##### 



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 Commission file number 033-20018
 PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
 in respect of
 PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT
 (Exact name of registrant as specified in its charter)
 New Jersey
    
    22-2426091(State or other jurisdiction of
    
    (IRS Employer Identification No.)incorporation or organization)
 213 Washington Street, Newark, New Jersey 07102-2992   (Address of principal executive offices) (Zip Code)
 (973) 802-6000  (Registrants telephone number, including area code)
 Indicate by check mark whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. YES þ NO o
 Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated
filer in Rule 12b-2 of the Exchange Act. (Check one):
 Large accelerated filer o Accelerated filer o Non-accelerated filer þ
 Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of
the Exchange Act). YES o NO þ




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##### 



PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT
(Registrant)
INDEX
 PageForward Looking Statement Disclosure
    
    
    3Part I  Financial InformationItem 1.
    
    Financial Statements (Unaudited)A. PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNTStatements of Net Assets  June 30, 2007 and December 31, 2006
    
    
    4Statements of Operations  Six and Three Months Ended June 30, 2007 and 2006
    
    
    4Statements of Changes in Net Assets  Six and Three Months Ended June 30, 2007 and 2006
    
    
    4Notes to the Financial Statements of the Real Property Account
    
    
    5B. THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIPConsolidated Statements of Assets and Liabilities  June 30, 2007 and December 31, 2006
    
    
    8Consolidated Statements of Operations  Six and Three Months Ended June 30, 2007 and 2006
    
    
    9Consolidated Statements of Changes in Net AssetsSix Months Ended June 30, 2007 and 2006
    
    
    10Consolidated Statements of Cash Flows  Six Months Ended June 30, 2007 and 2006
    
    
    11Consolidated Schedules of Investments  June 30, 2007 and December 31, 2006
    
    
    12Notes to Consolidated Financial Statements of the Partnership
    
    
    14Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    18Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    27Item 4.
    
    Controls and Procedures
    
    
    28Part II  Other InformationItem 1A.
    
    Risk Factors
    
    
    28Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    28Item 6.
    
    Exhibits
    
    
    28Signatures
    
    
    
    
    29
 2




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##### 



Forward-Looking Statement Disclosure
  3




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##### 



FINANCIAL STATEMENTS OF
 
 PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT
 
 STATEMENTS OF NET ASSETS
 June 30, 2007(unaudited)
    
    
    December 31, 2006ASSETSInvestment
in The Prudential Variable Contract Real Property Partnership
    
    $
    10,505,456
    
    
    $
    9,975,186Net Assets
    
    $
    10,505,456
    
    
    $
    9,975,186NET ASSETS,representing:Equity of contract owners
    
    $
    7,841,987
    
    
    $
    7,511,015Equity of Pruco Life Insurance Company of New Jersey
    
    
    2,663,469
    
    
    
    2,464,171$
    10,505,456
    
    
    $
    9,975,186Units outstanding
    
    
    3,323,470
    
    
    
    3,313,818Portfolio shares held
    
    
    294,526
    
    
    
    294,526Portfolio net asset value per share
    
    $
    35.67
    
    
    $
    33.87
 
 STATEMENTS OF OPERATIONS
 1/1/2007-6/30/2007
    
    
    1/1/2006-6/30/2006
    
    
    4/1/2007-6/30/2007
    
    
    4/1/2006-6/30/2006(unaudited)
    
    
    (unaudited)
    
    
    (unaudited)
    
    
    (unaudited)INVESTMENT INCOMENet investment income from Partnership operations
    
    $
    248,252
    
    
    $
    218,337
    
    
    $
    131,103
    
    
    $
    100,957EXPENSESCharges to contract owners for assuming mortality risk and
expense risk and for administration
    
    
    21,831
    
    
    
    19,912
    
    
    
    11,027
    
    
    
    10,098NET INVESTMENT INCOME
    
    
    226,421
    
    
    
    198,425
    
    
    
    120,076
    
    
    
    90,859NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTSNet change in unrealized gain (loss) on investments in Partnership
    
    
    248,915
    
    
    
    557,647
    
    
    
    165,051
    
    
    
    270,282Net realized gain (loss) on sale of investments in Partnership
    
    
    33,103
    
    
    
    2,945
    
    
    
    17,890
    
    
    
    3,072NET GAIN (LOSS) ON INVESTMENTS
    
    
    282,018
    
    
    
    560,592
    
    
    
    182,941
    
    
    
    273,354NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS
    
    $
    508,439
    
    
    $
    759,017
    
    
    $
    303,017
    
    
    $
    364,213
 
 STATEMENTS OF CHANGES IN NET ASSETS
 1/1/2007-6/30/2007
    
    
    1/1/2006-6/30/2006
    
    
    4/1/2007-6/30/2007
    
    
    4/1/2006-6/30/2006(unaudited)
    
    
    (unaudited)
    
    
    (unaudited)
    
    
    (unaudited)OPERATIONSNet investment income
    
    $
    226,421
    
    
    $
    198,425
    
    
    $
    120,076
    
    
    
    90,859Net change in unrealized gain (loss) on investments in Partnership
    
    
    248,915
    
    
    
    557,647
    
    
    
    165,051
    
    
    
    270,282Net realized gain (loss) on sale of investments in Partnership
    
    
    33,103
    
    
    
    2,945
    
    
    
    17,890
    
    
    
    3,072NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS
    
    
    508,439
    
    
    
    759,017
    
    
    
    303,017
    
    
    
    364,213CAPITAL TRANSACTIONSNet withdrawals by contract owners
    
    
    (45,660
    )
    
