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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, 2007
 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,
or a non-accelerated filer. See definition of accelerated filer and large accelerated filer
in Rule 12b-2 of the Exchange Act. (Check one):
 Large accelerated
filer o      Accelerated filer o      Non-accelerated filer þ
 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, 2007 and December 31, 2006
    
    
    4Statements of Operations  Three Months Ended March 31, 2007 and 2006
    
    
    4Statements of Changes in Net Assets  Three Months Ended March 31, 2007 and 2006
    
    
    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, 2007 and December 31, 2006
    
    
    8Consolidated Statements of Operations  Three Months Ended March 31, 2007 and 2006
    
    
    9Consolidated Statements of Changes in Net AssetsThree Months Ended March 31, 2007 and 2006
    
    
    10Consolidated Statements of Cash Flows  Three Months Ended March 31, 2007 and 2006
    
    
    11Consolidated Schedules of Investments  March 31, 2007 and December 31, 2006
    
    
    12Notes to Consolidated Financial Statements of the Partnership
    
    
    14Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    17Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    26Item 4. Controls and Procedures
    
    
    27Part II  Other InformationItem 1A. Risk Factors
    
    
    27Item 4. Submission of Matters to a Vote of Security Holders
    
    
    27Item 6. Exhibits
    
    
    27Signatures
    
    
    28
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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, 2007(unaudited)
    
    
    December 31, 2006ASSETSInvestment in The Prudential Variable Contract
Real Property Partnership
    
    $
    10,191,413
    
    
    $
    9,975,186Net Assets
    
    $
    10,191,413
    
    
    $
    9,975,186NET ASSETS,representing:Equity of contract owners
    
    $
    7,672,279
    
    
    $
    7,511,015Equity of Pruco Life Insurance Company of New Jersey
    
    
    2,519,134
    
    
    
    2,464,171$
    10,191,413
    
    
    $
    9,975,186Units outstanding
    
    
    3,318,633
    
    
    
    3,313,818Portfolio shares held
    
    
    294,526
    
    
    
    294,526Portfolio net asset value per share
    
    $
    34.60
    
    
    $
    33.87
 
 STATEMENTS OF OPERATIONS
  1/1/2007-3/31/2007
    
    
    1/1/2006-3/31/2006(unaudited)
    
    
    (unaudited)INVESTMENT INCOMENet investment income from Partnership operations
    
    $
    117,149
    
    
    $
    117,380EXPENSESCharges to contract owners for assuming mortality risk and
expense risk and for administration
    
    
    10,804
    
    
    
    9,814NET INVESTMENT INCOME
    
    
    106,345
    
    
    
    107,566NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTSNet change in unrealized gain (loss) on investments from Partnership
    
    
    83,865
    
    
    
    287,365Net realized gain (loss) on sale of investments from Partnership
    
    
    15,213
    
    
    
    (127
    )NET GAIN (LOSS) ON INVESTMENTS
    
    
    99,078
    
    
    
    287,238NET
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS
    
    $
    205,423
    
    
    $
    394,804
 
 STATEMENTS OF CHANGES IN NET ASSETS
  1/1/2007-3/31/2007
    
    
    1/1/2006-3/31/2006(unaudited)
    
    
    (unaudited)OPERATIONSNet investment income
    
    $
    106,345
    
    
    $
    107,566Net change in unrealized gain (loss) on investments in Partnership
    
    
    83,865
    
    
    
    287,365Net realized gain (loss) on sale of investments in Partnership
    
    
    15,213
    
    
    
    (127
    )NET
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS
    
    
    205,423
    
    
    
    394,804CAPITAL TRANSACTIONSNet
contributions (withdrawals) by contract owners
    
    
    8,935
    
    
    
    (71,283
    )Net contributions (withdrawals) by Pruco Life Insurance Company of New Jersey
    
    
    1,869
    
    
    
    81,097NET
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS
    
    
    10,804
    
    
    
    9,814TOTAL INCREASE (DECREASE) IN NET ASSETS
    
    
    216,227
    
    
    
    404,618NET ASSETSBeginning of period
    
    
    9,975,186
    
    
    
