UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 Commission file number 033-20018
 PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
 in respect of
 PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT
 (Exact name of registrant as specified in its charter)
 New Jersey
    
    22-2426091(State or other jurisdiction of 
incorporation or organization)
    
    (IRS Employer Identification No.)
 213 Washington Street, Newark, New Jersey 07102-2992
 (Address of principal executive offices) (Zip Code)
 (973) 802-6000
 (Registrants telephone number, including area code)
 þ o
  o o þ o
  o þ




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PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT  (Registrant)
 INDEX
 PageForward Looking Statement
Disclosure
    
    
    3Part I  Financial InformationItem 1.
    
    Financial Statements (Unaudited)A.
    
    PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNTStatements of Net Assets  June 30, 2008 and December 31,
2007
    
    
    4Statements of Operations  Six and Three Months Ended
June 30, 2008 and 2007
    
    
    4Statements of Changes in Net Assets  Six and Three
Months Ended June 30, 2008 and 2007
    
    
    4Notes to the Financial Statements of the
Real Property Account
    
    
    5B.
    
    THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIPConsolidated Statements of Assets and Liabilities  June
30, 2008 and December 31, 2007
    
    
    10Consolidated Statements of Operations  Six and Three
Months Ended June 30, 2008 and 2007
    
    
    11Consolidated Statements of Changes in Net Assets  Six
Months Ended June 30, 2008 and 2007
    
    
    12Consolidated Statements of Cash Flows  Six Months Ended
June 30, 2008 and 2007
    
    
    13Consolidated Schedules of Investments  June 30, 2008 and
December 31, 2007
    
    
    14Notes to Consolidated
Financial Statements of the Partnership
    
    
    16Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    24Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    35Item 4.
    
    Controls and Procedures
    
    
    36Part II  Other InformationItem 1A.
    
    Risk Factors
    
    
    36Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    36Item 6.
    
    Exhibits
    
    
    36Signatures
    
    
    37
 2




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##### 



Forward-Looking Statement Disclosure
 3




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##### 



FINANCIAL STATEMENTS OF
PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT
 STATEMENTS OF NET ASSETS
June 30, 2008 and December 31, 2007June 30, 2008(unaudited)
    
    December 31, 2007ASSETSInvestment in The Prudential Variable Contract

Real Property Partnership
    
    $
    10,971,785
    
    
    $
    10,764,653Net Assets
    
    $
    10,971,785
    
    
    $
    10,764,653NET ASSETS, representing:Equity of contract owners
    
    $
    7,786,760
    
    
    $
    7,715,262Equity of Pruco Life Insurance Company of New Jersey
    
    
    3,185,025
    
    
    
    3,049,391$
    10,971,785
    
    
    $
    10,764,653Units outstanding
    
    
    3,343,081
    
    
    
    3,333,399Portfolio shares held
    
    
    294,526
    
    
    
    294,526Portfolio net asset value per share
    
    $
    37.25
    
    
    $
    36.55STATEMENTS OF OPERATIONS
For the six and three months ended June 30, 2008 and 20071/1/2008-6/30/2008
    
    
    
    1/1/2007-6/30/2007
    
    
    
    4/1/2008-6/30/2008
    
    
    
    4/1/2007-6/30/2007(unaudited)
    
    (unaudited)
    
    (unaudited)
    
    (unaudited)INVESTMENT INCOMENet investment income from Partnership operations
    
    $
    262,997
    
    
    $
    248,252
    
    
    $
    121,826
    
    
    $
    131,103EXPENSESCharges to contract owners for assuming mortality risk and
expense risk and for administration
    
    
    22,001
    
    
    
    21,831
    
    
    
    11,011
    
    
    
    11,027NET INVESTMENT INCOME
    
    
    240,996
    
    
    
    226,421
    
    
    
    110,815
    
    
    
    120,076NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTSNet change in unrealized gain (loss) on investments in Partnership
    
    
    (55,865
    )
    
    
    248,915
    
    
    
    (25,768
    )
    
    
    165,051Net realized gain (loss) on sale of investments in Partnership
    
    
    0
    
    
    
    33,103
    
    
    
    0
    
    
    
    17,890NET GAIN (LOSS) ON INVESTMENTS
    
    
    (55,865
    )
    
    
    282,019
    
    
    
    (25,768
    )
    
    
    182,941NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS
    
    $
    185,131
    
    
    $
    508,439
    
    
    $
    85,047
    
    
    $
    303,017STATEMENTS OF CHANGES IN NET ASSETS
For the six and three months ended June 30, 2008 and 20071/1/2008-6/30/2008
    
    
    
    1/1/2007-6/30/2007
    
    
    
    4/1/2008-6/30/2008
    
    
    
    4/1/2007-6/30/2007(unaudited)
    
    (unaudited)
    
    (unaudited)
    
    (unaudited)OPERATIONSNet investment income
    
    $
    240,996
    
    
    $
    226,421
    
    
    $
    110,815
    
    
    
    120,076Net change in unrealized gain (loss) on investments in Partnership
    
    
    (55,865
    )
    
    
    248,915
    
    
    
    (25,768
    )
    
    
    165,051Net realized gain (loss) on sale of investments in Partnership
    
    
    0
    
    
    
    33,103
    
    
    
    0
    
    
    
    17,890NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS
    
    
    185,131
    
    
    
    508,439
    
    
    
    85,047
    
    
    
    303,017CAPITAL TRANSACTIONSNet withdrawals by contract owners
    
    
    (54,175
    )
    
    
    (45,660
    )
    
    
    (1,841
    )
    
    
    (54,595
    )Net contributions (withdrawals) by Pruco Life Insurance Company of New Jersey
    
    
    76,176
    
    
    
    67,491
    
    
    
    12,852
    
    
    
    65,622NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL TRANSACTIONS
    
    
    22,001
    
    
    
    21,831
    
    
    
    11,011
    
    
    
    11,027TOTAL INCREASE (DECREASE) IN NET ASSETS
    
    
    207,132
    
    
    
    530,270
    
    
    
    96,058
    
    
    
    314,044NET ASSETSBeginning of period
    
    
    10,764,653
    
    
    
    9,975,186
    
    
    
    10,875,727
    
    
    
    10,191,413End of period
    
    $
    10,971,785
    
    
    $
    10,505,456
    
    
    $
    10,971,785
    
    
    $
    10,505,457
 The accompanying notes are an integral part of these financial statements.
 4




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##### 



NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT
June 30, 2008
(Unaudited)
 Note 1:
    
    General
    Note 2:
    
    Summary of Significant Accounting Policies and Pronouncements
 A.
    
    Basis of Accounting
      5




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##### 



B.
    
    Investment in Partnership Interest
  C.
    
    Income Recognition
  D.
    
    Equity of Pruco Life Insurance Company of New Jersey
  Note 3:
    
    Charges and Expenses
 A.
    
    Mortality Risk and Expense Risk Charges
  B.
    
    Administrative Charges
  C.
    
    Cost of Insurance and Other Related Charges
  D.
    
    Deferred Sales Charge
  E.
    