    
    (145,464
    )
    
    
    (54,595
    )
    
    
    (74,181
    )Net contributions (withdrawals) by Pruco Life Insurance Company of New Jersey
    
    
    67,491
    
    
    
    165,376
    
    
    
    65,622
    
    
    
    84,279NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL TRANSACTIONS
    
    
    21,831
    
    
    
    19,912
    
    
    
    11,027
    
    
    
    10,098TOTAL INCREASE (DECREASE) IN NET ASSETS
    
    
    530,270
    
    
    
    778,929
    
    
    
    314,044
    
    
    
    374,311NET ASSETSBeginning of period
    
    
    9,975,186
    
    
    
    8,924,959
    
    
    
    10,191,413
    
    
    
    9,329,577End of period
    
    $
    10,505,456
    
    
    $
    9,703,888
    
    
    $
    10,505,457
    
    
    $
    9,703,888
  4




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##### 



NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT
June 30, 2007
(Unaudited)
 Note 1: General
    Note 2: Summary of Significant Accounting Policies and Pronouncements
 A. Basis of Accounting
      5




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##### 



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




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##### 



Note 4: Taxes
  Note 5: Net Withdrawals by Contract Owners
  Six months endedJune 30,(Unaudited)2007
    
    
    2006VAL
    
    $
    (30,243
    )
    
    $
    (104,301
    )VLI
    
    
    (8,126
    )
    
    
    (17,540
    )SPVA
    
    
    0
    
    
    
    (23,223
    )SPVL
    
    
    (7,291
    )
    
    
    (400
    )TOTAL
    
    $
    (45,660
    )
    
    $
    (145,464
    )
 Note 6: Partnership Distributions
  Note 7: Unit Information
  June 30, 2007
    
    December 31, 2006(Unaudited)Units Outstanding:
    
    
    3,323,470
    
    
    
    3,313,818Unit Value:
    
    
    2.75925 to 3.31948
    
    
    
    2.63621 to 3.15740
 Note 8: Financial Highlights
  Six months endedJune 30,(Unaudited)2007
    
    
    
    2006Total Return
    
    4.67% to 5.13%
    
    
    
    
    
    8.06% to 8.54%
 7




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##### 



THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
 
 CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
 June 30, 2007(Unaudited)
    
    
    December 31, 2006ASSETSREAL ESTATE INVESTMENTS  At estimated market value:Real estate and improvements
(cost: 6/30/2007 - $211,585,975; 12/31/2006 - $199,124,056)
    
    $
    229,961,712
    
    
    $
    214,444,568Real estate partnerships and preferred equity investments (cost: 6/30/2007 - $14,709,462; 12/31/2006 - $22,334,823)
    
    
    14,709,462
    
    
    
    17,941,039Other real estate investments (cost: 6/30/2007 - $3,043,557;
12/31/2006 - $2,857,851)
    
    
    3,043,557
    
    
    
    2,857,851Total real estate investments
    
    
    247,714,731
    
    
    
    235,243,458CASH AND CASH EQUIVALENTS
    
    
    35,078,576
    
    
    
    33,399,532OTHER ASSETS, NET
    
    
    2,742,731
    
    
    
    3,493,829Total assets
    
    $
    285,536,038
    
    
    $
    272,136,819LIABILITIES & PARTNERS EQUITYINVESTMENT LEVEL DEBT
    
    $
    32,420,942
    
    
    $
    32,710,488ACCOUNTS PAYABLE AND ACCRUED EXPENSES
    
    
    4,234,041
    
    
    
    3,091,930DUE TO AFFILIATES
    
    
    845,219
    
    
    
    789,889OTHER LIABILITIES
    
    
    809,956
    
    
    
    876,487MINORITY INTEREST
    
    
    6,140,312
    
    
    
    5,751,441Total liabilities
    
    $
    44,450,470
    
    
    $
    43,220,235COMMITMENTS AND CONTINGENCIESPARTNERS EQUITY
    
    
    241,085,568
    
    
    
    228,916,584Total liabilities and partners equity
    
    $
    285,536,038
    
    
    $
    272,136,819NUMBER OF SHARES OUTSTANDING AT END OF PERIOD
    
    
    6,758,960
    
    
    
    6,758,960SHARE VALUE AT END OF PERIOD
    
    $
    35.67
    
    
    $
    33.87
 The accompanying notes are an integral part of these consolidated financial statements.
 8




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##### 



THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (Unaudited)
 For the Six Months Ended June 30,
    
    
    For the Three Months Ended June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006INVESTMENT INCOME:Revenue from real estate and improvements
    
    $
    13,207,476
    
    
    $
    12,045,917
    
    
    $
    6,719,243
    
    
    $
    6,187,328Equity in income of real estate partnerships
    
    
    627,648
    
    
    
    332,579
    
    
    
    328,268
    
    
    
    (58,674
    )Interest and equity income on mortgage
and other loans receivable
    
    
    
    
    
    
    125,510
    
    
    
    
    
    
    
    Income from other real estate investments
    
    
    185,706
    
    
    
    30,780
    
    
    
    93,366
    
    
    
    30,780Interest on short-term investments
    
    
    953,257
    
    
    
    994,626
    
    
    
    421,582
    
    
    
    530,859Total investment income
    
    
    14,974,087
    
    
    
    13,529,412
    
    
    
    7,562,459
    
    
    
    6,690,293INVESTMENT EXPENSES:Operating
    
    
    3,382,865
    
    
    
    3,020,289
    
    
    
    1,658,885
    
    
    
