================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

(MARK ONE)

[X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
      SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2003

                                       OR

[ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
      SECURITIES EXCHANGE ACT OF 1934

COMMISSION FILE NUMBER 33-20018

                   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                (IRS EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)


              213 WASHINGTON STREET, NEWARK, NEW JERSEY 07102-2992
              ----------------------------------------------------
               (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

                                 (800) 778-2255
              ----------------------------------------------------
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)


INDICATE  BY CHECK  MARK  WHETHER  THE  REGISTRANT:  (1) HAS FILED  ALL  REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE  SECURITIES  EXCHANGE  ACT OF
1934  DURING  THE  PRECEDING  12 MONTHS  (OR FOR SUCH  SHORTER  PERIOD  THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS),  AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS.                YES [X] NO [_]

AMENDMENT ______________________________________________________________________

     INDICATE BY CHECK MARK WHETHER THE REGISTRANT IS AN  ACCELERATED  FILER (AS
DEFINED IN RULE 12B-2 OF THE EXCHANGE ACT).              YES [ ] NO [X]

END OF AMENDMENT _______________________________________________________________

================================================================================

<PAGE>


                   PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT
                              REAL PROPERTY ACCOUNT
                                  (REGISTRANT)


                                      INDEX
                                      -----

                                                                            PAGE
                                                                            ----

PART I--FINANCIAL INFORMATION

Item 1.  Financial Statements (Unaudited)

A.   PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT

Statements of Net Assets--June 30, 2003 and December 31, 2002................  3

     Statements of Operations--Six and Three Months Ended
     June 30, 2003 and 2002..................................................  3

     Statements of Changes in Net Assets--Six and Three Months Ended
     June 30, 2003 and 2002..................................................  3

     Notes to the Financial Statements of the Account........................  4

B.   THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

     Consolidated Statements of Assets and Liabilities--June 30, 2003
     and December 31, 2002...................................................  7

     Consolidated Statements of Operations--
         Six and Three Months Ended June 30, 2003 and 2002...................  8

     Consolidated Statements of Changes in Net Assets--
         Six and Three Months Ended June 30, 2003 and 2002...................  9

     Consolidated Statements of Cash Flows--
         Six and Three Months Ended June 30, 2003 and 2002................... 10

     Consolidated Schedules of Investments--June 30, 2003
     and December 31, 2002................................................... 11

     Notes to the Financial Statements of the Partnership.................... 12

Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations........................................... 14

Item 3.  Quantitative and Qualitative Disclosures About Market Risks......... 22

Item 4.  Controls and Procedures............................................. 23

PART II--OTHER INFORMATION

Item 5.  Submission of Matters to a Vote of Security Holders................. 24

Item 6.  Exhibits and Reports on Form 8-K.................................... 24

     Signature Page.......................................................... 26

                                       2
<PAGE>


                             FINANCIAL STATEMENTS OF
        PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT

<TABLE>
<CAPTION>
STATEMENTS OF NET ASSETS
June 30, 2003 and December 31, 2002
                                                                      JUNE 30, 2003    DECEMBER 31,
                                                                       (UNAUDITED)         2002
                                                                       -----------     -----------
<S>                                                                    <C>             <C>
ASSETS
Investment in The Prudential Variable Contract
Real Property Partnership .........................................    $ 8,875,493     $ 8,854,905
                                                                       -----------     -----------
Net Assets ........................................................    $ 8,875,493     $ 8,854,905
                                                                       ===========     ===========
NET ASSETS, representing:
Equity of contract owners .........................................    $ 5,790,482     $ 5,818,363
Equity of Pruco Life Insurance Company of New Jersey ..............      3,085,011       3,036,542
                                                                       -----------     -----------
                                                                       $ 8,875,493     $ 8,854,905
                                                                       ===========     ===========
Units outstanding .................................................      4,053,209       4,041,054
                                                                       ===========     ===========

<CAPTION>
STATEMENTS OF OPERATIONS
For the six and three months ended June 30, 2003 and 2002
                                                                        1/1/2003-       1/1/2002-       4/1/2003-       4/1/2002-
                                                                        6/30/2003       6/30/2002       6/30/2003       6/30/2002
                                                                       (UNAUDITED)     (UNAUDITED)     (UNAUDITED)     (UNAUDITED)
                                                                       -----------     -----------     -----------     -----------
<S>                                                                    <C>             <C>             <C>             <C>
INVESTMENT INCOME
Net investment income from Partnership operations .................    $   231,326     $   249,681     $   117,190     $   120,508
                                                                       -----------     -----------     -----------     -----------
EXPENSES
Charges to contract owners for assuming mortality risk and
expense risk and for administration ...............................         16,471          16,564           8,248           8,456
                                                                       -----------     -----------     -----------     -----------
NET INVESTMENT INCOME .............................................        214,855         233,117         108,942         112,052
                                                                       -----------     -----------     -----------     -----------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net change in unrealized loss on investments in Partnership .......       (233,124)       (319,451)        (29,348)       (152,650)
Net realized gain (loss) on sale of investments in Partnership ....         22,386             (70)              0
                                                                                                                                 0
                                                                       -----------     -----------     -----------     -----------
NET GAIN (LOSS) ON INVESTMENTS ....................................       (210,738)       (319,521)        (29,348)       (152,650)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS .........................................    $     4,117     $   (86,404)    $    79,594     $   (40,598)
                                                                       ===========     ===========     ===========     ===========

<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
For the six and three months ended June 30, 2003 and 2002
                                                                        1/1/2003-       1/1/2002-       4/1/2003-       4/1/2002-
                                                                        6/30/2003       6/30/2002       6/30/2003       6/30/2002
                                                                       (UNAUDITED)     (UNAUDITED)     (UNAUDITED)     (UNAUDITED)
                                                                       -----------     -----------     -----------     -----------
<S>                                                                    <C>             <C>             <C>             <C>
OPERATIONS
Net investment income .............................................    $   214,855     $   233,117     $   108,942     $   112,052
Net change in unrealized loss on investments in Partnership .......       (233,124)       (319,451)        (29,348)       (152,650)
Net realized gain (loss) on sale of investments in Partnership ....         22,386             (70)              0               0
                                                                       -----------     -----------     -----------     -----------

NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS .........................................          4,117         (86,404)         79,594         (40,598)
                                                                       -----------     -----------     -----------     -----------
CAPITAL TRANSACTIONS
Net withdrawals by contract owners ................................        (24,477)        (45,376)        (34,322)         (1,456)
Net contributions by Pruco Life Insurance Company of New Jersey ...         40,948          61,940          42,570           9,912
                                                                       -----------     -----------     -----------     -----------

NET INCREASE IN NET ASSETS
RESULTING FROM CAPITAL TRANSACTIONS ...............................         16,471          16,564           8,248           8,456
                                                                       -----------     -----------     -----------     -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS ...........................         20,588         (69,840)         87,842         (32,142)
NET ASSETS
Beginning of period ...............................................      8,854,905       8,747,935       8,787,651       8,710,237
                                                                       -----------     -----------     -----------     -----------
End of period .....................................................    $ 8,875,493     $ 8,678,095     $ 8,875,493     $ 8,678,095
                                                                       ===========     ===========     ===========     ===========
</TABLE>


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

                                       3
<PAGE>


                      NOTES TO THE FINANCIAL STATEMENTS OF
        PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT
                                  JUNE 30, 2003
                                   (UNAUDITED)

NOTE 1: GENERAL

Pruco Life of New Jersey Variable Contract Real Property Account ("Real Property
Account")  was  established  on October 30, 1987 by  resolution  of the Board of
Directors  of Pruco Life  Insurance  Company of New Jersey  ("Pruco  Life of New
Jersey"),  an  indirect  wholly-owned  subsidiary  of The  Prudential  Insurance
Company of America ("Prudential"),  as a separate investment account pursuant to
New Jersey law.  The assets of the Real  Property  Account are  segregated  from
Pruco Life of New Jersey's  other assets.  The Real Property  account is used to
fund  benefits  under  certain  variable  life  insurance  and variable  annuity
contracts  issued by Pruco Life of New Jersey.  These  products are  Appreciable
Life ("VAL"), Variable Life ("VLI"), Discovery Plus ("SPVA"), and Discovery Life
Plus ("SPVL").

The assets of the Real Property Account are invested in The Prudential  Variable
Contract Real Property  Partnership  (the  "Partnership").  The  Partnership  is
organized  under New Jersey law and is registered  under the  Securities  Act of
1933. The Partnership is the investment vehicle for assets allocated to the real
estate  investment  option under  certain  variable  life  insurance and annuity
contracts.  The Real  Property  Account,  along  with the  Pruco  Life  Variable
Contract  Real  Property  Account  and The  Prudential  Variable  Contract  Real
Property  Account,  are the sole investors in the  Partnership.  These financial
statements  should be read in conjunction  with the financial  statements of the
Partnership.

The  Partnership  has a policy of investing at least 65% of its assets in direct
ownership interests in income-producing  real estate and participating  mortgage
loans.

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. BASIS OF ACCOUNTING

The accompanying financial statements are prepared in conformity with accounting
principles  generally  accepted in the United  States of America  ("GAAP").  The
preparation  of the  financial  statements  in  conformity  with  GAAP  requires
management to make estimates and  assumptions  that affect the reported  amounts
and disclosures. Actual results could differ from those estimates.