    8,924,959End of period
    
    $
    10,191,413
    
    
    $
    9,329,577
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NOTES TO THE FINANCIAL STATEMENTS OF
 PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT
March 31, 2007
(Unaudited)
 Note 1: General
    Note 2: Summary of Significant Accounting Policies and Pronouncements
 A. Basis of Accounting
      B. Investment in Partnership Interest
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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
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Note 4: Taxes
  Note
5: Net Contributions (Withdrawals) by Contract Owners
  Three months endedMarch 31,(Unaudited)2007
    
    
    2006VAL
    
    $
    17,970
    
    
    $
    (41,721
    )VLI
    
    
    (1,759
    )
    
    
    (11,950
    )SPVA
    
    
    0
    
    
    
    (17,223
    )SPVL
    
    
    (7,276
    )
    
    
    (389
    )TOTAL
    
    $
    8,935
    
    
    $
    (71,283
    )
 Note 6: Partnership Distributions
  Note 7: Unit Information
  March 31, 2007
    
    December 31, 2006(Unaudited)Units Outstanding:
    
    
    3,318,633
    
    
    
    3,313,818Unit Value:
    
    
    2.68498 to 3.22309
    
    
    
    2.63621 to 3.15740
 Note 8: Financial Highlights
  Three months endedMarch 31,(Unaudited)2006
    
    2007Total Return
    
    1.85% to 2.08%
    
    4.21% to 4.44%
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THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
 
 CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
 March 31, 2007(Unaudited)
    
    
    December 31, 2006ASSETSREAL ESTATE INVESTMENTS  At estimated market value:Real estate and improvements
(cost: 3/31/2007 - $188,136,622; 12/31/2006 - $199,124,056)
    
    $
    202,461,712
    
    
    $
    214,444,568Real estate
partnerships and preferred equity investments (cost: 3/31/2007 - $22,339,907; 12/31/2006 - $22,334,823)
    
    
    17,977,922
    
    
    
    17,941,039Other real estate investments (cost: 3/31/2007 - $2,950,191;
12/31/2006 - $2,857,851)
    
    
    2,950,191
    
    
    
    2,857,851Total real estate investments
    
    
    223,389,825
    
    
    
    235,243,458CASH AND CASH EQUIVALENTS
    
    
    50,136,851
    
    
    
    33,399,532OTHER ASSETS, NET
    
    
    3,137,362
    
    
    
    3,493,829Total assets
    
    $
    276,664,038
    
    
    $
    272,136,819LIABILITIES & PARTNERS EQUITYINVESTMENT LEVEL DEBT
    
    $
    32,565,578
    
    
    $
    32,710,488ACCOUNTS PAYABLE AND ACCRUED EXPENSES
    
    
    2,614,096
    
    
    
    3,091,930DUE TO AFFILIATES
    
    
    837,447
    
    
    
    789,889OTHER LIABILITIES
    
    
    877,228
    
    
    
    876,487MINORITY INTEREST
    
    
    5,890,980
    
    
    
    5,751,441Total liabilities
    
    $
    42,785,329
    
    
    $
    43,220,235COMMITMENTS AND CONTINGENCIESPARTNERS EQUITY
    
    
    233,878,709
    
    
    
    228,916,584Total liabilities and partners equity
    
    $
    276,664,038
    
    
    $
    272,136,819NUMBER OF SHARES OUTSTANDING AT END OF PERIOD
    
    
    6,758,960
    
    
    
    6,758,960SHARE VALUE AT END OF PERIOD
    
    $
    34.60
    
    
    $
    33.87
 The accompanying notes are an integral part of these consolidated financial statements.
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THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (Unaudited)
 For the Three Months Ended March 31,2007
    
    
    2006INVESTMENT INCOME:Revenue from real estate and improvements
    
    $
    6,488,231
    
    
    $
    5,858,589Equity in
income of real estate partnerships
    
    
    299,380
    
    
    
    391,255Interest and equity income on mortgage
and other loans receivable
    
    
    
    
    
    
    125,510Income from other real estate investments
    
    
    92,340
    
    
    
    Interest on short-term investments
    
    
    531,674
    
    
    
    463,767Total investment income
    
    
    7,411,625
    
    
    
