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

                                  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, 2004
                               ------------------

                                       OR

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

COMMISSION FILE NUMBER 33-20018

                   PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY

                                  IN RESPECT OF

        PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT
        ----------------------------------------------------------------
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

            NEW JERSEY                                  22-2426091
-----------------------------------        -------------------------------------
  (STATE OR OTHER JURISDICTION OF            (IRS EMPLOYER IDENTIFICATION NO.)
  INCORPORATION OR ORGANIZATION)


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

                                 (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 IS AN ACCELERATED FILER (AS
DEFINED IN RULE 12b-2 OF THE EXCHANGE ACT)                YES [_]   NO [X]

--------------------------------------------------------------------------------
================================================================================

<PAGE>


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


                                               INDEX
                                              ------

                                                                            PAGE
                                                                            ----

Forward-Looking Statements ................................................    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, 2004
        and December 31, 2003 .............................................    4

        Statements of Operations--Nine and Three Months Ended
        September 30, 2004 and 2003 .......................................    4

        Statements of Changes in Net Assets--
        Nine and Three Months Ended September 30, 2004 and 2003 ...........    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, 2004 and December 31, 2003 ..........................    8

        Consolidated Statements of Operations--
        Nine and Three Months Ended September 30, 2004 and 2003 ...........    9

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

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

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

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

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

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

Item 4. Controls and Procedures ...........................................   24

PART II--OTHER INFORMATION

Item 4. Submission of Matters to a Vote of Security Holders ...............   24

Item 6. Exhibits ..........................................................   24

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


                                       2
<PAGE>


FORWARD-LOOKING STATEMENTS

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

                                       3
<PAGE>


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

<TABLE>
<CAPTION>
STATEMENTS OF NET ASSETS
September 30, 2004 and December 31, 2003   SEPTEMBER 30, 2004
                                               (UNAUDITED)     DECEMBER 31, 2003
                                           ------------------  -----------------
<S>                                           <C>                 <C>
ASSETS
Investment in The Prudential Variable Contract
  Real Property Partnership ...............   $  8,352,693        $  7,846,237
                                              ------------        ------------
Net Assets ................................   $  8,352,693        $  7,846,237
                                              ============        ============
NET ASSETS, representing:
Equity of contract owners .................   $  6,107,253        $  5,852,959
Equity of Pruco Life Insurance Company of
  New Jersey ..............................      2,245,440           1,993,278
                                              ------------        ------------
                                              $  8,352,693        $  7,846,237
                                              ============        ============
Units outstanding .........................      3,535,371           3,519,859
                                              ============        ============
Portfolio shares held .....................        318,217             318,217
Portfolio net asset value per share .......   $      26.25        $      24.66

<CAPTION>

STATEMENTS OF OPERATIONS
For the nine and three months ended
September 30, 2004 and 2003                1/1/2004-9/30/2004  1/1/2003-9/30/2003  7/1/2004-9/30/2004  7/1/2003-9/30/2003
                                               (UNAUDITED)         (UNAUDITED)         (UNAUDITED)         (UNAUDITED)
                                           ------------------  ------------------  ------------------  ------------------
<S>                                           <C>                 <C>                 <C>                 <C>
INVESTMENT INCOME
Net investment income from
  Partnership operations ..................   $    244,391        $    320,282        $     86,033        $     88,956
                                              ------------        ------------        ------------        ------------
EXPENSES
Charges to contract owners for assuming
  mortality risk and expense risk and
  for administration ......................         25,434              24,811               8,674               8,340
                                              ------------        ------------        ------------        ------------
NET INVESTMENT INCOME .....................        218,957             295,471              77,359              80,616
                                              ------------        ------------        ------------        ------------
NET REALIZED AND UNREALIZED GAIN
  (LOSS) ON INVESTMENTS
Net change in unrealized gain (loss)
  on investments in Partnership ...........        262,065            (329,926)            134,813             (96,802)
Net realized gain (loss) on sale of
  investments in Partnership ..............              0              22,386                   0                   0
                                              ------------        ------------        ------------        ------------
NET GAIN (LOSS) ON INVESTMENTS ............        262,065            (307,540)            134,813             (96,802)
                                              ------------        ------------        ------------        ------------
NET INCREASE (DECREASE) IN NET ASSETS
  RESULTING FROM OPERATIONS ...............   $    481,022        $    (12,069)       $    212,172        $    (16,186)
                                              ============        ============        ============        ============

<CAPTION>

STATEMENTS OF CHANGES IN NET ASSETS
For the nine and three months ended
  September 30, 2004 and 2003              1/1/2004-9/30/2004  1/1/2003-9/30/2003  7/1/2004-9/30/2004  7/1/2003-9/30/2003
                                               (UNAUDITED)         (UNAUDITED)         (UNAUDITED)         (UNAUDITED)
                                           ------------------  ------------------  ------------------  ------------------
<S>                                           <C>                 <C>                 <C>                 <C>
OPERATIONS
Net investment income .....................   $    218,957        $    295,471        $     77,359        $     80,616
Net change in unrealized gain (loss) on
  investments in Partnership ..............        262,065            (329,926)            134,813             (96,802)
Net realized gain (loss) on sale of
  investments in Partnership ..............              0              22,386                   0                   0
                                              ------------        ------------        ------------        ------------
NET INCREASE (DECREASE) IN
  NET ASSETS RESULTING FROM
  OPERATIONS ..............................        481,022             (12,069)            212,172             (16,186)
                                              ------------        ------------        ------------        ------------
CAPITAL TRANSACTIONS
Net withdrawals by contract owners ........        (94,749)            (48,076)            (49,067)            (23,599)
Net contributions (withdrawals) by Pruco
  Life Insurance Company of New Jersey ....        120,183              72,887              57,741              31,939
                                              ------------        ------------        ------------        ------------
NET INCREASE (DECREASE) IN
  NET ASSETS RESULTING FROM
  CAPITAL TRANSACTIONS ....................         25,434              24,811               8,674               8,340
                                              ------------        ------------        ------------        ------------
TOTAL INCREASE (DECREASE) IN
  NET ASSETS ..............................        506,456              12,742             220,846              (7,846)
NET ASSETS
Beginning of period .......................      7,846,237           8,854,905           8,131,847           8,875,493
                                              ------------        ------------        ------------        ------------
End of period .............................   $  8,352,693        $  8,867,647        $  8,352,693        $  8,867,647
                                              ============        ============        ============        ============
</TABLE>

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

                                       4
<PAGE>


                      NOTES TO THE FINANCIAL STATEMENTS OF
        PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT
                               SEPTEMBER 30, 2004
                                   (UNAUDITED)


NOTE 1: GENERAL

Pruco Life of New Jersey Variable Contract Real Property Account ("Account") was
established on October 30, 1987 by resolution of the Board of Directors of Pruco
Life Insurance  Company of New Jersey ("Pruco Life of New Jersey"),  an indirect
wholly-owned   subsidiary  of  The  Prudential   Insurance  Company  of  America
("Prudential"),  a wholly-owned subsidiary of Prudential Financial, Inc. ("PFI")
as a separate  investment  account  pursuant to New Jersey law and is registered
under the Securities Act of 1933. The assets of the 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 financial statements
of the Partnership.

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

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. BASIS OF ACCOUNTING

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

The interim  financial  data as of September 30, 2004 and for the nine and three
months ended September 30, 2004 and 2003 is unaudited;  however,  in the opinion
of management,  the interim data includes all  adjustments,  consisting  only of
normal recurring adjustments,  necessary for a fair statement of the results for
the interim periods.

