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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 Commission file number 033-20018
 PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
 in respect of
 PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT
 (Exact name of registrant as specified in its charter)
 New Jersey
    
    22-2426091(State or other jurisdiction of 
incorporation or organization)
    
    (IRS Employer Identification No.)
 213 Washington Street, Newark, New Jersey 07102-2992
 (Address of principal executive offices) (Zip Code)
 (973) 802-6000
 (Registrants telephone number, including area code)
 þ o
  o o þ
 o þ




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##### 



PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT  (Registrant)
 INDEX
 PageForward Looking Statement Disclosure
    
    
    3Part I  Financial InformationItem 1.
    
    Financial Statements (Unaudited)A.
    
    PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNTStatements of Net Assets                                    September 30, 2007 and
December 31, 2006
    
    
    4Statements of Operations                                    Nine
and Three Months Ended September 30, 2007 and 2006
    
    
    4Statements of Changes in Net
Assets  Nine and Three Months Ended September 30, 2007 and 2006
    
    
    4Notes to the Financial Statements of the
Real Property Account
    
    
    5B.
    
    THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIPConsolidated
Statements of Assets and Liabilities  September 30, 2007 and December 31, 2006
    
    
    8Consolidated
Statements of Operations  Nine and Three Months Ended September 30, 2007 and 2006
    
    
    9Consolidated
Statements of Changes in Net Assets  Nine Months Ended September 30, 2007 and 2006
    
    
    10Consolidated
Statements of Cash Flows  Nine Months Ended September 30, 2007 and 2006
    
    
    11Consolidated
Schedules of Investments  September 30, 2007 and December 31, 2006
    
    
    12Notes to Consolidated
Financial Statements of the Partnership
    
    
    14Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    17Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    26Item 4.
    
    Controls and Procedures
    
    
    27Part II  Other InformationItem 1A.
    
    Risk Factors
    
    
    27Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    27Item 6.
    
    Exhibits
    
    
    27Signatures
    
    
    28
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Forward-Looking Statement Disclosure
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FINANCIAL STATEMENTS OF
PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT
 STATEMENTS OF NET ASSETS
September 30, 2007 and December 31, 2006September 30, 2007(unaudited)
    
    December 31, 2006ASSETSInvestment in The Prudential Variable ContractReal Property Partnership
    
    $
    10,631,473
    
    
    $
    9,975,186Net Assets
    
    $
    10,631,473
    
    
    $
    9,975,186NET ASSETS,representing:Equity of contract owners
    
    $
    7,744,549
    
    
    $
    7,511,015Equity of Pruco Life
              Insurance Company of New Jersey
    
    
    2,886,924
    
    
    
    2,464,171$
    10,631,473
    
    
    $
    9,975,186Units outstanding
    
    
    3,328,371
    
    
    
    3,313,818Portfolio shares held
    
    
    294,526
    
    
    
    294,526Portfolio net asset value per share
    
    $
    36.10
    
    
    $
    33.87STATEMENTS OF OPERATIONSFor the nine and three months ended September 30, 2007 and 20061/1/2007-9/30/2007
    
    
    
    1/1/2006-9/30/2006
    
    
    
    7/1/2007-9/30/2007
    
    
    
    7/1/2006-9/30/2006(unaudited)
    
    (unaudited)
    
    (unaudited)
    
    (unaudited)INVESTMENT INCOMENet investment income from Partnership operations
    
    $
    394,082
    
    
    $
    353,798
    
    
    $
    145,830
    
    
    $
    135,461EXPENSESCharges to contract owners for assuming mortality risk and
expense risk and for administration
    
    
    32,964
    
    
    
    30,275
    
    
    
    11,133
    
    
    
    10,363NET INVESTMENT INCOME
    
    
          361,118
    
    
    
          323,523
    
    
    
          134,697
    
    
    
          125,098NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTSNet change in unrealized gain (loss) on investments in Partnership
    
    
          231,385
    
    
    
          621,699
    
    
    
          (17,530
    )
    
    
          64,052Net realized gain (loss) on sale of investments in Partnership
    
    
          30,820
    
    
    
          2,946
    
    
    
          (2,283
    )
    
    
          1NET GAIN (LOSS) ON INVESTMENTS
    
    
          262,205
    
    
    
          624,645
    
    
    
          (19,813
    )
    
    
          64,053NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS
    
    $
          623,323
    
    
    $
          948,168
    
    
    $
          114,884
    
    
    $
          189,151STATEMENTS OF CHANGES IN NET ASSETSFor the nine and three months ended September 30, 2007 and 20061/1/2007-9/30/2007
    
    
    
    1/1/2006-9/30/2006
    
    
    
    7/1/2007-9/30/2007
    
    
    
    7/1/2006-9/30/2006(unaudited)
    
    (unaudited)
    
    (unaudited)
    
    (unaudited)OPERATIONSNet investment income
    
    $
          361,118
    
    
    $
          323,523
    
    
    $
          134,697
    
    
    $
          125,098Net change in unrealized gain (loss) on investments in Partnership
    
    
          231,385
    
    
    
          621,699
    
    
    
          (17,530
    )
    
    
          64,052Net realized gain (loss) on sale of investments in Partnership
    
    
          30,820
    
    
    
          2,946
    
    
    
          (2,283
    )
    
    
          1NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS
    
    
          623,323
    
    
    
          948,168
    
    
    
          114,884
    
    
    
          189,151CAPITAL TRANSACTIONSNet withdrawals by
              contract owners
    
    
          (225,395
    )
    
    
          (193,978
    )
    
    
          (179,735
    )
    
    
          (48,514
    )Net contributions
              (withdrawals) by Pruco Life Insurance Company of New Jersey
    
    
          258,359
    
    
    
          (8,782
    )
    
    
          190,868
    
    
    
          (174,158
    )NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS
    
    
          32,964
    
    
    
          (202,760
    )
    
    
          11,133
    
    
    
          (222,672
    )TOTAL INCREASE (DECREASE) IN NET ASSETS
    
    
          656,287
    
    
    
          745,408
    
    
    
          126,017
    
    
    
          (33,521
    )NET ASSETSBeginning of period
    
    
          9,975,186
    
    
    
          8,924,959
    
    
    
          10,505,456
    
    
    
          9,703,888End of period
    
    $
          10,631,473
    
    
    $
          9,670,367
    
    
    $
          10,631,473
    
    
    $
          9,670,367
 The
    accompanying notes are an integral part of these financial
    statements.
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NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT
September 30, 2007
(Unaudited)
 Note 1:
    
    General
    Note 2:
    
    Summary of Significant Accounting Policies and Pronouncements
 A.
    