    Partial Withdrawal Charge
  6




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##### 



Note 4:
    
    Taxes
  Note 5:
    
    Net Contributions (Withdrawals) by Contract Owners
  Six Months Ended June 30,(Unaudited)2008
    
    
    2007VAL
    
    $
    (85,725
    )
    
    $
    (30,243
    )VLI
    
    
    (229
    )
    
    
    (8,126
    )SPVA
    
    
    32,000
    
    
    
    0SPVL
    
    
    (221
    )
    
    
    (7,291
    )TOTAL
    
    $
    (54,175
    )
    
    $
    (45,660
    )
 Note 6:
    
    Partnership Distributions
  Note 7:
    
    Unit Information
  June 30, 2008
    
    December 31, 2007(Unaudited)Units Outstanding:
    
    3,343,081
    
    3,333,399Unit Value:
    
    2.84596 to 3.45469
    
    2.80966 to 3.39532
 Note 8:
    
    Financial Highlights
  Six Months EndedJune 30,(Unaudited)2008
    
    2007Total Return
    
    1.29% to 1.75%
    
    4.67% to 5.13%
 7




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##### 



Note 9:
    
    Fair Value Disclosure
         8




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##### 



Table 1:
 ($ in 000s)Quoted Prices inAmounts
    
    
    Active Markets
    
    
    Significant Other
    
    
    SignificantMeasured at Fair
    
    
    for Identical
    
    
    Observable Inputs
    
    
    Unobservable6/30/2008
    
    
    Assets (Level 1)
    
    
    (Level 2)
    
    
    Inputs (Level 3)Assets:Investment in The
Prudential Variable
Contract Real
Property
Partnership
    
    $
    10,972
    
    
    $
    
    
    
    $
    
    
    
    $
    10,972Total Assets
    
    $
    10,972
    
    
    $
    
    
    
    $
    
    
    
    $
    10,972
 Table 2:
 ($ in 000s)Fair Value Measurements UsingSignificant Unobservable Inputs(Level 3)Investment inThe PrudentialVariable ContractReal Property
    
    
    TotalBeginning balance @ 12/31/07
    
    $
    10,765
    
    
    $
    10,765Total gains or losses (realized/unrealized)
included in earnings (or changes in net assets) from Partnership operations
    
    
    (56
    )
    
    
    (56
    )Net Investment Income from Partnership operations
    
    
    263
    
    
    
    263Acquisition/Additions
    
    
    
    
    
    
    Equity Income
    
    
    
    
    
    
    Distributions
    
    
    
    
    
    
    Ending balance @ 6/30/08
    
    $
    10,972
    
    
    $
    10,972The amount of total gains or losses for the period included in earnings
(or changes in net assets) attributable to the change in unrealized gains
or losses relating to assets still held at the reporting date relating to assets
still held at the reporting date
    
    $
    (56
    )
    
    $
    (56
    )
 9




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##### 



THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
 June 30, 2008(Unaudited)
    
    
    December 31, 2007ASSETSREAL ESTATE
INVESTMENTS  At estimated fair value:Real estate and improvements
(cost: 06/30/2008  $239,375,204; 12/31/2007  $233,233,775)
    
    $
    256,961,712
    
    
    $
    251,161,712Real estate partnerships and preferred equity investments
(cost: 06/30/2008  $14,492,329; 
12/31/2007 
$14,523,934)
    
    
    13,907,735
    
    
    
    14,523,934Other real estate investments (cost: 06/30/2008 
$3,419,073; 12/31/2007  $3,232,341)
    
    
    3,419,073
    
    
    
    3,232,341Total real estate investments
    
    $
    274,288,520
    
    
    $
    268,917,987CASH AND CASH EQUIVALENTS
    
    
    23,545,060
    
    
    
    18,215,871OTHER ASSETS, NET
    
    
    3,939,485
    
    
    
    3,033,040Total assets
    
    $
    301,773,065
    
    
    $
    290,166,898LIABILITIES & PARTNERS EQUITYINVESTMENT LEVEL DEBT
    
    $
    38,288,213
    
    
    $
    32,121,712ACCOUNTS PAYABLE AND ACCRUED EXPENSES
    
    
    2,631,082
    
    
    
    2,184,812DUE TO AFFILIATES
    
    
    883,055
    
    
    
    901,371OTHER LIABILITIES
    
    
    825,805
    
    
    
    920,454MINORITY INTEREST
    
    
    7,357,748
    
    
    
    7,004,790Total liabilities
    
    
    49,985,903
    
    
    
    43,133,139COMMITMENTS AND CONTINGENCIESPARTNERS EQUITY
    
    
    251,787,162
    
    
    
    247,033,759Total liabilities and partners equity
    
    $
    301,773,065
    
    
    $
    290,166,898NUMBER OF SHARES OUTSTANDING AT END OF PERIOD
    
    
    6,758,960
    
    
    
    6,758,960SHARE VALUE AT END OF PERIOD
    
    $
    37.25
    
    
    $
    36.55
 The accompanying notes are an integral part of these consolidated financial statements.
 10




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##### 



THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP  CONSOLIDATED STATEMENTS OF OPERATIONS  (Unaudited)
 For the Six Months
    
    
    For the Three MonthsEnded June 30,
    
    
    Ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007INVESTMENT INCOME:Revenue from real estate and improvements
    
    $
    15,209,440
    
    
    $
    13,207,476
    
    
    $
    7,594,780
    
    
    $
    6,719,243Equity in income of real estate partnerships
    
    
    509,865
    
    
    
    627,648
    
    
    
    209,416
    
    
    
    328,268Income from other real estate investments
    
    
    186,732
    
    
    
    185,706
    
    
    
    93,366
    
    
    
    93,366Interest on short-term investments
    
    
    231,379
    
    
    
    953,257
    
    
    
    107,136
    
    
    
    421,582Total investment income
    
    
    16,137,416
    
    
    
    14,974,087
    
    
    
    8,004,698
    
    
    
    7,562,459INVESTMENT EXPENSES:Operating
    
    
    3,477,527
    
    
    
    3,382,865
    
    
    
    1,753,917
    
    
    
    1,658,885Investment management fee
    
    
    1,731,170
    
    
    
    1,640,443
    
    
    
    869,648
    
    
    
    829,811Real estate taxes
    
    
    1,481,620
    
    
    
    1,054,609
    
    
    
    746,774
    
    
    
    542,724Administrative
    
    
    2,527,907
    
    
    
    2,037,531
    
    
    
    1,416,779
    
    
    
    1,053,062Interest expense
    
    
    958,671
    
    
    
    1,129,113
    
    
    
    516,518
    
    
    
    451,192Minority interest
    
    
    (74,900
    )
    
    
    32,487
    
    
    
    (94,691
    )
    
    
    18,144Total investment expenses
    
    
    10,101,995
    
    
    
    9,277,048
    
    
    
    5,208,945
    
    
    
    4,553,818NET INVESTMENT INCOME
    
    
    6,035,421
    
    
    
    5,697,039
    
    
    
    2,795,753
    
    
    
    3,008,641REALIZED AND UNREALIZED GAIN (LOSS) ON REAL ESTATE
INVESTMENTS:Net proceeds from real estate investments sold
    
    
    
    
    
    
    18,353,122
    
    
    
    
    
    
    
    3,703,880Less: Cost of real estate investments sold
    
    
    
    
    
    
    18,973,800
    
    
    
    
    
    
    
    7,687,109Realization of prior years unrealized
gain (loss) on real estate investments sold
    