B. INVESTMENT IN PARTNERSHIP INTEREST

The  investment  in the  Partnership  is  based on the  Account's  proportionate
interest of the  Partnership's  market value. At September 30, 2004 and December
31, 2003 the Account's interest in the Partnership was 4.3% or 318,217 shares.

C. INCOME RECOGNITION

Net  investment  income  and  realized  and  unrealized  gains  and  losses  are
recognized daily. Amounts are based upon the 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.

                                       5
<PAGE>


NOTE 3: CHARGES AND EXPENSES

A. MORTALITY RISK AND EXPENSE RISK CHARGES

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

B. ADMINISTRATIVE CHARGES

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

C. COST OF INSURANCE AND OTHER RELATED CHARGES

Contract owner  contributions  are subject to certain  deductions prior to being
invested in the 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 also subject to monthly charges for the costs of administering the
contract to compensate Pruco Life of New Jersey for the guaranteed minimum death
benefit risk. These charges are assessed through the redemption of units.

D. DEFERRED SALES CHARGE

Subsequent to a contract  owner  redemption,  a deferred sales charge is imposed
upon surrenders of certain variable life insurance contracts to compensate Pruco
Life of New Jersey  for sales and other  marketing  expenses.  The amount of any
sales  charge  will  depend on the number of years that have  elapsed  since the
contract was issued,  but will not exceed 45% for VAL and 9% for SPVL.  No sales
charge will be imposed  after the sixth and tenth year of the  contract for SPVL
and VAL,  respectively.  No sales  charge will be imposed on death  benefits.  A
deferred sales charge is assessed through the redemption of units.

E. PARTIAL WITHDRAWAL CHARGE

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

NOTE 4: TAXES

Pruco Life of New Jersey is taxed as a "life  insurance  company"  as defined by
the Internal  Revenue Code. The results of operations of the 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.

                                       6
<PAGE>


NOTE 5: NET 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 and three months ended September 30, 2004 and 2003, were as follows:


                              NINE MONTHS ENDED            THREE MONTHS ENDED
                                SEPTEMBER 30,                 SEPTEMBER 30,
                             2004          2003            2004          2003
                           -------       --------        -------       --------
                                (UNAUDITED)                   (UNAUDITED)
VAL ....................   $71,475       $ 31,662        $48,298       $  8,628
VLI ....................    16,836         (7,339)           503           (555)
SPVA ...................         0         23,828              0         16,000
SPVL ...................     6,438            (75)           266           (474)
                           -------       --------        -------       ---------
TOTAL ..................   $94,749       $ 48,076        $49,067       $ 23,599
                           =======       ========        =======       ========

NOTE 6: PARTNERSHIP DISTRIBUTIONS

As  of  September  30,  2004,   the   Partnership   had  made  no  current  year
distributions.  For the year ended  December  31,  2003,  the  Partnership  made
distributions  of $6.9 million.  The Pruco Life of New Jersey Account's share of
these distributions was $1.2 million.

NOTE 7: UNIT INFORMATION

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

                                     SEPTEMBER 30, 2004
                                         (UNAUDITED)           DECEMBER 31, 2003
                                     ------------------       ------------------
UNITS OUTSTANDING:                        3,535,371                3,519,859
UNIT VALUE:                          2.10082 to 2.46619       1.99197 to 2.32279

NOTE 8: FINANCIAL HIGHLIGHTS

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


                                                   NINE MONTHS ENDED
                                                      SEPTEMBER 30,
                                             2004                     2003
                                        --------------          ----------------
                                                       (UNAUDITED)
TOTAL RETURN                            5.46% to 6.17%          -0.79% to -0.12%

                                       7
<PAGE>


           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
                                                                          SEPTEMBER 30, 2004
                                                                              (UNAUDITED)     DECEMBER 31, 2003
                                                                          ------------------  -----------------
<S>                                                                          <C>                <C>
ASSETS
REAL ESTATE INVESTMENTS -- At estimated market value:
   Real estate and improvements
      (cost: 9/30/2004 -- $230,157,760; 12/31/2003 -- $223,943,870) ......   $212,328,172       $201,144,866
   Real estate partnership (cost: 9/30/2004 -- $11,000,421;
      12/31/2003 -- $10,609,273) .........................................     10,871,452          8,721,319
   Mortgage and other loans receivable (cost: 9/30/2004 -- $1,300,250;
      12/31/2003 -- $0) ..................................................      1,300,250                 --
   Other real estate investments (cost: 9/30/2004 -- $0;
      12/31/2003 -- $500,000) ............................................             --            500,000
                                                                             ------------       ------------
        Total real estate investments ....................................    224,499,874        210,366,185
CASH AND CASH EQUIVALENTS ................................................     25,419,959         18,901,814
OTHER ASSETS, NET ........................................................      7,283,373          6,359,853
                                                                             ------------       ------------
        Total assets .....................................................   $257,203,206       $235,627,852
                                                                             ============       ============

LIABILITIES
MORTGAGE LOANS PAYABLE ...................................................     52,150,916         43,934,494
ACCOUNTS PAYABLE AND ACCRUED EXPENSES ....................................      4,126,543          2,998,752
DUE TO AFFILIATES ........................................................        803,067          1,017,932
OTHER LIABILITIES ........................................................        884,798            947,110
MINORITY INTEREST ........................................................      5,870,186          5,086,503
                                                                             ------------       ------------
        Total liabilities ................................................     63,835,510         53,984,791
                                                                             ------------       ------------
COMMITMENTS AND CONTINGENCIES
PARTNERS' EQUITY .........................................................    193,367,696        181,643,061
                                                                             ------------       ------------
        Total liabilities and partners' equity ...........................   $257,203,206       $235,627,852
                                                                             ============       ============
NUMBER OF SHARES OUTSTANDING AT END OF PERIOD ............................      7,366,835          7,366,835
                                                                             ============       ============
SHARE VALUE AT END OF PERIOD .............................................         $26.25             $24.66
                                                                             ============       ============
</TABLE>

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

                                       8
<PAGE>


           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                             NINE MONTHS ENDED            THREE MONTHS ENDED
                                                               SEPTEMBER 30,                 SEPTEMBER 30,
                                                        ---------------------------     -------------------------
                                                           2004            2003           2004           2003
                                                        -----------    ------------     ----------    -----------
<S>                                                     <C>            <C>              <C>           <C>
INVESTMENT INCOME:
  Revenue from real estate and improvements ..........  $20,533,816    $ 18,037,709     $7,229,681    $ 5,905,056
  Equity in income of real estate partnership ........      350,210         488,635         83,529        183,672
  Interest and equity income on mortgage loans
    receivable and other loans receivable ............       55,485              --         27,266             --
  Income from other real estate investments ..........      246,765              --        103,863             --
  Interest on short-term investments .................      143,062         208,244         79,484         81,022
  Other income .......................................       51,000              --             --             --
                                                        -----------    ------------     ----------    -----------
      Total investment income ........................   21,380,338      18,734,588      7,523,823      6,169,750
                                                        -----------    ------------     ----------    -----------
INVESTMENT EXPENSES:
  Operating ..........................................    5,564,742       3,693,883      2,039,619      1,375,015
  Investment management fee ..........................    1,958,091       1,838,933        674,159        652,741
  Real estate taxes ..................................    2,140,949       2,005,379        679,894        672,615
  Administrative .....................................    3,980,106       2,550,588      1,396,616        931,685
  Interest expense ...................................    1,888,133       1,783,992        644,843        624,153
  Minority interest ..................................      190,592         193,751         97,016         61,551
                                                        -----------    ------------     ----------    -----------
      Total investment expenses ......................   15,722,613      12,066,526      5,532,147      4,317,760
                                                        -----------    ------------     ----------    -----------
NET INVESTMENT INCOME ................................    5,657,725       6,668,062      1,991,676      1,851,990
                                                        -----------    ------------     ----------    -----------
REALIZED AND UNREALIZED GAIN (LOSS)
  ON REAL ESTATE INVESTMENTS:
  Net proceeds from real estate investments sold .....           --       5,689,488             --             --
    Less: Cost of real estate investments sold .......           --       6,620,263             --             --
          Realization of prior periods' unrealized
          gain (loss) on real estate
          investments sold ...........................           --      (1,396,836)            --             --
                                                        -----------    ------------     ----------    -----------
  Net gain (loss) realized on real estate
    investments sold .................................           --         466,061             --             --
                                                        -----------    ------------     ----------    -----------
  Change in unrealized gain (loss) on
    real estate investments ..........................    6,728,401      (7,454,802)     3,195,318     (1,570,950)
  Less: Minority interest in unrealized gain
    (loss) on real estate investments ................      661,491        (585,969)        74,345        444,393
                                                        -----------    ------------     ----------    -----------
  Net unrealized gain (loss) on
    real estate investments ..........................    6,066,910      (6,868,833)     3,120,973     (2,015,343)
                                                        -----------    ------------     ----------    -----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
  ON REAL ESTATE INVESTMENTS .........................    6,066,910      (6,402,772)     3,120,973     (2,015,343)
                                                        -----------    ------------     ----------    -----------
INCREASE (DECREASE) IN NET ASSETS
  RESULTING FROM OPERATIONS ..........................  $11,724,635    $    265,290     $5,112,649    $  (163,353)
                                                        ===========    ============     ==========    ===========
</TABLE>