The interim  financial data as of June 30, 2003 and for the six and three months
ended June 30, 2003 and June 30, 2002 is unaudited ; however,  in the opinion of
management, the interim data includes all adjustments, consisting only of normal
recurring  adjustments,  necessary  for a fair  statement of the results for the
interim periods.

B. INVESTMENT IN PARTNERSHIP INTEREST

The  investment  in the  Partnership  is based on the  Real  Property  Account's
proportionate  interest of the Partnership's  market value. At June 30, 2003 and
December 31, 2002 the Real Property  Account's  interest in the  Partnership was
4.8% or 367,199 shares.

C. INCOME RECOGNITION

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

D. EQUITY OF PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY

Pruco Life of New Jersey  maintains a position in the Real Property  Account for
liquidity purposes  including unit purchases and redemptions,  Partnership share
transactions,  and expense  processing.  The position does not have an effect on
the contract owner's account or the related unit value.

                                       4
<PAGE>


NOTE 3:   INVESTMENT INFORMATION FOR THE PRUDENTIAL VARIABLE CONTRACT
          REAL PROPERTY PARTNERSHIP

The  number  of  shares  (rounded)  held by the  Real  Property  Account  in the
Partnership  and the Partnership net asset value per share (rounded) at June 30,
2003 and December 31, 2002 were as follows:

                                            JUNE 30, 2003
                                             (UNAUDITED)       DECEMBER 31, 2002
                                            -------------      -----------------
NUMBER OF SHARES (ROUNDED):                    367,199              367,199
NET ASSET VALUE PER SHARE (ROUNDED):           $24.17               $24.11
COST:                                        $4,271,993           $4,271,993

NOTE 4: CHARGES AND EXPENSES

A. MORTALITY RISK AND EXPENSE RISK CHARGES

Mortality risk and expense risk charges are determined  daily using an effective
annual  rate  of  0.6%,   0.35%,  0.9%  and  0.9%  for  VAL,  VLI,  SPVA,  SPVL,
respectively. Mortality risk is that life insurance contract owners may not live
as long as estimated or  annuitants  may live longer than  estimated and expense
risk is that the cost of  issuing  and  administering  the  policies  may exceed
related charges by Pruco Life of New Jersey.

B. ADMINISTRATIVE CHARGES

Administrative  charges are determined  daily using an effective  annual rate of
0.35%  applied  daily  against  the net assets  representing  equity of contract
owners held in each subaccount for SPVA and SPVL. Administrative charges include
costs  associated  with  issuing  the  contract,  establishing  and  maintaining
records, and providing reports to contract owners.

C. COST OF INSURANCE AND OTHER RELATED CHARGES

Contract owner  contributions  are subject to certain  deductions prior to being
invested in the Real Property  Account.  The  deductions for VAL and VLI are (1)
state premium taxes; (2) sales charges which are deducted in order to compensate
Pruco  Life  of New  Jersey  for  the  cost  of  selling  the  contract  and (3)
transaction costs,  applicable to VAL, are deducted from each premium payment to
cover premium  collection  and processing  costs.  Contracts are also subject to
monthly charges for the costs of administering  the contract to compensate Pruco
Life of New Jersey for the guaranteed minimum death benefit risk.

D. DEFERRED SALES CHARGE

Subsequent to a contract  owner  redemption,  a deferred sales charge is imposed
upon surrenders of certain variable life insurance contracts to compensate Pruco
Life of New Jersey  for sales and other  marketing  expenses.  The amount of any
sales  charge  will  depend on the number of years that have  elapsed  since the
contract was issued.  No sales charge will be imposed  after the sixth and tenth
year of the  contract  for SPVL and VAL,  respectively.  No sales charge will be
imposed on death benefits.

E. PARTIAL WITHDRAWAL CHARGE

A charge is imposed by Pruco  Life of New Jersey on partial  withdrawals  of the
cash surrender  value for VAL. A charge equal to the lesser of $15 or 2% will be
made in connection with each partial withdrawal of the cash surrender value of a
contract.

NOTE 5: TAXES

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

                                       5
<PAGE>


NOTE 6: NET WITHDRAWALS (CONTRIBUTIONS) BY CONTRACT OWNERS

Net  withdrawals  by contract  owners for the real estate  investment  option in
Pruco Life  Insurance  Company of New Jersey's  variable  insurance and variable
annuity products for the six and three months ended June 30, 2003 and 2002, were
as follows:

                           SIX MONTHS ENDED               THREE MONTHS ENDED
                               JUNE 30,                        JUNE 30,
                       -------         -------          -------        -------
                         2003            2002             2003           2002
                       -------         -------          -------        -------
                               (UNAUDITED)                    (UNAUDITED)
VAL                    $23,034         $38,841          $25,972        $ 7,902
VLI                     (6,784)          1,222              542           (918)
SPVA                     7,828               0            7,828              0
SPVL                       399           5,313              (20)        (5,528)
                       -------         -------          -------        -------
TOTAL                  $24,477         $45,376          $34,322        $ 1,456
                       =======         =======          =======        =======


NOTE 7: UNIT INFORMATION

Outstanding units and unit values at June 30, 2003 and December 31, 2002 were as
follows:

                                       JUNE 30, 2003          DECEMBER 31, 2002
                                    ------------------       ------------------
                                        (UNAUDITED)

UNITS OUTSTANDING:                       4,053,209                4,041,054
UNIT VALUE:                         1.96497 to 2.28104       1.97263 to 2.27966


                                       6
<PAGE>


           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

                                                    JUNE 30, 2003   DECEMBER 31,
                                                      (UNAUDITED)       2002
                                                     ------------   ------------
ASSETS
REAL ESTATE INVESTMENTS--At estimated market value:
   Real estate and improvements
      (cost: 06/30/2003--$213,240,126;
      12/31/2002--$215,592,277) ...................  $190,361,705   $196,631,183
   Real estate partnership
      (cost: 06/30/2003--$10,159,009;
      12/31/2002--$9,931,394) .....................     8,636,250      8,978,324
                                                     ------------   ------------
        Total real estate investments .............   198,997,955    205,609,507
   CASH AND CASH EQUIVALENTS ......................    32,348,054     18,591,149
   OTHER ASSETS (net of allowance
   for uncollectible accounts:
      06/30/2003--$59,100; 12/31/2002--$69,000) ...     5,370,080      5,519,457
                                                     ------------   ------------
        Total assets ..............................  $236,716,089   $229,720,113
                                                     ============   ============

LIABILITIES
MORTGAGE LOANS PAYABLE ............................    44,013,633     35,699,108
ACCOUNTS PAYABLE AND ACCRUED EXPENSES .............     2,849,288      3,092,098
DUE TO AFFILIATES .................................       940,014        907,503
OTHER LIABILITIES .................................       936,378        911,245
MINORITY INTEREST .................................     3,194,627      4,756,653
                                                     ------------   ------------
        Total liabilities .........................    51,933,940     45,366,607
                                                     ------------   ------------
COMMITMENTS AND CONTINGENCIES
PARTNERS' EQUITY ..................................   184,782,149    184,353,506
                                                     ------------   ------------
        Total liabilities and partners' equity ....  $236,716,089   $229,720,113
                                                     ============   ============
NUMBER OF SHARES OUTSTANDING AT END OF PERIOD .....     7,644,848      7,644,848
                                                     ============   ============
SHARE VALUE AT END OF PERIOD ......................  $      24.17   $      24.11
                                                     ============   ============

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

                                       7
<PAGE>


           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                               SIX MONTHS ENDED                         THREE MONTHS ENDED
                                                                    JUNE 30,                                 JUNE 30,
                                                       ---------------------------------         ---------------------------------
                                                           2003                 2002                 2003                 2002
                                                       ------------         ------------         ------------         ------------
<S>                                                    <C>                  <C>                  <C>                  <C>
INVESTMENT INCOME:
   Revenue from real estate and improvements ......    $ 12,132,657         $ 13,246,936         $  5,908,155         $  6,704,321
   Equity in income of real estate partnership ....         304,963               65,770              144,227              (10,272)
   Interest on short-term investments .............         127,222              226,556               61,808              120,452
                                                       ------------         ------------         ------------         ------------
      Total investment income .....................      12,564,842           13,539,262            6,114,190            6,814,501
                                                       ------------         ------------         ------------         ------------
EXPENSES:
   Investment managment fee .......................       1,186,192            1,244,087              608,606              625,850
   Real estate taxes ..............................       1,332,764            1,394,145              664,973              689,497
   Administrative .................................       1,618,904            1,606,971              813,759              937,380
   Operating ......................................       2,318,871            2,521,919            1,004,299            1,266,011
   Interest expense ...............................       1,159,839            1,018,066              578,571              527,982
   Minority interest ..............................         132,200               98,513                4,151               38,138
                                                       ------------         ------------         ------------         ------------
      Total investment expenses ...................       7,748,770            7,883,701            3,674,359            4,084,858
                                                       ------------         ------------         ------------         ------------
NET INVESTMENT INCOME .............................       4,816,072            5,655,561            2,439,831            2,729,643
                                                       ------------         ------------         ------------         ------------
REALIZED AND UNREALIZED LOSS ON
   REAL ESTATE INVESTMENTS
Net proceeds from real estate
   investments sold ...............................       5,689,488                6,075                   --                   --
   Less: Cost of real estate investments sold .....       6,620,263                7,653                   --                   --
         Realization of prior periods' unrealized
         loss on real estate investments sold .....      (1,396,836)                  --                   --                   --
                                                       ------------         ------------         ------------         ------------
   Net realized gain (loss) on real estate
   investments sold ...............................         466,061               (1,578)                  --                   --
                                                       ------------         ------------         ------------         ------------
   Change in unrealized loss on real estate
   investments ....................................      (5,883,852)          (7,451,488)          (1,617,269)          (3,635,059)
   Less: Minority interest in unrealized loss
   on investments .................................      (1,030,362)            (215,550)          (1,006,255)            (177,366)
                                                       ------------         ------------         ------------         ------------
   Net unrealized loss on real estate
   investments ....................................      (4,853,490)          (7,235,938)            (611,014)          (3,457,693)
                                                       ------------         ------------         ------------         ------------
NET REALIZED AND UNREALIZED LOSS
   ON REAL ESTATE INVESTMENTS .....................      (4,387,429)          (7,237,516)            (611,014)          (3,457,693)
                                                       ------------         ------------         ------------         ------------
NET INCREASE (DECREASE) IN NET ASSETS
   RESULTING FROM OPERATIONS ......................    $    428,643         $ (1,581,955)        $  1,828,817         $   (728,050)
                                                       ============         ============         ============         ============
</TABLE>

