        (2,246,510)          (449,444)
    Increase (decrease) in:

      Accounts payable and accrued expenses ......................         (93,346)          (377,144)           951,424
      Due to affiliates ..........................................         110,429             11,369              8,700
      Other liabilities ..........................................          35,865            (61,165)           303,201
                                                                      ------------       ------------       ------------
  Net cash flows from (used in) operating activities .............      10,666,413          8,457,660         12,959,482
                                                                      ------------       ------------       ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Net proceeds from real estate investments sold .................       5,689,488          6,282,075         53,417,000
  Acquisition of real estate investments .........................      (8,008,729)        (2,610,723)       (14,582,383)
  Additions to real estate and improvements ......................      (6,963,127)        (2,629,708)        (4,373,073)
  Contributions to real estate partnerships ......................      (1,326,071)        (2,851,395)          (353,956)
  Origination of other real estate investments ...................        (500,000)                --                 --
  Acquisition of real estate investment trust ....................              --                 --        (18,403,928)
  Sale of marketable securities, net .............................              --                 --          4,916,494
                                                                      ------------       ------------       ------------
  Net cash flows from (used in) investing activities .............     (11,108,439)        (1,809,751)        20,620,154
                                                                      ------------       ------------       ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Withdrawals by partners ........................................      (6,856,490)       (16,143,510)       (18,000,000)
  Principal payments on mortgage loans payable ...................        (514,614)          (696,828)          (437,588)
  Proceeds from mortgage loans payable ...........................       8,750,000                 --                 --
  Distributions to minority interest partners ....................        (868,559)          (100,528)                --
  Contributions from minority interest partners ..................         242,354          2,268,461            929,776
                                                                      ------------       ------------       ------------
  Net cash flows from (used in) financing activities .............         752,691        (14,672,405)       (17,507,812)
                                                                      ------------       ------------       ------------
NET CHANGE IN CASH AND CASH
   EQUIVALENTS ...................................................         310,665         (8,024,496)        16,071,824
CASH AND CASH EQUIVALENTS -- Beginning of period .................      18,591,149         26,615,645         10,543,821
                                                                      ------------       ------------       ------------
CASH AND CASH EQUIVALENTS -- End of period .......................    $ 18,901,814       $ 18,591,149       $ 26,615,645
                                                                      ============       ============       ============

               THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>

                                      F-13
<PAGE>


           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                CONSOLIDATED SCHEDULES OF REAL ESTATE INVESTMENTS

                           DECEMBER 31, 2003 AND 2002

<TABLE>
<CAPTION>
                                                                                                  DECEMBER 31,
                                                            TOTAL RENTABLE  -------------------------------------------------------
                                                              SQUARE FEET             2003                           2002
                                                                 UNLESS     -------------------------     -------------------------
                                                               OTHERWISE                   ESTIMATED                      ESTIMATED
                                                               INDICATED                     MARKET                         MARKET
PROPERTY NAME                  OWNERSHIP    CITY, STATE       (UNAUDITED)      COST          VALUE           COST           VALUE
------------------------------------------------------------------------------------------------------------------------------------
<C>                               <C>     <C>                  <C>        <C>            <C>            <C>            <C>
REAL ESTATE INVESTMENTS

