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 September 30, 2009

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

Commission file number 033-20018





PRUCO LIFE
INSURANCE COMPANY OF NEW JERSEY

in respect of

PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT

(Exact name of registrant as specified in its charter)







|                                                               |  |                                  
|-------------------------------------------------------------- |  | ---------------------------------
|New Jersey                                                     |  | 22-2426091                       
|(State or other jurisdiction of incorporation or organization) |  | (IRS Employer Identification No.)

213 Washington Street, Newark, New Jersey 07102-2992

(Address of principal executive offices) (Zip Code)

(973) 802-6000

(Registrants telephone number, including area code)





Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.    YES  x    NO   ̈

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files).     Yes   ̈    No   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See definitions of large accelerated filer, accelerated filer, and smaller reporting company in Rule 12b-2 of the Exchange Act.

(Check one):



|                        |  |                                                  |  |                           |  |  
|----------------------- |  | ------------------------------------------------ |  | ------------------------- |  | -
|Large accelerated filer |  |  ̈                                                |  | Accelerated filer         |  |  ̈
|                        |  |                                                  | 
|Non-accelerated filer   |  | x  (Do not check if a smaller reporting company) |  | Smaller reporting company |  |  ̈

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).    YES   ̈    NO  x









---

PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT

(Registrant)

INDEX



|                                                                    |  |                                                                                                 |  |   
|------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------- |  | --
|                                                                    |  | Page                                                                                           
|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  September 30, 2009 and December 31, 2008                             |  | 4 
|                                                                    |  | Statements of Operations  Nine and Three Months Ended September 30, 2009 and 2008              |  | 4 
|                                                                    |  | Statements of Changes in Net Assets  Nine and Three Months Ended September 30, 2009 and 2008   |  | 4 
|                                                                    |  | Notes to the Financial Statements of the Real Property Account                                  |  | 5 
|                                                                    | 
|B. THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP       |  |                                                                                                
|                                                                    |  | Consolidated Statements of Assets and Liabilities  September 30, 2009 and December 31, 2008    |  | 13
|                                                                    |  | Consolidated Statements of Operations  Nine and Three Months Ended September 30, 2009 and 2008 |  | 14
|                                                                    |  | Consolidated Statements of Changes in Net Assets  Months Ended September 30, 2009 and 2008     |  | 15
|                                                                    |  | Consolidated Statements of Cash Flows  Nine Months Ended September 30, 2009 and 2008           |  | 16
|                                                                    |  | Consolidated Schedules of Investments  September 30, 2009 and December 31, 2008                |  | 17
|                                                                    |  | Notes to Consolidated Financial Statements of the Partnership                                   |  | 19
|                                                                    |  |                                                                                                
|Item 2.                                                             |  | Managements Discussion and Analysis of Financial Condition and Results of Operations           |  | 28
|                                                                    |  |                                                                                                
|Item 3.                                                             |  | Quantitative and Qualitative Disclosures About Market Risk                                      |  | 38
|                                                                    |  |                                                                                                
|Item 4.                                                             |  | Controls and Procedures                                                                         |  | 39
|                                                                    | 
|Part II - Other Information                                         |  |                                                                                                
|                                                                    |  |                                                                                                
|Item 1A.                                                            |  | Risk Factors                                                                                    |  | 39
|                                                                    |  |                                                                                                
|Item 4.                                                             |  | Submission of Matters to a Vote of Security Holders                                             |  | 39
|                                                                    |  |                                                                                                
|Item 6.                                                             |  | Exhibits                                                                                        |  | 39
|                                                                    | 
|Signatures                                                          |  | 40                                                                                             



2



---

Forward-Looking Statement Disclosure

Certain of the statements included in this Quarterly Report on Form 10-Q, including but not limited to those in 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, should, will, shall 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,
or the Company, or the Pruco Life of New Jersey Variable Contract Real Property Account, or the Real Property Account. There can be no assurance that future developments affecting the Company and 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, among others: (1) general economic, market and political conditions, including the performance and fluctuations of fixed income, equity, real
estate and other financial markets, particularly in light of ongoing severe economic conditions and the severe stress experienced by the financial markets since the second half of 2007 (2) interest rate fluctuations; (3) reestimates of our
reserves for future policy benefits and claims; (4) differences between actual experience regarding mortality, morbidity, persistency, surrender experience, interest rates, or market returns and the assumptions we use in pricing our products,
establishing liabilities and reserves or for other purposes; (5) changes in our assumptions related to deferred policy acquisition costs and valuation of business acquired; (6) changes in our claims-paying ratings; (7) investment
losses, defaults and counterparty non-performance; (8) competition in our product lines and for personnel; (9) changes in tax law; (10) regulatory or legislative changes, including government actions in response to the stress
experienced by the financial markets; (11) adverse determinations in litigation or regulatory matters and our exposure to contingent liabilities; (12) domestic or international military actions, natural or man-made disasters including
terrorist activities or pandemic disease, or other events resulting in catastrophic loss of life; (13) ineffectiveness of risk management policies and procedures in identifying, monitoring and managing risks; and (14) changes in statutory
or U.S. GAAP accounting principles, practices or policies. As noted above, the period since the second half of 2007 has been characterized by extreme adverse market and economic conditions. The foregoing risks are even more pronounced in
these unprecedented market and economic conditions. The Company and the Real Property Account do not intend, and are under no obligation, to update any particular forward-looking statement included in this document. See Risk Factors
included in our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2009 for our discussion of certain risks relating to the operation of the Partnership and investment in our securities.



3



---

FINANCIAL STATEMENTS OF

PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT

STATEMENTS OF NET ASSETS

September 30, 2009 and December 31, 2008



|                                                                         |  |                               |           |                   |   |          
|------------------------------------------------------------------------ |  | ----------------------------- | --------- | ----------------- | - | ---------
|                                                                         |  | September 30, 2009(unaudited) |           | December 31, 2008
|                                                                         |  |                              
|ASSETS                                                                   |  |                               |           |                   |   |          
|Investment in The Prudential Variable Contract Real Property Partnership |  | $                             | 7,271,062 |                   | $ | 9,322,498
|                                                                         |  |                               |           |                   |   |          
|Net Assets                                                               |  | $                             | 7,271,062 |                   | $ | 9,322,498
|                                                                         |  |                               |           |                   |   |          
|                                                                         |  |                              
|NET ASSETS, representing:                                                |  |                               |           |                   |   |          
|Equity of contract owners                                                |  | $                             | 5,135,370 |                   | $ | 6,493,703
|Equity of Pruco Life Insurance Company of New Jersey                     |  |                               | 2,135,692 |                   |   | 2,828,795
|                                                                         |  |                               |           |                   |   |          
|                                                                         |  | $                             | 7,271,062 |                   | $ | 9,322,498
|                                                                         |  |                               |           |                   |   |          
|Units outstanding                                                        |  |                               | 3,232,925 |                   |   | 3,353,044
|                                                                         |  |                               |           |                   |   |          
|                                                                         |  |                              
|Portfolio shares held                                                    |  |                               | 282,778   |                   |   | 294,526  
|Portfolio net asset value per share                                      |  | $                             | 25.71     |                   | $ | 31.65    



|                                                                                                    |  |                    |            |   |                    |   |            |                    |  |   |                    |   |  |   |            |  
|--------------------------------------------------------------------------------------------------- |  | ------------------ | ---------- | - | ------------------ | - | ---------- | ------------------ |  | - | ------------------ | - |  | - | ---------- | -
|STATEMENTS OF OPERATIONS For the nine and three months ended September 30, 2009 and 2008            | 
|                                                                                                    |  |                    |            |  
|                                                                                                    |  | 1/1/2009-9/30/2009 |            |   | 1/1/2008-9/30/2008 |   |            | 7/1/2009-9/30/2009 |  |   | 7/1/2008-9/30/2008 |  
|                                                                                                    |  | (unaudited)        |            |   | (unaudited)        |   |            | (unaudited)        |  |   | (unaudited)        |  
|INVESTMENT INCOME                                                                                   |  |                    |            |   |                    |   |            |                    |  |   |                    |   |  |   |            |  
|Net investment income from Partnership operations                                                   |  | $                  | 228,467    |   |                    | $ | 367,686    |                    |  | $ | 75,415             |   |  | $ | 104,689    |  
|                                                                                                    |  |                    |            |   |                    |   |            |                    |  |   |                    |   |  |   |            |  
|                                                                                                    |  |                    |            |  
|EXPENSES                                                                                            |  |                    |            |   |                    |   |            |                    |  |   |                    |   |  |   |            |  
|Charges to contract owners for assuming mortality risk and expense risk and for administration      |  |                    | 24,520     |   |                    |   | 33,124     |                    |  |   | 7,625              |   |  |   | 11,123     |  
|                                                                                                    |  |                    |            |   |                    |   |            |                    |  |   |                    |   |  |   |            |  
|NET INVESTMENT INCOME                                                                               |  |                    | 203,947    |   |                    |   | 334,562    |                    |  |   | 67,790             |   |  |   | 93,566     |  
|                                                                                                    |  |                    |            |   |                    |   |            |                    |  |   |                    |   |  |   |            |  
|                                                                                                    |  |                    |            |  
|NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS                                              |  |                    |            |   |                    |   |            |                    |  |   |                    |   |  |   |            |  
|Net change in unrealized gain (loss) on investments in Partnership                                  |  |                    | (1,769,224 | ) |                    |   | (411,390   | )                  |  |   | (420,891           | ) |  |   | (355,525   | )
|Net realized gain (loss) on sale of investments in Partnership                                      |  |                    | (194,303   | ) |                    |   | 0          |                    |  |   | (194               | ) |  |   | 0          |  
|                                                                                                    |  |                    |            |   |                    |   |            |                    |  |   |                    |   |  |   |            |  
|NET GAIN (LOSS) ON INVESTMENTS                                                                      |  |                    | (1,963,527 | ) |                    |   | (411,390   | )                  |  |   | (421,085           | ) |  |   | (355,525   | )
|                                                                                                    |  |                    |            |   |                    |   |            |                    |  |   |                    |   |  |   |            |  
|                                                                                                    |  |                    |            |  
|NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS                                     |  | $                  | (1,759,580 | ) |                    | $ | (76,828    | )                  |  | $ | (353,295           | ) |  | $ | (261,959   | )
|                                                                                                    |  |                    |            |   |                    |   |            |                    |  |   |                    |   |  |   |            |  
|                                                                                                   
|STATEMENTS OF CHANGES IN NET ASSETS For the nine and three months ended September 30, 2009 and 2008 | 
|                                                                                                    |  |                    |            |  
|                                                                                                    |  | 1/1/2009-9/30/2009 |            |   | 1/1/2008-9/30/2008 |   |            | 7/1/2009-9/30/2009 |  |   | 7/1/2008-9/30/2008 |  
|                                                                                                    |  | (unaudited)        |            |   | (unaudited)        |   |            | (unaudited)        |  |   | (unaudited)        |  
|OPERATIONS                                                                                          |  |                    |            |   |                    |   |            |                    |  |   |                    |   |  |   |            |  
|Net investment income                                                                               |  | $                  | 203,947    |   |                    | $ | 334,562    |                    |  | $ | 67,790             |   |  | $ | 93,566     |  
|Net change in unrealized gain (loss) on investments in Partnership                                  |  |                    | (1,769,224 | ) |                    |   | (411,390   | )                  |  |   | (420,891           | ) |  |   | (355,525   | )
|Net realized gain (loss) on sale of investments in Partnership                                      |  |                    | (194,303   | ) |                    |   | 0          |                    |  |   | (194               | ) |  |   | 0          |  
|                                                                                                    |  |                    |            |   |                    |   |            |                    |  |   |                    |   |  |   |            |  
|NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS                                     |  |                    | (1,759,580 | ) |                    |   | (76,828    | )                  |  |   | (353,295           | ) |  |   | (261,959   | )
|                                                                                                    |  |                    |            |   |                    |   |            |                    |  |   |                    |   |  |   |            |  
|                                                                                                    |  |                    |            |  
|CAPITAL TRANSACTIONS                                                                                |  |                    |            |   |                    |   |            |                    |  |   |                    |   |  |   |            |  
|Net (withdrawals) by contract owners                                                                |  |                    | (127,532   | ) |                    |   | (102,804   | )                  |  |   | (43,426            | ) |  |   | (48,629    | )
|Net contributions (withdrawals) by Pruco Life Insurance Company of New Jersey                       |  |                    | (164,324   | ) |                    |   | 135,928    |                    |  |   | 51,051             |   |  |   | 59,752     |  
|                                                                                                    |  |                    |            |   |                    |   |            |                    |  |   |                    |   |  |   |            |  
|                                                                                                    |  |                    |            |  
|NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS                           |  |                    | (291,856   | ) |                    |   | 33,124     |                    |  |   | 7,625              |   |  |   | 11,123     |  
|                                                                                                    |  |                    |            |   |                    |   |            |                    |  |   |                    |   |  |   |            |  
|                                                                                                    |  |                    |            |  
|TOTAL INCREASE (DECREASE) IN NET ASSETS                                                             |  |                    | (2,051,436 | ) |                    |   | (43,704    | )                  |  |   | (345,670           | ) |  |   | (250,836   | )
|                                                                                                    |  |                    |            |  
|NET ASSETS                                                                                          |  |                    |            |   |                    |   |            |                    |  |   |                    |   |  |   |            |  
|Beginning of period                                                                                 |  |                    | 9,322,498  |   |                    |   | 10,764,653 |                    |  |   | 7,616,732          |   |  |   | 10,971,785 |  
|                                                                                                    |  |                    |            |   |                    |   |            |                    |  |   |                    |   |  |   |            |  
|End of period                                                                                       |  | $                  | 7,271,062  |   |                    | $ | 10,720,949 |                    |  | $ | 7,271,062          |   |  | $ | 10,720,949 |  
|                                                                                                    |  |                    |            |   |                    |   |            |                    |  |   |                    |   |  |   |            |  

The accompanying notes are an integral part of these financial statements.



4



---

NOTES TO THE FINANCIAL STATEMENTS OF

PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT

September 30, 2009

(Unaudited)

Note 1: General

Pruco
Life of New Jersey Variable Contract Real Property Account (the 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), a wholly-owned subsidiary of the Prudential Insurance Company of America (Prudential), an indirect 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, as amended. The assets of the Account are segregated from Pruco Life of New Jerseys other assets. The 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 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 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 unaudited interim 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 and Pronouncements

A. Basis of Accounting

The accompanying financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP). The preparation of the financial
statements in conformity with U.S. 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 September 30, 2009 and for the nine and three months ended September 30, 2009 and 2008 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. The Account has evaluated subsequent
events through November 12, 2009, the date these financial statements were issued as part of this Quarterly Report on Form 10-Q.

In September 2006, the FASB issued authoritative guidance for fair value measurements. This guidance defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and requires additional
disclosures about fair value measurements. This guidance does not require any new fair value measurements, but the application of this guidance could change current practices in determining fair value. This guidance is effective for fiscal years
beginning after November 15, 2007 with early adoption permitted. The Accounts adoption effective January 1, 2008 did not have any material effect on the Accounts financial position and result of operations. See Note 9 for more
information on Fair Value Measurements.

In February 2007, the FASB issued authoritative guidance on fair value
option for financial assets and financial liabilities, which provides entities with an option to report selected financial assets and liabilities at fair value. This guidance also amended certain provisions in the existing guidance for investments
in debt and equity securities. This guidance is effective for fiscal years beginning after November 15, 2007 with early adoption permitted. The Account adopted this guidance effective January 1, 2008. The Accounts adoption has no
effect on the Accounts financial position and results of operations.

In December 2007, FASB revised authoritative
guidance for business combinations, which expands the definition of a business and redefines the acquisition date in a merger and acquisition transaction. It significantly modifies the existing guidance for business combinations, including changes
to acquisition related contingent consideration, preacquisition contingencies, non controlling interest, restructuring costs, in-process R&D, goodwill and partial acquisition. This guidance is effective for acquisitions closing after the first
annual reporting period beginning after December 15, 2008. The Account adopted this guidance effective January 1, 2009. The Accounts adoption has no effect on the Accounts financial position and results of operations, but may
have an effect on the accounting for future business combinations.



5



---

In December 2007, FASB revised the accounting, presentation and disclosure for
noncontrolling interests in consolidated financial statements. This revised guidance will change the accounting for minority interests, which will be recharacterized as noncontrolling interests and classified by the parent company as a component of
equity. This guidance is effective for fiscal years beginning on or after December 15, 2008, with early adoption prohibited. Upon adoption, the guidance requires retroactive adoption of the presentation and disclosure requirements for existing
minority interests and prospective adoption for all other requirements. The adoption of this guidance has no effect on the Accounts financial position and results of operations.

In April 2009, the FASB revised authoritative guidance on issued recognition and presentation of other-than-temporary impairments. This revision amends the other-than-temporary
impairment guidance for debt securities and expands the presentation and disclosure requirements of other-than-temporary impairments on debt and equity securities in the financial statements. This revision also requires that the required annual
disclosures for debt and equity securities be made for interim reporting periods. This revision does not amend existing recognition and measurement guidance related to other-than-temporary impairments of equity securities. This revision is effective
for interim and annual reporting periods ending after June 15, 2009, and shall be applied prospectively. Early adoption is permitted for periods ending after March 15, 2009. The Accounts early adoption of this guidance effective
January 1, 2009 did not have a material effect on the Accounts financial position or results of operations.

In
April 2009, the FASB issued authoritative guidance on determining fair value when the volume and level of activity for the asset or liability have significantly decreased and identifying transactions that are not orderly. This guidance also amends
the disclosure requirements in interim and annual periods. This guidance is effective for interim and annual reporting periods ending after June 15, 2009, and shall be applied prospectively. Early adoption is permitted for periods ending after
March 15, 2009. The Accounts early adoption of this guidance effective January 1, 2009 did not have a material effect on the Accounts financial position or results of operations.

In April 2009, the FASB issued additional guidance for accounting for assets acquired and liabilities assumed in a business combination that
arise from contingencies. This guidance requires an asset acquired or liability assumed in a business combination that arises from a contingency to be recognized at fair value at the acquisition date, if the acquisition date fair value of that asset
or liability can be determined during the measurement period. If the acquisition date fair value of an asset acquired or liability assumed in a business combination that arises from a contingency cannot be determined during the measurement period,
the asset or liability shall be recognized at the acquisition date using the guidance in accounting for contingencies. This guidance also amends disclosure requirements. This guidance is effective for assets or liabilities arising from contingencies
in business combinations for which the acquisition date is on or after January 1, 2009. The Accounts adoption of this guidance effective January 1, 2009 did not have a material effect on the Accounts financial position or
results of operations.