    6,839,121INVESTMENT EXPENSES:Operating
    
    
    1,723,979
    
    
    
    1,485,963Investment management fee
    
    
    810,632
    
    
    
    739,816Real estate taxes
    
    
    511,886
    
    
    
    526,103Administrative
    
    
    984,469
    
    
    
    932,771Interest expense
    
    
    677,921
    
    
    
    448,686Minority interest
    
    
    14,343
    
    
    
    4,340Total investment expenses
    
    
    4,723,230
    
    
    
    4,137,679NET INVESTMENT INCOME
    
    
    2,688,395
    
    
    
    2,701,442REALIZED AND UNREALIZED GAIN (LOSS) ON REAL ESTATE
INVESTMENTS:Net proceeds from real estate investments sold
    
    
    14,649,241
    
    
    
    (2,919
    )Less: Cost of real estate investments sold
    
    
    11,286,691
    
    
    
    Realization of prior years unrealized
gain (loss) on real estate investments sold
    
    
    3,013,440
    
    
    
    NET GAIN (LOSS) REALIZED ON REAL ESTATE INVESTMENTS SOLD
    
    
    349,110
    
    
    
    (2,919
    )Change in unrealized gain (loss) on real estate investments
    
    
    2,049,817
    
    
    
    8,066,106Less: Minority interest in unrealized gain (loss) on real estate investments
    
    
    125,197
    
    
    
    1,452,555Net unrealized gain (loss) on real estate investments
    
    
    1,924,620
    
    
    
    6,613,551NET REALIZED AND UNREALIZED GAIN (LOSS)
ON REAL ESTATE INVESTMENTS
    
    
    2,273,730
    
    
    
    6,610,632INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS
    
    $
    4,962,125
    
    
    $
    9,312,074
 The accompanying notes are an integral part of these consolidated financial statements.
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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 31,2007
    
    
    2006INCREASE
(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS:Net investment income
    
    $
    2,688,395
    
    
    $
    2,701,442Net gain (loss) realized on real estate
investments sold
    
    
    349,110
    
    
    
    (2,919
    )Net unrealized gain (loss) from real estate
investments
    
    
    1,924,620
    
    
    
    6,613,551Increase (decrease) in net assets
resulting from operations
    
    
    4,962,125
    
    
    
    9,312,074NET ASSETS  Beginning of period
    
    
    228,916,584
    
    
    
    205,402,851NET ASSETS   End of period
    
    $
    233,878,709
    
    
    $
    214,714,925
 The accompanying notes are an integral part of these consolidated financial statements.
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THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)
 For the Three Months Ended March 31,2007
    
    
    2006CASH FLOWS FROM OPERATING ACTIVITIES:Net increase in net assets from operations
    
    $
    4,962,125
    
    
    $
    9,312,074Adjustments to reconcile net increase in net assets
to net cash from operating activitiesNet realized and unrealized loss (gain)
    
    
    (2,273,730
    )
    
    
    (6,610,632
    )Amortization of deferred financing costs
    
    
    238,710
    
    
    
    Distributions in excess of (less than) equity in income
of real estate partnerships operations
    
    
    (5,084
    )
    
    
    (267,543
    )Minority interest in consolidated partnerships
    
    
    14,343
    
    
    
    4,340Bad debt expense
    
    
    281
    
    
    
    52,358(Increase) Decrease in accrued interest included in
other real estate investments
    
    
    (92,340
    )
    
    
    (Increase) decrease in:Other assets
    
    
    117,476
    
    
    
    388,460Increase (decrease) in:Accounts payable and accrued expenses
    
    
    (477,834
    )
    
    
    (160,061
    )Due to affiliates
    
    
    47,558
    
    
    
    (7,702
    )Other liabilities
    
    
    741
    
    
    
    135,024Net cash flows from (used in) operating activities
    
    
    2,532,246
    
    
    
    2,846,318CASH FLOWS FROM INVESTING ACTIVITIES:Net proceeds from real estate investments sold
    
    
    14,649,241
    
    
    
    (2,919
    )Additions to real estate and improvements
    
    
    (299,258
    )
    
    
    (162,701
    )Contributions to real estate partnerships
    
    
    