    Basis of Accounting
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B.
    
    Investment in Partnership Interest
  C.
    
    Income Recognition
  D.
    
    Equity of Pruco Life Insurance Company of New Jersey
  Note 3:
    
    Charges and Expenses
 A.
    
    Mortality Risk and Expense Risk Charges
  B.
    
    Administrative Charges
  C.
    
    Cost of Insurance and Other Related Charges
  D.
    
    Deferred Sales Charge
  E.
    
    Partial Withdrawal Charge
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Note 4:
    
    Taxes
  Note 5:
    
    Net Withdrawals by Contract Owners
  Nine Months Ended September 30,(Unaudited)2007
    
    
    2006VAL
    
    $
          (170,790
    )
    
    $
          (149,773
    )VLI
    
          
    (51,628
    )
    
          
    (17,803
    )SPVA
    
    
    0
    
    
    
    (25,680SPVL
    
          
          (2,977
    )
    
          
          (722
    )TOTAL
    
    $
          (225,395
    )
    
    $
          (193,978
    )
 Note 6:
    
    Partnership Distributions
  Note 7:
    
    Unit Information
  September 30, 2007
    
    December 31, 2006(Unaudited)Units Outstanding:
    
    3,328,371
    
          3,313,818Unit Value:
    
    2.78372 to 3.35636
    
    2.63621 to 3.15740
 Note 8:
    
    Financial Highlights
  Nine Months EndedSeptember 30,(Unaudited)2007
    
    2006Total Return
    
    5.60% to 6.30%
    
    9.94% to 10.68%
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THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP  CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
 September 30, 2007(Unaudited)
    
    
    December 31, 2006ASSETSREAL ESTATE
INVESTMENTS  At estimated market value:Real estate and improvements
(cost: 9/30/2007  $232,183,894; 12/31/2006  $199,124,056)
    
    $
    249,555,306
    
    
    $
    214,444,568Real estate partnerships and preferred equity investments
(cost: 9/30/2007  $14,576,963;12/31/2006  $22,334,823)
    
    
    14,576,963
    
    
    
    17,941,039Other real estate investments (cost: 9/30/2007  $3,137,949;
12/31/2006  $2,857,851)
    
    
    3,137,949
    
    
    
    2,857,851Total real estate investments
    
    
    267,270,218
    
    
    
    235,243,458CASH AND CASH EQUIVALENTS
    
    
    17,304,021
    
    
    
    33,399,532OTHER ASSETS, NET
    
    
    3,100,642
    
    
    
    3,493,829Total assets
    
    
    287,674,881
    
    
    
    272,136,819LIABILITIES & PARTNERS EQUITYINVESTMENT LEVEL DEBT
    
    $
    32,273,790
    
    
    $
    32,710,488ACCOUNTS PAYABLE AND ACCRUED EXPENSES
    
    
    3,683,488
    
    
    
    3,091,930DUE TO AFFILIATES
    
    
    865,090
    
    
    
    789,889OTHER LIABILITIES
    
    
    991,218
    
    
    
    876,487MINORITY INTEREST
    
    
    5,883,820
    
    
    
    5,751,441Total liabilities
    
    
    43,697,406
    
    
    
    43,220,235COMMITMENTS AND CONTINGENCIESPARTNERS EQUITY
    
    
    243,977,475
    
    
    
    228,916,584Total liabilities and partners equity
    
    $
    287,674,881
    
    
    $
    272,136,819NUMBER OF SHARES OUTSTANDING AT END OF PERIOD
    
    
    6,758,960
    
    
    
    6,758,960SHARE VALUE AT END OF PERIOD
    
    $
    36.10
    
    
    $
    33.87
 The accompanying notes are an integral part of these consolidated financial statements.
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THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP  CONSOLIDATED STATEMENTS OF OPERATIONS  (Unaudited)
 For the Nine Months
    
    
    For the Three MonthsEnded September 30,
    
    
    Ended September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006INVESTMENT INCOME:Revenue from real estate and improvements
    
    $
    20,752,762
    
    
    $
    18,839,045
    
    
    $
    7,545,286
    
    
    $
    6,793,128Equity in income of real estate partnerships
    
    
    882,293
    
    
    
    646,978
    
    
    
    254,645
    
    
    
    314,399Interest and equity income on mortgage
and other loans receivable
    
    
    
    
    
    
    125,510
    
    
    
    
    
    
    
    Income from other real estate investments
    
    
    280,098
    
    
    
    125,172
    
    
    
    94,392
    
    
    
    94,392Interest on short-term investments
    
    
    1,293,428
    
    
    
    1,456,221
    
    
    
    340,171
    
    
    
    461,595Total investment income
    
    
    23,208,581
    
    
    
    21,192,926
    
    
    
    8,234,494
    
    
    
    7,663,514INVESTMENT EXPENSES:Operating
    
    
    5,137,964
    
    
    
    4,713,495
    
    
    
    1,755,099
    
    
    
    1,693,204Investment management fee
    
    
    2,492,126
    
    
    
    2,298,695
    
    
    
    851,683
    
    
    
    793,607Real estate taxes
    
    
    1,656,843
    
    
    
    1,627,836
    
    
    
    602,234
    
    
    
    564,428Administrative
    
    
    3,218,654
    
    
    
    2,820,122
    
    
    
    1,181,123
    
    
    
    921,392Interest expense
    
    
    1,575,492
    
    
    
    1,372,094
    
    
    
    446,379
    
    
    
    446,825Minority interest
    
    
    83,878
    
    
    
    220,627
    
    
    
    51,391
    
    
    
    128,901Total investment expenses
    
    
    14,164,957
    
    
    
    13,052,869
    
    
    
    4,887,909
    
    
    
    4,548,357NET INVESTMENT INCOME
    
    
    9,043,624
    
    
    
    8,140,057
    
    
    
    3,346,585
    
    
    
    3,115,157REALIZED AND UNREALIZED GAIN (LOSS) ON REAL ESTATE
INVESTMENTS:Net proceeds from real estate investments sold
    
    
    18,353,122
    
    
    