In April 2009, the FASB issued additional guidance for interim disclosures about fair value of
financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. This guidance is effective for interim reporting periods ending after June 15, 2009, with early adoption permitted. The
Account adopted this guidance within the interim period ending June 30, 2009. The Accounts adoption of this guidance did not have a material effect on the Accounts financial position or results of operations.

In May 2009, the FASB issued authoritative guidance for subsequent events. This guidance addresses the accounting for and disclosure of
subsequent events not addressed in other applicable generally accepted accounting principles, including disclosure of the date through which subsequent events have been evaluated. This guidance is effective for interim or annual periods ending after
June 15, 2009. The Accounts adoption of this guidance effective with the interim period ending June 30, 2009 did not have a material effect on the Accounts financial position or results of operations. The required disclosure of
the date through which subsequent events have been evaluated is provided in Note 2A.

In July 2009, the FASB launched its
Accounting Standards Codification (the Codification), as the sole source of authoritative U.S. GAAP to be applied by nongovernmental entities. The Codification generally does not change the existing rules of U.S. GAAP but rather makes it
easier to find and research U.S. GAAP applicable to a particular transaction or specific accounting issue. The Codification is a new structure which takes accounting pronouncements and organizes them by approximately ninety accounting topics and
aggregates them in four common accounting areas. Topics within each category are further broken down into subtopics, sections and paragraphs. Accounting standards that are included in the Codification will be considered authoritative whereas those
that are not included will be deemed non-authoritative. As a result, there are two levels of U.S. GAAP, authoritative and non-authoritative. The Codification is effective for financial statements that cover the interim and annual periods ending
after September 15, 2009 and will impact the way the Account references U.S. GAAP accounting standards in the financial statements.

New Accounting Pronouncements

In August 2009, the FASB issued updated
guidance for the fair value measurement of liabilities. This guidance includes techniques for measuring fair value when a quoted price in an active market for the identical liability is not available and clarifies that restrictions preventing the
transfer of a liability should not be considered as a separate input or adjustment in the measurement of its fair value. This guidance is effective for the first reporting period (including interim periods) beginning after issuance. The Account is
currently assessing the impact of this statement on the Accounts financial position, results of operations and financial statement disclosures.

In September 2009, the FASB issued updated guidance for the fair value measurement of investments in certain entities that calculate net asset value per share including certain alternative investments
such as hedge funds, private equity funds, and venture capital funds. This guidance allows companies to determine the fair value of such investments using net asset value (NAV) as a practical expedient if the fair value of the investment
is not readily determinable and the investee entity issues financial statements in accordance with measurement principles for investment companies. Use of this practical expedient is prohibited if it is probable the investment will be sold at
something other than NAV. This guidance also requires new disclosures for each major category of alternative investments. It is effective for the first annual or interim reporting period ending after December 15, 2009, with early application
permitted. The Account will adopt this guidance effective December 31, 2009. The Account is currently assessing the impact of this guidance on the Accounts financial position, results of operations and financial statement disclosures.



6



---

B. Investment in Partnership Interest

The investment in the Partnership is based on the Accounts proportionate interest of the Partnerships fair value. At
September 30, 2009 and December 31, 2008 the Accounts interest in the Partnership was 4.4% or 282,778 shares and 4.3% or 294,526 shares, respectively. Properties owned by the Partnership are illiquid and based on estimated fair value
as discussed in the notes to the Partnerships audited financial statements.

C. Income Recognition

Net investment income and realized and unrealized gains and losses are recognized daily for the Partnership. Amounts
are based upon the 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 Account for liquidity purposes, including unit
purchases and redemptions, Partnership share transactions and expense processing. The position does not affect contract owners accounts or the related unit values.

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 and SPVL, respectively. Mortality risk is the risk that life insurance contract owners may not live as long as estimated or annuitants may live longer than estimated and expense risk is the risk 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 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, which are deducted from each premium payment to cover
premium collection and processing costs. Contracts are subject to charges on each basic premium for assuming a guaranteed minimum death benefit risk. This charge compensates Pruco Life of New Jersey for the risk that an insured may die at a time
when the death benefit exceeds the benefit that would have been payable in the absence of a minimum guarantee. These charges are assessed through the redemption of units.

D. Deferred Sales Charge

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% of one scheduled annual premium for VAL and 9% of the initial premium payment 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. This 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. This 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 Account form a part of PFIs consolidated federal tax return. Under current federal law, no federal income
taxes are payable by the Account. As such, no provision for the tax liability has been recorded in these financial statements.



7



---

Note 5: Net Contributions (Withdrawals) by Contract Owners

Net contract owner withdrawals for the real estate investment option in Pruco Life of New Jerseys variable insurance and variable
annuity products for the nine months ended September 30, 2009 and 2008, were as follows:



|      |  |                                            |          |   |      |   |          |  
|----- |  | ------------------------------------------ | -------- | - | ---- | - | -------- | -
|      |  | Nine Months Ended September 30,(Unaudited) |         
|      |  | 2009                                       |          |   | 2008 |  
|      |  |                                           
|VAL   |  | $                                          | (61,426  | ) |      | $ | (114,134 | )
|VLI   |  |                                            | (40,748  | ) |      |   | (20,018  | )
|SPVA  |  |                                            | (18,456  | ) |      |   | 32,000   |  
|SPVL  |  |                                            | (6,902   | ) |      |   | (652     | )
|      |  |                                            |          |   |      |   |          |  
|TOTAL |  | $                                          | (127,532 | ) |      | $ | (102,804 | )
|      |  |                                            |          |   |      |   |          |  

Note 6: Partnership Distributions

As of September 30, 2009, the Partnership made a distribution of $8 million. The Pruco Life of New Jersey Accounts share of this distribution was $0.3 million. For the
year ended December 31, 2008, the Partnership made no distributions.

Note 7: Unit Information

Outstanding units and unit values at September 30, 2009 and December 31, 2008 were as follows:



|                   |  |                    |  |                   
|------------------ |  | ------------------ |  | ------------------
|                   |  | September 30, 2009 |  | December 31, 2008 
|                   |  | (Unaudited)        |  |                   
|Units Outstanding: |  | 3,232,925          |  | 3,353,044         
|Unit Value:        |  | 1.93394 to 2.37404 |  | 2.40304 to 2.93018

Note 8: Financial Highlights

The range of total return for the nine months ended September 30, 2009 and 2008 was as follows:



|             |  |                                            |  |                 
|------------ |  | ------------------------------------------ |  | ----------------
|             |  | Nine Months Ended September 30,(Unaudited)
|             |  | 2009                                       |  | 2008            
|Total Return |  | -19.52% to -18.98%                         |  | -1.33% to -0.67%



8



---

Note 9: Fair Value Disclosure

FASB guidance on fair value measurements and disclosures establishes a framework for measuring fair value that includes a hierarchy used to classify the inputs used in fair value.
The hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three levels. The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is
significant to the fair value measurement. The levels of the fair value hierarchy are as follows:

Level 1  Fair value
is based on unadjusted quoted prices in active markets that are accessible to the Company for identical assets or liabilities. These generally provide the most reliable evidence and should be used to measure fair value whenever available.

Level 2  Fair value is based on inputs, other than Level 1 inputs, that are observable for the asset or liability,
either directly or indirectly, for substantially the full term of the asset or liability through corroboration with observable market data.

Level 3  Fair value is based on significant unobservable inputs for the asset or liability. These inputs reflect the Companys own assumptions about the assumptions that market participants
would use in pricing the asset or liability.

The investment in the Partnership is based on the Accounts proportionate
interest of the Partnerships fair value which approximates the Partnerships net asset value. Properties owned by the Partnership are illiquid and based on estimated fair value from property appraisal reports prepared by independent real
estate appraisers as discussed in the notes to the Partnerships audited financial statements.

The purpose of an
appraisal is to estimate the fair value of real estate as of a specific date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement
date.

The estimate of fair value is based on the conventional approaches to value, all of which require the exercise of
subjective judgment. The three approaches are: (1) current cost of reproducing the real estate less deterioration and functional and economic obsolescence; (2) discounting a series of income streams and reversion at a specific yield or by
directly capitalizing a single year income estimate by an appropriate factor; and (3) value indicated by recent sales of comparable real estate in the market. In the reconciliation of these three approaches, the independent appraiser uses one
or a combination of them, to determine the approximated value for the type of real estate in the market.



9



---

In general, the input values used in the appraisal process are unobservable, therefore
unless indicated otherwise; underlying investments in the Partnership are classified as Level 3 under the fair value hierarchy. The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in
those securities.

Table 1 below summarizes the assets measured at fair value on a recurring basis and their respective
position in the fair value hierarchy.

Table 1:



|                                                                         |  |                                                                 |       |                                                             |   |                                             |  |                                         |   |  |   |      
|------------------------------------------------------------------------ |  | --------------------------------------------------------------- | ----- | ----------------------------------------------------------- | - | ------------------------------------------- |  | --------------------------------------- | - |  | - | -----
|                                                                         |  | ($ in 000s)Fair Value
Measurements at September 30, 2009 using
|Assets:                                                                  |  | Amounts Measuredat Fair Value09/30/2009                         |       | Quoted Prices inActive Markets forIdentical Assets(Level 1) |   | Significant OtherObservable Inputs(Level 2) |  | SignificantUnobservable Inputs(Level 3)
|                                                                         |  |                                                                 |       |                                                            
|Investment in The Prudential Variable Contract Real Property Partnership |  | $                                                               | 7,271 |                                                             | $ |                                            |  | $                                       |  |  | $ | 7,271
|                                                                         |  |                                                                 |       |                                                             |   |                                             |  |                                         |   |  |   |      
|Total Assets                                                             |  | $                                                               | 7,271 |                                                             | $ |                                            |  | $                                       |  |  | $ | 7,271
|                                                                         |  |                                                                 |       |                                                             |   |                                             |  |                                         |   |  |   |      
|                                                                         | 
|                                                                         |  | ($ in 000s)Fair Value
Measurements at December 31, 2008 using 
|Assets:                                                                  |  | Amounts Measuredat Fair
Value12/31/2008                         |       | Quoted Prices inActive Markets forIdentical Assets(Level 1) |   | Significant OtherObservable Inputs(Level 2) |  | SignificantUnobservable
Inputs(Level 3)
|                                                                         |  |                                                                 |       |                                                            
|Investment in The Prudential Variable Contract Real Property Partnership |  | $                                                               | 9,322 |                                                             | $ |                                            |  | $                                       |  |  | $ | 9,322
|                                                                         |  |                                                                 |       |                                                             |   |                                             |  |                                         |   |  |   |      
|Total Assets                                                             |  | $                                                               | 9,322 |                                                             | $ |                                            |  | $                                       |  |  | $ | 9,322
|                                                                         |  |                                                                 |       |                                                             |   |                                             |  |                                         |   |  |   |      



10



---

Table 2 below provides a reconciliation of the beginning and ending balances for all assets
measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the period ended September 30, 2009 and September 30, 2008.

Table 2:



|                                                                                                                                                                                                                                                                               |  |                                                                                                                             |        |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | --------------------------------------------------------------------------------------------------------------------------- | ------ | -
|                                                                                                                                                                                                                                                                               |  | ($ in
000s)Fair Value MeasurementsUsing SignificantUnobservable Inputs for thenine months endedSeptember 30, 2009(Level 3) |       
|                                                                                                                                                                                                                                                                               | 
|Beginning balance @ 1/1/09                                                                                                                                                                                                                                                     |  | $                                                                                                                           | 9,322  |  
|                                                                                                                                                                                                                                                                               | 
|Total gains or losses (realized/unrealized) included in earnings (or changes in net assets) from Partnership
operations                                                                                                                                                        |  | $                                                                                                                           | (1,963 | )
|Net Investment Income from Partnership operations                                                                                                                                                                                                                              |  | $                                                                                                                           | 228    |  
|Acquisition/Additions                                                                                                                                                                                                                                                          |  |                                                                                                                             |       |  
|Equity Income                                                                                                                                                                                                                                                                  |  |                                                                                                                             |       |  
|Contributions                                                                                                                                                                                                                                                                  |  |                                                                                                                             |       |  
|Disposition/Settlements                                                                                                                                                                                                                                                        |  | $                                                                                                                           | (316   | )
|Equity losses                                                                                                                                                                                                                                                                  |  |                                                                                                                             |       |  
|Distributions                                                                                                                                                                                                                                                                  |  |                                                                                                                             |       |  
|                                                                                                                                                                                                                                                                               |  |                                                                                                                             |        |  
|Ending balance @ 09/30/09                                                                                                                                                                                                                                                      |  | $                                                                                                                           | 7,271  |  
|                                                                                                                                                                                                                                                                               |  |                                                                                                                             |        |  
|                                                                                                                                                                                                                                                                               | 
|The amount of total gains or losses for the period included in earnings (or changes in net assets) attributable to the change in
(realized\unrealized) gains or losses relating to assets still held at the reporting date relating to assets still held at the reporting date |  | $                                                                                                                           | (1,963 | )
|                                                                                                                                                                                                                                                                               |  |                                                                                                                             |        |  
|                                                                                                                                                                                                                                                                               | 
|                                                                                                                                                                                                                                                                               |  | ($ in 000s)Fair Value
MeasurementsUsing SignificantUnobservable Inputs for thenine months endedSeptember 30, 2008(Level 3) |       
|                                                                                                                                                                                                                                                                               | 
|Beginning balance @ 1/1/08                                                                                                                                                                                                                                                     |  | $                                                                                                                           | 10,765 |  
|                                                                                                                                                                                                                                                                               | 
|Total gains or losses (realized/unrealized) included in earnings (or changes in net assets) from Partnership
operations                                                                                                                                                        |  | $                                                                                                                           | (412   | )
|Net Investment Income from Partnership operations                                                                                                                                                                                                                              |  | $                                                                                                                           | 368    |  
|Acquisition/Additions                                                                                                                                                                                                                                                          |  |                                                                                                                             |       |  
|Equity Income                                                                                                                                                                                                                                                                  |  |                                                                                                                             |       |  
|Contributions                                                                                                                                                                                                                                                                  |  |                                                                                                                             |       |  
|Disposition/Settlements                                                                                                                                                                                                                                                        |  | $                                                                                                                           |       |  
|Equity losses                                                                                                                                                                                                                                                                  |  |                                                                                                                             |       |  
|Distributions                                                                                                                                                                                                                                                                  |  |                                                                                                                             |       |  
|                                                                                                                                                                                                                                                                               |  |                                                                                                                             |        |  
|Ending balance @ 09/30/08                                                                                                                                                                                                                                                      |  | $                                                                                                                           | 10,721 |  
|                                                                                                                                                                                                                                                                               |  |                                                                                                                             |        |  
|                                                                                                                                                                                                                                                                               | 
|The amount of total gains or losses for the period included in earnings (or changes in net assets) attributable to the change in
(realized\unrealized) gains or losses relating to assets still held at the reporting date relating to assets still held at the reporting date |  | $                                                                                                                           | (412   | )
|                                                                                                                                                                                                                                                                               |  |                                                                                                                             |        |  



11



---

Table 2: (cont.)





|                                                                                                                                                                                                                                                                               |  |                                                                                                                              |        |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---------------------------------------------------------------------------------------------------------------------------- | ------ | -
|                                                                                                                                                                                                                                                                               |  | ($ in 000s)Fair Value MeasurementsUsing SignificantUnobservable Inputs for thethree months endedSeptember 30, 2009(Level 3) |       
|                                                                                                                                                                                                                                                                               | 
|Beginning balance @ 7/1/09                                                                                                                                                                                                                                                     |  | $                                                                                                                            | 7,617  |  
|                                                                                                                                                                                                                                                                               | 
|Total gains or losses (realized/unrealized) included in earnings (or changes in net assets) from Partnership
operations                                                                                                                                                        |  | $                                                                                                                            | (421   | )
|Net Investment Income from Partnership operations                                                                                                                                                                                                                              |  | $                                                                                                                            | 75     |  
|Acquisition/Additions                                                                                                                                                                                                                                                          |  |                                                                                                                              |       |  
|Equity Income                                                                                                                                                                                                                                                                  |  |                                                                                                                              |       |  
|Contributions                                                                                                                                                                                                                                                                  |  |                                                                                                                              |       |  
|Disposition/Settlements                                                                                                                                                                                                                                                        |  | $                                                                                                                            |       |  
|Equity losses                                                                                                                                                                                                                                                                  |  |                                                                                                                              |       |  
|Distributions                                                                                                                                                                                                                                                                  |  |                                                                                                                              |       |  
|                                                                                                                                                                                                                                                                               |  |                                                                                                                              |        |  
|Ending balance @ 09/30/09                                                                                                                                                                                                                                                      |  | $                                                                                                                            | 7,271  |  
|                                                                                                                                                                                                                                                                               |  |                                                                                                                              |        |  
|                                                                                                                                                                                                                                                                               | 
|The amount of total gains or losses for the period included in earnings (or changes in net assets) attributable to the change in
(realized\unrealized) gains or losses relating to assets still held at the reporting date relating to assets still held at the reporting date |  | $                                                                                                                            | (421   | )
|                                                                                                                                                                                                                                                                               |  |                                                                                                                              |        |  
|                                                                                                                                                                                                                                                                               | 
|                                                                                                                                                                                                                                                                               |  | ($ in 000s)Fair Value
MeasurementsUsing SignificantUnobservable Inputs for thethree months endedSeptember 30, 2008(Level 3) |       
|                                                                                                                                                                                                                                                                               | 
|Beginning balance @ 7/1/08                                                                                                                                                                                                                                                     |  | $                                                                                                                            | 10,972 |  
|                                                                                                                                                                                                                                                                               | 
|Total gains or losses (realized/unrealized) included in earnings (or changes in net assets) from Partnership
operations                                                                                                                                                        |  | $                                                                                                                            | (356   | )
|Net Investment Income from Partnership operations                                                                                                                                                                                                                              |  | $                                                                                                                            | 105    |  
|Acquisition/Additions                                                                                                                                                                                                                                                          |  |                                                                                                                              |       |  
|Equity Income                                                                                                                                                                                                                                                                  |  |                                                                                                                              |       |  
|Contributions                                                                                                                                                                                                                                                                  |  |                                                                                                                              |       |  
|Disposition/Settlements                                                                                                                                                                                                                                                        |  | $                                                                                                                            |       |  
|Equity losses                                                                                                                                                                                                                                                                  |  |                                                                                                                              |       |  
|Distributions                                                                                                                                                                                                                                                                  |  |                                                                                                                              |       |  
|                                                                                                                                                                                                                                                                               |  |                                                                                                                              |        |  
|Ending balance @ 09/30/08                                                                                                                                                                                                                                                      |  | $                                                                                                                            | 10,721 |  
|                                                                                                                                                                                                                                                                               |  |                                                                                                                              |        |  
|                                                                                                                                                                                                                                                                               | 
|The amount of total gains or losses for the period included in earnings (or changes in net assets) attributable to the change in
(realized\unrealized) gains or losses relating to assets still held at the reporting date relating to assets still held at the reporting date |  | $                                                                                                                            | (356   | )
|                                                                                                                                                                                                                                                                               |  |                                                                                                                              |        |  



