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 March 31, 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)
 Indicate by check mark whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. YES þ NO o
 Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer,
a non-accelerated filer, or a smaller reporting company.
See the definitions of large
accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):
 Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer
þ
    
    Smaller reporting
company o(Do not check if a smaller reporting company)
 Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of
the Exchange Act). YES o NO 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  March 31, 2008 and December 31, 2007
    
    
    4Statements of Operations  Three Months Ended March 31, 2008 and 2007 .
    
    
    4Statements of Changes in Net Assets  Three Months Ended March 31, 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  March 31, 2008 and December 31, 2007
    
    
    8Consolidated Statements of Operations  Three Months Ended March 31, 2008 and 2007
    
    
    9Consolidated Statements of Changes in Net AssetsThree Months Ended March 31, 2008 and 2007
    
    
    10Consolidated Statements of Cash Flows  Three Months Ended March 31, 2008 and 2007
    
    
    11Consolidated Schedules of Investments  March 31, 2008 and December 31, 2007
    
    
    12Notes to Consolidated Financial Statements of the Partnership
    
    
    14Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    22Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    32Item 4. Controls and Procedures .
    
    
    33Part II  Other InformationItem 1A. Risk Factors
    
    
    33Item 4. Submission of Matters to a Vote of Security Holders .
    
    
    33Item 6. Exhibits
    
    
    33Signature
    
    
    34
  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
 March 31, 2008(unaudited)
    
    
    December 31, 2007ASSETSInvestment in The Prudential Variable Contract Real
Property Partnership
    
    $
    10,875,727
    
    
    $
    10,764,653Net Assets
    
    $
    10,875,727
    
    
    $
    10,764,653NET ASSETS,representing:Equity of contract owners
    
    $
    7,731,415
    
    
    $
    7,715,262Equity of Pruco Life Insurance Company of New Jersey
    
    
    3,144,312
    
    
    
    3,049,391$
    10,875,727
    
    
    $
    10,764,653Units outstanding
    
    
    3,338,247
    
    
    
    3,333,399Portfolio shares held
    
    
    294,526
    
    
    
    294,526Portfolio net asset value per share
    
    $
    36.93
    
    
    $
    36.55
 
 STATEMENTS OF OPERATIONS
 1/1/2008-3/31/2008
    
    
    1/1/2007-3/31/2007(unaudited)
    
    
    (unaudited)INVESTMENT INCOMENet investment income from Partnership operations
    
    $
    141,171
    
    
    $
    117,149EXPENSESCharges to contract owners for assuming mortality risk and expense
risk and for administration
    
    
    10,990
    
    
    
    10,804NET INVESTMENT INCOME
    
    
    130,181
    
    
    
    106,345NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTSNet change in unrealized gain (loss) on investments from Partnership
    
    
    (30,097
    )
    
    
    83,865Net realized gain (loss) on sale of investments from Partnership
    
    
    0
    
    
    
    15,213NET GAIN (LOSS) ON INVESTMENTS
    
    
    (30,097
    )
    
    
    99,078NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS
    
    $
    100,084
    
    
    $
    205,423
 
 STATEMENTS OF CHANGES IN NET ASSETS
 1/1/2008-3/31/2008
    
    
    1/1/2007-3/31/2007(unaudited)
    
    
    (unaudited)OPERATIONSNet investment income
    
    $
    130,181
    
    
    $
    106,345Net change in unrealized gain (loss) on investments in Partnership
    
    
    (30,097
    )
    
    
    83,865Net realized gain (loss) on sale of investments in Partnership
    
    
    0
    
    
    
    15,213NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS
    
    
    100,084
    
    
    
    205,423CAPITAL TRANSACTIONSNet contributions (withdrawals) by contract owners
    
    
    (52,334
    )
    
    
    8,935Net contributions (withdrawals) by Pruco Life Insurance Company of New Jersey
    
    
    63,324
    
    
    
    1,869NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS
    
    
    10,990
    
    
    
    10,804TOTAL INCREASE (DECREASE) IN NET ASSETS
    
    
    111,074
    
    
    
    216,227NET ASSETSBeginning of period
    
    
    10,764,653
    
    
    
    9,975,186End of period
    
    $
    10,875,727
    
    
    $
    10,191,413
  4




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##### 



NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT
March 31, 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
  Nine Months Ended March 31,(Unaudited)2008
    
    
    2007VAL
    
    $
    (45,441
    )
    
    $
    17,970VLI
    
    
    (6,739
    )
    
    
    (1,759
    )SPVA
    
    
    0
    
    
    