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

                                       8
<PAGE>

           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                   THREE MONTHS ENDED MARCH 31,
                                                                 --------------------------------
                                                                     2003                2002
                                                                 ------------        ------------
<S>                                                              <C>                 <C>
NET DECREASE IN NET ASSETS RESULTING
   FROM OPERATIONS:
   Net investment income ......................................  $  2,376,242        $  2,925,918
   Net gain (loss) realized on real estate investments sold ...       466,061              (1,578)
   Net unrealized loss from real estate investments ...........    (4,242,476)         (3,778,245)
                                                                 ------------        ------------
      Net decrease in net assets resulting from operations ....    (1,400,173)           (853,905)
                                                                 ------------        ------------
NET DECREASE IN NET ASSETS ....................................    (1,400,173)           (853,905)
NET ASSETS--Beginning of period ...............................   184,353,506         198,150,636
                                                                 ------------        ------------
NET ASSETS--End of period .....................................  $182,953,333        $197,296,731
                                                                 ============        ============
</TABLE>


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

                                       9
<PAGE>


           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                          SIX MONTHS        SIX MONTHS
                                                                                             ENDED             ENDED
                                                                                         JUNE 30, 2003     JUNE 30, 2002
                                                                                          -----------       -----------
<S>                                                                                       <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net increase (decrease) increase in net assets resulting from operations ........      $   428,643       $(1,581,955)
   Adjustments to reconcile net increase (decrease) in net assets resulting from
      operations to net cash flows from operating activities:
         Net realized and unrealized loss on investments ...........................        4,387,429         7,237,516
         Equity in income of real estate partnership in excess/
           (less than) distributions ...............................................          644,015           (65,771)
         Minority interest from operating activities ...............................          132,200            98,513
         Bad debt expense ..........................................................           60,216            49,499
         Increase in:
           Dividend receivable .....................................................               --            20,802
           Other assets ............................................................           89,160            53,599
         (Decrease) Increase in:
           Accounts payable and accrued expenses ...................................         (242,810)         (489,052)
           Due to affiliates .......................................................           32,511            (1,876)
           Other liabilities .......................................................           25,133           (37,137)
                                                                                          -----------       -----------
   Net cash flows from operating activities ........................................        5,556,497         5,284,138
                                                                                          -----------       -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Net proceeds from real estate investments sold ..................................        5,689,488             6,075
   Additions to real estate ........................................................       (2,705,215)       (1,140,767)
   Additions to real estate partnership ............................................         (871,630)       (1,188,535)
                                                                                          -----------       -----------
   Net cash flows from (used in) investing activities ..............................        2,112,643        (2,323,227)
                                                                                          -----------       -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Principal payments on mortgage loan payable .....................................         (435,475)         (334,097)
   Proceeds from mortgage loan payable .............................................        8,750,000                --
   Distributions to minority interest partners .....................................       (2,227,226)          (25,697)
   Contributions from minority interest partners ...................................              466            12,304
                                                                                          -----------       -----------
   Net cash flows from (used in) financing activities ..............................        6,087,765          (347,490)
                                                                                          -----------       -----------

NET CHANGE IN CASH AND CASH EQUIVALENTS ............................................       13,756,905         2,613,421

CASH AND CASH EQUIVALENTS--Beginning of period .....................................       18,591,149        26,615,645
                                                                                          -----------       -----------

CASH AND CASH EQUIVALENTS--End of period ...........................................      $32,348,054       $29,229,066
                                                                                          ===========       ===========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the quarter for interest ..........................................      $ 1,077,240       $   980,363
                                                                                          ===========       ===========
</TABLE>

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


                                       10
<PAGE>


           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                             SCHEDULE OF INVESTMENTS

<TABLE>
<CAPTION>
                                                                  JUNE 30, 2003 (UNAUDITED)              DECEMBER 31, 2002
                                                                 ---------------------------      -----------------------------
                                                                                   ESTIMATED                          ESTIMATED
                                                                                    MARKET                             MARKET
                                                                   COST              VALUE             COST             VALUE
                                                                 ------------------------------------------------------------------
REAL ESTATE AND IMPROVEMENTS--
   PERCENTAGE OF NET ASSETS................................                           103.0%                              106.7%

Location                Description
-----------------------------------------------------------------------------------------------------------------------------------
<S>                     <C>                                    <C>              <C>               <C>               <C>
Lisle, IL               Office Building....................    $ 22,950,819     $ 12,593,571      $ 22,857,236      $ 13,854,988
Atlanta, GA             Garden Apartments..................      15,770,893       17,516,158        15,715,772        17,523,063
Roswell, GA             Retail Shopping Center.............      33,041,817       25,499,955        32,895,282        24,903,969
Raleigh, NC             Garden Apartments..................      15,945,326       17,501,490        15,943,836        17,502,998
Brentwood, TN           Office Building....................      10,320,577        8,899,999        10,320,613         9,651,831
Oakbrook Terrace, IL    Office Building....................      14,386,830       10,015,935        14,205,396        11,213,142
Beaverton, OR           Office Building....................      11,890,209       10,400,005        11,890,209        10,800,005
Salt Lake City, UT      Industrial Building................              --               --         6,599,482         5,202,646
Aurora, CO              Industrial Building................      10,659,059       10,213,369        10,294,784        10,557,058
Brentwood, TN           Office Building....................       9,837,483        7,000,043         9,826,195         7,709,345
*Jacksonville, FL       Garden Apartments..................      19,809,351       19,800,000        19,745,855        19,800,000
*Gresham/Salem, OR      Garden Apartments..................      18,886,676       18,125,000        18,838,570        18,600,000
Hampton, VA             Retail Shopping Center.............      18,012,768       19,996,180        16,446,909        19,300,000
*Ocean City, MD         Retail Shopping Center.............      11,728,318       12,800,000        10,012,138        10,012,138
                                                               ------------     ------------      ------------      ------------
                                                               $213,240,126     $190,361,705      $215,592,277      $196,631,183
                                                               ============     ============      ============      ============
REAL ESTATE PARTNERSHIP--
   PERCENTAGE OF NET ASSETS................................                             4.7%                                4.9%

Location                Description
-----------------------------------------------------------------------------------------------------------------------------------
Kansas City, KS; MO     Retail Shopping Centers............    $ 10,159,009      $ 8,636,250       $ 9,931,394       $ 8,978,324
                                                               ====================================================================

* Real estate partnerships accounted for by the consolidation method.

<CAPTION>
                                                                                    JUNE 30, 2003
                                                                                      (UNAUDITED)              DECEMBER 31, 2002
                                                                               -------------------------   ------------------------
                                                                     FACE                    ESTIMATED                   ESTIMATED
                                                                    AMOUNT        COST      MARKET VALUE      COST      MARKET VALUE
                                                                 -----------   -----------   -----------   -----------  -----------
<S>                      <C>         <C>                         <C>           <C>           <C>           <C>           <C>
CASH AND CASH EQUIVALENTS--PERCENTAGE OF NET ASSETS............                                    17.5%                       10.1%
Federal Home Loan Banks, 0.95%, July 1, 2003 ..................  $14,786,000   $14,785,610   $14,785,610   $        --   $        --
Federal National Mortgage Assoc., 1.14%, July 7, 2003 .........   12,000,000    11,988,220    11,988,220            --            --
General Elec. Cap Corp., 1.14%, July 10, 2003 .................    1,000,000       999,113       999,113
Federal National Mortgage Assoc., 0.88%, August 6, 2003 .......    3,900,000     3,895,996     3,895,996
Federal National Mortgage Assoc., 1.00%, January 02, 2003 .....    6,928,000            --            --     6,927,615     6,927,615
Federal National Mortgage Assoc., 1.27%, January 17, 2003 .....    1,218,000            --            --     1,217,055     1,217,055
Federal Home Loan Mortgage Corp., 1.27%, January 21, 2003 .....    3,461,000            --            --     3,457,581     3,457,581
Federal National Mortgage Assoc., 1.27%, January 21, 2003 .....    1,288,000            --            --     1,286,819     1,286,819
Federal National Mortgage Assoc., 1.22%, February 10, 2003 ....    1,000,000            --            --       998,611       998,611
Federal National Mortgage Assoc., 1.22%, February 13, 2003 ....    2,070,000            --            --     2,066,913     2,066,913
Federal Farm Credit Banks, 1.22%, February 14, 2003 ...........    1,870,000            --            --     1,867,148     1,867,148
                                                                               -----------   -----------   -----------   -----------
TOTAL CASH EQUIVALENTS ........................................                 31,668,939    31,668,939    17,821,742    17,821,742
CASH ..........................................................                    679,115       679,115       769,407       769,407
                                                                               -----------   -----------   -----------   -----------
TOTAL CASH AND CASH EQUIVALENTS ...............................                $32,348,054   $32,348,054   $18,591,149   $18,591,149
                                                                               ===========   ===========   ===========   ===========
</TABLE>

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

                                       11
<PAGE>


                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF

             PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                             JUNE 30, 2003 AND 2002

                                   (UNAUDITED)

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The  accompanying  unaudited  financial  statements  included  herein  have been
prepared  in  accordance  with the  requirements  of Form  10-Q  and  accounting
principles  generally  accepted  in the  United  States of America  for  interim
financial information. In the opinion of management, all adjustments (consisting
only of normal recurring adjustments)  considered necessary for a fair statement
have been included. Operating results for the six months ended June 30, 2003 are
not  necessarily  indicative  of the results  that may be expected  for the year
ended  December  31,  2003.  For  further  information,  refer to the  financial
statements and notes thereto included in each Partner's December 31, 2002 Annual
Report on Form 10K.