12



---

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES



|                                                                                                                   |  |                               |             |                   |   |            
|------------------------------------------------------------------------------------------------------------------ |  | ----------------------------- | ----------- | ----------------- | - | -----------
|                                                                                                                   |  | September 30, 2009(Unaudited) |             | December 31, 2008
|ASSETS                                                                                                             |  |                               |             |                   |   |            
|                                                                                                                   |  |                              
|REAL ESTATE INVESTMENTS - At estimated fair value:                                                                 |  |                               |             |                   |   |            
|Real estate and improvements (cost: 09/30/2009 - $210,403,975; 12/31/2008 -$245,808,214)                           |  | $                             | 167,499,987 |                   | $ | 221,196,000
|Real estate partnerships and preferred equity investments (cost: 09/30/2009$14,253,922; 12/31/2008 -
$14,324,204) |  |                               | 10,297,830  |                   |   | 11,796,716 
|                                                                                                                   |  |                               |             |                   |   |            
|                                                                                                                   |  |                              
|Total real estate investments                                                                                      |  | $                             | 177,797,817 |                   | $ | 232,992,716
|                                                                                                                   |  |                              
|CASH AND CASH EQUIVALENTS                                                                                          |  |                               | 33,183,323  |                   |   | 27,736,520 
|                                                                                                                   |  |                              
|OTHER ASSETS, NET                                                                                                  |  |                               | 2,756,576   |                   |   | 2,936,037  
|                                                                                                                   |  |                               |             |                   |   |            
|                                                                                                                   |  |                              
|Total assets                                                                                                       |  | $                             | 213,737,716 |                   | $ | 263,665,273
|                                                                                                                   |  |                               |             |                   |   |            
|                                                                                                                   |  |                              
|LIABILITIES & PARTNERS EQUITY                                                                                     |  |                               |             |                   |   |            
|                                                                                                                   |  |                              
|INVESTMENT LEVEL DEBT (net of unamortized discount: 9/30/09 $3,185; 12/31/08 $26,480)                              |  | $                             | 39,704,930  |                   | $ | 40,047,827 
|                                                                                                                   |  |                              
|ACCOUNTS PAYABLE AND ACCRUED EXPENSES                                                                              |  |                               | 3,819,087   |                   |   | 2,924,938  
|                                                                                                                   |  |                              
|DUE TO AFFILIATES                                                                                                  |  |                               | 638,217     |                   |   | 851,595    
|                                                                                                                   |  |                              
|OTHER LIABILITIES                                                                                                  |  |                               | 1,071,816   |                   |   | 978,342    
|                                                                                                                   |  |                               |             |                   |   |            
|                                                                                                                   |  |                              
|Total liabilities                                                                                                  |  |                               | 45,234,050  |                   |   | 44,802,702 
|                                                                                                                   |  |                               |             |                   |   |            
|                                                                                                                   |  |                              
|COMMITMENTS AND CONTINGENCIES                                                                                      |  |                               |             |                   |   |            
|                                                                                                                   |  |                              
|NET ASSETS, REPRESENTING PARTNERS EQUITY:                                                                         |  |                               |             |                   |   |            
|                                                                                                                   |  |                              
|GENERAL PARTNERS CONTROLLING INTEREST                                                                             |  |                               | 166,154,104 |                   |   | 213,938,308
|                                                                                                                   |  |                              
|NONCONTROLLING INTEREST                                                                                            |  |                               | 2,349,562   |                   |   | 4,924,263  
|                                                                                                                   |  |                               |             |                   |   |            
|                                                                                                                   |  |                               | 168,503,666 |                   |   | 218,862,571
|                                                                                                                   |  |                               |             |                   |   |            
|                                                                                                                   |  |                              
|Total liabilities and partners equity                                                                             |  | $                             | 213,737,716 |                   | $ | 263,665,273
|                                                                                                                   |  |                               |             |                   |   |            
|                                                                                                                   |  |                              
|NUMBER OF SHARES OUTSTANDING AT END OF PERIOD                                                                      |  |                               | 6,461,874   |                   |   | 6,758,960  
|                                                                                                                   |  |                               |             |                   |   |            
|                                                                                                                   |  |                              
|SHARE VALUE AT END OF PERIOD                                                                                       |  | $                             | 25.71       |                   | $ | 31.65      
|                                                                                                                   |  |                               |             |                   |   |            

The accompanying notes are an integral part of these consolidated financial
statements.



13



---

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



|                                                                                                                       |  |                                        |             |   |                                         |   |            |      |  |   |             |   |  |   |            |  
|---------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------- | ----------- | - | --------------------------------------- | - | ---------- | ---- |  | - | ----------- | - |  | - | ---------- | -
|                                                                                                                       |  | For the Nine Months EndedSeptember 30, |             |   | For the Three Months EndedSeptember 30, |  
|                                                                                                                       |  | 2009                                   |             |   | 2008                                    |   |            | 2009 |  |   | 2008        |  
|INVESTMENT INCOME:                                                                                                     |  |                                        |             |   |                                         |   |            |      |  |   |             |   |  |   |            |  
|Revenue from real estate and improvements                                                                              |  | $                                      | 19,469,511  |   |                                         | $ | 23,205,896 |      |  | $ | 6,157,406   |   |  | $ | 7,809,725  |  
|Equity in income of real estate partnerships                                                                           |  |                                        | 776,724     |   |                                         |   | 721,587    |      |  |   | 255,006     |   |  |   | 211,724    |  
|Interest on short-term investments                                                                                     |  |                                        | 32,551      |   |                                         |   | 344,807    |      |  |   | 11,862      |   |  |   | 113,428    |  
|                                                                                                                       |  |                                        |             |   |                                         |   |            |      |  |   |             |   |  |   |            |  
|                                                                                                                       |  |                                        |             |  
|Total investment income                                                                                                |  |                                        | 20,278,786  |   |                                         |   | 24,272,290 |      |  |   | 6,424,274   |   |  |   | 8,134,877  |  
|                                                                                                                       |  |                                        |             |   |                                         |   |            |      |  |   |             |   |  |   |            |  
|                                                                                                                       |  |                                        |             |  
|INVESTMENT EXPENSES:                                                                                                   |  |                                        |             |   |                                         |   |            |      |  |   |             |   |  |   |            |  
|Operating                                                                                                              |  |                                        | 5,109,382   |   |                                         |   | 5,401,923  |      |  |   | 1,665,730   |   |  |   | 1,924,396  |  
|Investment management fee                                                                                              |  |                                        | 2,017,562   |   |                                         |   | 2,608,842  |      |  |   | 624,809     |   |  |   | 877,672    |  
|Real estate taxes                                                                                                      |  |                                        | 2,109,217   |   |                                         |   | 2,173,562  |      |  |   | 640,192     |   |  |   | 691,942    |  
|Administrative                                                                                                         |  |                                        | 3,811,445   |   |                                         |   | 4,739,796  |      |  |   | 1,200,843   |   |  |   | 2,211,888  |  
|Interest expense                                                                                                       |  |                                        | 1,359,700   |   |                                         |   | 1,477,183  |      |  |   | 466,843     |   |  |   | 518,514    |  
|                                                                                                                       |  |                                        |             |   |                                         |   |            |      |  |   |             |   |  |   |            |  
|                                                                                                                       |  |                                        |             |  
|Total investment expenses                                                                                              |  |                                        | 14,407,306  |   |                                         |   | 16,401,306 |      |  |   | 4,598,417   |   |  |   | 6,224,412  |  
|                                                                                                                       |  |                                        |             |   |                                         |   |            |      |  |   |             |   |  |   |            |  
|                                                                                                                       |  |                                        |             |  
|NET INVESTMENT INCOME                                                                                                  |  |                                        | 5,871,480   |   |                                         |   | 7,870,984  |      |  |   | 1,825,857   |   |  |   | 1,910,465  |  
|                                                                                                                       |  |                                        |             |   |                                         |   |            |      |  |   |             |   |  |   |            |  
|                                                                                                                       |  |                                        |             |  
|REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:                                                                    |  |                                        |             |   |                                         |   |            |      |  |   |             |   |  |   |            |  
|Net proceeds from real estate investments sold                                                                         |  |                                        | 9,655,626   |   |                                         |   |           |      |  |   |            |   |  |   |           |  
|Less: Cost of real estate investments sold                                                                             |  |                                        | 37,901,326  |   |                                         |   |           |      |  |   |            |   |  |   |           |  
|                                                                                                                       |  |                                        |             |   |                                         |   |            |      |  |   |             |   |  |   |            |  
|Gain (loss) realized from real estate investments sold                                                                 |  |                                        | (28,245,700 | ) |                                         |   |           |      |  |   |            |   |  |   |           |  
|Less: Reversal of prior periods unrealized gain (loss) on real estate investments sold                                |  |                                        | (23,793,594 | ) |                                         |   |           |      |  |   |            |   |  |   |           |  
|                                                                                                                       |  |                                        |             |   |                                         |   |            |      |  |   |             |   |  |   |            |  
|                                                                                                                       |  |                                        |             |  
|Net gain (loss) recognized on real estate investments sold                                                             |  |                                        | (4,452,106  | ) |                                         |   |           |      |  |   |            |   |  |   |           |  
|                                                                                                                       |  |                                        |             |   |                                         |   |            |      |  |   |             |   |  |   |            |  
|                                                                                                                       |  |                                        |             |  
|Unrealized gain (loss) on investments:                                                                                 |  |                                        |             |   |                                         |   |            |      |  |   |             |   |  |   |            |  
|Change in unrealized gain (loss) on real estate investments                                                            |  |                                        | (43,513,970 | ) |                                         |   | (9,744,277 | )    |  |   | (10,216,120 | ) |  |   | (8,818,256 | )
|                                                                                                                       |  |                                        |             |   |                                         |   |            |      |  |   |             |   |  |   |            |  
|                                                                                                                       |  |                                        |             |  
|Net unrealized gain (loss) on real estate investments                                                                  |  |                                        | (43,513,970 | ) |                                         |   | (9,744,277 | )    |  |   | (10,216,120 | ) |  |   | (8,818,256 | )
|                                                                                                                       |  |                                        |             |   |                                         |   |            |      |  |   |             |   |  |   |            |  
|                                                                                                                       |  |                                        |             |  
|NET REALIZED AND UNREALIZED GAIN (LOSS) ON REAL ESTATE INVESTMENTS                                                     |  |                                        | (47,966,076 | ) |                                         |   | (9,744,277 | )    |  |   | (10,216,120 | ) |  |   | (8,818,256 | )
|                                                                                                                       |  |                                        |             |   |                                         |   |            |      |  |   |             |   |  |   |            |  
|                                                                                                                       |  |                                        |             |  
|Increase (decrease) in net assets resulting from operations                                                            |  | $                                      | (42,094,596 | ) |                                         | $ | (1,873,293 | )    |  | $ | (8,390,263  | ) |  | $ | (6,907,791 | )
|                                                                                                                       |  |                                        |             |   |                                         |   |            |      |  |   |             |   |  |   |            |  
|                                                                                                                       |  |                                        |             |  
|Amounts attributable to noncontrolling interest:                                                                       |  |                                        |             |   |                                         |   |            |      |  |   |             |   |  |   |            |  
|Net investment income attributable to noncontrolling interest                                                          |  |                                        | 636,552     |   |                                         |   | (566,900   | )    |  |   | 101,363     |   |  |   | (491,998   | )
|Net unrealized gain (loss) attributable to noncontrolling interest                                                     |  |                                        | (2,946,944  | ) |                                         |   | (303,455   | )    |  |   | (592,549    | ) |  |   | (659,452   | )
|                                                                                                                       |  |                                        |             |   |                                         |   |            |      |  |   |             |   |  |   |            |  
|Net increase (decrease) in net assets resulting from operations attributable to the noncontrolling interest            |  | $                                      | (2,310,392  | ) |                                         | $ | (870,355   | )    |  | $ | (491,186    | ) |  | $ | (1,151,450 | )
|                                                                                                                       |  |                                        |             |   |                                         |   |            |      |  |   |             |   |  |   |            |  
|                                                                                                                       |  |                                        |             |  
|Amounts attributable to general partners controlling interest:                                                        |  |                                        |             |   |                                         |   |            |      |  |   |             |   |  |   |            |  
|Net investment income attributable to general partners controlling interest                                           |  |                                        | 5,234,928   |   |                                         |   | 8,437,884  |      |  |   | 1,724,494   |   |  |   | 2,402,463  |  
|Net realized gain (loss) attributable to general partners controlling interest                                        |  |                                        | (4,452,106  | ) |                                         |   |           |      |  |   |            |   |  |   |           |  
|Net unrealized gain (loss) attributable to general partners controlling interest                                      |  |                                        | (40,567,026 | ) |                                         |   | (9,440,822 | )    |  |   | (9,623,571  | ) |  |   | (8,158,804 | )
|                                                                                                                       |  |                                        |             |   |                                         |   |            |      |  |   |             |   |  |   |            |  
|                                                                                                                       |  |                                        |             |  
|Net increase (decrease) in net assets resulting from operations attributable to general partners controlling
interest |  | $                                      | (39,784,204 | ) |                                         | $ | (1,002,938 | )    |  | $ | (7,899,077  | ) |  | $ | (5,756,341 | )
|                                                                                                                       |  |                                        |             |   |                                         |   |            |      |  |   |             |   |  |   |            |  

The accompanying notes are an integral part of these consolidated financial
statements.



14



---

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

(Unaudited)



|                                                                       |  |                                         |             |   |                        |   |            |       |  |   |                                       |   |  |                        |             |   |       |   |           |   |  |   |             |  
|---------------------------------------------------------------------- |  | --------------------------------------- | ----------- | - | ---------------------- | - | ---------- | ----- |  | - | ------------------------------------- | - |  | ---------------------- | ----------- | - | ----- | - | --------- | - |  | - | ----------- | -
|                                                                       |  | For the Nine Months Ended September 30, |            
|                                                                       |  | 2009                                    |             |   | 2008                   |  
|                                                                       |  | General PartnersControlling Interest   |             |   | NoncontrollingInterest |   |            | Total |  |   | General PartnersControlling Interest |   |  | NoncontrollingInterest |             |   | Total |  
|INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS:           |  |                                         |             |   |                        |   |            |       |  |   |                                       |   |  |                        |             |   |       |   |           |   |  |   |             |  
|Net investment income                                                  |  | $                                       | 5,234,928   |   |                        | $ | 636,552    |       |  | $ | 5,871,480                             |   |  | $                      | 8,437,884   |   |       | $ | (566,900  | ) |  | $ | 7,870,984   |  
|Net gain (loss) realized and unrealized from real estate investments   |  |                                         | (45,019,132 | ) |                        |   | (2,946,944 | )     |  |   | (47,966,076                           | ) |  |                        | (9,440,822  | ) |       |   | (303,455  | ) |  |   | (9,744,277  | )
|                                                                       |  |                                         |             |   |                        |   |            |       |  |   |                                       |   |  |                        |             |   |       |   |           |   |  |   |             |  
|Increase (decrease) in net assets resulting from operations            |  |                                         | (39,784,204 | ) |                        |   | (2,310,392 | )     |  |   | (42,094,596                           | ) |  |                        | (1,002,938  | ) |       |   | (870,355  | ) |  |   | (1,873,293  | )
|                                                                       |  |                                         |             |   |                        |   |            |       |  |   |                                       |   |  |                        |             |   |       |   |           |   |  |   |             |  
|                                                                       |  |                                         |             |   |                        |  
|INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS: |  |                                         |             |   |                        |   |            |       |  |   |                                       |   |  |                        |             |   |       |   |           |   |  |   |             |  
|Withdrawals                                                            |  |                                         | (8,000,000  | ) |                        |   |           |       |  |   | (8,000,000                            | ) |  |                        |            |   |       |   |          |   |  |   |            |  
|Contributions from noncontrolling interest                             |  |                                         |            |   |                        |   | 15,000     |       |  |   | 15,000                                |   |  |                        |            |   |       |   | 80,000    |   |  |   | 80,000      |  
|Distributions to noncontrolling interest                               |  |                                         |            |   |                        |   | (279,309   | )     |  |   | (279,309                              | ) |  |                        |            |   |       |   | (146,229  | ) |  |   | (146,229    | )
|                                                                       |  |                                         |             |   |                        |   |            |       |  |   |                                       |   |  |                        |             |   |       |   |           |   |  |   |             |  
|Increase (decrease) in net assets resulting from capital transactions  |  |                                         | (8,000,000  | ) |                        |   | (264,309   | )     |  |   | (8,264,309                            | ) |  |                        |            |   |       |   | (66,229   | ) |  |   | (66,229     | )
|                                                                       |  |                                         |             |   |                        |   |            |       |  |   |                                       |   |  |                        |             |   |       |   |           |   |  |   |             |  
|                                                                       |  |                                         |             |   |                        |  
|INCREASE (DECREASE) IN NET ASSETS                                      |  |                                         | (47,784,204 | ) |                        |   | (2,574,701 | )     |  |   | (50,358,905                           | ) |  |                        | (1,002,938  | ) |       |   | (936,584  | ) |  |   | (1,939,522  | )
|                                                                       |  |                                         |             |   |                        |  
|NET ASSETS - Beginning of period                                       |  |                                         | 213,938,308 |   |                        |   | 4,924,263  |       |  |   | 218,862,571                           |   |  |                        | 247,033,759 |   |       |   | 7,004,790 |   |  |   | 254,038,549 |  
|                                                                       |  |                                         |             |   |                        |   |            |       |  |   |                                       |   |  |                        |             |   |       |   |           |   |  |   |             |  
|                                                                       |  |                                         |             |   |                        |  
|NET ASSETS - End of period                                             |  | $                                       | 166,154,104 |   |                        | $ | 2,349,562  |       |  | $ | 168,503,666                           |   |  | $                      | 246,030,821 |   |       | $ | 6,068,206 |   |  | $ | 252,099,027 |  
|                                                                       |  |                                         |             |   |                        |   |            |       |  |   |                                       |   |  |                        |             |   |       |   |           |   |  |   |             |  

The accompanying notes are an integral part of these consolidated financial
statements.