    
    
    
    
    
    (1,380,344
    )
    
    
    
    
    
    
    (4,361,986
    )NET GAIN (LOSS) REALIZED ON REAL ESTATE INVESTMENTS SOLD
    
    
    
    
    
    
    759,666
    
    
    
    
    
    
    
    378,757Change in unrealized gain (loss) on real estate investments
    
    
    (926,021
    )
    
    
    6,068,665
    
    
    
    (309,944
    )
    
    
    4,050,646Less: Minority interest in unrealized gain (loss) on real estate investments
    
    
    355,997
    
    
    
    356,386
    
    
    
    281,416
    
    
    
    231,189Net unrealized gain (loss) on real estate investments
    
    
    (1,282,018
    )
    
    
    5,712,279
    
    
    
    (591,360
    )
    
    
    3,819,457NET REALIZED AND UNREALIZED GAIN (LOSS)
ON REAL ESTATE INVESTMENTS
    
    
    (1,282,018
    )
    
    
    6,471,945
    
    
    
    (591,360
    )
    
    
    4,198,214INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS
    
    $
    4,753,403
    
    
    $
    12,168,984
    
    
    $
    2,204,393
    
    
    $
    7,206,855
 The accompanying notes are an integral part of these consolidated financial statements.
 11




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##### 



THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP  CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS  (Unaudited)
 For the Six Months Ended June 30,2008
    
    
    2007INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS:Net investment income
    
    $
    6,035,421
    
    
    $
    5,697,039Net gain (loss) realized on real estate
investments sold
    
    
    
    
    
    
    759,666Net unrealized gain (loss) from real estate
investments
    
    
    (1,282,018
    )
    
    
    5,712,279Increase (decrease) in net assets
resulting from operations
    
    
    4,753,403
    
    
    
    12,168,984NET ASSETS  Beginning of period
    
    
    247,033,759
    
    
    
    228,916,584NET ASSETS  End of period
    
    $
    251,787,162
    
    
    $
    241,085,568
 The accompanying notes are an integral part of these consolidated financial statements.
 12




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##### 



THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP  CONSOLIDATED STATEMENTS OF CASH FLOWS  (Unaudited)
 For the Six Months Ended June 30,2008
    
    
    2007CASH FLOWS FROM OPERATING ACTIVITIES:Net increase in net assets from operations
    
    $
    4,753,403
    
    
    $
    12,168,984Adjustments to reconcile net increase in net assets
to net cash from operating activitiesNet realized and unrealized loss (gain)
    
    
    1,282,018
    
    
    
    (6,471,945
    )Amortization of deferred financing costs
    
    
    36,283
    
    
    
    250,414Distributions in excess of (less than) equity in income
of real estate partnerships operations
    
    
    31,609
    
    
    
    (60,056
    )Minority interest in consolidated partnerships
    
    
    (74,900
    )
    
    
    32,487Bad debt expense
    
    
    33,044
    
    
    
    60,927(Increase) Decrease in accrued interest included in
other real estate investments
    
    
    (186,732
    )
    
    
    (185,706
    )(Increase) decrease in:Other assets
    
    
    (975,772
    )
    
    
    439,757Increase (decrease) in:Accounts payable and accrued expenses
    
    
    446,270
    
    
    
    1,142,111Due to affiliates
    
    
    (18,318
    )
    
    
    55,330Other liabilities
    
    
    (94,649
    )
    
    
    (66,531
    )Net cash flows from (used in) operating activities
    
    
    5,232,256
    
    
    
    7,365,772CASH FLOWS FROM INVESTING ACTIVITIES:Net proceeds from real estate investments sold
    
    
    
    
    
    
    18,353,122Acquisition of real estate and improvements
    
    
    
    
    
    
    (22,706,166
    )Additions to real estate and improvements
    
    
    (6,141,430
    )
    
    
    (1,044,138
    )Net cash flows from (used in) investing activities
    
    
    (6,141,430
    )
    
    
    (5,397,182
    )CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from investment level debt
    
    
    22,005,985
    
    
    
    Principal payments on investment level debt
    
    
    (15,839,484
    )
    
    
    (289,546
    )Contributions from minority interest partners
    
    
    80,000
    
    
    
    Distributions to minority interest partners
    
    
    (8,138
    )
    
    
    Net cash flows from (used in) financing activities
    
    
    6,238,363
    
    
    
    (289,546
    )NET CHANGE IN CASH AND CASH EQUIVALENTS
    
    
    5,329,189
    
    
    
    1,679,044CASH AND CASH EQUIVALENTS  Beginning of period
    
    
    18,215,871
    
    
    
    33,399,532CASH AND CASH EQUIVALENTS  End of period
    
    $
    23,545,060
    
    
    $
    35,078,576DISCLOSURE OF SUPPLEMENTAL CASH FLOW INFORMATIONCash paid for interest
    
    $
    813,368
    
    
    $
    878,699
 The accompanying notes are an integral part of these consolidated financial statements.
 13




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##### 



THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP  CONSOLIDATED SCHEDULE OF INVESTMENTS
 2008 Total RentableSquare Feet
    
    
    June 30, 2008Unless Otherwise
    
    
    (unaudited)
    
    
    December 31, 2007June 30, 2008
    
    
    
    Indicated
    
    
    
    
    
    
    Estimated
    
    
    
    
    
    
    EstimatedProperty Name
    
    Ownership
    
    City, State
    
    (Unaudited)
    
    
    Cost
    
    

Fair Value
    
    

Fair Cost
    
    
    ValueOFFICES750 Warrenville
    
    WO
    
    Lisle, IL
    
    
    103,193
    
    
    $
    24,649,581
    
    
    $
    10,500,000
    
    
    $
    24,512,521
    
    
    $
    11,500,000Summit @ Cornell Oaks
    
    WO
    
    Beaverton , OR
    
    
    72,109
    
    
    
    12,403,057
    
    
    
    12,600,000
    
    
    
    12,401,252
    
    
    
    13,800,000Westpark
    
    WO
    
    Nashville, TN
    
    
    97,199
    
    
    
    11,347,623
    
    
    
    13,100,000
    
    
    
    11,323,885
    
    
    
    13,100,000Financial Plaza
    
    WO
    
    Brentwood, TN
    
    
    98,049
    
    
    
    12,371,092
    
    
    
    13,700,000
    
    
    
    12,371,092
    
    
    
    13,700,000Offices % as of 6/30/08
    
    
    20
    %
    
    
    60,771,353
    
    
    
    49,900,000
    
    
    
    60,608,750
    
    
    
    52,100,000APARTMENTSBrookwood Apartments
    
    WO
    
    Atlanta, GA
    
    
    240 Units
    
    
    
    19,647,849
    
    
    
    20,400,000
    
    
    
    19,548,293
    
    
    
    20,200,000Dunhill Trace Apartments
    
    WO
    
    Raleigh, NC
    
    
    250 Units
    
    
    
    16,394,100
    
    
    
    20,200,000
    
    
    
    16,375,037
    
    
    
    19,800,000Broadstone Crossing
    
    WO
    
    Austin, TX
    
    
    225 Units
    
    
    
    22,725,427
    
    
    
    27,300,000
    
    
    
    22,723,849
    
    
    
