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

                                  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, 2004

                                       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 | |


--------------------------------------------------------------------------------

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


--------------------------------------------------------------------------------

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

<PAGE>

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


                                      INDEX
                                     ------

<TABLE>
<CAPTION>

                                                                                                                 PAGE
                                                                                                                 ----

<S>                                                                                                                <C>
Cover Page...................................................................................................      1

Index........................................................................................................      2

Forward-Looking Statement Disclosure.........................................................................      3

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, 2004 and December 31, 2003........................................     4

         Statements of Operations--Six and Three Months Ended June 30, 2004 and 2003..........................     4

         Statements of Changes in Net Assets--
         Six and Three Months Ended June 30, 2004 and 2003...................................................      4

         Notes to the Financial Statements of the Account....................................................      5
B.   THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

         Consolidated Statements of Assets and Liabilities--
         June 30, 2004 and December 31, 2003.................................................................      8

         Consolidated Statements of Operations--
         Six and Three Months Ended June 30, 2004 and 2003...................................................      9

         Consolidated Statements of Changes in Net Assets--
         Six and Three Months Ended June 30, 2004 and 2003...................................................     10

         Consolidated Statements of Cash Flows--
         Six and Three Months Ended June 30, 2004 and 2003...................................................     11

         Consolidated Schedules of Investments--June 30, 2004 and December 31, 2003...........................    12

         Notes to the Financial Statements of the Partnership................................................     14

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations................     16

Item 3. Quantitative and Qualitative Disclosures About Market Risks..........................................     23

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
</TABLE>


                                       2
<PAGE>

FORWARD-LOOKING STATEMENT DISCLOSURE


Certain  of the  statements  included  in this  Quarterly  Report on Form  10-Q,
including but not limited to those in the  Management's  Discussion and Analysis
of Financial  Condition and Results of  Operations,  constitute  forward-looking
statements within the meaning of the U.S. Private  Securities  Litigation Reform
Act of 1995.  Words such as "expects",  "believes",  "anticipates",  "includes",
"plans", "assumes",  "estimates",  "projects",  "intends", or variations of such
words  are  generally  part  of  forward-looking   statements.   Forward-looking
statements  are made based on  management's  current  expectations  and  beliefs
concerning  future  developments  and their  potential  effects  upon Pruco Life
Insurance  Company of New Jersey ("the Company") or the Pruco Life of New Jersey
Variable Contract Real Property Account (the "Real Property Account"). There can
be no  assurance  that  future  developments  affecting  the Company or the Real
Property Account will be those anticipated by management.  These forward-looking
statements  are not a guarantee  of future  performance  and  involve  risks and
uncertainties,  and there are certain  important factors that could cause actual
results to differ, possibly materially, from expectations or estimates reflected
in  such  forward-looking  statements,  including  without  limitation:  general
economic,  market  and  political  conditions,   including  the  performance  of
financial markets, interest rate fluctuations and the continuing negative impact
of the current economic environment;  various domestic or international military
or terrorist  activities or conflicts;  economic  conditions in local markets in
which the properties in the Real Property Account are located; volatility in the
securities  markets;  reestimates of our reserves for future policy benefits and
claims; changes in our assumptions related to deferred policy acquisition costs;
our exposure to contingent  liabilities;  catastrophe losses;  investment losses
and defaults; changes in our claims-paying or credit ratings; competition in our
product lines and for personnel; fluctuations in foreign currency exchange rates
and foreign  securities  markets;  risks to our  international  operations;  the
impact of  changing  regulation  or  accounting  practices;  adverse  litigation
results;  and changes in tax law. The Company  does not intend,  and is under no
obligation to, update any particular  forward-looking statement included in this
document.


                                       3
<PAGE>

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

STATEMENTS OF NET ASSETS
June 30, 2004 and December 31, 2003           JUNE 30, 2004
                                               (UNAUDITED)    DECEMBER 31, 2003
                                       --------------------- -------------------
ASSETS
Investment in The Prudential Variable
   Contract Real Property Partnership          $8,131,847         $7,846,237
                                         ----------------   ----------------
Net Assets                                     $8,131,847         $7,846,237
                                         ================   ================
NET ASSETS, representing:
Equity of contract owners                      $6,003,101         $5,852,959
Equity of Pruco Life Insurance Company of
  New Jersey                                    2,128,746          1,993,278
                                         ----------------   ----------------
                                               $8,131,847         $7,846,237
                                         ================   ================
Units outstanding                               3,530,146          3,519,859
                                         ================   ================
Portfolio shares held                             318,217            318,217
Portfolio net asset value per share            $    25.55         $    24.66

<TABLE>
<CAPTION>

STATEMENTS OF OPERATIONS
For the six and three months ended
June 30, 2004 and 2003                   1/1/2004-6/30/2004  1/1/2003-6/30/2003 4/1/2004-6/30/2004 4/1/2003-6/30/2003
                                               (UNAUDITED)       (UNAUDITED)        (UNAUDITED)        (UNAUDITED)
                                        ------------------- ------------------- ------------------ -------------------
<S>                                             <C>                <C>                <C>               <C>
INVESTMENT INCOME
Net investment income from Partnership
  operations                                    $ 158,358          $ 231,326          $ 75,333          $ 117,190
                                         ----------------   ----------------  ----------------   ----------------
EXPENSES
Charges to contract owners for assuming
  mortality risk and expense risk and
  for administration                               16,760             16,471             8,474              8,248
                                         ----------------   ----------------  ----------------   ----------------
NET INVESTMENT INCOME                             141,598            214,855            66,859            108,942
                                         ----------------   ----------------  ----------------   ----------------
NET REALIZED AND UNREALIZED GAIN
  (LOSS) ON INVESTMENTS
Net change in unrealized gain (loss) on
  investments in Partnership                      127,252           (233,124)          151,489            (29,348)
Net realized gain (loss) on sale
  of investments in Partnership                         0             22,386                 0                  0
                                         ----------------   ----------------  ----------------   ----------------
NET GAIN (LOSS) ON INVESTMENTS                    127,252           (210,738)          151,489            (29,348)
                                         ----------------   ----------------  ----------------   ----------------
NET INCREASE (DECREASE) IN
  NET ASSETS RESULTING FROM
  OPERATIONS                                    $ 268,850          $   4,117         $ 218,348           $ 79,594
                                         ================   ================  ================   ================

STATEMENTS OF CHANGES IN NET ASSETS
For the six and three months ended
  June 30, 2004 and 2003                 1/1/2004-6/30/2004  1/1/2003-6/30/2003 4/1/2004-6/30/2004 4/1/2003-6/30/2003
                                               (UNAUDITED)       (UNAUDITED)        (UNAUDITED)        (UNAUDITED)
                                        ------------------- ------------------- ------------------ -------------------
OPERATIONS
Net investment income                          $  141,598         $  214,855        $   66,859         $  108,942
Net change in unrealized gain (loss) on
  investments in Partnership                      127,252           (233,124)          151,489            (29,348)
Net realized gain (loss) on sale
  of investments in Partnership                         0             22,386                 0                  0
                                         ----------------   ----------------  ----------------   ----------------
NET INCREASE (DECREASE) IN
  NET ASSETS RESULTING FROM
  OPERATIONS                                      268,850              4,117           218,348             79,594
                                         ----------------   ----------------  ----------------   ----------------
CAPITAL TRANSACTIONS
Net withdrawals by contract owners                (45,682)           (24,477)          (51,131)           (34,322)
Net contributions (withdrawals) by
  Pruco Life Insurance Company
  of New Jersey                                    62,442             40,948            59,606             42,570
                                         ----------------   ----------------  ----------------   ----------------
NET INCREASE (DECREASE) IN
  NET ASSETS RESULTING FROM
  CAPITAL TRANSACTIONS                             16,760             16,471             8,475              8,248
                                         ----------------   ----------------  ----------------   ----------------
TOTAL INCREASE (DECREASE) IN
  NET ASSETS                                      285,610             20,588           226,823             87,842
NET ASSETS
Beginning of period                             7,846,237          8,854,905         7,905,024          8,787,651
                                         ----------------   ----------------  ----------------   ----------------
End of period                                  $8,131,847         $8,875,493        $8,131,847         $8,875,493
                                         ================   ================  ================   ================
</TABLE>

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


                                       4
<PAGE>

                      NOTES TO THE FINANCIAL STATEMENTS OF
        PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT
                                  JUNE 30, 2004
                                   (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"),  a  wholly-owned  subsidiary  of  Prudential
Financial,  Inc. ("PFI") as a separate investment account pursuant to New Jersey
law and is registered  under the  Securities Act of 1933. 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 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, 2004 and for the six and three months
ended  June  30,  2004  and  2003  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, 2004 and
December 31, 2003 the Real Property  Account's  interest in the  Partnership was
4.3% or 318,217 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.