    
    
    
    (7,289,487
    )Collection of mortgage loan receivable
    
    
    
    
    
    
    4,277,769Net cash flows from (used in) investing activities
    
    
    14,349,983
    
    
    
    (3,177,338
    )CASH FLOWS FROM FINANCING ACTIVITIES:Principal payments on investment level debt
    
    
    (144,910
    )
    
    
    (135,450
    )Net cash flows from (used in) financing activities
    
    
    (144,910
    )
    
    
    (135,450
    )NET CHANGE
IN CASH AND CASH EQUIVALENTS
    
    
    16,737,319
    
    
    
    (466,470
    )CASH AND CASH EQUIVALENTS  Beginning of period
    
    
    33,399,532
    
    
    
    45,467,485CASH AND CASH EQUIVALENTS  End of period
    
    $
    50,136,851
    
    
    $
    45,001,015DISCLOSURE OF SUPPLEMENTAL CASH FLOW
INFORMATIONCash paid for interest
    
    $
    724,038
    
    
    $
    438,372
 The accompanying notes are an integral part of these consolidated financial statements.
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THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
 
 CONSOLIDATED SCHEDULE OF INVESTMENTS
 March 31, 2007Total RentableSquare Feet
    
    
    March 31, 2007Unless Otherwise
    
    

(Unaudited)
    
    
    December 31, 2006March 31, 2007
    
    
    
    
    
    
    Indicated
    
    
    
    
    
    
    Estimated Market
    
    
    
    
    
    
    Estimated MarketProperty Name
    
    Ownership
    
    
    City, State
    
    
    (Unaudited)
    
    
    Cost
    
    
    Value
    
    
    Cost
    
    
    ValueOFFICES750 Warrenville
    
    WO
    
    Lisle, IL
    
    
    103,193
    
    
    $
    24,522,399
    
    
    $
    11,500,000
    
    
    $
    24,517,391
    
    
    $
    10,700,000Summit @ Cornell Oaks
    
    WO
    
    Beaverton , OR
    
    
    72,109
    
    
    
    12,178,134
    
    
    
    12,500,000
    
    
    
    12,091,490
    
    
    
    12,500,000Westpark
    
    WO
    
    Nashville, TN
    
    
    97,199
    
    
    
    11,033,804
    
    
    
    12,800,000
    
    
    
    11,033,804
    
    
    
    12,800,000Financial Plaza
    
    WO
    
    Brentwood, TN
    
    
    98,049
    
    
    
    12,333,151
    
    
    
    13,200,000
    
    
    
    12,333,152
    
    
    
    13,500,000Offices % as of 3/31/2007
    
    
    21
    %
    
    
    60,067,488
    
    
    
    50,000,000
    
    
    
    59,975,837
    
    
    
    49,500,000APARTMENTSBrookwood Apartments
    
    WO
    
    Atlanta, GA
    
    240 Units
    
    
    19,058,781
    
    
    
    20,100,000
    
    
    
    18,918,016
    
    
    
    20,100,000Dunhill Trace Apartments
    
    WO
    
    Raleigh, NC
    
    250 Units
    
    
    16,290,082
    
    
    
    20,400,000
    
    
    
    16,287,767
    
    
    
    20,400,000Apartments % as of 3/31/2007
    
    
    17
    %
    
    
    35,348,863
    
    
    
    40,500,000
    
    
    
    35,205,783
    
    
    
    40,500,000RETAILKings Market
    
    WO
    
    Rosewell, GA
    
    
    314,358
    
    
    
    37,784,070
    
    
    
    30,000,000
    
    
    
    37,775,326
    
    
    
    28,400,000Hampton Towne Center
    
    WO
    
    Hampton, VA
    
    
    174,540
    
    
    
    18,042,611
    
    
    
    26,100,000
    
    
    
    18,042,611
    
    
    
    26,000,000White Marlin Mall
    
    CJV
    
    Ocean City, MD
    
    
    186,016
    
    
    
    15,556,300
    
    
    
    22,900,000
    
    
    
    15,538,779
    
    
    
    22,900,000Kansas City Portfolio
    
    EJV
    
    Kansas City, KS;MO
    
    
    487,660
    
    
    