    1,534,329Investment management fee
    
    
    1,640,443
    
    
    
    1,505,088
    
    
    
    829,811
    
    
    
    765,271Real estate taxes
    
    
    1,054,609
    
    
    
    1,063,409
    
    
    
    542,724
    
    
    
    537,306Administrative
    
    
    2,037,531
    
    
    
    1,898,730
    
    
    
    1,053,062
    
    
    
    965,959Interest expense
    
    
    1,129,113
    
    
    
    925,269
    
    
    
    451,192
    
    
    
    476,583Minority interest
    
    
    32,487
    
    
    
    91,726
    
    
    
    18,144
    
    
    
    87,386Total investment expenses
    
    
    9,277,048
    
    
    
    8,504,511
    
    
    
    4,553,818
    
    
    
    4,366,834NET INVESTMENT INCOME
    
    
    5,697,039
    
    
    
    5,024,901
    
    
    
    3,008,641
    
    
    
    2,323,459REALIZED AND UNREALIZED GAIN (LOSS) ON REAL ESTATE
INVESTMENTS:Net proceeds from real estate investments sold
    
    
    18,353,122
    
    
    
    67,770
    
    
    
    3,703,880
    
    
    
    70,689Less: Cost of real estate investments sold
    
    
    18,973,800
    
    
    
    
    
    
    
    7,687,109
    
    
    
    Realization of prior periods unrealized
gain (loss) on real estate investments sold
    
    
    (1,380,344
    )
    
    
    
    
    
    
    (4,361,986
    )
    
    
    NET GAIN (LOSS) REALIZED ON REAL ESTATE INVESTMENTS SOLD
    
    
    759,666
    
    
    
    67,770
    
    
    
    378,757
    
    
    
    70,689Change in unrealized gain (loss) on real estate investments
    
    
    6,068,665
    
    
    
    14,970,820
    
    
    
    4,050,646
    
    
    
    6,904,718Less: Minority interest in unrealized gain (loss) on real estate investments
    
    
    356,386
    
    
    
    2,136,875
    
    
    
    231,189
    
    
    
    684,323Net unrealized gain (loss) on real estate investments
    
    
    5,712,279
    
    
    
    12,833,945
    
    
    
    3,819,457
    
    
    
    6,220,395NET REALIZED AND UNREALIZED GAIN (LOSS)
ON REAL ESTATE INVESTMENTS
    
    
    6,471,945
    
    
    
    12,901,715
    
    
    
    4,198,214
    
    
    
    6,291,084INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS
    
    $
    12,168,984
    
    
    $
    17,926,616
    
    
    $
    7,206,855
    
    
    $
    8,614,543
 The accompanying notes are an integral part of these consolidated financial statements.
 9




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##### 



THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
 
 CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
(Unaudited)
 For the Six Months Ended June 30,2007
    
    
    2006INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS:Net investment income
    
    $
    5,697,039
    
    
    $
    5,024,901Net gain (loss) realized on real estate
investments sold
    
    
    759,666
    
    
    
    67,770Net unrealized gain (loss) from real estate
investments
    
    
    5,712,279
    
    
    
    12,833,945Increase (decrease) in net assets
resulting from operations
    
    
    12,168,984
    
    
    
    17,926,616NET ASSETS   Beginning of period
    
    
    228,916,584
    
    
    
    205,402,851NET ASSETS   End of period
    
    $
    241,085,568
    
    
    $
    223,329,467
 The accompanying notes are an integral part of these consolidated financial statements.
 10




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##### 



THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 For the Six Months Ended June 30,2007
    
    
    2006CASH FLOWS FROM OPERATING ACTIVITIES:Net increase in net assets from operations
    
    $
    12,168,984
    
    
    $
    17,926,616Adjustments to reconcile net increase in net assets
to net cash from operating activitiesNet realized and unrealized loss (gain)
    
    
    (6,471,945
    )
    
    
    (12,901,715
    )Amortization of deferred financing costs
    
    
    250,414
    
    
    
    Distributions in excess of (less than) equity in income
of real estate partnerships operations
    
    
    (60,056
    )
    
    
    Minority interest in consolidated partnerships
    
    
    32,487
    
    
    
    91,726Bad debt expense
    
    
    60,927
    
    
    
    109,288(Increase) decrease in accrued interest included in
other real estate investments
    
    
    (185,706
    )
    
    
    (30,780
    )(Increase) decrease in:Other assets
    
    
    439,757
    
    
    
    (590,722
    )Increase (decrease) in:Accounts payable and accrued expenses
    
    
    1,142,111
    
    
    
    137,784Due to affiliates
    
    
    55,330
    
    
    
    17,753Other liabilities
    
    
    (66,531
    )
    
    
    124,453Net cash flows from (used in) operating activities
    
    
    7,365,772
    
    
    
    4,884,403CASH FLOWS FROM INVESTING ACTIVITIES:Net proceeds from real estate investments sold
    
    
    18,353,122
    
    
    
    67,770Acquisition of real estate and improvements
    
    
    (22,706,166
    )
    
    
    (11,868,343
    )Additions to real estate and improvements
    
    
    (1,044,138
    )
    
    
    (459,630
    )Contributions to real estate partnerships
    
    
    
    
    
    
    (7,289,487
    )Return of investment in real estate partnerships
    
    
    
    
    
    
    3,620,455Collection of mortgage loan receivable
    
    
    
    
    
    
    4,277,769Origination of other real estate investments
    
    
    
    
    
    
    (2,638,287
    )Net cash flows from (used in) investing activities
    
    
    (5,397,182
    )
    