                                       5
<PAGE>

NOTE 3: 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. The mortality risk and expense risk
charges are assessed through reduction in unit values.

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. The administrative  charge is
assessed through reduction in unit values.

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, not to exceed 5% for VAL and 9% for VLI,
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.  These charges are assessed  through the
redemption of units.

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,  but will not exceed 45% for VAL and 9% for SPVL.  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.  A
deferred sales charge is assessed through the redemption of units.

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. A charge is assessed through the redemption of units.

NOTE 4: 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 PFI'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.


                                       6
<PAGE>

NOTE 5: NET WITHDRAWALS BY CONTRACT OWNERS


Contract owner activity for the real estate  investment  option in Pruco Life of
New Jersey's  variable  insurance and variable  annuity products for the six and
three months ended June 30, 2004 and 2003, were as follows:

<TABLE>
<CAPTION>

                                          SIX MONTHS ENDED                                THREE MONTHS ENDED
                                              JUNE 30,                                         JUNE 30,
                                    2004                      2003                   2004                    2003
                                ------------             --------------          ------------            ------------
                                             (UNAUDITED)                                      (UNAUDITED)
<S>                                <C>                        <C>                   <C>                     <C>
VAL                                $23,177                    $23,034               $33,942                 $25,972
VLI                                 16,333                     (6,784)               17,197                     542
SPVA                                     0                      7,828                     0                   7,828
SPVL                                 6,172                        399                    (8)                    (20)
                              ------------               ------------          ------------            ------------
TOTAL                              $45,682                    $24,477               $51,131                 $34,322
                              ============               ============          ============            ============
</TABLE>

NOTE 6: PARTNERSHIP DISTRIBUTIONS


As of June 30, 2004,  no  distributions  had been made for the current year from
the  Partnership.  For the year ended  December 31, 2003, the  Partnership  made
distributions  of $6.9  million.  The Pruco  Life of New  Jersey  Real  Property
Account's share of this distribution was $1.2 million.

NOTE 7: UNIT INFORMATION


Outstanding units and unit values at June 30, 2004 and December 31, 2003 were as
follows:

                                  JUNE 30, 2004
                                   (UNAUDITED)           DECEMBER 31, 2003
                                  ------------             ------------
UNITS OUTSTANDING:                  3,530,146                3,519,859
UNIT VALUE:                    2.05172 to 2.40308       1.99197 to 2.32279

NOTE 8: FINANCIAL HIGHLIGHTS


The range of total return for the six months ended June 30, 2004 and 2003 was as
follows:

                                           SIX MONTHS ENDED
                                               JUNE 30,
                                    2004                     2003
                                ------------             ------------
                                              (Unaudited)

TOTAL RETURN                   3.00% to 3.46%           -0.39% to 0.06%


                                       7
<PAGE>

           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>

                                                                                  JUNE 30, 2004
                                                                                   (UNAUDITED)       DECEMBER 31, 2003
                                                                          ------------------------ ---------------------
ASSETS
<S>                                                                              <C>                  <C>
REAL ESTATE INVESTMENTS -- At estimated market value:
   Real estate and improvements
      (cost: 6/30/2004-- $229,245,445; 12/31/2003-- $223,943,870)                 $208,152,286         $201,144,866
   Real estate partnership (cost: 6/30/2004-- $10,916,792;
      12/31/2003-- $10,609,273)                                                     10,856,076            8,721,319
   Mortgage and other loans receivable (cost: 6/30/2004-- $948,751;
      12/31/2003-- $0)                                                                 948,751                   --
   Other real estate investments (cost: 6/30/2004-- $4,392,901;
      12/31/2003-- $500,000)                                                         4,392,901              500,000
                                                                           -------------------  -------------------
        Total real estate investments                                              224,350,014          210,366,185
   CASH AND CASH EQUIVALENTS                                                        12,663,952           18,901,814
   OTHER ASSETS, NET                                                                 6,136,549            6,359,853
                                                                           -------------------  -------------------
        Total assets                                                              $243,150,515         $235,627,852
                                                                           ===================  ===================

LIABILITIES
MORTGAGE LOANS PAYABLE                                                              43,581,522           43,934,494
ACCOUNTS PAYABLE AND ACCRUED EXPENSES                                                3,868,882            2,998,752
DUE TO AFFILIATES                                                                      771,639            1,017,932
OTHER LIABILITIES                                                                      940,399              947,110
MINORITY INTEREST                                                                    5,733,026            5,086,503
                                                                           -------------------  -------------------
        Total liabilities                                                           54,895,468           53,984,791
                                                                           -------------------  -------------------
COMMITMENTS AND CONTINGENCIES
PARTNERS' EQUITY                                                                   188,255,047          181,643,061
                                                                           -------------------  -------------------
        Total liabilities and partners' equity                                    $243,150,515         $235,627,852
                                                                           ===================  ===================
NUMBER OF SHARES OUTSTANDING AT END OF PERIOD                                        7,366,835            7,366,835
                                                                           ===================  ===================
SHARE VALUE AT END OF PERIOD                                                            $25.55               $24.66
                                                                           ===================  ===================
</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 OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                            SIX MONTHS ENDED                  THREE MONTHS ENDED
                                                                JUNE 30,                           JUNE 30,
                                                  ----------------------------------    --------------------------------
                                                         2004              2003              2004             2003
                                                  ----------------  ----------------    --------------   ---------------
<S>                                                   <C>              <C>                <C>               <C>
INVESTMENT INCOME:
  Revenue from real estate and improvements.          $13,304,134      $12,132,657        $6,819,620        $5,908,155
  Equity in income of real estate partnership             266,681          304,963           100,794           144,227
  Interest and equity income on mortgage loans
    receivable and other loans receivable...               28,220               --            20,094                --
  Income from other real estate investments.              142,901               --           111,257                --
  Interest on short-term investments........               63,579          127,222            20,401            61,808
  Other income..............................               51,000               --                --                --
                                                  ----------------  ----------------    --------------   ---------------
      Total investment income...............           13,856,515       12,564,842         7,072,166         6,114,190
                                                  ----------------  ----------------    --------------   ---------------
INVESTMENT EXPENSES:
  Operating.................................            3,525,123        2,318,871         1,863,869         1,004,299
  Investment management fee.................            1,283,932        1,186,192           648,231           608,606
  Real estate taxes.........................            1,461,055        1,332,764           739,021           664,973
  Administrative............................            2,583,490        1,618,904         1,366,826           813,759
  Interest expense..........................            1,243,290        1,159,839           648,215           578,571
  Minority interest.........................               93,576          132,200            62,019             4,151
                                                  ----------------  ----------------    --------------   ---------------
      Total investment expenses.............           10,190,466        7,748,770         5,328,181         3,674,359
                                                  ----------------  ----------------    --------------   ---------------
NET INVESTMENT INCOME.......................            3,666,049        4,816,072         1,743,985         2,439,831
                                                  ----------------  ----------------    --------------   ---------------
REALIZED AND UNREALIZED GAIN (LOSS)
  ON REAL ESTATE INVESTMENTS:
Net proceeds from real estate investments sold                 --        5,689,488                --                --
  Less: Cost of real estate investments sold                   --        6,620,263                --                --
        Realization of prior periods'
        unrealized gain (loss) on real estate
        investments sold                                       --       (1,396,836)               --                --
                                                  ----------------  ----------------    --------------   ---------------
  Net gain (loss) realized on real estate
    investments sold........................                   --          466,061                --                --
                                                  ----------------  ----------------    --------------   ---------------
  Change in unrealized gain (loss) on real
    estate investments......................            3,533,083       (5,883,852)        3,721,120        (1,617,269)
  Less: Minority interest in unrealized
    gain (loss) on real estate investments..              587,146       (1,030,362)          214,083        (1,006,255)
                                                  ----------------  ----------------    --------------   ---------------
Net unrealized gain (loss) on real
  estate investments........................            2,945,937       (4,853,490)        3,507,037          (611,014)
                                                  ----------------  ----------------    --------------   ---------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
  ON REAL ESTATE INVESTMENTS................            2,945,937       (4,387,429)        3,507,037          (611,014)
                                                  ----------------  ----------------    --------------   ---------------
INCREASE (DECREASE) IN NET ASSETS
  RESULTING FROM OPERATIONS.................          $ 6,611,986      $   428,643        $5,251,022        $1,828,817
                                                  ================  ================    ==============   ===============
</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 CHANGES IN NET ASSETS
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                                       SIX MONTHS ENDED JUNE 30,
                                                                                      2004                 2003
                                                                                --------------        -------------
<S>                                                                               <C>                  <C>
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS:
   Net investment income..................................................        $  3,666,049         $  4,816,072
   Net gain (loss) realized on real estate investments sold...............                  --              466,061
   Net unrealized gain (loss) from real estate investments................           2,945,937           (4,853,490)
                                                                                --------------        -------------
      Increase (decrease) in net assets resulting from operations.........           6,611,986              428,643
                                                                                --------------        -------------
INCREASE (DECREASE) IN NET ASSETS.........................................           6,611,986              428,643
NET ASSETS--Beginning of period............................................        181,643,061          184,353,506
                                                                                --------------        -------------
NET ASSETS--End of period..................................................       $188,255,047         $184,782,149
                                                                                ==============        =============
</TABLE>