15



---

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



|                                                                                                |  |                                        |             |   |      |   |             |  
|----------------------------------------------------------------------------------------------- |  | -------------------------------------- | ----------- | - | ---- | - | ----------- | -
|                                                                                                |  | For the Nine Months EndedSeptember 30, |            
|                                                                                                |  | 2009                                   |             |   | 2008 |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                           |  |                                        |             |   |      |   |             |  
|Net increase in net assets from operations                                                      |  | $                                      | (42,094,596 | ) |      | $ | (1,873,293  | )
|Adjustments to reconcile net increase in net assets to net cash from operating activities       |  |                                        |             |   |      |   |             |  
|Net realized and unrealized loss (gain)                                                         |  |                                        | 47,966,076  |   |      |   | 9,744,277   |  
|Amortization of discount on investment level debt                                               |  |                                        | 23,295      |   |      |   | 1,489       |  
|Amortization of deferred financing costs                                                        |  |                                        | 46,010      |   |      |   | 63,913      |  
|Distributions in excess of (less than) equity in income of real estate partnerships operations |  |                                        | 70,282      |   |      |   | 91,969      |  
|Bad debt expense                                                                                |  |                                        | 69,047      |   |      |   | 1,104,707   |  
|(Increase) decrease in:                                                                         |  |                                        |             |   |      |   |             |  
|Other assets                                                                                    |  |                                        | 64,406      |   |      |   | (1,947,610  | )
|Increase (decrease) in:                                                                         |  |                                        |             |   |      |   |             |  
|Accounts payable and accrued expenses                                                           |  |                                        | 894,149     |   |      |   | 825,735     |  
|Due to affiliates                                                                               |  |                                        | (213,378    | ) |      |   | (10,291     | )
|Other liabilities                                                                               |  |                                        | 93,474      |   |      |   | 151,144     |  
|                                                                                                |  |                                        |             |   |      |   |             |  
|                                                                                                |  |                                       
|Net cash flows provided for (used in) operating activities                                      |  |                                        | 6,918,765   |   |      |   | 8,152,040   |  
|                                                                                                |  |                                        |             |   |      |   |             |  
|                                                                                                |  |                                       
|CASH FLOWS PROVIDED FOR INVESTING ACTIVITIES:                                                   |  |                                        |             |   |      |   |             |  
|Net proceeds from real estate investments sold                                                  |  |                                        | 9,655,626   |   |      |   |            |  
|Additions to real estate and improvements                                                       |  |                                        | (2,497,087  | ) |      |   | (7,749,947  | )
|                                                                                                |  |                                        |             |   |      |   |             |  
|                                                                                                |  |                                       
|Net cash flows provided for (used in) investing activities                                      |  |                                        | 7,158,539   |   |      |   | (7,749,947  | )
|                                                                                                |  |                                        |             |   |      |   |             |  
|                                                                                                |  |                                       
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                           |  |                                        |             |   |      |   |             |  
|Withdrawals                                                                                     |  |                                        | (8,000,000  | ) |      |   |            |  
|Proceeds from investment level debt                                                             |  |                                        |            |   |      |   | 23,557,099  |  
|Principal payments on investment level debt                                                     |  |                                        | (366,192    | ) |      |   | (15,963,961 | )
|Contributions from noncontrolling interest partners                                             |  |                                        | 15,000      |   |      |   | 80,000      |  
|Distributions to noncontrolling interest                                                        |  |                                        | (279,309    | ) |      |   | (146,229    | )
|                                                                                                |  |                                        |             |   |      |   |             |  
|                                                                                                |  |                                       
|Net cash flows provided for (used in) financing activities                                      |  |                                        | (8,630,501  | ) |      |   | 7,526,909   |  
|                                                                                                |  |                                        |             |   |      |   |             |  
|                                                                                                |  |                                       
|NET CHANGE IN CASH AND CASH                                                                     |  |                                        |             |   |      |   |             |  
|EQUIVALENTS                                                                                     |  |                                        | 5,446,803   |   |      |   | 7,929,002   |  
|                                                                                                |  |                                       
|CASH AND CASH EQUIVALENTS - Beginning of period                                                 |  |                                        | 27,736,520  |   |      |   | 18,215,871  |  
|                                                                                                |  |                                        |             |   |      |   |             |  
|                                                                                                |  |                                       
|CASH AND CASH EQUIVALENTS - End of period                                                       |  | $                                      | 33,183,323  |   |      | $ | 26,144,873  |  
|                                                                                                |  |                                        |             |   |      |   |             |  

The accompanying notes are an integral part of these consolidated financial
statements.



16



---

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

CONSOLIDATED SCHEDULE OF INVESTMENTS



|                                                                                                      |  |                              |  |                            |   |                                                                    |   |             |                               |                     |                   |   |            |             |   |             |             |   |           
|----------------------------------------------------------------------------------------------------- |  | ---------------------------- |  | -------------------------- | - | ------------------------------------------------------------------ | - | ----------- | ----------------------------- | ------------------- | ----------------- | - | ---------- | ----------- | - | ----------- | ----------- | - | ----------
|Property Name                                                                                         |  | September 30, 2009 Ownership |  | City, State                |   | 2009 Total RentableSquare
FeetUnless OtherwiseIndicated(Unaudited) |   |             | September 30, 2009(unaudited) |                     | December 31, 2008
|                                                                                                      |  |                              |  | Cost                       |   | Estimated FairValue                                                |   | Cost        |                               | Estimated FairValue
|                                                                                                      |  |                              |  |                            |   |                                                                    |  
|OFFICES                                                                                               |  |                              |  |                            |   |                                                                    |   |             |                               |                     |                   |   |            |             |   |             |             |   |           
|750 Warrenville                                                                                       |  | WO                           |  | Lisle, IL                  |   | 103,193                                                            |   |             | $                             | 25,568,055          |                   | $ | 6,700,000  |             | $ | 25,218,777  |             | $ | 9,542,046 
|Summit @ Cornell Oaks                                                                                 |  | WO                           |  | Beaverton , OR             |   | 72,109                                                             |   |             |                               | 12,585,402          |                   |   | 8,800,000  |             |   | 12,512,985  |             |   | 11,000,000
|Westpark                                                                                              |  | WO                           |  | Nashville, TN              |   | 97,199                                                             |   |             |                               | 13,002,229          |                   |   | 8,199,984  |             |   | 12,060,981  |             |   | 13,753,954
|Financial Plaza                                                                                       |  | WO                           |  | Brentwood, TN              |   | 98,049                                                             |   |             |                               | 12,563,493          |                   |   | 9,800,000  |             |   | 12,389,207  |             |   | 12,700,000
|                                                                                                      |  |                              |  |                            |   |                                                                    |   |             |                               |                     |                   |   |            |             |   |             |             |   |           
|                                                                                                      |  |                              |  | Offices % as of 9/30/09    |   | 20                                                                 | % |             |                               | 63,719,179          |                   |   | 33,499,984 |             |   | 62,181,950  |             |   | 46,996,000
|                                                                                                      |  |                              |  |                            |   |                                                                    |  
|APARTMENTS                                                                                            |  |                              |  |                            |   |                                                                    |   |             |                               |                     |                   |   |            |             |   |             |             |   |           
|                                                                                                      |  |                              |  |                            |   |                                                                    |  
|Brookwood Apartments                                                                                  |  | WO                           |  | Atlanta, GA                |   | 240 Units                                                          |   |             |                               | 20,149,552          |                   |   | 13,900,000 |             |   | 19,810,918  |             |   | 16,100,000
|Dunhill Trace Apartments                                                                              |  | WO                           |  | Raleigh, NC                |   | 250 Units                                                          |   |             |                               | 16,493,732          |                   |   | 15,000,000 |             |   | 16,433,544  |             |   | 16,600,000
|Broadstone Crossing                                                                                   |  | WO                           |  | Austin, TX                 |   | 225 Units                                                          |   |             |                               | 22,815,992          |                   |   | 21,000,000 |             |   | 22,732,363  |             |   | 25,000,000
|The Reserve At Waterford Lakes                                                                        |  | WO                           |  | Charlotte, NC              |   | 140 Units                                                          |   |             |                               | 13,734,841          |                   |   | 9,200,000  |             |   | 13,649,938  |             |   | 11,000,000
|                                                                                                      |  |                              |  |                            |   |                                                                    |   |             |                               |                     |                   |   |            |             |   |             |             |   |           
|                                                                                                      |  |                              |  | Apartments % as of 9/30/09 |   | 36                                                                 | % |             |                               | 73,194,117          |                   |   | 59,100,000 |             |   | 72,626,763  |             |   | 68,700,000
|                                                                                                      |  |                              |  |                            |   |                                                                    |  
|RETAIL                                                                                                |  |                              |  |                            |   |                                                                    |   |             |                               |                     |                   |   |            |             |   |             |             |   |           
|Kings Market                                                                                         |  | WO                           |  | Rosewell, GA               |   | Sold                                                               |   |             |                               |                    |                   |   |           |             |   | 37,893,595  |             |   | 14,100,000
|Hampton Towne Center                                                                                  |  | WO                           |  | Hampton, VA                |   | 174,540                                                            |   |             |                               | 18,125,200          |                   |   | 19,100,000 |             |   | 18,110,816  |             |   | 23,400,000
|White Marlin Mall                                                                                     |  | CJV                          |  | Ocean City, MD             |   | 197,098                                                            |   |             |                               | 23,298,198          |                   |   | 25,000,000 |             |   | 23,271,014  |             |   | 28,600,000
|Westminster Crossing East, LLC                                                                        |  | CJV                          |  | Westminster, MD            |   | 89,890                                                             |   |             |                               | 15,044,877          |                   |   | 13,600,000 |             |   | 15,044,721  |             |   | 17,700,000
|Kansas City Portfolio                                                                                 |  | EJV                          |  | Kansas City, KS;MO         |   | Sold                                                               |   |             |                               |                    |                   |   |           |             |   | 13,595      |             |   | 13,595    
|CARS Preferred Equity                                                                                 |  | PE                           |  | Various                    |   | N/A                                                                |   |             |                               | 14,253,922          |                   |   | 10,297,833 |             |   | 14,310,609  |             |   | 11,783,121
|Harnett Crossing                                                                                      |  | CJV                          |  | Dunn, NC                   |   | 194,327                                                            |   |             |                               | 6,392,692           |                   |   | 3,200,000  |             |   | 6,366,767   |             |   | 3,900,000 
|                                                                                                      |  |                              |  |                            |   |                                                                    |   |             |                               |                     |                   |   |            |             |   |             |             |   |           
|                                                                                                      |  |                              |  | Retail % as of 9/30/09     |   | 43                                                                 | % |             |                               | 77,114,889          |                   |   | 71,197,833 |             |   | 115,011,117 |             |   | 99,496,716
|                                                                                                      |  |                              |  |                            |   |                                                                    |  
|HOTEL                                                                                                 |  |                              |  |                            |   |                                                                    |   |             |                               |                     |                   |   |            |             |   |             |             |   |           
|Portland Crown Plaza                                                                                  |  | CJV                          |  | Portland, OR               |   | 161 Rooms                                                          |   |             |                               | 10,629,712          |                   |   | 14,000,000 |             |   | 10,312,588  |             |   | 17,800,000
|                                                                                                      |  |                              |  |                            |   |                                                                    |   |             |                               |                     |                   |   |            |             |   |             |             |   |           
|                                                                                                      |  |                              |  | Hotel % as of 9/30/09      |   | 8                                                                  | % |             |                               | 10,629,712          |                   |   | 14,000,000 |             |   | 10,312,588  |             |   | 17,800,000
|Total Real Estate Investments as a Percentage of General Partners Controlling Interest as of 9/30/09 |  |                              |  | 107                        | % |                                                                    | $ | 224,657,897 |                               | $                   | 177,797,817       |   | $          | 260,132,418 |   | $           | 232,992,716
|                                                                                                      |  |                              |  |                            |   |                                                                    |   |             |                               |                     |                   |   |            |             |   |             |             |   |           



WO - Wholly Owned Investment

CJV - Consolidated Joint Venture

EJV - Joint Venture Investment accounted for under the equity method

PE - Preferred equity investments accounted for under the equity method

The accompanying notes are an integral part of these consolidated financial statements.



17



---

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

CONSOLIDATED SCHEDULE OF INVESTMENTS



|                                                                                |  |             |            |                               |   |                     |                   |   |            |   |                     |   |            |  |   |            |  
|------------------------------------------------------------------------------- |  | ----------- | ---------- | ----------------------------- | - | ------------------- | ----------------- | - | ---------- | - | ------------------- | - | ---------- |  | - | ---------- | -
|                                                                                |  |             |            | September 30, 2009(unaudited) |   |                     | December 31, 2008 |  
|                                                                                |  | Face Amount |            | Cost                          |   | EstimatedFair Value |                   |   | Cost       |   | EstimatedFair Value |  
|CASH AND CASH EQUIVALENTS - Percentageof General Partners Controlling Interest |  |             |            |                               |   |                     |                   |   | 20.0       | % |                     |   |            |  |   | 13.0       | %
|                                                                                |  |             |            |                               |  
|Federal Home Loan Bank, 0 coupon bond, October 1, 2009                          |  | $           | 4,002,000  |                               | $ | 4,002,000           |                   | $ | 4,002,000  |   |                     | $ | 1,000,000  |  | $ | 1,000,000  |  
|Federal Home Loan Bank, 0 coupon bond, December 4, 2009                         |  |             | 4,998,875  |                               |   | 4,998,533           |                   |   | 4,998,533  |   |                     |   | 4,446,932  |  |   | 4,446,932  |  
|Federal Home Loan Bank, 0 coupon bond December 16, 2009                         |  |             | 1,999,367  |                               |   | 1,999,367           |                   |   | 1,999,367  |   |                     |   | 1,999,985  |  |   | 1,999,985  |  
|Federal Home Loan Bank, 0 coupon bond October 22, 2009                          |  |             | 19,997,958 |                               |   | 19,997,958          |                   |   | 19,997,958 |   |                     |   | 18,831,977 |  |   | 18,831,977 |  
|                                                                                |  |             |            |                               |   |                     |                   |   |            |   |                     |   |            |  |   |            |  
|                                                                                |  |             |            |                               |  
|Total Cash Equivalents                                                          |  |             |            |                               |   | 30,997,858          |                   |   | 30,997,858 |   |                     |   | 26,278,894 |  |   | 26,278,894 |  
|                                                                                |  |             |            |                               |  
|Cash                                                                            |  |             |            |                               |   | 2,185,465           |                   |   | 2,185,465  |   |                     |   | 1,457,626  |  |   | 1,457,626  |  
|                                                                                |  |             |            |                               |   |                     |                   |   |            |   |                     |   |            |  |   |            |  
|                                                                                |  |             |            |                               |  
|Total Cash and Cash Equivalents                                                 |  |             |            |                               | $ | 33,183,323          |                   | $ | 33,183,323 |   |                     | $ | 27,736,520 |  | $ | 27,736,520 |  
|                                                                                |  |             |            |                               |   |                     |                   |   |            |   |                     |   |            |  |   |            |  

The accompanying notes are an integral part of these consolidated financial
statements.



18



---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

September 30, 2009 and December 31, 2008

Note 1: Summary of
Significant Accounting Policies



| | A. | Basis of Presentation -The accompanying unaudited consolidated financial statements of The Prudential Variable Contract Real Property
Partnership (the Partnership) included herein have been prepared in accordance with the requirements of Form 10-Q and accounting principles generally accepted in the United States of America for interim financial information. In the
opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair statement have been included. Operating results for the nine months ended September 30, 2009 are not necessarily indicative
of the results that may be expected for the year ended December 31, 2009. For further information, refer to the audited consolidated financial statements and notes thereto included in each partners Annual Report on Form 10-K for the year
ended December 31, 2008. The Partnership has evaluated subsequent events through November 12, 2009, the date these financial statements were issued as part of this Quarterly Report on Form 10-Q.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | B. | Accounting Pronouncements Adopted -The Partnership adopted the FASB interpretation guidance on accounting for uncertainty in income taxes as
of January 1, 2007. This interpretation prescribes a comprehensive model for how a partnership should recognize, measure, present, and disclose in its financial statements uncertain tax positions that a partnership has taken or expects to take
on a tax return. The adoption of this guidance had no effect to the financial position and result of operations of the Partnership.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In September 2006, the FASB issued authoritative guidance for fair value measurements. This guidance defines fair value, establishes a framework for measuring fair value in generally accepted accounting
principles, and requires additional disclosures about fair value measurements. This guidance does not require any new fair value measurements, but the application of this guidance could change current practices in determining fair value. This
guidance is effective for fiscal years beginning after November 15, 2007 with early adoption permitted. The Partnerships adoption effective January 1, 2008 did not have any material effect on the Partnerships financial position
and result of operations.

In February 2007, the FASB issued authoritative guidance on fair value option for
financial assets and financial liabilities, which provides entities with an option to report selected financial assets and liabilities at fair value. This guidance also amended certain provisions in the existing guidance for investments in debt and
equity securities. This guidance is effective for fiscal years beginning after November 15, 2007 with early adoption permitted. The Partnership adopted this guidance effective January 1, 2008, however, the Partnership did not make a fair
value option election for its existing debt. The Partnerships adoption did not have any effect on the Partnerships consolidated financial position and results of operations. Please refer to Note 4 for details.

In December 2007, FASB revised authoritative guidance for business combinations, which expands the definition of a business
and redefines the acquisition date in a merger and acquisition transaction. It significantly modifies the existing guidance for business combinations, including changes to acquisition related contingent consideration, preacquisition contingencies,
noncontrolling interest, restructuring costs, in-process R&D, goodwill and partial acquisition. This guidance is effective for acquisitions closing after the first annual reporting period beginning after December 15, 2008. The
Partnerships adoption of this guidance effective January 1, 2009 did not have a material effect on the Partnerships consolidated financial position or results of operations, but may have an effect on the accounting for future
business combinations.

In December 2007, FASB revised the accounting, presentation and disclosure for
noncontrolling interests in consolidated financial statements. This revised guidance requires noncontrolling interests to be reported as a separate component of equity. It also changes the allocation of losses and accounting in step acquisitions.
The provisions in this revision should be applied prospectively except for the presentation and disclosure requirements, which are required retrospectively for all periods presented. This guidance is effective for the annual periods beginning after
December 15, 2008. The Partnerships adoption of this guidance effective January 1, 2009 did not have a material effect on the Partnerships consolidated financial position or results of operations, but did affect financial
statement presentation and disclosure. Noncontrolling interests, previously reported as a liability, are now required to be reported as a separate component of equity on the balance sheet, and totaled $4.9 million as of December 31, 2008. In
addition, net income (loss) attributable to the noncontrolling interest, which was previously reported as an expense and reflected within Net Investment Income is now reported as a separate amount below Increase (decrease) in Net Assets
Resulting from Operations, and totaled ($0.5) and ($0.6) million for the three and nine months ended September 30, 2008, respectively.