    0SPVL
    
    
    (154
    )
    
    
    (7,276
    )TOTAL
    
    $
    (52,334
    )
    
    $
    8,935
 Note 6: Partnership Distributions
  Note 7: Unit Information
  March 31, 2008
    
    December 31, 2007(Unaudited)Units Outstanding:
    
    
    3,338,247
    
    
    
    3,333,399Unit Value:
    
    
    2.82980 to 3.42736
    
    
    
    2.80966 to 3.39532
 Note 8: Financial Highlights
  Three Months EndedMarch 31,(Unaudited)2008
    
    2007Total Return
    
    0.72% to 0.94%
    
    1.85% to 2.08%
 7




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##### 



Note 9: Fair Value Disclosure
         Table 1:
 ($ in 000s)Amounts
    
    Quoted Prices in
    
    SignificantMeasured at
    
    Active Markets
    
    Other
    
    SignificantFair
    
    for Identical
    
    Observable
    
    Unobservable3/31/2008
    
    Assets (Level 1)
    
    Inputs (Level 2)
    
    Inputs (Level 3)Assets:Investment in The  Prudential Variable
Contract Real Property Partnership
    
    $
    10,876
    
    
    $
    
    
    
    $
    
    
    
    $
    10,876Total Assets
    
    $
    10,876
    
    
    $
    
    
    
    $
    
    
    
    $
    10,876
 Table 2:
 ($ in 000s)Fair Value
Measurements Using Significant Unobservable Inputs (Level 3)Investment inThe PrudentialVariable ContractReal PropertyPartnership
    
    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
    
    
    (30
    )
    
    
    (30
    )Net
Investment Income from Partnership
operations
    
    
    141
    
    
    
    141Acquisition/Additions
    
    
    
    
    
    
    Equity Income
    
    
    
    
    
    
    Distributions
    
    
    
    
    
    
    Ending balance @ 3/31/08
    
    $
    10,876
    
    
    $
    10,876The 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
    
    $
    (30
    )
    
    $
    (30
    )
 8




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##### 



THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
 
 CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
 March 31, 2008(Unaudited)
    
    
    December 31, 2007ASSETSREAL ESTATE INVESTMENTS
 At estimated fair value:Real estate and improvements
(cost: 03/31/2008 - $236,349,852; 12/31/2007 - $233,233,775)
    
    $
    253,661,712
    
    
    $
    251,161,712Real estate partnerships and preferred equity investments (cost:03/31/2008 - $14,555,001; 12/31/2007 - $14,523,934)
    
    
    14,555,001
    
    
    
    14,523,934Other real estate investments (cost: 03/31/2008 - $3,325,707;
12/31/2007 - $3,232,341)
    
    
    3,325,707
    
    
    
    3,232,341Total real estate investments
    
    $
    271,542,420
    
    
    $
    268,917,987CASH AND CASH EQUIVALENTS
    
    
    17,244,462
    
    
    
    18,215,871OTHER ASSETS, NET
    
    
    3,969,951
    
    
    
    3,033,040Total assets
    
    $
    292,756,833
    
    
    $
    290,166,898LIABILITIES & PARTNERS EQUITYINVESTMENT LEVEL DEBT
    
    $
    31,968,048
    
    
    $
    32,121,712ACCOUNTS PAYABLE AND ACCRUED EXPENSES
    
    
    2,348,564
    
    
    
    2,184,812DUE TO AFFILIATES
    
    
    874,929
    
    
    
    901,371OTHER LIABILITIES
    
    
    883,364
    
    
    
    920,454MINORITY INTEREST
    
    
    7,099,159
    
    
    
    7,004,790Total liabilities
    
    
    43,174,064
    
    
    
    43,133,139COMMITMENTS AND CONTINGENCIESPARTNERS EQUITY
    
    
    249,582,769
    
    
    
    247,033,759Total liabilities and partners equity
    
    $
    292,756,833
    
    
    $
    290,166,898NUMBER OF SHARES OUTSTANDING AT END OF PERIOD
    
    
    6,758,960
    
    
    
    6,758,960SHARE VALUE AT END OF PERIOD
    
    $
    36.93
    
    
    $
    36.55
 The accompanying notes are an integral part of these consolidated financial statements.
 9




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##### 



THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (Unaudited)
 For the Three Months Ended March 31,2008
    
    
    2007INVESTMENT INCOME:Revenue from real estate and improvements
    
    $
    7,614,660
    
    
    $
    6,488,231Equity in income of real estate partnerships
    
    
    300,449
    
    
    