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


                                       10
<PAGE>

           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                   SIX MONTHS           SIX MONTHS
                                                                                      ENDED                ENDED
                                                                                  JUNE 30, 2004        JUNE 30, 2003
                                                                                ----------------      ---------------
<S>                                                                                <C>                    <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net increase (decrease) in net assets resulting from operations                 $ 6,611,986          $   428,643
   Adjustments to reconcile net increase (decrease) in net assets
      to net cash flows from operating activities:
        Net realized and unrealized (gain) loss on investments                      (2,945,937)           4,387,429
        Distributions in excess of (less than) equity in income of real
          estate partnership operations                                                (62,493)             644,015
        Minority interest from operating activities                                     93,576              132,200
        (Increase) decrease in accrued interest included in mortgage
          and other loans receivable                                                   (28,220)                  --
        (Increase) decrease in accrued interest included in other real
          estate investments                                                          (142,901)                  --
        Bad debt expense                                                               217,271               60,216
        (Increase) decrease in:
          Other assets                                                                   6,033               89,160
        Increase (decrease) in:
          Accounts payable and accrued expenses                                        870,130             (242,810)
          Due to affiliates                                                           (246,293)              32,511
          Other liabilities                                                             (6,711)              25,133
                                                                                   -----------          -----------
   Net cash flows from (used in) operating activities                                4,366,441            5,556,497
                                                                                   -----------          -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Net proceeds from real estate investments sold                                           --            5,689,488
   Additions to real estate and improvements                                        (5,301,575)          (2,705,215)
   Contribution to real estate partnership                                            (245,026)            (871,630)
   Origination of mortgage and other loans receivable                                 (920,531)                  --
   Origination of other real estate investments                                     (3,750,000)                  --
                                                                                   -----------          -----------
   Net cash flows from (used in) investing activities                              (10,217,132)           2,112,643
                                                                                   -----------          -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Principal payments on mortgage loan payable                                        (352,972)            (435,475)
   Proceeds from mortgage loan payable                                                      --            8,750,000
   Distributions to minority interest partners                                         (34,199)          (2,227,226)
   Contributions from minority interest partners                                            --                  466
                                                                                   -----------          -----------
   Net cash flows from (used in) financing activities                                 (387,171)           6,087,765
                                                                                   -----------          -----------

   NET CHANGE IN CASH AND CASH EQUIVALENTS                                          (6,237,862)          13,756,905

   CASH AND CASH EQUIVALENTS--Beginning of period                                   18,901,814           18,591,149
                                                                                   -----------          -----------

   CASH AND CASH EQUIVALENTS--End of period                                        $12,663,952          $32,348,054
                                                                                   -----------          -----------

   SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
   Cash paid during the period for interest                                        $ 1,254,833          $ 1,077,240
                                                                                   ===========          ===========
</TABLE>

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


                                       11
<PAGE>

           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                      CONSOLIDATED SCHEDULES OF INVESTMENTS

<TABLE>
<CAPTION>

                                                    TOTAL
                                                   RENTABLE
                                                  SQUARE FEET        JUNE 30, 2004
                                                     UNLESS            (UNAUDITED)              DECEMBER 31, 2003
                                                   OTHERWISE    -------------------------   --------------------------
                                                   INDICATED                 ESTIMATED                     ESTIMATED
PROPERTY NAME          OWNERSHIP    CITY, STATE    (UNAUDITED)    COST      MARKET VALUE       COST       MARKET VALUE
-------------         -----------  -------------   -----------  --------    ------------    -----------    -----------
<S>                     <C>      <C>               <C>        <C>          <C>            <C>             <C>
REAL ESTATE INVESTMENTS

OFFICES
750 Warrenville           WO         Lisle, IL       103,193  $ 23,025,884  $ 10,008,032   $ 23,023,835   $ 12,110,725
Oakbrook Terrace          WO       Oakbrook, IL      123,734    14,743,140     9,710,789     14,619,120     10,097,932
Summit @ Cornell Oaks     WO      Beaverton , OR     72,109     11,890,209    10,000,005     11,890,209     10,000,005
Westpark                  WO       Brentwood, TN     97,199     10,544,662     9,620,935     10,423,727      9,239,260
Financial Plaza           WO       Brentwood, TN     95,768     12,184,402    10,207,829      9,837,482      6,700,041

----------------------------------------------------------------------------------------------------------------------
                          Offices % as of 6/30/04      26%      72,388,297    49,547,590     69,794,373     48,147,963
APARTMENTS
Brookwood Apartments      WO        Atlanta, GA     240 Units   16,070,299    17,564,046     15,781,263     17,000,000
Dunhill Trace Apartments  WO        Raleigh, NC     250 Units   16,067,692    18,330,350     16,010,326     17,665,000
Riverbend Apartments      CJV    Jacksonville, FL   458 Units   19,996,542    22,400,000     19,946,920     22,400,000
SIMA Apartments           CJV    Gresham/Salem, OR  493 Units   19,299,442    18,175,000     19,281,738     17,975,000

----------------------------------------------------------------------------------------------------------------------
                       Apartments % as of 6/30/04      40%      71,433,975    76,469,396     71,020,247     75,040,000
RETAIL
King's Market             WO       Rosewell, GA      314,358    33,143,064    23,506,113     33,102,401     23,539,665
Hampton Towne Center      WO        Hampton, VA      174,540    18,031,494    20,605,576     18,013,068     20,000,000
White Marlin Mall         CJV     Ocean City, MD     186,016    15,181,229    19,500,000     13,198,649     15,900,000
Kansas City Portfolio     EJV   Kansas City, KS;MO   487,660    10,916,792    10,856,076     10,609,273      8,721,319

----------------------------------------------------------------------------------------------------------------------
                           Retail % as of 6/30/04      40%      77,272,579    74,467,765     74,923,391     68,160,984
INDUSTRIAL
Smith Road                WO        Aurora, CO       277,930    10,908,064    10,623,611     10,806,403     10,508,509

