e10vq

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2007


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

Commission file number 033-20018

PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY

in respect of

PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT

(Exact name of registrant as specified in its charter)


New Jersey		22-2426091

(State or other jurisdiction of		(IRS Employer Identification No.)
incorporation or organization)

213 Washington Street, Newark, New Jersey 07102-2992

(Address of principal executive offices) (Zip Code)

(973) 802-6000

(Registrant’s telephone number, including area code)

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer o Non-accelerated filer þ

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

Forward-Looking Statement Disclosure

Certain of the statements included in this Quarterly Report on Form 10-Q, including but not limited to those in Management’s Discussion and Analysis of Financial Condition and Results of Operations, constitute forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Words such as “expects,” “believes,” “anticipates,” “includes,” “plans,” “assumes,” “estimates,” “projects,” “intends,” “should,” “will,” “shall” or variations of such words are generally part of forward-looking statements. Forward-looking statements are made based on management’s current expectations and beliefs concerning future developments and their potential effects upon Pruco Life Insurance Company of New Jersey, or the “Company, or the Prudential Variable Contract Real Property Account, or the “Real Property Account”. There can be no assurance that future developments affecting the Company and the Real Property Account will be those anticipated by management. These forward-looking statements are not a guarantee of future performance and involve risks and uncertainties, and there are certain important factors that could cause actual results to differ, possibly materially, from expectations or estimates reflected in such forward-looking statements, including, among others: (1) general economic, market and political conditions, including the performance and fluctuations of stock, real estate and other financial markets; (2) interest rate fluctuations; (3) re-estimates of our reserves for future policy benefits and claims; (4) differences between actual experience regarding mortality, morbidity, persistency, surrender experience, interest rates, or market returns and the assumption we use in pricing our products, establishing liabilities and reserves or for other purposes; (5) changes in our assumptions related to deferred policy acquisition costs and valuation of business acquired or goodwill; (6) changes in our claims-paying or credit ratings; (7) investment losses and defaults; (8) competition in our product lines and for personnel; (9) changes in tax law; (10) regulatory or legislative changes; (11) adverse determinations in litigation or regulatory matters and our exposure to contingent liabilities, including in connection with our divestiture or winding down of businesses; (12) domestic or international military actions, natural or man-made disasters including terrorist activities or pandemic disease, or other events resulting in catastrophic loss of life; (13) ineffectiveness of risk management policies and procedures in identifying, monitoring and managing risks; (14) effects of acquisitions, divestitures and restructurings, including possible difficulties in integrating and realizing the projected results of acquisitions; and (15) changes in statutory or accounting principles generally accepted in the United States of America, or “U.S. GAAP”, accounting principles, practices or policies. The Company and the Real Property Account do not intend, and are under no obligation to, update any particular forward-looking statement included in this document. See “Risk Factors” included in the Annual Report on Form 10-K for the year ended December 31, 2006 for discussion of certain risks relating to the operation of the Partnership.

FINANCIAL STATEMENTS OF

PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT

STATEMENTS OF NET ASSETS
June 30, 2007 and December 31, 2006


	June 30, 2007
	(unaudited)		December 31, 2006
ASSETS
Investment in The Prudential Variable Contract Real Property Partnership	$	10,505,456	$	9,975,186

Net Assets	$	10,505,456	$	9,975,186


NET ASSETS, representing:
Equity of contract owners	$	7,841,987	$	7,511,015
Equity of Pruco Life Insurance Company of New Jersey		2,663,469		2,464,171

	$	10,505,456	$	9,975,186


Units outstanding		3,323,470		3,313,818


Portfolio shares held		294,526		294,526
Portfolio net asset value per share	$	35.67	$	33.87

STATEMENTS OF OPERATIONS
For the six and three months ended June 30, 2007 and 2006


	1/1/2007-6/30/2007		1/1/2006-6/30/2006		4/1/2007-6/30/2007		4/1/2006-6/30/2006
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
INVESTMENT INCOME
Net investment income from Partnership operations	$	248,252	$	218,337	$	131,103	$	100,957


EXPENSES
Charges to contract owners for assuming mortality risk and expense risk and for administration		21,831		19,912		11,027		10,098

NET INVESTMENT INCOME		226,421		198,425		120,076		90,859


NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net change in unrealized gain (loss) on investments in Partnership		248,915		557,647		165,051		270,282
Net realized gain (loss) on sale of investments in Partnership		33,103		2,945		17,890		3,072

NET GAIN (LOSS) ON INVESTMENTS		282,018		560,592		182,941		273,354


NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS	$	508,439	$	759,017	$	303,017	$	364,213

STATEMENTS OF CHANGES IN NET ASSETS
For the six and three months ended June 30, 2007 and 2006


	1/1/2007-6/30/2007			1/1/2006-6/30/2006			4/1/2007-6/30/2007			4/1/2006-6/30/2006
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
OPERATIONS
Net investment income	$	226,421		$	198,425		$	120,076			90,859
Net change in unrealized gain (loss) on investments in Partnership		248,915			557,647			165,051			270,282
Net realized gain (loss) on sale of investments in Partnership		33,103			2,945			17,890			3,072


NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		508,439			759,017			303,017			364,213


CAPITAL TRANSACTIONS
Net withdrawals by contract owners		(45,660	)		(145,464	)		(54,595	)		(74,181	)
Net contributions (withdrawals) by Pruco Life Insurance Company of New Jersey		67,491			165,376			65,622			84,279


NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS		21,831			19,912			11,027			10,098


TOTAL INCREASE (DECREASE) IN NET ASSETS		530,270			778,929			314,044			374,311

NET ASSETS
Beginning of period		9,975,186			8,924,959			10,191,413			9,329,577

End of period	$	10,505,456		$	9,703,888		$	10,505,457		$	9,703,888

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

NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT
June 30, 2007
(Unaudited)

Note 1: General

Pruco Life of New Jersey Variable Contract Real Property Account (the “Account”) was established on October 30, 1987 by resolution of the Board of Directors of Pruco Life Insurance Company of New Jersey (“Pruco Life of New Jersey”), which is an indirect wholly-owned subsidiary of The Prudential Insurance Company of America (“Prudential”), a wholly-owned subsidiary of Prudential Financial, Inc. (“PFI”), as a separate investment account pursuant to New Jersey law and is registered under the Securities Act of 1933, as amended. The assets of the Account are segregated from Pruco Life of New Jersey’s other assets. The Account is used to fund benefits under certain variable life insurance and variable annuity contracts issued by Pruco Life of New Jersey. These products are Appreciable Life (“VAL”), Variable Life (“VLI”), Discovery Plus (“SPVA”), and Discovery Life Plus (“SPVL”).