    299,380Income from other real estate investments
    
    
    93,366
    
    
    
    92,340Interest on short-term investments
    
    
    124,243
    
    
    
    531,674Total investment income
    
    
    8,132,718
    
    
    
    7,411,625INVESTMENT EXPENSES:Operating
    
    
    1,723,610
    
    
    
    1,723,979Investment management fee
    
    
    861,522
    
    
    
    810,632Real estate taxes
    
    
    734,846
    
    
    
    511,886Administrative
    
    
    1,111,128
    
    
    
    984,469Interest expense
    
    
    442,153
    
    
    
    677,921Minority interest
    
    
    19,791
    
    
    
    14,343Total investment expenses
    
    
    4,893,050
    
    
    
    4,723,230NET INVESTMENT INCOME
    
    
    3,239,668
    
    
    
    2,688,395REALIZED AND UNREALIZED GAIN (LOSS) ON REAL ESTATE
INVESTMENTS:Net proceeds from real estate investments sold
    
    
    
    
    
    
    14,649,241Less: Cost of real estate investments sold
    
    
    
    
    
    
    11,286,691Realization of prior years unrealized
gain (loss) on real estate investments sold
    
    
    
    
    
    
    3,013,440NET GAIN (LOSS) REALIZED ON REAL ESTATE INVESTMENTS SOLD
    
    
    
    
    
    
    349,110Change in unrealized gain (loss) on real estate investments
    
    
    (616,077
    )
    
    
    2,049,817Less: Minority interest in unrealized gain (loss) on real
estate investments
    
    
    74,581
    
    
    
    125,197Net unrealized gain (loss) on real estate investments
    
    
    (690,658
    )
    
    
    1,924,620NET REALIZED AND UNREALIZED GAIN (LOSS)
ON REAL ESTATE INVESTMENTS
    
    
    (690,658
    )
    
    
    2,273,730INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS
    
    $
    2,549,010
    
    
    $
    4,962,125
 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 CHANGES IN NET ASSETS
(Unaudited)
 For the Three Months Ended March 31,2008
    
    
    2007INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS:Net investment income
    
    $
    3,239,668
    
    
    $
    2,688,395Net gain (loss) realized on real estate
investments sold
    
    
    
    
    
    
    349,110Net unrealized gain (loss) from real estate
investments
    
    
    (690,658
    )
    
    
    1,924,620Increase (decrease) in net assets
resulting from operations
    
    
    2,549,010
    
    
    
    4,962,125NET ASSETS   Beginning of period
    
    
    247,033,759
    
    
    
    228,916,584NET ASSETS   End of period
    
    $
    249,582,769
    
    
    $
    233,878,709
 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 CASH FLOWS
(Unaudited)
 For the Three Months Ended March 31,2008
    
    
    2007CASH FLOWS FROM OPERATING ACTIVITIES:Net increase in net assets from operations
    
    $
    2,549,010
    
    
    $
    4,962,125Adjustments to reconcile net increase in net assets
to net cash from operating activitiesNet realized and unrealized loss (gain)
    
    
    690,658
    
    
    
    (2,273,730
    )Amortization of deferred financing costs
    
    
    11,704
    
    
    
    238,710Distributions in excess of (less than) equity in income
of real estate partnerships operations
    
    
    (31,066
    )
    
    
    (5,084
    )Minority interest in consolidated partnerships
    
    
    19,791
    
    
    
    14,343Bad debt expense
    
    
    18,600
    
    
    
    281(Increase) Decrease in accrued interest included in
other real estate investments
    
    
    (93,366
    )
    
    
    (92,340
    )(Increase) decrease in:Other assets
    
    
    (967,217
    )
    
    
    117,476Increase (decrease) in:Accounts payable and accrued expenses
    
    
    163,752
    
    
    
    (477,834
    )Due to affiliates
    
    
    (26,444
    )
    
    
    47,558Other liabilities
    
    
    (37,090
    )
    
    
    741Net cash flows from (used in) operating activities
    
    
    2,298,332
    
    
    
    2,532,246CASH FLOWS FROM INVESTING ACTIVITIES:Net proceeds from real estate investments sold
    
    
    
    
    
    
    14,649,241Additions to real estate and improvements
    
    
    (3,116,077
    )
    
    
    (299,258
    )Net cash flows from (used in) investing activities
    
    
    (3,116,077
    )
    
    
    14,349,983CASH FLOWS FROM FINANCING ACTIVITIES:Principal payments on investment level debt
    
    
    (153,664
    )
    