    67,770
    
    
    
    
    
    
    
    Less: Cost of real estate investments sold
    
    
    19,026,181
    
    
    
    
    
    
    
    52,381
    
    
    
    Realization of prior periods unrealized
gain (loss) on real estate investments sold
    
    
    (1,380,344
    )
    
    
    
    
    
    
    
    
    
    
    NET GAIN (LOSS) REALIZED ON REAL ESTATE INVESTMENTS SOLD
    
    
    707,285
    
    
    
    67,770
    
    
    
    (52,381
    )
    
    
    Change in unrealized gain (loss) on real estate investments
    
    
    5,064,340
    
    
    
    16,401,107
    
    
    
    (1,004,324
    )
    
    
    1,430,286Less: Minority interest change in unrealized gain(loss) on real estate investments
    
    
    (245,642
    )
    
    
    2,090,356
    
    
    
    (602,027
    )
    
    
    (46,520
    )Net unrealized gain (loss) on real estate investments
    
    
    5,309,982
    
    
    
    14,310,751
    
    
    
    (402,297
    )
    
    
    1,476,806NET REALIZED AND UNREALIZED GAIN (LOSS)
ON REAL ESTATE INVESTMENTS
    
    
    6,017,267
    
    
    
    14,378,521
    
    
    
    (454,678
    )
    
    
    1,476,806INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS
    
    $
    15,060,891
    
    
    $
    22,518,578
    
    
    $
    2,891,907
    
    
    $
    4,591,963
 The accompanying notes are an integral part of these consolidated financial statements.
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THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP  CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS  (Unaudited)
 For the Nine Months Ended September 30,2007
    
    
    2006INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS:Net investment income
    
    $
    9,043,624
    
    
    $
    8,140,057Net gain (loss) realized on real estate
investments sold
    
    
    707,285
    
    
    
    67,770Net unrealized gain (loss) from real estate
investments
    
    
    5,309,982
    
    
    
    14,310,751Increase (decrease) in net assets
resulting from operations
    
    
    15,060,891
    
    
    
    22,518,578INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CAPITAL TRANSACTIONS:Withdrawals
    
    
    
    
    
    
    (6,000,000
    )Increase (decrease) in net assets
resulting from capital transactions
    
    
    
    
    
    
    (6,000,000
    )INCREASE (DECREASE) IN NET ASSETS
    
    
    15,060,891
    
    
    
    16,518,578NET ASSETS
  Beginning of period
    
    
    228,916,584
    
    
    
    205,402,851NET ASSETS
  End of period
    
    $
    243,977,475
    
    
    $
    221,921,429
 The accompanying notes are an integral part of these consolidated financial statements.
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THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP  CONSOLIDATED STATEMENTS OF CASH FLOWS  (Unaudited)
 For the Nine Months Ended September 30,2007
    
    
    2006CASH FLOWS FROM OPERATING ACTIVITIES:Net increase in net assets from operations
    
    $
    15,060,891
    
    
    $
    22,518,578Adjustments to reconcile net increase in net assets
to net cash from operating activitiesNet realized and unrealized loss (gain)
    
    
    (6,017,267
    )
    
    
    (14,378,521
    )Amortization of deferred financing costs
    
    
    258,751
    
    
    
    Distributions in excess of (less than) equity in income
of real estate partnerships operations
    
    
    20,063
    
    
    
    (59,755
    )Minority interest in consolidated partnerships
    
    
    83,878
    
    
    
    220,627Bad debt expense
    
    
    67,818
    
    
    
    116,285(Increase) decrease in accrued interest included in
other real estate investments
    
    
    (280,098
    )
    
    
    (125,172
    )(Increase) decrease in:Other assets
    
    
    66,618
    
    
    
    (589,493
    )Increase (decrease) in:Accounts payable and accrued expenses
    
    
    591,558
    
    
    
    680,428Due to affiliates
    
    
    75,201
    
    
    
    46,089Other liabilities
    
    
    114,731
    
    
    
    239,715Net cash flows from (used in) operating activities
    
    
    10,042,144
    
    
    
    8,668,781CASH FLOWS FROM INVESTING ACTIVITIES:Net proceeds from real estate investments sold
    
    
    18,353,122
    
    
    
    67,770Acquisition of real estate and improvements
    
    
    (42,209,760
    )
    
    
    (12,159,443
    )Additions to real estate and improvements
    
    
    (2,138,462
    )
    
    
    (1,310,684
    )Contributions to real estate partnerships
    
    
    
    
    
    
    (7,289,487
    )Return of investment in real estate partnerships
    
    
    
    
    
    
    3,620,455Collection of mortgage loan receivable
    
    
    
    
    
    
    4,277,769Origination of other real estate investments
    
    
    
    
    
    
    (2,638,287
    )Net cash flows from (used in) investing activities
    
    
    (25,995,100
    )
    
    
    (15,431,907
    )CASH FLOWS FROM FINANCING ACTIVITIES:Withdrawals
    
    
    
    
    
    
    (6,000,000
    )Principal payments on investment level debt
    
    
    (436,698
    )
    
    
    (407,729
    )Contributions from minority interest partners
    
    
    294,143
    
    
    
    Distributions to minority interest partners
    
    
    
    
    
    
    (65,391
    )Net cash flows from (used in) financing activities
    
    
    (142,555
    )
    
    
    (6,473,120
    )NET CHANGE IN CASH AND CASH
EQUIVALENTS
    
    
    (16,095,511
    )
    
    
    (13,236,246
    )CASH AND
CASH EQUIVALENTS  Beginning of period
    
    
    33,399,532
    
    
    
    45,467,485CASH AND
CASH EQUIVALENTS  End of period
    
    $
    17,304,021
    
    
    $
    32,231,239DISCLOSURE OF SUPPLEMENTAL CASH FLOW
INFORMATIONCash paid for interest
    
    $
    1,317,281
    
    
    $
    1,341,565
 The accompanying notes are an integral part of these consolidated financial statements.
 11




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THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
CONSOLIDATED SCHEDULE OF INVESTMENTS
 September 30, 2007Total RentableSquare Feet
    
    
    September 30, 2007Unless Otherwise
    
    
    (Unaudited)
    
    
    December 31, 2006September 30, 2007
    
    
    
    
    
    
    Indicated
    
    
    
    
    
    
    Estimated
    
    
    
    
    