The assets of the Account are invested in The Prudential Variable Contract Real Property Partnership (the “Partnership”). The Partnership is the investment vehicle for assets allocated to the real estate investment option under certain variable life insurance and annuity contracts. The Account, along with the Pruco Life Variable Contract Real Property Account and The Prudential Variable Contract Real Property Account, are the sole investors in the Partnership. These financial statements should be read in conjunction with the financial statements of the Partnership.

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

Note 2: Summary of Significant Accounting Policies and Pronouncements

A. Basis of Accounting

The accompanying financial statements are prepared in conformity with U.S. GAAP. The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures. Actual results could differ from those estimates.

The interim financial data as of June 30, 2007 and for the six and three months ended June 30, 2007 and 2006 is unaudited; however, in the opinion of management, the interim data includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results for the interim periods.

In September 2006, the staff of the U.S. Securities and Exchange Commission, or “SEC”, issued Staff Accounting Bulletin, or “SAB”, No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements.” The interpretations in this SAB express the staff’s views regarding the process of quantifying financial statement misstatements. Specifically, the SEC staff believes that registrants must quantify the impact on current period financial statements of correcting all misstatements, including both those occurring in the current period and the effect of reversing those that have accumulated from prior periods. This SAB must be applied beginning with the first fiscal year ending after November 15, 2006, with early adoption encouraged. Since the Account’s method for quantifying financial statement misstatements already considers those occurring in the current period and the effect of reversing those that have accumulated from prior periods, the adoption of SAB No. 108 should have no effect on the financial position and result of operations of the Account.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” This Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and requires additional disclosures about fair value measurements. This Statement does not require any new fair value measurements, but the application of this Statement could change current practices in determining fair value. The Company plans to adopt this guidance effective January 1, 2008. The Company is currently assessing the impact of SFAS No. 157 on the Company’s consolidated financial position and results of operations.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities,” including an amendment of FASB Statement No. 115. This statement provides companies with an option to report selected financial assets and liabilities at fair value. This statement is effective for fiscal years beginning after November 15, 2007 with early adoption permitted. The Company plans to adopt this guidance effective January 1, 2008. The Company is currently assessing the impact of SFAS No. 159 on its consolidated financial position and results of operations.

B. Investment in Partnership Interest

The investment in the Partnership is based on the Account’s proportionate interest of the Partnership’s market value. At June 30, 2007 and December 31, 2006 the Account’s interest in the Partnership was 4.3% or 294,526 shares.

C. Income Recognition

Net investment income and realized and unrealized gains and losses are recognized daily. Amounts are based upon the Account’s proportionate interest in the Partnership.

D. Equity of Pruco Life Insurance Company of New Jersey

Pruco Life of New Jersey maintains a position in the Account for liquidity purposes, including unit purchases and redemptions, Partnership share transactions, and expense processing. The position does not affect contract owners’ accounts or the related unit values.

Note 3: Charges and Expenses

A. Mortality Risk and Expense Risk Charges

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

B. Administrative Charges

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

C. Cost of Insurance and Other Related Charges

Contract owner contributions are subject to certain deductions prior to being invested in the Account. The deductions for VAL and VLI are (1) state premium taxes; (2) sales charges, not to exceed 5% for VAL and 9% for VLI, which are deducted in order to compensate Pruco Life of New Jersey for the cost of selling the contract and (3) transaction costs, applicable to VAL, which are deducted from each premium payment to cover premium collection and processing costs. Contracts are subject to charges on each basic premium for assuming a guaranteed minimum death benefit risk. This charge compensates Prudential for the risk that an insured may die at a time when the death benefit exceeds the benefit that would have been payable in the absence of a minimum guarantee. These charges are assessed through the redemption of units.

D. Deferred Sales Charge

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

E. Partial Withdrawal Charge

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

Note 4: Taxes

Pruco Life of New Jersey is taxed as a “life insurance company”, as defined by the Internal Revenue Code. The results of operations of the Account form a part of PFI’s consolidated federal tax return. Under current federal law, no federal income taxes are payable by the Account. As such, no provision for the tax liability has been recorded in these financial statements.

Note 5: Net Withdrawals by Contract Owners

Net contract owner withdrawals for the real estate investment option in Pruco Life of New Jersey’s variable insurance and variable annuity products for the six months ended June 30, 2007 and 2006, were as follows:


	Six months ended
	June 30,
	(Unaudited)
	2007			2006
VAL	$	(30,243	)	$	(104,301	)
VLI		(8,126	)		(17,540	)
SPVA		0			(23,223	)
SPVL		(7,291	)		(400	)

TOTAL	$	(45,660	)	$	(145,464	)

Note 6: Partnership Distributions

As of June 30, 2007, the Partnership had made no current year distributions. For the year ended December 31, 2006, the Partnership made distributions of $6 million. The Account’s share of these distributions was $0.2 million.

Note 7: Unit Information

Outstanding units and unit values at June 30, 2007 and December 31, 2006 were as follows:


	June 30, 2007		December 31, 2006
	(Unaudited)
Units Outstanding:		3,323,470		3,313,818
Unit Value:		2.75925 to 3.31948		2.63621 to 3.15740

Note 8: Financial Highlights

The range of total return for the six months ended June 30, 2007 and 2006 was as follows:

Six months ended

June 30,

(Unaudited)

2007

2006

Total Return

4.67% to 5.13%

8.06% to 8.54%

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES


	June 30, 2007
	(Unaudited)		December 31, 2006
ASSETS

REAL ESTATE INVESTMENTS — At estimated market value:
Real estate and improvements (cost: 6/30/2007 - $211,585,975; 12/31/2006 - $199,124,056)	$	229,961,712	$	214,444,568
Real estate partnerships and preferred equity investments (cost: 6/30/2007 - $14,709,462; 12/31/2006 - $22,334,823)		14,709,462		17,941,039
Other real estate investments (cost: 6/30/2007 - $3,043,557; 12/31/2006 - $2,857,851)		3,043,557		2,857,851


Total real estate investments		247,714,731		235,243,458

CASH AND CASH EQUIVALENTS		35,078,576		33,399,532

OTHER ASSETS, NET		2,742,731		3,493,829


Total assets	$	285,536,038	$	272,136,819


LIABILITIES & PARTNERS’ EQUITY

INVESTMENT LEVEL DEBT	$	32,420,942	$	32,710,488

ACCOUNTS PAYABLE AND ACCRUED EXPENSES		4,234,041		3,091,930

DUE TO AFFILIATES		845,219		789,889

OTHER LIABILITIES		809,956		876,487

MINORITY INTEREST		6,140,312		5,751,441


Total liabilities	$	44,450,470	$	43,220,235


COMMITMENTS AND CONTINGENCIES

PARTNERS’ EQUITY		241,085,568		228,916,584


Total liabilities and partners’ equity	$	285,536,038	$	272,136,819


NUMBER OF SHARES OUTSTANDING AT END OF PERIOD		6,758,960		6,758,960


SHARE VALUE AT END OF PERIOD	$	35.67	$	33.87

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

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	For the Six Months Ended June 30,					For the Three Months Ended June 30,
	2007			2006		2007			2006
INVESTMENT INCOME:
Revenue from real estate and improvements	$	13,207,476		$	12,045,917	$	6,719,243		$	6,187,328
Equity in income of real estate partnerships		627,648			332,579		328,268			(58,674	)
Interest and equity income on mortgage and other loans receivable		—			125,510		—			—
Income from other real estate investments		185,706			30,780		93,366			30,780
Interest on short-term investments		953,257			994,626		421,582			530,859


