-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, I2iJlcyIUVP5kCvFmE8iFAs/QBqEzMFxgFeu5oqqkUe2lpLFPLi3cdXVIOabX02N +ucLdngX1W8O/UjRMosq8Q== 0001047469-98-012964.txt : 19980401 0001047469-98-012964.hdr.sgml : 19980401 ACCESSION NUMBER: 0001047469-98-012964 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980331 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACC CENTRAL INDEX KEY: 0000829114 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 222426091 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 033-20018 FILM NUMBER: 98582379 BUSINESS ADDRESS: STREET 1: 213 WASHINGTON STREET STREET 2: 111 DURHAM AVENUE CITY: NEWARK STATE: NJ ZIP: 07102-2992 BUSINESS PHONE: 8004454571 MAIL ADDRESS: STREET 1: PRUCO LIFE INSURANCE CO OF NEW JERSEY STREET 2: 213 WASHINGTON STREET CITY: NEWARK STATE: NJ ZIP: 07102 10-K 1 10-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE - --- SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended December 31, 1997 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE - --- SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] Commission file number 33-20018 PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY in respect of PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT ------------------------------------------ (Exact name of Registrant as specified in its charter) New Jersey 22-2426091 - ------------------------------- --------------------------------- (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 213 Washington Street, Newark, New Jersey 07102-2992 ---------------------------------------------------- (Address of principal executive offices) (Zip Code) (800) 445-4571 ---------------------------------------------------- (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 --- --- PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT (REGISTRANT) INDEX ITEM NO. PAGE NO. Cover Page Index 2 PART I 1. Business 3 2. Properties 4 3. Legal Proceedings 5 4. Submission of Matters to a Vote of Security Holder 5 PART II 5. Market for the Registrant's Interests and Related Security Holder Matters 6 6. Selected Financial Data 6 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 8. Financial Statements and Supplementary Data 15 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 15 PART III 10. Directors and Executive Officers of Pruco Life of New Jersey 16 11. Executive Compensation 17 12. Security Ownership of Certain Beneficial Owners and Management 17 13. Certain Relationships and Related Transactions 18 PART IV 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K 19 Exhibit Index 19 Signatures 22 2 PART I ITEM 1. BUSINESS Pruco Life of New Jersey Variable Contract Real Property Account (the "Real Property Account"), the Registrant, was established on October 30, 1987 by Pruco Life Insurance Company of New Jersey ("Pruco Life of New Jersey"), as a separate investment account, pursuant to New Jersey law. The Real Property Account was established to provide a real estate investment option offered in connection with the funding of benefits under certain variable life insurance and variable annuity contracts (the "Contracts") issued by Pruco Life of New Jersey. The assets of the Real Property Account are invested in The Prudential Variable Contract Real Property Partnership (the "Partnership"). The Partnership, a general partnership organized under New Jersey law on April 29, 1988, was formed through agreement among The Prudential Insurance Company of America, Pruco Life Insurance Company, and Pruco Life Insurance Company of New Jersey, to provide a means for assets allocated to the real property option under certain variable life insurance and variable annuity contracts issued by the respective companies to be invested in a commingled pool. The Partnership has an investment policy of investing at least 65% of its assets in direct ownership interests in income-producing real estate and participating mortgage loans. The largest portion of these real estate investments will be direct ownership interests in income-producing real estate, such as office buildings, agricultural land, shopping centers, hotels, apartments, or industrial properties. From 10% to 15% of the Partnership's assets generally will be invested in short-term or intermediate-term marketable debt instruments. The remainder of the Partnership's assets may be invested in other types of real estate-related investments, including conventional, non-participating mortgage loans and real estate investment trusts. The Partnership's investments will be maintained so as to meet the diversification requirements set forth in Treasury Regulations issued pursuant to Section 817(h) of the Internal Revenue Code relating to the investments of variable life insurance and variable annuity separate accounts. For information regarding the Partnership's investments, operations, and other significant events, see Item 2, Properties, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, and Item 8, Financial Statements and Supplementary Data. 3 ITEM 2. PROPERTIES The Partnership owns the following properties as of December 31, 1997. OFFICE FACILITY IN LISLE, ILLINOIS The property is a four-story office building on 5.6 acres of land. It was constructed in 1985 and contains approximately 102,000 square feet of leasable space. The facility is located at 750 Warrenville Road in the Corporetum Office Park in Lisle, Illinois, 25 miles west of downtown Chicago. At December 31, 1997 the property was 37% leased. APARTMENT COMPLEX IN ATLANTA, GEORGIA Brookwood Valley Apartments is a garden apartment complex located approximately 3 miles north of downtown Atlanta. It consists of eight three-story buildings containing a total of 240 units. Construction of the 7.1 acre site was completed in 1987. At December 31, 1997 the property was 99% leased. WAREHOUSE FACILITY IN POMONA, CALIFORNIA The Partnership owns six industrial buildings on approximately 28 acres in Pomona, California. The site is approximately 30 miles east of downtown Los Angeles. The buildings were constructed between 1982 and 1984 and contain approximately 531,000 square feet of leasable space. The property was 100% leased at December 31, 1997. The land, previously a ground lease, was purchased in 1997. SHOPPING CENTER IN ROSWELL, GEORGIA King's Market shopping center was constructed in 1988. It is located approximately 22 miles north of downtown Atlanta on a 30 acre site. It contains approximately 300,000 square feet of rentable space. At December 31, 1997 it was 96% leased. OFFICE FACILITY IN MORRISTOWN, NEW JERSEY This four-story suburban office building was constructed in 1981 and contains 83,000 rentable square feet. It is located on a 5.1 acre site, approximately 30 miles west of New York City. At December 31, 1997 it was 99% leased. WAREHOUSE FACILITY IN BOLINGBROOK, ILLINOIS This single-story warehouse was completed in 1989. It contains 224,640 rentable square feet. It is located approximately 20 miles southwest of downtown Chicago. The entire facility is leased to the Gillette Company under a lease expiring in October, 2000. APARTMENT COMPLEX IN FARMINGTON HILLS, MICHIGAN Indian Creek Apartments consists of fifteen two-story buildings containing 156 two-bedroom and 40 one- bedroom units. It was constructed in 1988 and is located approximately 20 miles northwest of Detroit. At December 31, 1997, the property was 93% leased. APARTMENT COMPLEX IN RALEIGH, NC Dunhill Trace consists of fourteen two and three story apartment buildings. It was constructed and acquired in June, 1995 and located on a 16.2 acre site in Northwest Raleigh, NC. At December 31, 1997 it was 91% leased. OFFICE FACILITY IN NASHVILLE, TN Westpark is a 97,000 square foot office center located in suburban Nashville, Tennessee. The property was constructed in 1982. At December 31, 1997 the building was 100% leased. 4 OFFICE FACILITY IN OAKBROOK TERRACE, ILLINOIS Oakbrook Terrace Corporate Center is a 123,000 square foot building located in a western suburb of Oakbrook Terrace, Illinois. At December 31, 1997 the property is 100% leased. OFFICE FACILITY IN BEAVERTON, OREGON This three story office building was completed in 1995. It contains approximately 72,000 square feet of rentable space. The building is located on a 3.89 acre land parcel in Beaverton, Oregon. At December 31, 1997 the building was 100% leased. WAREHOUSE CENTER IN SALT LAKE CITY, UTAH This one story warehouse-distribution facility was completed in 1997. It contains approximately 182,500 square feet of rentable space. The building is located on a 9.605 acre land parcel in Salt Lake City, Utah. At December 31, 1997 the building was vacant. DISTRIBUTION CENTER IN AURORA, COLORADO This industrial complex consists of two separate buildings completed in 1997. It contains approximately 278,000 square feet of rentable space. The building is located on an approximate 16 acre land parcel in Aurora, Colorado. At December 31, 1997 the building was vacant. OFFICE FACILITY IN BRENTWOOD, TENNESSEE This two story office facility was completed in 1987. It contains approximately 97,000 square feet of rentable space. The building is located on a 6.96 acre land parcel in Brentwood, Tennessee At December 31, 1997 the building was 100% leased. ITEM 3. LEGAL PROCEEDINGS None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS Contract owners participating in the Real Property Account have no voting rights with respect to the Real Property Account. 5 PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. Owners of the Contracts may participate by allocating all or part of the net premiums or purchase payments to the Real Property Account. Contract values will vary with the performance of the Real Property Account's investments through the Partnership. Participating interests in the Real Property Account are not traded in any public market, thus a discussion of market information is not relevant. As of March 6, 1998, there were approximately 3,797 Contract Owners of record investing in the Real Property Account. ITEM 6. SELECTED FINANCIAL DATA Information about contract unit values may be found in Note 4 to the Financial Statements on page F-7.