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

                                       9
<PAGE>


           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                      NINE MONTHS ENDED SEPTEMBER 30,
                                                                          2004               2003
                                                                      ------------      -------------
<S>                                                                   <C>               <C>
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS:
   Net investment income ...........................................  $  5,657,725      $   6,668,062
   Net gain (loss) realized on real estate investments sold ........            --            466,061
   Net unrealized gain (loss) from real estate investments .........     6,066,910         (6,868,833)
                                                                      ------------      -------------
     Increase (decrease) in net assets resulting from operations ...    11,724,635            265,290
                                                                      ------------      -------------
INCREASE (DECREASE) IN NET ASSETS ..................................    11,724,635            265,290
NET ASSETS--Beginning of period ....................................   181,643,061        184,353,506
                                                                      ------------      -------------
NET ASSETS--End of period ..........................................  $193,367,696      $ 184,618,796
                                                                      ============      =============
</TABLE>

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

                                       10
<PAGE>


           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                              NINE MONTHS         NINE MONTHS
                                                                                 ENDED               ENDED
                                                                          SEPTEMBER 30, 2004   SEPTEMBER 30, 2003
                                                                          ------------------   ------------------
<S>                                                                           <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net increase (decrease) in net assets resulting from operations ........   $11,724,635         $   265,290
   Adjustments to reconcile net increase (decrease) in net assets
      to net cash flows from operating activities:
        Net realized and unrealized (gain) loss on investments ............    (6,066,910)          6,402,772
        Distributions in excess of (less than) equity in income of real
          estate partnership operations ...................................      (146,022)            460,343
        Minority interest from operating activities .......................       190,592             193,751
        (Increase) decrease in accrued interest included in mortgage
          and other loans receivable ......................................       (55,485)                 --
        Bad debt expense ..................................................       328,102             146,108
        (Increase) decrease in:
          Other assets ....................................................    (1,251,622)            278,266
        Increase (decrease) in:
          Accounts payable and accrued expenses ...........................     1,127,791             (37,217)
          Due to affiliates ...............................................      (214,865)             92,396
          Other liabilities ...............................................       (62,312)             (9,498)
                                                                              -----------         -----------
   Net cash flows from (used in) operating activities .....................     5,573,904           7,792,211
                                                                              -----------         -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Net proceeds from real estate investments sold .........................            --           5,689,488
   Additions to real estate and improvements ..............................    (6,213,890)         (4,640,975)
   Contribution to real estate partnership ................................      (245,126)         (1,326,071)
   Origination of mortgage and other loans receivable .....................    (1,244,765)                 --
   Repayment of other real estate investments .............................     4,975,000                  --
   Origination of other real estate investments ...........................    (4,475,000)                 --
                                                                              -----------         -----------
   Net cash flows from (used in) investing activities .....................    (7,203,781)           (277,558)
                                                                              -----------         -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Principal payments on mortgage loan payable ............................      (533,578)           (655,998)
   Proceeds from mortgage loan payable ....................................     8,750,000           8,750,000
   Distributions to minority interest partners ............................       (68,400)         (2,382,496)
   Contributions from minority interest partners ..........................            --                 466
                                                                              -----------         -----------
   Net cash flows from (used in) financing activities .....................     8,148,022           5,711,972
                                                                              -----------         -----------

   NET CHANGE IN CASH AND CASH EQUIVALENTS ................................     6,518,145          13,226,625

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

   CASH AND CASH EQUIVALENTS--End of period ...............................   $25,419,959         $31,817,774
                                                                              ===========         ===========

   SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
   Cash paid during the period for interest ...............................   $ 1,901,338         $ 1,903,965
                                                                              ===========         ===========
</TABLE>

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

                                       11
<PAGE>


           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                      CONSOLIDATED SCHEDULES OF INVESTMENTS

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

OFFICES
750 Warrenville           WO         Lisle, IL        103,193   $23,074,182    $10,054,282     $23,023,835    $12,110,725
Oakbrook Terrace          WO       Oakbrook, IL       123,734    14,760,686      9,700,000      14,619,120     10,097,932
Summit at Cornell Oaks    WO      Beaverton , OR      72,109     11,890,209      9,600,005      11,890,209     10,000,005
Westpark                  WO       Brentwood, TN      97,199     10,557,643     10,762,982      10,423,727      9,239,260
Financial Plaza           WO       Brentwood, TN      95,768     11,966,961     10,082,601       9,837,482      6,700,041
-------------------------------------------------------------------------------------------------------------------------
                          Offices % as of 9/30/04       26%      72,249,681     50,199,870      69,794,373     48,147,963
APARTMENTS
Brookwood Apartments      WO        Atlanta, GA      240 Units   16,826,630     18,630,376      15,781,263     17,000,000
Dunhill Trace Apartments  WO        Raleigh, NC      250 Units   16,083,054     18,315,361      16,010,326     17,665,000
Riverbend Apartments      CJV    Jacksonville, FL    458 Units   19,996,542     23,000,000      19,946,920     22,400,000
SIMA Apartments           CJV    Gresham/Salem, OR   493 Units   19,316,180     19,500,000      19,281,738     17,975,000
-------------------------------------------------------------------------------------------------------------------------
                       Apartments % as of 9/30/04       41%      72,222,406     79,445,737      71,020,247     75,040,000
RETAIL
King's Market             WO       Rosewell, GA       314,358    33,325,894     23,653,643      33,102,401     23,539,665
Hampton Towne Center      WO        Hampton, VA       174,540    18,031,495     21,000,000      18,013,068     20,000,000
White Marlin Mall         CJV     Ocean City, MD      186,016    15,203,661     19,300,000      13,198,649     15,900,000
Kansas City Portfolio     EJV   Kansas City, KS;MO    487,660    11,000,321     10,871,352      10,609,273      8,721,319
-------------------------------------------------------------------------------------------------------------------------
                           Retail % as of 9/30/04       39%      77,561,371     74,824,995      74,923,391     68,160,984
INDUSTRIAL
Smith Road                WO        Aurora, CO        277,930    10,914,071     10,628,922      10,806,403     10,508,509
-------------------------------------------------------------------------------------------------------------------------
                       Industrial % as of 9/30/04       5%       10,914,071     10,628,922      10,806,403     10,508,509
HOTEL
Portland Crown Plaza      CJV     Lake Oswego, OR    161 Rooms    8,210,552      8,100,000       8,008,729      8,008,729
-------------------------------------------------------------------------------------------------------------------------
                            Hotel % as of 9/30/04       4%        8,210,552      8,100,000       8,008,729      8,008,729
LAND
Gateway Village           EJV    Blue Springs, MO                       100            100              --             --
-------------------------------------------------------------------------------------------------------------------------
                             Land % as of 9/30/04       0%              100            100              --             --
MORTGAGE AND OTHER LOANS RECEIVABLE
Westminster West          MD      Westminster, MD                 1,300,250      1,300,250              --             --
-------------------------------------------------------------------------------------------------------------------------
  Mortgage and Other Loans Receivable% as of 9/30/04    1%        1,300,250      1,300,250              --             --
OTHER REAL ESTATE INVESTMENTS
Westminster East          NR      Westminster, MD                        --             --         500,000        500,000
-------------------------------------------------------------------------------------------------------------------------
     Other Real Estate Investments% as of 9/30/04       0%               --             --         500,000        500,000