Total investment income		14,974,087			13,529,412		7,562,459			6,690,293


INVESTMENT EXPENSES:
Operating		3,382,865			3,020,289		1,658,885			1,534,329
Investment management fee		1,640,443			1,505,088		829,811			765,271
Real estate taxes		1,054,609			1,063,409		542,724			537,306
Administrative		2,037,531			1,898,730		1,053,062			965,959
Interest expense		1,129,113			925,269		451,192			476,583
Minority interest		32,487			91,726		18,144			87,386


Total investment expenses		9,277,048			8,504,511		4,553,818			4,366,834


NET INVESTMENT INCOME		5,697,039			5,024,901		3,008,641			2,323,459


REALIZED AND UNREALIZED GAIN (LOSS) ON REAL ESTATE INVESTMENTS:
Net proceeds from real estate investments sold		18,353,122			67,770		3,703,880			70,689
Less: Cost of real estate investments sold		18,973,800			—		7,687,109			—
Realization of prior periods’ unrealized gain (loss) on real estate investments sold		(1,380,344	)		—		(4,361,986	)		—


NET GAIN (LOSS) REALIZED ON REAL ESTATE INVESTMENTS SOLD		759,666			67,770		378,757			70,689


Change in unrealized gain (loss) on real estate investments		6,068,665			14,970,820		4,050,646			6,904,718
Less: Minority interest in unrealized gain (loss) on real estate investments		356,386			2,136,875		231,189			684,323


Net unrealized gain (loss) on real estate investments		5,712,279			12,833,945		3,819,457			6,220,395


NET REALIZED AND UNREALIZED GAIN (LOSS) ON REAL ESTATE INVESTMENTS		6,471,945			12,901,715		4,198,214			6,291,084


INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS	$	12,168,984		$	17,926,616	$	7,206,855		$	8,614,543

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

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)


	For the Six Months Ended June 30,
	2007			2006
CASH FLOWS FROM OPERATING ACTIVITIES:
Net increase in net assets from operations	$	12,168,984		$	17,926,616
Adjustments to reconcile net increase in net assets to net cash from operating activities
Net realized and unrealized loss (gain)		(6,471,945	)		(12,901,715	)
Amortization of deferred financing costs		250,414			—
Distributions in excess of (less than) equity in income of real estate partnerships’ operations		(60,056	)		—
Minority interest in consolidated partnerships		32,487			91,726
Bad debt expense		60,927			109,288
(Increase) decrease in accrued interest included in other real estate investments		(185,706	)		(30,780	)
(Increase) decrease in:
Other assets		439,757			(590,722	)
Increase (decrease) in:
Accounts payable and accrued expenses		1,142,111			137,784
Due to affiliates		55,330			17,753
Other liabilities		(66,531	)		124,453


Net cash flows from (used in) operating activities		7,365,772			4,884,403


CASH FLOWS FROM INVESTING ACTIVITIES:
Net proceeds from real estate investments sold		18,353,122			67,770
Acquisition of real estate and improvements		(22,706,166	)		(11,868,343	)
Additions to real estate and improvements		(1,044,138	)		(459,630	)
Contributions to real estate partnerships		—			(7,289,487	)
Return of investment in real estate partnerships		—			3,620,455
Collection of mortgage loan receivable		—			4,277,769
Origination of other real estate investments		—			(2,638,287	)


Net cash flows from (used in) investing activities		(5,397,182	)		(14,289,753	)


CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on investment level debt		(289,546	)		(270,416	)


Net cash flows from (used in) financing activities		(289,546	)		(270,416	)


NET CHANGE IN CASH AND CASH EQUIVALENTS		1,679,044			(9,675,766	)

CASH AND CASH EQUIVALENTS — Beginning of period		33,399,532			45,467,485


CASH AND CASH EQUIVALENTS — End of period	$	35,078,576		$	35,791,719


DISCLOSURE OF SUPPLEMENTAL CASH FLOW INFORMATION

Cash paid for interest	$	878,699		$	865,536

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

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

CONSOLIDATED SCHEDULE OF INVESTMENTS


			June 30, 2007
			Total Rentable
			Square Feet	June 30, 2007
			Unless Otherwise	(Unaudited)				December 31, 2006
	June 30, 2007		Indicated			Estimated Market				Estimated Market
Property Name	Ownership	City, State	(Unaudited)	Cost		Value		Cost		Value

OFFICES
750 Warrenville	WO	Lisle, IL	103,193	$	24,528,965	$	11,500,000	$	24,517,391	$	10,700,000
Summit@Cornell Oaks	WO	Beaverton, OR	72,109		12,348,341		13,000,000		12,091,490		12,500,000
Westpark	WO	Nashville, TN	97,199		11,203,261		12,800,000		11,033,804		128,000,000
Financial Plaza	WO	Brentwood, TN	98,049		12,356,996		13,200,000		12,333,152		13,500,000

		Offices % as of 6/30/2007	21%		60,437,563		50,500,000		59,975,837		49,500,000

APARTMENTS
Brookwood	WO	Atlanta, GA	240 Units		19,174,898		202,000,000		18,918,016		20,100,000
Dunhill Trace Apartments	WO	Raleigh, NC	250 Units		16,294,869		19,600,000		16,287,767		20,400,000
Broadstone Crossing	WO	Austin, TX	255 Units		22,706,166		23,100,000		—		—

		Apartments % as of 6/30/2007	27%		58,175,933		65,900,000		35,205,783		40,500,000

RETAIL
King’s Market	WO	Rosewell, GA	314,358		37,837,929		30,000,000		37,755,326		28,400,000
Hampton Towne Center	WO	Hampton, VA	174,540		18,046,331		26,100,000		18,042,611		26,000,000
White Marlin Mall	CJV	Ocean City, MD	186,016		15,742,511		23,000,000		15,538,799		22,900,000
Kansas City Portfolio	EJV	kansas City, KS; MO	487,660		293,027		293,027		7,816,531		3,422,747
Westminster Crossing East, LLC	CJV	Westminster, MD	89,890		12,393,585		18,061,712		12,358,340		17,744,568
CARS Preferred Equity	PE	Various	N/A		14,416,435		14,416,435		14,518,292		14,518,292