    
    (144,910
    )Net cash flows from (used in) financing activities
    
    
    (153,664
    )
    
    
    (144,910
    )NET CHANGE IN CASH AND CASH
EQUIVALENTS
    
    
    (971,409
    )
    
    
    16,737,319CASH AND CASH EQUIVALENTS  Beginning of period
    
    
    18,215,871
    
    
    
    33,399,532CASH AND CASH EQUIVALENTS  End of period
    
    $
    17,244,462
    
    
    $
    50,136,851DISCLOSURE OF SUPPLEMENTAL CASH FLOW
INFORMATIONCash paid for interest
    
    $
    430,449
    
    
    $
    724,038
 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 SCHEDULE OF INVESTMENTS
 2008 Total RentableSquare Feet


    
    March 31, 2008Unless Otherwise

    
    (unaudited)
    
    
    December 31,2007March 31, 2008
    
    
    
    
    
    
    Indicated


    
    
    
    
    
    Estimated Fair
    
    
    
    
    
    
    Estimated FairProperty Name
    
    Ownership
    
    
    City, State
    
    
    (Unaudited)

    
    Cost
    
    
    Value
    
    
    Cost
    
    
    ValueOFFICES750 Warrenville
    
    WO
    
    Lisle, IL
    
    
    103,193
    
    
    $
    24,546,795
    
    
    $
    10,500,000
    
    
    $
    24,512,521
    
    
    $
    11,500,000Summit @ Cornell Oaks
    
    WO
    
    Beaverton , OR
    
    
    72,109
    
    
    
    12,399,094
    
    
    
    12,700,000
    
    
    
    12,401,252
    
    
    
    13,800,000Westpark
    
    WO
    
    Nashville, TN
    
    
    97,199
    
    
    
    11,323,885
    
    
    
    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 3/31/08
    
    
    20%
    
    
    
    60,640,866
    
    
    
    50,000,000
    
    
    
    60,608,750
    
    
    
    52,100,000APARTMENTSBrookwood Apartments
    
    WO
    
    Atlanta, GA
    
    
    240 Units
    
    
    
    19,605,815
    
    
    
    20,300,000
    
    
    
    19,548,293
    
    
    
    20,200,000Dunhill Trace Apartments
    
    WO
    
    Raleigh, NC
    
    
    250 Units
    
    
    
    16,394,772
    
    
    
    20,100,000
    
    
    
    16,375,037
    
    
    
    19,800,000Broadstone Crossing
    
    WO
    
    Austin, TX
    
    
    225 Units
    
    
    
    22,723,849
    
    
    
    27,600,000
    
    
    
    22,723,849
    
    
    
    27,100,000The Reserve At Waterford Lakes
    
    WO
    
    Charlotte, NC
    
    
    140 Units
    
    
    
    13,558,045
    
    
    
    13,500,000
    
    
    
    13,535,450
    
    
    
    13,500,000Apartments % as of 3/31/08
    
    
    33%
    
    
    
    72,282,481
    
    
    
    81,500,000
    
    
    
    72,182,629
    
    
    
    80,600,000RETAILKings Market
    
    WO
    
    Rosewell, GA
    
    
    314,358
    
    
    
    37,883,922
    
    
    
    24,700,000
    
    
    
    37,883,222
    
    
    
    24,700,000Hampton Towne Center
    
    WO
    
    Hampton, VA
    
    
    174,540
    
    
    
    18,053,425
    
    
    
    27,200,000
    
    
    
    18,050,090
    
    
    
    26,500,000White Marlin Mall
    
    CJV
    
    Ocean City, MD
    
    
    186,016
    
    
    
    19,481,322
    
    
    
    26,700,000
    
    
    
    17,016,325
    
    
    
    23,900,000Westminster Crossing East, LLC
    
    CJV
    
    Westminster, MD
    
    
    89,890
    
    
    
    12,405,500
    
    
    
    17,961,712
    
    
    
    12,405,500
    
    
    
    17,861,712Kansas City Portfolio
    
    EJV
    
    Kansas City, KS;MO
    
    
    487,660
    
    
    
    189,483
    
    
    
    189,483
    
    
    
    140,911
    
    
    
    140,911CARS Preferred Equity
    
    PE
    
    Various
    
    
    N/A
    
    
    
    14,365,518
    
    
    
    14,365,518
    
    
    
    14,383,023
    
    
    
    14,383,023Harnett Crossing
    
    CJV
    
    Dunn, NC
    
    
    193,235
    
    
    
    5,958,845
    
    
    
    7,200,000
    
    
    
    5,958,844
    
    
    