    27,100,000The Reserve At Waterford Lakes
    
    WO
    
    Charlotte, NC
    
    
    140 Units
    
    
    
    13,604,939
    
    
    
    13,500,000
    
    
    
    13,535,450
    
    
    
    13,500,000Apartments % as of 6/30/08
    
    
    32
    %
    
    
    72,372,315
    
    
    
    81,400,000
    
    
    
    72,182,629
    
    
    
    80,600,000RETAILKings Market
    
    WO
    
    Rosewell, GA
    
    
    314,358
    
    
    
    37,892,171
    
    
    
    24,000,000
    
    
    
    37,883,222
    
    
    
    24,700,000Hampton Towne Center
    
    WO
    
    Hampton, VA
    
    
    174,540
    
    
    
    18,055,021
    
    
    
    27,800,000
    
    
    
    18,050,090
    
    
    
    26,500,000White Marlin Mall
    
    CJV
    
    Ocean City, MD
    
    
    186,016
    
    
    
    21,864,705
    
    
    
    29,500,000
    
    
    
    17,016,325
    
    
    
    23,900,000Westminster Crossing East, LLC
    
    CJV
    
    Westminster, MD
    
    
    89,890
    
    
    
    12,406,433
    
    
    
    17,861,712
    
    
    
    12,405,500
    
    
    
    17,861,712Kansas City Portfolio
    
    EJV
    
    Kansas City, KS;MO
    
    
    487,660
    
    
    
    148,398
    
    
    
    148,398
    
    
    
    140,911
    
    
    
    140,911CARS Preferred Equity
    
    PE
    
    Various
    
    
    N/A
    
    
    
    14,343,931
    
    
    
    13,759,337
    
    
    
    14,383,023
    
    
    
    14,383,023Harnett Crossing
    
    CJV
    
    Dunn, NC
    
    
    193,235
    
    
    
    5,958,844
    
    
    
    7,400,000
    
    
    
    5,958,844
    
    
    
    7,200,000Retail % as of 6/30/08
    
    
    49
    %
    
    
    110,669,503
    
    
    
    120,469,447
    
    
    
    105,837,915
    
    
    
    114,685,646HOTELPortland Crown Plaza
    
    CJV
    
    Portland, OR
    
    
    161 Rooms
    
    
    
    10,054,362
    
    
    
    19,100,000
    
    
    
    9,128,415
    
    
    
    18,300,000Hotel % as of 6/30/08
    
    
    8
    %
    
    
    10,054,362
    
    
    
    19,100,000
    
    
    
    9,128,415
    
    
    
    18,300,000OTHER REAL ESTATE INVESTMENTSWestminster East
    
    Eloan
    
    Westminster, MD
    
    
    
    
    
    
    3,419,073
    
    
    
    3,419,073
    
    
    
    3,232,341
    
    
    
    3,232,341Other Real EstateInvestments % as of6/30/08
    
    
    1
    %
    
    
    3,419,073
    
    
    
    3,419,073
    
    
    
    3,232,341
    
    
    
    3,232,341Total Real Estate Investments
as a 
Percentage of
Net Assets as of 6/30/08
    
    
    
    
    
    
    109
    %
    
    $
    257,286,606
    
    
    $
    274,288,520
    
    
    $
    250,990,050
    
    
    $
    268,917,987
 
 The accompanying notes are an integral part of these consolidated financial statements.
 14




---



##### 



THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP  CONSOLIDATED SCHEDULE OF INVESTMENTS
 June 30, 2008(unaudited)
    
    
    December 31, 2007Estimated
    
    
    
    
    
    
    EstimatedFace Amount
    
    
    Cost
    
    
    Fair Value
    
    
    Cost
    
    
    Fair ValueCASH AND CASH EQUIVALENTS  Percentage of
 Net Assets
    
    
    
    
    
    
    
    
    
    
    9.4
    %
    
    
    
    
    
    
    7.4
    %Federal Home Loan Bank, 0 coupon bond, July, 2008
    
    $
    13,855,000
    
    
    $
    13,855,000
    
    
    $
    13,855,000
    
    
    $
    2,065,813
    
    
    $
    2,065,813Federal Home Loan Bank, 0 coupon bond, July, 2008
    
    
    7,997,213
    
    
    
    7,997,213
    
    
    
    7,997,213
    
    
    
    4,998,313
    
    
    
    4,998,313Federal Home Loan Bank, 0 coupon bond, May, 2008
    
    
    N/A
    
    
    
    
    
    
    
    
    
    
    
    9,997,633
    
    
    
    9,997,633Total Cash Equivalents
    
    
    
    
    
    
    21,852,213
    
    
    
    21,852,213
    
    
    
    17,061,759
    
    
    
    17,061,759Cash
    
    
    
    
    
    
    1,692,847
    
    
    
    1,692,847
    
    
    
    1,154,112
    
    
    
    1,154,112Total Cash and Cash Equivalents
    
    
    
    
    
    $
    23,545,060
    
    
    $
    23,545,060
    
    
    $
    18,215,871
    
    
    $
    18,215,871
 The accompanying notes are an integral part of these consolidated financial statements.
 15




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF  THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP  (Unaudited)
 Note 1:     Summary of Significant Accounting Policies and Pronouncements
 A.
    
    Basis of Presentation The accompanying unaudited consolidated financial
statements of The Prudential Variable Contract Real Property Partnership (the
Partnership) included herein have been prepared in accordance with the requirements
of Form 10-Q and accounting principles generally accepted in the United States of
America for interim financial information. In the opinion of management, all
adjustments (consisting only of normal recurring adjustments) considered necessary for
a fair statement have been included. Operating results for the six months ended June
30, 2008 are not necessarily indicative of the results that may be expected for the
year ended December 31, 2008. For further information, refer to the audited
consolidated financial statements and notes thereto included in each partners Annual
Report on Form 10-K for the Year Ended December 31, 2007.B.
    
    Managements Use of Estimates in the Financial
Statements The preparation of
financial statements in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions that
affect the amounts reported in the consolidated financial statements and accompanying
notes. Actual results could differ from those estimates.C.
    
    New Accounting Pronouncements FASB Interpretation No. 46, Consolidation of
Variable Interest Entities (FIN 46), was issued in January 2003. In December 2003,
FASB issued a revised interpretation of FIN 46 (FIN 46-R) that supersedes FIN 46. FIN
46-R defers the effective date for applying the provisions of FIN46 for those companies
currently accounting for their investments in accordance with the AICPA Audit and
Accounting Guide, Audits of Investment Companies (the Audit Guide). The FASB is
currently considering modifying FIN 46-R to provide an exception for companies that
apply the Audit Guide. The Partnership is awaiting the final determination from the
FASB in order to evaluate the extent in which, if any, its equity investments may need
to be consolidated as a result of this FIN 46-R.In September 2006, the staff of the U.S. Securities and Exchange Commission, or SEC,
issued Staff Accounting Bulletin, or SAB, No. 108, Considering the Effects of Prior
Year Misstatements when Quantifying Misstatements in Current Year Financial Statements.
The interpretations in this SAB express the staffs views regarding the process of
quantifying financial statement misstatements. Specifically, the SEC staff believes
that registrants must quantify the impact on current period financial statements of
correcting all misstatements, including both those occurring in the current period and
the effect of reversing those that have accumulated from prior periods. This SAB must
be applied beginning with the first fiscal year ending after November 15, 2006, with
early adoption encouraged. Since the Partnerships method for quantifying financial
statement misstatements already considers those occurring in the current period and the
effect of reversing those that have accumulated from prior periods, the adoption of SAB
No. 108 had no effect on the financial position and result of operations of the
Partnership.The Partnership adopted FASB Interpretation No. 48 (FIN 48), Accounting for
Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109 as of January
1, 2007. This interpretation prescribes a comprehensive model for how a Partnership
should recognize, measure, present, and disclose in its financial statements uncertain
tax positions that the Partnership has taken or expects to take on a tax return. The
adoption of FIN 48 had no effect to the financial position and result of operations of
the Partnership.In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. This
statement defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles, and requires additional disclosures about fair
value measurements. This statement does not require any new fair value measurements, but
the application of this statement could change current practices in determining fair
value. This adoption did not change the methodology used to fair value our real estate
investments.
 16




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF  THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP  (Unaudited)
 Note 1:     Summary of Significant Accounting Policies and Pronouncements (continued)
 C.
    