		Retail % as of 6/30/2007	46%		98,729,818		111,871,174		106,049,879		112,985,607

INDUSTRIAL
Smith Road	WO	Aurora, CO	277,930		—		—		11,286,560		14,300,000

		Industrial % as of 6/30/2007	0%		—		—		11,286,560		14,300,000

HOTEL
Portland Crown Plaza	CJV	Portland, OR	161 Rooms		8,952,123		16,400,000		8,940,820		15,100,000

		Hotel % as of 6/30/2007	7%		8,952,123		16,400,000		8,940,820		15,100,000

OTHER REAL ESTATE INVESTMENTS
Westminster East	Eloan	Westminster, MD			3,043,557		3,043,557		2,857,851		2,857,851

		Other Real Estate Investments % as of 6/30/2007	1%		3,043,557		3,043,557		2,857,851		2,857,851

Total Real Estate Investments as a percentage of net Assets as of 6/30/2007			103%	$	229,338,994	$	247,714,731	$	224,316,730	$	235,243,458

WO- Wholly Owned Investment
CJV- Consolidated Joint Venture
EJV- Joint Venture Investment accounted for under the equity method
PE- Preferred equity investments accounted for under equity method
Eloan- mezzanine loan accounted for under equity method

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
June 30, 2007 and 2006
(Unaudited)

Note 1: Summary of Significant Accounting Policies and Pronouncements

The accompanying unaudited consolidated financial statements of The Prudential Variable Contract Real Property Partnership (the “Partnership”) included herein have been prepared in accordance with the requirements of Form 10-Q and accounting principles generally accepted in the United States of America for interim financial information. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair statement have been included. Operating results for the six months ended June 30, 2007 are not necessarily indicative of the results that may be expected for the year ended December 31, 2007. For further information, refer to the audited consolidated financial statements and notes thereto included in each partner’s Annual Report on Form 10-K for the year ended December 31, 2006.

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

FASB Interpretation No. 46, “Consolidation of Variable Interest Entities”, (“FIN 46”) was issued in January 2003. In December 2003, FASB issued a revised interpretation of FIN 46 (“FIN 46-R”), which supersedes FIN 46. FIN 46-R defers the effective date for applying the provisions of FIN 46 for those companies currently accounting for their investments in accordance with the AICPA Audit and Accounting Guide, “Audits of Investment Companies” (“the Audit Guide”). In June 2007, the AICPA released the Statement of Position 07-1, Clarification of the Scope of the Audit and Accounting Guide Investment Companies and Accounting by Parent Companies and Equity Method Investors for Investments in Investment Companies and as a result, the FASB amended FIN 46-R to provide an exception for companies that apply the Audit Guide. The Partnership is within the scope of the Audit Guide, therefore, FIN46-R is not applicable.

In September 2006, the staff of the U.S. Securities and Exchange Commission, or “SEC”, issued Staff Accounting Bulletin, or “SAB”, No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements.” The interpretations in this SAB express the staff’s views regarding the process of quantifying financial statement misstatements. Specifically, the SEC staff believes that registrants must quantify the impact on current period financial statements of correcting all misstatements, including both those occurring in the current period and the effect of reversing those that have accumulated from prior periods. This SAB must be applied beginning with the first fiscal year ending after November 15, 2006, with early adoption encouraged. Since the Partnership’s method for quantifying financial statement misstatements already considers those occurring in the current period and the effect of reversing those that have accumulated from prior periods, the adoption of SAB No. 108 had no effect on the financial position and result of operations of the Partnership.

The Partnership adopted FASB Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes,” an Interpretation of FASB Statement No. 109 as of January 1, 2007. This interpretation prescribes a comprehensive model for how a partnership should recognize, measure, present, and disclose in its financial statements uncertain tax positions that the partnership has taken or expects to take on a tax return. The adoption of FIN 48 had no effect on the financial position and result of operations of the Partnership.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and requires additional disclosures about fair value measurements. This statement does not require any new fair value measurements, but the application of this statement could change current practices in determining fair value. The Partnership plans to adopt this guidance effective January 1, 2008. The Partnership is currently assessing the impact of SFAS No. 157 on the Partnership’s consolidated financial position and results of operations.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
June 30, 2007 and 2006
(Unaudited)

Note 1: Summary of Significant Accounting Policies and Pronouncements (continued)

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities,” including an amendment of FASB Statement No. 115. This statement provides companies with an option to report selected financial assets and liabilities at fair value. This statement is effective for fiscal years beginning after November 15, 2007 with early adoption permitted. The Partnership plans to adopt this guidance effective January 1, 2008. The Partnership is currently assessing the impact of SFAS No. 159 on its consolidated financial position and results of operations.

Note 2: Related Party Transactions

Pursuant to an investment management agreement, Prudential Investment Management, Inc. (“PIM”), which is an indirectly owned subsidiary of Prudential Financial Inc. (“PFI”), charges the Partnership a daily investment management fee at an annual rate of 1.25% of the average daily gross asset valuation of the Partnership. For the six months ended June 30, 2007 and 2006 investment management fees incurred by the Partnership were $1,640,443 and $1,505,088, respectively. For the three months ended June 30, 2007 and 2006 investment management fees incurred by the Partnership were $829,811 and $765,271, respectively.

The Partnership also reimburses PIM for certain administrative services rendered by PIM. The amounts incurred for the six months ended June 30, 2007 and 2006 were $58,082 and $73,465, respectively, and are classified as administrative expense in the Consolidated Statements of Operations. The amounts incurred for the three months ended June 30, 2007 and 2006 were $29,041 and $36,753, respectively, and are classified as administrative expense in the Consolidated Statements of Operations.

Note 3: Commitments and Contingencies

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
June 30, 2007 and 2006
(Unaudited)

Note 4: Financial Highlights


	For The Six Months Ended June 30,
	2007			2006			2005			2004			2003
Per Share(Unit) Operating Performance:
Net Asset Value, beginning of period	$	33.87		$	29.59		$	26.15		$	24.66		$	24.11
Income From Investment Operations:
Investment income, before management fee		1.08			0.94			0.78			0.67			0.79
Investment Management fee		(0.24	)		(0.22	)		(0.19	)		(0.17	)		(0.16	)
Net realized and unrealized gain (loss) on investments		0.96			1.86			0.76			0.39			(0.57	)

Net Increase in Net Assets Resulting from Operations		1.80			2.58			1.35			0.89			0.06


Net Asset Value, end of period	$	35.67		$	32.17		$	27.50		$	25.55		$	24.17


Total Return, before Management Fee (a):		6.05	%		9.49	%		5.90	%		4.37	%		0.88	%
Ratios/Supplemental Data:
Net Assets, end of period (in millions)	$	241		$	223		$	196		$	188		$	185
Ratios to average net assets (b):
Total Portfolio Level Expenses		0.77	%		0.73	%		0.73	%		0.70	%		0.65	%
Investment Income before Management Fee		3.19	%		3.13	%		2.96	%		2.71	%		3.27	%


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

		Net Investment Income + Net Realized and Unrealized Gains/(Losses)

		Beg. Net Asset Value + Time Weighted Contributions — Time Weighted Distributions

(b)		Average net assets are based on beginning of quarter net assets.