    7,200,000Retail % as of 3/31/08
    
    
    48%
    
    
    
    108,338,015
    
    
    
    118,316,713
    
    
    
    105,837,915
    
    
    
    114,685,646HOTELPortland Crown Plaza
    
    CJV
    
    Portland, OR
    
    
    161 Rooms
    
    
    
    9,643,491
    
    
    
    18,400,000
    
    
    
    9,128,415
    
    
    
    18,300,000Hotel % as of 3/31/08
    
    
    7%
    
    
    
    9,643,491
    
    
    
    18,400,000
    
    
    
    9,128,415
    
    
    
    18,300,000OTHER REAL ESTATE INVESTMENTSWestminster East
    
    Eloan
    
    Westminster, MD
    
    
    
    
    
    
    3,325,707
    
    
    
    3,325,707
    
    
    
    3,232,341
    
    
    
    3,232,341Other Real Estate
    
    
    1%
    
    
    
    3,325,707
    
    
    
    3,325,707
    
    
    
    3,232,341
    
    
    
    3,232,341Investments % as of3/31/2008Total Real Estate Investments as a
    
    
    
    
    
    
    109%
    
    
    $
    254,230,560
    
    
    $
    271,542,420
    
    
    $
    250,990,050
    
    
    $
    268,917,987Percentage of Net Assets as of 3/31/08
 
 
 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
 March 31, 2008(unaudited)
    
    
    December 31, 2007Estimated Fair
    
    
    
    
    
    
    Estimated FairFace Amount
    
    
    Cost
    
    
    Value
    
    
    Cost
    
    
    ValueCASH AND CASH EQUIVALENTS  Percentage of Net Assets
    
    
    
    
    
    
    6.9
    %
    
    
    
    
    
    
    7.4
    %Federal Home Loan Bank, 0 coupon
bond, April, 2008
    
    $
    3,281,000
    
    
    $
    3,281,000
    
    
    $
    3,281,000
    
    
    $
    2,065,813
    
    
    $
    2,065,813Federal Home Loan Bank, 0 coupon
bond, April, 2008
    
    
    2,997,025
    
    
    
    2,997,025
    
    
    
    2,997,025
    
    
    
    4,998,313
    
    
    
    4,998,313Federal Home Loan Bank, 0 coupon
bond, May, 2008
    
    
    9,976,250
    
    
    
    9,976,250
    
    
    
    9,976,250
    
    
    
    9,997,633
    
    
    
    9,997,633Total Cash Equivalents
    
    
    
    
    
    
    16,254,275
    
    
    
    16,254,275
    
    
    
    17,061,759
    
    
    
    17,061,759Cash
    
    
    
    
    
    
    990,187
    
    
    
    990,187
    
    
    
    1,154,112
    
    
    
    1,154,112Total Cash and Cash Equivalents
    
    
    
    
    
    $
    17,244,462
    
    
    $
    17,244,462
    
    
    $
    18,215,871
    
    
    $
    18,215,871
 The accompanying notes are an integral part of these consolidated financial statements.
 14




---



##### 



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 three months ended March 31,
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 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 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.
 15




---



##### 



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 cost 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 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.
 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)
 D.
    
    Real Estate Investments (continued)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. Where conditions precedent to funding have been met by its
development partners, and the Partnerships commitment to fund is firm, the amount of
any unrealized gain or loss is recognized based upon the difference between the
estimated investments fair value as described above and the Partnerships funding
obligation. The funding obligation and related assets are recorded in the consolidated
financial statements. As of March 31, 2008 and December 31, 2007, no such funding
obligation existed.Land and development properties held for future development is carried at
acquisition cost including soft costs incurred prior to development.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 March
31, 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 are classified as Level 3
under SFAS157 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.H.
    
    Other Assets Restricted cash of $115,000 and $186,736 was maintained by the
wholly owned and consolidated properties at March 31, 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 $28,885 and $39,764 at March 31,
2008 and December 31, 2007, respectively.
 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)
 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 allocated 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.
 18




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
(Unaudited)
 Note 2: Fair Value Disclosure
 Fair 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.
  ($ in 000s)Amounts
    
    Quoted Prices in
    
    SignificantMeasured at
    
    Active Markets
    
    Other
    
    SignificantFair Value
    
    for Identical
    
    Observable
    
    Unobservable3/31/2008
    
    Assets (Level 1)
    
    Inputs (Level 2)
    
    Inputs (Level 3)Assets:Real Estate Investments
    
    $
    253,662
    
    
    $
    
    
    
    $
    
    
    