19



---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

September 30, 2009 and December 31, 2008



Note 1: Summary of Significant Accounting Policies (continued)



| | B. | Accounting Pronouncements Adopted (continued)
| | -- | ---------------------------------------------



In April 2009, the FASB revised authoritative guidance on issued
recognition and presentation of other-than-temporary impairments. This revision amends the other-than-temporary impairment guidance for debt securities and expands the presentation and disclosure requirements of other-than-temporary impairments on
debt and equity securities in the financial statements. This revision also requires that the required annual disclosures for debt and equity securities be made for interim reporting periods. This revision does not amend existing recognition and
measurement guidance related to other-than-temporary impairments of equity securities. This revision is effective for interim and annual reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after
March 15, 2009. The Partnerships early adoption of this guidance effective January 1, 2009 did not have a material effect on the Partnerships consolidated financial position or results of operations.

In April 2009, the FASB issued authoritative guidance on determining fair value when the volume and level of activity for the
asset or liability have significantly decreased and identifying transactions that are not orderly. This guidance also amends the disclosure requirements in interim and annual periods. This guidance is effective for interim and annual reporting
periods ending after June 15, 2009, and shall be applied prospectively. Early adoption is permitted for periods ending after March 15, 2009. The Partnerships early adoption of this guidance effective January 1, 2009 did not have
a material effect on the Partnerships consolidated financial position or results of operations.

In April
2009, the FASB issued additional guidance for accounting for assets acquired and liabilities assumed in a business combination that arise from contingencies. This guidance requires an asset acquired or liability assumed in a business combination
that arises from a contingency to be recognized at fair value at the acquisition date, if the acquisition date fair value of that asset or liability can be determined during the measurement period. If the acquisition date fair value of an asset
acquired or liability assumed in a business combination that arises from a contingency cannot be determined during the measurement period, the asset or liability shall be recognized at the acquisition date using the guidance in accounting for
contingencies. This guidance also amends disclosure requirements. This guidance is effective for assets or liabilities arising from contingencies in business combinations for which the acquisition date is on or after January 1, 2009. The
Partnerships adoption of this guidance effective January 1, 2009 did not have a material effect on the Partnerships consolidated financial position or results of operations.

In April 2009, the FASB issued additional guidance for interim disclosures about fair value of financial instruments for
interim reporting periods of publicly traded companies as well as in annual financial statements. This guidance is effective for interim reporting periods ending after June 15, 2009, with early adoption permitted. The Partnership adopted this
guidance within the interim period ending June 30, 2009. The Partnerships adoption of this guidance did not have a material effect on the Partnerships consolidated financial position or results of operations.

In May 2009, the FASB issued authoritative guidance for subsequent events. This guidance addresses the accounting for
and disclosure of subsequent events not addressed in other applicable United States Generally Accepted Accounting Principles (U.S. GAAP), including disclosure of the date through which subsequent events have been evaluated. This guidance
is effective for interim or annual periods ending after June 15, 2009. The Partnerships adoption of this guidance effective with the interim period ending June 30, 2009 did not have a material effect on the Partnerships
consolidated financial position or results of operations. The required disclosure of the date through which subsequent events have been evaluated is provided in Note 1A.

In July 2009, the FASB launched its Accounting Standards Codification (the Codification), as the sole source of authoritative U.S. GAAP to be applied by nongovernmental
entities. The Codification generally does not change the existing rules of U.S. GAAP but rather makes it easier to find and research U.S. GAAP applicable to a particular transaction or specific accounting issue. The Codification is a new structure
which takes accounting pronouncements and organizes them by approximately ninety accounting topics and aggregates them in four common accounting areas. Topics within each category are further broken down into subtopics, sections and paragraphs.
Accounting standards that are included in the Codification will be considered authoritative whereas those that are not included will be deemed non-authoritative. As a result, there are two levels of U.S. GAAP, authoritative and non-authoritative.
The Codification is effective for financial statements that cover the interim and annual periods ending after September 15, 2009 and will impact the way the Partnership references U.S. GAAP accounting standards in the financial statements.



20



---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

September 30, 2009 and December 31, 2008



Note 1: Summary of Significant Accounting Policies (continued)



| | C. | New Accounting Pronouncements
| | -- | -----------------------------

In August 2009, the FASB issued updated guidance for the fair value measurement of liabilities. This guidance includes techniques for measuring fair value when a quoted price in an active market for the
identical liability is not available and clarifies that restrictions preventing the transfer of a liability should not be considered as a separate input or adjustment in the measurement of its fair value. This guidance is effective for the first
reporting period (including interim periods) beginning after issuance. The Partnership will adopt this guidance effective with the annual reporting period ended December 31, 2009. The Partnership is currently assessing the impact of this
statement on the Partnerships consolidated financial position, results of operations, and financial statement disclosures.

In September 2009, the FASB issued updated guidance for the fair value measurement of investments in certain entities that calculate net asset value per share including certain alternative investments
such as hedge funds, private equity funds, and venture capital funds. This guidance allows companies to determine the fair value of such investments using net asset value (NAV) as a practical expedient if the fair value of the investment
is not readily determinable and the investee entity issues financial statements in accordance with measurement principles for investment companies. Use of this practical expedient is prohibited if it is probable the investment will be sold at
something other than NAV. This guidance also requires new disclosures for each major category of alternative investments. It is effective for the first annual or interim reporting period ending after December 15, 2009, with early application
permitted. The Partnership will adopt this guidance effective December 31, 2009. The Partnership is currently assessing the impact of this guidance on the Partnerships consolidated financial position, results of operations, and financial
statement disclosures.

Note 2: Reclassification

Certain prior period balances have been reclassified to conform with current period presentation. Such reclassifications had no effect on previously reported net assets.

Note 3: Disclosure of Supplemental Cash Flow Information and Non-Cash Investing and Financing Activity

Cash paid for interest during the nine months ended September 30, 2009, and 2008, was $1,313,693 and $1,413,270,
respectively.



21



---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

September 30, 2009 and December 31, 2008



Note 4: Fair Value Measurements

Valuation Methods

Real estate investments are carried at fair value. Properties owned are initially recorded at the purchase price plus closing costs. Development costs and major renovations are capitalized as a component
of cost, and routine maintenance and repairs are charged to expense as incurred. Real estate costs include the cost of acquired property, including all the tangible and intangible assets. Tangible assets include the value of all land, building and
tenant improvements at the time of acquisition. Intangible assets include the value of any above and below market leases, in-place leases, and tenant relationships at the time of acquisition.

The purpose of an appraisal is to estimate the fair value of real estate as of a specific date. In accordance with the FASB
guidance on fair value measurements and disclosures, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The estimate of fair
value is based on the conventional approaches to value, all of which require the exercise of subjective judgment. The three approaches are: (1) current cost of reproducing the real estate less deterioration and functional and economic
obsolescence; (2) discounting a series of income streams and reversion at a specific yield or by directly capitalizing a single year income estimate by an appropriate factor; and (3) value indicated by recent sales of comparable real
estate in the market. In the reconciliation of these three approaches, the independent appraiser uses one or a combination of them, to determine the approximated value for the type of real estate in the market.

Fair Value Measurements:

FASB guidance on fair value measurements and disclosures establishes a fair value measurement framework, provides a single definition of fair value and requires expanded disclosure summarizing fair value
measurements. This guidance provides a three-level hierarchy based on the inputs used in the valuation process. The level in the fair values hierarchy within which the fair value measurement falls is determined based on the lowest level input that
is significant to the fair value measurement. The levels of the fair value hierarchy are as follows:

Level 1-
Fair value is based on unadjusted quoted prices inactive markets that are accessible to the entity for identical assets or liabilities. These generally provide the most reliable evidence and should be used to measure fair value whenever available.

Level 2- Fair value is based on inputs, other than Level 1 inputs, that are observable for the asset or
liability, either directly or indirectly, for substantially the full term of the asset or liability through corroboration with observable market data.

Level 3- Fair value is based on significant unobservable inputs for the asset or liability. These inputs reflect the entitys own assumptions about the assumptions that market participants would use
in pricing the asset or liability.

For items classified as Level 3, a reconciliation of the beginning and
ending balances, as shown in table 2 below, is also required.



22



---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

September 30, 2009 and December 31, 2008



Note 4: Fair Value Measurements (continued)



Table 1 below summarizes the assets measured at fair value on a
recurring basis and their respective position in the fair value hierarchy.

Table 1

|                                                          |  |                           |         |                                                     |   |                                                            |  |                                            |   |                                         |   |   |  |   |        
|--------------------------------------------------------- |  | ------------------------- | ------- | --------------------------------------------------- | - | ---------------------------------------------------------- |  | ------------------------------------------ | - | --------------------------------------- | - | - |  | - | -------
|                                                          |  |                           |         | (in 000s)                                         
|                                                          |  |                           |         | Fair value measurements at September 30, 2009 using
|Assets:                                                   |  | Carryingamount at9/30/09  |         | Amountsmeasured atfair value9/30/09                 |   | Quoted pricesin activemarkets foridentical assets(level 1) |  | Significantotherobservableinputs (level 2) |   | Significantunobservableinputs (level 3)
|                                                          |  |                           |         |                                                     |  
|Real estate and improvements                              |  | $                         | 210,404 |                                                     | $ | 167,500                                                    |  | $                                          |  |                                         | $ |  |  | $ | 167,500
|Real estate partnerships and preferred equity investments |  |                           | 14,254  |                                                     |   | 10,298                                                     |  |                                            |  |                                         |   |  |  |   | 10,298 
|                                                          |  |                           |         |                                                     |   |                                                            |  |                                            |   |                                         |   |   |  |   |        
|Total                                                     |  | $                         | 224,658 |                                                     | $ | 177,798                                                    |  | $                                          |  |                                         | $ |  |  | $ | 177,798
|                                                          |  |                           |         |                                                     |   |                                                            |  |                                            |   |                                         |   |   |  |   |        
|                                                          |  |                          
|                                                          |  |                           |         | (in 000s)                                         
|                                                          |  |                           |         | Fair value measurements at December 31, 2008 using 
|Assets:                                                   |  | Carryingamount at12/31/08 |         | Amountsmeasured atfair value12/31/2008              |   | Quoted pricesin activemarkets foridentical assets(level 1) |  | Significantotherobservableinputs (level 2) |   | Significantunobservableinputs (level 3)
|                                                          |  |                           |         |                                                     |  
|Real estate and improvements                              |  | $                         | 245,808 |                                                     | $ | 221,196                                                    |  | $                                          |  |                                         | $ |  |  | $ | 221,196
|Real estate partnerships and preferred equity investments |  |                           | 14,324  |                                                     |   | 11,797                                                     |  |                                            |  |                                         |   |  |  |   | 11,797 
|                                                          |  |                           |         |                                                     |   |                                                            |  |                                            |   |                                         |   |   |  |   |        
|Total                                                     |  | $                         | 260,132 |                                                     | $ | 232,993                                                    |  | $                                          |  |                                         | $ |  |  | $ | 232,993
|                                                          |  |                           |         |                                                     |   |                                                            |  |                                            |   |                                         |   |   |  |   |        



23



---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

September 30, 2009 and December 31, 2008



Note 4: Fair Value Measurements (continued)



Table 2 below provides a reconciliation of the beginning and ending
balances for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the period ended September 30, 2009 and September 30, 2008.

Table 2

(in 000s)

Fair value measurements using significant unobservable inputs

for the nine months ending September 30, 2009

(Level 3)



|                                                                                                     |  |                             |         |   |                                                            |   |        |       |  |   |         |  
|---------------------------------------------------------------------------------------------------- |  | --------------------------- | ------- | - | ---------------------------------------------------------- | - | ------ | ----- |  | - | ------- | -
|                                                                                                     |  | Real estate andimprovements |         |   | Real estate andpartnerships andpreferred equityinvestments |   |        | Total | 
|                                                                                                     |  |                             |        
|Beginning balance @ 1/1/09                                                                           |  | $                           | 221,196 |   |                                                            | $ | 11,797 |       |  | $ | 232,993 |  
|                                                                                                     |  |                             |        
|Net gains (losses) realized/unrealized included in earnings (or changes in net assets)               |  |                             | (46,537 | ) |                                                            |   | (1,429 | )     |  |   | (47,966 | )
|Equity income (losses)/interest income                                                               |  |                             |        |   |                                                            |   | 777    |       |  |   | 777     |  
|Purchases, issuances and settlements                                                                 |  |                             | (7,159  | ) |                                                            |   | (847   | )     |  |   | (8,006  | )
|                                                                                                     |  |                             |         |   |                                                            |   |        |       |  |   |         |  
|Ending balance @ 9/30/09                                                                             |  | $                           | 167,500 |   |                                                            | $ | 10,298 |       |  | $ | 177,798 |  
|                                                                                                     |  |                             |         |   |                                                            |   |        |       |  |   |         |  
|                                                                                                     |  |                             |        
|Unrealized gains (losses) for the period relating to level 3 assets still held at the reporting date |  | $                           | (42,085 | ) |                                                            | $ | (1,429 | )     |  | $ | (43,514 | )
|                                                                                                     |  |                             |         |   |                                                            |   |        |       |  |   |         |  

(in 000s)

Fair value measurements using significant unobservable inputs

for the nine months ending September 30, 2008

(Level 3)



|                                                                                                     |  |                             |         |   |                                                            |   |        |       |  |   |         |  
|---------------------------------------------------------------------------------------------------- |  | --------------------------- | ------- | - | ---------------------------------------------------------- | - | ------ | ----- |  | - | ------- | -
|                                                                                                     |  | Real estate andimprovements |         |   | Real estate andpartnerships andpreferred equityinvestments |   |        | Total | 
|                                                                                                     |  |                             |        
|Beginning balance @ 1/1/08                                                                           |  | $                           | 254,394 |   |                                                            | $ | 14,524 |       |  | $ | 268,918 |  
|                                                                                                     |  |                             |        
|Net gains (losses) realized/unrealized included in earnings (or changes in net assets)               |  |                             | (8,931  | ) |                                                            |   | (813   | )     |  |   | (9,744  | )
|Equity income (losses)/interest income                                                               |  |                             |        |   |                                                            |   | 722    |       |  |   | 722     |  
|Purchases, issuances and settlements                                                                 |  |                             | 7,750   |   |                                                            |   | (814   | )     |  |   | 6,936   |  
|                                                                                                     |  |                             |         |   |                                                            |   |        |       |  |   |         |  
|Ending balance @ 9/30/08                                                                             |  | $                           | 253,213 |   |                                                            | $ | 13,619 |       |  | $ | 266,832 |  
|                                                                                                     |  |                             |         |   |                                                            |   |        |       |  |   |         |  
|                                                                                                     |  |                             |        
|Unrealized gains (losses) for the period relating to level 3 assets still held at the reporting date |  | $                           | (8,931  | ) |                                                            | $ | (813   | )     |  | $ | (9,744  | )
|                                                                                                     |  |                             |         |   |                                                            |   |        |       |  |   |         |  



24



---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

September 30, 2009 and December 31, 2008



Note 4: Fair Value Measurements (continued)



(in 000s)

Fair value measurements using significant unobservable inputs

for the three months ending September 30, 2009

(Level 3)



|                                                                                                     |  |                             |         |   |                                                            |   |        |       |  |   |         |  
|---------------------------------------------------------------------------------------------------- |  | --------------------------- | ------- | - | ---------------------------------------------------------- | - | ------ | ----- |  | - | ------- | -
|                                                                                                     |  | Real estate andimprovements |         |   | Real estate andpartnerships andpreferred equityinvestments |   |        | Total | 
|                                                                                                     |  |                             |        
|Beginning balance @ 7/1/09                                                                           |  | $                           | 176,200 |   |                                                            | $ | 10,489 |       |  | $ | 186,689 |  
|                                                                                                     |  |                             |        
|Net gains (losses) realized/unrealized included in earnings (or changes in net assets)               |  |                             | (10,078 | ) |                                                            |   | (138   | )     |  |   | (10,216 | )
|Equity income (losses)/interest income                                                               |  |                             |        |   |                                                            |   | 255    |       |  |   | 255     |  
|Purchases, issuances and settlements                                                                 |  |                             | 1,378   |   |                                                            |   | (308   | )     |  |   | 1,070   |  
|                                                                                                     |  |                             |         |   |                                                            |   |        |       |  |   |         |  
|Ending balance @ 9/30/09                                                                             |  | $                           | 167,500 |   |                                                            | $ | 10,298 |       |  | $ | 177,798 |  
|                                                                                                     |  |                             |         |   |                                                            |   |        |       |  |   |         |  
|                                                                                                     |  |                             |        
|Unrealized gains (losses) for the period relating to level 3 assets still held at the reporting date |  | $                           | (10,078 | ) |                                                            | $ | (138   | )     |  | $ | (10,216 | )
|                                                                                                     |  |                             |         |   |                                                            |   |        |       |  |   |         |  

(in 000s)

Fair value measurements using significant unobservable inputs

for the three months ending September 30, 2008

(Level 3)



|                                                                                                     |  |                             |         |   |                                                            |   |        |       |  |   |         |  
|---------------------------------------------------------------------------------------------------- |  | --------------------------- | ------- | - | ---------------------------------------------------------- | - | ------ | ----- |  | - | ------- | -
|                                                                                                     |  | Real estate andimprovements |         |   | Real estate andpartnerships andpreferred equityinvestments |   |        | Total | 
|                                                                                                     |  |                             |        
|Beginning balance @ 7/1/08                                                                           |  | $                           | 260,381 |   |                                                            | $ | 13,908 |       |  | $ | 274,289 |  
|                                                                                                     |  |                             |        
|Net gains (losses) realized/unrealized included in earnings (or changes in net assets)               |  |                             | (8,590  | ) |                                                            |   | (229   | )     |  |   | (8,819  | )
|Equity income (losses)/interest income                                                               |  |                             |        |   |                                                            |   | 212    |       |  |   | 212     |  
|Purchases, issuances and settlements                                                                 |  |                             | 1,422   |   |                                                            |   | (272   | )     |  |   | 1,150   |  
|                                                                                                     |  |                             |         |   |                                                            |   |        |       |  |   |         |  
|Ending balance @ 9/30/08                                                                             |  | $                           | 253,213 |   |                                                            | $ | 13,619 |       |  | $ | 266,832 |  
|                                                                                                     |  |                             |         |   |                                                            |   |        |       |  |   |         |  
|                                                                                                     |  |                             |        
|Unrealized gains (losses) for the period relating to level 3 assets still held at the reporting date |  | $                           | (8,590  | ) |                                                            | $ | (229   | )     |  | $ | (8,819  | )
|                                                                                                     |  |                             |         |   |                                                            |   |        |       |  |   |         |  



25



---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

September 30, 2009 and December 31, 2008



Note 5: Investment Level Debt

Investment level debt includes mortgage loans payable on wholly owned properties and consolidated partnerships and is stated
at the principal amount of the obligations outstanding. At times the Partnership may assume debt in connection with the purchase of real estate. For debt assumed, the Partnership allocates a portion of the purchase price to the below/above market
debt and amortizes the premium/discount over the remaining life of the debt.