TOTAL REAL ESTATE INVESTMENTS AS A PERCENTAGE OF
NET ASSETS AS OF 9/30/04                               116%    $242,458,431   $224,499,874    $235,053,143   $210,366,185
                                                       ====    ============   ============    ============   ============
</TABLE>

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

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

                                       12
<PAGE>


           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                      CONSOLIDATED SCHEDULES OF INVESTMENTS


<TABLE>
<CAPTION>
                                                                                    SEPTEMBER 30, 2004
                                                                                         (UNAUDITED)           DECEMBER 31, 2003
                                                                                  ------------------------  ------------------------
                                                                        FACE                   ESTIMATED                 ESTIMATED
                                                                       AMOUNT        COST     MARKET VALUE     COST     MARKET VALUE
                                                                    -----------   ----------- ------------  ----------- ------------
<S>                                                                 <C>           <C>          <C>          <C>          <C>
CASH AND CASH EQUIVALENTS--
Federal Home Loan Mortgage Corp., 4.621%, October 1, 2004  ........ $ 2,900,000   $ 2,901,350  $ 2,901,350  $        --  $        --
Federal Home Loan Bank, 10.159%, October 1, 2004 ..................   9,625,000     9,624,599    9,624,599           --           --
Federal National Mortgage Association, 10.205%, October 1, 2004 ...   5,000,000     4,996,289    4,996,289           --           --
Federal National Mortgage Association, 1.746%, November 4, 2004 ...   6,700,000     6,686,242    6,686,242           --           --
Federal National Mortgage Assoc., 1.06%, February 4, 2004  ........   5,974,000            --           --    5,967,907    5,967,907
Federal Home Loan Mortgage Corp., 0.88%, January 2, 2004 ..........  12,331,000            --           --   12,330,520   12,330,520
                                                                                  -----------  -----------  -----------  -----------
TOTAL CASH EQUIVALENTS ............................................                24,208,480   24,208,480   18,298,427   18,298,427
CASH ..............................................................                 1,211,479    1,211,479      603,387      603,387
                                                                                  -----------  -----------  -----------  -----------
TOTAL CASH AND CASH EQUIVALENTS ...................................               $25,419,959  $25,419,959  $18,901,814  $18,901,814
                                                                                  ===========  ===========  ===========  ===========
PERCENTAGE OF NET ASSETS ..........................................                                  13.1%                     10.4%
</TABLE>

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

                                       13
<PAGE>


                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF

             PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                           SEPTEMBER 30, 2004 AND 2003

                                   (UNAUDITED)


NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The  accompanying  unaudited  financial  statements  included  herein  have been
prepared  in  accordance  with the  requirements  of Form  10-Q  and  accounting
principles  generally  accepted  in the  United  States of America  for  interim
financial information. In the opinion of management, all adjustments (consisting
only of normal recurring adjustments)  considered necessary for a fair statement
have been included.  Operating  results for the nine months ended  September 30,
2004 are not necessarily  indicative of the results that may be expected for the
year ended  December 31, 2004. For further  information,  refer to the financial
statements and notes thereto included in each Partner's December 31, 2003 Annual
Report on Form 10K.

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

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

NOTE 2: RELATED PARTY TRANSACTIONS

Pursuant  to  an  investment   management   agreement,   Prudential   Investment
Management, L.L.C. ("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, 2004 and 2003  investment
management  fees incurred by the  Partnership  were  $1,958,091  and  $1,838,933
respectively.  For the three months ended September 30, 2004 and 2003 investment
management  fees  incurred  by  the  Partnership   were  $674,159  and  $652,741
respectively.

The Partnership also reimburses PIM for certain administrative services rendered
by PIM. The amounts  incurred for the nine months ended  September  30, 2004 and
2003 were $92,722 and $87,472 respectively, and are classified as administrative
expense in the Consolidated  Statements of Operations.  Administrative  services
incurred by the  Partnership  for the three months ended  September 30, 2004 and
2003 were $18,907 and $29,157 respectively.

NOTE 3: FORWARD CONTRACTS OBLIGATIONS

Certain purchases of real estate are contingent on a developer building the real
estate according to plans and specifications  outlined in the pre-sale agreement
or the property achieving a certain level of leasing. Once those conditions have
been met, it is  anticipated  that funding  will be provided by  operating  cash
flow,  real  estate  investment  sales,   existing   portfolio-level  cash,  and
financings or third-party debt.

As of September 30, 2004, the Partnership  had an outstanding  commitment of $12
million in  connection  with a retail  investment  to purchase  real estate once
conditions precedent to funding have been met.

                                       14
<PAGE>


                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF

             PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                           SEPTEMBER 30, 2004 AND 2003

                                   (UNAUDITED)


NOTE 4: COMMITMENTS AND CONTINGENCIES

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

Prudential  (on  behalf of the  Partnership)  has  entered  into a date  certain
take-out  guarantee of approximately  $1.6 million for the land acquisition of a
retail investment in the pre-development stages. The Partnership would be liable
to Prudential for any losses it incurs as a result of this guarantee.

NOTE 5: FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
                                                                    FOR THE NINE MONTHS ENDED SEPTEMBER 30,
                                                             ------------------------------------------------------
                                                              2004        2003        2002        2001        2000
                                                             ------      ------      ------      ------      ------
<S>                                                          <C>         <C>         <C>         <C>         <C>
PER SHARE(UNIT) OPERATING PERFORMANCE:
Net Asset Value, beginning of period ......................  $24.66      $24.11      $23.82      $22.74      $20.86
                                                             ------      ------      ------      ------      ------
INCOME FROM INVESTMENT OPERATIONS:
Investment income, before management fee ..................    1.04        1.12        1.20        1.25        1.23
Management fee ............................................   (0.27)      (0.24)      (0.23)      (0.22)      (0.21)
Net realized and unrealized gain (loss) on investments ....    0.82       (0.84)      (0.85)      (0.00)       0.05
                                                             ------      ------      ------      ------      ------
   Net Increase in Net Assets Resulting from Operations ...    1.59        0.04        0.12        1.03        1.07
                                                             ------      ------      ------      ------      ------
NET ASSET VALUE, END OF PERIOD ............................  $26.25      $24.15      $23.94      $23.77      $21.93
                                                             ======      ======      ======      ======      ======
TOTAL RETURN, BEFORE MANAGEMENT FEE (a): ..................    7.58%       1.15%       1.44%       5.56%       6.16%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (in millions) ...................    $193        $185        $188        $216        $213
   Ratios to average net assets (b):