OFFICES
750 Warrenville                   WO          Lisle, IL           92,478  $ 23,023,835   $ 12,110,725   $ 22,857,236   $ 13,854,988
Oakbrook Terrace                  WO        Oakbrook, IL         107,610    14,619,120     10,097,932     14,205,396     11,213,142
Summit @ Cornell Oaks             WO       Beaverton , OR         72,109    11,890,209     10,000,005     11,890,209     10,800,005
Westpark                          WO        Nashville, TN         97,036    10,423,727      9,239,260     10,320,613      9,651,831
Financial Plaza                   WO        Brentwood, TN        742,931     9,837,482      6,700,041      9,826,195      7,709,345
------------------------------------------------------------------------------------------------------------------------------------
                                              Offices %
                                           as of 12/31/03            27%    69,794,373     48,147,963     69,099,649     53,229,311
APARTMENTS
Brookwood Apartments              WO         Atlanta, GA       240 Units    15,781,263     17,000,000     15,715,772     17,523,063
Dunhill Trace Apartments          WO         Raleigh, NC       250 Units    16,010,326     17,665,000     15,943,836     17,502,998
Riverbend Apartments              CJV     Jacksonville, FL     458 Units    19,946,920     22,400,000     19,745,855     19,800,000
SIMA Apartments                   CJV     Gresham/Salem, OR    493 Units    19,281,738     17,975,000     18,838,570     18,600,000
------------------------------------------------------------------------------------------------------------------------------------
                                            Apartments %
                                           as of 12/31/03            41%    71,020,247     75,040,000     70,244,033     73,426,061
RETAIL
King's Market                     WO        Rosewell, GA         314,358    33,102,401     23,539,665     32,895,282     24,903,969
Hampton Towne Center              WO         Hampton, VA         174,540    18,013,068     20,000,000     16,446,909     19,300,000
White Marlin Mall                 CJV      Ocean City, MD        186,016    13,198,649     15,900,000     10,012,138     10,012,138
Kansas City Portfolio             EJV    Kansas City, KS;MO      487,660    10,609,273      8,721,319      9,931,394      8,978,324
------------------------------------------------------------------------------------------------------------------------------------
                                             Retail %
                                           as of 12/31/03            38%    74,923,391     68,160,984     69,285,723     63,194,431
INDUSTRIAL
Smith Road                        WO         Aurora, CO          277,930    10,806,403     10,508,509     10,294,784     10,557,058
Walsh Higgins                     WO     Salt Lake City, UT      182,500            --             --      6,599,482      5,202,646
------------------------------------------------------------------------------------------------------------------------------------
                                            Industrial %
                                           as of 12/31/03             6%    10,806,403     10,508,509     16,894,266     15,759,704
HOTEL
Portland Crown Plaza              CJV       Portland, OR       161 Rooms     8,008,729      8,008,729             --             --
------------------------------------------------------------------------------------------------------------------------------------
                                              Hotel %
                                           as of 12/31/03             4%     8,008,729      8,008,729             --             --
OTHER REAL ESTATE INVESTMENTS
Englar Lowes Loan                 NR       Westminster, MD                     500,000        500,000             --             --
------------------------------------------------------------------------------------------------------------------------------------
                   Other Real Estate Investments % as of 12/31/03     0%       500,000        500,000             --             --

TOTAL REAL ESTATE INVESTMENTS AS A PERCENTAGE OF
  NET ASSETS AS OF 12/31/03                                         116%  $235,053,143   $210,366,185   $225,523,671   $205,609,507
                                                                    ===   ============   ============   ============   ============
</TABLE>

WO  -- Wholly Owned Investment
CJV -- Consolidated Joint Venture
EJV -- Joint Venture Investment accounted for under the equity method
NR  -- Note Receivable

                                      F-14
<PAGE>


           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                             SCHEDULE OF INVESTMENTS

<TABLE>
<CAPTION>
                                                                                   DECEMBER 31, 2003           DECEMBER 31, 2002
                                                                              -------------------------   --------------------------
                                                                                             ESTIMATED                   ESTIMATED
                                                                FACE AMOUNT      COST      MARKET VALUE      COST       MARKET VALUE
                                                                ------------  -----------  ------------   -----------   ------------
<S>                                                              <C>          <C>           <C>           <C>           <C>
CASH AND CASH EQUIVALENTS--PERCENTAGE OF NET ASSETS............                                   10.4%                       10.1%
Federal National Mortgage Assoc., 1.06%, February 4, 2004......  $ 5,974,000  $ 5,967,907   $ 5,967,907   $        --   $        --
Federal Home Loan Mortgage Corp., 0.88%, January 2, 2004.......   12,331,000   12,330,520    12,330,520            --            --
Federal National Mortgage Assoc., 1.00%, January 02, 2003......    6,928,000          --             --     6,927,615     6,927,615
Federal National Mortgage Assoc., 1.27%, January 17, 2003......    1,218,000          --             --     1,217,055     1,217,055
Federal Home Loan Mortgage Corp., 1.27%, January 21, 2003......    3,461,000          --             --     3,457,581     3,457,581
Federal National Mortgage Assoc., 1.27%, January 21, 2003......    1,288,000          --             --     1,286,819     1,286,819
Federal National Mortgage Assoc., 1.22%, February 10, 2003.....    1,000,000          --             --       998,611       998,611
Federal National Mortgage Assoc., 1.22%, February 13, 2003.....    2,070,000          --             --     2,066,913     2,066,913
Federal Farm Credit Banks, 1.22%, February 14, 2003............    1,870,000          --             --     1,867,148     1,867,148
                                                                              -----------   -----------   -----------   -----------
TOTAL CASH EQUIVALENTS.........................................                18,298,427    18,298,427    17,821,742    17,821,742
    CASH.......................................................                   603,387       603,387       769,407       769,407
                                                                              -----------   -----------   -----------   -----------
    TOTAL CASH AND CASH EQUIVALENTS............................               $18,901,814   $18,901,814   $18,591,149   $18,591,149
                                                                              ===========   ===========   ===========   ===========

               THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>

                                      F-15
<PAGE>


                NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF

           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                FOR YEARS ENDED DECEMBER 31, 2003, 2002, AND 2001

NOTE 1: ORGANIZATION

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

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

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

Shares of the  Partnership  are held by 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.

Prudential  Real Estate  Investors  ("PREI") is the real estate advisory unit of
Prudential  Investment  Management,  Inc. ("PIM"),  which is an indirectly owned
subsidiary of  Prudential  Financial  Inc.  ("PFI").  PREI  provides  investment
advisory  services to the  Partnership's  partners  pursuant to the terms of the
Advisory Agreement as described in Note 9.

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     A:   BASIS  OF  PRESENTATION--The   accompanying   consolidated   financial
          statements are presented on the accrual basis of accounting. It is the
          Partnership's  policy to consolidate those real estate partnerships in
          which it has a  controlling  interest.  All  significant  intercompany
          balances and transactions have been eliminated in consolidation.

     B:   REAL ESTATE INVESTMENTS--The  Partnership's investments in real estate
          are initially valued at their purchase price. Thereafter,  real estate
          investments are reported at their  estimated  market values based upon
          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  objective and accurate 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  objectivity  and  accuracy  of  the
          appraisal process.

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

                                      F-16
<PAGE>


                NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF

           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                FOR YEARS ENDED DECEMBER 31, 2003, 2002, AND 2001

          As described above, the estimated market value of real estate and real
          estate  related  assets is  determined  through an appraisal  process.
          These estimated market values may vary  significantly  from the prices
          at which the real estate investments would sell since market prices of
          real estate investments can only be determined by negotiation  between
          a willing  buyer and seller.  Although  the  estimated  market  values
          represent  subjective  estimates,  management believes these estimated
          market values are reasonable  approximations  of market prices and the
          aggregate  value of investments in real estate is fairly  presented as
          of December 31, 2003 and 2002.

     C:   OTHER REAL ESTATE  INVESTMENTS--Other  real estate investments include
          notes  receivable,  which are valued at the amount due and approximate
          market value.

     D:   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.

     E:   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.

     F:   MORTGAGE  LOANS  PAYABLE--Mortgage  loans  payable  are  stated at the
          principal  amount  of  the  obligation   outstanding.   At  times  the
          Partnership  may assume debt in  connection  with the purchase of real
          estate.  At the time of the assumption,  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.

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

     H:   OTHER  ASSETS--Cash  of $216,883 and $237,732  was  maintained  by the
          wholly  owned and  consolidated  properties  at December  31, 2003 and
          2002,  respectively,  for tenant security  deposits and is included in
          Other Assets on the Consolidated Statements of Assets and Liabilities.
          Other  assets  are net of  allowance  for  uncollectible  accounts  of
          $76,800 and $69,000 at December 31, 2003 and 2002, respectively.

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

     J:   FEDERAL  INCOME  TAXES--The  Partnership is not a taxable entity under
          the  provisions of the Internal  Revenue Code.  The income and capital
          gains and losses of the Partnership are attributed, for federal income
          tax purposes, to the Partners in the Partnership.  The Partnership may
          be  subject  to state and  local  taxes in  jurisdictions  in which it
          operates.

     K:   DEFERRED  FINANCING  COSTS--Included  in  Other  Assets  are  deferred
          financing costs  amounting to $313,425 and $637,980,  which are net of
          accumulated  amortization  of $713,990 and $190,404 as of December 31,
          2003 and 2002,  respectively,  and which are being  amortized over the
          term of the related obligation.