    New Accounting Pronouncements (continued)In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities, including an amendment of FASB Statement No. 115.
This statement provides partnerships with an option to report selected financial assets
and liabilities at fair value.SFAS No. 157 and SFAS No. 159 are effective for fiscal years beginning after November
15, 2007 with early adoption permitted. The Partnership adopted SFAS No. 157 and SFAS
No. 159 effective January 1, 2008, however, the Partnership did not make a fair value
option election for its existing debt. The adoption does not have any effect on the
Partnerships consolidated financial position and results of operations. Please refer
to Notes 1E and 2 for details.In June 2007, the Accounting Standards Executive Committee issued Statement of Position
07-1, Clarification of the Scope of the Audit and Accounting Guide Investment Companies
and Accounting by Parent Companies and Equity Method Investors for Investments in
Investment Companies (SOP 07-1). SOP 07-1 provides guidance for determining whether
an entity is within the scope of the AICPA Audit and Accounting Guide Investment
Companies (the Audit Guide). SOP 07-1 was originally determined to be effective for
fiscal years beginning on or after December 15, 2007, however, on February 6, 2008, FASB
issued a final Staff Position indefinitely deferring the effective date and prohibiting
early adoption of SOP 07-1 while addressing implementation issues.D.
    
    Real Estate Investments Real estate investments are shown at estimated fair
value. The costs of properties owned are initially recorded at the purchase price plus
closing costs. Development costs and major renovations are capitalized as a component
of cost, and routine maintenance and repairs are charged to expense as incurred. Real
estate costs include the cost of acquired property, including all the tangible and
intangible assets. Tangible assets include the value of all land, building and tenant
improvements at the time of acquisition. Intangible assets include the value of any
above and below market leases, in-place leases, and tenant relationships at the time of
acquisition.Fair value estimates are based upon property appraisal reports prepared by independent
real estate appraisers (members of the Appraisal Institute or an equivalent
organization) within a reasonable amount of time following acquisition of the real
estate and no less frequently than annually thereafter. The fair value measurement
objective is to determine the exit price at which the Fund would receive to sell an
asset based on the highest and best use valuation premise or pay to transfer a liability
taking into consideration the perspectives of market participant and the assumptions
they may use. The Chief Real Estate Appraiser of Prudential Investment Management, Inc.
(PIM), which is an indirectly owned subsidiary of Prudential Financial Inc. (PFI),
is responsible to assure that the valuation process provides independent and reasonable
property fair value estimates. An unaffiliated third party appraisal firm has been
appointed by PIM to assist the Chief Real Estate Appraiser in maintaining and monitoring
the independence and the accuracy of the appraisal process. The fair value of real
estate investments does not reflect the transaction sale costs, which may be incurred
upon disposition of the real estate investments.Unconsolidated real estate partnerships are valued at the Partnerships equity in net
assets as reflected in the partnerships financial statements with properties valued as
described above and in Note 1E below. Under the equity method, the investment is
initially recorded at the original investment amount, plus or minus additional amounts
invested or distributed, and is subsequently adjusted for the Partnerships share of
undistributed earnings or losses, including unrealized appreciation and depreciation,
from the underlying entity.
 17




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF  THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP  (Unaudited)
 Note 1:     Summary of Significant Accounting Policies and Pronouncements (continued)
 D.
    
    Real Estate Investments (continued)Land held for development is reported at estimated fair value, which approximates the
acquisition cost plus soft costs incurred prior to development. The estimated fair value
is determined based on the amount at which the Fund would receive if the land were sold
at the reporting date taking into consideration the assumptions that market participants
may use.The Partnership periodically enters into forward contracts to acquire, for a fixed
price, real estate investments to be constructed in accordance with predetermined plans
and specifications. The funding obligation/forward contract obligation and related asset
are recorded in the consolidated financial statements in the period in which the project
is waived or deemed to have reached substantial completion, equal to or over 90%
complete, and the Funds commitment to fund is firm. The amount of any unrealized gain
or loss recognized is based upon the difference between the estimated investments
market value as described above and the Funds funding obligation. The funding
obligation and related assets are recorded in the consolidated financial statements. As
of June 30, 2008 and December 31, 2007, no such funding obligation existed.As described above, the estimated fair value of real estate and real estate related
assets is determined through an appraisal process. These estimated fair values may vary
significantly from the prices at which the real estate investments would sell, since
market prices of real estate investments can only be determined by negotiation between a
willing buyer and seller and could be material to the consolidated financial statements.
Although the estimated fair values represent subjective estimates, management believes
these estimated fair values are reasonable approximations of market prices and the
aggregate estimated value of investments in real estate is fairly presented as of June
30, 2008 and December 31, 2007.E.
    
    Valuation Methodology The purpose of an appraisal is to estimate the fair
value of real estate as of a specific date. Fair value is the price that would be
received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date.The estimate of fair value is based on the conventional approaches to value, all of
which require the exercise of subjective judgment. The three approaches are: (1)
current cost of reproducing the real estate less deterioration and functional and
economic obsolescence; (2) discounting a series of income streams and reversion at a
specific yield or by directly capitalizing a single year income estimate by an
appropriate factor; and (3) value indicated by recent sales of comparable real estate in
the market. In the reconciliation of these three approaches, the one most heavily
relied upon is the one then recognized as the most appropriate by the independent
appraiser for the type of real estate in the market.In general, the input values used in the appraisal process are unobservable, therefore
unless indicated otherwise; real estate investments and debt are classified as Level 3
under SFAS 157 fair value hierarchy.F.
    
    Other Real Estate Investments Other real estate investments include
short-term notes receivable, which are valued at the amount due and approximate fair
value.G.
    
    Cash and Cash Equivalents Cash and cash equivalent are comprised of all
short-term investments and investments in money market funds with a maximum maturity of
three months. Cash equivalents consist of investments in the Prudential Investment
Liquidity Pool offered and managed by an affiliate of PFI and are accounted for at fair
value.
 18




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF  THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP  (Unaudited)
 Note
1:     Summary of Significant Accounting Policies and Pronouncements (continued)
 H.
    