    
    EstimatedProperty Name
    
    Ownership
    
    
    City, State
    
    
    (Unaudited)
    
    
    Cost
    
    
    Market Value
    
    
    Cost
    
    
    Market ValueOFFICES750 Warrenville
    
    WO
    
    Lisle, IL
    
    
    103,193
    
    
    $
    24,561,578
    
    
    $
    11,500,000
    
    
    $
    24,517,391
    
    
    $
    10,700,000Summit @ Cornell Oaks
    
    WO
    
    Beaverton , OR
    
    
    72,109
    
    
    
    12,356,027
    
    
    
    13,800,000
    
    
    
    12,091,490
    
    
    
    12,500,000Westpark
    
    WO
    
    Nashville, TN
    
    
    97,199
    
    
    
    11,307,881
    
    
    
    12,800,000
    
    
    
    11,033,804
    
    
    
    12,800,000Financial Plaza
    
    WO
    
    Brentwood, TN
    
    
    98,049
    
    
    
    12,358,189
    
    
    
    13,700,000
    
    
    
    12,333,152
    
    
    
    13,500,000Offices % as of 9/30/2007
    
    
    21
    %
    
    
    60,583,675
    
    
    
    51,800,000
    
    
    
    59,975,837
    
    
    
    49,500,000APARTMENTSBrookwood Apartments
    
    WO
    
    Atlanta, GA
    
    240 Units
    
    
    
    19,389,939
    
    
    
    20,800,000
    
    
    
    18,918,016
    
    
    
    20,100,000Dunhill Trace Apartments
    
    WO
    
    Raleigh, NC
    
    250 Units
    
    
    
    16,327,426
    
    
    
    19,800,000
    
    
    
    16,287,767
    
    
    
    20,400,000The Reserve
    
    WO
    
    Charlotte, NC
    
    140 Units
    
    
    
    13,534,750
    
    
    
    13,534,750
    
    
    
    
    
    
    
    Broadstone Crossing
    
    WO
    
    Austin, TX
    
    225 Units
    
    
    
    22,716,166
    
    
    
    26,100,000
    
    
    
    
    
    
    
    Apartments % as of 9/30/2007
    
    
    33
    %
    
    
    71,968,281
    
    
    
    80,234,750
    
    
    
    35,205,783
    
    
    
    40,500,000RETAILKings Market
    
    WO
    
    Rosewell, GA
    
    
    314,358
    
    
    
    37,865,762
    
    
    
    28,300,000
    
    
    
    37,775,326
    
    
    
    28,400,000Hampton Towne Center
    
    WO
    
    Hampton, VA
    
    
    174,540
    
    
    
    18,046,356
    
    
    
    26,200,000
    
    
    
    18,042,611
    
    
    
    26,000,000White Marlin Mall
    
    CJV
    
    Ocean City, MD
    
    
    186,016
    
    
    
    16,391,027
    
    
    
    23,000,000
    
    
    
    15,538,779
    
    
    
    22,900,000Kansas City Portfolio
    
    EJV
    
    Kansas City, KS;MO
    
    
    487,660
    
    
    
    178,716
    
    
    
    178,716
    
    
    
    7,816,531
    
    
    
    3,422,747Westminster Crossing East, LLC
    
    CJV
    
    Westminster, MD
    
    
    89,890
    
    
    
    12,403,221
    
    
    
    18,061,712
    
    
    
    12,358,340
    
    
    
    17,744,568Hartnett Crossing
    
    CJV
    
    Dunn, NC
    
    
    193,235
    
    
    
    5,958,844
    
    
    
    5,958,844
    
    
    
    
    
    
    
    CARS Preferred Equity
    
    PE
    
    Various
    
    
    N/A
    
    
    
    14,398,247
    
    
    
    14,398,247
    
    
    
    14,518,292
    
    
    
    14,518,292Retail % as of 9/30/2007
    
    
    48
    %
    
    
    105,242,173
    
    
    
    116,097,519
    
    
    
    106,049,879
    
    
    
    112,985,607INDUSTRIALSmith Road
    
    WO
    
    Aurora, CO
    
    Sold
    
    
    
    
    
    
    
    
    
    
    
    11,286,560
    
    
    
    14,300,000Industrial % as of 9/30/2007
    
    
    0
    %
    
    
    
    
    
    
    
    
    
    
    11,286,560
    
    
    
    14,300,000HOTELPortland Crown Plaza
    
    CJV
    
    Portland, OR
    
    
    161 Rooms
    
    
    
    8,966,728
    
    
    
    16,000,000
    
    
    
    8,940,820
    
    
    
    15,100,000Hotel % as of 9/30/2007
    
    
    7
    %
    
    
    8,966,728
    
    
    
    16,000,000
    
    
    
    8,940,820
    
    
    
    15,100,000OTHER REAL ESTATE INVESTMENTSWestminster East
    
    Eloan
    
    Westminster, MD
    
    
    
    
    
    
    3,137,949
    
    
    
    3,137,949
    
    
    
    2,857,851
    
    
    
    2,857,851Other Real EstateInvestments % as of9/30/2007
    
    
    
    1
    %
    
    
    3,137,949
    
    
    
    3,137,949
    
    
    
    2,857,851
    
    
    
    2,857,851Total Real Estate Investments as
a Percentage of Net Assets as of
9/30/2007
    
    
    
    
    
    
    
    
    
    
    110
    %
    
    
    249,898,806
    
    
    
    267,270,218
    
    
    
    224,316,730
    
    
    
    235,243,458
 
 The accompanying notes are an integral part of these consolidated financial statements.
 12




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##### Table of Contents



THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
CONSOLIDATED SCHEDULE OF INVESTMENTS
 September 30, 2007(Unaudited)
    
    
    December 31, 2006Estimated
    
    
    
    
    
    
    EstimatedFace Amount
    
    
    Cost
    
    
    Market Value
    
    
    Cost
    
    
    Market ValueCASH AND
CASH EQUIVALENTS  Percentage of Net Assets
    
    
    
    
    
    
    
    
    
    
    7.1
    %
    
    
    
    
    
    
    14.6
    %Federal Home Loan Bank, 0 coupon bond, October 1, 2007
    
    $
    5,403,000
    
    
    $
    5,403,000
    
    
    $
    5,403,000
    
    
    $
    7,245,028
    
    
    $
    7,245,028Federal Home Loan Bank, 0 coupon bond, October 9, 2007
    
    
    9,990,000
    
    
    