----------------------------------------------------------------------------------------------------------------------
                       Industrial % as of 6/30/04      6%       10,908,064    10,623,611     10,806,403     10,508,509
HOTEL
Portland Crown Plaza      CJV     Lake Oswego, OR   161 Rooms    8,159,322     7,900,000      8,008,729      8,008,729

----------------------------------------------------------------------------------------------------------------------
                            Hotel % as of 6/30/04      4%        8,159,322     7,900,000      8,008,729      8,008,729
MORTGAGE AND OTHER LOANS RECEIVABLE
Westminster West          MD      Westminster, MD                  948,751       948,751             --             --

----------------------------------------------------------------------------------------------------------------------
Mortgage and Other Loans Receivable % as of 6/30/04    1%          948,751       948,751             --             --
OTHER REAL ESTATE INVESTMENTS
Westminster East          NR      Westminster, MD                4,392,901     4,392,901        500,000        500,000

----------------------------------------------------------------------------------------------------------------------
    Other Real Estate Investments % as of 6/30/04      2%        4,392,901     4,392,901        500,000        500,000

TOTAL REAL ESTATE INVESTMENTS AS A PERCENTAGE OF
NET ASSETS AS OF 6/30/04                              119%    $245,503,889  $224,350,014   $235,053,143   $210,366,185
                                                      ====    ============  ============   ============   ============
</TABLE>

WO -- Wholly Owned Investment
CJV -- Consolidated Joint Venture
EJV -- Joint Venture Investment accounted for under the equity method NR -- Note
Receivable MD -- Mezzanine Debt

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


                                       12
<PAGE>

           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                      CONSOLIDATED SCHEDULES OF INVESTMENTS

<TABLE>
<CAPTION>
                                                                            JUNE 30, 2004
                                                                              (UNAUDITED)         DECEMBER 31, 2003
                                                                         ---------------------- ----------------------
                                                                FACE                 ESTIMATED              ESTIMATED
                                                               AMOUNT      COST    MARKET VALUE    COST   MARKET VALUE
                                                              -------   ---------- ------------ --------- ------------
<S>                                                         <C>         <C>        <C>          <C>         <C>
CASH AND CASH EQUIVALENTS--PERCENTAGE OF NET ASSETS........                                6.7%                   10.4%
Federal Home Loan Bank, 1.22%, July 1, 2004...............  $ 4,902,000$ 4,901,837 $ 4,901,837 $        -- $        --
Federal Home Loan Mortgage Corp., 1.20%, July 15, 2004....    2,354,000  2,368,665   2,368,665          --          --
Federal Home Loan Mortgage Corp., 1.14%, July 15, 2004....    3,710,000  3,720,166   3,720,166          --          --
Federal National Mortgage Assoc., 1.06%, February 4, 2004.    5,974,000         --          --   5,967,907   5,967,907
Federal Home Loan Mortgage Corp., 0.88%, January 2, 2004..   12,331,000         --          --  12,330,520  12,330,520
                                                                        ---------- ----------- ----------- -----------
TOTAL CASH EQUIVALENTS....................................              10,990,668  10,990,668  18,298,427  18,298,427
CASH  ....................................................               1,673,284   1,673,284     603,387     603,387
                                                                        ---------- ----------- ----------- -----------
TOTAL CASH AND CASH EQUIVALENTS...........................             $12,663,952 $12,663,952 $18,901,814 $18,901,814
                                                                       =========== =========== =========== ===========
</TABLE>

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


                                       13
<PAGE>

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF

             PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                             JUNE 30, 2004 AND 2003

                                   (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, 2004 are
not  necessarily  indicative  of the results  that may be expected  for the year
ended  December  31,  2004.  For  further  information,  refer to the  financial
statements and notes thereto included in each Partner's December 31, 2003 Annual
Report on Form 10K.

Real estate investments are reported at their estimated fair market values.

FASB Interpretation No. 46, "Consolidation of Variable Interest Entities", ("FIN
46") was  issued in  January  2003.  In  December  2003,  FASB  issued a revised
interpretation of FIN 46 ("FIN 46-R"),  which supersedes FIN 46. FIN 46-R defers
the effective  date for applying the  provisions  of FIN 46 for those  companies
currently  accounting for their  investments in accordance  with the AICPA Audit
and Accounting Guide, "Audits of Investment  Companies" ("the Audit Guide"). The
FASB is currently  considering  modifying  FIN 46-R to provide an exception  for
companies  that apply the Audit Guide.  The  Prudential  Variable  Contract Real
Property  Partnership  ("Partnership") is awaiting the final  determination from
the  FASB in  order  to  evaluate  the  extent  in  which,  if any,  its  equity
investments may need to be consolidated as a result of this FIN 46-R.

NOTE 2: COMMITMENTS AND CONTINGENCIES


The  Partnership is subject to various legal  proceedings  and claims arising in
the  ordinary  course of  business.  These  matters  are  generally  covered  by
insurance.  In the  opinion  of  Prudential's  management,  the  outcome of such
matters will not have a significant effect on the Partnership.

NOTE 3: RELATED PARTY TRANSACTIONS


Pursuant to an investment management agreement, Prudential Investment Management
("PIM") charges the Partnership a daily  investment  management fee at an annual
rate of 1.25% of the average daily gross asset valuation of the Partnership. For
the six months ended June 30, 2004 and 2003 investment  management fees incurred
by the Partnership  were $1,283,932 and $1,186,192  respectively.  For the three
months ended June 30, 2004 and 2003  investment  management fees incurred by the
Partnership were $648,231 and $608,606 respectively.

The Partnership also reimburses PIM for certain administrative services rendered
by PIM.  The amounts  incurred  for the six months  ended June 30, 2004 and 2003
were $73,815 and $58,315  respectively,  and are  classified  as  administrative
expense in the Consolidated  Statements of Operations.  Administrative  services
incurred by the  Partnership  for the three  months ended June 30, 2004 and 2003
were $44,657 and $29,157 respectively.


                                       14
<PAGE>

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF

             PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                             JUNE 30, 2004 AND 2003

                                   (UNAUDITED)

NOTE 4: FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
                                                                        FOR THE SIX MONTHS ENDED JUNE 30,
                                                           --------------------------------------------------------
                                                               2004        2003       2002        2001        2000
                                                           ---------   ---------  ---------   ---------   ---------
<S>                                                          <C>         <C>        <C>         <C>         <C>
PER SHARE(UNIT) OPERATING PERFORMANCE:
Net Asset Value, beginning of period                         $24.66      $24.11     $23.82      $22.74      $20.86
                                                           ---------   ---------  ---------   ---------   ---------
INCOME FROM INVESTMENT OPERATIONS:
Investment income, before management fee                       0.67        0.79       0.83        0.82        0.80
Management fee                                                (0.17)      (0.16)     (0.15)      (0.15)      (0.14)
Net realized and unrealized gain (loss) on investments         0.39       (0.57)     (0.87)       0.36       (0.04)
                                                           ---------   ---------  ---------   ---------   ---------
   Net Increase in Net Assets Resulting from Operations        0.89        0.06      (0.19)       1.03        0.62
                                                           ---------   ---------  ---------   ---------   ---------
NET ASSET VALUE, END OF PERIOD                               $25.55      $24.17     $23.63      $23.77      $21.48
                                                           =========   =========  =========   =========   =========

TOTAL RETURN, BEFORE MANAGEMENT FEE (a):                       4.37%       0.88%     (0.17)%      5.20%       3.66%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (in millions)                        $188        $185       $197        $216        $209
   Ratios to average net assets (b):
      Management Fee                                           0.70%       0.65%      0.63%       0.65%       0.64%
      Investment Income, before Management Fee                 2.71%       3.27%      3.55%       3.63%       3.84%
</TABLE>


(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.


                                       15
<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 included elsewhere
herein.

(A) LIQUIDITY AND CAPITAL RESOURCES


As of June 30, 2004, the Partnership's liquid assets consisting of cash and cash
equivalents were $12.7 million, a decrease of $6.2 million from $18.9 million at
December 31, 2003. The change in the  Partnership's  cash position was primarily
due to the following  three items:  additional  fundings of $3.75 million to the
note  receivable  associated  with  a  retail  center  located  in  Westminster,
Maryland; $2.6 million primarily associated with leasing related costs at one of
the  office  buildings  located  in  Brentwood,   Tennessee,  and  $1.4  million
associated  with the  development  of the retail  center  located in Ocean City,
Maryland. Offsetting these outflows was net cash flow from property operations.