Based on borrowing rates
available to the Partnership at September 30, 2009 for loans with similar terms and average maturities, the Partnerships mortgages on wholly owned properties and consolidated partnerships have an estimated fair value of approximately $40
million, and a carrying value of $40 million. Different assumptions or changes in future market conditions could significantly affect estimated fair value.

Note 6: Risk

A. Valuation Risk

There continue to be significant disruptions in the global capital, credit and real estate markets. These disruptions have
led to, among other things, a significant decline in the volume of transaction activity, in the fair value of many real estate and real estate related investments, and a significant contraction in short-term and long-term debt and equity funding
sources. The decline in liquidity and prices of real estate and real estate related investments, as well as in the availability of observable transaction data and inputs, may have made it more difficult to determine the fair value of such
investments. As a result, these estimated fair values may vary significantly from the prices at which the real estate investments would sell, since market prices of real estate investments can only be determined by negotiation between a willing
buyer and seller and these differences could be material to the financial statements. Although the estimated fair values represent subjective estimates, management believes that these estimated fair values are reasonable approximations of market
prices and the aggregate estimated value of investments in real estate are fairly presented as of September 30, 2009 and December 31, 2008.

B. Financing, Covenant, and Repayment Risks

In the
normal course of business, the Partnership enters into loan agreements with certain lenders to finance its real estate investment transactions. Unfavorable economic conditions could increase related borrowing costs, limit access to the capital
markets or result in a decision by lenders not to extend credit to the Partnership. There is no guarantee that the Partnerships borrowing arrangements or ability to obtain leverage will continue to be available, or if available, will be
available on terms and conditions acceptable to the Partnership. Further, these loan agreements contain, among other conditions, events of default and various covenants and representations. In the normal course of business, the Partnership may be in
the process of renegotiating terms for loans outstanding that have passed their maturity dates. At September 30, 2009 the Partnership had no outstanding matured loans.

A decline in market value of the Partnerships assets may also have particular adverse consequences in instances where the Partnership borrowed money based on the fair value of
specific assets. A decrease in market value of these assets may result in the lender requiring the Partnership to post additional collateral or otherwise repay these loans.

In the event the Partnerships current portfolio and investment obligations are not refinanced or extended when they become due and/or the Partnership is required to repay such
borrowings and obligations, management anticipates that the repayment of these obligations will be provided by operating cash flow, new debt refinancing, and real estate investment sales.

Note 7: 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 the Partnerships
management, the outcome of such matters will not have a significant effect on the financial position of the Partnership.



26



---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

September 30, 2009 and December 31, 2008



Note 8: Related Party Transactions

Pursuant to an investment management agreement, Prudential Investment Management, Inc. (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 nine months ended September 30, 2009 and 2008, management fees incurred by the Partnership were
$2,017,562 and $2,608,842, respectively.

The Partnership also reimburses PIM for certain administrative
services rendered by PIM. The amounts incurred for each of the nine months ended September 30, 2009 and 2008 were $40,222 and $40,222, respectively, and are classified as administrative expenses in the Consolidated Statements of Operations.

Note 9: Financial Highlights



|                                                                                                              |  |                                         |        |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|------------------------------------------------------------------------------------------------------------- |  | --------------------------------------- | ------ | - | ---- | - | ----- | ---- |  | - | ----- | - |  | ---- | ----- | - |  | - | ----- | -
|                                                                                                              |  | For The Nine Months Ended September 30, |       
|                                                                                                              |  | 2009                                    |        |   | 2008 |   |       | 2007 |  |   | 2006  |   |  | 2005 |      
|Per Share(Unit) Operating Performance:                                                                        |  |                                         |        |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|Net Asset Value attributable to general partners controlling interest, beginning of period                   |  | $                                       | 31.65  |   |      | $ | 36.55 |      |  | $ | 33.87 |   |  | $    | 29.59 |   |  | $ | 26.15 |  
|Income From Investment Operations:                                                                            |  |                                         |        |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|Net investment income attributable to general partners controlling interest, before management fee           |  |                                         | 1.09   |   |      |   | 1.55  |      |  |   | 1.71  |   |  |      | 1.50  |   |  |   | 1.22  |  
|Investment Management fee attributable to general partners controlling interest                              |  |                                         | (0.30  | ) |      |   | (0.39 | )    |  |   | (0.37 | ) |  |      | (0.33 | ) |  |   | (0.29 | )
|Net realized and unrealized gain (loss) on investments attributable to general partners controlling
interest |  |                                         | (6.73  | ) |      |   | (1.31 | )    |  |   | 0.89  |   |  |      | 2.07  |   |  |   | 2.05  |  
|                                                                                                              |  |                                         |        |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|Net Increase in Net Assets Resulting from Operations attributable to general partners controlling interest   |  |                                         | (5.94  | ) |      |   | (0.15 | )    |  |   | 2.23  |   |  |      | 3.24  |   |  |   | 2.98  |  
|                                                                                                              |  |                                         |        |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|                                                                                                              |  |                                         |        |   |     
|Net Asset Value attributable to general partners controlling interest, end of period                         |  | $                                       | 25.71  |   |      | $ | 36.40 |      |  | $ | 36.10 |   |  | $    | 32.83 |   |  | $ | 29.13 |  
|                                                                                                              |  |                                         |        |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|                                                                                                              |  |                                         |        |   |     
|Total Return attributable to general partners controlling interest, before Management Fee:                   |  |                                         | -17.85 | % |      |   | 0.64  | %    |  |   | 7.70  | % |  |      | 12.14 | % |  |   | 12.58 | %
|Total Return attributable to general partners controlling interest, after Management Fee (a):                |  |                                         | -18.75 | % |      |   | -0.41 | %    |  |   | 6.58  | % |  |      | 10.96 | % |  |   | 11.39 | %
|Ratios/Supplemental Data:                                                                                     |  |                                         |        |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|Net Assets attributable to general partners controlling interest, end of period (in millions)                |  | $                                       | 166    |   |      | $ | 246   |      |  | $ | 244   |   |  | $    | 222   |   |  | $ | 208   |  
|Ratios to average net assets for the period ended (b):                                                        |  |                                         |        |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|Total Portfolio Level Expenses                                                                                |  |                                         | 1.23   | % |      |   | 1.08  | %    |  |   | 1.15  | % |  |      | 1.15  | % |  |   | 1.10  | %
|Net Investment Income, before Management Fee                                                                  |  |                                         | 3.76   | % |      |   | 4.20  | %    |  |   | 5.02  | % |  |      | 4.87  | % |  |   | 3.04  | %



|(a) | Total Return, after 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.
|--- | ----------------------------------------------------------------

Note 10: Subsequent Event

On October 1, 2009, the
Partnership paid in full the outstanding investment level debt balance and accrued interest related to the Brookwood Apartments in the amount of $8,782,013.



27



---

|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

All of the assets of the Real Property Account, or the Account, are invested in the Partnership. Accordingly, the liquidity and capital resources and results of
operations for the Account are contingent upon those of the Partnership. Therefore, this managements discussion and analysis addresses these items at the Partnership level. The partners in the Partnership are Prudential, Pruco Life Insurance
Company, and Pruco Life Insurance Company of New Jersey, or collectively, the Partners.

The following discussion
and analysis of the liquidity and capital resources and results of operations of the Partnership should be read in conjunction with the unaudited Consolidated Financial Statements of the Account and the Partnership and the related Notes included in
this filing.

(a) Liquidity and Capital Resources

As of September 30, 2009, the Partnerships liquid assets, consisting of cash and cash equivalents, were approximately $33.2 million, an increase of approximately $5.5
million from $27.7 million at December 31, 2008. The increase was primarily due to cash flows received from the Partnerships operating activities and the disposition of a retail asset, as discussed below. Partially offsetting this
increase were capital expenditures to existing properties and a distribution to the Partners, as detailed below. Sources of liquidity included net cash flow from property operations, financings, dispositions, and interest from short-term
investments. The Partnership uses cash for its real estate investment activities and for its distributions to its partners. As of September 30, 2009, approximately 15.5% of the Partnerships total assets consisted of cash and cash
equivalents.

The Partnership disposed of a retail center in Roswell, Georgia during the nine months ended September 30,
2009. The property sold for net proceeds of approximately $9.7 million. Also during the period, the Partnership made distributions to its Partners totaling $8.0 million. As of September 30, 2009, the Partnership had reserved approximately $8.8
million to pay off the loan secured by the apartment property in Atlanta, Georgia, which was paid on October 1, 2009.

During the nine months ended September 30, 2009, the Partnership spent approximately $2.5 million on capital improvements to various existing properties. Approximately $0.9 million was associated with leasing commissions and capital
upgrades at the office property in Brentwood, Tennessee; approximately $0.3 million was spent on property upgrades and leasing costs at the office property in Lisle, Illinois; approximately $0.3 million funded renovations and repairs at the
apartment property in Atlanta, Georgia; approximately $0.3 million contributed to renovations and exterior upgrades at the hotel property in Lake Oswego, Oregon; and approximately $0.2 million financed a parking lot expansion at the office property
in Brentwood, Tennessee. The remaining $0.5 million was associated with minor capital improvements and transaction costs associated with leasing expenses of various other properties.



28



---

(b) Results of Operations

The following is a comparison of the Partnerships results of operations for the nine and three-month periods ended September 30,
2009, and 2008.

Net Investment Income Overview

The Partnerships net investment income attributable to the general partners controlling interest for the nine months ended September 30, 2009 was approximately $5.2
million, a decrease of approximately $3.2 million from the prior year period. The decrease in net investment income attributable to the general partners controlling interest resulted primarily from a $1.3 million decline in the retail sector
investments net investment income from the prior year period. Additionally the office, apartment, and hotel sector investments net investment incomes declined approximately $0.9 million, $0.5 million, and $0.5 million from the prior year
period, respectively. The components of this net investment income and/or loss attributable to the general partners controlling interest are discussed below by investment type.

The Partnerships net investment income attributable to the general partners controlling interest for the quarter ended September 30, 2009 was approximately $1.7
million, a decrease of approximately $0.7 million from the prior year period. The decrease in net investment income attributable to the general partners controlling interest was primarily attributable to the $0.5 million decline in the office
sector investments net investment income from the prior year period. Additionally the hotel and apartment sector investments net investment incomes attributable to the general partners controlling interest declined approximately
$0.2 million and $0.1 million from the prior year period, respectively. Partially offsetting this decline was a decrease in other net investment losses attributable to the general partners controlling interest of approximately $0.1 million
from the prior year period. The components of this net investment income and/or loss attributable to the general partners controlling interest are discussed below by investment type.

Valuation Overview

The Partnership recognized a loss attributable to the general partners controlling interest of $4.5 million for the nine-month period ended September 30, 2009, compared with no realized gains or losses attributable to the general
partners controlling interest for the prior year period. The loss was a result of a disposition of an asset at a price below the appraised gross market value of the Partnerships retail property in Roswell, Georgia.

The Partnership recorded a net unrealized loss attributable to the general partners controlling interest of approximately $40.6
million for the nine months ended September 30, 2009, compared with a net unrealized loss attributable to the general partners controlling interest of approximately $9.4 million for the prior year period. The net unrealized loss
attributable to the general partners controlling interest for the nine months ended September 30, 2009 was due to property valuation declines across all property sectors.

The Partnership recorded a net unrealized loss attributable to the general partners controlling interest of approximately $9.6 million for the quarter ended September 30,
2009, compared with a net unrealized loss attributable to the general partners controlling interest of approximately $8.2 million for the prior year period. The net unrealized loss attributable to the general partners controlling
interest for the quarter ended September 30, 2009 was a result of property valuation declines in the retail, office, hotel, and apartment sector investments of approximately $4.7 million, $3.5 million, $0.8 million, and $0.7 million,
respectively. The net unrealized losses attributable to the general partners controlling interest for the nine and three-month periods ended September 30, 2009, respectively, were attributable to valuation declines in all property sectors
primarily due to increased investment rates suggesting an industry-wide repricing. Investment rates include direct and terminal capitalization rates (average increases for the Partnership of 86 and 55 basis points, respectively, from the period
ended December 31, 2008), and discount rates (average increase for the Partnership of 72 basis points from the period ended December 31, 2008), which reflect investors yield requirements on investments. The increase in investment
rates was caused by the national economic downturn, frozen credit markets, weakening market fundamentals, and deteriorated demand for commercial real estate. The components of these valuation losses are discussed below by investment type.



29



---

The following table presents a comparison of the Partnerships sources of net
investment income attributable to the general partners controlling interest, and realized and unrealized gains or losses attributable to the general partners controlling interest by investment type for the nine and three-month periods
ended September 30, 2009 and 2008.



|                                                                   |  |                                 |             |   |                                  |   |            |      |  |   |            |   |  |   |            |  
|------------------------------------------------------------------ |  | ------------------------------- | ----------- | - | -------------------------------- | - | ---------- | ---- |  | - | ---------- | - |  | - | ---------- | -
|                                                                   |  | Nine Months Ended September 30, |             |   | Three Months Ended September 30, |  
|                                                                   |  | 2009                            |             |   | 2008                             |   |            | 2009 |  |   | 2008       |  
|Net Investment Income:                                             |  |                                 |             |   |                                  |   |            |      |  |   |            |   |  |   |            |  
|                                                                   |  |                                 |             |  
|Office properties                                                  |  | $                               | 2,063,323   |   |                                  | $ | 2,946,458  |      |  | $ | 507,941    |   |  | $ | 1,002,889  |  
|Apartment properties                                               |  |                                 | 1,883,182   |   |                                  |   | 2,403,477  |      |  |   | 592,254    |   |  |   | 703,351    |  
|Retail properties                                                  |  |                                 | 3,194,788   |   |                                  |   | 4,464,769  |      |  |   | 1,032,375  |   |  |   | 1,060,885  |  
|Hotel property                                                     |  |                                 | 416,843     |   |                                  |   | 961,822    |      |  |   | 261,054    |   |  |   | 432,562    |  
|Other (including interest income, investment mgt fee, etc.)        |  |                                 | (2,323,208  | ) |                                  |   | (2,338,642 | )    |  |   | (669,130   | ) |  |   | (797,223   | )
|                                                                   |  |                                 |             |   |                                  |   |            |      |  |   |            |   |  |   |            |  
|Total Net Investment Income                                        |  | $                               | 5,234,928   |   |                                  | $ | 8,437,884  |      |  | $ | 1,724,494  |   |  | $ | 2,402,464  |  
|                                                                   |  |                                 |             |   |                                  |   |            |      |  |   |            |   |  |   |            |  
|                                                                   |  |                                 |             |  
|Net Realized Gain (Loss) on Real Estate Investments:               |  |                                 |             |   |                                  |   |            |      |  |   |            |   |  |   |            |  
|                                                                   |  |                                 |             |  
|Retail properties                                                  |  |                                 | (4,452,106  | ) |                                  |   |           |      |  |   |           |   |  |   |           |  
|                                                                   |  |                                 |             |   |                                  |   |            |      |  |   |            |   |  |   |            |  
|Net Realized Gain (Loss) on Real Estate Investments                |  |                                 | (4,452,106  | ) |                                  |   |           |      |  |   |           |   |  |   |           |  
|                                                                   |  |                                 |             |   |                                  |   |            |      |  |   |            |   |  |   |            |  
|                                                                   |  |                                 |             |  
|Net Unrealized Gain (Loss) on Real Estate Investments:             |  |                                 |             |   |                                  |   |            |      |  |   |            |   |  |   |            |  
|                                                                   |  |                                 |             |  
|Office properties                                                  |  |                                 | (15,033,244 | ) |                                  |   | (3,810,194 | )    |  |   | (3,492,532 | ) |  |   | (1,447,594 | )
|Apartment properties                                               |  |                                 | (10,167,354 | ) |                                  |   | 1,550,725  |      |  |   | (642,718   | ) |  |   | 940,413    |  
|Retail properties                                                  |  |                                 | (12,136,729 | ) |                                  |   | (6,721,128 | )    |  |   | (4,728,952 | ) |  |   | (7,292,156 | )
|Hotel property                                                     |  |                                 | (3,229,699  | ) |                                  |   | (460,225   | )    |  |   | (759,369   | ) |  |   | (359,467   | )
|                                                                   |  |                                 |             |   |                                  |   |            |      |  |   |            |   |  |   |            |  
|                                                                   |  |                                 |             |  
|Net Unrealized Gain (Loss) on Real Estate Investments              |  |                                 | (40,567,026 | ) |                                  |   | (9,440,822 | )    |  |   | (9,623,571 | ) |  |   | (8,158,804 | )
|                                                                   |  |                                 |             |   |                                  |   |            |      |  |   |            |   |  |   |            |  
|                                                                   |  |                                 |             |  
|Net Realized and Unrealized Gain (Loss) on Real Estate Investments |  | $                               | (45,019,132 | ) |                                  | $ | (9,440,822 | )    |  | $ | (9,623,571 | ) |  | $ | (8,158,804 | )
|                                                                   |  |                                 |             |   |                                  |   |            |      |  |   |            |   |  |   |            |  