FASB Interpretation No. 46, "Consolidation of Variable Interest Entities", ("FIN
46") was issued in January 2003. FIN 46 applies immediately to variable interest
entities  created or for which an interest is acquired  after  January 31, 2003.
For all interests in variable  interest  entities  acquired  before  February 1,
2003,  FIN 46 goes into effect for periods  beginning  after June 15, 2003.  The
Partnership is evaluating the extent to which our equity  investment may need to
be consolidated as a result of this Interpretation.  The adoption of FIN 46 will
not  have a  material  impact  on  the  Partnership's  carrying  value  of  this
investment.

NOTE 2: DISCLOSURE OF NON-CASH INVESTING ACTIVITY

On April 15, 2003, a buyout of a minority  partner's  interest in a consolidated
retail  asset  resulted in an increase  in the  Partnership's  basis in the real
estate investment of approximately $1.6 million.

NOTE 3: COMMITMENT FROM PARTNER

In 1986, the Prudential Insurance Company of America ("Prudential") committed to
fund up to $100 million to enable the Prudential Variable Contract Real Property
Partnership ("Partnership") to acquire real estate investments. Contributions to
the Partnership  under this commitment were utilized for property  acquisitions,
and could be  returned  to  Prudential  on an ongoing  basis  from the  contract
owners' net contributions  and other available cash. This commitment  terminated
on December 31, 2002.  Prudential did not make any contributions during the 2002
fiscal year.  During the period that this  commitment was in effect,  Prudential
funded $44 million.

NOTE 4: RELATED PARTY TRANSACTIONS

Pursuant  to  an  investment  management   agreement,   Prudential  charges  the
Partnership a daily investment  management fee at an annual rate of 1.25% of the
average daily gross asset valuation of the Partnership. For the six months ended
June 30, 2003 and 2002  investment  management  fees incurred by the Partnership
were  $1,186,192 and $1,244,087  respectively.  Management  fees incurred by the
Partnership  for the three months ended June 30, 2003 and 2002 were $608,606 and
$625,850 respectively.

The Partnership also reimburses Prudential for certain  administrative  services
rendered by Prudential.  The amounts  incurred for the six months ended June 30,
2003 and 2002 were $58,315 for each period, and are classified as administrative
expense in the Consolidated  Statements of Operations.  Administrative  expenses
for the three months ended June 30, 2003 and 2002 were $29,157 for each period.

NOTE 5: DEBT

On June 27, 2003, a wholly owned property  obtained loan financing in the amount
of $8.75 million,  with a fixed interest rate of 3.09%. The loan matures in five
years  with  monthly  payments  of  interest  only and a  balloon  payment  upon
maturity.

                                       12
<PAGE>


                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF

             PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                             JUNE 30, 2003 AND 2002

                                   (UNAUDITED)

NOTE 6: FINANCIAL HIGHLIGHTS

                                                             FOR THE SIX MONTHS
                                                                   ENDED
                                                             ------------------
                                                             JUNE 30,   JUNE 30,
                                                              2003       2002
                                                             ------     ------
PER SHARE(UNIT) OPERATING PERFORMANCE:
Net Asset Value, beginning of period .....................   $24.11     $23.82
INCOME FROM INVESTMENT OPERATIONS:
Net Investment income, before management fee .............   $ 0.79     $ 0.83
Management fee ...........................................    (0.16)     (0.15)
Net realized and unrealized (loss) gain on investments ...    (0.57)     (0.87)
                                                             ------     ------
Net Decrease in Net Assets Resulting from Operations .....     0.06      (0.19)
                                                             ------     ------
NET ASSET VALUE, END OF PERIOD ...........................   $24.17     $23.63
                                                             ======     ======
(a)  TOTAL RETURN BEFORE MANAGEMENT FEE: .................     0.88%     (0.17)%

RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (in millions) ..................     $185       $197
   Ratios to average net assets (b):
      Management Fee .....................................     0.65%      0.63%
      Net Investment Income, before Management Fee .......     3.27%      3.55%


(a)  Total Return  before  Management  Fee is  calculated  by 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 period net assets.


                                       13
<PAGE>


ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF
          FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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

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

(A)  LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 2003, the Partnership's liquid assets consisting of cash and cash
equivalents were $32.3 million,  an increase of $13.7 million from $18.6 million
at December 31, 2002. This increase was primarily due to an increase in net cash
flows from operations,  the sale of the industrial property located in Salt Lake
City, Utah on January 28, 2003, the sale of one of the retail centers located in
Kansas City,  Missouri on April 23, 2003, and mortgage proceeds of $8.75 million
received in connection with financing placed on the apartment complex located in
Raleigh,  North Carolina on June 27, 2003. Sources of liquidity include net cash
flow from property  operations,  interest from  short-term  investments,  sales,
financing  and  operational   positions   maintained  by  the  Partners.   These
operational  positions  may  be  periodically  withdrawn  by the  Partners  from
available cash.

The  Partnership's  investment  policy  allows up to 30%  investment in cash and
short-term  obligations,  although the Partnership generally holds approximately
10% of its assets in cash and short-term obligations. At June 30, 2003, 13.7% of
the Partnership's total assets consisted of cash and short-term obligations.

In 1986, the Prudential Insurance Company of America ("Prudential") committed to
fund up to $100  million  to enable  the  Partnership  to  acquire  real  estate
investments.  Contributions  to the Prudential  Variable  Contract Real Property
Partnership  ("Partnership")  under this  commitment  were utilized for property
acquisitions,  and could be returned to  Prudential on an ongoing basis from the
contract  owners' net  contributions  and other  available cash. This commitment
terminated  on December  31,  2002.  Prudential  did not make any  contributions
during the 2002  fiscal  year.  During the period  that this  commitment  was in
effect, Prudential funded $44 million.

The Partners did not withdraw  any  operational  positions  during the first six
months of either 2003 or 2002.  Withdrawals of operational positions may be made
by the  Partners  during 2003 based upon the  percentage  of assets  invested in
short-term obligations,  taking into consideration anticipated cash needs of the
Partnership including potential property acquisitions, property dispositions and
capital expenditures.  Management anticipates that its current liquid assets and
ongoing cash flow from operations will satisfy the Partnership's  needs over the
next twelve months and the foreseeable future.

During the first six months of 2003, the Partnership  spent  approximately  $2.7
million in capital  expenditures  on wholly owned and  consolidated  properties.
Approximately  $1.7 million was  associated  with the  development of the retail
center located in Ocean City,  Maryland.  The remaining $0.9 million balance was
primarily  associated with leasing at the industrial building located in Aurora,
Colorado,  the office located in Oakbrook Terrace,  Illinois,  the retail center
located in Roswell,  Georgia,  and the office  located in Lisle,  Illinois.  The
Partnership  also  increased  its  investment  in real  estate  partnerships  by
approximately $0.2 million in connection with the redevelopment and expansion of
the retail centers located in Kansas City, Missouri.

                                       14
<PAGE>


(B)  RESULTS OF OPERATIONS

The  following  is  a  brief  year-to-date  and  quarterly   comparison  of  the
Partnership's  results of  operations  for the  periods  ended June 30, 2003 and
2002.