    
    (14,289,753
    )CASH FLOWS FROM FINANCING ACTIVITIES:Principal payments on investment level debt
    
    
    (289,546
    )
    
    
    (270,416
    )Net cash flows from (used in) financing activities
    
    
    (289,546
    )
    
    
    (270,416
    )NET CHANGE IN CASH AND CASH
EQUIVALENTS
    
    
    1,679,044
    
    
    
    (9,675,766
    )CASH AND CASH EQUIVALENTS  Beginning of period
    
    
    33,399,532
    
    
    
    45,467,485CASH AND CASH EQUIVALENTS  End of period
    
    $
    35,078,576
    
    
    $
    35,791,719DISCLOSURE OF SUPPLEMENTAL CASH FLOW
INFORMATIONCash paid for interest
    
    $
    878,699
    
    
    $
    865,536
 The accompanying notes are an integral part of these consolidated financial statements.
 11




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##### 



THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
 
 CONSOLIDATED SCHEDULE OF INVESTMENTS
 June 30, 2007Total RentableSquare Feet
    
    June 30, 2007Unless Otherwise
    

    (Unaudited)
    
    

December 31, 2006June 30, 2007
    
    
    
    Indicated
    
    
    
    
    
    Estimated Market
    
    
    
    
    
    
    Estimated MarketProperty Name
    
    Ownership
    
    City, State
    
    (Unaudited)
    
    Cost
    
    
    Value
    
    

Cost
    
    
    ValueOFFICES750 Warrenville
    
    WO
    
    Lisle, IL
    
    103,193
    
    $
    24,528,965
    
    
    $
    11,500,000
    
    
    $
    24,517,391
    
    
    $
    10,700,000Summit@Cornell Oaks
    
    WO
    
    Beaverton, OR
    
    72,109
    
    
    12,348,341
    
    
    
    13,000,000
    
    
    
    12,091,490
    
    
    
    12,500,000Westpark
    
    WO
    
    Nashville, TN
    
    97,199
    
    
    11,203,261
    
    
    
    12,800,000
    
    
    
    11,033,804
    
    
    
    128,000,000Financial Plaza
    
    WO
    
    Brentwood, TN
    
    98,049
    
    
    12,356,996
    
    
    
    13,200,000
    
    
    
    12,333,152
    
    
    
    13,500,000Offices % as of 6/30/2007
    
    21%
    
    
    60,437,563
    
    
    
    50,500,000
    
    
    
    59,975,837
    
    
    
    49,500,000APARTMENTSBrookwood
    
    WO
    
    Atlanta, GA
    
    240 Units
    
    
    19,174,898
    
    
    
    202,000,000
    
    
    
    18,918,016
    
    
    
    20,100,000Dunhill Trace Apartments
    
    WO
    
    Raleigh, NC
    
    250 Units
    
    
    16,294,869
    
    
    
    19,600,000
    
    
    
    16,287,767
    
    
    
    20,400,000Broadstone Crossing
    
    WO
    
    Austin, TX
    
    255 Units
    
    
    22,706,166
    
    
    
    23,100,000
    
    
    
    
    
    
    
    Apartments % as of 6/30/2007
    
    27%
    
    
    58,175,933
    
    
    
    65,900,000
    
    
    
    35,205,783
    
    
    
    40,500,000RETAILKings Market
    
    WO
    
    Rosewell, GA
    
    314,358
    
    
    37,837,929
    
    
    
    30,000,000
    
    
    
    37,755,326
    
    
    
    28,400,000Hampton Towne Center
    
    WO
    
    Hampton, VA
    
    174,540
    
    
    18,046,331
    
    
    
    26,100,000
    
    
    
    18,042,611
    
    
    
    26,000,000White Marlin Mall
    
    CJV
    
    Ocean City, MD
    
    186,016
    
    
    15,742,511
    
    
    
    23,000,000
    
    
    
    15,538,799
    
    
    
    22,900,000Kansas City Portfolio
    
    EJV
    
    kansas City, KS; MO
    
    487,660
    
    
    293,027
    
    
    
    293,027
    
    
    
    7,816,531
    
    
    
    3,422,747Westminster Crossing East, LLC
    
    CJV
    
    Westminster, MD
    
    89,890
    
    
    12,393,585
    
    
    
    18,061,712
    
    
    
    12,358,340
    
    
    
    17,744,568CARS Preferred Equity
    
    PE
    
    Various
    
    N/A
    
    
    14,416,435
    
    
    
    14,416,435
    
    
    
    14,518,292
    
    
    
    14,518,292Retail % as of 6/30/2007
    
    46%
    
    
    98,729,818
    
    
    
    111,871,174
    
    
    
    106,049,879
    
    
    
    112,985,607INDUSTRIALSmith Road
    
    WO
    
    Aurora, CO
    
    277,930
    
    
    
    
    
    
    
    
    
    
    11,286,560
    
    
    
    14,300,000Industrial % as of 6/30/2007
    
    0%
    
    
    
    
    
    
    
    
    
    
    11,286,560
    
    
    
    14,300,000HOTELPortland Crown Plaza
    
    CJV
    
    Portland, OR
    
    161 Rooms
    
    
    8,952,123
    
    
    
    16,400,000
    
    
    
    8,940,820
    
    
    
    15,100,000Hotel % as of 6/30/2007
    
    7%
    
    
    8,952,123
    
    
    
    16,400,000
    
    
    
    8,940,820
    
    
    
    15,100,000OTHER REAL ESTATE INVESTMENTSWestminster East
    
    Eloan
    
    Westminster, MD
    
    
    
    
    3,043,557
    
    
    
    3,043,557
    
    
    
    2,857,851
    
    
    
    2,857,851Other
Real Estate Investments % as of 6/30/2007
    
    1%
    
    
    3,043,557
    
    
    
    3,043,557
    
    
    
    2,857,851
    
    
    
    2,857,851Total Real Estate
Investments as a
percentage of net
Assets as of 6/30/2007
    
    103%
    
    $
    229,338,994
    
    
    $
    247,714,731
    
    
    $
    224,316,730
    
    
    $
    235,243,458
 
 
 The accompanying notes are an integral part of these consolidated financial statements.