      Management Fee ......................................    1.06%       1.00%       0.95%       0.97%       0.96%
      Investment Income, before Management Fee ............    4.13%       4.62%       5.15%       5.56%       5.80%

(a)   Total Return, before management fee is calculated by linking quarterly returns which are calculated using the
      formula below:

                         Net Investment Income + Net Realized and Unrealized Gains/(Losses)
              --------------------------------------------------------------------------------------
              Beginning Net Asset Value + Time Weighted Contributions -- Time Weighted Distributions

(b)   Average net assets are based on beginning of quarter net assets.
</TABLE>

                                                        15
<PAGE>


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

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

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

(a) LIQUIDITY AND CAPITAL RESOURCES

As of September 30, 2004, the Partnership's liquid assets consisting of cash and
cash equivalents were approximately  $25.4 million, an increase of approximately
$6.5 million from $18.9  million at December 31, 2003.  Besides  operating  cash
flow generated by the  Partnership's  assets,  the increase in cash position was
primarily due to mortgage  proceeds of $8.8 million  received in connection with
financing  placed on the  apartment  complex  located  in  Atlanta,  Georgia  on
September 21, 2004,  partially offset by additional fundings of (a) $2.1 million
primarily  associated with leasing related costs at one of the office  buildings
located  in  Brentwood,  Tennessee,  and (b) $1.4  million  associated  with the
development of the retail center located in Ocean City, Maryland.

At September 30, 2004, 9.9% of the Partnership's  total assets consisted of cash
and short-term  obligations,  well below the 30% allowed under the Partnership's
investment policy.

During the first nine months of 2004, the Partnership spent  approximately  $6.2
million on capital  improvements to wholly owned and consolidated  joint venture
properties. Approximately $2.1 million was associated with leasing related costs
and tenant  improvements  at one of the office  buildings  located in Brentwood,
Tennessee.  Another $1.0 million was associated with renovation at the apartment
complex located in Atlanta, Georgia. Of the remaining $3.1 million balance, $2.0
million was associated  with the expansion of the retail center located in Ocean
City,  Maryland.  The  Partnership  also increased its investment in real estate
partnerships by approximately  $0.2 million in connection with redevelopment and
expansion activities at the retail centers located in Kansas City, Missouri.

During 2004, the Partnership provided short-term financing of approximately $5.0
million for the acquisition of a retail center located in Westminster, Maryland.
The loan was repaid to the  Partnership  on  September  13, 2004  together  with
interest at 10.5% upon obtaining third party construction financing.

(b) RESULTS OF OPERATIONS

The  following  is  a  brief  year-to-date  and  quarterly   comparison  of  the
Partnership's  results  of  operations  for the  nine  and  three  months  ended
September 30, 2004 and 2003.

                                       16
<PAGE>


SEPTEMBER 30, 2004 VS. SEPTEMBER 30, 2003

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

<TABLE>
<CAPTION>
                                                     NINE MONTHS ENDED             THREE MONTHS ENDED
                                                       SEPTEMBER 30,                  SEPTEMBER 30,
                                                --------------------------     --------------------------
                                                   2004            2003           2004            2003
                                                ----------     -----------     ----------     -----------
<S>                                             <C>            <C>             <C>            <C>
NET INVESTMENT INCOME:
Office properties ............................  $1,400,615     $ 1,460,220     $  418,915     $   374,433
Apartment complexes ..........................   1,982,985       2,771,247        630,205         709,341
Retail properties ............................   3,469,560       3,682,276      1,178,799       1,311,411
Industrial properties ........................     511,840         541,673        191,139         117,456
Hotel property ...............................     402,509              --        226,826              --
Other (including interest income,
   investment management fee) ................  (2,109,784)     (1,787,354)      (654,208)       (660,651)
                                                ----------     -----------     ----------     -----------
TOTAL NET INVESTMENT INCOME ..................  $5,657,725     $ 6,668,062     $1,991,676     $ 1,851,990
                                                ==========     ===========     ==========     ===========
NET REALIZED GAIN (LOSS) ON
  REAL ESTATE INVESTMENTS:
Industrial properties ........................          --         466,061             --              --
                                                ----------     -----------     ----------     -----------
TOTAL NET REALIZED GAIN (LOSS) ON
   REAL ESTATE INVESTMENTS ...................          --         466,061             --              --
                                                ----------     -----------     ----------     -----------
NET UNREALIZED GAIN (LOSS) ON
   REAL ESTATE INVESTMENTS:
Office properties ............................  $ (403,401)    $(5,428,138)    $  790,896     $  (822,110)
Apartment complexes ..........................   2,957,522        (571,737)     1,957,062          23,389
Retail properties ............................   3,472,078         152,372        229,617        (903,256)
Industrial properties ........................      12,745      (1,021,330)          (696)       (313,366)
Hotel property ...............................      27,966              --        144,094              --
                                                ----------     -----------     ----------     -----------
TOTAL NET UNREALIZED GAIN (LOSS) ON
   REAL ESTATE INVESTMENTS ...................   6,066,910      (6,868,833)     3,120,973      (2,015,343)
                                                ----------     -----------     ----------     -----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
   REAL ESTATE INVESTMENTS ...................  $6,066,910     $(6,402,772)    $3,120,973     $(2,015,343)
                                                ==========     ===========     ==========     ===========
</TABLE>

                         NET INVESTMENT INCOME OVERVIEW

The  Partnership's net investment income for the nine months ended September 30,
2004 was $5.7  million,  a  decrease  of $1.0  million  from $6.7  million  when
compared to the  corresponding  period in 2003. The decrease is primarily due to
soft market  conditions and increased  rental  concessions  within the apartment
portfolio  partially  offset by the  Partnership's  acquisition of a controlling
interest in a 161-room  hotel located in Lake Oswego,  Oregon in late 2003.  The
Partnership's net investment income for the quarter ended September 30, 2004 was
$2.0 million, an increase of $0.1 million from $1.9 million when compared to the
corresponding period in 2003.

Revenue increased $2.5 million in the first nine months of 2004 when compared to
the same  period in 2003.  Revenue  also  increased  $1.3  million  in the third
quarter  of 2004  when  compared  to the same  period  in  2003.  Administrative
expenses  increased  $1.4 million in the first nine months of 2004 when compared
to the same period in 2003.  Administrative expenses also increased $0.5 million
in the third quarter of 2004 when compared to the same period in 2003. Operating
expenses  increased  $1.9 million in the first nine months of 2004 when compared
to the same period in 2003.  Operating  expenses also  increased $0.7 million in
the  third  quarter  of 2004 when  compared  to the same  period in 2003.  These
increases  were  all  primarily  due  to  the  Partnership's  acquisition  of  a
controlling  interest  in a 161-room  hotel  located in Lake  Oswego,  Oregon as
discussed above.

                                       17
<PAGE>


Equity in income of real estate partnership  decreased $0.1 million for both the
first nine months and third quarter of 2004 when compared to the same periods in
2003.  The  decrease  for the first nine months is due to  increases in expenses
such as repairs and  maintenance  and snow  removal.  The decrease for the third
quarter is due to a slight decrease in occupancy.

Income  from other real  estate  investments  increased  $0.2  million  and $0.1
million for the nine months and quarter ended September 30, 2004,  respectively.
The increase was due to  short-term  financing for the  acquisition  of a retail
center located in Westminster, Maryland.