    9,990,000
    
    
    
    9,990,000
    
    
    
    24,914,167
    
    
    
    24,914,167Total Cash Equivalents
    
    
    
    
    
    
    15,393,000
    
    
    
    15,393,000
    
    
    
    32,159,195
    
    
    
    32,159,195Cash
    
    
    
    
    
    
    1,911,021
    
    
    
    1,911,021
    
    
    
    1,240,337
    
    
    
    1,240,337Total Cash and Cash Equivalents
    
    
    
    
    
    $
    17,304,021
    
    
    $
    17,304,021
    
    
    $
    33,399,532
    
    
    $
    33,399,532
 The accompanying
      notes are an integral part of these consolidated financial statements
 13




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
September 30, 2007 and 2006
(Unaudited)
 Note 1:
    
    Summary of Significant Accounting Policies and PronouncementsThe accompanying unaudited consolidated financial statements of The Prudential Variable Contract
Real Property Partnership (the Partnership) included herein have been prepared in accordance with
the requirements of Form 10-Q and accounting principles generally accepted in the United States of
America for interim financial information. In the opinion of management, all adjustments
(consisting only of normal recurring adjustments) considered necessary for a fair statement have
been included. Operating results for the nine months ended September 30, 2007 are not necessarily
indicative of the results that may be expected for the year ended December 31, 2007. For further
information, refer to the audited consolidated financial statements and notes thereto included in
each partners Annual Report on Form 10-K for the year ended December 31, 2006.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) that
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 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.In September 2006, the staff of the U.S. Securities and Exchange Commission, or SEC, issued Staff
Accounting Bulletin, or SAB, No. 108, Considering the Effects of Prior Year Misstatements when
Quantifying Misstatements in Current Year Financial Statements. The interpretations in this SAB
express the staffs views regarding the process of quantifying financial statement misstatements.
Specifically, the SEC staff believes that registrants must quantify the impact on current period
financial statements of correcting all misstatements, including both those occurring in the current
period and the effect of reversing those that have accumulated from prior periods. This SAB must
be applied beginning with the first fiscal year ending after November 15, 2006, with early adoption
encouraged. Since the Partnerships method for quantifying financial statement misstatements
already considers those occurring in the current period and the effect of reversing those that have
accumulated from prior periods, the adoption of SAB No. 108 had no effect on the financial position
and result of operations of the Partnership.The Partnership adopted FASB Interpretation No. 48 (FIN 48), Accounting for Uncertainty in
Income Taxes, an Interpretation of FASB Statement No. 109 as of January 1, 2007. This
interpretation prescribes a comprehensive model for how a partnership should recognize, measure,
present, and disclose in its financial statements uncertain tax positions that the partnership has
taken or expects to take on a tax return. The adoption of FIN 48 had no effect to the financial
position and result of operations of the Partnership.In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. This statement defines
fair value, establishes a framework for measuring fair value in generally accepted accounting
principles, and requires additional disclosures about fair value measurements. This statement does
not require any new fair value measurements, but the application of this statement could change
current practices in determining fair value.
 14




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
September 30, 2007 and 2006
(Unaudited)
 Note 1:
    
    Summary of Significant Accounting Policies and Pronouncements (continued)In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and
Financial Liabilities, including an amendment of FASB Statement No. 115. This statement provides
partnerships with an option to report selected financial assets and liabilities at fair value.SFAS No. 157 and SFAS No. 159 are effective for fiscal
            years beginning after November 15, 2007 with early adoption permitted.
            The Partnership plans to adopt this guidance effective January 1,
            2008. The Partnership is currently assessing the impact of SFAS 157
            and SFAS 159 on the Partnerships consolidated financial position and results
            of operations.In June 2007, the Accounting Standards Executive Committee issued
            Statement of Position 07-1, Clarification of the Scope of the
            Audit and Accounting Guide Investment Companies and Accounting by
            Parent Companies and Equity Method Investors for Investments in Investment
            Companies (SOP 07-1). SOP 07-1 provides guidance
            for determining whether an entity is within the scope of the AICPA
            Audit and Accounting Guide Investment Companies (the Audit Guide).
            The SOP was supposed to be effective for fiscal years beginning on
            or after December 15, 2007, however FASB has deferred the effective
            date while addressing implementation issues. The Partnership is awaiting
            the final determination from the FASB in order to evaluate the impact
            on the Partnerships financial position and results of operations.Note 2:
    
    Related Party TransactionsPursuant to an investment management agreement, Prudential Investment Management, Inc. (PIM),
which is an indirectly owned subsidiary of Prudential Financial Inc. (PFI), 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, 2007 and 2006
investment management fees incurred by the Partnership were $2,492,126 and $2,298,695,
respectively. For the three months ended September 30, 2007 and 2006 investment management fees
incurred by the Partnership were $851,683 and $793,607, respectively.The Partnership also reimburses PIM for certain administrative services rendered by PIM. The
amounts incurred for the nine months ended September 30, 2007 and 2006 were $87,122 and $98,197,
respectively, and are classified as administrative expense in the Consolidated Statements of
Operations. The amounts incurred for the three months ended September 30, 2007 and 2006 were
$29,041 and $36,732, respectively, and are classified as administrative expense in the Consolidated
Statements of Operations.Note 3:
    
    Commitments and ContingenciesThe Partnership is subject to various legal proceedings and claims arising in the ordinary course
of business. These matters are generally covered by insurance. In the opinion of the
Partnerships management, the outcome of such matters will not have a material effect on the
Partnership.
 15




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF  THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP  September 30, 2007 and 2006  (Unaudited)
 Note 4: Financial Highlights
 For The Nine Months Ended September 30,2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Per Share(Unit) Operating Performance:Net Asset Value, beginning of period
    
    $
    33.87
    
    
    $
    29.59
    
    
    $
    26.15
    
    
    $
    24.66
    
    
    $
    24.11Income From Investment Operations:Investment income, before management fee
    
    
    1.71
    
    
    
    1.50
    
    
    
    1.22
    
    
    
    1.04
    
    
    
    1.12Investment Management fee
    
    
    (0.37
    )
    
    
    (0.33
    )
    
    
    (0.29
    )
    
    
    (0.27
    )
    