    $
    253,662Real estate
partnerships and
preferred equity
investments
    
    
    14,555
    
    
    
    
    
    
    
    
    
    
    
    14,555Total Assets
    
    $
    268,217
    
    
    $
    
    
    
    $
    
    
    
    $
    268,217
 19




---



##### 



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 andReal Estate
    
    Preferred equityInvestments
    
    investments
    
    TotalBeginning balance @ 12/31/07
    
    $
    251,162
    
    
    $
    14,524
    
    
    $
    265,686Total gains or losses (realized/unrealized)
included in earnings (or changes in net assets)
    
    
    (616
    )
    
    
    
    
    
    
    (616
    )Acquisition/Additions
    
    
    3,116
    
    
    
    
    
    
    
    3,116Equity Income
    
    
    
    
    
    
    49
    
    
    
    49Distributions
    
    
    
    
    
    
    (18
    )
    
    
    (18
    )Ending balance @ 3/31/08
    
    $
    253,662
    
    
    $
    14,555
    
    
    $
    268,217The 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
    
    $
    (616
    )
    
    $
    
    
    
    $
    (616
    )
 20




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
(Unaudited)
 Note 3: Related Party Transactions
   Note 4: Commitments and Contingencies
  Note 5: Subsequent Event
  21




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
(Unaudited)
 Note 6: Financial Highlights
 For The Three Months Ended March 31,2008
    
    
    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
    
    
    0.61
    
    
    
    0.52
    
    
    
    0.50
    
    
    
    0.36
    
    
    
    0.35Investment Management fee
    
    
    (0.13
    )
    
    
    (0.12
    )
    
    
    (0.11
    )
    
    
    (0.09
    )
    
    
    (0.09
    )Net realized and unrealized gain (loss) on investments
    
    
    (0.10
    )
    
    
    0.33
    
    
    
    0.95
    
    
    
    0.36
    
    
    
    (0.08
    )Net Increase in Net Assets Resulting from Operations
    
    
    0.38
    
    
    
    0.73
    
    
    
    1.34
    
    
    
    0.63
    
    
    
    0.18Net Asset Value, end of period
    
    $
    36.93
    
    
    $
    34.60
    
    
    $
    30.93
    
    
    $
    26.78
    
    
    $
    24.84Total Return, before Management Fee (a):
    
    
    1.38
    %
    
    
    2.53
    %
    
    
    4.89
    %
    
    
    2.79
    %
    
    
    1.10
    %Total Return, after Management Fee :
    
    
    1.03
    %
    
    
    2.17
    %
    
    
    4.53
    %
    
    
    2.42
    %
    
    
    0.75
    %Ratios/Supplemental Data:Net Assets, end of period (in millions)
    
    $
    250
    
    
    $
    234
    
    
    $
    215
    
    
    $
    191
    
    
    $
    183Ratios to average net assets for the year ended (b):Total Portfolio Level Expenses
    
    
    0.35
    %
    
    
    0.38
    %
    
    
    0.36
    %
    
    
    0.36
    %
    
    
    0.35
    %Investment Income before Management Fee
    
    
    1.66
    %
    
    
    1.53
    %
    
    
    1.68
    %
    
    
    1.43
    %
    
    
    1.41
    %
 
 (a)
    
    Total Return, before management fee is calculated by geometrically linking quarterly returns which
are calculated using the formula below:Net Investment Income + Net Realized and Unrealized Gains/(Losses)Beg. Net Asset Value + Time Weighted Contributions  Time Weighted Distributions(b)
    
    Average net assets are based on beginning of quarter net assets. 22




---



##### 



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
   (a) Liquidity and Capital Resources
     23




---



##### 



(b) Results of Operations
  Net Investment Income Overview
  Valuation Overview
   24




---



##### 



Three Months Ended March 31,2008
    
    
    2007Net Investment Income:Office properties
    
    $
    971,415
    
    
    $
    852,515Apartment properties
    
    
    849,245
    
    
    
    141,603Retail properties
    
    
    1,900,128
    
    
    
    1,666,350Industrial property
    
    
    
    
    
    
    113,561Hotel property
    
    
    248,858
    
    
    
    255,673Other (including interest income,
investment mgt fee, etc.)
    