    7,902,515
    
    
    
    3,540,530
    
    
    
    7,816,531
    
    
    
    3,422,747Westminster Crossing East, LLC
    
    CJV
    
    Westminster, MD
    
    
    89,890
    
    
    
    12,388,625
    
    
    
    17,861,712
    
    
    
    12,358,340
    
    
    
    17,744,568CARS Preferred Equity
    
    PE
    
    Various
    
    
    N/A
    
    
    
    14,437,392
    
    
    
    14,437,392
    
    
    
    14,518,292
    
    
    
    14,518,292Retail % as of 3/31/2007
    
    
    49
    %
    
    
    106,111,513
    
    
    
    114,839,634
    
    
    
    106,049,879
    
    
    
    112,985,607INDUSTRIALSmith Road
    
    WO
    
    Aurora, CO
    
    
    277,930
    
    
    
    
    
    
    
    
    
    
    
    11,286,560
    
    
    
    14,300,000Industrial % as of 3/31/2007
    
    
    0
    %
    
    
    
    
    
    
    
    
    
    
    11,286,560
    
    
    
    14,300,000HOTELPortland Crown Plaza
    
    CJV
    
    Portland, OR
    
    161 Rooms
    
    
    8,948,665
    
    
    
    15,100,000
    
    
    
    8,940,820
    
    
    
    15,100,000Hotel % as of 3/31/2007
    
    
    6
    %
    
    
    8,948,665
    
    
    
    15,100,000
    
    
    
    8,940,820
    
    
    
    15,100,000OTHER REAL ESTATE INVESTMENTSWestminster East
    
    Eloan
    
    Westminster, MD
    
    
    
    
    
    
    2,950,191
    
    
    
    2,950,191
    
    
    
    2,857,851
    
    
    
    2,857,851Other Real Estate Investments % as of 3/31/2007
    
    
    1
    %
    
    
    2,950,191
    
    
    
    2,950,191
    
    
    
    2,857,851
    
    
    
    2,857,851Total Real Estate Investments as a Percentage of Net Assets as of 3/31/2007
    
    
    96
    %
    
    $
    213,426,720
    
    
    $
    223,389,825
    
    
    $
    224,316,730
    
    
    $
    235,243,458
 
 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
 March 31, 2007(Unaudited)
    
    
    December 31, 2006Estimated
    
    
    
    
    
    
    EstimatedFace Amount
    
    
    Cost
    
    
    Market Value
    
    
    Cost
    
    
    Market ValueCASH AND CASH EQUIVALENTS  Percentage of Net Assets
    
    
    
    
    
    
    
    
    
    
    21.4
    %
    
    
    
    
    
    
    14.6
    %Federal Home Loan Bank, 0 coupon bond, April 2, 2007
    
    $
    9,258,740
    
    
    $
    9,258,740
    
    
    $
    9,258,740
    
    
    $
    7,245,028
    
    
    $
    7,245,028Federal Home Loan Bank, 0 coupon bond, April 13, 2007
    
    
    39,931,167
    
    
    
    39,931,167
    
    
    
    39,931,167
    
    
    
    24,914,167
    
    
    
    24,914,167Total Cash Equivalents
    
    
    
    
    
    
    49,189,907
    
    
    
    49,189,907
    
    
    
    32,159,195
    
    
    
    32,159,195Cash
    
    
    
    
    
    
    946,944
    
    
    
    946,944
    
    
    
    1,240,337
    
    
    
    1,240,337Total Cash and Cash Equivalents
    
    
    
    
    
    $
    50,136,851
    
    
    $
    50,136,851
    
    
    $
    33,399,532
    
    
    $
    33,399,532
 The accompanying notes are an integral part of these consolidated financial statements.
 13




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF
 THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
March 31, 2007 and 2006
(Unaudited)
 Note 1: Summary of Significant Accounting Policies and Pronouncements
        14




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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
March 31, 2007 and 2006
(Unaudited)
 Note 2: Related Party Transactions
   Note 3: Commitments and Contingencies
    CommitmentsProperty Type
    