                                      F-17
<PAGE>


                NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF

           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                FOR YEARS ENDED DECEMBER 31, 2003, 2002, AND 2001

     L:   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 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.

     M:   NEW ACCOUNTING PRONOUNCEMENTS--In April 2002, the FASB issued SFAS No.
          145, which rescinded Statement No. 4, "Reporting Gains and Losses from
          Extinguishment  of Debt".  SFAS No. 145 is effective  for fiscal years
          beginning after May 15, 2002. The Partnership  adopted SFAS No. 145 on
          January 1,  2003,  which had no impact on the  consolidated  financial
          statements  of  the   Prudential   Variable   Contract  Real  Property
          Partnership.

          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. FIN 46-R defers the effective date for applying the
          provisions  of FIN-46 for those  companies  currently  accounting  for
          their  investments  in accordance  with the AICPA Audit and Accounting
          Guide,  "Audits of  Investment  Companies"  ("the Audit  Guide").  The
          effective  date is  delayed  while the AICPA  finalizes  the  proposed
          Statement of Position ("SOP") on the clarification of the scope of the
          Audit  Guide.  Following  the issuance of the final SOP, the FASB will
          consider modifying FIN 46-R to provide an exception for companies that
          apply  the  Audit  Guide.   The  Partnership  is  awaiting  the  final
          determination  from the FASB in order to evaluate the extent in which,
          if any, its equity investments may need to be consolidated as a result
          of this FIN 46-R.

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, 2003,  2002, and 2001
was $2,462,387, $1,989,473, and $1,776,701, respectively.

During the fourth  quarter 2002, in conjunction  with the  acquisition of a real
estate  investment,  the  Partnership  assumed  mortgage loan  financing of $7.4
million.

During  the  first  and  second  quarters  of  2001,  in  conjunction  with  the
acquisition of two real estate  investments,  the Partnership  assumed  mortgage
loan financing of $9.0 million and $10.3 million, respectively.

NOTE 4: REAL ESTATE PARTNERSHIP

Real estate  partnership is valued at the Partnership's  equity in net assets as
reflected by the  partnership's  financial  statements with properties valued as
indicated in Note 2B above. The  partnership's  combined  financial  position at
December  31,  2003 and 2002,  and  results of  operations  for the years  ended
December 31, 2003, 2002, and 2001 are summarized as follows:

                                                       DECEMBER 31,
                                                  2003             2002
                                              -----------      -----------
Partnership Assets and Liabilities
   Real estate at estimated market value ...  $29,450,000      $31,300,000
   Other assets ............................    1,536,444        1,643,304
                                              -----------      -----------
   Total assets ............................   30,986,444       32,943,304
                                              -----------      -----------
   Mortgage loans payable ..................   18,833,958       20,389,498
   Other liabilities .......................      320,588          362,837
                                              -----------      -----------
   Total liabilities .......................   19,154,546       20,752,335
                                              -----------      -----------
   Net Assets ..............................  $11,831,898      $12,190,969
                                              ===========      ===========
Partnership's Share of Net Assets ..........  $ 8,721,319      $ 8,978,324
                                              ===========      ===========

                                      F-18
<PAGE>


                NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF

           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                FOR YEARS ENDED DECEMBER 31, 2003, 2002, AND 2001

<TABLE>
<CAPTION>
                                                                                     YEAR ENDED DECEMBER 31,
                                                                            2003              2002             2001
                                                                        -----------       -----------       -----------
<S>                                                                     <C>               <C>               <C>
Partnership Operations
   Rental revenue....................................................   $ 4,473,698       $ 4,170,038       $ 4,497,459
   Real estate expenses and taxes....................................     3,751,112         3,717,425         3,536,948
                                                                        -----------       -----------       -----------
   Net Investment Income.............................................   $   722,586       $   452,613       $   960,511
                                                                        ===========       ===========       ===========
Partnership's Share of Net Investment Income.........................   $   560,660       $   276,209       $   686,801
                                                                        ===========       ===========       ===========

NOTE 5: MORTGAGE LOANS PAYABLE:

Debt includes mortgage loans payable as summarized below:

<CAPTION>
                                                                           PARTNERSHIP
                                                    PARTNERSHIP DEBT         DEBT AS
                                                     AS OF 12/31/03        OF 12/31/02          AS OF 12/31/03
                                                -------------------------   -----------    -----------------------------
                                                             PARTNERSHIP'S
                                                 100% LOAN     SHARE OF      100% LOAN     INTEREST   MATURITY
                                                  BALANCE    LOAN BALANCE*    BALANCE       RATE**      DATE    TERMS***
                                                -----------  -------------  -----------    --------   --------  --------
<S>                                             <C>           <C>           <C>              <C>        <C>     <C>
MORTGAGES OF WHOLLY OWNED PROPERTIES & CONSOLIDATED PARTNERSHIPS
Jacksonville, FL .............................  $10,000,000   $ 8,976,000   $ 9,844,318      4.34%      2008       PP, I
Gresham/Salem, OR ............................    8,433,665     8,433,665     8,657,061      7.97%      2006     PP, P&I
Hampton, VA ..................................    9,451,819     9,451,819     9,804,475      6.75%      2018     PP, P&I
Ocean City, MD ...............................    7,299,010     4,291,818     7,393,254      7.24%      2008     PP, P&I
Raleigh, NC ..................................    8,750,000     8,750,000            --      3.09%      2008       PP, I
------------------------------------------------------------------------------------------------------------------------
Total ........................................  $43,934,494   $39,903,302   $35,699,108

MORTGAGE LOANS ON EQUITY PARTNERSHIP
Kansas City, MO - Ten Quivira ................  $ 6,775,930   $ 4,994,538   $ 6,864,726      8.16%      2007     PP, P&I
Kansas City, MO- Ten Quivira Parcel ..........      974,750       718,488       987,524      8.16%      2007     PP, P&I
Kansas City, MO - Cherokee Hill ..............    3,129,145     2,306,493     3,172,260      7.79%      2007     PP, P&I
Kansas City, KS - Devonshire .................    2,171,880     1,600,893     2,200,342      8.16%      2007     PP, P&I
Kansas City, MO - Brywood Center .............    5,782,253     4,262,099     5,858,028      8.16%      2007     PP, P&I
Kansas City, MO - Willow Creek ...............           --            --     1,306,619        --       2005          --
------------------------------------------------------------------------------------------------------------------------
Total ........................................  $18,833,958   $13,882,510   $20,389,498

TOTAL MORTGAGE LOANS PAYABLE .................                $53,785,812                    6.33%
</TABLE>

*    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, 2003. It does not represent
     the Partnership's legal obligation.

**   The  Partnership's  weighted average interest rate at December 31, 2003 and
     2002 were 6.33% and 6.42%,  respectively.  The  weighted  average  interest
     rates were calculated using the Partnership's  annualized  interest expense
     for each loan  (derived  using the same  percentage  as that in (*)  above)
     divided by the Partnership's share of total debt.

***  Loan Terms  PP=Prepayment  penalties  applicable to loan,  I=Interest only,
     P&I=Principal and Interest

On October 9, 2003 the  Partnership  refinanced  its  variable  rate debt on the
apartment investment located in Jacksonville,  Florida to a fixed rate of 4.34%.
The interest rate on the variable rate debt was  previously  adjusted  annually.
The rate was equal to the 6-month Treasury rate plus 1.565%. It was subject to a
maximum of 11.345% and a minimum of 2.345%.  On December 31, 2002,  the interest
rate on the variable rate debt was 3.235%.

As of December 31, 2003,  mortgage loans payable on wholly owned  properties and
consolidated partnerships are payable as follows:

YEAR ENDING DECEMBER 31,                                       (000'S)
------------------------                                       -------
   2004.......................................................   $ 719
   2005.......................................................     774
   2006.......................................................   8,479
   2007.......................................................     588
   2008.......................................................  26,091
   Thereafter.................................................   7,284
                                                               -------
   Total...................................................... $43,935
                                                               =======

                                      F-19
<PAGE>


                NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF

           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                FOR YEARS ENDED DECEMBER 31, 2003, 2002, AND 2001

The  mortgage  loans  payable  are secured by real  estate  investments  with an
estimated market value of $93,875,000.