Year Ended December 31, ----------------------------------------------------------------------- 1997 1996 1995 1994 1993 ----------- ----------- ----------- ----------- ----------- RESULTS OF OPERATIONS: Net Investment Income $ 512,156 $ 574,648 $ 538,224 $ 438,732 $ 404,853 Net Gain/(Loss) on Investment in Partnership $ 338,904 $ (190,276) $ 27,210 $ 57,089 $ (77,985) ----------- ----------- ----------- ----------- ----------- Net Increase/(Decrease) in Net Assets Resulting From Operations $ 851,060 $ 384,372 $ 565,434 $ 495,821 $ 326,868 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Financial Position:
Year Ended December 31, ----------------------------------------------------------------------- 1997 1996 1995 1994 1993 ----------- ----------- ----------- ----------- ----------- Total Assets $ 8,768,215 $ 7,878,541 $ 7,455,048 $ 6,851,923 $ 6,320,579 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
6 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS All of the assets of Pruco Life of New Jersey Variable Contract Real Property Account ("the Account") are invested in the 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"). (a) Liquidity and Capital Resources As of December 31, 1997, the Partnership's liquid assets consisting of cash, cash equivalents and marketable securities (excluding the Partnership's shares in Meridian Industrial Trust REIT) were $26,851,981. This is a decrease of $18,312,867 from $45,164,848 at December 31, 1996. The decrease is due primarily to the acquisition of five real estate investments in 1997 totaling $37,417,479. This decrease was partially offset by: (1) the sale of the Partnership's interest in a portfolio of industrial properties located in Jacksonville, FL for net proceeds of $6,272,330, (2) operations of the Partnership's properties, and (3) interest income received from the Partnership's short term investments. Sources of liquidity include net cash flow from property operations, interest from short term investments, and dividends on REIT shares. Prudential has committed to fund up to $100 million to enable the Partnership to acquire real estate investments. Contributions to the Partnership under this commitment are utilized for property acquisitions, and returned to Prudential on an ongoing basis from Contract owners' net contributions. The amount of the commitment is reduced by $10 million for every $100 million in current value net assets of the Partnership. The amount available for future investment is approximately $47 million as of December 31, 1997. The Partnership will generally invest 10-15% of its assets in cash and short-term obligations to maintain liquidity; however, its investment policy allows up to 30% investment in cash and short term obligations. At December 31, 1997, 12.06% of the Partnership's assets consisted of cash, cash equivalents and marketable securities (excluding REIT shares). The Partners made no withdrawals in 1997. Withdrawals may be made during 1998 based upon the percentage of assets invested in short term obligations. The withdrawals should also take into consideration anticipated cash needs of the Partnership including potential property acquisitions, property dispositions and capital expenditures. Management anticipates that current liquid assets and ongoing cash flows from operations will satisfy the Partnership's needs over the next twelve months and the foreseeable future. In 1997, the Partnership made acquisitions aggregating $37,417,479 consisting of the following: an industrial building in Salt Lake City, UT for $5,388,134; an industrial complex in Aurora, CO for $8,540,585; land under an existing industrial complex already owned by the Partnership in Pomona, CA for $4,000,000; an office building in Brentwood, TN for $9,488,755; and 506,894 shares of Meridian Industrial REIT for $10,000,005. These acquisitions were funded entirely by the Partnership's cash reserves. During 1997, the Partnership made $1,311,864 in capital expenditures for tenant alterations, leasing commissions, land improvements and building improvements. The most significant transaction was $378,959 for tenant alterations and leasing commissions at the office property located in Lisle, IL, which related to a new lease signed with Pitney Bowes. Other significant capital expenditures 7 included tenant alterations and leasing commissions throughout the properties owned by the Partnership. The office property located in Brentwood, TN accounted for $212,983 of the total tenant alterations and leasing commissions. Approximately $104,000 was for tenant alterations and leasing commissions related to a new lease with Service Experts. Budgeted capital expenditures for 1998 are approximately $8.5 million. Of this amount, $7.3 million is budgeted for tenant improvements and leasing commissions. Four of the Partnership's properties account for the majority of these leasing related capital expenditures. The Lisle, IL office property is budgeted to expend $3.2 million in leasing related capital expenditures. This property, which was previously leased in its entirety to a single tenant, is expected to require $2.8 million in tenant improvements, and $0.5 million in leasing commissions to re-establish 100% occupancy. At the Salt Lake City, UT industrial property, management anticipates $1.0 million of capital to be expended in its effort to lease the currently vacant property. Of the total capital to be expended at this property, $0.8 million is projected for tenant improvements and $0.2 million is anticipated for leasing commissions. At the Aurora, CO industrial property, management anticipates spending $1.7 million in its effort to lease this vacant property. Of the total capital to be expended $1.4 million is projected for tenant improvements and $0.3 million is anticipated for leasing commissions. Management anticipates expending $0.9 million for leasing related capital expenditures at the Morristown, NJ office building. It is anticipated that Smith Barney, a major tenant in the building, will vacate their offices. To secure a new tenant, $0.5 million in tenant improvements, and $0.4 million in leasing commissions will be necessary. All of these projected expenditures relate to prospective leases and are based upon reasonable costs. The actual amount of such expenditures will depend upon the number of new leases signed, the actual needs of the particular construction or repair, and the timing of lease executions. Other major capital projects planned for 1998 include the following: reconstruction of the lobby and common areas at the Lisle, IL office building ($0.6 million); refurbishment and upgrading the heating ventilation and air conditioning system at this same property ($0.2 million); residing and painting the exterior on the Atlanta, GA residential community ($0.1 million); and reconfiguration of the traffic flow in and around the Atlanta, GA retail property ($0.1 million). (b) Results of Operations The following is a brief comparison of the Partnership's results of operations for the years ended December 31, 1997, 1996 and 1995. 1997 vs. 1996 The Partnership's net investment income for 1997 was $13,789,747, a decrease of $1,629,771 from net investment income of $15,419,518 in 1996. This decrease is the result of the factors discussed below. Income from property operations, including income from interest in properties, was $14,651,366 in 1997, a decrease of $1,410,043 from $16,061,406 in 1996. This decrease, in income, was primarily due to the results of sales of two portfolio properties, and an increased vacancy in a third property. Decrease in income for $1,646,337 resulted from the sales of the Flint, MI office park, and the Azusa, CA industrial center; while an increased vacancy in the Lisle, IL office property accounted for another $673,119. The effects of the decrease in income from these properties were partially offset by $342,829 due to the acquisitions of a new office property in Brentwood, TN and 506,894 REIT shares. Rent from properties was $21,582,968 in 1997, a decrease of $1,216,726 from $22,799,694 in 1996. 8 The majority of this decrease is attributable to properties held for a full year in 1996 and sold during 1997. Also contributing to the decrease was a decrease in rent collected at the Lisle, IL office property which became 100% vacant in the fourth quarter. Income from interest in properties relates to the Partnership's 50% co-investment in several warehouse properties (the Unit warehouses). Income from this source decreased from $606,558 in 1996 to $435,296 in 1997, for a total decrease of $171,262. The primary reason for the decrease was due to the sale of the Partnership's interest in these properties on September 30, 1997. Dividend income from real estate investment trusts totaled $158,154. The 506,894 shares of Meridian Industrial REIT were acquired on September 24, 1997. Administrative expenses on the Statement of Operations includes property operations and the administration of the Partnership. Property administrative expenses in 1997 were $2,009,449, an increase of $355,564 from $1,653,885 in 1996. This increase was primarily due to the acquisition of three new properties, plus a full year of administrative expenses for a property acquired at the end of 1996. Property operating expenses for 1997 were $3,296,350, an increase of $391,730 from $2,904,620 in 1996. In 1997, this increase was primarily due to a full year ownership of the office property in Beaverton, OR and expenses incurred for new acquisitions, including the industrial buildings in Salt Lake City, UT and Aurora, CO. These three properties contributed $274,530 to the increased operating expenses. The acquisition of the office building in Brentwood, TN contributed $103,234. Real estate taxes for 1997 were $2,208,972, a decrease of $158,432 from $2,367,404 in 1996. This decrease was primarily due to the sale of the office building located in Flint, MI in December 1996, which resulted in a decrease of $162,701; and the sale of the industrial property in Asuza, CA in April 1996, which resulted in a decrease of $51,149. These decreases were partially offset by increased real estate taxes at the office property in Oakbrook Terrace, IL of $50,513, and an increase of $40,908 at the industrial property in Bolingbrook, IL. Administrative expense related to the Partnership was $316,705 in 1997, an increase of $105,157 from $211,548 in 1996. The investment management fee for 1997 was $2,640,470, an increase of $146,241 from the 1996 management fee of $2,494,229. This fee is computed at 1.25% of gross assets which were significantly higher in 1997 than 1996. The following is a comparison of the Partnership's property results of operations and realized and unrealized gains or losses, by investment type, for the twelve months ended December 31, 1997 and December 31, 1996. OFFICE PROPERTIES Net investment income from property operations for the office properties in 1997 was $5,329,310. This was a decrease of $488,187 (8.4%) from $5,817,497 in 1996. The decrease was primarily due to the sale of an office building in Flint, MI which accounts for $1,001,711 of the decrease; and lowered rental income at the Lisle, IL office property which accounts for $673,119 of the decrease. These factors are offset by owning an office building in Beaverton, OR for a full year ($833,643), and the acquisition of the second office property in Brentwood, TN ($194,851). For office properties held for the comparable period, net investment income increased by $318,674 (6.5%) from $4,877,349 in 1996, to $5,196,023 in 1997. 