    (000s)Other
    
    $
    20,805
 15




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
March 31, 2007 and 2006
(Unaudited)
 Note 4: Financial Highlights
 For The Three Months Ended March 31,2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Per Share(Unit) Operating Performance:Net Asset Value, beginning of period
    
    $
    33.87
    
    
    $
    29.59
    
    
    $
    26.15
    
    
    $
    24.66
    
    
    $
    24.11Income From Investment Operations:Investment income, before management fee
    
    
    0.52
    
    
    
    0.50
    
    
    
    0.36
    
    
    
    0.35
    
    
    
    0.39Investment Management fee
    
    
    (0.12
    )
    
    
    (0.11
    )
    
    
    (0.09
    )
    
    
    (0.09
    )
    
    
    (0.08
    )Net realized and unrealized gain (loss) on investments
    
    
    0.33
    
    
    
    0.95
    
    
    
    0.36
    
    
    
    (0.08
    )
    
    
    (0.49
    )Net Increase in Net Assets Resulting from Operations
    
    
    0.73
    
    
    
    1.34
    
    
    
    0.63
    
    
    
    0.18
    
    
    
    (0.18
    )Net Asset Value, end of period
    
    $
    34.60
    
    
    $
    30.93
    
    
    $
    26.78
    
    
    $
    24.84
    
    
    $
    23.93Total Return, before Management Fee (a):
    
    
    2.53
    %
    
    
    4.89
    %
    
    
    2.79
    %
    
    
    1.10
    %
    
    
    (.45
    %)Ratios/Supplemental Data:Net Assets, end of period (in millions)
    
    $
    234
    
    
    $
    215
    
    
    $
    191
    
    
    $
    183
    
    
    $
    183Ratios to average net assets (b):Total Portfolio Level Expenses
    
    
    0.38
    %
    
    
    0.36
    %
    
    
    0.36
    %
    
    
    0.35
    %
    
    
    0.31
    %Investment Income before Management Fee
    
    
    1.53
    %
    
    
    1.68
    %
    
    
    1.43
    %
    
    
    1.41
    %
    
    
    1.60
    %
 
 (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. 16




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
   (a) Liquidity and Capital Resources
    17




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##### Table of Contents



(b) Results of Operations
  Net Investment Income Overview
  Valuation Overview
   18




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##### Table of Contents



Three Months Ended March 31,2007
    
    
    2006Net Investment Income:Office properties
    
    $
    852,515
    
    
    $
    823,847Apartment properties
    
    
    141,603
    
    
    
    261,496Retail properties
    
    
    1,666,350
    
    
    
    1,484,989Industrial property
    
    
    113,561
    
    
    
    195,933Hotel property
    
    
    255,673
    
    
    
    278,301Land
    
    
    
    
    
    
    (43,508
    )Other (including interest income,
investment mgt fee, etc.)
    
    
    (341,307
    )
    
    
    (299,616
    )Total Net Investment Income
    
    $
    2,688,395
    
    
    $
    2,701,442Net Realized Gain (Loss) on Real Estate Investments:Land
    
    $
    
    
    
    $
    (2,919
    )Industrial property
    
    
    349,110
    
    
    
    Total Net Realized Gain (Loss) on Real Estate Investments
    
    
    349,110
    
    
    
    (2,919
    )Net Unrealized Gain (Loss) on Real Estate Investments:Office properties
    
    
    408,348
    
    
    
    2,122,136Apartment properties
    
    
    (143,081
    )
    
    
    (72,246
    )Retail properties
    
    
    1,665,629
    
    
    
    18,996Industrial property
    
    
    
    
    
    
    743,833Hotel property
    
    
    (6,276
    )
    
    
    3,800,832Total Net Unrealized Gain (Loss) on Real Estate Investments
    
    
    1,924,620
    
    
    
    6,613,551Net Realized and Unrealized Gain (Loss) on Real Estate Investments
    
    $
    2,273,730
    
    
    $
    6,610,632
 19




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##### Table of Contents



OFFICE PROPERTIES
 Net
    
    NetInvestment
    
    Investment
    
    Unrealized
    
    UnrealizedThree Months Ended
    
    Income/(Loss)
    
    Income/(Loss)
    
    Gain/(Loss)
    
    Gain/(Loss)
    