As of December  31, 2003,  principal  amounts of mortgage  loans  payable on the
equity partnership are payable as follows:

                                           100% LOAN  PARTNERSHIP'S
                                             BALANCE      SHARE
                                           ---------  -------------

YEAR ENDING DECEMBER 31,                     (000'S)     (000'S)
------------------------                     -------     -------
   2004 ................................     $   268     $   198
   2005 ................................         291         214
   2006 ................................         315         232
   2007 ................................      17,960      13,239
                                             -------     -------
   Total ...............................     $18,834     $13,883
                                             =======     =======

Based on borrowing  rates  available to the Partnership at December 31, 2003 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  $44.9  million and a carrying  value of $43.6  million,
which is net of deferred  financing  costs of $0.3  million.  The  Partnership's
share of equity  partnership  debt has an estimated fair value of  approximately
$15.4 million and a carrying  value of $13.9  million,  which is net of deferred
financing  costs of $0.  Different  assumptions  or  changes  in  future  market
conditions could significantly affect estimated fair value.

NOTE 6: CONCENTRATION OF RISK ON REAL ESTATE INVESTMENTS

At December  31,  2003,  the  Partnership  had real estate  investments  located
throughout  the United States.  The  diversification  of the account's  holdings
based on the  estimated  market  values  and  established  NCREIF  regions is as
follows:

                                            ESTIMATED
                                          MARKET VALUE
   REGION                                    (000'S)    REGION %
   ------                                 ------------  --------
   Southeast ...........................    $ 78,879       37%
   Mideast .............................      54,065       26%
   Pacific .............................      35,984       17%
   East North Central ..................      22,209       11%
   Mountain ............................      10,508        5%
   West North Central ..................    $  8,721        4%
                                            --------
   Total ...............................    $210,366
                                            ========

The above  allocations  are based on (1) 100% of the  estimated  market value of
wholly-owned  properties and consolidated joint ventures,  and (2) the estimated
market value of the Partnership's net equity in non-consolidated ventures.

NOTE 7: 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 2004 to 2023. At December 31, 2003, 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,                     (000'S)
------------------------                     -------
   2004 ................................     $10,344
   2005 ................................       9,626
   2006 ................................       8,716
   2007 ................................       8,142
   2008 ................................       7,155
   Thereafter ..........................      18,120
                                             -------
   Total ...............................     $62,103
                                             =======

                                      F-20
<PAGE>


                NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF

           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                FOR YEARS ENDED DECEMBER 31, 2003, 2002, AND 2001

The  above  future  minimum  base  rental  payments  exclude  residential  lease
agreements,  which accounted for 39.32% of the Partnership's  2003 annual rental
income.

NOTE 8: 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,  2003,  the cost basis of  Prudential's  equity
interest  in the  Partnership  under  this  commitment  (held  through  the Real
Property  Accounts) was $44 million.  Prudential did not make any  contributions
during the 2002 fiscal year and terminated this commitment on December 31, 2002.

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

NOTE 9: 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, 2003,
2002 and 2001  management  fees incurred by the  Partnership  were $2.5 million,
$2.5 million, and $2.7 million for each of the three years, respectively.

The Partnership also reimburses PIM for certain administrative services rendered
by PIM.  The amounts  incurred for the years ended  December 31, 2003,  2002 and
2001 were $132,380; $132,380; and $118,972,  respectively, and are classified as
administrative expenses in the Consolidated Statements of Operations.

During the years ended December 31, 2003,  2002 and 2001, the  Partnership  made
the following distributions to the Partners:

YEAR ENDING DECEMBER 31,                     (000'S)
------------------------                     -------
   2003 ................................     $ 6,856
   2002 ................................      16,143
   2001 ................................      18,000

NOTE 10: FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
                                                                               FOR THE YEAR ENDED DECEMBER 31,
                                                                2003          2002          2001          2000          1999
                                                              --------      --------      --------      --------      --------
<S>                                                           <C>           <C>           <C>           <C>           <C>
PER SHARE (UNIT) OPERATING PERFORMANCE:
Net Asset Value, beginning of period .......................  $  24.11      $  23.82      $  22.74      $  20.86      $  20.27
INCOME FROM INVESTMENT OPERATIONS:
Investment income, before management fee ...................      1.71          1.63          1.66          1.67          1.52
Management fee .............................................     (0.33)        (0.30)        (0.30)        (0.26)        (0.26)
Net realized and unrealized gain (loss) on investments .....     (0.83)        (1.04)        (0.28)         0.47         (0.67)
                                                              --------      --------      --------      --------      --------
Net Increase in Net Assets Resulting from Operations .......      0.55          0.29          1.08          1.88          0.59
                                                              --------      --------      --------      --------      --------
NET ASSET VALUE, END OF PERIOD .............................  $  24.66      $  24.11      $  23.82      $  22.74      $  20.86
                                                              ========      ========      ========      ========      ========
TOTAL RETURN, BEFORE MANAGEMENT FEE (a): ...................      3.63%         2.52%         6.14%        10.40%         4.22%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (in millions) ....................  $    182      $    184      $    198      $    206      $    210
Ratios to average net assets (b):
Management Fee .............................................      1.35%         1.28%         1.27%         1.28%         1.25%
Investment Income, before Management Fee ...................      7.12%         6.85%         7.11%         7.76%         7.30%
</TABLE>