9 The office properties owned by the Partnership experienced a net unrealized gain of $1,897,749 in 1997. The largest net unrealized gain was attributable to the office property in Oakbrook Terrace, IL and was due to the improving office market conditions in suburban Chicago. The Morristown, NJ and the Brentwood, TN office properties also experienced net unrealized gains of $557,241 and $576,381, respectively. Unrealized losses of $28,285 at the Summit Building in Beaverton, OR, and $13,602 at the Lisle, IL office property offset these gains. The Partnership acquired a second office property in Brentwood, TN. The 97,378 square foot suburban office building was acquired on September 15, 1997 for $9,488,755. This property was 100% occupied at the time of acquisition. Occupancy at the Beaverton, OR, Oakbrook Terrace, IL and Brentwood, TN properties remained unchanged from December 31, 1996 at 100% . Occupancy at the Morristown, NJ property increased from 93% to 100%, while occupancy dropped from 100% at the Lisle, IL office property at December 31, 1996 to 37% at year end 1997. As of December 31, 1997, all vacant spaces are being marketed. APARTMENT COMPLEXES Net investment income from apartment property operations was $3,888,263 in 1997, a decrease of $37,487 from $3,925,750 in 1996. The three apartment communities owned by the Partnership experienced a net unrealized gain of $1,053,061 during 1997. The Atlanta, GA property was the largest contributor to the gain as it appreciated $1,392,186. This gain was attributable to increased rental rates and occupancy. The Farmington Hills, MI property also had a net unrealized gain of $80,839 due to increased rental rates. The Raleigh, NC community had a net unrealized loss of $328,481 due to the appraisal assumptions concerning above market rentals expiring and subsequently renewing at lower market rates. Weighted average occupancy at the Partnership's residential communities increased from 93.1%, as of December 31, 1996, to 94.3% as of December 31, 1997. The occupancy at the Atlanta, GA and Farmington Hills, MI communities improved from 93% and 89%, respectively, as of December 31, 1996 to 99% and 93%, respectively, at year end 1997. The occupancy at the Raleigh, NC community slipped from 97% at the end of 1996 to 91% as of December 31, 1997. RETAIL PROPERTIES Net investment income for the Partnership's retail properties decreased to $2,758,995 in 1997, from $3,129,390 in 1996. This decrease was primarily due to decreased occupancy at the shopping center earlier in the year. Revenues decreased by $299,474 and expenses increased by $70,920 from the prior year. The retail center had an unrealized gain of $1,109,099. This was a result of changes in the assumed capital needs of the property, and the leasing of vacant spaces in the third and fourth quarters which stabilized future cash flows and brought occupancy back up to 96%. The shopping center was 96% occupied as of December 31, 1997, unchanged from the prior year. Currently, there are three vacant suites. All vacant spaces are being marketed. 10 INDUSTRIAL PROPERTIES Net investment income from industrial property operations was $2,526,820 in 1997, a decrease of $661,949 from $3,188,769 in 1996. The primary reason for the decline was the sale of the industrial complex in Azusa, CA, in April 1996, which accounted for $644,625 of the decrease. The sale of the Partnership's investment in the Jacksonville, FL industrial properties, in September 1997, also contributed to the decline in net investment income. For properties held for comparable periods in 1996 and 1997, net investment income increased from $1,941,812 to $2,042,184, respectively. The Partnership acquired three industrial properties in 1997. The first acquisition was a 182,500 square foot building in Salt Lake City, UT for $5,388,134. The second acquisition was a two building 277,500 square foot facility in Aurora, CO for $8,540,585. As of December 31, 1997, both properties were vacant. The third acquisition was land under the Partnership's existing Pomona CA, industrial complex. The Partnership acquired the land under a purchase option for $4,000,000. The industrial properties (including the recently purchased land) had $1,901,523 of net unrealized appreciation in 1997. The largest single gain of $1,740,917 was attributable to the purchase of the land under the Pomona, CA property. The Salt Lake City, UT and Aurora, CO properties experienced $38,133 and $140,585 negative net appreciation as a result of softer market conditions. As of December 31, 1997, occupancy at the Partnership's Pomona, CA and Bolingbrook, IL, industrial properties remained unchanged from December 31, 1996 at 100%. As of December 31, 1997, both the Salt Lake City, UT and Aurora, CO properties were 100% vacant. As of December 31, 1997, all vacant spaces were being marketed. The partnership sold its interest in the Jacksonville, FL warehouses for net sales proceeds of $6.3 million, resulting in a gain of $284,581. The Partnership also acquired 506,894 shares of Meridian Industrial Trust for $10,000,005 on September 24, 1997. Meridian is a self administered and self-managed equity real estate investment trust engaged in owning, operating, and leasing high quality, modern industrial properties nationwide. As of December 31, 1997, these shares experienced a $2,523,800 net unrealized gain and generated $147,978 in net investment income. These shares were purchased in a private transaction at a favorable below-market price. 1996 vs. 1995 The Partnership's net investment income for 1996 was $15,419,518, an increase of $699,247 (4.8%) from net investment income of $14,720,271 in 1995. The increase was primarily due to higher net income from property operations ($1,455,941), offset by a higher management fee ($152,351) and lower interest income from short-term investments ($526,479). Income from property operations, including income from interest in properties, was $16,061,409 for 1996. This was an increase of $980,119 (6.5%) from $15,081,290, in 1995. This was primarily due to increased rent from properties (approximately $2,973,000). The increase was offset by increased operating expenses (approximately $1,034,000) and real estate taxes (approximately $429,000). Rent from properties for 1996 increased by $2,972,650 (15.0%) to $22,799,694 from $19,827,044 for 1995. A large portion of this was the result of properties that were acquired during 1995 and held for the full year of 1996. This increase in revenue totaled approximately $4,367,000. 11 These additional revenues were primarily offset by the sale of the Azusa industrial building which resulted in approximately $1,092,000 reduction in revenues from last year and the Roswell, GA shopping center which accounted for a decrease of approximately $214,000 due to lower percentage rents in 1996 and decreased occupancy. Income from interest in properties relates to the Partnership's 50% co-investment in several warehouses (the Unit warehouses). Income from this source decreased approximately $31,624 (4.9%) from $638,183 in 1995 to $606,558 in 1996. The reduction is the result of GATX vacating a portion of its space in October and the space not being re-leased. Administrative expenses on the Statement of Operations includes property operations and the administration of the Partnership. Property administrative expenses for 1996 were $1,653,934. This was $78,271 (5.0%) higher than the $1,575,663 for 1995. The increase was primarily due to a full year of administrative expenses of approximately $234,000 from the Nashville, TN office building, Oakbrook Terrace, IL office facility and the Raleigh, NC apartment complex. The increase was partially offset by the sale of two 1996 properties totaling approximately $130,000. Property operating expenses for 1996 were $2,904,620 compared to $1,870,183 for 1995, an increase of $1,034,437 (55%). This increase was primarily due to a full year of operating expenses totaling approximately $943,000 related to the Raleigh, Oakbrook Terrace and Nashville properties, all of which were acquired in 1995. Increases were also due to the Morristown office property incurring window repairs of approximately $21,000, and an increase to its grounds contract for approximately $59,000 offset by lower repairs and maintenance expenses totaling $23,000. The Atlanta and the Farmington Hills apartments had increases totaling approximately $57,000 for 1996 apartment make-ready due to higher turnover as compared to 1995. Real estate taxes for 1996 were $2,367,404, an increase of $429,314 (22.2%) from $1,938,090 for 1995. The increase was primarily due to a full year of real estate tax expenses totaling approximately $572,000 related to the Raleigh, Oakbrook Terrace and Nashville properties. At the Morristown office building, real estate taxes increased by approximately $32,000. These increases were offset by decreases of approximately $106,000, as a result of the Azusa and Flint properties being sold in 1996. Real estate taxes at the Farmington Hills apartments decreased approximately $26,000 due to last year's tax appeal. Administrative expenses related to the Partnership totaled $211,499 for 1996. This is an increase of $7,930 (3.6%) from $219,429 for 1995. The investment management fee for 1996 was $2,494,229. This was $152,351 (6.5%) higher than the 1995 fee of $2,341,878. The fee is computed at 1.25% of gross assets. During 1996, gross assets were slightly higher than the prior year due to cash flows retained by the Partnership and increased market values of the real estate investments. The following is a brief comparison of the Partnership's property results of operations and realized and unrealized gains or losses, by investment type, for the twelve months ended December 31, 1996 and December 31, 1995. During 1996, the Partnership recognized an unrealized loss of $3,211,436 on its real estate investments. This represents 1.9% of the value of the investments at December 31, 1995. The retail center experienced the largest unrealized loss, of approximately $3,787,000. The offices had a net unrealized loss of approximately $560,000. The industrial properties had a net unrealized loss of 12 approximately $75,000 offset by the apartments' net unrealized gains of approximately $1,210,000. Occupancy at the Partnership's properties at December 31, 1996 was generally lower than at December 31, 1995. During 1996, the Partnership acquired a 72,109 square feet office building in Beaverton, Oregon. At December 31, 1996, the Beaverton office building was 100% occupied by five tenants and there are no expirations in 1997. OFFICE PROPERTIES The Lisle, IL office had an unrealized loss of approximately $1,700,000 (14.7% of its year-end 1995 value). This was caused by R.R. Donnelley (sole-tenant) not renewing its lease, which expired September 1997, and the anticipated expenses that would be incurred in order to re-lease the building in 1997. The Morristown property experienced an unrealized gain of approximately $409,000 (4.3% of its December 31, 1995 value), due to improved market conditions in the Northern NJ market. The Nashville office experienced an unrealized gain of approximately $166,000. The increase represented 1.9% of its year-end 1995 value. The rise in value reflects the expectations of continued high occupancy and the potential for higher rental rates in the future. The Oakbrook Terrace office building had an increase of $565,000 (4.5% of its December 31, 1995 value). This was the result of two tenant rent increases that occurred in 1996. Occupancy at the Lisle, IL office building remained at 100% during 1996. R.R. Donnelley had given notice they will be vacating their space in 1997. The Oakbrook Terrace office building continued its 99% occupancy. The Nashville office building occupancy remained at 99%. During 1996, a total of 25,394 square feet was re-leased, leaving a vacant space of 1,350 square feet. During 1997, at the Nashville office building, 11,966 square feet expired. Occupancy at the Morristown office decreased from 98% to 93% as of December 31, 1996. There are four vacant suites totaling 9,583 square feet. During 1996, Mutual of Omaha renewed their lease of 5,479 square feet and Sprint Spectrum signed a two month temporary agreement for 4,010 square feet, while Chase Home Mortgage vacated their suite of 4,010 square feet. During 1997, at the Morristown office building, a total of 15,753 square feet was up for renewal. All vacant spaces are currently being marketed. APARTMENT COMPLEXES The Partnership's Atlanta apartment complex had an unrealized gain of approximately $1,083,000 (8.6% of its year-end 1995 value), and the Farmington Hills apartment complex had an unrealized gain of approximately $477,000 (3.4% of its year-end 1995 value). These increases were primarily the result of higher rental rates and occupancy than were previously projected for these properties. The luxury garden apartment complex in Raleigh had an unrealized loss of approximately $350,000 (2.0% of its year-end 1995 value). The property had experienced lowered loss of occupancy but recovered to a December 31, 1996 occupancy of 97%. Occupancy at the Atlanta and the Farmington Hills apartments decreased from 97% and 98% at December 31, 1995 to 93% and 88%, in 1996. Occupancy at the Raleigh apartments increased from 95% at December 31, 1995 to 97% at the end of 1996. All vacant apartments were being marketed as of December 31, 1996. RETAIL PROPERTIES The Partnership's sole retail property in Roswell, GA, had an unrealized loss of $3,786,554 (11.8% of its December 31, 1995 value). This was due to increased competition in the local market resulting in downward pressure on rental rates and occupancy. 