                               VALUATION OVERVIEW

The  Partnership  experienced  an  unrealized  gain of $6.1 million for the nine
months ended  September 30, 2004 compared to an unrealized  loss of $6.9 million
during  the  corresponding  period  in  2003.  The  Partnership  experienced  an
unrealized  gain of $3.1 million for the three months ended  September  30, 2004
compared to an unrealized loss of $2.0 million during the  corresponding  period
in 2003. The unrealized  gain during the first nine months of 2004 was primarily
attributable to the retail and apartment sectors.  The retail sector recorded an
unrealized  gain totaling $3.5 million,  primarily due to  strengthening  market
fundamentals, renovation and re-leasing efforts at the retail centers located in
Kansas City,  Kansas and  Missouri,  strengthening  market  fundamentals  at the
retail center  located in Hampton,  Virginia,  and  pre-leased  expansion at the
center located in Ocean City, Maryland. The apartment portfolio also recorded an
unrealized gain of $3.0 million. While fundamentals remain weak in the apartment
market,  continued  investor demand has increased  valuations.  Offsetting these
gains was the loss in value in the office  sector of $0.4 million  primarily due
to decreases in occupancy coupled with soft market conditions that have resulted
in reductions in market rental rates and increased leasing costs. The unrealized
gain during the third quarter of 2004 was primarily experienced in the apartment
and office sectors.  The increases for the apartment sectors are due to the same
reasons as noted above. The office sector  experienced value gains mainly due to
increased  market  rents at one of the office  complexes  located in  Brentwood,
Tennessee.

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

OFFICE PORTFOLIO

<TABLE>
<CAPTION>
                              NET            NET
                          INVESTMENT     INVESTMENT     UNREALIZED      UNREALIZED
                            INCOME         INCOME       GAIN/(LOSS)     GAIN/(LOSS)    OCCUPANCY    OCCUPANCY
PROPERTY                   09/30/04       09/30/03       09/30/04        09/30/03      09/30/04     09/30/03
--------                  ----------     ----------     -----------     -----------    ---------    ---------
<S>                       <C>            <C>            <C>             <C>                <C>         <C>
YEAR TO DATE
Lisle, IL ..............  $  298,887     $  567,140     $(2,106,789)    $(1,848,587)        43%         47%
Brentwood, TN ..........     606,990        502,303       1,389,806        (451,796)        82%         78%
Oakbrook Terrace, IL ...     214,345        (43,049)       (539,499)     (1,507,165)        41%         36%
Beaverton, OR ..........     666,350        726,221        (400,000)       (800,000)        72%         81%
Brentwood, TN ..........    (385,957)      (292,395)      1,253,081        (820,590)       100%          0%
                          ----------     ----------     -----------     -----------
                          $1,400,615     $1,460,220     $  (403,401)    $(5,428,138)
                          ----------     ----------     -----------     -----------
QUARTER TO DATE
Lisle, IL ..............  $  114,847     $   57,497     $    (2,048)    $  (493,587)
Brentwood, TN ..........     207,389        195,321       1,129,066         300,000
Oakbrook Terrace, IL ...      91,718        (20,286)        (28,335)       (128,523)
Beaverton, OR ..........     212,959        231,611        (400,000)       (400,000)
Brentwood, TN ..........    (207,998)       (89,710)         92,213        (100,000)
                          ----------     ----------     -----------     -----------
                          $  418,915     $  374,433     $   790,896     $  (822,110)
                          ----------     ----------     -----------     -----------
</TABLE>

                              NET INVESTMENT INCOME

Net  investment  income from property  operations  for the office sector for the
nine and  three  months  ended  September  30,  2004  have  remained  relatively
unchanged.

                                       18
<PAGE>


                              UNREALIZED GAIN/LOSS

The five office  properties  owned by the Partnership  experienced an unrealized
loss of  approximately  $0.4 million  during the first nine months of 2004.  The
losses were experienced at the office  complexes  located in Lisle and Oakbrook,
Illinois and Beaverton, Oregon primarily due to lower market rents and increased
lease up costs.  Partially offsetting these losses were the gains experienced at
both of the office  complexes in Brentwood,  Tennessee  primarily due to capital
improvements, increased occupancy, and market rent increases.

The five office  properties  owned by the Partnership  experienced an unrealized
loss of  approximately  $5.4 million  during the first nine months of 2003.  The
losses were  primarily  due to  decreased  occupancy,  lower market  rents,  and
increased lease up costs.

The five office properties  experienced an unrealized gain of approximately $0.8
million during the third quarter of 2004.  The unrealized  gain is primarily due
to market rent increases at one of the office complexes in Brentwood, Tennessee.

The five office  properties  owned by the Partnership  experienced an unrealized
loss of approximately  $0.8 million during the third quarter of 2003,  primarily
due to softening market conditions.

APARTMENT COMPLEXES

<TABLE>
<CAPTION>
                              NET            NET
                          INVESTMENT     INVESTMENT     UNREALIZED      UNREALIZED
                            INCOME         INCOME       GAIN/(LOSS)     GAIN/(LOSS)    OCCUPANCY    OCCUPANCY
PROPERTY                   09/30/04       09/30/03       09/30/04        09/30/03      09/30/04     09/30/03
--------                  ----------     ----------     -----------     -----------    ---------    ---------
<S>                       <C>            <C>            <C>             <C>               <C>         <C>
YEAR TO DATE
Atlanta, GA ............  $  626,795     $  632,012     $   585,008     $   (83,988)      95%         91%
Raleigh, NC ............     415,751        625,173         577,633          (4,488)      94%         93%
Jacksonville, FL .......     794,333        929,282         304,325         265,710       91%         91%
Gresham/Salem, OR ......     146,106        584,780       1,490,556        (748,971)      92%         93%
                          ----------     ----------     -----------     -----------
                          $1,982,985     $2,771,247     $ 2,957,522     $  (571,737)
                          ----------     ----------     -----------     -----------
QUARTER TO DATE
Atlanta, GA ............  $  206,259     $  189,497     $   309,999     $   (21,962)
Raleigh, NC ............     120,848        180,600         (30,352)         (1,490)
Jacksonville, FL .......     275,022        287,459         369,154         272,706
Gresham/Salem, OR ......      28,076         51,785       1,308,261        (225,865)
                          ----------     ----------     -----------     -----------
                          $  630,205     $  709,341     $ 1,957,062     $    23,389
                          ----------     ----------     -----------     -----------
</TABLE>

                              NET INVESTMENT INCOME

Net investment income from property operations for the apartment sector was $2.0
million  for the nine  months  ended  September  30,  2004,  a decrease  of $0.8
million,  when  compared to the  corresponding  period in 2003.  Net  investment
income from property  operations  for the apartment  sector was $0.6 million for
the three months ended  September  30,  2004, a decrease of $0.1  million,  when
compared to the corresponding  period in 2003. The decreases were mainly due to:
mortgage  interest  incurred for the complex located in Raleigh,  North Carolina
that was not applicable  during the first six months of 2003,  coupled with soft
market  conditions  affecting the apartment  complexes located in Gresham/Salem,
Oregon and Jacksonville, Florida.

                              UNREALIZED GAIN/LOSS

The apartment complexes owned by the Partnership  experienced an unrealized gain
of $3.0  million for the nine months  ended  September  30, 2004  compared to an
unrealized  loss of $0.6 million for the nine months ended  September  30, 2003.
The  unrealized  gain for the first  nine  months of 2004 was  primarily  due to
continued investor demand, which has increased  valuations.  The unrealized loss
of $0.6  million in the first nine  months of 2003 was  mainly  attributable  to
increased  projected  operating  expenses at the apartment  complexes located in
Gresham/Salem, Oregon.