30



---

OFFICE PROPERTIES



|                                 |  |                                 |           |   |                                 |   |                           |  |   |                           |   |  |               |            |   |               |     |   |  |     |  
|-------------------------------- |  | ------------------------------- | --------- | - | ------------------------------- | - | ------------------------- |  | - | ------------------------- | - |  | ------------- | ---------- | - | ------------- | --- | - |  | --- | -
|Nine Months Ended September 30,  |  | Net InvestmentIncome/(Loss)2009 |           |   | Net InvestmentIncome/(Loss)2008 |   | UnrealizedGain/(Loss)2009 |  |   | UnrealizedGain/(Loss)2008 |   |  | Occupancy2009 |            |   | Occupancy2008 |    
|Property                         |  |                                 |           |   |                                 |   |                           |  |   |                           |   |  |               |            |   |               |     |   |  |     |  
|Lisle, IL                        |  | $                               | 51,479    |   |                                 | $ | 523,139                   |  | $ | (3,191,325                | ) |  | $             | (2,144,192 | ) |               | 36  | % |  | 70  | %
|Brentwood, TN                    |  |                                 | 319,676   |   |                                 |   | 780,310                   |  |   | (6,495,216                | ) |  |               | 249,458    |   |               | 70  | % |  | 89  | %
|Beaverton, OR                    |  |                                 | 899,962   |   |                                 |   | 840,781                   |  |   | (2,272,417                | ) |  |               | (1,215,460 | ) |               | 88  | % |  | 88  | %
|Brentwood, TN                    |  |                                 | 792,206   |   |                                 |   | 802,228                   |  |   | (3,074,286                | ) |  |               | (700,000   | ) |               | 100 | % |  | 100 | %
|                                 |  |                                 |           |   |                                 |   |                           |  |   |                           |   |  |               |            |   |               |     |   |  |     |  
|                                 |  | $                               | 2,063,323 |   |                                 | $ | 2,946,458                 |  | $ | (15,033,244               | ) |  | $             | (3,810,194 | ) |               |     |   |  |     |  
|                                 |  |                                 |           |   |                                 |   |                           |  |   |                           |   |  |               |            |   |               |     |   |  |     |  
|                                 |  |                                 |           |   |                                 |  
|Three Months Ended September 30, |  |                                 |           |   |                                 |   |                           |  |   |                           |   |  |               |            |   |               |    
|Property                         |  |                                 |           |   |                                 |   |                           |  |   |                           |   |  |               |            |   |               |     |   |  |     |  
|Lisle, IL                        |  | $                               | 5,704     |   |                                 | $ | 229,109                   |  | $ | (894,393                  | ) |  | $             | (1,007,132 | ) |               |     |   |  |     |  
|Brentwood, TN                    |  |                                 | (33,309   | ) |                                 |   | 256,049                   |  |   | (2,003,042                | ) |  |               | 273,195    |   |               |     |   |  |     |  
|Beaverton, OR                    |  |                                 | 295,655   |   |                                 |   | 279,321                   |  |   | (242,152                  | ) |  |               | (13,657    | ) |               |     |   |  |     |  
|Brentwood, TN                    |  |                                 | 239,891   |   |                                 |   | 238,410                   |  |   | (352,945                  | ) |  |               | (700,000   | ) |               |     |   |  |     |  
|                                 |  |                                 |           |   |                                 |   |                           |  |   |                           |   |  |               |            |   |               |     |   |  |     |  
|                                 |  | $                               | 507,941   |   |                                 | $ | 1,002,889                 |  | $ | (3,492,532                | ) |  | $             | (1,447,594 | ) |               |     |   |  |     |  
|                                 |  |                                 |           |   |                                 |   |                           |  |   |                           |   |  |               |            |   |               |     |   |  |     |  

Net Investment Income

Net investment income attributable to the general partners controlling interest for the Partnerships office properties was approximately $2.1 million for the nine months
ended September 30, 2009, a decrease of approximately $0.9 million from the prior year period. Net investment income attributable to the general partners controlling interest for the Partnerships office properties was approximately
$0.5 million for the quarter ended September 30, 2009, a decrease of approximately $0.5 million from the prior year period. The decreases for the nine and three-month periods ended September 30, 2009 were primarily due to a) decreased
occupancy at the property in Lisle, Illinois; and b) a decrease in occupancy and a rental abatement given to the largest tenant at the property in Brentwood, Tennessee. Partially offsetting this decrease was an increase in net investment income
attributable to the general partners controlling interest at the property in Beaverton, Oregon due to increased rents.

Unrealized Gain/(Loss)

The office properties owned by the Partnership recorded a net unrealized loss
attributable to the general partners controlling interest of approximately $15.0 million during the nine months ended September 30, 2009, compared with a net unrealized loss attributable to the general partners controlling interest
of approximately $3.8 million for the prior year period. The net unrealized loss attributable to the general partners controlling interest for the nine-month period ended September 30, 2009 was primarily due to valuation declines caused
by (a) increased investment rates (average direct capitalization rate increases for the Partnerships office investments of 65 basis points for the nine-month period ended September 30, 2009) and implementation of more conservative
growth and market leasing projections reflecting the market downturn across the office sector; and (b) significant upcoming capital requirements associated with leasing costs at the properties in Lisle, Illinois and Brentwood, Tennessee.

The office properties owned by the Partnership recorded a net unrealized loss attributable to the general partners
controlling interest of approximately $3.5 million during the quarter ended September 30, 2009, compared with a net unrealized loss attributable to the general partners controlling interest of approximately $1.4 million for the prior year
period. The net unrealized loss attributable to the general partners controlling interest for the three-month period ended September 30, 2009 was primarily due to valuation declines caused by significant upcoming capital requirements
associated with leasing costs at the properties in Lisle, Illinois and Brentwood, Tennessee.



31



---

APARTMENT PROPERTIES



|                                 |  |                                 |           |                                 |   |                           |  |   |                           |   |  |               |           |   |               |    |   |  |    |  
|-------------------------------- |  | ------------------------------- | --------- | ------------------------------- | - | ------------------------- |  | - | ------------------------- | - |  | ------------- | --------- | - | ------------- | -- | - |  | -- | -
|Nine Months Ended September 30,  |  | Net InvestmentIncome/(Loss)2009 |           | Net InvestmentIncome/(Loss)2008 |   | UnrealizedGain/(Loss)2009 |  |   | UnrealizedGain/(Loss)2008 |   |  | Occupancy2009 |           |   | Occupancy2008 |   
|Property                         |  |                                 |           |                                 |   |                           |  |   |                           |   |  |               |           |   |               |    |   |  |    |  
|Atlanta, GA                      |  | $                               | 332,593   |                                 | $ | 417,093                   |  | $ | (2,538,635                | ) |  | $             | 269,612   |   |               | 95 | % |  | 92 | %
|Raleigh, NC                      |  |                                 | 186,989   |                                 |   | 476,502                   |  |   | (1,660,188                | ) |  |               | 865,688   |   |               | 96 | % |  | 94 | %
|Austin, TX                       |  |                                 | 941,126   |                                 |   | 1,063,838                 |  |   | (4,083,628                | ) |  |               | 498,422   |   |               | 94 | % |  | 94 | %
|Charlotte, NC                    |  |                                 | 422,474   |                                 |   | 446,044                   |  |   | (1,884,903                | ) |  |               | (82,997   | ) |               | 96 | % |  | 94 | %
|                                 |  |                                 |           |                                 |   |                           |  |   |                           |   |  |               |           |   |               |    |   |  |    |  
|                                 |  | $                               | 1,883,182 |                                 | $ | 2,403,477                 |  | $ | (10,167,354               | ) |  | $             | 1,550,725 |   |               |    |   |  |    |  
|                                 |  |                                 |           |                                 |   |                           |  |   |                           |   |  |               |           |   |               |    |   |  |    |  
|                                 |  |                                 |           |                                 |   |                          
|Three Months Ended September 30, |  |                                 |           |                                 |   |                           |  |   |                           |   |  |               |           |   |               |   
|Property                         |  |                                 |           |                                 |   |                           |  |   |                           |   |  |               |           |   |               |    |   |  |    |  
|Atlanta, GA                      |  | $                               | 92,606    |                                 | $ | 86,778                    |  | $ | (596,264                  | ) |  | $             | 169,169   |   |               |    |   |  |    |  
|Raleigh, NC                      |  |                                 | 79,867    |                                 |   | 144,058                   |  |   | (29,414                   | ) |  |               | 484,751   |   |               |    |   |  |    |  
|Austin, TX                       |  |                                 | 270,168   |                                 |   | 302,575                   |  |   | 1,000,000                 |   |  |               | 300,000   |   |               |    |   |  |    |  
|Charlotte, NC                    |  |                                 | 149,613   |                                 |   | 169,940                   |  |   | (1,017,040                | ) |  |               | (13,507   | ) |               |    |   |  |    |  
|                                 |  |                                 |           |                                 |   |                           |  |   |                           |   |  |               |           |   |               |    |   |  |    |  
|                                 |  | $                               | 592,254   |                                 | $ | 703,351                   |  | $ | (642,718                  | ) |  | $             | 940,413   |   |               |    |   |  |    |  
|                                 |  |                                 |           |                                 |   |                           |  |   |                           |   |  |               |           |   |               |    |   |  |    |  

Net Investment Income

Net investment income attributable to the general partners controlling interest for the Partnerships apartment properties was approximately $1.9 million for the nine
months ended September 30, 2009, a decrease of approximately $0.5 million from the prior year period. The decrease in net investment income attributable to the general partners controlling interest for the nine month period ended
September 30, 2009 was primarily due to the write-off of previous years accrued receivables at the property in Raleigh, North Carolina, and increased concessions at each apartment property caused by soft market conditions and weakened
demand.

Net investment income attributable to the general partners controlling interest for the Partnerships
apartment properties was approximately $0.6 million for the quarter ended September 30, 2009, a decrease of approximately $0.1 million from the prior year period. The decrease in net investment income attributable to the general partners
controlling interest for the quarter ended September 30, 2009 was primarily due to increased concessions at each apartment property caused by soft market conditions and weakened demand.

Unrealized Gain/(Loss)

The apartment properties owned by the Partnership recorded a net unrealized loss attributable to the general partners controlling interest of approximately $10.2 million for the nine months ended
September 30, 2009, compared with a net unrealized gain attributable to the general partners controlling interest of approximately $1.6 million for the prior year period. The apartment properties owned by the Partnership recorded a net
unrealized loss attributable to the general partners controlling interest of approximately $0.6 million for the quarter ended September 30, 2009, compared with a net unrealized gain attributable to the general partners controlling
interest of approximately $0.9 million for the prior year period. The net unrealized losses attributable to the general partners controlling interest for the nine and three-month periods ended September 30, 2009 were primarily due to
valuation declines caused by increased investment rates (average direct capitalization rate increases for the Partnerships apartment investments of 79 and 20 basis points, respectively, for the nine and three-month periods ended
September 30, 2009) and implementation of more conservative growth and market leasing projections reflecting the market downturn across the apartment sector.



32



---

RETAIL PROPERTIES



|                                 |  |                                 |           |   |                                 |   |           |                                     |  |   |                           |   |  |               |            |   |               |     |   |  |     |  
|-------------------------------- |  | ------------------------------- | --------- | - | ------------------------------- | - | --------- | ----------------------------------- |  | - | ------------------------- | - |  | ------------- | ---------- | - | ------------- | --- | - |  | --- | -
|Nine Months Ended September 30,  |  | Net InvestmentIncome/(Loss)2009 |           |   | Net InvestmentIncome/(Loss)2008 |   |           | Realized &UnrealizedGain/(Loss)2009 |  |   | UnrealizedGain/(Loss)2008 |   |  | Occupancy2009 |            |   | Occupancy2008 |    
|Property                         |  |                                 |           |   |                                 |   |           |                                     |  |   |                           |   |  |               |            |   |               |     |   |  |     |  
|Roswell, GA(1)                   |  | $                               | 137,068   |   |                                 | $ | 1,307,896 |                                     |  | $ | (4,452,106                | ) |  | $             | (6,210,373 | ) |               | N/A |   |  | 79  | %
|Kansas City, KS(2)               |  |                                 | 21,094    |   |                                 |   | (34,738   | )                                   |  |   |                          |   |  |               |           |   |               | N/A |   |  | N/A |  
|Hampton, VA                      |  |                                 | 753,204   |   |                                 |   | 990,925   |                                     |  |   | (4,314,384                | ) |  |               | 1,039,970  |   |               | 89  | % |  | 99  | %
|Ocean City, MD                   |  |                                 | 845,623   |   |                                 |   | 588,363   |                                     |  |   | (1,877,704                | ) |  |               | (135,750   | ) |               | 95  | % |  | 89  | %
|Westminster, MD                  |  |                                 | 888,835   |   |                                 |   | 875,779   |                                     |  |   | (4,100,156                | ) |  |               | (594,987   | ) |               | 100 | % |  | 100 | %
|Dunn, NC                         |  |                                 | (200,090  | ) |                                 |   | (13,500   | )                                   |  |   | (415,885                  | ) |  |               | (6,820     | ) |               | 34  | % |  | 34  | %
|CARS Preferred Equity            |  |                                 | 749,054   |   |                                 |   | 750,044   |                                     |  |   | (1,428,600                | ) |  |               | (813,168   | ) |               | N/A |   |  | N/A |  
|                                 |  |                                 |           |   |                                 |   |           |                                     |  |   |                           |   |  |               |            |   |               |     |   |  |     |  
|                                 |  | $                               | 3,194,788 |   |                                 | $ | 4,464,769 |                                     |  | $ | (16,588,835               | ) |  | $             | (6,721,128 | ) |               |     |   |  |     |  
|                                 |  |                                 |           |   |                                 |   |           |                                     |  |   |                           |   |  |               |            |   |               |     |   |  |     |  
|                                 |  |                                 |           |   |                                 |  
|Three Months Ended September 30, |  |                                 |           |   |                                 |   |           |                                     |  |   |                           |   |  |               |            |   |               |    
|Property                         |  |                                 |           |   |                                 |   |           |                                     |  |   |                           |   |  |               |            |   |               |     |   |  |     |  
|Roswell, GA(1)                   |  | $                               | (96,692   | ) |                                 | $ | 392,849   |                                     |  | $ |                          |   |  | $             | (5,501,424 | ) |               |     |   |  |     |  
|Kansas City, KS(2)               |  |                                 | 362       |   |                                 |   | (42,225   | )                                   |  |   |                          |   |  |               |           |   |               |     |   |  |     |  
|Hampton, VA                      |  |                                 | 250,499   |   |                                 |   | 321,838   |                                     |  |   | (2,501,128                | ) |  |               | (255,099   | ) |               |     |   |  |     |  
|Ocean City, MD                   |  |                                 | 278,854   |   |                                 |   | 265,982   |                                     |  |   | (370,820                  | ) |  |               | (616,807   | ) |               |     |   |  |     |  
|Westminster, MD                  |  |                                 | 279,782   |   |                                 |   | 111,047   |                                     |  |   | (1,300,036                | ) |  |               | (594,054   | ) |               |     |   |  |     |  
|Dunn, NC                         |  |                                 | 66,926    |   |                                 |   | (238,221  | )                                   |  |   | (418,568                  | ) |  |               | (96,196    | ) |               |     |   |  |     |  
|CARS Preferred Equity            |  |                                 | 252,644   |   |                                 |   | 249,615   |                                     |  |   | (138,400                  | ) |  |               | (228,576   | ) |               |     |   |  |     |  
|                                 |  |                                 |           |   |                                 |   |           |                                     |  |   |                           |   |  |               |            |   |               |     |   |  |     |  
|                                 |  | $                               | 1,032,375 |   |                                 | $ | 1,060,885 |                                     |  | $ | (4,728,952                | ) |  | $             | (7,292,156 | ) |               |     |   |  |     |  
|                                 |  |                                 |           |   |                                 |   |           |                                     |  |   |                           |   |  |               |            |   |               |     |   |  |     |  



|(1) | The Roswell,
Georgia retail property was sold on May 1, 2009.
|--- | -------------------------------------------------------------

|(2) | The Kansas City, Kansas retail property was sold on June 29, 2007 but certain post-closing adjustments were recognized during the nine months
ended September 30, 2009.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

Net Investment Income

Net investment income attributable to the general partners controlling interest for the Partnerships retail properties was
approximately $3.2 million for the nine months ended September 30, 2009, a decrease of approximately $1.3 million from the prior year period. The decrease in net investment income attributable to the general partners controlling interest
for the nine-month period ended September 30, 2009 was largely due to (a) the loss of income related to the disposition of the Roswell, Georgia retail property; (b) increased vacancy at the retail property in Hampton, Virginia; and
(c) increased rent relief across each retail property. This decrease was partially offset by an increase in net investment income at the retail property in Ocean City, Maryland due to increased occupancy resulting from the completion of
redevelopment.

Net investment income attributable to the general partners controlling interest for the
Partnerships retail properties was approximately $1.0 million for the quarter ended September 30, 2009, relatively unchanged from the prior year period. The loss of income related to the disposition of the Roswell, Georgia retail property
was offset by a one-time occurrence related to bad debt expense at the retail property in Dunn, North Carolina during the prior year period and the allowance for accrued interest income that was deemed uncollectible and written off at the retail
property in Westminster, Maryland during the prior year period.



33



---

Realized and Unrealized Gain/(Loss)

The retail properties owned by the Partnership recorded a net realized and unrealized loss attributable to the general partners
controlling interest of approximately $16.6 million for the nine months ended September 30, 2009, compared with a net unrealized gain attributable to the general partners controlling interest of approximately $6.7 million for the prior
year period. The unrealized loss attributable to the general partners controlling interest for the nine-month period ended September 30, 2009 was primarily due to (a) a net realized loss attributable to the general partners
controlling interest of approximately $4.5 million at the retail property in Roswell, Georgia due to the disposition of the asset at a price below the appraised gross market value; (b) a net unrealized loss attributable to the general
partners controlling interest of approximately $1.4 million the Capital Automotive Real Estate Services, or CARS, preferred equity investment due to increased market yield expectations for similar financial investments and an
increasingly high position in the capital stack, which reflects a decreased likelihood of return of capital; (c) deteriorating retail fundamentals resulting in reduced market rents and increased rent relief across the retail sector investments;
(d) increased investment rates (average direct capitalization rate increase for the Partnerships retail investments excluding CARS of 117 basis points for the nine-month period ended September 30, 2009); and
(e) implementation of more conservative growth and market leasing projections reflecting the market downturn across the retail sector.

The retail properties owned by the Partnership recorded a net realized and unrealized loss attributable to the general partners controlling interest of approximately $4.7 million for the quarter
ended September 30, 2009, compared with a net unrealized loss attributable to the general partners controlling interest of approximately $7.3 million for the prior year period. The unrealized loss attributable to the general
partners controlling interest for the quarter ended September 30, 2009 was primarily due to (a) deteriorating retail fundamentals resulting in reduced market rents and increased rent relief across the retail sector investments; and
(b) increased investment rates (average direct capitalization rate increases for the Partnerships retail investments excluding CARS of 40 basis points for the quarter ended September 30, 2009); and (c) implementation
of more conservative growth and market leasing projections reflecting the market downturn across the retail sector.