    Other Assets Restricted cash of $115,000 and $186,736 was maintained by the
wholly owned and consolidated properties at June 30, 2008 and December 31, 2007,
respectively. Tenant security deposits are included in Other Assets on the Consolidated
Statements of Assets and Liabilities. Other assets also include tenant receivables and
are net of allowance for uncollectible accounts of $1,322 and $39,764 at June 30, 2008
and December 31, 2007, respectively.I.
    
    Investment Level Debt Investment level debt is stated at the principal
amount of the obligations outstanding. At times the Partnership may assume debt in
connection with the purchase of real estate. 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.J.
    
    Deferred Financing Costs Deferred Financing Costs related to debt were
capitalized and amortized over the terms of the related obligations.K.
    
    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 fair value, net income
is not reduced by depreciation or amortization expense.L.
    
    Equity in Income of Real Estate Partnerships Equity in income from real
estate partnership operations represents the Partnerships share of the current years
partnership income as provided for under the terms of the partnership agreements. As
is the case with wholly owned real estate, partnership net income is not reduced by
depreciation or amortization expense. Frequency of distribution of income is determined
by formal agreements or by the executive committee of the partnership.M.
    
    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.
 19




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
(Unaudited)
 Note 2:
    
    Fair Value DisclosureFair Value Measurements:SFAS 157 establishes a fair value measurement framework, provides a single definition of fair
value and requires expanded disclosure summarizing fair value measurements. This statement
provides a three-level hierarchy based on the input values used in the valuation process;
level 1quoted price, level 2indirect observable inputs and level 3unobservable inputs.
For items classified as Level 3, a reconciliation of the beginning and ending balances, as
shown in table 2 below, is also required.Table 1 below summarizes the assets measured at fair value on a recurring basis.Table 1:
 ($ in 000s)Amounts
    
    
    Quoted Prices in
    
    
    SignificantMeasured at
    
    
    Active Markets
    
    
    Other
    
    
    SignificantFair Value
    
    
    for Identical
    
    
    Observable
    
    
    UnobservableAssets:
    
    6/30/2008
    
    
    Assets (Level 1)
    
    
    Inputs (Level 2)
    
    
    Inputs (Level 3)Real estate investments
    
    $
    256,962
    
    
    $
    
    
    
    $
    
    
    
    $
    256,962Real estate
partnerships and
preferred equity
investments
    
    
    13,907
    
    
    
    
    
    
    
    
    
    
    
    13,907Other real estate investments
    
    
    3,419
    
    
    
    
    
    
    
    
    
    
    
    3,419Total
    
    $
    274,288
    
    
    $
    
    
    
    $
    
    
    
    $
    274,288
 20




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
(Unaudited)
 NOTE 2: Fair Value Disclosure (continued)
 Table 2:
 ($ in 000s)Fair Value Measurements Using Significant Unobservable Inputs(Level 3)Real EstatePartnerships and
    
    
    OtherReal Estate
    
    
    Preferred Equity
    
    

    Real EstateInvestments
    
    
    Investments
    
    
    Investments
    
    
    TotalBeginning balance @ 12/31/07
    
    $
    251,162
    
    
    $
    14,524
    
    
    $
    3,232
    
    
    $
    268,918Total gains or losses (realized/unrealized)
included in earnings (or changes in net assets)
    
    
    (341
    )
    
    
    (585
    )
    
    
    
    
    
    
    (926
    )Acquisition/Issuances
    
    
    6,141
    
    
    
    
    
    
    
    
    
    
    
    6,141Equity Income/Interest Income
    
    
    
    
    
    
    510
    
    
    
    187
    
    
    
    697Distributions
    
    
    
    
    
    
    (542
    )
    
    
    
    
    
    
    (542
    )Ending balance
    
    $
    256,962
    
    
    $
    13,907
    
    
    $
    3,419
    
    
    $
    274,288The amount of total gains or losses for the period
included in earnings (or changes in net assets)
attributable to the change in unrealized gains or
losses
relating to assets still held at the reporting date
    
    $
    (341
    )
    
    $
    (585
    )
    
    $
    
    
    
    $
    (926
    )
 21




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
(Unaudited)
 Note 3:
    
    Related Party TransactionsPursuant 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 six months ended June 30, 2008 and 2007, investment
management fees incurred by the Partnership were $1,731,170 and $1,640,443, respectively.The Partnership also reimburses PIM for certain administrative services rendered by PIM.
The amounts incurred for the six months ended June 30, 2008 and 2007 were $26,814 and
$58,082, respectively, and are classified as administrative expense in the Consolidated
Statements of Operations.Note 4:
    
    Investment Level DebtOn April 1, 2008, White Marlin Mall refinanced their existing loan for a construction loan
in order to complete Phase III development at the property. The interest rate is one-day
LIBOR + 225 basis points. The maturity date is April 1, 2010 with a one-year extension
(April 1, 2011). Total loan amount is not to exceed $16,624,000.On June 30, 2008 Dunhill Trace refinanced their existing loan of $9,000,000. The interest
rate is the 90-day DMBS + 142 basis points. The maturity date is June 30, 2013.Note 5:
    
    Commitments and ContingenciesThe 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
the Partnerships management, the outcome of such matters will not have a material effect on
the Partnership.
 22




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
(Unaudited)
 Note 6: Financial Highlights
 For The Six Months Ended June 30,2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004Per Share(Unit) Operating Performance:Net Asset Value, beginning of period
    
    $
    36.55
    
    
    $
    33.87
    
    
    $
    29.59
    
    
    $
    26.15
    
    
    $
    24.66Income From Investment Operations:Investment income, before management fee
    
    
    1.15
    
    
    
    1.08
    
    
    
    0.94
    
    
    
    0.78
    
    
    
    0.67Investment Management fee
    
    
    (0.26
    )
    
    
    (0.24
    )
    
    
    (0.22
    )
    
    
    (0.19
    )
    
    
    (0.17
    )Net realized and unrealized gain (loss) on investments
    
    
    (0.19
    )
    
    
    0.96
    
    
    
    1.86
    
    
    
    0.76
    
    
    
    0.39Net Increase in Net Assets Resulting from Operations
    
    
    0.70
    
    
    
    1.80
    
    
    
    2.58
    
    
    
    1.35
    
    
    
    0.89Net Asset Value, end of period
    
    $
    37.25
    
    
    $
    35.67
    
    
    $
    32.17
    
    
    $
    27.50
    
    
    $
    25.55Total Return, before Management Fee:
    
    
    2.63
    %
    
    
    6.05
    %
    
    
    9.49
    %
    
    
    5.90
    %
    
    
    4.37
    %Total Return, after Management Fee (a):
    
    
    1.92
    %
    
    
    5.32
    %
    
    
    8.73
    %
    
    
    5.16
    %
    
    
    3.64
    %Ratios/Supplemental Data:Net Assets, end of period (in millions)
    
    $
    252
    
    
    $
    241
    
    
    $
    223
    
    
    $
    196
    
    
    $
    188Ratios to average net assets for the period ended (b):Total Portfolio Level Expenses
    
    
    0.72
    %
    
    
    0.77
    %
    
    
    0.73
    %
    
    
    0.73
    %
    
    
    0.70
    %Investment Income before Management Fee
    
    
    3.14
    %
    
    
    3.19
    %
    
    
    3.13
    %
    
    
    2.96
    %
    
    
    2.71
    %
 
 (a)
    