12



---



##### 



THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
 CONSOLIDATED SCHEDULE OF INVESTMENTS
 June 30, 2007(Unaudited)
    
    
    December 31, 2006Estimated
    
    
    
    
    
    
    EstimatedFace Amount
    
    
    Cost
    
    
    Market Value
    
    
    Cost
    
    
    Market ValueCASH AND CASH EQUIVALENTS  Percentage of Net Assets
    
    
    
    
    
    
    
    
    
    
    14.6
    %
    
    
    
    
    
    
    14.6
    %Federal Home Loan Bank, zero coupon bond, July 2, 2007
    
    $
    10,582,589
    
    
    $
    10,582,589
    
    
    $
    10,582,589
    
    
    $
    7,245,028
    
    
    $
    7,245,028Federal Home Loan Bank, zero coupon bond, July 18, 2007
    
    
    22,944,044
    
    
    
    22,944,044
    
    
    
    22,944,044
    
    
    
    24,914,167
    
    
    
    24,914,167Total Cash Equivalents
    
    
    
    
    
    
    33,526,633
    
    
    
    33,526,633
    
    
    
    32,159,195
    
    
    
    32,159,195Cash
    
    
    
    
    
    
    1,551,943
    
    
    
    1,551,943
    
    
    
    1,240,337
    
    
    
    1,240,337Total Cash and Cash Equivalents
    
    
    
    
    
    $
    35,078,576
    
    
    $
    35,078,576
    
    
    $
    33,399,532
    
    
    $
    33,399,532
 The accompanying notes are an integral part of these consolidated financial statements.
 13




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
June 30, 2007 and 2006
(Unaudited)
 Note 1: Summary of Significant Accounting Policies and Pronouncements
   Clarification of the Scope of the Audit and Accounting
Guide Investment Companies and Accounting by Parent Companies and Equity Method Investors for
Investments in Investment Companies
    14




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
June 30, 2007 and 2006
(Unaudited)
 Note 1: Summary of Significant Accounting Policies and Pronouncements (continued)
  Note 2: Related Party Transactions
   Note 3: Commitments and Contingencies
  15




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
June 30, 2007 and 2006
(Unaudited)
 Note 4: Financial Highlights
 For The Six Months Ended June 30,2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Per Share(Unit) Operating Performance:Net Asset Value, beginning of period
    
    $
    33.87
    
    
    $
    29.59
    
    
    $
    26.15
    
    
    $
    24.66
    
    
    $
    24.11Income From Investment Operations:Investment income, before management fee
    
    
    1.08
    
    
    
    0.94
    
    
    
    0.78
    
    
    
    0.67
    
    
    
    0.79Investment Management fee
    
    
    (0.24
    )
    
    
    (0.22
    )
    
    
    (0.19
    )
    
    
    (0.17
    )
    
    
    (0.16
    )Net realized and unrealized gain (loss) on investments
    
    
    0.96
    
    
    
    1.86
    
    
    
    0.76
    
    
    
    0.39
    
    
    
    (0.57
    )Net Increase in Net Assets Resulting from Operations
    
    
    1.80
    
    
    
    2.58
    
    
    
    1.35
    
    
    
    0.89
    
    
    
    0.06Net Asset Value, end of period
    
    $
    35.67
    
    
    $
    32.17
    
    
    $
    27.50
    
    
    $
    25.55
    
    
    $
    24.17Total Return, before Management Fee (a):
    
    
    6.05
    %
    
    
    9.49
    %
    
    
    5.90
    %
    
    
    4.37
    %
    
    
    0.88
    %Ratios/Supplemental Data:Net Assets, end of period (in millions)
    
    $
    241
    
    
    $
    223
    
    
    $
    196
    
    
    $
    188
    
    
    $
    185Ratios to average net assets (b):Total Portfolio Level Expenses
    
    
    0.77
    %
    
    
    0.73
    %
    
    
    0.73
    %
    
    
    0.70
    %
    
    
    0.65
    %Investment Income before Management Fee
    
    
    3.19
    %
    
    
    3.13
    %
    
    
    2.96
    %
    
    
    2.71
    %
    
    
    3.27
    %
 
 (a)
    
    Total Return, before management fee is calculated by geometrically linking quarterly returns which
are calculated using the formula below:Net Investment Income + Net Realized and Unrealized Gains/(Losses)Beg. Net Asset Value + Time Weighted Contributions  Time Weighted Distributions(b)
    
    Average net assets are based on beginning of quarter net assets. 16




---



##### 



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




---



##### 



Valuation Overview
   18




---



##### 



Six Months Ended June 30,
    
    
    Three Months Ended June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net Investment Income:Office properties
    
    $
    1,846,551
    
    
    $
    1,651,536
    
    
    $
    994,036
    
    
    $
    827,689Apartment properties
    
    
    638,357
    
    
    
    542,468
    
    
    
    496,754
    
    
    
    280,972Retail properties
    
    
    3,452,296
    
    
    
    2,647,330
    
    
    
    1,785,949
    
    
    
    1,162,341Industrial property
    
    
    15,959
    
    
    
    378,960
    
    
    
    (97,602
    )
    
    
    183,027Hotel property
    
    
    526,401
    
    
    
    533,403
    
    
    
    270,729
    
    
    
    255,102Land
    
    
    
    
    
    
    (43,508
    )
    
    
    
    
    
    
    Other (including interest income,
investment mgt fee, etc.)
    