13 Occupancy at the Roswell center decreased from 99% at December 31, 1995 to 96% at December 31, 1996, a loss of 3%. During 1996, a total of 10,464 square feet expired and 4,127 square feet was renewed. Shepherd's Staff Christian Book Store leased 6,100 square feet. Two tenants leasing a total of 6,100 square feet have vacated prior to their lease expiration. At December 31, 1996 a total of 10,464 square feet remained vacant. Several lease proposals were in negotiation, while all other vacant spaces were being marketed. INDUSTRIAL PROPERTIES The Bolingbrook warehouse had the largest unrealized loss of this property type, approximately $300,000 (4.1% of its year-end 1995 value). Gillette, a tenant of the entire property, indicated that they needed additional space and will relocate at the expiration of their lease in 2000. The Pomona property had an unrealized gain of approximately $175,000 (1.0% of its year-end 1995 value), as a result of signing leases that maintained the property occupancy at 100%. The market values of the four Unit warehouses, in which the Partnership owns a 50% interest at the end of 1996, had an unrealized gain of approximately $50,000 (0.9% of their December 31, 1995 value). Occupancy at the Pomona warehouse remained at 100%. During 1996, a total of 234,292 square feet expired and was re-leased. The most significant renewal was SCI signing an amendment to their lease to extend the term for five years. During 1997, JB Engineering's 49,697 square feet lease expired. Occupancy at the Bolingbrook warehouse also remained at 100%. Gillette's lease of this entire facility will expire in the year 2000, at which time they will relocate. At the Unit warehouses, occupancy decreased from 100% in 1995 to 85% in 1996. GATX vacated its space in October and the space has not been leased. All vacant spaces are being marketed as of December 31, 1996. During 1996, the Partnership sold its Azusa, CA industrial property and its Flint, MI office building. The sale of these two properties resulted in a realized loss of $1,573,147. The Flint, MI property had the largest loss of $1,094,521 (16.7% of its year-end 1995 value). This was the result of both the uncertain economic outlook and leasing demand in Flint, MI, as well as the physical condition of the property. The Azusa property had a realized loss of $478,627 (3.2% of its year-end 1995 value). The gross sales price of the property was $15,250,000 and the net proceeds were $14,697,789. 14 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA See Index to Financial Statements and Financial Statement Schedules on pages F-1 and F-2. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. 15 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF PRUCO LIFE OF NEW JERSEY
Name Position Age - ---- -------- --- James J. Avery, Jr. Chairman of the Board and Director 46 I. Edward Price Vice Chairman of the Board and Director 55 Esther H. Milnes President and Director 47 James Drozanowski Senior Vice President 55 Frank Marino Senior Vice President 53 Edward A. Minogue Senior Vice President 55 Hwei-Chung Shao Senior Vice President and and Chief Actuary 43 Karen L. Shapiro Senior Vice President 42 James M. Schlomann Vice President, Comptroller and Chief Accounting Officer 49 William M. Bethke Director 50 Ira J. Kleinman Director 50 Mendel M. Melzer Director 37 Kiyofumi Sakaguchi Director 54
- -------------------------------------------------------------------------------- James J. Avery, Jr., age 46 was elected Chairman of the Board of Directors of the Company on June 27, 1997. Mr. Avery joined The Prudential Insurance Company of America in 1988 and has served as the Senior Vice President, CFO and Chief Actuary for The Prudential Individual Insurance Group since 1997. I. Edward Price, age 55, has been Senior Vice President and Actuary of Prudential Individual Insurance since 1995. From 1994 to 1995, he was Chief Executive Officer of Prudential International Insurance. From 1993 to 1994, he was President of Prudential International Insurance. Prior to 1993, he was Senior Vice President and Company Actuary of Prudential. Esther H. Milnes, age 47, has been Vice President and Actuary of Prudential Individual Insurance Group since 1996. From 1993 to 1995, she was Senior Vice President and Chief Actuary of Prudential Insurance and Financial Services. Prior to 1993, she was Vice President and Associate Actuary of Prudential. James C. Drozanowski, age 55, has been Vice President and Operations Executive, Prudential Individual Insurance Group since 1996; 1995 to 1996: President and Chief Executive Officer of Chase Manhattan Bank; 1993 to 1995: Vice President, North America Customer Services, Chase Manhattan Bank; prior to 1993, Operations Executive, Global Securities Services, Chase Manhattan Bank. 16 Frank P. Marino, age 53, has been Vice President, Policyowner Relations Department, Prudential Individual Insurance Group since 1996; prior to 1996, Senior Vice President, Prudential Mutual Fund Services. Edward A. Minogue, age 55, was elected a Senior Vice President of the Company on September 1, 1997. Mr. Minogue has been a Vice President of The Prudential Insurance Company of America since July, 1997. Prior to 1997, Mr. Minogue was a director of Merrill Lynch, Pierce & Smith, Inc. Hwei-Chung Shao, age 43, has been Vice President and Associate Actuary, Prudential. Karen L. Shapiro, age 42, has been Vice President, Prudential Individual Insurance Group since 1996; Vice President and Associate General Counsel, Prudential Securities Incorporated 1993 to 1996; prior to 1993, Senior Associate with Shaw, Pittman, Potts and Trowbridge. James M. Schlomann, age 49, joined The Prudential in August of 1997 and was elected the Vice President, Comptroller and Chief Accounting Officer of the Company effective November 18, 1997. He was a Senior Executive Vice President and Chief Financial Officer of US LIFE Corp. from 1993 to 1997. Prior to 1993, Mr. Schlomann was a Senior Vice President and Comptroller of Frank B. Hall & Co., Inc. William M. Bethke, age 50, has been President, Prudential Capital Markets Group since 1992. Ira J. Kleinman, age 50, has been Chief Marketing and Product Development Officer of Prudential Individual Insurance Group since 1995. From 1993 to 1995, he was President of Prudential Select. From 1992 to 1993, he was Senior Vice President of Prudential. Prior to 1992, he was Vice President of Prudential. Mendel A. Melzer, age 37, has been Chief Investment Officer, Mutual Funds and Annuities, Prudential Investments since 1996; 1995 to 1996: Chief Financial Officer of the Money Management Group of Prudential; 1993 to 1995: Senior Vice President and Chief Financial Officer of Prudential Preferred Financial Services; prior to 1993, Managing Director, Prudential Investment Corporation. Kiyofumi Sakaguchi, age 54, has been President, Prudential International Insurance Group since 1995; 1994 to 1995: Chairman and Chief Executive Officer, The Prudential Life Insurance Co., Ltd.; prior to 1994, President and Chief Executive Officer, Asia Pacific Region-Prudential International Insurance, and President, The Prudential Life Insurance Co., Ltd. ITEM 11. EXECUTIVE COMPENSATION The Real Property Account does not pay any fees, compensation or reimbursement to any Director or Officer of the Registrant. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Not applicable. 17 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Pursuant to an investment management agreement, Prudential 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 years ended December 31, 1997, 1996 and 1995 management fees incurred by the Partnership were $2,640,470; $2,494,229; and $2,341,878, respectively. The Partnership also reimburses Prudential for certain administrative services rendered by Prudential. The amounts incurred for the years ended December 31, 1997, 1996 and 1995 were $115,346; $116,818; and $123,919, respectively, and are classified as administrative expenses in the Statements of Operations. The Partnership owns a 50% interest in four warehouse/distribution buildings in Jacksonville, Florida (the Unit warehouses). The remaining 50% interest is owned by Prudential and one of its subsidiaries. In September 1997, the Unit warehouses were sold as part of an industrial package for cash of $12,544,659. The partnership's share of the proceeds was $6,272,329. The Partnership has contracted with PREMISYS Real Estate Services, Inc. (PREMISYS), an affiliate of Prudential, sold by Prudential in 1997, to provide property management services at the Unit warehouses. The property management fee earned by PREMISYS, incurred by the Partnership and Prudential for the years ended December 31, 1997, 1996 and 1995 was $32,175; $36,000; and $31,360, respectively. 18 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) The following documents are filed as part of this report: 1. Financial Statements See the Index to Financial Statement on pages F-1 and F-2. 2. Financial Statement Schedules The following financial statement schedules of The Prudential Variable Contract Real Property Partnership should be read in conjunction with the financial statements in Item 8 of this Annual Report on Form 10-K: III. Real Estate Owned: Properties III. Real Estate Owned: Interest in Properties See the Index to Financial Statement on pages F-1 and F-2. 3. Documents Incorporated by Reference See the following list of exhibits. 4. Exhibits See the following list of exhibits. (b) Reports on Form 8-K. See Form 8-K as filed May 17, 1996. (c) The following is a list of Exhibits to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1997. The Registrant will furnish a copy of any Exhibit listed below to any security holder of the Registrant who requests it upon payment of a fee of 15 cents per page. All Exhibits are either contained in this Annual Report on Form 10-K or are incorporated by reference as indicated below. 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 Amended By-Laws of Pruco Life Insurance Company of New Jersey, filed as Exhibit 1.A.(6)(b) to Post-Effective Amendment No. 17 to Form S-6, Registration Statement No. 2-89780, filed March 1, 1991, and incorporated herein by reference. 3.3 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, 19 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 28, 1985, and incorporated herein by reference. 4.5 Flexible Premium Variable Life Insurance Contract, filed as Exhibit 1.A.(5) to Form S-6, Registration Statement No. 2-99537, filed August 8, 1985, and incorporated herein by reference. 9. None. 10.1 Investment Management Agreement between The Prudential Insurance Company of America and The Prudential Variable Contract Real Property Partnership filed as Exhibit (10A) to Post-Effective Amendment No. 2 to Form S-1, Registration Statement No. 33-20018, filed April 6, 1990, and incorporated herein by reference. 10.2 Service Agreement between The Prudential Insurance Company of America and The Prudential Investment Corporation, filed as Exhibit (10B) to Form S-1, Registration Statement No. 33-8698, filed September 12, 1986, and incorporated herein by reference. 10.3 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. 13. None. 18. None. 21. Not applicable. 20 22. Not applicable. 23. None. 24. Powers of Attorney: James J. Avery, Edward A. Minogue, and James M. Schlomann. Powers of Attorney for all other directors and officers are incorporated by reference to Form N-4, Registration No. 333-18117. 27. Not applicable. 