    Total Return, after management fee is calculated by geometrically
linking quarterly returns which are calculated using the formula below: 
  (b)
    
    Average net assets are based on beginning of quarter net assets.
 23




---



##### 



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
   (a) Liquidity and Capital Resources
 24




---



##### 



(b) Results of Operations
  Net Investment Income Overview
   Valuation Overview
 25




---



##### 



Six Months Ended
    
    
    Three Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net Investment Income:Office properties
    
    $
    1,943,568
    
    
    $
    1,846,551
    
    
    $
    972,153
    
    
    
    994,036Apartment properties
    
    
    1,700,126
    
    
    
    638,357
    
    
    
    850,881
    
    
    
    496,754Retail properties
    
    
    3,577,898
    
    
    
    3,452,296
    
    
    
    1,677,769
    
    
    
    1,785,949Industrial property
    
    
    
    
    
    
    15,959
    
    
    
    
    
    
    
    (97,602
    )Hotel property
    
    
    529,259
    
    
    
    526,401
    
    
    
    280,402
    
    
    
    270,729Other (including interest income,
investment management fee, etc.)
    
    
    (1,715,430
    )
    
    
    (782,525
    )
    
    
    (985,452
    )
    
    
    (441,225
    )Total Net Investment Income
    
    $
    6,035,421
    
    
    $
    5,697,039
    
    
    $
    2,795,753
    
    
    
    3,008,641Net Realized Gain (Loss) on Real Estate
Investments:Retail properties
    
    
    
    
    
    
    413,834
    
    
    
    
    
    
    
    382,035Industrial property
    
    
    
    
    
    
    345,832
    
    
    
    
    
    
    
    (3,278
    )Total Net Realized Gain (Loss) on Real
Estate Investments
    
    
    
    
    
    
    759,666
    
    
    
    
    
    
    
    378,757Net Unrealized Gain (Loss) on Real Estate
Investments:Office properties
    
    
    (2,362,601
    )
    
    
    538,273
    
    
    
    (230,486
    )
    
    
    129,925Apartment properties
    
    
    610,313
    
    
    
    2,429,850
    
    
    
    (189,835
    )
    
    
    2,572,930Retail properties
    
    
    571,028
    
    
    
    1,713,199
    
    
    
    (402,342
    )
    
    
    79,368Hotel property
    
    
    (100,758
    )
    
    
    1,030,957
    
    
    
    231,303
    
    
    
    1,037,234Total Net Unrealized Gain (Loss) on Real
Estate Investments
    
    
    (1,282,018
    )
    
    
    5,712,279
    
    
    
    (591,360
    )
    
    
    3,819,457Net Realized and Unrealized Gain (Loss) on
Real Estate Investments
    
    $
    (1,282,018
    )
    
    $
    6,471,945
    
    
    $
    (591,360
    )
    
    $
    4,198,214
 26




---



##### 



OFFICE PROPERTIES
 Net Investment
    
    
    Net Investment
    
    
    Unrealized
    
    
    UnrealizedIncome/(Loss)
    
    
    Income/(Loss)
    
    
    Gain/(Loss)
    
    
    Gain/(Loss)
    
    
    Occupancy
    
    
    OccupancySix
Months Ended June 30,
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007PropertyLisle, IL
    
    $
    294,029
    
    
    $
    218,442
    
    
    $
    (1,137,059
    )
    
    $
    788,426
    
    
    
    61%
    
    
    
    61%Brentwood, TN
    
    
    524,261
    
    
    
    554,533
    
    
    
    (23,737
    )
    
    
    (169,458
    )
    
    
    89%
    
    
    
    100%Beaverton, OR
    
    
    561,460
    
    
    
    513,915
    
    
    
    (1,201,805
    )
    
    
    243,150
    
    
    
    85%
    
    
    
    89%Brentwood, TN
    
    
    563,818
    
    
    
    559,661
    
    
    
    
    
    
    
    (323,845
    )
    
    
    100%
    
    
    
    100%$
    1,943,568
    
    
    $
    1,846,551
    
    
    $
    (2,362,601
    )
    
    $
    538,273Three Months Ended June 30,PropertyLisle, IL
    
    $
    170,639
    
    
    $
    148,241
    
    
    $
    (102,786
    )
    
    $
    (6,566
    )Brentwood, TN
    
    
    260,132
    
    
    
    280,705
    
    
    
    (23,737
    )
    
    
    (169,458
    )Beaverton, OR
    
    
    277,788
    
    
    
    268,440
    
    
    
    (103,963
    )
    
    
    329,794Brentwood, TN
    
    
    263,594
    
    
    
    296,650
    
    
    
    
    
    
    
    (23,845
    )$
    972,153
    
    
    $
    994,036
    
    
    $
    (230,486
    )
    
    $
    129,925
 Net Investment Income
  Unrealized Gain/(Loss)
   27




---



##### 



APARTMENT PROPERTIES
 Net Investment
    
    
    Net Investment
    
    
    Unrealized
    
    
    UnrealizedIncome/(Loss)
    
    
    Income/(Loss)
    
    
    Gain/(Loss)
    
    
    Gain/(Loss)
    
    
    Occupancy
    
    
    OccupancySix
Months Ended June 30,
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007PropertyAtlanta, GA
    
    $
    330,315
    
    
    $
    154,369
    
    
    $
    100,443
    
    
    $
    (156,882
    )
    
    
    93%
    
    
    
    95%Raleigh, NC
    
    
    332,444
    
    
    
    250,994
    
    
    
    380,937
    
    
    
    (807,102
    )
    
    
    88%
    
    
    
    92%Jacksonville, FL (1)
    
    
    
    
    
    
    17,342
    
    
    
    
    
    
    
    
    
    
    
    N/A
    
    
    
    N/AAustin, TX (2)
    
    
    761,263
    
    
    
    215,652
    
    
    
    198,422
    
    
    
    3,393,834
    
    
    
    94%
    
    
    
    94%Charlotte,
NC (3)
    
    
    276,104
    
    
    
    
    
    
    
    (69,489
    )
    
    
    
    
    
    
    89%
    
    
    
    N/A$
    1,700,126
    
    
    $
    638,357
    
    
    $
    610,313
    
    
    $
    2,429,850Three Months Ended June 30,PropertyAtlanta, GA
    
    $
    167,179
    
    
    $
    112,059
    
    
    $
    57,966
    
    
    $
    (16,117
    )Raleigh, NC
    
    
    169,068
    
    
    
    169,043
    
    
    
    100,672
    
    
    
    (804,787
    )Austin, TX (2)
    
    
    369,812
    
    
    
    215,652
    
    
    
    (301,578
    )
    
    
    3,393,834Charlotte,
NC (3)
    
    
    144,822
    
    
    
    
    
    
    
    (46,895
    )
    
    
    $
    850,881
    
    
    $
    496,754
    
    
    $
    (189,835
    )
    
    $
    2,572,930
 
 (1)
    
    The Jacksonville, Florida apartment property was sold on November 30, 2005 but certain post-closing adjustments were recognized during the six months ended June 30, 2007.(2)
    
    The Austin, Texas apartment property was acquired on May 8, 2007.(3)
    
    The Charlotte, North Carolina apartment property was acquired on September 6, 2007. Net Investment Income
  Unrealized Gain/(Loss)
 28