    Occupancy
    
    OccupancyMarch 31,
    
    2007
    
    2006
    
    2007
    
    2006
    
    2007
    
    2006PropertyLisle, IL
    
    $
    70,201
    
    
    $
    98,403
    
    
    $
    794,992
    
    
    $
    600,000
    
    
    
    61
    %
    
    
    38
    %Brentwood, TN
    
    
    273,828
    
    
    
    227,999
    
    
    
    
    
    
    
    (110,907
    )
    
    
    100
    %
    
    
    93
    %Oakbrook Terrace, IL (1)
    
    
    
    
    
    
    1,323
    
    
    
    
    
    
    
    
    
    
    
    N/A
    
    
    
    N/ABeaverton, OR
    
    
    245,475
    
    
    
    229,068
    
    
    
    (86,644
    )
    
    
    1,133,043
    
    
    
    89
    %
    
    
    78
    %Brentwood, TN
    
    
    263,011
    
    
    
    267,054
    
    
    
    (300,000
    )
    
    
    500,000
    
    
    
    100
    %
    
    
    100
    %$
    852,515
    
    
    $
    823,847
    
    
    $
    408,348
    
    
    $
    2,122,136
 
 (1)
    
    The Oakbrook Terrace, Illinois office property was sold on June 8, 2005 but certain post-closing
adjustments were recognized during the quarter ended March 31, 2006. Net Investment Income
  Unrealized Gain/(Loss)
  20




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APARTMENT PROPERTIES
 Net
    
    NetInvestment
    
    Investment
    
    Unrealized
    
    UnrealizedThree Months Ended
    
    Income/(Loss)
    
    Income/(Loss)
    
    Gain/(Loss)
    
    Gain/(Loss)
    
    Occupancy
    
    OccupancyMarch 31,
    
    2007
    
    2006
    
    2007
    
    2006
    
    2007
    
    2006PropertyAtlanta, GA
    
    $
    42,310
    
    
    $
    114,338
    
    
    $
    (140,765
    )
    
    $
    (70,189
    )
    
    
    86
    %
    
    
    91
    %Raleigh, NC
    
    
    81,951
    
    
    
    147,158
    
    
    
    (2,316
    )
    
    
    (2,057
    )
    
    
    95
    %
    
    
    93
    %Jacksonville, FL (1)
    
    
    17,342
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    N/A
    
    
    
    N/A$
    141,603
    
    
    $
    261,496
    
    
    $
    (143,081
    )
    
    $
    (72,246
    )
 
 (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. Net Investment Income
  Unrealized Gain/(Loss)
  21




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##### Table of Contents



RETAIL PROPERTIES
 Net
    
    NetInvestment
    
    Investment
    
    Unrealized
    
    UnrealizedThree Months Ended
    
    Income/(Loss)
    
    Income/(Loss)
    
    Gain/(Loss)
    
    Gain/(Loss)
    
    Occupancy
    
    OccupancyMarch 31,
    
    2007
    
    2006
    
    2007
    
    2006
    
    2007
    
    2006PropertyRoswell, GA
    
    $
    535,481
    
    
    $
    531,549
    
    
    $
    1,591,257
    
    
    $
    674,414
    
    
    
    88
    %
    
    
    94
    %Kansas City, KS; MO (1)
    
    
    85,986
    
    
    
    196,561
    
    
    
    31,798
    
    
    
    (55,660
    )
    
    
    76
    %
    
    
    81
    %Hampton, VA
    
    
    320,717
    
    
    
    318,723
    
    
    
    100,000
    
    
    
    (100,000
    )
    
    
    100
    %
    
    
    100
    %Ocean City, MD
    
    
    146,560
    
    
    
    126,501
    
    
    
    (144,286
    )
    
    
    (499,758
    )
    
    
    79
    %
    
    
    84
    %Westminster, MD(2)
    
    
    364,212
    
    
    
    
    
    
    
    86,860
    
    
    
    
    
    
    
    100
    %
    
    
    N/AWestminster, MD (3)
    
    
    
    
    
    
    124,362
    
    
    
    
    
    
    
    
    
    
    
    N/A
    
    
    
    N/ACARS Preferred Equity (4)
    