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

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

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

(a) Liquidity and Capital Resources

As of June 30, 2007, the Partnership’s liquid assets, consisting of cash and cash equivalents, were approximately $35.1 million, an increase of approximately $1.7 million from $33.4 million at December 31, 2006. The increase was primarily due to the disposition of the Partnership’s industrial property in Aurora, Colorado and retail property in Kansas City, Kansas, as described below, and the cash flows from the Partnership’s operating activities of approximately $7.4 million. Partially offsetting the increase was the acquisition of an apartment property, as discussed below. Sources of liquidity included net cash flow from property operations, sales and interest from short-term investments. The Partnership uses cash for its real estate investment activities and for its distributions to its partners. As of June 30, 2007, approximately 12.3% of the Partnership’s total assets consisted of cash and cash equivalents.

Dispositions for the six months ended June 30, 2007 included the sale of the Partnership’s industrial property located in Aurora, Colorado that resulted in net proceeds of approximately $14.6 million to the Account. In addition, the Partnership sold a retail center in Kansas City, Kansas, which resulted in net proceeds of $3.7 million after the repayment of debt.

Acquisition for the six months ended June 30, 2007 included the purchase of the Partnership’s apartment property located in Austin, Texas. In May, the Partnership invested $22.7 million to acquire a 225 unit garden apartment property located in Austin, Texas.

During the six months ended June 30, 2007, the Partnership spent approximately $1.0 million on capital improvements to various existing properties. Approximately $0.2 million was associated with leasing expenses at the office property in Beaverton, Oregon, approximately $0.3 million funded the renovation of an apartment property in Atlanta, Georgia, approximately $0.2 million was associated with capital improvements at the office properties in Brentwood, Tennessee and approximately $0.2 million was associated with leasing expenses at the retail property in Ocean City, Maryland. The remaining $0.1 million was associated with minor capital improvements and transaction costs related to leasing expenses of various other properties.

(b) Results of Operations

The following is a comparison of the Partnership’s results of operations for the six and three-month periods ended June 30, 2007, and 2006.

Net Investment Income Overview

The Partnership’s net investment income for the six months ended June 30, 2007 was approximately $5.7 million, an increase of $0.7 million from the prior year period. The office, apartment and retail sector investments posted increases of approximately $0.2 million, $0.1 million and $0.8 million, respectively, from the prior year period. Offsetting this increase was a decrease in net investment income in the industrial sector investment of approximately $0.4 million from the prior year period. In addition, other net investment income decreased approximately $0.1 million from the prior year period. The components of this net investment income are discussed below by property type.

The Partnership’s net investment income for the quarter ended June 30, 2007 was approximately $3.0 million, an increase of $0.7 million from the prior year period. The office, apartment and retail sector investments posted increases of $0.2 million, $0.2 million and $0.6 million, respectively, from the prior year period. Offsetting this increase was a decrease in net investment income in the industrial sector investment of approximately $0.3 million. In addition, other net investment income remained unchanged for the quarter ended June 30, 2007, from the prior year period. The components of this net investment income are discussed below by property type.

Valuation Overview

The Partnership recorded an aggregate net realized gain of approximately $0.8 million for the six months ended June 30, 2007, compared to a $0.1 million aggregate net realized gain for the prior year period. The aggregate net realized gain of approximately $0.8 million for the six months ended June 30, 2007 was attributable to the retail and industrial sector investments. The partnership recorded an aggregate net realized gain of approximately $0.4 million for the quarter ended June 30, 2007, compared to a $0.1 million aggregate net realized gain for the prior year period. The aggregate net realized gain of $ 0.4 million for the quarter ended June 30, 2007 was attributable to the retail sector investments as a result of the sale of the Partnership’s Kansas City, Kansas retail property on June 29, 2007. The components of these valuation gains and/or losses are discussed below by property type.

The Partnership recorded an aggregate net unrealized gain of approximately $5.7 million for the six months ended June 30, 2007, compared to an aggregate net unrealized gain of $12.8 million for the prior year period. The Partnership recorded an aggregate net unrealized gain of approximately $3.8 million for the quarter ended June 30, 2007, compared to an aggregate net unrealized gain of $6.2 million for the prior year period. The aggregate net unrealized gain for the six months and quarter ended June 30, 2007 was attributable to valuation gains in the office, apartment, retail and hotel sector investments. The components of these valuation gains and/or losses are discussed below by property type.

The following table presents a comparison of the Partnership’s sources of net investment income, and realized and unrealized gains or losses by investment type for the six and three-month periods ended June 30, 2007, and 2006.


	Six Months Ended June 30,						Three Months Ended June 30,
	2007			2006			2007			2006
*Net Investment Income:*

Office properties	$	1,846,551		$	1,651,536		$	994,036		$	827,689
Apartment properties		638,357			542,468			496,754			280,972
Retail properties		3,452,296			2,647,330			1,785,949			1,162,341
Industrial property		15,959			378,960			(97,602	)		183,027
Hotel property		526,401			533,403			270,729			255,102
Land		—			(43,508	)		—			—
Other (including interest income, investment mgt fee, etc.)		(782,525	)		(685,288	)		(441,225	)		(385,672	)

Total Net Investment Income	$	5,697,039		$	5,024,901		$	3,008,641		$	2,323,459


*Net Realized Gain (Loss) on Real Estate Investments:*

Apartment properties		—			70,689			—			70,689
Retail properties		413,834			—			382,035			—
Land		—			(2,919	)		—			—
Industrial property		345,832			—			(3,278	)		—

Total Net Realized Gain (Loss) on Real Estate Investments		759,666			67,770			378,757			70,689


*Net Unrealized Gain (Loss) on Real Estate Investments:*

Office properties		538,273			2,187,729			129,925			65,593
Apartment properties		2,429,850			1,005,664			2,572,930			1,077,910
Retail properties		1,713,199			5,186,762			79,368			5,167,766
Industrial property		—			622,797			—			(121,036	)
Hotel property		1,030,957			3,830,993			1,037,234			30,162

Total Net Unrealized Gain (Loss) on Real Estate Investments		5,712,279			12,833,945			3,819,457			6,220,395


Net Realized and Unrealized Gain (Loss) on Real Estate Investments	$	6,471,945		$	12,901,715		$	4,198,214		$	6,291,084

OFFICE PROPERTIES


	Net Investment		Net Investment		Unrealized			Unrealized
Six Months Ended	Income/(Loss)		Income/(Loss)		Gain/(Loss)			Gain/(Loss)			Occupancy			Occupancy
June 30,	2007		2006		2007			2006			2007			2006