(a)  Total Return,  before management fee is calculated by geometrically linking
     quarterly returns which are calculated using the formula below:
<TABLE>
<S><C>
       Net Investment Income + Net Realized and Unrealized Gains/(Losses)
-----------------------------------------------------------------------------------------------
     Beg.  Net  Asset  Value  + Time  Weighted  Contributions  -  Time  Weighted  Distributions
</TABLE>
(b)  Average net assets are based on beginning of quarter net assets.

                                      F-21
<PAGE>


           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                   SCHEDULE III--REAL ESTATE OWNED: PROPERTIES

                                DECEMBER 31, 2003

<TABLE>
<CAPTION>
                                INITIAL COSTS TO THE                                       GROSS AMOUNT AT WHICH
                                     PARTNERSHIP                                          CARRIED AT CLOSE OF YEAR
                                --------------------     COSTS         ------------------------------------------------------------
                                          BUILDING &  CAPITALIZED                                                  YEAR OF
                ENCUMBRANCES               IMPROVE-  SUBSEQUENT TO             BUILDING &     2003        TOTAL  CONSTRUC-  DATE
DESCRIPTION      AT 12/31/03    LAND        MENTS     ACQUISITION      LAND   IMPROVEMENTS   SALES      (a)(b)(c)   TION   ACQUIRED
-----------      -----------    ----      ----------  -----------      ----   ------------   -----      ---------   ----   --------
<S>               <C>         <C>         <C>          <C>          <C>        <C>         <C>          <C>         <C>         <C>
PROPERTIES:
Office Building
Lisle, IL .......      None   1,780,000   15,743,881   5,499,954    1,780,000  21,243,835               23,023,835  1985  Apr., 1988
Garden Apartments
Atlanta, GA  ....      None   3,631,212   11,168,904     981,147(b) 3,631,212  12,150,051               15,781,263  1987  Apr., 1988
Retail Shopping
Center
Roswell, GA  ....      None   9,454,622   21,513,677   2,134,102    9,462,951  23,639,450               33,102,401  1988  Jan., 1989
Garden Apartments
Raleigh, NC ..... 8,750,000   1,623,146   14,135,553     251,627    1,623,146  14,387,180               16,010,326  1995  Jun., 1995
Office Building
Brentwood, TN ...      None   1,797,000    6,588,451   2,038,276    1,797,377   8,626,350               10,423,727  1982  Oct., 1995
Office Park
Oakbrook
Terrace, IL .....      None   1,313,310   11,316,883   1,988,927    1,313,821  13,305,299               14,619,120  1988  Dec., 1995
Office Building
Beaverton, OR ...      None     816,415    9,897,307   1,176,487      845,887  11,044,322               11,890,209  1995  Dec., 1996
Industrial
Building
Salt Lake
City, UT  .......      None     582,457    4,805,676   1,211,349      702,323   5,897,159  (6,599,482)           0  1997  Jul., 1997
Industrial
Building
Aurora, CO ......      None   1,338,175    7,202,411   2,265,817    1,415,159   9,391,244               10,806,403  1997  Sep., 1997
Office Complex
Brentwood, TN ...      None   2,425,000    7,063,755     348,727    2,453,117   7,384,365                9,837,482  1987  Oct., 1997
Retail Shopping
Center
Hampton, VA...... 9,451,819   2,339,100   12,767,956   2,906,012    3,276,520  14,736,548               18,013,068  1998   May, 2001
                 ----------  ----------  -----------  ----------   ---------- -----------  ----------  -----------
                 18,201,819  27,100,437  122,204,454  20,802,425   28,301,513 141,805,803  (6,599,482) 163,507,834
                 ==========  ==========  ===========  ==========   ========== ===========  ==========  ===========
</TABLE>