    
    (729,978
    )
    
    
    (341,307
    )Total Net Investment Income
    
    $
    3,239,668
    
    
    $
    2,688,395Net Realized Gain (Loss) on Real Estate Investments:Industrial property
    
    
    
    
    
    
    349,110Total Net Realized Gain (Loss) on Real Estate Investments
    
    
    
    
    
    
    349,110Net Unrealized Gain (Loss) on Real Estate Investments:Office properties
    
    
    (2,132,116
    )
    
    
    408,348Apartment properties
    
    
    800,147
    
    
    
    (143,081
    )Retail properties
    
    
    973,371
    
    
    
    1,665,629Hotel property
    
    
    (332,060
    )
    
    
    (6,276
    )Total Net Unrealized Gain (Loss) on Real Estate
Investments
    
    
    (690,658
    )
    
    
    1,924,620Net Realized and Unrealized Gain (Loss) on Real Estate
Investments
    
    $
    (690,658
    )
    
    $
    2,273,730
 25




---



##### 



OFFICE PROPERTIES
 Net Investment
    
    Net Investment
    
    Unrealized
    
    UnrealizedThree Months Ended
    
    Income/(Loss)
    
    Income/(Loss)
    
    Gain/(Loss)
    
    Gain/(Loss)
    
    Occupancy
    
    OccupancyMarch 31,
    
    2008
    
    2007
    
    2008
    
    2007
    
    2008
    
    2007PropertyLisle, IL
    
    $
    123,390
    
    
    $
    70,201
    
    
    $
    (1,034,274
    )
    
    $
    794,992
    
    
    
    61
    %
    
    
    61
    %Brentwood, TN
    
    
    264,129
    
    
    
    273,828
    
    
    
    
    
    
    
    
    
    
    
    89
    %
    
    
    100
    %Beaverton, OR
    
    
    283,672
    
    
    
    245,475
    
    
    
    (1,097,842
    )
    
    
    (86,644
    )
    
    
    88
    %
    
    
    89
    %Brentwood, TN
    
    
    300,224
    
    
    
    263,011
    
    
    
    
    
    
    
    (300,000
    )
    
    
    100
    %
    
    
    100
    %$
    971,415
    
    
    $
    852,515
    
    
    $
    (2,132,116
    )
    
    $
    408,348
 Net Investment Income
  Unrealized Gain/(Loss)
  26




---



##### 



APARTMENT PROPERTIES
 Net Investment
    
    Net Investment
    
    Unrealized
    
    UnrealizedThree Months Ended
    
    Income/(Loss)
    
    Income/(Loss)
    
    Gain/(Loss)
    
    Gain/(Loss)
    
    Occupancy
    
    OccupancyMarch 31,
    
    2008
    
    2007
    
    2008
    
    2007
    
    2008
    
    2007PropertyAtlanta, GA
    
    $
    163,136
    
    
    $
    42,310
    
    
    $
    42,477
    
    
    $
    (140,765
    )
    
    
    93
    %
    
    
    86
    %Raleigh, NC
    
    
    163,376
    
    
    
    81,951
    
    
    
    280,265
    
    
    
    (2,316
    )
    
    
    88
    %
    
    
    95
    %Jacksonville, FL (1)
    
    
    
    
    
    
    17,342
    
    
    
    
    
    
    
    
    
    
    
    N/A
    
    
    
    N/AAustin, TX (2)
    
    
    391,451
    
    
    
    
    
    
    
    500,000
    
    
    
    
    
    
    
    94
    %
    
    
    N/ACharlotte, NC(3)
    
    
    131,282
    
    
    
    
    
    
    
    (22,595
    )
    
    
    
    
    
    
    89
    %
    
    
    N/A$
    849,245
    
    
    $
    141,603
    
    
    $
    800,147
    
    
    $
    (143,081
    )
 
 (1)
    
    The Jacksonville, Florida apartment property was sold on November 30, 2005 but certain post-closing
adjustments were recognized during the quarter ended March 31, 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)
  27




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##### 



RETAIL PROPERTIES
 Net Investment
    
    Net Investment
    
    Unrealized
    
    UnrealizedThree Months Ended
    
    Income/(Loss)
    
    Income/(Loss)
    
    Gain/(Loss)
    
    Gain/(Loss)
    
    Occupancy
    
    OccupancyMarch 31,
    
    2008
    
    2007
    
    2008
    
    2007
    
    2008
    
    2007PropertyRoswell, GA
    
    $
    453,329
    
    
    $
    535,481
    
    
    $
    (700
    )
    
    $
    1,591,257
    
    
    
    82
    %
    
    
    88
    %Kansas City, KS (1)
    
    
    48,571
    
    
    
    85,986
    
    
    
    
    
    
    
    31,798
    
    
    
    N/A
    
    
    
    76
    %Hampton, VA
    
    
    335,405
    
    
    
    320,717
    
    
    