28. None. 21 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: March 31, 1998 By: /s/ -------------------- ----------------------- Esther H. Milnes President Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Signature Title Date - --------- ----- ---- * Chairman of the Board March 31, 1998 - ------------------------------ and Director James J. Avery * Vice Chairman of the Board March 31, 1998 - ------------------------------ and Director I. Edward Price /s/ President and Director March 31, 1998 - ------------------------------ Esther H. Milnes /s/ Vice President, Comptroller March 31, 1998 - ------------------------------ and Chief Accounting Officer James M. Schlomann * Director March 31, 1998 - ------------------------------ William Bethke * Director March 31, 1998 - ------------------------------ Ira J. Kleinman * Director March 31, 1998 - ------------------------------ Mendel A. Melzer By: */s/ --------------------- Thomas C. Castano (Attorney-in-Fact) 22 PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT (Registrant) INDEX Page ---- A. PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT Report of Independent Accountants F-3 Financial Statements: Statements of Net Assets - December 31, 1997 and 1996 F-5 Statements of Operations and Changes In Net Assets Years Ended December 31, 1997, 1996 and 1995 F-5 Notes to the Financial Statements F-6 B. THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP Report of Independent Accountants F-9 1. Financial Statements: Statements of Assets and Liabilities - December 31, 1997 and 1996 F-11 Statements of Operations -Years Ended December 31, 1997, 1996 and 1995 F-12 Statements of Changes in Net Assets - Years Ended December 31, 1997, 1996 and 1995 F-13 Statements of Cash Flows - Years Ended December 31, 1997, 1996 and 1995 F-14 Schedule of Investments - December 31, 1997 and 1996 F-15 Notes to the Financial Statements F-18 F-1 PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT (Registrant) INDEX Page ---- B. THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP (continued) 2. Financial Statement Schedules: Real Estate Owned: Properties F-23 Real Estate Owned: Interest in Properties F-24 All other schedules are omitted because they are not applicable, or because the required information is included in the financial statements or notes thereto. F-2 REPORT OF INDEPENDENT ACCOUNTANTS To the Contract Owners of the Pruco Lifo of New Jersey Variable Contract Real Property Account and the Board of Directors of Pruco Life Insurance Company of New Jersey In our opinion, the accompanying statements of net assets and the related statements of operations and changes in net assets present fairly, in all material respects, the financial position of Pruco Life of New Jersey Variable Contract Real Property Account at December 31, 1997 and 1996, and the results of its operations and the changes in its net assets for the years then ended in conformity with generally accepted accounting principles. These financial statements are the responsibility of Pruco Life Insurance Company of New Jersey's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of shares owned in The Prudential Variable Contract Real Property Partnership at December 31, 1997 and 1996, provide a reasonable basis for the opinion expressed above. PRICE WATERHOUSE LLP New York, New York March 20, 1998 F-3 INDEPENDENT AUDITORS' REPORT To the Partners of Pruco Life of New Jersey Variable Contract Real Property Account Newark, New Jersey We have audited the accompanying statements of operations and changes in net assets of Pruco Life of New Jersey Variable Contract Real Property Account ("Real Property Account") for the year ended December 31, 1995. These financial statements are the responsibility of the Real Property Account's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, such financial statements present fairly, in all material respects, the results of operations and changes in net assets of Pruco Life of New Jersey Variable Contract Real Property Account for the year ended December 31, 1995, in conformity with generally accepted accounting principles. Deloitte & Touche LLP Parsippany, New Jersey March 1, 1996 F-4 FINANCIAL STATEMENTS OF PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT STATEMENTS OF NET ASSETS
DECEMBER 31, 1997 DECEMBER 31, 1996 ----------------- ----------------- Investment in shares of The Prudential Variable Contract Real Property Partnership (Note 3) $ 8,768,215 $ 7,878,541 ----------------- ----------------- ----------------- ----------------- NET ASSETS, representing: Equity of Contract Owners (Note 4) $ 6,643,068 $ 6,505,842 Equity of Pruco Life Insurance Company of New Jersey 2,125,147 1,372,699 ----------------- ----------------- $ 8,768,215 $ 7,878,541 ----------------- ----------------- ----------------- -----------------
STATEMENTS OF OPERATIONS AND CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31, --------------------------------------------------------- 1997 1996 1995 ----------------- ----------------- ----------------- INVESTMENT INCOME: Net Investment Income from Partnership Operations $ 550,770 $ 613,768 $ 575,915 EXPENSES: Charges to Contract Owners for Assuming Mortality Risk and Expense Risk and for Administration (Note 5) 38,614 39,120 37,691 ----------------- ----------------- ----------------- NET INVESTMENT INCOME 512,156 574,648 538,224 ----------------- ----------------- ----------------- Net Change in Unrealized Gain (Loss) on Investments in Partnership 326,681 (127,658) 27,210 Net Realized Gain (Loss) on Sale of Investments in Partnership 12,223 (62,618) 0 ----------------- ----------------- ----------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 851,060 384,372 565,434 ----------------- ----------------- ----------------- CAPITAL TRANSACTIONS: Net Contributions (Withdrawals) by Contract Owners (Note 7) (524,157) (380,371) 45,403 Net Contributions (Withdrawals) by Pruco Life Insurance Company of New Jersey 562,771 419,492 (7,712) ----------------- ----------------- ----------------- NET INCREASE IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS 38,614 39,121 37,691 ----------------- ----------------- ----------------- TOTAL INCREASE IN NET ASSETS 889,674 423,493 603,125 NET ASSETS: Beginning of year 7,878,541 7,455,048 6,851,923 ----------------- ----------------- ----------------- End of year $ 8,768,215 $ 7,878,541 $ 7,455,048 ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES F-6 THROUGH F-8. F-5 NOTES TO THE FINANCIAL STATEMENTS OF PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT For the Year Ended December 31, 1997 NOTE 1: GENERAL Pruco Life of New Jersey Variable Contract Real Property Account (the "Real Property Account") was established on October 30, 1987 by resolution of the Board of Directors of Pruco Life Insurance Company of New Jersey ("Pruco Life of New Jersey"), an indirect wholly-owned subsidiary of The Prudential Insurance Company of America ("Prudential"), as a separate investment account pursuant to New Jersey law. The assets of the Real Property Account are segregated from Pruco Life of New Jersey's other assets. The Real Property Account is used to fund benefits under certain variable life insurance and variable annuity contracts issued by Pruco Life of New Jersey. These products are Variable Appreciable Life Insurance ("VAL"), Variable Life Insurance ("VLI"), Discovery Plus ("SPVA"), and Discovery Life Plus ("SPVL"). The assets of the Real Property Account are invested in The Prudential Variable Contract Real Property Partnership (the "Partnership"). The Partnership is organized under New Jersey law and is registered under the Securities Act of 1933. The Partnership is the investment vehicle for assets allocated to the real property option under certain variable life insurance and annuity contracts. The Real Property Account, along with the Pruco Life Variable Contract Real Property Account and The Prudential Variable Contract Real Property Account, are the sole investors in the Partnership. 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 financial statements are prepared in conformity with generally accepted accounting principles (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. B. INVESTMENT IN PARTNERSHIP INTEREST The investment in the Partnership is based on the Real Property Account's proportionate interest of the Partnership's market value. At December 31, 1997 and 1996 the Real Property Account's interest in the Partnership was 4.0% or 473,226 shares. C. INCOME RECOGNITION Net investment income and realized and unrealized gains and losses are recognized daily. Amounts are based upon the Real Property Account's proportionate interest in the Partnership. D. EQUITY OF PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY Pruco Life of New Jersey maintains a position in the Real Property Account for anticipated property acquisitions and capital expenditure funding needs. The position is also utilized for liquidity purposes F-6 including unit purchases and redemptions, Partnership share transactions, and expense processing. The position does not have an effect on the Contract owner's account or the related unit value. NOTE 3: INVESTMENT INFORMATION FOR THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP The investment in the Partnership, the number of shares held by the Account in the the Partnership, the Partnership share value and the aggregate cost of investments in the Accounts' shares held at December 31, 1997 and 1996 were as follows:
1997 1996 ---- ---- INVESTMENT: $8,768,215 $7,878,541 SHARE VALUE: $ 18.52861 $ 16.64859 SHARES OUTSTANDING: 473,226 473,226 COST: $5,503,605 $5,503,605
NOTE 4: CONTRACT OWNER UNIT INFORMATION Outstanding Contract owner units, unit values and total value of Contract owner equity at December 31, 1997 and 1996 were as follows:
1997: - ----- VAL VLI SPVA SPVL TOTAL --- --- ---- ---- ----- CONTRACT OWNER UNITS OUTSTANDING: 3,180,962 485,517 81,395 81,807 3,829,681 UNIT VALUE: $1.73358 $1.78248 $1.61267 $1.61267 CONTRACT OWNER EQUITY: $5,514,452 $865,424 $131,263 $131,928 $6,643,068 1996: - ----- VAL VLI SPVA SPVL TOTAL --- --- ---- ---- ----- CONTRACT OWNER UNITS OUTSTANDING: 3,460,872 509,344 85,030 94,923 4,150,169 UNIT VALUE: $1.56700 $1.60720 $1.46726 $1.46726 CONTRACT OWNER EQUITY: $5,423,186 $818,618 $124,762 $139,276 $6,505,842
NOTE 5: CHARGES AND EXPENSES A. MORTALITY RISK AND EXPENSE RISK CHARGES Mortality risk and expense charges are determined daily using an effective annual rate of 0.6%, 0.35%, 0.9% and 0.9% for VAL, VLI, SPVA and SPVL, respectively. Mortality risk is 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 the estimated expenses. For the years ended December 31, 1997 and 1996 the amount of these charges paid to Pruco Life of New Jersey was $37,720 and $38,126, respectively. B. ADMINISTRATIVE CHARGES Administrative charges are determined daily using an effective annual rate of 0.35% for SPVA and SPVL. Administrative charges include costs associated with issuing the Contract, establishing and maintaining F-7 records, and providing reports to Contract owners. For the years ended December 31, 1997 and 1996 the amount of these charges paid to Pruco Life of New Jersey was $894 and $994, respectively. NOTE 6: TAXES Pruco Life of New Jersey is taxed as a "life insurance company" as defined by the Internal Revenue Code and the results of operations of the Real Property Account form a part of Pruco Life of New Jersey's federal tax return. Under current federal law, no federal income taxes are payable by the Real Property Account. As such, no provision for tax liability has been recorded in these financial statements. NOTE 7: NET WITHDRAWALS BY CONTRACT OWNERS Contract owner activity for the Pruco Life of New Jersey products for the year ended December 31, 1997, was as follows:
VAL VLI SPVA SPVL TOTAL --- --- ---- ---- ----- Contract Owner Net Payments: $ 533,340 $ 88,026 $ (5) $ 37 $ 621,398 Policy Loans: (171,484) (14,313) 0 (2,456) (188,253) Policy Loan Repayments and interest: 136,212 14,124 0 1,104 151,440 Surrenders, Withdrawals, and Death Benefits: (336,616) (74,935) (5,395) 0 (416,946) Administrative and Other Charges: (315,155) (32,755) 0 (904) (348,814) Net Transfers From/To Other Subaccounts or Fixed Rate Options: (304,993) (20,526) 0 (17,463) (342,982) ---------- ---------- ---------- ---------- ---------- Net Withdrawals $ (458,696) $ (40,379) $ (5,400) $ (19,682) $ (524,157) ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
NOTE 8: UNIT ACTIVITY Transactions in units for the years ended December 31, 1997 and 1996 were as follows:
1997: - ----- VAL VLI SPVA SPVL --- --- ---- ---- Contract Owner Contributions: 477,493.201 4,305.347 0 758.345 Contract Owner Redemptions: (757,408.249) (88,132.335) (3,635.257) (13,873.728) 1996: - ----- VAL VLI SPVA SPVL --- --- ---- ---- Contract Owner Contributions: 535,548.596 78,896.065 34.722 1,685.627 Contract Owner Redemptions: (744,916.258) (96,270.303) (17,943.310) (6,531.170)