JUNE 30, 2003 VS. JUNE 30, 2002

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

<TABLE>
<CAPTION>
                                                               SIX MONTHS ENDED                           QUARTER ENDED
                                                                   JUNE 30,                                  JUNE 30,
                                                       --------------------------------          --------------------------------
                                                           2003                 2002                 2003                 2002
                                                       -----------          -----------          -----------          -----------
<S>                                                    <C>                  <C>                  <C>                  <C>
NET INVESTMENT INCOME:
Office properties .................................    $ 1,085,786          $ 2,629,727          $   439,086          $ 1,278,123
Apartment complexes ...............................      2,061,907            1,559,422            1,187,222              731,556
Retail property ...................................      2,065,901            1,798,448            1,083,914              824,321
Industrial properties .............................        424,218              717,129              198,367              283,825
Equity in income of real estate partnership .......        304,963               65,770              144,227              (10,272)
Other (including interest income,
   investment mgt fee, etc.) ......................     (1,126,703)          (1,114,935)            (612,985)            (377,910)
                                                       -----------          -----------          -----------          -----------
TOTAL NET INVESTMENT INCOME .......................    $ 4,816,072          $ 5,655,561          $ 2,439,831          $ 2,729,643
                                                       -----------          -----------          -----------          -----------
NET UNREALIZED LOSS ON
   REAL ESTATE INVESTMENTS:
Office properties .................................    $(4,606,028)         $(3,644,336)         $  (660,192)         $(2,172,863)
Apartment complexes ...............................       (595,127)          (1,891,874)            (661,411)          (1,072,254)
Retail property ...................................      1,625,319           (1,225,001)             972,930              267,453
Industrial properties .............................       (707,964)             153,140                   --             (233,295)
Interest in real estate partnership ...............       (569,690)            (627,867)            (262,341)            (246,734)
                                                       -----------          -----------          -----------          -----------
TOTAL NET UNREALIZED LOSS ON
   REAL ESTATE INVESTMENTS ........................    $(4,853,490)         $(7,235,938)         $  (611,014)         $(3,457,693)
                                                       -----------          -----------          -----------          -----------

<CAPTION>
                                                               SIX MONTHS ENDED                           QUARTER ENDED
                                                                   JUNE 30,                                  JUNE 30,
                                                       --------------------------------          --------------------------------
                                                           2003                 2002                 2003                 2002
                                                       -----------          -----------          -----------          -----------
<S>                                                    <C>                  <C>                  <C>                  <C>
NET REALIZED GAIN (LOSS) ON
   REAL ESTATE INVESTMENTS:
Industrial properties .............................    $   466,061          $        --          $        --          $        --
Real estate investment trust ......................             --               (1,578)                  --                   --
                                                       -----------          -----------          -----------          -----------
TOTAL NET REALIZED GAIN (LOSS) ON
   REAL ESTATE INVESTMENTS ........................        466,061               (1,578)                  --                   --
                                                       -----------          -----------          -----------          -----------
NET REALIZED AND UNREALIZED LOSS ON
   REAL ESTATE INVESTMENTS ........................    $(4,387,429)         $(7,237,516)         $  (611,014)         $(3,457,693)
                                                       -----------          -----------          -----------          -----------
</TABLE>

The  Partnership's  net investment income for the six months ended June 30, 2003
was $4.8 million,  a decrease of $0.8 million from $5.6 million when compared to
the  corresponding  period in 2002. The  Partnership's net investment income for
the quarter  ended June 30, 2003 was $2.4  million,  a decrease of $0.3  million
from $2.7  million  when  compared  to the  corresponding  period  in 2002.  The
decrease is primarily due to increased  vacancy within the office  portfolio and
the sales of the industrial  properties in  Bolingbrook,  Illinois and Salt Lake
City, Utah.

Equity in income of real estate  partnership  was $0.3 million for the first six
months  of  2003,  an  increase  of  $0.2  million  from  $0.1  million  in  the
corresponding  period in 2002.  Equity in income of real estate  partnership was
$0.1  million for the second  quarter of 2003,  an increase of $0.2 million from
($0.01) million in the corresponding  period in 2002. This increase is due to an
increase in revenue  associated  with  expansion of the existing  grocery  store
anchor that was completed this quarter.

Interest on short-term investments decreased approximately $0.1 million or 43.8%
for the six months  ended June 30, 2003 due  primarily  to a lower  average cash
balance  when  compared  to  the  corresponding  period  in  2002.  Interest  on
short-term  investments  decreased  approximately  $0.1 million or 48.7% for the
quarter ended June 30, 2003 compared to the corresponding  quarter last year due
primarily to lower interest rates.

                                       15
<PAGE>


Administrative  expense decreased $0.1 million,  or 13.2%, in the second quarter
of 2003 compared to the corresponding period in 2002. The decrease was primarily
due to the Partnership's  sale of the two industrial  properties in Bolingbrook,
Illinois  and  Salt  Lake  City,   Utah  and  a  slight  overall   reduction  in
administrative expense throughout the portfolio.

Operating  expense  decreased $0.3 million,  or 20.7%,  in the second quarter of
2003 compared to the  corresponding  period in 2002.  The decrease was primarily
due to the Partnership's  sale of the two industrial  properties in Bolingbrook,
Illinois and Salt Lake City,  Utah, and a  reclassification  of 2002 repairs and
maintenance expenses to building  improvements for the apartment complex located
in Gresham/Salem, Oregon during the second quarter of 2003.

Interest  expense  increased $0.1 million,  or 13.9%, in the first six months of
2003 compared to the  corresponding  period in 2002. This increase was primarily
due  to  the  Partnership's  assumption  of a  $7.4  million  mortgage  loan  in
conjunction  with the  acquisition of a controlling  interest in a retail center
located in Ocean City, Maryland in late 2002.

Minority  interest expense  increased $0.03 million,  or 34.2%, in the first six
months of 2003 compared to the  corresponding  period in 2002. This increase was
primarily due to the  Partnership's  acquisition of a controlling  interest in a
retail center located in Ocean City,  Maryland in late 2002.  Minority  interest
expense  decreased  $0.03  million,  or 89.1%,  in the  second  quarter  of 2003
compared to the corresponding period in 2002. This decrease was primarily due to
the Partnership's buyout of its minority partner's interest in the retail center
located in Hampton, Virginia on April 15, 2003.

The  Partnership  experienced a net unrealized  loss of $4.9 million for the six
months  ended June 30, 2003  compared to a net  unrealized  loss of $7.2 million
during the corresponding  period in 2002. The unrealized losses during the first
six months of 2003 were experienced in the office,  industrial,  apartment,  and
equity partnership sectors. The office properties recorded an unrealized loss of
$4.6  million  primarily  due to the  buildings  located  in  Oakbrook  Terrace,
Illinois,  Lisle,  Illinois,  and Brentwood,  Tennessee;  decreases in occupancy
coupled with soft market conditions have resulted in reductions in market rental
rates and increased  leasing  costs.  The  industrial  site in Aurora,  Colorado
experienced an unrealized  loss of $0.7 million for the first six months of 2003
due to decreases in market rental rates.  The apartment  sector also experienced
an  unrealized  loss of $0.6 million  primarily  associated  with the  apartment
portfolio  located  in  Gresham/Salem,  Oregon.  The  decrease  is a  result  of
projected  increases in operating  expenses.  The equity partnership sector also
experienced  a net  unrealized  loss of $0.6  million  primarily  due to capital
expenditures that were not reflected as an increase in market value.  Offsetting
some of these losses were unrealized gains of $1.6 million in the retail sector.
Increases in value were primarily due to renovation  and  re-leasing  efforts at
the Ocean City,  Maryland retail center, a strengthening of market  fundamentals
at the  Hampton,  Virginia  retail  center,  and a major  tenant at the Roswell,
Georgia retail center renewing their lease.

The Partnership  experienced a net unrealized loss of $0.6 million for the three
months  ended June 30, 2003  compared to a net  unrealized  loss of $3.5 million
during the  corresponding  period in 2002. The unrealized  losses for the second
quarter were  primarily  experienced  in the office sector ($0.7  million),  the
apartment  sector  ($0.7  million),  and the  equity  partnership  sector  ($0.3
million) for the same reasons discussed previously.  Offsetting these unrealized
losses  were net  unrealized  gains  experienced  by the  retail  sector of $1.0
million for the same reasons discussed previously.

Minority interest in unrealized loss on investments  changed  approximately $0.8
million from $0.2 million for the six months ended June 30, 2002 to $1.0 million
for the  corresponding  period in 2003.  This  change was  primarily  due to the
Partnership's  buyout of its minority  partner's  interest in the retail  center
located in Hampton, Virginia as discussed previously.

                                       16
<PAGE>


OFFICE PROPERTIES

<TABLE>
<CAPTION>
                              NET              NET
                          INVESTMENT       INVESTMENT
                            INCOME           INCOME        APPRECIATION      APPRECIATION      OCCUPANCY        OCCUPANCY
PROPERTY                   06/30/03         06/30/02         06/30/03          06/30/02         06/30/03         06/30/02
                          ----------       ----------       -----------       ----------       ----------       -----------
<S>                       <C>              <C>              <C>               <C>                  <C>              <C>
YEAR TO DATE
Lisle, IL ..............  $  509,643       $  757,535       $(1,355,000)      $  (204,359)         44%              100%
Brentwood, TN ..........     306,981          281,640          (751,796)       (1,429,012)         78%               68%
Oakbrook Terrace, IL ...     (22,763)         541,585        (1,378,642)       (1,121,052)         31%               79%
Beaverton, OR ..........     494,610          549,935          (400,000)          210,877          81%              100%
Brentwood, TN ..........    (202,685)         442,815          (720,590)       (1,100,790)          0%              100%
Morristown, NJ .........          --           56,217                --                --
                          ----------       ----------       -----------       -----------
                          $1,085,786       $2,629,727       $(4,606,028)      $(3,644,336)
                          ----------       ----------       -----------       -----------
QUARTER TO DATE
Lisle, IL ..............  $  122,560       $  380,231       $        --       $  (210,820)
Brentwood, TN ..........     185,984          130,992          (399,964)       (1,200,000)
Oakbrook Terrace, IL ...     (14,516)         277,571           (48,933)         (762,043)
Beaverton, OR ..........     246,541          271,310          (200,000)               --
Brentwood, TN ..........    (101,483)         218,019           (11,295)               --
                          ----------       ----------       -----------        -----------
                          $  439,086       $1,278,123       $  (660,192)       $(2,172,863)
                          ----------       ----------       -----------        -----------
</TABLE>


NET INVESTMENT INCOME

Net investment  income from property  operations for the office sector decreased
approximately  $1.5  million,  or 58.7%,  for the six months ended June 30, 2003
when compared to the  corresponding  period in 2002. Net investment  income from
property  operations  for the office sector also  decreased  approximately  $0.8
million,  or 65.6%,  for the quarter  ended June 30,  2003 when  compared to the
corresponding  period in 2002.  Decreases in occupancy at one of the  Brentwood,
Tennessee properties and the Oakbrook Terrace, Illinois office property were the
primary reason that net investment income decreased for the office sector.