Property
Lisle, IL	$	218,442	$	186,570	$	788,426		$	600,000			61	%		38	%
Brentwood, TN		554,533		489,855		(169,458	)		(132,371	)		100	%		100	%
Oakbrook Terrace, IL ⁽¹⁾		—		1,323		—			—			N/A			N/A
Beaverton, OR		513,915		466,066		243,150			1,120,100			89	%		76	%
Brentwood, TN		559,661		507,722		(323,845	)		600,000			100	%		100	%

	$	1,846,551	$	1,651,536	$	538,273		$	2,187,729


	Net Investment		Net Investment		Unrealized			Unrealized
Three Months Ended	Income/(Loss)		Income/(Loss)		Gain/(Loss)			Gain/(Loss)
June 30,	2007		2006		2007			2006

Property
Lisle, IL	$	148,241	$	88,167	$	(6,566	)	$	—
Brentwood, TN		280,705		261,856		(169,458	)		(21,464	)
Beaverton, OR		268,440		236,998		329,794			(12,943	)
Brentwood, TN		296,650		240,668		(23,845	)		100,000

	$	994,036	$	827,689	$	129,925		$	65,593


⁽¹⁾		The Oakbrook Terrace, Illinois office property was sold on June 8, 2005 but certain post-closing adjustments were recognized during the six months ended June 30, 2006.

Net Investment Income

Net investment income for the Partnership’s office properties was approximately $1.8 million for the six months ended June 30, 2007, an increase of $0.2 million from the prior year period. Net investment income for the Partnership’s office properties was approximately $1.0 million for the quarter ended June 30, 2007, an increase of $0.2 million from the prior year period. The increase for both the six and three month periods ended June 30, 2007 was primarily due to increased occupancy at the properties in Lisle, Illinois and Beaverton, Oregon and increased rents at the properties in Brentwood, Tennessee.

Unrealized Gain/(Loss)

The office properties owned by the Partnership recorded an aggregate net unrealized gain of approximately $0.5 million for the six months ended June 30, 2007, compared to an aggregate net unrealized gain of $2.2 million for the prior year period. The net unrealized gain of $0.5 million for the six months ended June 30, 2007 was primarily due to continued improving market conditions and increased occupancy at the properties in Lisle, Illinois and Beaverton, Oregon. Partially offsetting these unrealized gains were a net unrealized loss of approximately $0.2 million at the property in Brentwood, Tennessee due to capital improvements, and a net unrealized loss of approximately $0.3 million recorded at the office property in Brentwood, Tennessee due to weakening property fundamentals.

The office properties owned by the Partnership recorded an aggregate net unrealized gain of approximately $0.1 million during the quarter ended June 30, 2007, compared to an aggregate net unrealized gain of $0.1 million for the prior year period. The net unrealized gain of $0.1 million for the quarter ended June 30, 2007 was primarily due to continued improving market conditions at the property in Beaverton, Oregon. Partially offsetting these unrealized gains were unrealized losses recorded at the properties in Brentwood, Tennessee and Lisle, Illinois due to capital improvements.

APARTMENT PROPERTIES


									Realized /
	Net Investment		Net Investment			Unrealized			Unrealized
Six Months Ended	Income/(Loss)		Income/(Loss)			Gain/(Loss)			Gain/(Loss)		Occupancy			Occupancy
June 30,	2007		2006			2007			2006		2007			2006

Property
Atlanta, GA	$	154,369	$	236,936		$	(156,882	)	$	307,721		95	%		90	%
Raleigh, NC		250,994		315,532			(807,102	)		697,943		92	%		91	%
Gresham/Salem, OR ⁽¹⁾		—		(10,000	)		—			169		N/A			N/A
Jacksonville, FL ^{(2 )}		17,342		—			—			70,520		N/A			N/A
Austin, TX ⁽³⁾		215,652		—			3,393,834			—		94	%		N/A

	$	638,357	$	542,468		$	2,429,850		$	1,076,353


									Realized /
	Net Investment		Net Investment			Unrealized			Unrealized
Three Months Ended	Income/(Loss)		Income/(Loss)			Gain/(Loss)			Gain/(Loss)
June 30,	2007		2006			2007			2006

Property
Atlanta, GA	$	112,059	$	122,598		$	(16,117	)	$	377,910
Raleigh, NC		169,043		168,374			(804,787	)		700,000
Gresham/Salem, OR ⁽¹⁾		—		(10,000	)		—			169
Jacksonville, FL ⁽²⁾		—		—			—			70,520
Austin, TX ⁽³⁾		215,652		—			3,393,834			—

	$	496,754	$	280,972		$	2,572,930		$	1,148,599


⁽¹⁾		The Gresham, Oregon and Salem, Oregon apartment properties were sold on August 10, 2005 and March 10, 2005, respectively, but certain post-closing adjustments were recognized during the six and three month periods ended June 30, 2006.

⁽²⁾		The Jacksonville, Florida apartment property was sold on November 30, 2005 but certain post-closing adjustments were recognized during the six months ended June 30, 2007.

⁽³⁾		Net investment income for the six and three month periods ended June 30, 2007 reflects partial period results for the Austin, Texas apartment property that was acquired on May 8, 2007.

Net Investment Income

Net investment income for the Partnership’s apartment properties was approximately $0.6 million for the six months ended June 30, 2007, an increase of approximately $0.1 million from the prior year period. The increase in net investment income for the six month period ended June 30, 2007 was primarily due to the acquisition of the apartment property in Austin, Texas. Partially offsetting this increase in net investment income were increased operating expenses at the apartment properties in Raleigh, North Carolina and Atlanta, Georgia.

Net investment income for the Partnership’s apartment properties was approximately $0.5 million for the quarter ended June 30, 2007, an increase of approximately $0.2 million from the prior year period. The increase in net investment income for the three month period ended June 30, 2007 was primarily due to the acquisition of the apartment property in Austin, Texas. Partially offsetting this increase in net investment income were increased operating expenses at the apartment property in Atlanta, Georgia.

Total Realized and Unrealized Gain/Loss

The apartment properties owned by the Partnership recorded an aggregate net unrealized gain of approximately $2.4 million for the six months ended June 30, 2007, compared to an aggregate net realized and unrealized gain of approximately $1.1 million for the prior year period. The apartment properties owned by the Partnership recorded an aggregate net unrealized gain of approximately $2.6 million for the quarter ended June 30, 2007, compared to an aggregate net realized and unrealized gain of $1.1 million for the prior year period. The aggregate net unrealized gain for both the six and three month periods ended June 30, 2007 was primarily due to the acquisition of the apartment property in Austin, Texas at cost, which resulted in $3.4 million in valuation gains. Partially offsetting the aggregate net unrealized gain for both the six and three month periods ended June 30, 2007 were (a) unfavorable market conditions at the apartment property in Raleigh, North Carolina; and (b) capital improvements at the apartment property in Atlanta, Georgia that did not result in valuation gains.