                                       19
<PAGE>


The apartment  complexes  experienced an unrealized gain of $1.9 million for the
quarter ended  September 30, 2004. The unrealized  gain for the third quarter of
2004 was primarily due to the same reasons discussed above.

RETAIL PROPERTIES

<TABLE>
<CAPTION>
                              NET            NET
                          INVESTMENT     INVESTMENT     UNREALIZED      UNREALIZED
                            INCOME         INCOME       GAIN/(LOSS)     GAIN/(LOSS)    OCCUPANCY    OCCUPANCY
PROPERTY                   09/30/04       09/30/03       09/30/04        09/30/03      09/30/04     09/30/03
--------                  ----------     ----------     -----------     -----------    ---------    ---------
<S>                       <C>            <C>            <C>             <C>               <C>         <C>
YEAR TO DATE
Roswell, GA ............  $1,154,113     $1,983,560     $  (109,515)    $   (50,548)       78%         93%
Kansas City, KS; MO ....     344,936        488,634       1,758,986        (882,480)       85%         86%
Hampton, VA ............     916,802        781,543         981,574         570,136       100%        100%
Ocean City, MD .........     700,459        428,539         841,033         515,264        99%         97%
Westminster, MD* .......     246,765            N/A              --             N/A        N/A         N/A
Westminster, MD** ......     106,485            N/A              --             N/A        N/A         N/A
                          ----------     ----------     -----------     -----------
                          $3,469,560     $3,682,276     $ 3,472,078     $   152,372
                          ----------     ----------     -----------     -----------
QUARTER TO DATE
Roswell, GA ............  $  369,753     $  641,069     $   (35,300)    $  (500,000)
Kansas City, KS; MO ....      83,528        183,671         (68,253)       (312,790)
Hampton, VA ............     305,542        292,863         394,424           3,520
Ocean City, MD .........     288,846        193,808         (61,254)        (93,986)
Westminster, MD* .......     103,864            N/A              --             N/A
Westminster, MD** ......      27,266            N/A              --             N/A
                          ----------     ----------     -----------     -----------
                          $1,178,799     $1,311,411     $   229,617     $  (903,256)
                          ----------     ----------     -----------     -----------
</TABLE>

*  Other Real Estate Investment (Acquired October 2003)
** Mortgage Loan Receivable (Acquired January 2004)

                              NET INVESTMENT INCOME

Net  investment  income  for  the  Partnership's   retail  properties  decreased
approximately  $0.2  million for the nine months ended  September  30, 2004 when
compared to the  corresponding  period in 2003.  Net  investment  income for the
Partnership's  retail properties also decreased  approximately  $0.1 million for
the three months ended  September  30, 2004 when  compared to the  corresponding
period in 2003.  While net investment  income was  essentially the same for both
periods,  the  properties  within the  retail  portfolio  contributed  different
amounts  during  the  respective  periods.  Increases  in 2004  were  due to the
expanded  center located in Ocean City,  Maryland and the acquisition of the two
Westminster,  Maryland  investments.  It should  also be noted that on April 15,
2003 the Partnership acquired its joint venture partner's membership interest in
the retail center located in Hampton,  Virginia,  thus entitling the Partnership
to all of the net  investment  income  generated by the  investment.  Offsetting
these  increases was a substantial  decrease in net  investment  income from the
retail center located in Roswell,  Georgia,  which experienced increased vacancy
due to a major lease termination in late 2003.

                              UNREALIZED GAIN/LOSS

The retail  properties  experienced  an unrealized  gain of $3.5 million for the
nine months ended  September 30, 2004. The Kansas City,  Kansas and Missouri and
Hampton,  Virginia retail centers experienced  unrealized gains primarily due to
strengthening  market  fundamentals.  The Ocean  City,  Maryland  retail  center
experienced a gain due to a pre-leased expansion.

The retail  properties  experienced  an unrealized  gain of $0.2 million for the
nine months ended  September  30, 2003.  The retail  center  located in Hampton,
Virginia  experienced  an  unrealized  gain of $0.6  million  for the first nine
months of 2003 due to strengthening  market  fundamentals.  The retail center in
Ocean City,  Maryland  experienced a net unrealized gain of $0.5 million for the
first nine months of 2003 due to renovation and re-leasing  efforts.  Offsetting
these gains was the  unrealized  loss for the Kansas  City,  Kansas and Missouri
retail centers,  primarily due to renovations from the expansion of the existing
grocery store anchor, which were not reflected as an increase in market value.

                                       20
<PAGE>


The retail  properties  experienced  an unrealized  gain of $0.2 million for the
three months  ended  September  30, 2004.  This  unrealized  gain was  primarily
experienced by the retail center located in Hampton,  Virginia,  for the reasons
discussed above.

The retail  properties  experienced  an unrealized  loss of $0.9 million for the
three months ended September 30, 2003.  These  unrealized  losses were primarily
experienced by the retail center located in Roswell, Georgia due to decreases in
rental rates and shorter-term lease renewals. Also adding to the unrealized loss
was the  Kansas  City,  Kansas  and  Missouri  retail  centers  for the  reasons
discussed above.

INDUSTRIAL PROPERTIES

<TABLE>
<CAPTION>
                              NET            NET        UNREALIZED      UNREALIZED
                          INVESTMENT     INVESTMENT      REALIZED        REALIZED
                            INCOME         INCOME       GAIN/(LOSS)     GAIN/(LOSS)    OCCUPANCY    OCCUPANCY
PROPERTY                   09/30/04       09/30/03       09/30/04        09/30/03      09/30/04     09/30/03
--------                  ----------     ----------     -----------     -----------    ---------    ---------
<S>                       <C>            <C>            <C>             <C>              <C>           <C>
YEAR TO DATE
Aurora, CO .............  $  510,737     $  527,986     $    12,745     $(1,021,330)     88%           79%
Bolingbrook, IL ........       2,603           (146)             --              --     Sold September 2002
Salt Lake City, UT .....      (1,500)        13,833              --         466,061      Sold January 2003
                          ----------     ----------     -----------     -----------
                          $  511,840     $  541,673     $    12,745     $  (555,269)
                          ----------     ----------     -----------     -----------
QUARTER TO DATE
Aurora, CO .............  $  191,299     $  119,414     $      (696)    $  (313,366)
Bolingbrook, IL ........          --             --              --              --
Salt Lake City, UT .....        (160)        (1,958)             --              --
                          ----------     ----------     -----------     -----------
                          $  191,139     $  117,456     $      (696)    $  (313,366)
                          ----------     ----------     -----------     -----------
</TABLE>

                              NET INVESTMENT INCOME

Net investment income from property operations for the industrial properties was
substantially the same, at $0.5 million, for the nine months ended September 30,
2004 and 2003. Net investment income from property operations for the industrial
properties  increased from $0.1 million for the three months ended September 30,
2003 to $0.2 million for the three months ended September 30, 2004. The increase
for the quarter was due to an increase in occupancy.

                              UNREALIZED GAIN/LOSS

The Aurora, Colorado industrial property owned by the Partnership experienced an
immaterial unrealized gain for the nine months ended September 30, 2004 compared
to an unrealized  loss of  approximately  $1.0 million for the nine months ended
September 30, 2003.  The  unrealized  loss  experienced  in 2003 was due to soft
market  conditions  and  capital  improvements  at the  property  that  were not
reflected  as  an  increase  in  market  value.  Also  the  unrealized  loss  of
approximately $0.3 million for the three months ended September 30, 2003 was due
to the same reasons.