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, 2004, 5.2% of
the Partnership's total assets consisted of cash and short-term obligations.

During the first six months of 2004, the Partnership  spent  approximately  $5.3
million on capital  improvements to wholly owned and consolidated  joint venture
properties. Approximately $2.3 million was associated with leasing related costs
and tenant  improvements  at one of the office  buildings  located in Brentwood,
Tennessee.  Of the remaining $3.0 million  balance,  $2.0 million was associated
with the development of the retail center located in Ocean City,  Maryland.  The
Partnership  also  increased  its  investment  in real  estate  partnerships  by
approximately $0.3 million in connection with the redevelopment and expansion of
the retail centers located in Kansas City, Missouri.

On March  24,  2004,  the  Partnership  provided  short-term  financing  for the
acquisition of a retail center located in Westminster, Maryland in the amount of
$3.75 million. The loan will be repaid to the Partnership together with interest
at 10.5% upon obtaining third party construction financing.

(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, 2004 and
2003.


                                       16
<PAGE>

JUNE 30, 2004 VS. JUNE 30, 2003


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,
                                                      ----------------------------         ---------------------------
                                                         2004              2003              2004             2003
                                                      -----------      -----------         ---------        ----------
<S>                                                     <C>            <C>                 <C>               <C>
NET INVESTMENT INCOME:
Office properties...........................          $   981,699      $ 1,085,786        $  478,904        $  439,086
Apartment complexes.........................            1,352,780        2,061,907           611,230         1,187,222
Retail properties...........................            2,290,760        2,370,864         1,132,508         1,228,141
Industrial properties.......................              320,701          424,218           172,915           198,367
Hotel property..............................              175,683               --           115,952                --
Other (including interest income,
   investment mgt fee, etc.)................           (1,455,574)      (1,126,703)         (767,524)         (612,985)
                                                      -----------      -----------         ---------        ----------
TOTAL NET INVESTMENT INCOME.................          $ 3,666,049      $ 4,816,072        $1,743,985        $2,439,831
                                                      ===========      ===========        ==========        ==========
NET UNREALIZED GAIN (LOSS) ON
   REAL ESTATE INVESTMENTS:
Office properties...........................          $(1,194,297)     $(4,606,028)        $ 885,313        $ (660,192)
Apartment complexes.........................            1,000,460         (595,127)        1,085,535          (661,411)
Retail properties...........................            3,242,461        1,055,629         1,679,353           710,589
Industrial properties.......................               13,441         (707,964)           21,947                --
Hotel property..............................             (116,128)              --          (165,111)               --
                                                      -----------      -----------         ---------        ----------
TOTAL NET UNREALIZED GAIN (LOSS) ON
   REAL ESTATE INVESTMENTS..................            2,945,937       (4,853,490)        3,507,037          (611,014)
                                                      -----------      -----------         ---------        ----------
NET REALIZED GAIN (LOSS) ON
   REAL ESTATE INVESTMENTS:
Industrial properties.......................                   --          466,061                --                --
                                                      -----------      -----------         ---------        ----------
TOTAL NET REALIZED GAIN (LOSS) ON
   REAL ESTATE INVESTMENTS..................                   --          466,061                --                --
                                                      -----------      -----------         ---------        ----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
   REAL ESTATE INVESTMENTS..................          $ 2,945,937      $(4,387,429)       $3,507,037        $ (611,014)
                                                      ===========      ===========        ==========        ==========
</TABLE>

                         NET INVESTMENT INCOME OVERVIEW


The  Partnership's  net investment income for the six months ended June 30, 2004
was $3.7 million,  a decrease of $1.1 million from $4.8 million when compared to
the  corresponding  period in 2003. The  Partnership's net investment income for
the quarter  ended June 30, 2004 was $1.7  million,  a decrease of $0.7  million
from $2.4  million  when  compared  to the  corresponding  period  in 2003.  The
decrease  is  primarily  due to soft  market  conditions  and  increased  rental
concessions within the apartment portfolio.

Revenue from real estate and  improvements  increased $0.9 million in the second
quarter  of 2004  when  compared  to the same  period  in  2003.  Administrative
expenses increased $1.0 million in the first six months of 2004 when compared to
the same period in 2003.  Administrative expenses also increased $0.6 million in
the second  quarter of 2004 when compared to the same period in 2003.  Operating
expenses increased $1.2 million in the first six months of 2004 when compared to
the same period in 2003.  Operating  expenses also increased $0.9 million in the
second quarter of 2004 when compared to the same period in 2003. These increases
were  all  primarily  due  to the  Partnership's  acquisition  of a  controlling
interest in a 161-room hotel located in Lake Oswego, Oregon in late 2003.


                                       17
<PAGE>

                               VALUATION OVERVIEW


The  Partnership  experienced a net unrealized  gain of $2.9 million for the six
months  ended June 30, 2004  compared to a net  unrealized  loss of $4.9 million
during the  corresponding  period in 2003.  The  Partnership  experienced  a net
unrealized  gain of $3.5  million  for the  three  months  ended  June 30,  2004
compared  to a net  unrealized  loss of $0.6  million  during the  corresponding
period in 2003.  The  unrealized  gain  during  the first six months of 2004 was
primarily  attributable to the retail and apartment  sectors.  The retail sector
recorded  an  unrealized   gain   totaling   $3.2  million,   primarily  due  to
strengthening  market  fundamentals,  renovation and  re-leasing  efforts at the
retail  centers  located in Kansas  City,  Kansas and  Missouri  and  pre-leased
expansion at the center located in Ocean City, Maryland. The apartment portfolio
also recorded an unrealized gain of $1.0 million,  primarily due to increases in
rental  rates at the  apartment  complex  located in  Raleigh,  North  Carolina.
Offsetting  these  gains  was the  loss in value in the  office  sector  of $1.2
million  primarily  due to  decreases  in  occupancy  coupled  with soft  market
conditions that have resulted in reductions in market rental rates and increased
leasing  costs.  The  unrealized  gain  during  the  second  quarter of 2004 was
primarily  experienced  in  the  retail,  apartment,  and  office  sectors.  The
increases  for the retail and  apartment  sectors are due to the same reasons as
noted above.  The office  sector  experienced  value gains mainly due to capital
improvements  and 100% lease up at the  office  complex  located  in  Brentwood,
Tennessee.

OFFICE PORTFOLIO

<TABLE>
<CAPTION>
                                   NET           NET
                               INVESTMENT    INVESTMENT     UNREALIZED     UNREALIZED
                                 INCOME        INCOME       GAIN/(LOSS)    GAIN/(LOSS)    OCCUPANCY      OCCUPANCY
PROPERTY                        06/30/04      06/30/03       06/30/04       06/30/03      06/30/04       06/30/03
--------                        --------      --------       --------       --------      --------       --------
<S>                             <C>           <C>          <C>            <C>                <C>            <C>
YEAR TO DATE
Lisle, IL..................     $ 184,040    $  509,643    $(2,104,741)   $(1,355,000)       44%            44%
Brentwood, TN..............       399,601       306,981        260,740       (751,796)       83%            78%
Oakbrook Terrace, IL.......       122,627       (22,763)      (511,164)    (1,378,642)       41%            31%
Beaverton, OR..............       453,390       494,610             --       (400,000)       75%            81%
Brentwood, TN..............      (177,959)     (202,685)     1,160,868       (720,590)      100%             0%
                                ---------    ----------    -----------    -----------
                                $ 981,699    $1,085,786    $(1,194,297)   $(4,606,028)
                                ---------    ----------    -----------    -----------
QUARTER TO DATE
Lisle, IL..................     $  90,839    $  122,560    $        --    $        --
Brentwood, TN..............       199,316       185,984        300,000       (399,964)
Oakbrook Terrace, IL.......        58,992       (14,516)      (141,279)       (48,933)
Beaverton, OR..............       217,086       246,541             --       (200,000)
Brentwood, TN..............       (87,329)     (101,483)       726,592        (11,295)
                                ---------    ----------    -----------    -----------
                                $ 478,904    $  439,086    $   885,313    $  (660,192)
                                ---------    ----------    -----------    -----------
</TABLE>

                              NET INVESTMENT INCOME


Net investment  income from property  operations for the office sector decreased
approximately $0.1 million, or 9.6%, for the six months ended June 30, 2004 when
compared to the  corresponding  period in 2003.  The  decrease for the first six
months of 2004 was primarily due to increased vacancy resulting from weak market
fundamentals.