    
    213,394
    
    
    
    187,293
    
    
    
    
    
    
    
    
    
    
    
    N/A
    
    
    
    N/A$
    1,666,350
    
    
    $
    1,484,989
    
    
    $
    1,665,629
    
    
    $
    18,996
 
 (1)
    
    Net investment income (loss) and occupancy for the quarter ended March 31, 2007 reflects results for the
remaining retail property in Kansas City, Kansas. Net investment income for the quarter ended March 31, 2006
reflects results for all four retail properties located in Kansas City, Kansas and Kansas City, Missouri, prior to the
sale of three out of the four centers on May 15, 2006.(2)
    
    The Westminster, Maryland retail property was acquired on June 13, 2006.(3)
    
    Mortgage Loan Receivable (mortgage paid in full on March 3, 2006).(4)
    
    Net investment income for the quarter ended March 31, 2006 reflects partial period results for the second
funding of the Partnerships preferred equity investment, which occurred on February 14, 2006. Net Investment Income
  Unrealized Gain/(Loss)
  22




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##### Table of Contents



INDUSTRIAL PROPERTY
 Net
    
    NetInvestment
    
    Investment
    
    Realized
    
    UnrealizedThree Months Ended
    
    Income/(Loss)
    
    Income/(Loss)
    
    Gain/(Loss)
    
    Gain/(Loss)
    
    Occupancy
    
    OccupancyMarch 31,
    
    2007
    
    2006
    
    2007
    
    2006
    
    2007
    
    2006PropertyAurora, CO (1)
    
    $
    113,561
    
    
    $
    195,933
    
    
    $
    349,110
    
    
    $
    743,833
    
    
    
    N/A
    
    
    
    78
    %
 
 (1)
    
    Net investment income 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
  Total Realized and Unrealized Gain/(Loss)
  HOTEL PROPERTY
 Net
    
    NetInvestment
    
    Investment
    
    Unrealized
    
    UnrealizedThree Months Ended
    
    Income/(Loss)
    
    Income/(Loss)
    
    Gain/(Loss)
    
    Gain/(Loss)
    
    Occupancy
    
    OccupancyMarch 31,
    
    2007
    
    2006
    
    2007
    
    2006
    
    2007
    
    2006PropertyLake Oswego, OR
    
    $
    255,673
    
    
    $
    278,301
    
    
    $
    (6,276
    )
    
    $
    3,800,832
    
    
    
    68
    %
    
    
    72
    %
 Net Investment Income
  Unrealized Gain/(Loss)
  23




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##### Table of Contents



Other
  (c) Inflation
  Critical Accounting Policies
   Valuation of Investments
 Real Estate Investments
 24




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##### Table of Contents



Other Estimates
  25




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk
 Interest Rate Risk 
  Estimated Market Value
    
    
    Weighted AverageMaturity
    
    
    (millions)
    
    
    Interest RateCash and Cash equivalents
    
    0-3 months
    
    $50.1
    
    5.57%
  Debt (in $ thousands),
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Estimatedincluding current portion
    
    2007
    
    2008
    
    2009
    
    2010
    
    2011
    
    Thereafter
    
    Total
    
    Fair ValueWeighted Average Fixed Interest Rate
    
    
    5.35
    %
    
    
    5.74
    %
    
    
    6.75
    %
    
    
    6.75
    %
    
    
    6.75
    %
    
    
    6.75
    %
    
    
    6.41
    %Fixed Rate
    
    $
    444
    
    
    $
    16,090
    
    
    $
    9,277
    
    
    $
    565
    
    
    $
    604
    
    
    $
    5,586
    
    
    $
    32,566
    
    
    $
    32,738Variable Rate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total Mortgage Loans Payable
    
    $
    444
    
    
    $
    16,090
    
    
    $
    9,277
    
    
    $
    565
    
    
    $
    604
    
    
    $
    5,586
    
    
    $
    32,566
    
    
    $
    32,738
  26




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##### Table of Contents



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.
 27




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SIGNATURES
  PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
 
 Date:  May 11, 2007
    By:
    /s/ Scott D. KaplanScott D. KaplanPresident and Director
(Principal Executive Officer) 28