UNREALIZED LOSS

The five office properties owned by the Partnership experienced a net unrealized
loss of approximately $0.7 million during the second quarter of 2003. One of the
Brentwood,   Tennessee   properties   experienced  a  net  unrealized   loss  of
approximately  $0.4 million  primarily due to softening market  conditions.  The
office property located in Beaverton,  Oregon  experienced an unrealized loss of
approximately $0.2 million due to a slight decrease in average market rent.

The five office properties owned by the Partnership experienced a net unrealized
loss of approximately $2.2 million during the second quarter of 2002. One of the
Brentwood,   Tennessee   properties   experienced  a  net  unrealized   loss  of
approximately  $1.2 million  primarily due to a reduction in market rental rates
and  softening  market  conditions.  The  Oakbrook  Terrace,  Illinois  property
experienced a net unrealized loss of approximately $0.8 million primarily due to
softening market conditions and the near-term lease expiration of a major tenant
at  the  property  that  has  already  vacated.  The  Lisle,  Illinois  property
experienced a net unrealized loss of approximately $0.2 million primarily due to
impending tenant rollover.

The five office properties owned by the Partnership experienced a net unrealized
loss of  approximately  $4.6  million  during the first six months of 2003.  The
Oakbrook Terrace, Illinois and Lisle, Illinois properties both experienced a net
unrealized  loss  of  approximately  $1.4  million  primarily  due to  decreased
occupancy,  lower market rents,  and increased  lease up costs.  Both Brentwood,
Tennessee  properties  experienced a net unrealized loss of  approximately  $0.7
million  each  primarily  due  to  softening  market  conditions  and  increased
expenses.  The office  property  located in  Beaverton,  Oregon  experienced  an
unrealized loss of approximately $0.4 million due to the lease expiration of one
of the tenants and a slight decrease in average market rent.

The five office properties owned by the Partnership experienced a net unrealized
loss of  approximately  $3.6 million during the first six months of 2002. One of
the  Brentwood,  Tennessee  properties  experienced  a net  unrealized  loss  of
approximately  $1.4 million  primarily due to a reduction in market rental rates
and  softening  market  conditions.  The  Oakbrook  Terrace,  Illinois  property
experienced a net unrealized loss of approximately $1.1 million primarily due to
softening market conditions and the near-term lease expiration of a major tenant

                                       17
<PAGE>


at the  property.  The other  Brentwood,  Tennessee  property  experienced a net
unrealized loss of approximately  $1.1 million  primarily due to the move-out of
the single  tenant at the property in July 2002.  The Lisle,  Illinois  property
experienced a net unrealized loss of approximately $0.2 million primarily due to
anticipated  lease  expirations.  Offsetting  these  unrealized  losses  was  an
unrealized gain of approximately  $0.2 million at the office property located in
Beaverton, Oregon. This unrealized gain was attributable to a slight increase in
average market rent.

As of June 30, 2003 all vacant spaces were being marketed.

APARTMENT COMPLEXES

<TABLE>
<CAPTION>
                             NET             NET
                         INVESTMENT      INVESTMENT
                           INCOME          INCOME       APPRECIATION      APPRECIATION       OCCUPANCY        OCCUPANCY
PROPERTY                  06/30/03        06/30/02        06/30/03          06/30/02          06/30/03         06/30/02
---------------------    ----------      ---------       -----------       -----------       ---------        -----------
<S>                      <C>             <C>              <C>              <C>                   <C>              <C>
YEAR TO DATE
Atlanta, GA .........    $  442,515      $  345,528       $ (62,026)       $  (557,139)          92%              82%
Raleigh, NC .........       444,574         589,936          (2,998)          (608,160)          95%              85%
Jacksonville, FL ....       641,823         389,130          (6,996)          (393,065)          91%              91%
Gresham/Salem, OR ...       532,995         234,828        (523,107)          (333,510)          88%              94%
                         ----------      ----------       ---------        -----------
                         $2,061,907      $1,559,422       $(595,127)       $(1,891,874)
                         ----------      ----------       ---------        -----------
QUARTER TO DATE
Atlanta, GA .........    $  199,466      $  153,760       $ (33,224)       $  (205,000)
Raleigh, NC .........       225,453         295,394              --                 --
Jacksonville, FL ....       374,588         155,488        (137,706)          (184,782)
Gresham/Salem, OR ...       387,715         126,914        (490,481)          (682,472)
                         ----------      ----------       ---------        -----------
                         $1,187,222      $  731,556       $(661,411)       $(1,072,254)
                         ----------      ----------       ---------        -----------
</TABLE>

NET INVESTMENT INCOME

Net investment income from property operations for the apartment sector was $2.1
million for the six months ended June 30, 2003, an increase of $0.5 million,  or
32.2%, when compared to the corresponding  period in 2002. Net investment income
from  property  operations  for the  apartment  sector was $1.2  million for the
quarter  ended June 30,  2003,  an  increase  of $0.5  million,  or 62.3%,  when
compared to the corresponding period in 2002. The increases were mainly due to a
reclassification   of  2002  repairs  and   maintenance   expenses  to  building
improvements  for the apartment  complex  located in  Gresham/Salem,  Oregon and
increased   operational   efficiencies  at  the  apartment  complex  located  in
Jacksonville, Florida during the second quarter of 2003.

UNREALIZED LOSS

The apartment  complexes owned by the  Partnership  experienced a net unrealized
loss of $1.1  million in the second  quarter of 2002.  The  apartment  portfolio
located in  Gresham/Salem,  Oregon,  experienced a net  unrealized  loss of $0.7
million  primarily due to softening market  conditions,  which resulted in lower
short-term occupancy and income projections, and increased rent concessions. The
apartment complex located in Atlanta,  Georgia also experienced a net unrealized
loss of approximately  $0.2 million for this same reason.  The apartment complex
located in Jacksonville,  Florida experienced an unrealized loss of $0.2 million
due to slightly higher expense estimates and higher rental concessions resulting
from soft market conditions.

The apartment  complexes owned by the  Partnership  experienced a net unrealized
loss of $0.6  million for the six months  ended June 30, 2003  compared to a net
unrealized  loss of $1.9  million for the six months  ended June 30,  2002.  The
apartment  complexes owned by the Partnership  experienced a net unrealized loss
of $0.7 million for the quarter  ended June 30, 2003.  The  unrealized  loss for
year-to-date and  quarter-to-date  2003 was mainly attributable to the apartment
complex  located  in  Gresham/Salem,  Oregon  due to an  increase  in  projected
operating expenses.

The apartment  complexes owned by the  Partnership  experienced a net unrealized
loss of $1.9 million for the six months ended June 30, 2002.  Of the  unrealized
loss  experienced in the first six months of 2002,  $0.6 million was experienced
at each of the  apartment  complexes  located in  Raleigh,  North  Carolina  and
Atlanta,   Georgia.  These  unrealized  losses  were  due  to  softening  market
conditions, which resulted in lower short-term occupancy and income projections,
and increased rent concessions. The apartment complex located in

                                       18
<PAGE>


Jacksonville,  Florida  experienced  an  unrealized  loss of $0.4 million due to
slightly  higher  expense  estimates  and  softening  market  conditions,  which
resulted in reduced  occupancy  levels and lower  market  rents.  The  apartment
portfolio  located in Gresham/Salem,  Oregon,  also experienced a net unrealized
loss of $0.3 million  primarily due to increases in operating expense levels and
softening market  conditions,  which resulted in lower short-term  occupancy and
income projections, and increased rent concessions.

As of June 30, 2003, all available vacant units were being marketed.