                              UNREALIZED GAIN/LOSS


The five office properties owned by the Partnership experienced a net unrealized
loss of  approximately  $1.2  million  during the first six months of 2004.  The
losses were experienced at the office  complexes  located in Lisle and Oakbrook,
Illinois  primarily  due to lower  market  rents and  increased  lease up costs.
Partially  offsetting  these  losses were the gains  experienced  at both of the
office complexes in Brentwood,  Tennessee primarily due to capital  improvements
and increased occupancy.

The  five  office   properties  had   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


                                       18
<PAGE>

$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  experienced a net unrealized gain of  approximately
$0.9 million  during the second  quarter of 2004.  The gain is primarily  due to
capital   improvements  and  leasing  at  the  office  complexes  in  Brentwood,
Tennessee.

The  five  office   properties  had   experienced  a  net  unrealized   loss  of
approximately  $0.7 million  during the second quarter of 2003. The loss was due
to softening market conditions and a slight decrease in average market rent.

As of June 30, 2004 all vacant spaces were being marketed.

APARTMENT COMPLEXES

<TABLE>
<CAPTION>
                                   NET           NET
                               INVESTMENT    INVESTMENT     UNREALIZED     UNREALIZED
                                 INCOME        INCOME       GAIN/(LOSS)    GAIN/(LOSS)    OCCUPANCY      OCCUPANCY
PROPERTY                        06/30/04      06/30/03       06/30/04       06/30/03      06/30/04       06/30/03
--------                        --------      --------       --------       --------      --------       --------
<S>                             <C>           <C>            <C>            <C>              <C>            <C>
YEAR TO DATE
Atlanta, GA................    $  420,536    $  442,515     $  275,009     $  (62,026)       91%            92%
Raleigh, NC................       294,903       444,574        607,985         (2,998)       94%            95%
Jacksonville, FL...........       519,311       641,823        (64,829)        (6,996)       95%            91%
Gresham/Salem, OR..........       118,030       532,995        182,295       (523,107)       86%            88%
                               ----------    ----------     ----------     ----------
                               $1,352,780    $2,061,907     $1,000,460     $ (595,127)
                               ----------    ----------     ----------     ----------
QUARTER TO DATE
Atlanta, GA................    $  213,167    $  199,466     $  (14,991)    $  (33,224)
Raleigh, NC................       147,211       225,453        672,985             --
Jacksonville, FL...........       245,694       374,588        (36,829)      (137,706)
Gresham/Salem, OR..........         5,158       387,715        464,370       (490,481)
                               ----------    ----------     ----------     ----------
                               $  611,230    $1,187,222     $1,085,535     $ (661,411)
                               ----------    ----------     ----------     ----------
</TABLE>

                              NET INVESTMENT INCOME


Net investment income from property operations for the apartment sector was $1.4
million for the six months ended June 30, 2004, a decrease of $0.7 million, when
compared  to the  corresponding  period  in 2003.  Net  investment  income  from
property  operations  for the  apartment  sector was $0.6  million for the three
months  ended June 30, 2004, a decrease of $0.6  million,  when  compared to the
corresponding  period  in 2003.  The  decreases  were  mainly  due to:  mortgage
interest  incurred for the complex  located in Raleigh,  North Carolina that was
not  applicable  during the first six  months of 2003;  soft  market  conditions
affect the apartment  complexes  located in Gresham/Salem,  Oregon;  and capital
improvements  at the  Jacksonville,  FL complex  that were not  reflected  as an
increase in market value.

                              UNREALIZED GAIN/LOSS


The apartment  complexes owned by the  Partnership  experienced a net unrealized
gain of $1.0  million for the six months  ended June 30, 2004  compared to a net
unrealized  loss of $0.6  million for the six months  ended June 30,  2003.  The
unrealized  gain for the first six months of 2004 was primarily due to increases
in rental rates at the  apartment  complex  located in Raleigh,  North  Carolina
coupled  with  unrealized  gain at the  apartment  complex  located in  Atlanta,
Georgia due to decreased projected expenses. The unrealized loss of $0.6 million
in the  first  half of 2003  was  mainly  attributable  to  increased  projected
operating expenses at the apartment complexes located in Gresham/Salem, Oregon.

The apartment  complexes  experienced a net unrealized  gain of $1.1 million for
the  quarter  ended June 30,  2004  compared  to a net  unrealized  loss of $0.7
million for the quarter ended June 30, 2003. The unrealized  gain for the second
quarter of 2004 was  primarily  due to increases  in market  rental rates at the
apartment  complex  located in Raleigh,  North Carolina  coupled with unrealized
gains at the apartment complexes located


                                       19
<PAGE>

in Gresham/Salem,  Oregon due to decreased  capitalization rates used in valuing
properties of this type. The unrealized loss for quarter-to-date 2003 was mainly
attributable  to  increased   projected  operating  expenses  at  the  apartment
complexes located in Gresham/Salem, Oregon.

As of June 30, 2004, all available vacant units were being marketed.

RETAIL PROPERTIES

<TABLE>
<CAPTION>
                                   NET           NET
                               INVESTMENT    INVESTMENT     UNREALIZED     UNREALIZED
                                 INCOME        INCOME       GAIN/(LOSS)    GAIN/(LOSS)    OCCUPANCY      OCCUPANCY
PROPERTY                        06/30/04      06/30/03       06/30/04       06/30/03      06/30/04       06/30/03
--------                        --------      --------       --------       --------      --------       --------
<S>                             <C>          <C>             <C>            <C>              <C>            <C>
YEAR TO DATE
Roswell, GA................    $  784,360    $1,342,491     $  (74,215)    $  449,452        74%            93%
Kansas City, KS; MO........       261,406       304,963      1,827,239       (569,690)       87%            87%
Hampton, VA ...............       611,260       488,680        587,150        566,617       100%           100%
Ocean City, MD.............       411,613       234,730        902,287        609,250        99%            97%
Westminster, MD*...........       142,901           N/A             --            N/A       N/A            N/A
Westminster, MD**..........        79,220           N/A             --            N/A       N/A            N/A
                               ----------    ----------     ----------     ----------
                               $2,290,760    $2,370,864     $3,242,461     $1,055,629
                               ----------    ----------     ----------     ----------
QUARTER TO DATE
Roswell, GA................    $  357,942    $  652,273     $  (34,505)    $  (17,500)
Kansas City, KS; MO........       100,794       144,227      1,083,231       (262,341)
Hampton, VA ...............       307,179       270,452        301,650        566,617
Ocean City, MD.............       235,242       161,189        328,977        423,813
Westminster, MD*...........       111,257           N/A             --            N/A
Westminster, MD**..........        20,094           N/A             --            N/A
                               ----------    ----------     ----------     ----------
                               $1,132,508    $1,228,141     $1,679,353     $  710,589
                               ----------    ----------     ----------     ----------
</TABLE>

* Note Receivable (Acquired October 2003)
**Mortgage Loan Receivable (Acquired January 2004)

                              NET INVESTMENT INCOME


Net  investment  income  for  the  Partnership's   retail  properties  decreased
approximately $0.1 million, for the six months ended June 30, 2004 when compared
to the corresponding period in 2003. Net investment income for the Partnership's
retail  properties  also  decreased  approximately  $0.1 million,  for the three
months ended June 30, 2004 when  compared to the  corresponding  period in 2003.
While net  investment  income was  essentially  the same for both  periods,  the
properties within the retail portfolio  contributed different amounts during the
respective periods. Increases in 2004 were due to the expanded center located in
Ocean  City,  Maryland  and the  acquisition  of the two  Westminster,  Maryland
investments.  It should  also be noted  that 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.  Offsetting these increases was a
substantial  decrease in net investment income from the retail center located in
Roswell,  Georgia,  which  experienced  increased  vacancy  due to a major lease
termination in late 2003.