---



##### 



RETAIL PROPERTIES
 Realized/Net Investment
    
    
    Net Investment
    
    
    Unrealized
    
    
    UnrealizedIncome/(Loss)
    
    
    Income/(Loss)
    
    
    Gain/(Loss)
    
    
    Gain/(Loss)
    
    
    Occupancy
    
    
    OccupancySix
Months Ended June 30,
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007PropertyRoswell, GA
    
    $
    915,047
    
    
    $
    1,051,609
    
    
    $
    (708,950
    )
    
    $
    1,537,398
    
    
    
    82%
    
    
    
    89%Kansas City, KS (1)
    
    
    7,487
    
    
    
    161,913
    
    
    
    
    
    
    
    413,834
    
    
    
    N/A
    
    
    
    N/AHampton, VA
    
    
    669,087
    
    
    
    651,539
    
    
    
    1,295,069
    
    
    
    96,280
    
    
    
    99%
    
    
    
    100%Ocean City, MD
    
    
    322,381
    
    
    
    382,326
    
    
    
    481,057
    
    
    
    (202,378
    )
    
    
    85%
    
    
    
    89%Westminster, MD
    
    
    764,734
    
    
    
    739,639
    
    
    
    (933
    )
    
    
    281,899
    
    
    
    100%
    
    
    
    100%Dunn, NC (2)
    
    
    398,733
    
    
    
    
    
    
    
    89,377
    
    
    
    
    
    
    
    65%
    
    
    
    N/ACARS Preferred Equity
    
    
    500,429
    
    
    
    465,270
    
    
    
    (584,592
    )
    
    
    
    
    
    
    N/A
    
    
    
    N/A$
    3,577,898
    
    
    $
    3,452,296
    
    
    $
    571,028
    
    
    $
    2,127,033Three Months Ended June 30,PropertyRoswell, GA
    
    $
    461,716
    
    
    $
    516,128
    
    
    $
    (708,250
    )
    
    $
    (53,859
    )Kansas City, KS (1)
    
    
    (41,084
    )
    
    
    75,927
    
    
    
    
    
    
    
    382,035Hampton, VA
    
    
    333,683
    
    
    
    330,824
    
    
    
    598,405
    
    
    
    (3,720
    )Ocean City, MD
    
    
    182,135
    
    
    
    235,767
    
    
    
    237,823
    
    
    
    (58,092
    )Westminster, MD
    
    
    381,172
    
    
    
    375,427
    
    
    
    (100,933
    )
    
    
    195,039Dunn, NC (2)
    
    
    111,497
    
    
    
    
    
    
    
    155,205
    
    
    
    CARS Preferred Equity
    
    
    248,650
    
    
    
    251,876
    
    
    
    (584,592
    )
    
    
    $
    1,677,769
    
    
    $
    1,785,949
    
    
    $
    (402,342
    )
    
    $
    461,403
 
 (1)
    
    The Kansas City, Kansas retail property was sold on June 29, 2007 but certain post-closing adjustments were recognized during the six months ended June 30, 2008.(2)
    
    The Dunn, North Carolina retail property was acquired on August 17, 2007. Net Investment Income
 29




---



##### 



Realized and Unrealized Gain/(Loss)
   INDUSTRIAL PROPERTY
 Net Investment
    
    
    Net Investment
    
    
    Realized
    
    
    RealizedIncome/(Loss)
    
    
    Income/(Loss)
    
    
    Gain/(Loss)
    
    
    Gain/(Loss)
    
    
    Occupancy
    
    
    OccupancySix
Months Ended June 30,
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007PropertyAurora, CO (1)
    
    $
    
    
    
    $
    15,959
    
    
    $
    
    
    
    $
    345,832
    
    
    
    N/A
    
    
    
    N/AThree
Months Ended June 30,PropertyAurora, CO (1)
    
    $
    
    
    
    $
    (97,602
    )
    
    $
    
    
    
    $
    (3,278
    )
 
 (1)
    
    The Partnership sold the property on February 7, 2007. Net Investment Income
   Total Realized and Unrealized Gain/(Loss)
  30




---



##### 



HOTEL PROPERTY
 Net Investment
    
    
    Net Investment
    
    
    Unrealized
    
    
    UnrealizedIncome/(Loss)
    
    
    Income/(Loss)
    
    
    Gain/(Loss)
    
    
    Gain/(Loss)
    
    
    Occupancy
    
    
    OccupancySix
Months Ended June 30,
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007PropertyLake Oswego, OR
    
    $
    529,259
    
    
    $
    526,401
    
    
    $
    (100,758
    )
    
    $
    1,030,957
    
    
    
    70%
    
    
    
    72%Three
Months Ended June 30,PropertyLake Oswego, OR
    
    $
    280,402
    
    
    $
    270,729
    
    
    $
    231,303
    
    
    $
    1,037,234
 Net Investment Income
  Unrealized Gain/(Loss)
   31




---



##### 



Other
  (c) Inflation
  Critical Accounting Policies
   New Accounting Pronouncements
    32




---



##### 



Valuation of Investments
 Real Estate Investments 
     33




---



##### 



Valuation Methodology
    Other Estimates
  34




---



##### 



ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
 Interest Rate Risk 
  Estimated Market Value
    
    AverageMaturity
    
    (millions)
    
    Interest RateCash and Cash equivalents
    
    0-3 months
    
    $
    23.5
    
    
    
    3.45
    %
  Debt (in $ thousands),
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Estimatedincluding
current portion
    
    2008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    Thereafter
    
    
    Total
    
    
    Fair ValueWeighted Average Fixed Interest Rate
    
    
    5.57%
    
    
    
    5.75%
    
    
    
    5.11%
    
    
    
    5.04%
    
    
    
    5.04%
    
    
    
    5.04%
    
    
    
    5.26%Fixed Rate
    
    $
    250
    
    
    $
    9,277
    
    
    $
    565
    
    
    $
    604
    
    
    $
    646
    
    
    $
    4,940
    
    
    $
    16,282
    
    
    $
    16,679Variable Rate
    
    
    
    
    
    
    
    
    
    $
    13,035
    
    
    
    
    
    
    
    
    
    
    $
    9,000
    
    
    $
    22,035
    
    
    $
    21,455Total Mortgage Loans Payable
    
    $
    250
    
    
    $
    9,277
    
    
    $
    13,600
    
    
    $
    604
    
    
    $
    646
    
    
    $
    13,940
    
    
    $
    38,318
    
    
    $
    38,135
  35




---



##### 



Item 4. Controls and Procedures
  PART
II  OTHER INFORMATION
 Item 1A. Risk Factors
  Item 4. Submission of Matters to a Vote of Security Holders
  Item 6. Exhibits
 31.1
    
    Section 302 Certification of the Chief Executive Officer.31.2
    
    Section 302 Certification of the Chief Financial Officer.32.1
    
    Section 906 Certification of the Chief Executive Officer.32.2
    
    Section 906 Certification of the Chief Financial Officer.
 36




---



##### 



SIGNATURES
  PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
in respect of
Pruco Life of New Jersey Variable Contract Real Property Account
(Registrant)
 
 Date:  August 11, 2008By:
    /s/ Scott D. KaplanScott D. KaplanPresident and Director
(Principal Executive Officer) 37