    
    (782,525
    )
    
    
    (685,288
    )
    
    
    (441,225
    )
    
    
    (385,672
    )Total Net Investment Income
    
    $
    5,697,039
    
    
    $
    5,024,901
    
    
    $
    3,008,641
    
    
    $
    2,323,459Net Realized Gain (Loss) on Real Estate Investments:Apartment properties
    
    
    
    
    
    
    70,689
    
    
    
    
    
    
    
    70,689Retail properties
    
    
    413,834
    
    
    
    
    
    
    
    382,035
    
    
    
    Land
    
    
    
    
    
    
    (2,919
    )
    
    
    
    
    
    
    Industrial property
    
    
    345,832
    
    
    
    
    
    
    
    (3,278
    )
    
    
    Total Net Realized Gain (Loss) on Real Estate Investments
    
    
    759,666
    
    
    
    67,770
    
    
    
    378,757
    
    
    
    70,689Net Unrealized Gain (Loss) on Real Estate Investments:Office properties
    
    
    538,273
    
    
    
    2,187,729
    
    
    
    129,925
    
    
    
    65,593Apartment properties
    
    
    2,429,850
    
    
    
    1,005,664
    
    
    
    2,572,930
    
    
    
    1,077,910Retail properties
    
    
    1,713,199
    
    
    
    5,186,762
    
    
    
    79,368
    
    
    
    5,167,766Industrial property
    
    
    
    
    
    
    622,797
    
    
    
    
    
    
    
    (121,036
    )Hotel property
    
    
    1,030,957
    
    
    
    3,830,993
    
    
    
    1,037,234
    
    
    
    30,162Total Net Unrealized Gain (Loss) on Real Estate Investments
    
    
    5,712,279
    
    
    
    12,833,945
    
    
    
    3,819,457
    
    
    
    6,220,395Net Realized and Unrealized Gain (Loss) on Real Estate Investments
    
    $
    6,471,945
    
    
    $
    12,901,715
    
    
    $
    4,198,214
    
    
    $
    6,291,084
 19




---



##### 



OFFICE PROPERTIES
 Net Investment
    
    Net Investment
    
    Unrealized
    
    UnrealizedSix Months Ended
    
    Income/(Loss)
    
    Income/(Loss)
    
    Gain/(Loss)
    
    Gain/(Loss)
    
    Occupancy
    
    OccupancyJune 30,
    
    2007
    
    2006
    
    2007
    
    2006
    
    2007
    
    2006PropertyLisle, IL
    
    $
    218,442
    
    
    $
    186,570
    
    
    $
    788,426
    
    
    $
    600,000
    
    
    
    61
    %
    
    
    38
    %Brentwood, TN
    
    
    554,533
    
    
    
    489,855
    
    
    
    (169,458
    )
    
    
    (132,371
    )
    
    
    100
    %
    
    
    100
    %Oakbrook Terrace, IL (1)
    
    
    
    
    
    
    1,323
    
    
    
    
    
    
    
    
    
    
    
    N/A
    
    
    
    N/ABeaverton, OR
    
    
    513,915
    
    
    
    466,066
    
    
    
    243,150
    
    
    
    1,120,100
    
    
    
    89
    %
    
    
    76
    %Brentwood, TN
    
    
    559,661
    
    
    
    507,722
    
    
    
    (323,845
    )
    
    
    600,000
    
    
    
    100
    %
    
    
    100
    %$
    1,846,551
    
    
    $
    1,651,536
    
    
    $
    538,273
    
    
    $
    2,187,729Net Investment
    
    Net Investment
    
    Unrealized
    
    UnrealizedThree Months Ended
    
    Income/(Loss)
    
    Income/(Loss)
    
    Gain/(Loss)
    
    Gain/(Loss)June 30,
    
    2007
    
    2006
    
    2007
    
    2006PropertyLisle, IL
    
    $
    148,241
    
    
    $
    88,167
    
    
    $
    (6,566
    )
    
    $
    Brentwood, TN
    
    
    280,705
    
    
    
    261,856
    
    
    
    (169,458
    )
    
    
    (21,464
    )Beaverton, OR
    
    
    268,440
    
    
    
    236,998
    
    
    
    329,794
    
    
    
    (12,943
    )Brentwood, TN
    
    
    296,650
    
    
    
    240,668
    
    
    
    (23,845
    )
    
    
    100,000$
    994,036
    
    
    $
    827,689
    
    
    $
    129,925
    
    
    $
    65,593
 
 (1)
    
    The Oakbrook Terrace, Illinois office property was sold on June 8, 2005 but certain post-closing
adjustments were recognized during the six months ended June 30, 2006. Net Investment Income
  Unrealized Gain/(Loss)
   20




---



##### 



APARTMENT PROPERTIES
 Realized /Net Investment
    
    Net Investment
    
    Unrealized
    
    UnrealizedSix Months Ended
    
    Income/(Loss)
    
    Income/(Loss)
    
    Gain/(Loss)
    
    Gain/(Loss)
    