    
    (0.24
    )Net realized and unrealized gain (loss) on investments
    
    
    0.89
    
    
    
    2.07
    
    
    
    2.05
    
    
    
    0.82
    
    
    
    (0.84
    )Net Increase in Net Assets Resulting from Operations
    
    
    2.23
    
    
    
    3.24
    
    
    
    2.98
    
    
    
    1.59
    
    
    
    0.04Net Asset Value, end of period
    
    $
    36.10
    
    
    $
    32.83
    
    
    $
    29.13
    
    
    $
    26.25
    
    
    $
    24.15Total
Return, before Management Fee
(a):
    
    
    7.70
    %
    
    
    12.14
    %
    
    
    12.58
    %
    
    
    7.58
    %
    
    
    1.15
    %Ratios/Supplemental Data:Net Assets, end of period (in millions)
    
    $
    244
    
    
    $
    222
    
    
    $
    208
    
    
    $
    193
    
    
    $
    185Ratios to
average net assets
(b):Total Portfolio Level Expenses
    
    
    1.15
    %
    
    
    1.15
    %
    
    
    1.10
    %
    
    
    1.06
    %
    
    
    1.00
    %Investment Income before Management Fee
    
    
    5.02
    %
    
    
    4.87
    %
    
    
    3.04
    %
    
    
    4.13
    %
    
    
    4.62
    %
 
 (a)
    
    Total Return, before management fee is calculated by geometrically linking quarterly returns which
are calculated using the formula below: 
  (b)
    
    Average net assets are based on beginning of quarter net assets. 16




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##### Table of Contents



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




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##### Table of Contents



(b) Results of Operations
  Net Investment Income Overview
   Valuation Overview
   18




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##### Table of Contents



Nine Months Ended
    
    
    Three Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net Investment Income:Office properties
    
    $
    2,850,757
    
    
    $
    2,503,937
    
    
    $
    1,004,205
    
    
    $
    852,401Apartment properties
    
    
    1,278,936
    
    
    
    779,306
    
    
    
    640,578
    
    
    
    236,838Retail properties
    
    
    5,276,342
    
    
    
    4,426,107
    
    
    
    1,824,046
    
    
    
    1,778,777Industrial property
    
    
    14,363
    
    
    
    578,378
    
    
    
    (1,595
    )
    
    
    199,418Hotel property
    
    
    979,791
    
    
    
    963,740
    
    
    
    453,390
    
    
    
    430,337Land
    
    
    
    
    
    
    (43,508
    )
    
    
    
    
    
    
    Other (including interest income,
investment mgt fee, etc.)
    
    
    (1,356,565
    )
    
    
    (1,067,903
    )
    
    
    (574,039
    )
    
    
    (382,614
    )Total Net Investment Income
    
    $
    9,043,624
    
    
    $
    8,140,057
    
    
    $
    3,346,585
    
    
    $
    3,115,157Net Realized Gain (Loss) on Real Estate
Investments:Apartment properties
    
    
    
    
    
    
    70,689
    
    
    
    
    
    
    
    Retail properties
    
    
    361,453
    
    
    
    
    
    
    
    (52,381
    )
    
    
    Land
    
    
    
    
    
    
    (2,919
    )
    
    
    
    
    
    
    Industrial property
    
    
    345,832
    
    
    
    
    
    
    
    
    
    
    
    Total Net Realized Gain (Loss) on Real Estate
Investments
    
    
    707,285
    
    
    
    67,770
    
    
    
    (52,381
    )
    
    
    Net Unrealized Gain (Loss) on Real Estate
Investments:Office properties
    
    
    1,692,160
    
    
    
    2,493,348
    
    
    
    1,153,887
    
    
    
    305,619Apartment properties
    
    
    2,972,253
    
    
    
    797,104
    
    
    
    542,403
    
    
    
    (208,560
    )Retail properties
    
    
    (53,704
    )
    
    
    5,758,846
    
    
    
    (1,766,903
    )
    
    
    572,084Industrial property
    
    
    
    
    
    
    1,463,579
    
    
    
    
    
    
    
    840,782Hotel property
    
    
    699,273
    
    
    
    3,797,874
    
    
    
    (331,684
    )
    
    
    (33,119
    )Total Net Unrealized Gain (Loss) on Real Estate
Investments
    
    
    5,309,982
    
    
    
    14,310,751
    
    
    
    (402,297
    )
    
    
    1,476,806Net Realized and Unrealized Gain (Loss) on Real
Estate Investments
    
    $
    6,017,267
    
    
    $
    14,378,521
    
    
    
    ($454,678
    )
    
    $
    1,476,806
 19




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##### Table of Contents



OFFICE PROPERTIES
 Net Investment
    
    
    Net Investment
    
    
    Unrealized
    
    
    UnrealizedIncome/(Loss)
    
    
    Income/(Loss)
    
    
    Gain/(Loss)
    
    
    Gain/(Loss)
    
    
    Occupancy
    
    
    OccupancyNine Months Ended September 30,
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006PropertyLisle, IL
    
    $
    420,962
    
    
    $
    324,823
    
    
    $
    755,813
    
    
    $
    292,021
    
    
    
    61%
    
    
    
    38%Brentwood, TN
    
    
    842,377
    
    
    
    756,318
    
    
    
    (274,078
    )
    
    
    (299,760
    )
    
    
    100%
    
    
    
    100%Oakbrook Terrace,
              IL (1)
    
    
    
    
    
    
    1,323
    
    
    
    
    
    
    
    
    
    
    
    N/A
    
    
    
    N/ABeaverton, OR
    
    
    782,795
    
    
    
    679,636
    
    
    
    1,035,463
    
    
    
    1,901,087
    
    
    
    91%
    
    
    
    76%Brentwood, TN
    
    
    804,623
    
    
    
    741,837
    
    
    
    174,962
    
    
    
    600,000
    
    
    
    100%
    
    
    
    100%$
    2,850,757
    
    
    $
    2,503,937
    
    
    $
    1,692,160
    
    
    $
    2,493,348Net Investment
    
    
    Net Investment
    
    
    Unrealized
    
    
    UnrealizedIncome/(Loss)
    
    
    Income/(Loss)
    
    
    Gain/(Loss)
    
    
    Gain/(Loss)Three Months Ended September 30,
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006PropertyLisle, IL
    
    $
    202,520
    
    
    $
    138,253
    
    
    $
    (32,613
    )
    