RETAIL PROPERTIES

<TABLE>
<CAPTION>
                            NET               NET
                        INVESTMENT        INVESTMENT
                          INCOME            INCOME         APPRECIATION      APPRECIATION       OCCUPANCY         OCCUPANCY
PROPERTY                 06/30/03          06/30/02          06/30/03          06/30/02          06/30/03          06/30/02
------------            ----------        ----------       ------------      ------------       ---------         ---------
<S>                     <C>               <C>               <C>              <C>                    <C>              <C>
YEAR TO DATE
Roswell, GA .......     $1,342,491        $1,458,365        $  449,452       $(1,428,341)            93%              92%
Hampton, VA .......        488,680           340,083           566,617           203,340            100%             100%
Ocean City, MD ....        234,730               N/A           609,250               N/A             97%             N/A
                        ----------        ----------        ----------       -----------
                        $2,065,901        $1,798,448        $1,625,319       $(1,225,001)
                        ----------        ----------        ----------       -----------
QUARTER TO DATE
Roswell, GA .......     $  652,273        $  659,495        $  (17,500)      $     1,053
Hampton, VA .......        270,452           164,826           566,617           266,400
Ocean City, MD ....        161,189               N/A           423,813               N/A
                        ----------        ----------        ----------       -----------
                        $1,083,914        $  824,321        $  972,930       $   267,453
                        ----------        ----------        ----------       -----------
</TABLE>


NET INVESTMENT INCOME

Net investment income for the Partnership's  retail properties was approximately
$2.1  million  for the six  months  ended June 30,  2003,  an  increase  of $0.3
million,  or 14.9%,  when  compared  to the  corresponding  period in 2002.  Net
investment income for the Partnership's retail properties was approximately $1.1
million for the quarter  ended June 30, 2003,  an increase of $0.3  million,  or
31.5%,  when  compared to the  corresponding  period in 2002.  This increase was
primarily due to the  Partnership's  acquisition of a controlling  interest in a
retail center  located in Ocean City,  Maryland in late 2002.  Also on April 15,
2003 the Partnership acquired its joint venture partner's membership interest in
the retail center located in Hampton,  Virginia,  thus entitling the Partnership
to all of the net investment  income  generated by the investment  commencing on
the buyout date and going forward.

UNREALIZED GAIN/LOSS

The retail properties  experienced a net unrealized gain of $1.0 million for the
quarter ended June 30, 2003. These  unrealized gains were primarily  experienced
by the retail centers located in Hampton,  Virginia and Ocean City, Maryland for
the same reasons as discussed previously.

The retail properties  experienced a net unrealized gain of $0.3 million for the
quarter  ended June 30, 2002.  The retail  center  located in Hampton,  Virginia
experienced  an  unrealized  gain of $0.3  million due to the addition of 20,000
rentable square feet, as discussed  previously.  Capital expenditures related to
the construction of this new building coupled with the leasing of 75% of the new
space drove the increase in value.

The retail properties  experienced a net unrealized gain of $1.6 million for the
six  months  ended June 30,  2003.  The retail  center in Ocean  City,  Maryland
experienced  a net  unrealized  gain of $0.6 million for the first six months of
2003 due to renovation  and  re-leasing  efforts.  The retail center  located in
Hampton,  Virginia  experienced  a net  unrealized  gain of $0.6 million for the
first six months of 2003 due to strengthening  market  fundamentals.  The retail
center located in Roswell,  Georgia also  experienced a net  unrealized  gain of
$0.4  million for the first six months of 2003 due to a major  tenant  signing a
lease renewal.

The retail properties  experienced a net unrealized loss of $1.2 million for the
six months ended June 30, 2002.  The retail center  located in Roswell,  Georgia
experienced  a net  unrealized  loss of $1.4 million for the first six months of
2002 due to  increased  risk that a major  tenant  would  not  renew its  lease,
coupled with a deterioration in the market position of the property.  Offsetting
this loss, the retail center located in Hampton, Virginia experi-

                                       19
<PAGE>


enced an unrealized  gain of $0.2 million due to the addition of 20,000 rentable
square  feet.  Capital  expenditures  related  to the  construction  of this new
building  coupled  with the  leasing  of 75% of the new space  have  driven  the
increase in value.

As of June 30, 2003, all vacant spaces were being marketed.

INDUSTRIAL PROPERTIES

<TABLE>
<CAPTION>
                             NET            NET
                         INVESTMENT     INVESTMENT
                           INCOME         INCOME      APPRECIATION     APPRECIATION     OCCUPANCY        OCCUPANCY
PROPERTY                  06/30/03       06/30/02       06/30/03          06/30/02       06/30/03         06/30/02
------------              --------       --------       ---------        ---------      ---------        ---------
<S>                       <C>            <C>            <C>             <C>                 <C>              <C>
YEAR TO DATE
Aurora, CO ...........    $408,573       $355,560       $(707,964)      $ 494,264           84%              75%
Bolingbrook, IL ......        (146)       154,333              --         (50,230)
Salt Lake City, UT ...      15,791        207,236         466,061        (290,894)
                          --------       --------       ---------       ---------
                          $424,218       $717,129       $(241,903)      $ 153,140
                          --------       --------       ---------       ---------
QUARTER TO DATE
Aurora, CO ...........    $207,529       $172,547       $      --       $  (6,736)
Bolingbrook, IL ......        (146)        16,489              --         (23,156)
Salt Lake City, UT ...      (9,016)        94,789              --        (203,403)
                          --------       --------       ---------       ---------
                          $198,367       $283,825       $      --       $(233,295)
                          --------       --------       ---------       ---------
</TABLE>

NET INVESTMENT INCOME

Net investment  income from property  operations  for the industrial  properties
decreased  from $0.7  million  for the six months  ended  June 30,  2002 to $0.4
million for the corresponding  period ended June 30, 2003. Net investment income
from property  operations  for the  industrial  properties  decreased  from $0.3
million  for  the  quarter   ended  June  30,  2002  to  $0.2  million  for  the
corresponding  period ended June 30, 2003. The majority of this decrease was due
to the sale of the industrial  property located in Bolingbrook,  Illinois during
the third  quarter of 2002 and the sale of the  industrial  property  located in
Salt Lake City, Utah during the first quarter of 2003.

UNREALIZED GAIN/LOSS AND REALIZED GAIN

The Aurora,  Colorado industrial property owned by the Partnership experienced a
net unrealized loss of approximately  $0.7 million for the six months ended June
30, 2003 compared to a net unrealized gain of approximately $0.5 million for the
six months ended June 30, 2002. The unrealized  loss  experienced in 2003 is due
to soft market conditions.

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

The three  industrial  properties  owned by the  Partnership  experienced  a net
unrealized gain of approximately  $0.2 million for the six months ended June 30,
2002.  The  majority of this  unrealized  gain was  attributable  to the Aurora,
Colorado industrial property. This gain of approximately $0.5 million was due to
an increase in market rents.  Offsetting  this unrealized gain was the Salt Lake
City, Utah facility, which experienced a net unrealized loss of $0.3 million due
to capital  expenditures  at the property that were not reflected as an increase
in market value and softening market conditions.

As of June 30, 2003, all vacant spaces were being marketed.

EQUITY IN INCOME OF REAL ESTATE PARTNERSHIP

<TABLE>
<CAPTION>
                                    NET           NET
                                INVESTMENT    INVESTMENT
                                  INCOME        INCOME      APPRECIATION   APPRECIATION    OCCUPANCY      OCCUPANCY
PROPERTY                         06/30/03      06/30/02       06/30/03       06/30/02       06/30/03       06/30/02
------------                     --------       -------      ---------      ---------      ---------      ---------
<S>                              <C>            <C>          <C>            <C>                <C>            <C>
YEAR TO DATE
Kansas City, KS; MO........      $304,963       $65,770      $(569,690)     $(627,867)         87%            83%

QUARTER TO DATE
Kansas City, KS; MO........      $144,227      $(10,272)     $(262,341)     $(246,734)
</TABLE>


                                       20
<PAGE>

NET INVESTMENT INCOME/LOSS

During the six months ended June 30, 2003, income from the investment located in
Kansas City,  Kansas and Missouri was $0.3 million  compared to $0.1 million for
the six months  ended June 30,  2002.  During the quarter  ended June 30,  2003,
income from the investment  located in Kansas City, Kansas and Missouri amounted
to $0.1  million  compared to ($0.01)  million for the six months ended June 30,
2002.  This increase is due to an increase in revenue  associated with expansion
of the existing  grocery store anchor that was completed this quarter.  On April
23, 2003, one of the retail centers located in Kansas City, Missouri was sold. A
gain or loss was not  realized  on the sale of this  investment  because all the
sale  proceeds  were used to pay down  outstanding  preferred  return due on the
entire portfolio of retail centers located in Kansas City, Kansas and Missouri.

UNREALIZED LOSS

The equity investment experienced a net unrealized loss of $0.6 million for both
the  six-month  periods  ended June 30,  2003 and 2002.  The  equity  investment
experienced a net unrealized  loss of $0.3 million and a net unrealized  loss of
$0.2 million for the quarter ended June 30, 2003 and 2002,  respectively.  These
unrealized  losses were primarily due to  renovations  from the expansion of the
existing grocery store anchor, which were not reflected as an increase in market
value.

As of June 30, 2003, all vacant spaces were being marketed.

OTHER

Other net investment income decreased $0.2 million during the quarter ended June
30, 2003  compared to the  corresponding  period in 2002.  Other net  investment
income  includes  interest  income  from  short-term   investments,   investment
management fees, and expenses not related to property activities.

(C)  INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS

Certain  statements  contained in  Management's  Discussion  and Analysis may be
considered  forward-looking  statements.  Words such as  "expects",  "believes",
"anticipates",  "intends",  "plans",  or  variations of such words are generally
part of forward-looking  statements.  Forward-looking  statements are made based
upon   management's   current   expectations  and  beliefs   concerning   future
developments and their potential  effects upon the Partnership.  There can be no
assurance  that future  developments  affecting  the  Partnership  will be those
anticipated by management.  There are certain important factors that could cause
actual results to differ materially from estimates or expectations  reflected in
such forward-looking statements including without limitation, changes in general
economic conditions, including the performance of financial markets and interest
rates; market acceptance of new products and distribution channels; competitive,
regulatory  or tax changes that affect the cost or demand for the  Partnership's
products;  and adverse  litigation  results.  While the  Partnership  reassesses
material trends and uncertainties  affecting its financial  position and results
of  operations,   it  does  not  intend  to  review  or  revise  any  particular
forward-looking   statement  referenced  in  this  Management's  Discussion  and
Analysis in light of future  events.  Readers  should  consider the  information
referred to above when  reviewing any  forward-looking  statements  contained in
this Management's Discussion and Analysis.