NOTE 9: PURCHASES AND SALES OF INVESTMENTS There were no purchases or sales of investments in the Partnership for the years ended December 31, 1997 and 1996. F-8 REPORT OF INDEPENDENT ACCOUNTANTS February 20, 1998 To the Partners of Prudential Variable Contract Real Property Partnership In our opinion, the financial statements listed in the accompanying index present fairly, in all material respects, the financial position of Prudential Variable Contract Real Property Partnership (the "Partnership") at December 31, 1997 and 1996, and the results of its operations and its cash flows for the years then ended, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the management of the Prudential Insurance Company of America; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. Price Waterhouse LLP New York, New York F-9 INDEPENDENT AUDITORS' REPORT To the Partners of The Prudential Variable Contract Real Property Partnership Newark, New Jersey We have audited the accompanying statements of operations, changes in net assets and cash flows of the Prudential Variable Contract Real Property Partnership (the "Partnership") for the year ended December 31, 1995 and the per share data and ratios for each of the three years in the period ended December 31, 1995. These financial statements and the per share data and ratios are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements and the per share data and ratios based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such financial statements and per share data and ratios present fairly, in all material respects, the results of operations, changes in net assets and cash flows of The Prudential Variable Contract Real Property Partnership for the year ended December 31, 1995 and the per share data and ratios for each of the three years in the period ended December 31, 1995, in conformity with generally accepted accounting principles. Deloitte & Touche LLP Parsippany, New Jersey March 1, 1996 F-10 THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1997 DECEMBER 31, 1996 ----------------- ----------------- ASSETS REAL ESTATE INVESTMENTS - At estimated market value: Real estate and improvements (cost: 12/31/97 -- $201,670,248; 12/31/96 -- $177,082,291) $181,317,624 $151,074,276 Interest in properties at estimated market value (cost:12/31/97--$0; 12/31/96--$6,133,157) 0 5,850,000 Real estate investment trust (cost: 12/31/97 -- $10,000,005; 12/31/96 -- $0) 12,523,805 0 ----------------- ----------------- Total real estate investments 193,841,429 156,924,276 MARKETABLE SECURITIES - At estimated market value (cost: 12/31/97 -- $13,939,000; 12/31/96 -- $24,345,000) 13,971,421 24,426,644 CASH AND CASH EQUIVALENTS 12,880,560 20,738,204 DIVIDEND RECEIVABLE 146,999 0 ACCRUED INVESTMENT INCOME AND OTHER ASSETS (net of allowance for uncollectible accounts: 12/31/97 -- $68,000; 12/31/96 -- $56,000) 1,904,726 2,066,916 ----------------- ----------------- Total assets $222,745,135 $204,156,040 ----------------- ----------------- ----------------- ----------------- LIABILITIES AND PARTNERS' EQUITY OBLIGATION UNDER CAPITAL LEASE 0 $4,072,677 ACCOUNTS PAYABLE AND ACCRUED EXPENSES $1,842,027 1,640,360 DUE TO AFFILIATES 832,922 719,200 OTHER LIABILITIES 538,413 467,009 ----------------- ----------------- Total liabilities 3,213,362 6,899,246 ----------------- ----------------- PARTNERS' EQUITY 219,531,773 197,256,794 ----------------- ----------------- TOTAL LIABILITIES AND PARTNERS' EQUITY $222,745,135 $204,156,040 ----------------- ----------------- ----------------- ----------------- NUMBER OF SHARES OUTSTANDING AT END OF PERIOD 11,848,275 11,848,275 ----------------- ----------------- ----------------- ----------------- SHARE VALUE AT END OF PERIOD $18.53 $16.65 ----------------- ----------------- ----------------- -----------------
The accompanying notes are an integral part of these financial statements. F-11 THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, --------------------------------------------------- 1997 1996 1995 ------------- ------------- ------------- INVESTMENT INCOME: Revenues from real estate and improvements $21,582,968 $22,799,694 $19,827,044 Income from interest in properties 435,296 606,558 638,183 Dividend income from real estate investment trusts 158,184 0 0 Interest on short-term investments 2,305,364 2,134,386 2,660,865 ------------- ------------- ------------- Total investment income 24,481,812 25,540,638 23,126,092 ------------- ------------- ------------- EXPENSES: Investment management fee 2,640,470 2,494,229 2,341,878 Real estate taxes 2,208,972 2,367,404 1,938,090 Administrative expense 2,326,155 1,865,433 1,795,092 Operating expense 3,296,350 2,904,620 1,870,183 Interest expense 220,118 489,434 460,578 ------------- ------------- ------------- Total investment expenses 10,692,065 10,121,120 8,405,821 ------------- ------------- ------------- NET INVESTMENT INCOME 13,789,747 15,419,518 14,720,271 ------------- ------------- ------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net proceeds from real estate investments sold 6,297,422 20,497,789 0 Less: Cost of real estate investments sold 6,274,539 26,610,932 0 Realization of prior years' unrealized gain on real estate investments sold (283,157) (4,539,996) 0 ------------- ------------- ------------- Net gain (loss) realized on real estate investments sold 306,040 (1,573,147) 0 ------------- ------------- ------------- Change in unrealized gain (loss) on real estate investments 8,179,192 (3,211,436) 661,623 ------------- ------------- ------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 8,485,232 (4,784,583) 661,623 ------------- ------------- ------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $22,274,979 $10,634,935 $15,381,894 ------------- ------------- ------------- ------------- ------------- -------------
The accompanying notes are an integral part of these financial statements. F-12 THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31, --------------------------------------------------- 1997 1996 1995 ------------- ------------- ------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS: Net investment income $13,789,747 $15,419,518 $14,720,271 Net gain (loss) realized on real estate investments sold 306,040 (1,573,147) 0 Net unrealized gain (loss) from real estate investments 8,179,192 (3,211,436) 661,623 ------------- ------------- ------------- Net increase in net assets resulting from operations 22,274,979 10,634,935 15,381,894 ------------- ------------- ------------- NET DECREASE IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS: Withdrawals by partners (Shares: 1997 -- 0; 1996 -- 188,409; 1995 -- 204,350) 0 (3,000,000) (3,000,000) ------------- ------------- ------------- Net decrease in net assets resulting from capital transactions 0 (3,000,000) (3,000,000) ------------- ------------- ------------- NET INCREASE IN NET ASSETS 22,274,979 7,634,935 12,381,894 NET ASSETS - Beginning of year 197,256,794 189,621,859 177,239,965 ------------- ------------- ------------- NET ASSETS - End of year $219,531,773 $197,256,794 $189,621,859 ------------- ------------- ------------- ------------- ------------- -------------
The accompanying notes are an integral part of these financial statements. F-13 THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31, --------------------------------------------------- 1997 1996 1995 ------------- ------------- ------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net increase in net assets resulting from operations $22,274,979 $10,634,935 $15,381,894 Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by operating activities: Net realized and unrealized (gain) loss on investments (8,485,232) 4,784,583 (661,623) (Increase) decrease in: Dividend receivable (146,999) 0 0 Accrued investment income and other assets 162,190 (323,611) 474,790 (Decrease) increase in: Obligation under capital lease (72,677) 190,256 77,585 Accounts payable and accrued expenses 201,667 (502,254) 1,337,548 Due to affiliates 113,722 36,405 58,589 Other liabilities 71,404 (197,060) 18,156 ------------- ------------- ------------- Net cash flows from operating activities 14,119,054 14,623,254 16,686,939 ------------- ------------- ------------- CASH FLOWS FROM INVESTING ACTIVITIES: Net proceeds from real estate investments sold 6,297,422 20,497,789 0 Acquisition of real estate property (23,417,474) (10,713,722) (36,774,343) Acquisition of real estate investment trust (10,000,005) 0 0 Improvements and additional costs on prior purchases: Additions to real estate owned (1,311,864) (997,893) (1,050,197) Additions to real estate partnerships 0 0 (24,415) Sale (purchase) of marketable securities 10,455,223 (13,894,489) 5,292,044 ------------- ------------- ------------- Net cash flows from investing activities (17,976,698) (5,108,315) (32,556,911) ------------- ------------- ------------- CASH FLOWS FROM FINANCING ACTIVITIES: Withdrawals by partners 0 (3,000,000) (3,000,000) Principal payments on capital lease obligation (4,000,000) 0 0 ------------- ------------- ------------- Net cash flows from financing activities (4,000,000) (3,000,000) (3,000,000) ------------- ------------- ------------- NET CHANGE IN CASH AND CASH EQUIVALENTS (7,857,644) 6,514,939 (18,869,972) CASH AND CASH EQUIVALENTS - Beginning of year 20,738,204 14,223,265 33,093,237 ------------- ------------- ------------- CASH AND CASH EQUIVALENTS - End of year $12,880,560 $20,738,204 $14,223,265 ------------- ------------- ------------- ------------- ------------- ------------- SUPPLEMENTAL INFORMATION: Cash paid during the year for interest $220,118 $376,450 $376,450 ------------- ------------- ------------- ------------- ------------- -------------
The accompanying notes are an integral part of these financial statements. F-14 THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP SCHEDULE OF INVESTMENTS
DECEMBER 31,1997 DECEMBER 31, 1996 -------------------------------- -------------------------------- ESTIMATED ESTIMATED MARKET MARKET COST VALUE COST VALUE ---------------------------------------------------------------------- REAL ESTATE AND IMPROVEMENTS (PERCENT OF NET ASSETS) 82.6% 76.6% Location Description - -------------------------------------------------------------------------------------------------------------------------------- Lisle, IL Office Building $17,916,983 $10,278,959 $17,524,421 $9,900,000 Atlanta, GA Garden Apartments 15,446,293 15,100,000 15,396,738 13,707,814 Pomona, CA Warehouse 23,637,049 19,504,612 23,456,751 17,553,849 Roswell, GA Retail Shopping Center 31,858,198 29,547,042 31,754,073 28,333,818 Morristown, NJ Office Building 18,931,914 10,805,918 18,797,224 10,113,986 Bolingbrook, IL Warehouse 8,948,028 7,100,000 8,948,028 7,100,000 Farmington Hills, MI Garden Apartments 13,641,971 14,805,258 13,623,952 14,706,400 Raleigh, NC Garden Apartments 15,804,860 16,525,751 15,762,951 16,854,252 Nashville, TN Office Building 8,613,828 9,611,329 8,379,326 8,800,436 Oakbrook Terrace, IL Office Complex 12,725,366 14,100,000 12,725,105 13,290,000 Beaverton, OR Office Complex 10,728,285 10,700,000 10,713,722 10,713,721 Salt Lake City, UT Industrial Building 5,388,134 5,350,000 0 0 Aurora, CO Industrial Building 8,540,585 8,400,000 0 0 Brentwood, TN Office Complex 9,488,755 9,488,755 0 0 ---------------------------------------------------------------------- $201,670,248 $181,317,624 $177,082,291 $151,074,276 ---------------------------------------------------------------------- ---------------------------------------------------------------------- INTEREST IN PROPERTIES (PERCENT OF NET ASSETS) 0.0% 3.0% Location Description - -------------------------------------------------------------------------------------------------------------------------------- Jacksonville, FL Warehouse/Distribution $0 $0 $1,317,453 $1,225,000 Jacksonville, FL Warehouse/Distribution 0 0 1,002,448 1,000,000 Jacksonville, FL Warehouse/Distribution 0 0 1,442,894 1,325,000 Jacksonville, FL Warehouse/Distribution 0 0 2,370,362 2,300,000 ------------- ------------ ------------ ------------ $0 $0 $6,133,157 $5,850,000 ------------- ------------ ------------ ------------ ------------- ------------ ------------ ------------ REAL ESTATE TRUST (PERCENT OF NET ASSETS) 5.7% 0.0% - -------------------------------------------------------------------------------------------------------------------------------- Meridian REIT Shares (506,894 shares) $10,000,005 $12,523,805 $0 $0 ------------- ------------ ------------ ------------ ------------- ------------ ------------ ------------ DECEMBER 31,1997 DECEMBER 31, 1996 -------------------------------- -------------------------------- ESTIMATED ESTIMATED FACE MARKET FACE MARKET AMOUNT VALUE AMOUNT VALUE ---------------------------------------------------------------------- MARKETABLE SECURITIES (PERCENT OF NET ASSETS) 6.4% 12.4% (See pages F-14 to F-15 for details) Description - -------------------------------------------------------------------------------------------------------------------------------- Marketable Securities $13,939,000 $13,971,421 $24,345,000 $24,426,644 ------------- ------------ ------------ ------------ ------------- ------------ ------------ ------------ CASH AND CASH EQUIVALENTS (PERCENT OF NET ASSETS) 5.9% 10.5% (See pages F-14 to F-15 for details) Description - -------------------------------------------------------------------------------------------------------------------------------- Commercial Paper and Cash $12,918,158 $12,880,560 $20,804,826 $20,738,204 ------------- ------------ ------------ ------------ ------------- ------------ ------------ ------------