    $
    (307,979
    )Brentwood, TN
    
    
    287,843
    
    
    
    266,463
    
    
    
    (104,620
    )
    
    
    (167,389
    )Beaverton, OR
    
    
    268,880
    
    
    
    213,570
    
    
    
    792,313
    
    
    
    780,987Brentwood, TN
    
    
    244,962
    
    
    
    234,115
    
    
    
    498,807
    
    
    
    $
    1,004,205
    
    
    $
    852,401
    
    
    $
    1,153,887
    
    
    $
    305,619
 
 (1)
    
    The Oakbrook Terrace, Illinois office property was sold on June 8, 2005 but certain post-closing
adjustments were recognized during the nine months ended September 30, 2006. Net Investment Income
  Unrealized Gain/(Loss)
   20




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##### Table of Contents



APARTMENT PROPERTIES
 Realized /Net Investment
    
    
    Net Investment
    
    
    Unrealized
    
    
    UnrealizedIncome/(Loss)
    
    
    Income/(Loss)
    
    
    Gain/(Loss)
    
    
    Gain/(Loss)
    
    
    Occupancy
    
    
    OccupancyNine Months Ended September 30,
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006PropertyAtlanta, GA
    
    $
    250,388
    
    
    $
    351,593
    
    
    $
    228,077
    
    
    $
    170,649
    
    
    
    92%
    
    
    
    95%Raleigh, NC
    
    
    445,473
    
    
    
    437,763
    
    
    
    (639,658
    )
    
    
    626,455
    
    
    
    96%
    
    
    
    90%Gresham/Salem, OR
              (1)
    
    
    
    
    
    
    (10,050
    )
    
    
    
    
    
    
    169
    
    
    
    N/A
    
    
    
    N/AJacksonville, FL
              (2)
    
    
    17,342
    
    
    
    
    
    
    
    
    
    
    
    70,520
    
    
    
    N/A
    
    
    
    N/AAustin, TX (3)
    
    
    508,926
    
    
    
    
    
    
    
    3,383,834
    
    
    
    
    
    
    
    94%
    
    
    
    N/ACharlotte, NC(4)
    
    
    56,807
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    95%
    
    
    
    N/A$
    1,278,936
    
    
    $
    779,306
    
    
    $
    2,972,253
    
    
    $
    867,793Net Investment
    
    
    Net Investment
    
    
    Unrealized
    
    
    UnrealizedIncome/(Loss)
    
    
    Income/(Loss)
    
    
    Gain/(Loss)
    
    
    Gain/(Loss)Three Months Ended September 30,
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006PropertyAtlanta, GA
    
    $
    96,019
    
    
    $
    114,657
    
    
    $
    384,959
    
    
    $
    (137,072
    )Raleigh, NC
    
    
    194,479
    
    
    
    122,231
    
    
    
    167,444
    
    
    
    (71,488
    )Gresham/Salem, OR (1)
    
    
    
    
    
    
    (50
    )
    
    
    
    
    
    
    Austin, TX (3)
    
    
    293,273
    
    
    
    
    
    
    
    (10,000
    )
    
    
    Charlotte, NC (4)
    
    
    56,807
    
    
    
    
    
    
    
    
    
    
    
    $
    640,578
    
    
    $
    236,838
    
    
    $
    542,403
    
    
    $
    (208,560
    )
 
 (1)
    
    The Gresham, Oregon and Salem, Oregon apartment properties were sold on August 10, 2005 and
March 10, 2005, respectively, but certain post-closing adjustments were recognized during the nine
and three month periods ended September 30, 2006.(2)
    
    The Jacksonville, Florida apartment property was sold on November 30, 2005 but certain post-closing
adjustments were recognized during the nine months ended September 30, 2007.(3)
    
    Net investment income for the nine and three month periods ended September 30, 2007 reflects partial period
results for the Austin, Texas apartment property that was acquired on May 8, 2007.(4)
    
    Net investment income for the nine and three month periods ended September 30, 2007 reflects partial period
results for the Charlotte, North Carolina apartment property that was acquired on September 6, 2007. Net Investment Income
  Total Realized and Unrealized Gain/Loss
  21




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##### Table of Contents



RETAIL PROPERTIES
 Realized/
    
    
    Realized/Net Investment
    
    
    Net Investment
    
    
    Unrealized
    
    
    UnrealizedIncome/(Loss)
    
    
    Income/(Loss)
    
    
    Gain/(Loss)
    
    
    Gain/(Loss)
    
    
    Occupancy
    
    
    OccupancyNine Months Ended September 30,
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006PropertyRoswell, GA
    
    $
    1,584,095
    
    
    $
    1,573,010
    
    
    $
    (190,435
    )
    
    $
    1,101,171
    
    
    
    94%
    
    
    
    95%Kansas City, KS;
              MO (1)
    
    
    158,663
    
    
    
    (56,085
    )
    
    
    361,453
    
    
    
    (345,788
    )
    
    
    N/A
    
    
    
    91%Hampton, VA
    
    
    973,673
    
    
    
    983,373
    
    
    
    196,255
    
    
    
    (105,132
    )
    
    
    100%
    
    
    
    100%Ocean City, MD
    
    
    605,871
    
    
    
    645,473
    
    
    
    (336,204
    )
    
    
    122,365
    
    
    
    89%
    
    
    
    84%Westminster, MD (2)
    
    
    1,171,141
    
    
    
    464,981
    
    
    
    272,262
    
    
    
    4,986,230
    
    
    
    100%
    
    
    
    98%Westminster, MD (3)
    
    
    
    
    
    
    124,362
    
    
    
    
    
    
    
    
    
    
    
    N/A
    
    
    
    N/ADunn, NC (4)
    
    
    62,983
    
    
    
    
    
    
    
    4,418
    
    
    
    
    
    
    
    90%
    
    
    
    N/ACARS Preferred Equity
              (5)
    
    
    719,916
    
    
    
    690,993
    
    
    
    
    
    
    
    
    
    
    
    N/A
    
    
    
    N/A$
    5,276,342
    
    
    $
    4,426,107
    
    
    $
    307,749
    
    
    $
    5,758,846Realized/
    
    
    Realized/Net Investment
    
    
    Net Investment
    
    
    Unrealized
    
    
    UnrealizedIncome/(Loss)
    
    
    Income/(Loss)
    