                                            2003          2002          2001
                                        -----------   -----------    -----------
(a)  Balance at beginning of year...    150,548,805   158,410,798    154,613,404
     Additions:
       Acquistions..................              0             0              0
       Improvements, etc............      1,545,443     1,231,735      3,797,394
       Conversions from JV to WO....     18,013,068             0              0
     Deletions:
       Sale.........................     (6,599,482)   (9,093,728)             0
                                        -----------   -----------    -----------
Balance at end of year..............    163,507,834   150,548,805    158,410,798
                                        ===========   ===========    ===========
(b)  Net of $1,000,000 settlement received from lawsuit.

                                      F-22
<PAGE>


           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

            SCHEDULE III - REAL ESTATE OWNED: INTEREST IN PROPERTIES

                                DECEMBER 31, 2003

<TABLE>
<CAPTION>
                                                                                         GROSS AMOUNT AT WHICH
                INITIAL COSTS TO THE PARTNERSHIP                                        CARRIED AT CLOSE OF YEAR
              -------------------------------------     COSTS        -------------------------------------------------------------
                                         BUILDING &  CAPITALIZED                                                  YEAR OF
               ENCUMBRANCES               IMPROVE-  SUBSEQUENT TO             BUILDING &     2003      TOTAL    CONSTRUC-  DATE
DESCRIPTION     AT 12/31/03    LAND        MENTS     ACQUISITION     LAND    IMPROVEMENTS   SALES    (A)(B)(C)     TION   ACQUIRED
-----------     -----------    ----      ----------  -----------     ----    ------------   -----    ---------     ----   --------
<S>              <C>         <C>         <C>          <C>         <C>         <C>         <C>        <C>        <C>      <C>
INTEREST IN
PROPERTIES:
Garden Apartments
Jacksonville,
FL...............10,000,000   2,750,000  14,650,743   2,546,177   2,750,000  17,196,920              19,946,920   1973  Sept., 1999

Retail Shopping
Center
Kansas City MO                                                                                                   Various
and KS*..........13,900,817   5,710,916  15,211,504   2,601,686   5,710,916  17,813,190              23,524,106  Ranging Sept., 1999
                                                                                                                  From
                                                                                                                1972-1992
Garden Apartments
Gresham/Salem,                                                                                                   Various
OR............... 8,433,665   3,063,000  15,318,870     899,868   3,063,000  16,218,738              19,281,738  Ranging  Feb., 2001
                                                                                                                   From
                                                                                                                1971-1983
Retail Shopping
Center
Hampton, VA......          0  2,339,100  12,767,956   1,339,852   3,276,520  13,170,388  (16,446,908)         0    1998    May, 2001

Retail Shopping
Center
Ocean City, MD... 7,299,010   1,517,099   8,495,039   3,186,511   1,517,099  11,681,550              13,198,649    1986   Nov., 2002

Hotel
Portland, OR.....          0  1,500,000   6,508,729           0   1,500,000   6,508,729               8,008,729    1989   Dec., 2003
                 ----------  ----------  ----------  ----------  ----------  ----------  ----------- ----------
                 39,633,492  16,880,115  72,952,841  10,574,094  17,817,535  82,589,515  (16,446,908)83,960,142
                 ==========  ==========  ==========  ==========  ==========  ==========  =========== ==========
</TABLE>

                                               2003          2002        2001
                                            ----------   ----------   ----------
(a)  Balance at beginning of year.........  74,974,865   60,659,900   25,121,329
     Additions:
       Acquistions........................   8,008,729   10,012,138   33,488,926
       Improvements, etc..................   3,392,575    4,097,329    1,674,862
     Deletions:
       Sale...............................           0            0           0
       Conversions from JV to WO.......... (16,446,908)
Encumbrances on Joint Ventures accounted
   for by the equity method...............   1,116,048      205,498      374,783
                                            ----------   ----------   ----------
       Balance at end of year.............  71,045,309   74,974,865   60,659,900
                                            ==========   ==========   ==========

* Partnership interest accounted for by the equity method.

                                      F-23