                                  REALIZED GAIN

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

HOTEL PROPERTY

<TABLE>
<CAPTION>
                              NET            NET
                          INVESTMENT     INVESTMENT     UNREALIZED      UNREALIZED
                            INCOME         INCOME       GAIN/(LOSS)     GAIN/(LOSS)    OCCUPANCY    OCCUPANCY
PROPERTY                   09/30/04       09/30/03       09/30/04        09/30/03      09/30/04     09/30/03
--------                  ----------     ----------     -----------     -----------    ---------    ---------
<S>                       <C>            <C>            <C>             <C>               <C>         <C>
YEAR TO DATE
Lake Oswego, OR*             $402,509       N/A           $ 27,966          N/A           76%         N/A

QUARTER TO DATE
Lake Oswego, OR*             $226,826       N/A           $144,094          N/A
</TABLE>

*Hotel purchased in December 2003

                                       21
<PAGE>


                              NET INVESTMENT INCOME

On December 10,  2003,  the  Partnership  acquired a  controlling  interest in a
161-room  hotel  located in Portland,  Oregon for $8.0 million.  Net  investment
income  from  hotel  operations  was  $0.4  million  for the nine  months  ended
September 30, 2004. Net investment income from hotel operations was $0.2 million
for the three months ended September 30, 2004.

                              UNREALIZED GAIN/LOSS

The Lake Oswego,  Oregon hotel property owned by the Partnership  experienced an
immaterial  unrealized  gain for the nine months ended September 30, 2004 and an
unrealized  gain of $0.1 million for the three months ended  September  30, 2004
due to capital improvements that were reflected as an increase in market value.

OTHER

Other net investment  income decreased $0.3 million during the nine months ended
September  30, 2004  compared  to the  corresponding  period in 2003.  Other net
investment  income was  substantially  the same  during the three  months  ended
September  30, 2003 and 2004.  Other net  investment  income  includes  interest
income from short-term  investments,  investment  management fees, and portfolio
level expenses.

(c) INFLATION

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

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America  requires the application of
accounting  policies  that  often  involve a  significant  degree  of  judgment.
Management, on an ongoing basis, reviews critical estimates and assumptions.  If
management   determines,   as  a  result  of  its  consideration  of  facts  and
circumstances  that  modifications in assumptions and estimates are appropriate,
results of  operations  and financial  position as reported in the  Consolidated
Financial Statements may change significantly.  Actual results could differ from
those estimates.

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

VALUATION OF INVESTMENTS

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

                                       22
<PAGE>


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

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

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

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

As described  above,  the estimated  market value of real estate and real estate
related assets is determined through an appraisal process, except for other real
estate investments, which are determined as stated above. These estimated market
values  may  vary  significantly  from the  prices  at  which  the  real  estate
investments  would sell since market prices of real estate  investments can only
be determined by  negotiation  between a willing buyer and seller.  Although the
estimated  market values represent  subjective  estimates,  management  believes
these estimated market values are reasonable approximations of market prices and
the  aggregate  value of  investments  in real estate is fairly  presented as of
September 30, 2004 and September 30, 2003.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk. The  Partnership's  exposure to market rate risk for changes
in interest rates relates to about 40.12% of its investment portfolio consisting
primarily  of  short-term  fixed rate  commercial  paper and fixed and  variable
interest  rate  debt.  The  Partnership   does  not  use  derivative   financial
instruments. By policy, the Partnership places its investments with high quality
debt security  issuers,  limits the amount of credit exposure to any one issuer,
limits  duration by  restricting  the term,  and holds  investments  to maturity
except under rare circumstances.

The table below presents the amounts and related weighted  interest rates of the
Partnership's cash equivalents and short-term investments at September 30, 2004:

                                             ESTIMATED MARKET
                                                   VALUE           AVERAGE
                               MATURITY       (IN $ MILLIONS)   INTEREST RATE
                            ----------------------------------------------------
Cash equivalents..........    0-3 months           $25.4            7.18%

The table below discloses the Partnership's  fixed rate debt as of September 30,
2004. All of the Partnership's  long-term debt bears interest at fixed rates and
therefore the fair value of these  instruments  is affected by changes in market
interest rates. The following table presents principal cash flows (in thousands)
based  upon   maturity   dates  of  the  debt   obligations   and  the   related
weighted-average  interest  rates by expected  maturity dates for the fixed rate
debt.

<TABLE>
<CAPTION>
DEBT (IN $ THOUSANDS),           10/1/2004-                                                                  ESTIMATED
INCLUDING CURRENT PORTION        12/31/2004  2005      2006      2007      2008     THEREAFTER     TOTAL    FAIR VALUE
                                 ----------  ----     ------     ----     -------   ----------    -------   ----------
<S>                                 <C>      <C>      <C>        <C>      <C>         <C>         <C>         <C>
Average Fixed Interest Rate ....    5.07%    5.67%      5.20%    5.18%       5.00%       6.75%       6.24%
Fixed Rate .....................    $185     $774     $8,479     $588     $26,091     $16,034     $52,151     $53,547
                                    ----     ----     ------     ----     -------     -------     -------     -------
Total Mortgage Loans Payable ...    $185     $774     $8,479     $588     $26,091     $16,034     $52,151     $53,547
                                    ----     ----     ------     ----     -------     -------     -------     -------
</TABLE>

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

                                       23
<PAGE>


ITEM 4. CONTROLS AND PROCEDURES

In order to ensure that the information we must disclose in our filings with the
Securities  and Exchange  Commission  is recorded,  processed,  summarized,  and
reported  on a timely  basis,  the  Company's  management,  including  our Chief
Executive Officer and President and Chief Accounting Officer,  have reviewed and
evaluated  the  effectiveness  of our  disclosure  controls and  procedures,  as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e), as of September 30, 2004.
Based on such  evaluation,  the Chief Executive  Officer and President and Chief
Accounting Officer have concluded that, as of September 30, 2004, our disclosure
controls  and  procedures  were  effective in timely  alerting  them to material
information  relating to us required to be included in our periodic SEC filings.
There has been no change in our internal control over financial reporting during
the quarter  ended  September  30, 2004,  that has  materially  affected,  or is
reasonably  likely to materially  affect,  our internal  control over  financial
reporting.

                          PART II -- OTHER INFORMATION

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


(a)   EXHIBITS

      2.    Not applicable.

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

      3.2   Certificate of Amendment of Articles of  Incorporation of Pruco Life
            Insurance  Company  of New  Jersey,  filed  as  Exhibit  A(3)(A)  to
            Post-Effective Amendment No. 12 Form S-1, Registration Statement No.
            33-20018, filed April 15, 1999 on behalf of Pruco Life of New Jersey
            Real Property Account, and incorporated herein by reference.

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

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

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

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

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

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

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

      9.    None.

                                       24
<PAGE>


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

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

      11.   Not applicable.

      12.   Not applicable.

      15.   Not applicable.

      18.   None.

      19.   Not applicable.

      22.   Not applicable.

      23.   None.

      24.   Not applicable.

      27.   Not applicable.

      31.1  Section  302  Certification  of  the  Chief  Executive  Officer  and
            President.

      31.2  Section 302 Certification of the Chief Accounting Officer.

      32.1  Section  906  Certification  of  the  Chief  Executive  Officer  and
            President.

      32.2  Section 906 Certification of the Chief Accounting Officer.

      b)    REPORT ON FORM 8-K

            None.

                                       25
<PAGE>


                                   SIGNATURES

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


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


Date:   November 15, 2004                     By:  /s/ Andrew J. Mako
        -----------------                         ----------------------
                                                     Andrew J. Mako
                                                     Chief Executive Officer and
                                                     President

                                       26