    
    Gain/(Loss)
    
    
    Gain/(Loss)Three Months Ended September 30,
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006PropertyRoswell, GA
    
    $
    532,486
    
    
    $
    533,961
    
    
    $
    (1,727,833
    )
    
    $
    486,624Kansas City, KS;
              MO (1)
    
    
    (3,250
    )
    
    
    57,905
    
    
    
    (52,381
    )
    
    
    117,840Hampton, VA
    
    
    322,134
    
    
    
    331,673
    
    
    
    99,975
    
    
    
    Ocean City, MD
    
    
    223,546
    
    
    
    243,574
    
    
    
    (133,826
    )
    
    
    (28,645
    )Westminster, MD (2)
    
    
    431,502
    
    
    
    359,841
    
    
    
    (9,637
    )
    
    
    (3,735
    )Dunn, NC (4)
    
    
    62,984
    
    
    
    
    
    
    
    4,418
    
    
    
    CARS Preferred Equity
    
    
    254,644
    
    
    
    251,823
    
    
    
    
    
    
    
    $
    1,824,046
    
    
    $
    1,778,777
    
    
    $
    (1,819,284
    )
    
    $
    572,084
 
 (1)
    
    Net investment income (loss) for the nine and three month periods ended September 30, 2007 reflects partial period results for the
remaining retail property in Kansas City, Kansas that was sold on June 29, 2007. Net investment income for the nine and three
month periods ended September 30, 2006 reflects results for all four retail properties located in Kansas City, Kansas
and Kansas City, Missouri, prior to the sale of three out of the four centers on May 15, 2006.(2)
    
    The Westminster, Maryland retail
property was acquired on June 13, 2006.(3)
    
    Mortgage Loan Receivable (mortgage paid in full on March 3, 2006).(4)
    
    Net investment income for the nine and three month periods ended September 30, 2007 reflects partial period results for
the Dunn, North Carolina retail property that was acquired on August 17, 2007.(5)
    
    Net investment income for the nine months ended September 30, 2006 reflects partial period results for the second
funding of the Partnerships preferred equity investment, which occurred on February 14, 2006. Net Investment Income/ (Loss)
  22




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##### Table of Contents



Total Realized and Unrealized Gain/(Loss)
   INDUSTRIAL PROPERTY
 Net Investment
    
    
    Net Investment
    
    
    Realized
    
    
    UnrealizedIncome/(Loss)
    
    
    Income/(Loss)
    
    
    Gain/(Loss)
    
    
    Gain/(Loss)
    
    
    Occupancy
    
    
    OccupancyNine Months Ended September 30,
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006PropertyAurora, CO (1)
    
    $
    14,363
    
    
    $
    578,378
    
    
    $
    345,832
    
    
    $
    1,463,579
    
    
    
    N/A
    
    
    
    85%Net Investment
    
    
    Net Investment
    
    
    Realized
    
    
    UnrealizedIncome/(Loss)
    
    
    Income/(Loss)
    
    
    Gain/(Loss)
    
    
    Gain/(Loss)Three Months Ended September 30,
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006PropertyAurora, CO (1)
    
    $
    (1,595
    )
    
    $
    199,418
    
    
    $
    
    
    
    $
    840,782
 
 (1)
    
    Net investment income (loss) for the nine and three month periods ended September 30, 2007 reflects partial period results for
the Aurora,Colorado industrial property that was sold on February 7, 2007. Net Investment Income/(Loss)
  Total Realized and Unrealized Gain/(Loss)
   23




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##### Table of Contents



HOTEL PROPERTY
 Net Investment
    
    
    Net Investment
    
    
    Unrealized
    
    
    UnrealizedIncome/(Loss)
    
    
    Income/(Loss)
    
    
    Gain/(Loss)
    
    
    Gain/(Loss)
    
    
    Occupancy
    
    
    OccupancyNine
Months Ended September 30,
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006PropertyLake Oswego, OR
    
    $
    979,791
    
    
    $
    963,740
    
    
    $
    699,273
    
    
    $
    3,797,874
    
    
    
    77%
    
    
    
    78%Net Investment
    
    Net Investment
    
    Unrealized
    
    UnrealizedIncome/(Loss)
    
    Income/(Loss)
    
    Gain/(Loss)
    
    Gain/(Loss)Three
Months Ended September 30,
    
    
    2007
    
    
    
    2006
    
    
    
    2007
    
    
    
    2006PropertyLake Oswego, OR
    
    $
    453,390
    
    
    $
    430,337
    
    
    $
    (331,684
    )
    
    $
    (33,119
    )
 Net Investment Income
  Unrealized Gain/(Loss)
   Other
  (c) Inflation
 24




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##### Table of Contents



Critical Accounting Policies
   Valuation of Investments
 Real Estate Investments
     25




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##### Table of Contents



Other Estimates
  
 ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
 Interest Rate Risk 
  Estimated Market Value
    
    Weighted AverageMaturity
    
    (millions)
    
    Interest RateCash and Cash equivalents
    
    0-3 months
    
    $
    17.3
    
    
    
    5.61
    %
  Debt (in $ thousands),
    
    
    

    
    
    
    

    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Estimatedincluding
current portion
    
    2007
    

    2008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    Thereafter
    
    
    Total
    
    
    Fair ValueWeighted Average Fixed Interest Rate
    
    
    5.35%

    
    
    5.74%
    
    
    
    6.75%
    
    
    
    6.75%
    
    
    
    6.75%
    
    
    
    6.75%
    
    
    
    6.35%Fixed Rate
    
    $
    258

    
    $
    15,984
    
    
    $
    9,277
    
    
    $
    565
    
    
    $
    604
    
    
    $
    5,586
    
    
    $
    32,274
    
    
    $
    32,311Variable Rate
    
    
    

    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total Mortgage Loans Payable
    
    $
    258

    
    $
    15,984
    
    
    $
    9,277
    
    
    $
    565
    
    
    $
    604
    
    
    $
    5,586
    
    
    $
    32,274
    
    
    $
    32,311
 26




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##### Table of Contents



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




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##### Table of Contents



SIGNATURES
  PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY  in respect of  Pruco Life of New Jersey Variable Contract Real Property Account  (Registrant)
 
 Date:  November 13, 2007
    By:
        /s/
          Scott D. KaplanScott D. Kaplan 
President and Director
(Principal Executive Officer)
 28