    Occupancy
    
    OccupancyJune 30,
    
    2007
    
    2006
    
    2007
    
    2006
    
    2007
    
    2006PropertyAtlanta, GA
    
    $
    154,369
    
    
    $
    236,936
    
    
    $
    (156,882
    )
    
    $
    307,721
    
    
    
    95
    %
    
    
    90
    %Raleigh, NC
    
    
    250,994
    
    
    
    315,532
    
    
    
    (807,102
    )
    
    
    697,943
    
    
    
    92
    %
    
    
    91
    %Gresham/Salem, OR (1)
    
    
    
    
    
    
    (10,000
    )
    
    
    
    
    
    
    169
    
    
    
    N/A
    
    
    
    N/AJacksonville, FL (2 )
    
    
    17,342
    
    
    
    
    
    
    
    
    
    
    
    70,520
    
    
    
    N/A
    
    
    
    N/AAustin, TX (3)
    
    
    215,652
    
    
    
    
    
    
    
    3,393,834
    
    
    
    
    
    
    
    94
    %
    
    
    N/A$
    638,357
    
    
    $
    542,468
    
    
    $
    2,429,850
    
    
    $
    1,076,353Realized /Net Investment
    
    Net Investment
    
    Unrealized
    
    UnrealizedThree Months Ended
    
    Income/(Loss)
    
    Income/(Loss)
    
    Gain/(Loss)
    
    Gain/(Loss)June 30,
    
    2007
    
    2006
    
    2007
    
    2006PropertyAtlanta, GA
    
    $
    112,059
    
    
    $
    122,598
    
    
    $
    (16,117
    )
    
    $
    377,910Raleigh, NC
    
    
    169,043
    
    
    
    168,374
    
    
    
    (804,787
    )
    
    
    700,000Gresham/Salem, OR (1)
    
    
    
    
    
    
    (10,000
    )
    
    
    
    
    
    
    169Jacksonville, FL (2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    70,520Austin, TX (3)
    
    
    215,652
    
    
    
    
    
    
    
    3,393,834
    
    
    
    $
    496,754
    
    
    $
    280,972
    
    
    $
    2,572,930
    
    
    $
    1,148,599
 
 (1)
    
    The Gresham, Oregon and Salem, Oregon apartment properties were sold on August 10, 2005 and
March 10, 2005, respectively, but certain post-closing adjustments were recognized during the six
and three month periods ended June 30, 2006.(2)
    
    The Jacksonville, Florida apartment property was sold on November 30, 2005 but certain post-closing
adjustments were recognized during the six months ended June 30, 2007.(3)
    
    Net investment income for the six and three month periods ended June 30, 2007 reflects partial period results for the
Austin, Texas apartment property that was acquired on May 8, 2007. Net Investment Income
   Total Realized and Unrealized Gain/Loss
  21




---



##### 



RETAIL PROPERTIES
 Realized/Net Investment
    
    Net Investment
    
    Unrealized
    
    UnrealizedSix Months Ended
    
    Income/(Loss)
    
    Income/(Loss)
    
    Gain/Loss
    
    Gain/(Loss)
    
    Occupancy
    
    OccupancyJune 30,
    
    2007
    
    2006
    
    2007
    
    2006
    
    2007
    
    2006PropertyRoswell, GA
    
    $
    1,051,609
    
    
    $
    1,039,049
    
    
    $
    1,537,398
    
    
    $
    614,547
    
    
    
    89
    %
    
    
    95
    %Kansas City, KS; MO (1)
    
    
    161,913
    
    
    
    (113,990
    )
    
    
    413,834
    
    
    
    (463,628
    )
    
    
    N/A
    
    
    
    91
    %Hampton, VA
    
    
    651,539
    
    
    
    651,700
    
    
    
    96,280
    
    
    
    (105,132
    )
    
    
    100
    %
    
    
    100
    %Ocean City, MD
    
    
    382,326
    
    
    
    401,899
    
    
    
    (202,378
    )
    
    
    151,010
    
    
    
    77
    %
    
    
    84
    %Westminster, MD(2)
    
    
    739,639
    
    
    
    105,140
    
    
    
    281,899
    
    
    
    4,989,965
    
    
    
    100
    %
    
    
    98
    %Westminster, MD (3)
    
    
    
    
    
    
    124,362
    
    
    
    
    
    
    
    
    
    
    
    N/A
    
    
    
    N/ACARS Preferred Equity (4)
    
    
    465,270
    
    
    
    439,170
    
    
    
    
    
    
    
    
    
    
    
    N/A
    
    
    
    N/A$
    3,452,296
    
    
    $
    2,647,330
    
    
    $
    2,127,033
    
    
    $
    5,186,762Realized/Net Investment
    
    Net Investment
    
    Unrealized
    
    UnrealizedThree Months Ended
    
    Income/(Loss)
    
    Income/(Loss)
    
    Gain/(Loss)
    
    Gain/(Loss)June 30,
    
    2007
    
    2006
    
    2007
    
    2006PropertyRoswell, GA
    
    $
    516,128
    
    
    $
    507,500
    
    
    $
    (53,859
    )
    
    $
    (59,867
    )Kansas City, KS; MO (1)
    
    
    75,927
    
    
    
    (310,551
    )
    
    
    382,035
    
    
    
    (407,968
    )Hampton, VA
    
    
    330,824
    
    
    
    332,977
    
    
    
    (3,720
    )
    
    
    (5,132
    )Ocean City, MD
    
    
    235,767
    
    
    
    275,398
    
    
    
    (58,092
    )
    
    
    650,768Westminster, MD(2)
    
    
    375,427
    
    
    