HOTEL PROPERTY



|                                 |  |                                 |         |                                 |   |                           |  |   |                           |   |  |               |          |   |               |    |   |  |    |  
|-------------------------------- |  | ------------------------------- | ------- | ------------------------------- | - | ------------------------- |  | - | ------------------------- | - |  | ------------- | -------- | - | ------------- | -- | - |  | -- | -
|Nine Months Ended September 30,  |  | Net InvestmentIncome/(Loss)2009 |         | Net InvestmentIncome/(Loss)2008 |   | UnrealizedGain/(Loss)2009 |  |   | UnrealizedGain/(Loss)2008 |   |  | Occupancy2009 |          |   | Occupancy2008 |   
|Property                         |  |                                 |         |                                 |   |                           |  |   |                           |   |  |               |          |   |               |    |   |  |    |  
|Lake Oswego, OR                  |  | $                               | 416,843 |                                 | $ | 961,822                   |  | $ | (3,229,699                | ) |  | $             | (460,225 | ) |               | 61 | % |  | 76 | %
|                                 |  |                                 |         |                                 |   |                          
|Three Months Ended September 30, |  |                                 |         |                                 |   |                           |  |   |                           |   |  |               |          |   |               |   
|Property                         |  |                                 |         |                                 |   |                           |  |   |                           |   |  |               |          |   |               |    |   |  |    |  
|Lake Oswego, OR                  |  | $                               | 261,054 |                                 | $ | 432,562                   |  | $ | (759,369                  | ) |  | $             | (359,467 | ) |               |    |   |  |    |  

Net Investment Income

Net investment income attributable to the general partners controlling interest for the Partnerships hotel property was approximately $0.4 million for the nine months
ended September 30, 2009, a decrease of approximately $0.6 million from the prior year period. Net investment income attributable to the general partners controlling interest for the Partnerships hotel property was approximately
$0.3 million for the quarter ended September 30, 2009, a decrease of approximately $0.2 million from the prior year period. The decrease in net investment income attributable to the general partners controlling interest for the
Partnerships hotel property for the nine and three-month periods ended September 30, 2009 was largely due to decreased occupancy and average daily room rate at the property as a result of the weakening hospitality market driven by
decreased business and vacation travel.

Unrealized Gain/(Loss)

The Partnerships hotel property recorded an unrealized loss attributable to the general partners controlling interest of approximately $3.2 million for the nine months
ended September 30, 2009, compared with an unrealized loss attributable to the general partners controlling interest of approximately $0.5 million for the prior year period. The Partnerships hotel property recorded an unrealized
loss attributable to the general partners controlling interest of approximately $0.8 million for the quarter ended September 30, 2009, compared with an unrealized loss attributable to the general partners controlling interest of
$0.4 million for the prior year period. The unrealized losses attributable to the general partners controlling interest for the Partnerships hotel property for both the nine and three-month periods ended September 30, 2009 were due
to valuation declines caused by decreased occupancy and average daily rate, increased investment rates (average direct capitalization rate increases for the Partnerships hotel investment of 75 basis points for the nine-month period ended
September 30, 2009), and implementation of more conservative growth and market leasing projections reflecting the market downturn across the hotel sector.



34



---

Other

Other net investment loss attributable to the general partners controlling interest remained relatively unchanged from the prior year period for the nine month period ended
September 30, 2009. Other net investment loss attributable to the general partners controlling interest decreased $0.1 million for the quarter ended September 30, 2009 over the prior year period. Other net investment includes
interest income from short-term investments, investment management fees, and portfolio level expenses.

(c) Inflation

A majority of the Partnerships leases with 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 partially 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, or U.S. GAAP, requires the application of accounting
policies that often involve a significant degree of judgment. Management reviews critical estimates and assumptions on an ongoing basis. 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 unaudited Consolidated Financial Statements of the Account and the Partnership may change significantly.

The following sections discuss those critical accounting policies applied in preparing the unaudited Consolidated Financial Statements of
the Account and the Partnership that are most dependent on the application of estimates and assumptions.

Accounting
Pronouncements Adopted

The Partnership adopted the FASB interpretation guidance on accounting for uncertainty in
income taxes as of January 1, 2007. This interpretation prescribes a comprehensive model for how a partnership should recognize, measure, present, and disclose in its financial statements uncertain tax positions that the Partnership has taken
or expects to take on a tax return. The adoption of this guidance had no effect to the financial position and result of operations of the Partnership.

In September 2006, the FASB issued authoritative guidance for fair value measurements. This guidance defines fair value, establishes a framework for measuring fair value in generally accepted accounting
principles, and requires additional disclosures about fair value measurements. This guidance does not require any new fair value measurements, but the application of this guidance could change current practices in determining fair value. This
guidance is effective for fiscal years beginning after November 15, 2007 with early adoption permitted. The Partnerships adoption effective January 1, 2008 did not have any material effect on the Partnerships financial position
and result of operations.

In February 2007, the FASB issued authoritative guidance on fair value option for financial assets
and financial liabilities, which provides entities with an option to report selected financial assets and liabilities at fair value. This guidance also amended certain provisions in the existing guidance for investments in debt and equity
securities. This guidance is effective for fiscal years beginning after November 15, 2007 with early adoption permitted. The Partnership adopted this guidance effective January 1, 2008, however, the Partnership did not make a fair value
option election for its existing debt. The Partnerships adoption did not have any effect on the Partnerships consolidated financial position and results of operations. Please refer to Note 4 of the related Notes in this filing for
details.

In December 2007, FASB revised authoritative guidance for business combinations, which expands the definition of a
business and redefines the acquisition date in a merger and acquisition transaction. It significantly modifies the existing guidance for business combinations, including changes to acquisition related contingent consideration, preacquisition
contingencies, noncontrolling interest, restructuring costs, in-process R&D, goodwill and partial acquisition. This guidance is effective for acquisitions closing after the first annual reporting period beginning after December 15, 2008.
The Partnerships adoption of this guidance effective January 1, 2009 did not have a material effect on the Partnerships consolidated financial position or results of operations, but may have an effect on the accounting for future
business combinations.

In December 2007, FASB revised the accounting, presentation and disclosure for noncontrolling
interests in consolidated financial statements. This revised guidance requires noncontrolling interests to be reported as a separate component of equity. It also changes the allocation of losses and accounting in step acquisitions. The provisions in
this revision should be applied prospectively except for the presentation and disclosure requirements, which are required retrospectively for all periods presented. This guidance is effective for the annual periods beginning after December 15,
2008. The Partnerships adoption of this guidance effective January 1, 2009 did not have a material effect on the Partnerships consolidated financial position or results of operations, but did affect financial statement presentation
and disclosure. Noncontrolling interests, previously reported as a liability, are now required to be reported as a separate component of equity on the balance sheet, and totaled $4.9 million as of December 31, 2008. In addition, net income
(loss) attributable to the noncontrolling interest, which was previously reported as an expense and reflected within Net Investment Income is now reported as a separate amount below Increase (decrease) in Net Assets Resulting from
Operations, and totaled ($0.5) and ($0.6) million for the three and nine months ended September 30, 2008, respectively.



35



---

In April 2009, the FASB revised authoritative guidance on issued recognition and
presentation of other-than-temporary impairments. This revision amends the other-than-temporary impairment guidance for debt securities and expands the presentation and disclosure requirements of other-than-temporary impairments on debt and equity
securities in the financial statements. This revision also requires that the required annual disclosures for debt and equity securities be made for interim reporting periods. This revision does not amend existing recognition and measurement guidance
related to other-than-temporary impairments of equity securities. This revision is effective for interim and annual reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. The
Partnerships early adoption of this guidance effective January 1, 2009 did not have a material effect on the Partnerships consolidated financial position or results of operations.

In April 2009, the FASB issued authoritative guidance on determining fair value when the volume and level of activity for the asset or
liability have significantly decreased and identifying transactions that are not orderly. This guidance also amends the disclosure requirements in interim and annual periods. This guidance is effective for interim and annual reporting periods ending
after June 15, 2009, and shall be applied prospectively. Early adoption is permitted for periods ending after March 15, 2009. The Partnerships early adoption of this guidance effective January 1, 2009 did not have a material
effect on the Partnerships consolidated financial position or results of operations.

In April 2009, the FASB issued
additional guidance for accounting for assets acquired and liabilities assumed in a business combination that arise from contingencies. This guidance requires an asset acquired or liability assumed in a business combination that arises from a
contingency to be recognized at fair value at the acquisition date, if the acquisition date fair value of that asset or liability can be determined during the measurement period. If the acquisition date fair value of an asset acquired or liability
assumed in a business combination that arises from a contingency cannot be determined during the measurement period, the asset or liability shall be recognized at the acquisition date using the guidance in accounting for contingencies. This guidance
also amends disclosure requirements. This guidance is effective for assets or liabilities arising from contingencies in business combinations for which the acquisition date is on or after January 1, 2009. The Partnerships adoption of this
guidance effective January 1, 2009 did not have a material effect on the Partnerships consolidated financial position or results of operations.

In April 2009, the FASB issued additional guidance for interim disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual
financial statements. This guidance is effective for interim reporting periods ending after June 15, 2009, with early adoption permitted. The Partnership adopted this guidance within the interim period ending June 30, 2009. The
Partnerships adoption of this guidance did not have a material effect on the Partnerships consolidated financial position or results of operations.

In May 2009, the FASB issued authoritative guidance for subsequent events. This guidance addresses the accounting for and disclosure of subsequent events not addressed in other applicable U.S. GAAP,
including disclosure of the date through which subsequent events have been evaluated. This guidance is effective for interim or annual periods ending after June 15, 2009. The Partnerships adoption of this guidance effective with the
interim period ending June 30, 2009 did not have a material effect on the Partnerships consolidated financial position or results of operations. The required disclosure of the date through which subsequent events have been evaluated is
provided in Note 1A of the related Notes in this filing.

In July 2009, the FASB launched its Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles, or the Codification, as the sole source of authoritative U.S. GAAP to be applied by nongovernmental entities. The Codification generally does not change the
existing rules of U.S. GAAP but rather makes it easier to find and research U.S. GAAP applicable to a particular transaction or specific accounting issue. The Codification is a new structure which takes accounting pronouncements and organizes them
by approximately ninety accounting topics and aggregates them in four common accounting areas. Topics within each category are further broken down into subtopics, sections and paragraphs. Accounting standards that are included in the Codification
will be considered authoritative whereas those that are not included will be deemed non-authoritative. As a result, there are two levels of U.S. GAAP, authoritative and non-authoritative. The Codification is effective for financial statements that
cover the interim and annual periods ending after September 15, 2009 and will impact the way the Partnership references U.S. GAAP accounting standards in the financial statements.



36



---

New Accounting Pronouncements

In August 2009, the FASB issued updated guidance for the fair value measurement of liabilities. This guidance includes techniques for
measuring fair value when a quoted price in an active market for the identical liability is not available and clarifies that restrictions preventing the transfer of a liability should not be considered as a separate input or adjustment in the
measurement of its fair value. This guidance is effective for the first reporting period (including interim periods) beginning after issuance. The Partnership will adopt this guidance effective with the annual reporting period ended
December 31, 2009. The Partnership is currently assessing the impact of this statement on the Partnerships consolidated financial position, results of operations, and financial statement disclosures.

In September 2009, the FASB issued updated guidance for the fair value measurement of investments in certain entities that calculate net
asset value per share including certain alternative investments such as hedge funds, private equity funds, and venture capital funds. This guidance allows companies to determine the fair value of such investments using net asset value
(NAV) as a practical expedient if the fair value of the investment is not readily determinable and the investee entity issues financial statements in accordance with measurement principles for investment companies. Use of this practical
expedient is prohibited if it is probable the investment will be sold at something other than NAV. This guidance also requires new disclosures for each major category of alternative investments. It is effective for the first annual or interim
reporting period ending after December 15, 2009, with early application permitted. The Partnership will adopt this guidance effective December 31, 2009. The Partnership is currently assessing the impact of this guidance on the
Partnerships consolidated financial position, results of operations, and financial statement disclosures.

Valuation of Investments

Real Estate Investments - Real estate investments are carried at fair
value. Properties owned are initially recorded at the purchase price plus closing costs. Development costs and major renovations are capitalized as a component of cost, and routine maintenance and repairs are charged to expense as incurred. Real
estate costs include the cost of acquired property, including all the tangible and intangible assets. Tangible assets include the value of all land, building and tenant improvements at the time of acquisition. Intangible assets include the value of
any above and below market leases, in-place leases, and tenant relationships at the time of acquisition.

In general fair
value estimates are based upon property appraisal reports prepared by independent real estate appraisers (members of the Appraisal Institute or an equivalent organization) within a reasonable amount of time following acquisition of the real estate
and no less frequently than annually thereafter. The Chief Real Estate Appraiser of Prudential Investment Management, Inc. (PIM), which is an indirectly owned subsidiary of Prudential Financial, Inc. (PFI), is responsible to
assure that the valuation process provides independent and reasonable property fair value estimates. An unaffiliated third party has been appointed by PIM to assist the Chief Real Estate Appraiser in maintaining and monitoring the independence and
the accuracy of the appraisal process. The fair value of real estate investments does not reflect the transaction sale costs, which may be incurred upon disposition of the real estate investments.

The purpose of an appraisal is to estimate the fair value of real estate as of a specific date. In accordance with the FASB guidance on fair
value measurements and disclosures, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The estimate of fair value is based on
the conventional approaches to value, all of which require the exercise of subjective judgment. The three approaches are: (1) current cost of reproducing the real estate less deterioration and functional and economic obsolescence;
(2) discounting a series of income streams and reversion at a specific yield or by directly capitalizing a single year income estimate by an appropriate factor; and (3) value indicated by recent sales of comparable real estate in the
market. In the reconciliation of these three approaches, the independent appraiser uses one or a combination of them, to determine the approximated value for the type of real estate in the market.



37



---

Other Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
at the date of the unaudited Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.



|ITEM 3. | Quantitative and Qualitative Disclosures about Market Risk
|------- | ----------------------------------------------------------

Interest Rate Risk  The general partners controlling interest exposure to market rate risk for changes in interest rates relates to approximately 43.87% of its investment portfolio as
of September 30, 2009, which consists primarily of short-term commercial paper and fixed and variable interest rate debt. The Partnership does not use derivative financial instruments. As a matter of 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 unusual circumstances.

The table below presents the amounts and related weighted interest rates of the Partnerships cash equivalents and short-term
investments at September 30, 2009:



|                          |  |            |  |                                  |      |                      |      |  
|------------------------- |  | ---------- |  | -------------------------------- | ---- | -------------------- | ---- | -
|                          |  | Maturity   |  | Estimated Market Value(millions) |      | AverageInterest Rate |     
|Cash and Cash equivalents |  | 0-3 months |  | $                                | 33.2 |                      | 1.57 | %

The table below discloses the Partnerships debt as of September 30, 2009.
The fair value of the Partnerships long-term debt is affected by changes in market interest rates. The following table presents principal cash flows based upon maturity dates of the debt obligations and the related weighted-average interest
rates by expected maturity dates for the debt.



|                                                                  |  |      |       |   |      |   |        |      |  |   |      |   |  |      |      |   |            |   |       |       |  |   |                     |   |  |   |        |   |  |   |       
|----------------------------------------------------------------- |  | ---- | ----- | - | ---- | - | ------ | ---- |  | - | ---- | - |  | ---- | ---- | - | ---------- | - | ----- | ----- |  | - | ------------------- | - |  | - | ------ | - |  | - | ------
|Investment level debt (in $ thousands), including current portion |  | 2009 |       |   | 2010 |   |        | 2011 |  |   | 2012 |   |  | 2013 |      |   | Thereafter |   |       | Total |  |   | EstimatedFair Value
|                                                                  |  |      |       |   |      |   |        |     
|Weighted Average Fixed Interest Rate                              |  |      | 6.75  | % |      |   | 6.75   | %    |  |   | 6.75 | % |  |      | 6.75 | % |            |   | 6.75  | %     |  |   | 6.75                | % |  |   | 6.75   | % |  |   |       
|Fixed Rate                                                        |  | $    | 8,883 |   |      | $ | 566    |      |  | $ | 604  |   |  | $    | 646  |   |            | $ | 463   |       |  | $ | 4,475               |   |  | $ | 15,637 |   |  | $ | 15,581
|Variable Rate                                                     |  |      |      |   |      | $ | 15,071 |      |  |   |     |   |  |      |     |   |            | $ | 9,000 |       |  |   |                    |   |  | $ | 24,071 |   |  | $ | 24,012
|Premium/(Discount) on Investment Level Debt                       |  | $    | (3    | ) |      |   |       |      |  |   |     |   |  |      |     |   |            |   |       |       |  |   |                    |   |  | $ | (3     | ) |  |   |      
|                                                                  |  |      |       |   |      |   |        |      |  |   |      |   |  |      |      |   |            |   |       |       |  |   |                     |   |  |   |        |   |  |   |       
|Total Investment Level Debt                                       |  | $    | 8,880 |   |      | $ | 15,637 |      |  | $ | 604  |   |  | $    | 646  |   |            | $ | 9,463 |       |  | $ | 4,475               |   |  | $ | 39,705 |   |  | $ | 39,593
|                                                                  |  |      |       |   |      |   |        |      |  |   |      |   |  |      |      |   |            |   |       |       |  |   |                     |   |  |   |        |   |  |   |       

The Partnership is exposed to market risk from tenants. While the Partnership has not
experienced any significant credit losses, in the event of significant increases in interest rates and/or an economic downturn, delinquencies could increase and result in losses to the Partnership and the Account that could adversely affect its
operating results and liquidity.



38



---

|Item 4. | Controls and Procedures
|------- | -----------------------

In order to ensure that the information we must disclose in our filings with the Securities and Exchange Commission, or SEC, is recorded, processed, summarized, and reported on a timely basis, the Companys management,
including our Chief Executive Officer and Chief Financial Officer, have reviewed and evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e), under the Securities Exchange Act of 1934, as
amended, as of September 30, 2009. Based on such evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of September 30, 2009, 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, as defined in Exchange Act Rules 13a-15(f) and 15d-15(e), during the quarter
ended September 30, 2009, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II  OTHER INFORMATION



|Item 1A. | Risk Factors
|-------- | ------------

You should
carefully consider the risks described in our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2009. These risks could materially affect our business, results of operations or financial condition, or cause our actual
results to differ materially from those expected or those expressed in any forward looking statements made by or on behalf of the Company. These risks are not exclusive, and additional risks to which we are subject include, but are not limited to,
the factors mentioned under Forward-Looking Statements above and the risks of our business described elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2008.



|Item 4. | 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
|------- | --------



|     |  |                                                          
|---- |  | ---------------------------------------------------------
|31.1 |  | Section 302 Certification of the Chief Executive Officer.
|     | 
|31.2 |  | Section 302 Certification of the Chief Financial Officer.
|     | 
|32.1 |  | Section 906 Certification of the Chief Executive Officer.
|     | 
|32.2 |  | Section 906 Certification of the Chief Financial Officer.



39



---

SIGNATURES

Pursuant to the requirements 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: November 12, 2009



By:

/S/    SCOTT D.
KAPLANScott D. KaplanPresident and Director(Principal Executive Officer)




40