(D)  INFLATION

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

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America  requires the application of
accounting  policies  that  often  involve a  significant  degree  of  judgment.
Management, on an ongoing basis, reviews critical estimates and assumptions.  If
management

                                       21
<PAGE>

determines,  as a result of its  consideration of facts and  circumstances  that
modifications  in  assumptions  and  estimates  are   appropriate,   results  of
operations  and  financial  position as reported in the  Consolidated  Financial
Statements may change significantly.

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

VALUATION OF INVESTMENTS

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

The purpose of an appraisal is to estimate the market value of real estate as of
a specific  date.  Market value has been defined as the most probable  price for
which the  appraised  real estate will sell in a  competitive  market  under all
conditions  requisite  for a fair sale,  with the buyer and seller  each  acting
prudently,  knowledgeably,  and for self interest,  and assuming that neither is
under undue duress.

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

As described  above,  the estimated  market value of real estate and real estate
related  assets is  determined  through an appraisal  process.  These  estimated
market  values may vary  significantly  from the prices at which the real estate
investments  would sell since market prices of real estate  investments can only
be determined by  negotiation  between a willing buyer and seller.  Although the
estimated  market values represent  subjective  estimates,  management  believes
these estimated market values are reasonable approximations of market prices and
the aggregate value of investments in real estate is fairly presented as of June
30, 2003 and December 31, 2002.

OTHER ESTIMATES

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America requires  management to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities at the date of the financial  statements and the reported amounts of
revenues and expenses during the reporting  period.  Actual results could differ
from those estimates.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk. The  Partnership's  exposure to market rate risk for changes
in interest rates relates to about 41.33% of its investment portfolio consisting
primarily  of  short-term  fixed rate  commercial  paper and fixed and  variable
interest  rate  debt.  The  Partnership   does  not  use  derivative   financial
instruments. By policy, the Partnership places its investments with high quality
debt security  issuers,  limits the amount of credit exposure to any one issuer,
limits  duration by  restricting  the term,  and holds  investments  to maturity
except under rare circumstances.

The table below presents the amounts and related weighted  interest rates of the
Partnership's cash equivalents and short-term investments at June 30, 2003:

                                              ESTIMATED MARKET
                                                    VALUE            AVERAGE
                                 MATURITY      (IN $ MILLIONS)    INTEREST RATE
                              ------------    ----------------    -------------
Cash equivalents............    0-3 months          $32.3             1.02%

The table below discloses the  Partnership's  fixed and variable rate debt as of
June 30, 2003.  Approximately $34.3 million of the Partnership's  long-term debt
bears interest at fixed rates and therefore the fair value of these  instruments
is affected by changes in market  interest  rates.  The following table presents
principal  cash  flows (in  thousands)  based  upon  maturity  dates of the debt
obligations and the related weighted-average


                                       22
<PAGE>


<TABLE>
<CAPTION>

interest rates by expected  maturity dates for the fixed rate debt. The interest
rate on the  variable  rate  debt is equal to the  6-month  Treasury  rate  plus
1.565%.  It is  subject to a maximum  of  11.345%  and a minimum of 2.345%.  The
interest rate on the variable rate debt as of June 30, 2003 was 3.235%.

JUNE 30, 2003

DEBT (IN $ THOUSANDS),            7/1/2003-                                                                               ESTIMATED
INCLUDING CURRENT PORTION        12/31/2003    2004        2005          2006       2007     THEREAFTER       TOTAL      FAIR VALUE
-------------------------        ----------    ----       ------       -------      ----     ----------      -------     ----------
<S>                                 <C>        <C>          <C>           <C>       <C>           <C>           <C>        <C>
Average Fixed Interest Rate ....    5.91%      6.31%        6.29%         5.67%     5.65%         6.75%         7.39%
Fixed Rate .....................    $342       $719       $  774       $ 8,479      $588       $23,373       $34,275       $35,421
Variable Rate ..................     126        242          250         9,121        --            --         9,739         9,601
                                 -------------------------------------------------------------------------------------------------
Total Mortgage Loans Payable ...    $468       $961       $1,024       $17,600      $588       $23,373       $44,014       $45,022
                                 -------------------------------------------------------------------------------------------------
</TABLE>

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

ITEM 4. CONTROLS AND PROCEDURES

In order to ensure that the information we must disclose in our filings with the
Securities  and Exchange  Commission  is recorded,  processed,  summarized,  and
reported on a timely basis,  the Company's  management,  including our President
and Chief Accounting  Officer,  have reviewed and evaluated the effectiveness of
our  disclosure  controls  and  procedures,  as  defined in  Exchange  Act Rules
13a-15(e) and  15d-15(e),  as of June 30, 2003.  Based on such  evaluation,  the
President and Chief Accounting Officer have concluded that, as of June 30, 2003,
our disclosure controls and procedures were effective in timely alerting them to
material information relating to us (and our consolidated subsidiaries) required
to be  included in our  periodic  SEC  filings.  There has been no change in our
internal  control over  financial  reporting  during the quarter  ended June 30,
2003,  that has  materially  affected,  or is  reasonably  likely to  materially
affect, our internal control over financial reporting.

                                       23
<PAGE>


                                     PART II

ITEM 5. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS


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

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(A)   EXHIBITS

      2.      Not applicable.

      3.1     Amended Articles of Incorporation of Pruco Life Insurance  Company
              of New  Jersey  filed  as  Exhibit  1.A.(6)(a)  to Post  Effective
              Amendment No. 17 to Form S-6, Registration  Statement No. 2-89780,
              filed March 1, 1991, and incorporated herein by reference.

      3.2     Amended  By-Laws of Pruco Life  Insurance  Company of New  Jersey,
              filed as Exhibit 1.A.(6)(b) to Post-Effective  Amendment No. 17 to
              Form S-6, Registration Statement No. 2-89780, filed March 1, 1991,
              and incorporated herein by reference.

      3.3     Resolution of the Board of Directors  establishing  the Pruco Life
              of New Jersey Variable  Contract Real Property  Account,  filed as
              Exhibit (3C) to Form S-1,  Registration  Statement  No.  33-20018,
              filed February 5, 1988, and incorporated herein by reference.

      4.1     Variable  Life  Insurance  Contract  filed as Exhibit A(5) to Form
              N-8B-2,  Registration  Statement  No.  2-81243,  filed January 10,
              1983, and incorporated herein by reference.

      4.2     Revised Variable  Appreciable  Life Insurance  Contract with fixed
              death  benefit,  filed as  Exhibit  1.A.(5)(c)  to  Post-Effective
              Amendment No. 5 to Form S-6,  Registration  Statement No. 2-89780,
              filed July 11, 1986, and incorporated herein by reference.

      4.3     Revised Variable Appreciable Life Insurance Contract with variable
              death  benefit,  filed as  Exhibit  1.A.(5)(d)  to  Post-Effective
              Amendment No. 5 to Form S-6,  Registration  Statement No. 2-89780,
              filed July 11, 1986, and incorporated herein by reference.

      4.4     Single Premium Variable Annuity Contract, filed as Exhibit 4(i) to
              Form N-4,  Registration  Statement No.  2-99916,  filed August 13,
              1985, and incorporated herein by reference.

      4.5     Flexible  Premium  Variable  Life  Insurance  Contract,  filed  as
              Exhibit 1.A.(5) to Form S-6,  Registration  Statement No. 2-99537,
              filed August 8, 1985, and incorporated herein by reference.

      9.      None.

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

      10.2    Service  Agreement  between The  Prudential  Insurance  Company of
              America  and  The  Prudential  Investment  Corporation,  filed  as
              Exhibit (10B) to Form S-1,  Registration  Statement  No.  33-8698,
              filed September 12, 1986, and incorporated herein by reference.

      10.3    Partnership  Agreement of The  Prudential  Variable  Contract Real
              Property  Partnership  filed as  Exhibit  (10C) to  Post-Effective
              Amendment No. 2 to Form S-1, Registration  Statement No. 33-20018,
              filed April 6, 1990, and incorporated herein by reference.

      11.     Not applicable.

      12.     Not applicable.

      13.     None.

      18.     None.

                                       24
<PAGE>


      21.     Not applicable.

      22.     Not applicable.

      23.     None.

      24.     Not applicable.

      27.     Not applicable.

      31.1    Certification of President required pursuant to 18 U.S.C.  Section
              1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
              of 2002.

      31.2    Certification of Chief Accounting  Officer required pursuant to 18
              U.S.C.  Section  1350,  as adopted  pursuant to Section 302 of the
              Sarbanes-Oxley Act of 2002.

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

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

B)    REPORT ON FORM 8-K

      None.

                                       25
<PAGE>


                                   SIGNATURES

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


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



Date:     August 14, 2003                      By:  /s/ Andrew J. Mako
          ---------------                           ----------------------------
                                                        Andrew J. Mako
                                                        President


Date:     August 14, 2003                      By:  /s/ William J. Eckert, IV
          ---------------                           ----------------------------
                                                        William J. Eckert, IV
                                                        Chief Accounting Officer

                                       26