RETAIL PROPERTIES


						Realized/
	Net Investment		Net Investment			Unrealized			Unrealized
Six Months Ended	Income/(Loss)		Income/(Loss)			Gain/Loss			Gain/(Loss)			Occupancy			Occupancy
June 30,	2007		2006			2007			2006			2007			2006

Property
Roswell, GA	$	1,051,609	$	1,039,049		$	1,537,398		$	614,547			89	%		95	%
Kansas City, KS; MO ⁽¹⁾		161,913		(113,990	)		413,834			(463,628	)		N/A			91	%
Hampton, VA		651,539		651,700			96,280			(105,132	)		100	%		100	%
Ocean City, MD		382,326		401,899			(202,378	)		151,010			77	%		84	%
Westminster, MD⁽²⁾		739,639		105,140			281,899			4,989,965			100	%		98	%
Westminster, MD ⁽³⁾		—		124,362			—			—			N/A			N/A
CARS Preferred Equity ⁽⁴⁾		465,270		439,170			—			—			N/A			N/A

	$	3,452,296	$	2,647,330		$	2,127,033		$	5,186,762


						Realized/
	Net Investment		Net Investment			Unrealized			Unrealized
Three Months Ended	Income/(Loss)		Income/(Loss)			Gain/(Loss)			Gain/(Loss)
June 30,	2007		2006			2007			2006

Property
Roswell, GA	$	516,128	$	507,500		$	(53,859	)	$	(59,867	)
Kansas City, KS; MO ⁽¹⁾		75,927		(310,551	)		382,035			(407,968	)
Hampton, VA		330,824		332,977			(3,720	)		(5,132	)
Ocean City, MD		235,767		275,398			(58,092	)		650,768
Westminster, MD⁽²⁾		375,427		105,140			195,039			4,989,965
Westminster, MD ⁽³⁾		—		—			—			—
CARS Preferred Equity ⁽⁴⁾		251,876		251,877			—			—

	$	1,785,949	$	1,162,341		$	461,403		$	5,167,766


⁽¹⁾		Net investment income (loss) for the six and three month periods ended June 30, 2007 reflects partial period results for the remaining retail property in Kansas City, Kansas that was sold on June 29, 2007. Net investment income for the six and three month periods ended June 30, 2006 reflects results for all four retail properties located in Kansas City, Kansas and Kansas City, Missouri, prior to the sale of three out of the four centers on May 15, 2006.

⁽²⁾		The Westminster, Maryland retail property was acquired on June 13, 2006.

⁽³⁾		Mortgage Loan Receivable (mortgage paid in full on March 3, 2006).

⁽⁴⁾		Net investment income for the six and three months ended June 30, 2006 reflects partial period results for the second funding of the Partnership’s preferred equity investment, which occurred on February 14, 2006.

Net Investment Income

Net investment income for the Partnership’s retail properties was approximately $3.5 million for the six months ended June 30, 2007, a net increase of $0.8 million from the prior year period. Net investment income for the Partnership’s retail properties was approximately $1.8 million for the quarter ended June 30, 2007, an increase of $0.6 million from the prior year period. The increase in net investment income for both the six and three month periods ended June 30, 2007 was primarily due to the additional net investment income generated by the Westminster, Maryland retail property that was acquired on June 13, 2006 and reduced expenses at the Kansas City, Kansas retail property.

Total Realized and Unrealized Gain/(Loss)

The retail properties owned by the Partnership recorded an aggregate net realized and unrealized gain of $2.1 million for the six months ended June 30, 2007, compared to a net unrealized gain of $5.2 million for the prior year period. The net unrealized gain for the six months ended June 30, 2007 was primarily due to continued investor demand at the retail properties in Roswell, Georgia and Westminster, Maryland. In addition, the Kansas City, Kansas retail property that was sold on June 29, 2007 recognized realized gains of approximately $0.4 million. These realized and unrealized gains were partially offset by an unrealized loss of approximately $0.2 million recorded at the retail property in Ocean City, Maryland due to capital expenses including tenant improvements and leasing commissions expanded in connection with recent leasing efforts.

The retail properties owned by the Partnership recorded an aggregate net realized and unrealized gain of $0.5 million for the quarter ended June 30, 2007, compared to an aggregate net unrealized gain of $5.2 million the prior year period. The unrealized gain for the quarter ended June 30, 2007 was primarily due to the sale of the Kansas City, Kansas retail property, as discussed above, and strengthening property fundamentals at the Westminster, Maryland retail property. These unrealized gains were partially offset by unrealized losses of approximately $0.1 million recorded at the retail properties in Roswell, Georgia and Ocean City, Maryland due to decreased occupancy and weakening property fundamentals, respectively.

INDUSTRIAL PROPERTY

Net Investment

Realized

Unrealized

Six Months Ended

Net Investment

Income/(Loss) 2006

Gain/(Loss)

Occupancy

June 30,

Income/(Loss) 2007

2007

2006

2007

2006

Property

Aurora, CO ⁽¹⁾

15,959

378,960

345,832

622,797

N/A

Net Investment

Realized

Unrealized

Three Months Ended

Income/(Loss)

Gain/(Loss)

June 30,

2007

2006

2007

2006

Property

Aurora, CO ⁽¹⁾

(97,602

)

183,027

(3,278

)

(121,036

)


⁽¹⁾		Net investment income (loss) for the quarter ended June 30, 2007 reflects partial period results for the Aurora, Colorado industrial property that was sold on February 7, 2007.

Net Investment Income/Loss

Net investment income for the Partnership’s industrial property was minimal for the six months ended June 30, 2007, a decrease of approximately $0.4 million from the prior year period. Net investment loss for the Partnership’s industrial property was $0.1 million for the quarter ended June 30, 2007, a decrease of approximately $0.3 million from the prior year period. The decrease in net investment income for both the six and three month periods ended June 30, 2007 was primarily due to the loss of rent and certain post closing adjustments at the property as a result of the sale on February 7, 2007.

Total Realized and Unrealized Gain/(Loss)

The industrial property owned by the Partnership recorded a realized gain of approximately $0.3 million for the six months ended June 30, 2007, compared to an unrealized gain of approximately $0.6 million for the prior year period. The realized gain for the six month period ended June 30, 2007 was due to the February 7, 2007 sale at a price above market value.

The industrial property owned by the Partnership recorded a minimal net realized loss for the quarter ended June 30, 2007, compared to a net unrealized loss of $0.1 million for the prior year period. The slight net realized loss for the quarter ended June 30, 2007 reflects certain post-closing adjustments.