                              UNREALIZED GAIN/LOSS


The retail properties  experienced a net unrealized gain of $3.2 million for the
six months  ended  June 30,  2004.  The Kansas  City,  Kansas and  Missouri  and
Hampton,  Virginia retail centers experienced net unrealized gains primarily due
to strengthening  market  fundamentals.  The Ocean City,  Maryland retail center
experienced a gain due to a pre-leased expansion.

The retail properties  experienced a net unrealized gain of $1.1 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.


                                       20
<PAGE>

The retail properties  experienced a net unrealized gain of $1.7 million for the
three  months  ended  June 30,  2004.  These  unrealized  gains  were  primarily
experienced by the retail centers  located in Kansas City,  Kansas and Missouri,
Ocean City, Maryland and Hampton, Virginia for the reasons discussed previously.

The retail properties  experienced a net unrealized gain of $0.7 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
offset by the loss by the  retail  centers  located in Kansas  City,  Kansas and
Missouri for the reasons discussed previously.

As of June 30, 2004, all vacant spaces were being marketed.

INDUSTRIAL PROPERTIES

<TABLE>
<CAPTION>
                                   NET           NET        UNREALIZED/    UNREALIZED/
                               INVESTMENT    INVESTMENT      REALIZED       REALIZED
                                 INCOME        INCOME       GAIN/(LOSS)    GAIN/(LOSS)    OCCUPANCY      OCCUPANCY
PROPERTY                        06/30/04      06/30/03       06/30/04       06/30/03      06/30/04       06/30/03
--------                        --------      --------       --------       --------      --------       --------
<S>                              <C>           <C>             <C>          <C>              <C>            <C>
YEAR TO DATE
Aurora, CO.................      $319,438      $408,573        $13,441      $(707,964)       88%            84%
Bolingbrook, IL............         2,603          (146)            --             --       Sold September 2002
Salt Lake City, UT.........        (1,340)       15,791             --        466,061        Sold January 2003
                                 --------      --------        -------      ---------
                                 $320,701      $424,218        $13,441      $(241,903)
                                 --------      --------        -------      ---------
QUARTER TO DATE
Aurora, CO.................      $174,026      $207,529        $21,947      $      --
Bolingbrook, IL............            --          (146)            --             --
Salt Lake City, UT.........        (1,111)       (9,016)            --             --
                                 --------      --------        -------      ---------
                                 $172,915      $198,367        $21,947      $      --
                                 --------      --------        -------      ---------
</TABLE>

                              NET INVESTMENT INCOME


Net investment  income from property  operations  for the industrial  properties
decreased  from $0.4  million  for the six months  ended  June 30,  2003 to $0.3
million for the corresponding  period ended June 30, 2004. Net investment income
from property  operations for the industrial  properties was  substantially  the
same,  at $0.2  million,  for the  quarters  ended June 30,  2004 and 2003.  The
decrease for the six month period was due to a rental  concession given to a new
tenant at the industrial  property  located in Aurora,  Colorado and the sale of
the industrial property located in Salt Lake City, Utah during the first quarter
of 2003.

                              UNREALIZED GAIN/LOSS


The Aurora, Colorado industrial property owned by the Partnership experienced an
immaterial net  unrealized  gain for the six months ended June 30, 2004 compared
to a net unrealized loss of approximately  $0.7 million for the six months ended
June 30, 2003.

As of June 30, 2004, all vacant spaces were being marketed.

                                  REALIZED GAIN


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

HOTEL PROPERTY

<TABLE>
<CAPTION>
                                   NET           NET        UNREALIZED/    UNREALIZED/
                               INVESTMENT    INVESTMENT      REALIZED       REALIZED
                                 INCOME        INCOME       GAIN/(LOSS)    GAIN/(LOSS)    OCCUPANCY      OCCUPANCY
PROPERTY                        06/30/04      06/30/03       06/30/04       06/30/03      06/30/04       06/30/03
--------                        --------      --------       --------       --------      --------       --------
<S>                              <C>              <C>        <C>                <C>         <C>           <C>
YEAR TO DATE
Lake Oswego, OR*...........      $175,683          N/A       $(116,128)          N/A         73%          N/A
QUARTER TO DATE
Lake Oswego, OR*...........      $115,952          N/A       $(165,111)          N/A
</TABLE>

*Hotel purchased in December 2003


                                       21
<PAGE>

                              NET INVESTMENT INCOME


On December 10,  2003,  the  Partnership  acquired a  controlling  interest in a
161-room  hotel  located in Portland,  Oregon for $8.0 million.  Net  investment
income from hotel  operations was $0.2 million for the six months ended June 30,
2004. Net investment income from hotel operations was $0.1 million for the three
months ended June 30, 2004.

                              UNREALIZED GAIN/LOSS


The Lake Oswego,  Oregon hotel property owned by the  Partnership  experienced a
net unrealized  loss of $0.1 million and a net  unrealized  loss of $0.2 million
for the six months and quarter ended June 30, 2004, respectively.

OTHER


Other net investment  income  decreased $0.3 million during the six months ended
June 30, 2004 compared to the corresponding period in 2003. Other net investment
income decreased $0.2 million during the quarter ended June 30, 2004 compared to
the corresponding  period in 2003. Other net investment income includes interest
income from short-term  investments,  investment  management fees, and portfolio
level expenses.

(C) 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   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.  Actual results could differ from
those estimates.

The following sections discuss critical accounting policies applied in preparing
our consolidated 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 carried at their purchase price. Subsequently, 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,  with independent updates quarterly. The Chief Real Estate Appraiser
of Prudential  Investment Management is responsible to assure that the valuation
process provides objective and reasonable 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.

Unconsolidated 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.

Mortgage  and other loans  receivable,  which are  accounted  for as loans,  are
independently   valued  according  to  the  same  appraisal   process  as  other
investments in real estate.


                                       22
<PAGE>

Other real estate investments include notes receivable,  which are valued at the
amount due and approximate market value.

As described  above,  the estimated  market value of real estate and real estate
related  assets is  determined  through an appraisal  process  except other real
estate investments, which are determined as stated above. 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, 2004 and June 30, 2003.

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 29.88% 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, 2004:

                                          ESTIMATED MARKET
                                                VALUE           AVERAGE
                            MATURITY       (IN $ MILLIONS)   INTEREST RATE
                         ----------------------------------------------------
Cash equivalents.......    0-3 months           $12.7            1.19%


The table below discloses the Partnership's fixed rate debt as of June 30, 2004.
All 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  interest  rates by expected  maturity dates for the fixed rate
debt.

<TABLE>
<CAPTION>
DEBT (IN $ THOUSANDS),             7/1/2004-                                                                 ESTIMATED
INCLUDING CURRENT PORTION         12/31/2004   2005      2006       2007      2008   THEREAFTER     TOTAL   FAIR VALUE
-------------------------         ----------   ----      ----       ----      ----   ----------     -----   ----------
<S>                                  <C>       <C>      <C>         <C>    <C>          <C>        <C>        <C>
Average Fixed Interest Rate......    5.85%     5.83%      5.28%     5.26%     5.04%       6.75%       6.32%
Fixed Rate.......................    $366      $774     $8.479      $588   $26,091      $7,284     $43,582    $44,415
----------------------------------------------------------------------------------------------------------------------
Total Mortgage Loans Payable.....    $366      $774     $8,479      $588   $26,091      $7,284     $43,582    $44,415
----------------------------------------------------------------------------------------------------------------------
</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 Chief
Executive Officer and 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, 2004.
Based on such  evaluation,  the Chief Executive  Officer and President and Chief
Accounting  Officer have  concluded  that, as of June 30, 2004,  our  disclosure
controls  and  procedures  were  effective in timely  alerting  them to material
information  relating to us 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, 2004, 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   Certificate of Amendment of Articles of  Incorporation of Pruco Life
            Insurance  Company  of New  Jersey,  filed  as  Exhibit  A(3)(A)  to
            Post-Effective Amendment No. 12 Form S-1, Registration Statement No.
            33-20018, filed April 15, 1999 on behalf of Pruco Life of New Jersey
            Real Property Account, and incorporated herein by reference.