    696,665
    
    
    
    100,000
    
    
    
    99
    %
    
    
    100
    %Ocean City, MD
    
    
    140,246
    
    
    
    146,560
    
    
    
    243,234
    
    
    
    (144,286
    )
    
    
    68
    %
    
    
    79
    %Westminster, MD
    
    
    383,562
    
    
    
    364,212
    
    
    
    100,000
    
    
    
    86,860
    
    
    
    100
    %
    
    
    100
    %Dunn, NC (2)
    
    
    287,236
    
    
    
    
    
    
    
    (65,828
    )
    
    
    
    
    
    
    35
    %
    
    
    N/ACARS Preferred Equity
    
    
    251,779
    
    
    
    213,394
    
    
    
    
    
    
    
    
    
    
    
    N/A
    
    
    
    N/A$
    1,900,128
    
    
    $
    1,666,350
    
    
    $
    973,371
    
    
    $
    1,665,629
 
 (1)
    
    The Kansas City, Kansas retail property was sold on June 29, 2007 but
certain post-closing
adjustments were recognized during the quarter ended March 31, 2008.(2)
    
    The Dunn, North Carolina retail property was acquired on August 17, 2007. Net Investment Income
  Unrealized Gain/(Loss)
  28




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##### 



INDUSTRIAL PROPERTY
 Net Investment
    
    Net Investment
    
    Realized
    
    RealizedThree Months Ended
    
    Income/(Loss)
    
    Income/(Loss)
    
    Gain/(Loss)
    
    Gain/(Loss)
    
    Occupancy
    
    OccupancyMarch 31,
    
    2008
    
    2007
    
    2008
    
    2007
    
    2008
    
    2007PropertyAurora, CO (1)
    
    $
    
    
    
    $
    113,561
    
    
    $
    
    
    
    $
    349,110
    
    
    
    N/A
    
    
    
    N/A
 
 (1)
    
    Net investment income (loss) for the quarter ended March 31, 2007 reflects partial period results for the
Aurora, Colorado industrial property that was sold on February 7, 2007. Net Investment Income
  Realized Gain/(Loss)
  HOTEL PROPERTY
 Net Investment
    
    Net Investment
    
    Unrealized
    
    UnrealizedThree Months Ended
    
    Income/(Loss)
    
    Income/(Loss)
    
    Gain/(Loss)
    
    Gain/(Loss)
    
    Occupancy
    
    OccupancyMarch 31,
    
    2008
    
    2007
    
    2008
    
    2007
    
    2008
    
    2007PropertyLake Oswego, OR
    
    $
    248,858
    
    
    $
    255,673
    
    
    $
    (332,060
    )
    
    $
    (6,276
    )
    
    
    67
    %
    
    
    68
    %
 Net Investment Income
  Unrealized Gain/(Loss)
  29




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##### 



Other
  (c) Inflation
  Critical Accounting Policies
   New Accounting Pronouncements
    30




---



##### 



Valuation of Investments
 Real Estate Investments
     31




---



##### 



Valuation Methodology
     Other Estimates
  32




---



##### 



Item 3. Quantitative and Qualitative Disclosures About Market Risk
 Interest Rate Risk 
  Estimated Fair Value
    
    AverageMaturity
    
    (millions)
    
    Interest RateCash and Cash equivalents
    
    0-3 months
    
    $
    17.2
    
    
    
    4.20
    %
  Debt (in $ thousands),
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Estimatedincluding current portion
    
    2008
    
    2009
    
    2010
    
    2011
    
    2012
    
    Thereafter
    
    Total
    
    Fair ValueWeighted Average Fixed Interest Rate
    
    
    5.74
    %
    
    
    6.75
    %
    
    
    6.75
    %
    
    
    6.75
    %
    
    
    6.75
    %
    
    
    6.75
    %
    
    
    5.78
    %Fixed Rate
    
    $
    15,936
    
    
    $
    9,277
    
    
    $
    565
    
    
    $
    604
    
    
    $
    646
    
    
    $
    4,940
    
    
    $
    31,968
    
    
    $
    32,584Variable Rate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total Mortgage Loans Payable
    
    $
    15,936
    
    
    $
    9,277
    
    
    $
    565
    
    
    $
    604
    
    
    $
    646
    
    
    $
    4,940
    
    
    $
    31,968
    
    
    $
    32,584
  33




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##### 



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.
 34




---



##### 



SIGNATURES
  PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
 
  By:
    /s/ Scott D. KaplanScott D. KaplanPresident and Director 
(Principal Executive Officer) 35