    105,140
    
    
    
    195,039
    
    
    
    4,989,965Westminster, MD (3)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    CARS Preferred Equity (4)
    
    
    251,876
    
    
    
    251,877
    
    
    
    
    
    
    
    $
    1,785,949
    
    
    $
    1,162,341
    
    
    $
    461,403
    
    
    $
    5,167,766
 
 (1)
    
    Net investment income (loss) for the six and three month periods ended June 30, 2007 reflects partial period results for the
remaining retail property in Kansas City, Kansas that was sold on June 29, 2007. Net investment income for the six and three
month periods ended June 30, 2006 reflects results for all four retail properties located in Kansas City, Kansas
and Kansas City, Missouri, prior to the sale of three out of the four centers on May 15, 2006.(2)
    
    The Westminster, Maryland retail property was acquired on June 13, 2006.(3)
    
    Mortgage Loan Receivable (mortgage paid in full on March 3, 2006).(4)
    
    Net investment income for the six and three months ended June 30, 2006 reflects partial period results for the second
funding of the Partnerships preferred equity investment, which occurred on February 14, 2006. Net Investment Income
  22




---



##### 



Total Realized and Unrealized Gain/(Loss)
   INDUSTRIAL PROPERTY
 Net Investment
    
    Realized
    
    UnrealizedSix Months Ended
    
    Net Investment
    
    Income/(Loss) 2006
    
    Gain/(Loss)
    
    Gain/(Loss)
    
    Occupancy
    
    OccupancyJune 30,
    
    Income/(Loss) 2007
    
    2007
    
    2007
    
    2006
    
    2007
    
    2006PropertyAurora, CO (1)
    
    $
    15,959
    
    
    $
    378,960
    
    
    $
    345,832
    
    
    $
    622,797
    
    
    
    N/A
    
    
    
    85
    %Net Investment
    
    Net Investment
    
    Realized
    
    UnrealizedThree Months Ended
    
    Income/(Loss)
    
    Income/(Loss)
    
    Gain/(Loss)
    
    Gain/(Loss)June 30,
    
    2007
    
    2006
    
    2007
    
    2006PropertyAurora, CO (1)
    
    $
    (97,602
    )
    
    $
    183,027
    
    
    $
    (3,278
    )
    
    $
    (121,036
    )
 
 (1)
    
    Net investment income (loss) for the quarter ended June 30, 2007 reflects partial period results for the Aurora,
Colorado industrial property that was sold on February 7, 2007. Net Investment Income/Loss
  23




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##### 



Total Realized and Unrealized Gain/(Loss)
   HOTEL PROPERTY
 Net Investment
    
    Net Investment
    
    Unrealized
    
    UnrealizedSix Months Ended
    
    Income/(Loss)
    
    Income/(Loss)
    
    Gain/(Loss)
    
    Gain/(Loss)
    
    Occupancy
    
    OccupancyJune 30,
    
    2007
    
    2006
    
    2007
    
    2006
    
    2007
    
    2006PropertyLake Oswego, OR
    
    $
    526,401
    
    
    $
    533,403
    
    
    $
    1,030,957
    
    
    $
    3,830,993
    
    
    
    72
    %
    
    
    78
    %Net Investment
    
    Net Investment
    
    Unrealized
    
    UnrealizedThree Months Ended
    
    Income/(Loss)
    
    Income/(Loss)
    
    Gain/(Loss)
    
    Gain/(Loss)June 30,
    
    2007
    
    2006
    
    2007
    
    2006PropertyLake Oswego, OR
    
    $
    270,729
    
    
    $
    255,102
    
    
    $
    1,037,234
    
    
    $
    30,162
 Net Investment Income
  Unrealized Gain/(Loss)
  Other
  24




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##### 



(c) Inflation
  Critical Accounting Policies
   Valuation of Investments
 Real Estate Investments
    25




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##### 



Other Estimates
  
 ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
 Interest Rate Risk 
  Estimated Market Value
    
    Weighted AverageMaturity
    
    (millions)
    
    Interest RateCash and Cash equivalents
    
    0-3 months
    
    $
    35.1
    
    
    
    5.78
    %
  Debt (in $ thousands),
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Estimatedincluding current portion
    
    2007
    
    2008
    
    2009
    
    2010
    
    2011
    
    Thereafter
    
    Total
    
    Fair ValueWeighted Average Fixed Interest Rate
    
    
    5.36
    %
    
    
    5.74
    %
    
    
    6.75
    %
    
    
    6.75
    %
    
    
    6.75
    %
    
    
    6.75
    %
    
    
    6.41
    %Fixed Rate
    
    $
    258
    
    
    $
    16,131
    
    
    $
    9,277
    
    
    $
    565
    
    
    $
    604
    
    
    $
    5,586
    
    
    $
    32,421
    
    
    $
    32,349Variable Rate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total Mortgage Loans Payable
    
    $
    258
    
    
    $
    16,131
    
    
    $
    9,277
    
    
    $
    565
    
    
    $
    604
    
    
    $
    5,586
    
    
    $
    32,421
    
    
    $
    32,349
  26




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##### 



Item 4. Controls and Procedures
  PART II  OTHER INFORMATION
 
 Item 1A. Risk Factors
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 6. Exhibits
 31.1
    
    
    Section 302 Certification of the Chief Executive Officer.31.2
    
    
    Section 302 Certification of the Chief Financial Officer.32.1
    
    
    Section 906 Certification of the Chief Executive Officer.32.2
    
    
    Section 906 Certification of the Chief Financial Officer.
 27




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##### 



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