      3.3   Amended By-Laws of Pruco Life Insurance Company of New Jersey, filed
            as  Exhibit  A(6)(C)  to  Form  S-6,   Registration   Statement  No.
            333-85117,  filed  February  5,  1988,  and  incorporated  herein by
            reference.

      3.4   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  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.

      15. Not applicable.


                                       24
<PAGE>

      18. None.

      19. Not applicable.

      22. Not applicable.

      23. None.

      24  Not applicable.

      27. Not applicable.

      31.1  Certification  of Chief  Executive  Officer and  President  required
            pursuant to Exchange Act Rules  13a-15(e) and 15d-15(e),  as adopted
            pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

      31.2  Certification  of Chief  Accounting  Officer  required  pursuant  to
            Exchange Act Rules 13a-15(e) and 15d-15(e),  as adopted  pursuant to
            Section 302 of the Sarbanes-Oxley Act of 2002.

      32.1  Certification  of Chief  Executive  Officer and  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 13, 2004                       By:  /s/ Andrew J. Mako
        ---------------                            ---------------------
                                                     Andrew J. Mako
                                                     Chief Executive Officer and
                                                     President


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<PAGE>

EXHIBIT 31.1


                                  CERTIFICATION


I, Andrew J. Mako, certify that:

1. I have  reviewed  this  quarterly  report on Form  10-Q of Pruco  Life of New
Jersey Variable Contract Real Property Account;

2. Based on my  knowledge,  this  quarterly  report  does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not misleading with respect to the period covered by this report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information included in this report, fairly present in all material respects the
financial  condition,  results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;

4. The  registrant's  other  certifying  officer(s)  and I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:

a) Designed such disclosure  controls and procedures,  or caused such disclosure
controls and  procedures to be designed  under our  supervision,  to ensure that
material  information  relating to the  registrant,  including its  consolidated
subsidiaries, is made known to us by others within those entities,  particularly
during the period in which this report is being prepared;

b) Evaluated  the  effectiveness  of the  registrant's  disclosure  controls and
procedures and presented in this report our conclusions  about the effectiveness
of the disclosure  controls and procedures,  as of the end of the period covered
by this report based on such evaluation; and

c) Disclosed in this report any change in the registrant's internal control over
financial  reporting that occurred  during the  registrant's  most recent fiscal
quarter (the registrant's fourth fiscal quarter in the case of an annual report)
that has materially affected,  or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and

5. The registrant's other certifying  officer(s) and I have disclosed,  based on
our most recent evaluation of internal control over financial reporting,  to the
registrant's  auditors  and the audit  committee  of the  registrant's  board of
directors (or persons performing the equivalent functions):

a) All  significant  deficiencies  and  material  weaknesses  in the  design  or
operation of internal  control over  financial  reporting  which are  reasonably
likely  to  adversely  affect  the  registrant's  ability  to  record,  process,
summarize and report financial information; and

b) Any  fraud,  whether  or not  material,  that  involves  management  or other
employees who have a significant role in the registrant's  internal control over
financial reporting.

Date: August 13, 2004

/s/ Andrew J. Mako
-------------------

Andrew J. Mako
Chief Executive Officer and President


                                       27
<PAGE>

EXHIBIT 31.2


                                  CERTIFICATION


I, John Chieffo, certify that:

1. I have  reviewed  this  quarterly  report on Form  10-Q of Pruco  Life of New
Jersey Variable Contract Real Property Account;

2. Based on my  knowledge,  this  quarterly  report  does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not misleading with respect to the period covered by this report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information included in this report, fairly present in all material respects the
financial  condition,  results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;

4. The  registrant's  other  certifying  officer(s)  and I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:

a) Designed such disclosure  controls and procedures,  or caused such disclosure
controls and  procedures to be designed  under our  supervision,  to ensure that
material  information  relating to the  registrant,  including its  consolidated
subsidiaries, is made known to us by others within those entities,  particularly
during the period in which this report is being prepared;

b) Evaluated  the  effectiveness  of the  registrant's  disclosure  controls and
procedures and presented in this report our conclusions  about the effectiveness
of the disclosure  controls and procedures,  as of the end of the period covered
by this report based on such evaluation; and

c) Disclosed in this report any change in the registrant's internal control over
financial  reporting that occurred  during the  registrant's  most recent fiscal
quarter (the registrant's fourth fiscal quarter in the case of an annual report)
that has materially affected,  or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and

5. The registrant's other certifying  officer(s) and I have disclosed,  based on
our most recent evaluation of internal control over financial reporting,  to the
registrant's  auditors  and the audit  committee  of the  registrant's  board of
directors (or persons performing the equivalent functions):

a) All  significant  deficiencies  and  material  weaknesses  in the  design  or
operation of internal  control over  financial  reporting  which are  reasonably
likely  to  adversely  affect  the  registrant's  ability  to  record,  process,
summarize and report financial information; and

b) Any  fraud,  whether  or not  material,  that  involves  management  or other
employees who have a significant role in the registrant's  internal control over
financial reporting.

Date: August 13, 2004

/s/ John Chieffo
-------------------

John Chieffo
Chief Accounting Officer


                                       28
<PAGE>

EXHIBIT 32.1


                                  CERTIFICATION


Pursuant to 18 U.S.C.  Section 1350, I, Andrew J. Mako, Chief Executive  Officer
and President of Pruco Life Insurance Company of New Jersey, hereby certify that
the  accompanying  Quarterly  Report on Form 10-Q for the quarter ended June 30,
2004,  containing the financial  statements of Pruco Life of New Jersey Variable
Contract  Real  Property  Account (a  separate  account of Pruco Life  Insurance
Company of New  Jersey)  and The  Prudential  Variable  Contract  Real  Property
Partnership  (the "Report"),  fully complies with the requirements of Section 13
(a) or 15 (d) of the  Securities  Exchange Act of 1934 and that the  information
contained in the Report fairly presents, in all material respects, the financial
condition  and  results  of  operations  of Pruco  Life of New  Jersey  Variable
Contract  Real  Property  Account  and The  Prudential  Variable  Contract  Real
Property Partnership.

Date: August 13, 2004

/s/ Andrew J. Mako
-------------------

Name: Andrew J. Mako
Title: Chief Executive Officer and President

The foregoing  certification  is being  furnished  solely  pursuant to 18 U.S.C.
Section  1350 and is not  being  filed as part of the  Report  or as a  separate
disclosure document.


                                       29
<PAGE>

EXHIBIT 32.2


                                  CERTIFICATION


Pursuant to 18 U.S.C. Section 1350, I, John Chieffo, Chief Accounting Officer of
Pruco Life Insurance Company of New Jersey, hereby certify that the accompanying
Quarterly  Report on Form 10-Q for the quarter  ended June 30, 2004,  containing
the  financial  statements  of Pruco Life of New Jersey  Variable  Contract Real
Property  Account (a  separate  account of Pruco Life  Insurance  Company of New
Jersey) and The  Prudential  Variable  Contract Real Property  Partnership  (the
"Report"),  fully complies with the  requirements of Section 13 (a) or 15 (d) of
the Securities  Exchange Act of 1934 and that the  information  contained in the
Report fairly presents,  in all material respects,  the financial  condition and
results  of  operations  of Pruco  Life of New  Jersey  Variable  Contract  Real
Property Account and The Prudential Variable Contract Real Property Partnership.

Date: August 13, 2004

/s/ John Chieffo
-------------------

Name: John Chieffo
Title: Chief Accounting Officer

The foregoing  certification  is being  furnished  solely  pursuant to 18 U.S.C.
Section  1350 and is not  being  filed as part of the  Report  or as a  separate
disclosure document.


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