The accompanying notes are an integral part of these financial statements. F-15 THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP SCHEDULE OF INVESTMENTS
DECEMBER 31, 1997 ------------------------------- FACE ESTIMATED AMOUNT MARKET VALUE ------------ ------------ MARKETABLE SECURITIES (PERCENT OF NET ASSETS) 6.4% International Lease Finance Corp., 5.92%, January 15, 1998 $500,000 $499,083 Smith Barney Holding Inc., 5.70%, January 28, 1998 1,304,000 1,285,475 Suntrust Banks, 8.875%, February 1, 1998 1,500,000 1,517,880 Chase Manhattan Bank, 5.75%, February 10, 1998 2,000,000 2,000,000 Beneficial Corp., 9.125%, February 15, 1998 700,000 705,948 Citicorp, 10.15%, February 15, 1998 200,000 207,324 General Motors Acceptance Corp., 5.9%, February 19, 1998 985,000 994,545 General Motors Acceptance Corp., 5.9875%, February 23, 1998 1,300,000 1,299,363 American General Finance Corp., 7.25%, March 1, 1998 500,000 507,880 Commercial Credit Co., 5.7%, March 1, 1998 375,000 375,199 Associates Corp. of North America, 7.3%, March 15, 1998 400,000 406,635 International Lease Finance Corp., 5.75%, March 15, 1998 400,000 399,940 Morgan Guaranty Trust Co., 5.85%, March 16, 1998 500,000 499,855 Royal Bank of Canada, 5.91%, June 17, 1998 2,000,000 1,998,853 FCC National Bank, 5.75281%, July 2, 1998 1,025,000 1,024,202 General Mills Inc., 5.38%, July 8, 1998 250,000 249,238 ------------ ------------ TOTAL MARKETABLE SECURITIES $13,939,000 $13,971,421 ------------ ------------ ------------ ------------ CASH AND CASH EQUIVALENTS (PERCENT OF NET ASSETS) 5.9% Barnett Bank, Inc., 6.70%, January 2, 1998 $1,235,000 $1,234,540 American Greetings Corp., 6.26%, January 5, 1998 1,250,000 1,247,179 Xerox Capital, 5.85%, January 6, 1998 1,000,000 995,775 Nike Inc., 6.10%, January 8, 1998 1,215,000 1,213,353 Paccar Financial Corp., 5.85%, January 9, 1998 1,000,000 996,100 Pitney Bowes Credit Corp., 6.00%, January 13, 1998 750,000 747,375 Merrill Lynch & Co., Inc. 5.85%, January 15, 1998 1,000,000 994,313 Bank of Montreal, 5.90%, January 16, 1998 1,000,000 1,000,000 Countrywide Home Loan, Inc., 5.85%, January 22, 1998 1,000,000 993,175 General Electric Capital Corp., 5.74%, February 9, 1998 1,000,000 990,593 ------------ ------------ TOTAL CASH EQUIVALENTS 10,450,000 10,412,402 CASH 2,468,158 2,468,158 ------------ ------------ TOTAL CASH AND CASH EQUIVALENTS $12,918,158 $12,880,560 ------------ ------------ ------------ ------------
The accompanying notes are an integral part of these financial statements. F-16 THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996 ---------------------------------- FACE ESTIMATED AMOUNT MARKET VALUE --------------- -------------- MARKETABLE SECURITIES (PERCENT OF NET ASSETS) 12.4% PNC Bank, 5.48%, January 6, 1997 $2,200,000 $2,199,643 Wells Fargo, 5.54%, January 28, 1997 2,300,000 2,300,446 Sears Roebuck Acceptance Corp, 7.48%, February 19, 1997 100,000 102,187 General Motors Acceptance Corp, 5.88%, February 27, 1997 105,000 107,143 Sears Roebuck Acceptance Corp,7.72%, February 27, 1997 800,000 812,000 Dean Witter Discover & Co., 5.75%, March 6,1997 500,000 500,387 General Motors Acceptance Corp, 5.74%, March 18, 1997 1,200,000 1,201,344 Sears Discover Credit Corp, 7.81%, March 18, 1997 1,150,000 1,164,548 American Home Products, 6.88%, April 15, 1997 2,000,000 2,019,323 Ford Motor Credit, 5.90%, May 5, 1997 1,400,000 1,405,337 Ford Motor Credit, 5.90%, May 5, 1997 350,000 350,875 Ford Motor Credit, 9.15%, May 7, 1997 500,000 515,010 Key Bank NA, 5.58%, May 14, 1997 900,000 899,130 American Express Centurion Bank, 5.58%, June 10, 1997 2,300,000 2,299,862 Associates Corp of North America, 7.05%, June 30, 1997 600,000 604,766 Bank One Columbus, 5.58%, July 1, 1997 1,110,000 1,108,812 Associates Corp of North America, 5.88%, August 15, 1997 1,230,000 1,230,744 Key Bank of New York, 4.82%, September 4, 1997 1,300,000 1,298,740 Bank One Milwaukee, NA, 5.26%, October 8, 1997 1,000,000 1,002,870 Morgan Guaranty Trust Co., 5.38%, November 14, 1997 1,000,000 999,271 Norwest Financial Inc., 6.50%, November 15, 1997 300,000 302,286 Norwest Corp., 5.55%, November 21, 1997 2,000,000 2,001,922 --------------- -------------- TOTAL MARKETABLE SECURITIES $24,345,000 $24,426,644 --------------- -------------- --------------- -------------- CASH AND CASH EQUIVALENTS (PERCENT OF NET ASSETS) 10.5% Gateway Fuel Corp, 7.15%, January 2, 1997 $2,177,000 $2,176,135 Bell Atlantic Financial Services, 5.50%, January 14, 1997 2,650,000 2,638,664 Pioneer Hi-Bred Intl, 5.47%, January 15, 1997 1,200,000 1,194,712 Bank of Montreal, 5.43%, January 27, 1997 2,300,000 2,300,000 Canadian Imperial Bank, 5.39%, January 27, 1997 2,400,000 2,400,000 HJ Heinz Co., 5.46%, January 29, 1997 2,370,000 2,354,184 General Electric Capital Corp, 5.34%, February 3, 1997 2,300,000 2,279,871 Bankers Trust Co., 5.35%, February 20, 1997 2,000,000 2,007,723 Colonial PL Co Note, 5.60%, February 21, 1997 800,000 792,658 Colonial PL Co Note, 5.35%, March 4, 1997 783,000 773,109 General Electric Capital Corp., 5.45%, March 14, 1997 300,000 296,321 --------------- -------------- TOTAL CASH EQUIVALENTS 19,280,000 19,213,378 CASH 1,524,826 1,524,826 --------------- -------------- TOTAL CASH AND CASH EQUIVALENTS $20,804,826 $20,738,204 --------------- -------------- --------------- --------------
The accompanying notes are an integral part of these financial statements. F-17 NOTES TO FINANCIAL STATEMENTS OF PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP FOR YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 GENERAL On April 29, 1988, Prudential Variable Contract Real Property Partnership (the "Partnership"), a general partnership organized under New Jersey law, was formed through an agreement among Prudential Insurance Company of America ("Prudential"), Pruco Life Insurance Company ("Pruco Life"), and Pruco Life Insurance Company of New Jersey ("Pruco Life of New Jersey"). The Partnership was established as a means by which assets allocated to the real estate investment option under certain variable life insurance and variable annuity contracts issued by the respective companies could be invested in a commingled pool. The partners in the Partnership are Prudential, Pruco Life and Pruco Life of New Jersey. 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. The Partnership's investments are valued on a daily basis, consistent with the Partnership Agreement. On each day during which the New York Stock Exchange is open for business, the net assets of the Partnership are valued using the estimated market value of its investments as described in Notes 1A and 1B below, plus an estimate of net investment income from operations reduced by any liabilities of the Partnership. The periodic adjustments to property values described in Notes 1A and 1B below and the corrections of previous estimates of net investment income are made on a prospective basis. There can be no assurance that all such adjustments and estimates will be made timely. Shares of the Partnership are sold to Prudential Variable Contract Real Property Account, Pruco Life Variable Contract Real Property Account and Pruco Life of New Jersey Variable Contract Real Property Account (the "Real Property Accounts") at the current share value of the Partnership's net assets. Share value is calculated by dividing the estimated market value of net assets of the Partnership as determined below by the number of shares outstanding. A Contract owner participates in the Partnership through interests in the Real Property Accounts. NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A: Real Estate Owned and Interest in Properties - The Partnership's investments in real estate owned and interests in properties are initially valued at their purchase price. Thereafter, 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) which are ordinarily obtained on an annual basis. The property valuations are reviewed internally at least every three months and adjusted if there has been a change in the value of the property since the last valuation. The Chief Appraiser of Prudential Insurance Company Comptroller's Department Valuation Unit (Valuation Unit) is responsible to assure that the valuation process provides independent and accurate market value estimates. In the interest of maintaining and monitoring the independence and accuracy of the appraisal process, the Comptroller of Prudential has appointed a third party firm to act as the Appraisal Management Firm. The Appraisal Management Firm, among other responsibilities, approves the selection and scheduling of external appraisals; reviews and provides comments on a sample of external F-18 and internal appraisals; assists in developing policies and procedures and assists in the evaluation of the performance and competency of external appraisers. The real estate valuations are reviewed quarterly by the Valuation Unit and adjusted if there has been any significant changes in circumstances related to the real estate since the most recent independent appraisal. 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 to fair sale, with the buyer and seller each acting prudently, knowledgeably, and for self interest, and assuming that neither is under undue duress. The estimate of market value generally is a correlation of three approaches, all of which require the exercise of subjective judgment. The three approaches are: (1) current cost of reproducing the real estate less deterioration and functional and economic obsolescence; (2) discounting of a series of income streams and reversion at a specified yield or by directly capitalizing a single year income estimate by an appropriate factor; and (3) value indicated by recent sales of comparable properties in the market space. In the reconciliation of these three approaches, the one most heavily relied upon is the one then recognized as the most appropriate by the independent appraiser for the type of real estate in the market. As described above, the estimated market value of real estate and real estate related assets are determined through an appraisal process. 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 December 31, 1997 and 1996. B: Investments in Real Estate Investment Trusts - Shares of real estate investment trusts (REITs) are generally valued at their quoted market price at December 31, 1997. These values may be discounted for restrictions, if any, on the future sale of these shares, such as lockout periods or limitations on the number of shares which may be sold in a given time period. Any such discounts are determined by the Valuations Unit. C: Revenue Recognition - Rent from real estate is recognized when billed. Revenue from certain real estate investments is net of all or a portion of related real estate expenses and taxes, as lease arrangements vary as to responsibility for payment of these expenses between tenants and the Partnership. Since real estate is stated at estimated market value, net income is not reduced by depreciation expense. Dividend income is accrued at the ex-dividend date. D: Cash and Cash Equivalents - For purposes of the statement of cash flows, all short-term investments with a maximum maturity of three months and investments in money market funds with a maximum weighted average maturity of three months are considered to be cash F-19 equivalents. Cash equivalents are carried at market value. Cash of $128,089 and $144,314 at December 31, 1997 and 1996, respectively, was maintained by the properties for tenant security deposits and is included in Other Assets on the Statements of Assets and Liabilities. E: Marketable Securities - Marketable securities are highly liquid investments with maturities of more than three months when purchased and are carried at market value. F: Federal Income Taxes - The Partnership is not a taxable entity under the provisions of the Internal Revenue Code. The income and capital gains and losses of the Partnership are attributed, for federal income tax purposes, to the Partners in the Partnership. The Partnership may be subject to state and local taxes in jurisdictions in which it operates. G: Management's Use of Estimates in the Financial Statements - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. NOTE 2: OBLIGATION UNDER CAPITAL LEASE The Partnership maintained an interest in a leasehold estate consisting of six one-story industrial warehouse buildings located in Pomona, California. In conjunction with this interest, the Partnership assumed assignment of a ground lease agreement expiring in November 2078 with no renewal options. The annual ground lease payments after November 1994, and for each 10 year increment thereafter, were subject to increase 50% of the increase in the Consumer Price Index during the previous period. In 1995, the annual ground lease payment increased by $126,450 to $376,450. The ground lease contained a purchase option that exercisable from November 1994 to November 1997 at a fixed price of $4,000,000. In August 1997, the Partnership exercised this purchase option. NOTE 3: LEASING ACTIVITY The Partnership leases space to tenants under various operating lease agreements. These agreements, without giving effect to renewal options, have expiration dates ranging from 1997 to 2010. At December 31, 1997, the aggregate future minimum base rental payments under non-cancelable operating lease by year are:
Year Ending December 31, (000's) ------------ ------------ 1998 $ 12,877 1999 11,857 2000 10,221 2001 8,669 2002 6,834 Thereafter 11,916 -------- Total $ 62,374 -------- --------
F-20 NOTE 4: COMMITMENT FROM PARTNER On January 9, 1990, Prudential committed to fund up to $100 million to enable the Partnership to take advantage of opportunities to acquire attractive real property investments whose cost is greater than the Partnership's then available cash. Contributions to the Partnership under this commitment are utilized for property acquisitions and returned to Prudential on an ongoing basis from Contract owners' net contributions. Also, the amount of the commitment is reduced by $10 million for every $100 million in estimated market value net assets of the Partnership. The amount available under this commitment for property purchases as of December 31, 1997 is approximately $47 million. NOTE 5: RELATED PARTY TRANSACTIONS Pursuant to an investment management agreement, Prudential 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 years ended December 31, 1997, 1996 and 1995 management fees incurred by the Partnership were $2,640,470; $2,494,229; and $2,341,878, respectively. The Partnership also reimburses Prudential for certain administrative services rendered by Prudential. The amounts incurred for the years ended December 31, 1997, 1996 and 1995 were $115,346; $116,818; and $123,919, respectively, and are classified as administrative expenses in the statements of operations. The Partnership owned a 50% interest in four warehouse/distribution buildings in Jacksonville, Florida (the Unit warehouses). The remaining 50% interest was owned by Prudential and one of its subsidiaries. In September 1997, the Unit warehouses were sold as part of an industrial package for cash of $12,544,659. The partnership's share of the proceeds was $6,272,329. The Partnership has contracted with PREMISYS Real Estate Services, Inc. (PREMISYS), an affiliate of Prudential, sold by Prudential in 1997, to provide property management services at the Unit warehouses. The property management fee earned by PREMISYS, incurred by the Partnership and Prudential for the years ended December 31, 1997, 1996 and 1995 was $32,175; $36,000; and $31,360, respectively. F-21 Per Share Information (For a share outstanding throughout the period)
01/01/97 01/01/96 01/01/95 to to to 12/31/97 12/31/96 12/31/95 -------- -------- -------- Rent from properties $ 1.8216 $ 1.9173 $ 1.6387 Income from interest in properties $ 0.0367 $ 0.0510 $ 0.0527 Dividend income from real estate investment trusts $ 0.0134 $ 0.0000 $ 0.0000 Interest from short-term investments $ 0.1946 $ 0.1795 $ 0.2199 --------- --------- --------- INVESTMENT INCOME $ 2.0663 $ 2.1478 $ 1.9113 --------- --------- --------- --------- --------- --------- Investment management fee $ 0.2229 $ 0.2097 $ 0.1936 Real estate tax expense $ 0.1864 $ 0.1991 $ 0.1602 Administrative expenses $ 0.1963 $ 0.1569 $ 0.1484 Operating expenses $ 0.2782 $ 0.2442 $ 0.1546 Interest expense $ 0.0186 $ 0.0412 $ 0.0381 --------- --------- --------- EXPENSES $ 0.9024 $ 0.8511 $ 0.6949 --------- --------- --------- --------- --------- --------- NET INVESTMENT INCOME $ 1.1639 $ 1.2967 $ 1.2164 --------- --------- --------- --------- --------- --------- Net realized gain/(loss) on investments sold $ 0.0258 ($ 0.1323) $ 0.0000 Net unrealized gain/(loss) on investments $ 0.6903 ($ 0.2695) $ 0.0581 --------- --------- --------- NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS $ 0.7162 ($ 0.4018) $ 0.0581 --------- --------- --------- Net increase/(decrease) in share value $ 1.8800 $ 0.8949 $ 1.2745 Share Value at beginning of period $ 16.6486 $ 15.7537 $ 14.4792 --------- --------- --------- Share Value at end of period $ 18.5286 $ 16.6486 $ 15.7537 --------- --------- --------- --------- --------- --------- Ratio of expenses to average net assets 5.16% 5.26% 4.62% Ratio of net investment income to average net assets 6.66% 8.01% 8.08% Number of shares outstanding at end of period (000's) 11,848 11,848 12,037
ALL CALCULATIONS ARE BASED ON AVERAGE MONTH-END SHARES OUTSTANDING WHERE APPLICABLE. PER SHARE INFORMATION PRESENTED HEREIN IS SHOWN ON A BASIS CONSISTENT WITH THE FINANCIAL STATEMENTS AS DISCUSSED IN NOTE 1G. F-22 THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP SCHEDULE III - REAL ESTATE OWNED: PROPERTIES DECEMBER 31, 1997
Initial Costs to the Partnership Costs ------------------------------------------ Capitalized Building & Subsequent to Description Encumbrances Land Improvements Acquisition Land ----------- ------------ -------- ------------ ------------- ---------- Properties: Office Building Lisle, IL None 1,780,000 15,743,881 393,102 1,780,000 Garden Apartments Atlanta, GA None 3,631,212 11,168,904 646,177 (b) 3,631,212 Warehouse Pomona, CA None 3,412,636 19,091,210 1,133,203 3,463,515 Retail Shopping Center Roswell, GA None 9,454,622 21,513,677 889,899 9,462,951 Office Building Morristown, NJ None 2,868,660 12,958,451 3,104,803 2,868,660 Office/Warehouse Bolingbrook, IL None 1,373,199 7,302,518 272,311 1,373,199 Garden Apartments Farmington Hills, MI None 1,550,000 11,744,571 347,400 1,583,320 Garden Apartments Raleigh, NC None 1,623,146 14,135,553 46,160 1,623,146 Office Building Nashville, TN None 1,797,000 6,588,451 228,377 1,797,327 Office Park Oakbrook Terrace, IL None 1,313,310 11,316,883 95,173 1,313,821 Office Building Beaverton, OR None 816,415 9,897,307 14,563 816,415 Industrial Building Salt Lake City, UT None 582,457 4,805,676 0 582,457 Industrial Building Aurora, CO None 1,338,175 7,202,411 0 1,338,175 Office Complex Brentwood, TN None 2,425,000 7,063,755 0 2,425,000 ------------ ----------- ---------- ----------- 33,965,832 160,533,248 7,171,168 34,059,198 ------------ ----------- ---------- ----------- ------------ ----------- ---------- ----------- Gross Amount at Which Carried at Close of Year --------------------------------------------------------- Building & Year of Date Description Improvements Total(a)(b)(c) Construction Acquired ----------- ------------ -------------- ------------ --------- Properties: Office Building Lisle, IL 16,136,983 17,916,983 1985 Apr., 1988 Garden Apartments Atlanta, GA 11,815,081 15,446,293 1987 Apr., 1988 Warehouse Pomona, CA 20,173,534 23,637,049 1984 Apr., 1988 Retail Shopping Center Roswell, GA 22,395,247 31,858,198 1988 Jan., 1989 Office Building Morristown, NJ 16,063,254 18,931,914 1981 Aug., 1988 Office/Warehouse Bolingbrook, IL 7,574,829 8,948,028 1989 Feb., 1990 Garden Apartments Farmington Hills, MI 12,058,651 13,641,971 1988 Jan., 1990 Garden Apartments Raleigh, NC 14,181,713 15,804,859 1995 Jun., 1995 Office Building Nashville, TN 6,816,501 8,613,828 1982 Oct., 1995 Office Park Oakbrook Terrace, IL 11,411,545 12,725,366 1988 Dec., 1995 Office Building Beaverton, OR 9,911,870 10,728,285 1995 Dec., 1996 Industrial Building Salt Lake City, UT 4,805,676 5,388,133 1997 Jul., 1997 Industrial Building Aurora, CO 7,202,411 8,540,586 1997 Sept., 1997 Office Complex Brentwood, TN 7,063,755 9,488,755 1987 Oct., 1997 ------------ ------------ 167,611,050 201,670,248 ------------ ------------ ------------ ------------
1997 1996 1995 ------------ ----------- ----------- (a) Balance at beginning of year 177,082,291 191,981,608 154,157,068 Additions: Acquisitions 23,417,474 10,713,722 36,774,343 Improvements, etc. 1,170,483 550,050 1,050,197 Deletions: Sale (26,163,089) 0 ------------ ----------- ----------- Balance at end of year 201,670,248 177,082,291 191,981,608 ------------ ----------- ----------- ------------ ----------- -----------
(b) Net of $1,000,000 settlement received from lawsuit. F-23 THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP SCHEDULE III - REAL ESTATE OWNED: INTEREST IN PROPERTIES DECEMBER 31, 1997
Initial Costs to the Partnership Costs -------------------------------------- Capitalized Building & Subsequent to Description Encumbrances Land Improvements Acquisition Land ----------- ------------ ---- ------------ ------------- --------- Interest in properties: Warehouse/Distribution Jacksonville, FL None $231,119 $1,073,849 $12,485 $231,119 Warehouse/Distribution Jacksonville, FL None 176,256 818,935 7,257 176,256 Warehouse/Distribution Jacksonville, FL None 255,545 1,187,335 14 255,545 Warehouse/Distribution Jacksonville, FL None 415,548 1,930,761 24,053 415,548 ---------- ---------- ---------- ---------- $1,078,468 $5,010,880 $43,809 $1,078,468 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Gross Amount at Which Carried at Close of Year ---------------------------------------------------------------------- Building & 1997 Year of Date Description Improvements Sales Total (a) Construction Acquired ----------- ------------- ------------ --------- ------------ ----------- Interest in properties: Warehouse/Distribution Jacksonville, FL $1,086,334 (1,317,453) $0 1988 Jan., 1990 Warehouse/Distribution Jacksonville, FL 826,192 (1,002,448) 0 1986 Jan., 1990 Warehouse/Distribution Jacksonville, FL 1,187,349 (1,442,894) 0 1982 Jan., 1990 Warehouse/Distribution Jacksonville, FL 1,954,814 (2,370,362) 0 1979 Jan., 1990 ------------- ------------ --------- $5,054,689 ($6,133,157) $0 ------------- ------------ --------- ------------- ------------ ---------
1997 1996 1995 ---------- ---------- ---------- Balance at beginning of year $6,133,157 $6,133,157 $6,108,742 Additions: Acquisitions 0 0 24,415 Improvements, etc. 0 0 0 Deletions: Sale (6,133,157) 0 0 ---------- ---------- ---------- Balance at end of year $0 $6,133,157 $6,133,157 ---------- ---------- ---------- ---------- ---------- ----------
(a) All of these industrial properties were sold at 9/30/97 F-24 EX-27.1 2 EXHIBIT 27.1
6 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM STATEMENTS OF NET ASSETS; STATEMENTS OF OPERATIONS AND CHANGES IN NET ASSETS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000829114 PRUCO LIFE OF NEW JERSEY 001 PRUCO LIFE OF NEW JERSEY CONTRACT REAL PROPERTY ACCOUNT 12-mos DEC-31-1997 DEC-31-1997 0 0 0 0 0 0 0 0 0 0 0 0 473,226 473,226 0 0 0 0 0 0 0 0 0 38,614 512,156 12,223 328,681 851,060 0 0 0 0 0 0 0 889,674 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
EX-27.2 3 EXHIBIT 27.2
6 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM STATEMENTS OF ASSETS & LIABILITIES; STATEMENTS OF OPERATIONS; STATEMENTS OF CHANGES IN NET ASSETS; STATEMENTS OF CASH FLOWS; PER SHARE TABLE; SCHEDULE OF INVESTMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 002 THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP 12-MOS DEC-31-1997 DEC-31-1997 211,670,253 193,841,429 2,051,725 26,851,981 0 222,745,135 0 0 0 3,213,362 0 0 11,848,275 11,848,275 0 0 0 0 0 222,745,135 158,184 2,305,364 22,018,264 10,692,065 13,789,747 306,040 8,179,192 22,274,979 0 0 0 0 0 0 0 22,274,979 0 0 0 0 2,640,470 220,118 10,692,065 0 16.649 1.164 0.716 0 0 0 18.529 5.16 0 0
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