HOTEL PROPERTY

Net Investment

Unrealized

Six Months Ended

Income/(Loss)

Gain/(Loss)

Occupancy

June 30,

2007

2006

2007

2006

2007

2006

Property

Lake Oswego, OR

526,401

533,403

1,030,957

3,830,993

Net Investment

Unrealized

Three Months Ended

Income/(Loss)

Gain/(Loss)

June 30,

2007

2006

2007

2006

Property

Lake Oswego, OR

270,729

255,102

1,037,234

30,162

Net Investment Income

Net investment income for the Partnership’s hotel property was $0.5 million for the six months ended June 30, 2007, unchanged from the prior year period. Net investment income for the Partnership’s hotel property was $0.3 million for the quarter ended June 30, 2007, also unchanged from the prior year period.

Unrealized Gain/(Loss)

The hotel property owned by the Partnership recorded an unrealized gain of $1.0 million for the six months ended June 30, 2007, compared to a net unrealized gain of $3.8 million for the prior year period. The hotel property owned by the Partnership recorded an unrealized gain of $1.0 million for the quarter ended June 30, 2007, compared to a minimal net unrealized gain during the prior year period. The net unrealized gain for both the six and three month periods ended June 30, 2007 reflected both the strengthening of market and property fundamentals.

Other

Other net investment loss deepened by $0.1 million for the six-month period ended June 30, 2007 from the prior year period. Other net investment income remained unchanged for the quarter ended June 30, 2007, compared to the prior year period. Other net investment income includes interest income from short-term investments, investment management fees, and portfolio level expenses.

(c) Inflation

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

Critical Accounting Policies

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

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

Valuation of Investments

Real Estate Investments – Real estate investments are shown at estimated market value in accordance with the terms of the Partnership’s contracts. Properties owned are initially recorded at the purchase price plus closing costs. Development costs and major renovations are capitalized as a component of cost, and routine maintenance and repairs are charged to expense as incurred. Real estate costs include the cost of acquired property, including all the tangible and intangible assets. Tangible assets include the value of all land, building and tenant improvements at the time of acquisition. Intangible assets include the value of any above and below market leases, in-place leases, and tenant relationships at the time of acquisition. Market value estimates are based upon property appraisal reports prepared by independent real estate appraisers (members of the Appraisal Institute or an equivalent organization) within a reasonable amount of time following acquisition of the real estate and no less frequently than annually thereafter. The Chief Real Estate Appraiser of Prudential Investment Management, or “PIM”, which is an indirectly owned subsidiary of Prudential Financial, Inc., is responsible for assuring that the valuation process provides independent and reasonable property market value estimates. American Appraisal Associates, or the “Appraisal Management Firm”, an entity not affiliated with PIM, has been appointed by PIM to assist the Chief Real Estate Appraiser in maintaining and monitoring the independence and the accuracy of the appraisal process. Unless a property is currently held for sale, the market value of real estate investments does not reflect the transaction sale costs, which may be incurred upon disposition of the real estate investments.

Unconsolidated real estate partnerships are valued at the Partnership’s equity in net assets as reflected in the partnership’s financial statements with properties valued as described above. Under the equity method, the investment is initially recorded at the original investment amount, plus or minus additional amounts invested or distributed, and is subsequently adjusted for the Partnership’s share of undistributed earnings or losses, including unrealized appreciation and depreciation, from the underlying entity.

The Partnership periodically enters into forward contracts to acquire, for a fixed price, real estate investments to be constructed in accordance with predetermined plans and specifications or that achieve a certain level of leasing. Where conditions precedent to funding have been met by its development partner, and the Partnership’s commitment to fund is firm, the amount of any unrealized gain or loss is recognized based upon the difference between the estimated investment’s market value as described above and the Partnership’s funding obligation. The funding obligation and related assets are recorded in the consolidated financial statements.

Land and development properties held for future development is carried at acquisition cost including soft costs incurred prior to development.

As described above, the estimated market value of real estate and real estate related assets is determined through an appraisal process. These estimated market values may vary significantly from the prices at which the real estate investments would sell, because market prices of real estate investments can only be determined by negotiation between a willing buyer and seller and could be material to the consolidated financial statements. Although the estimated market values represent subjective estimates, management believes that these estimated market values are reasonable approximations of market prices and that the aggregate estimated value of investments in real estate is fairly presented as of June 30, 2007, and 2006.

Other Estimates

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

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk – The Partnership’s exposure to market rate risk for changes in interest rates relates to approximately 28.00% of its investment portfolio as of June 30, 2007, which consists primarily of short-term fixed rate commercial paper and fixed and variable interest rate debt. The Partnership does not use derivative financial instruments. By policy, the Partnership places its investments with high quality debt security issuers, limits the amount of credit exposure to any one issuer, limits duration by restricting the term, and holds investments to maturity except under unusual circumstances.

The table below presents the amounts and related weighted interest rates of the Partnership’s cash equivalents and short-term investments at June 30, 2007:

Estimated Market Value

Weighted Average

Maturity

(millions)

Interest Rate

Cash and Cash equivalents

0-3 months

35.1

5.78

The table below discloses the Partnership’s debt as of June 30, 2007. All of the Partnership’s long-term debt bears interest at fixed rates and therefore the fair value of these instruments is affected by changes in market interest rates. The following table presents principal cash flows based upon maturity dates of the debt obligations and the related weighted-average interest rates by expected maturity dates for the fixed rate debt.


Debt (in $ thousands),																						Estimated
including current portion	2007			2008			2009			2010			2011			Thereafter			Total			Fair Value
Weighted Average Fixed Interest Rate		5.36	%		5.74	%		6.75	%		6.75	%		6.75	%		6.75	%		6.41	%
Fixed Rate	$	258		$	16,131		$	9,277		$	565		$	604		$	5,586		$	32,421		$	32,349
Variable Rate		—			—			—			—			—			—			—			—

Total Mortgage Loans Payable	$	258		$	16,131		$	9,277		$	565		$	604		$	5,586		$	32,421		$	32,349

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

Item 4. Controls and Procedures

In order to ensure that the information we must disclose in our filings with the SEC is recorded, processed, summarized, and reported on a timely basis, the Company’s management, including our Chief Executive Officer and Chief Financial Officer, have reviewed and evaluated the effectiveness of our disclosure controls and procedures, as defined in Exchange Act Rules 13a-15(e) and 15d-15(e), under the Securities Exchange Act of 1934, as amended as of June 30, 2007. Based on such evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of June 30, 2007, our disclosure controls and procedures were effective in timely alerting them to material information relating to us required to be included in our periodic SEC filings. There has been no change in our internal control over financial reporting during the quarter ended June 30, 2007, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1A. Risk Factors

You should carefully consider the risks described under “–Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2006. These risks could materially affect our business, results of operations or financial condition or cause our actual results to differ materially from those expected or those expressed in any forward looking statements made by or on behalf of the Company. These risks are not exclusive, and additional risks to which we are subject include, but are not limited to, the factors mentioned under “Forward-Looking Statements” above and the risks of our businesses described elsewhere in our Annual Report on Form 10-K and this Quarterly Report on Form 10-Q.

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

Contract owners participating in the Real Property Account have no voting rights with respect to the Real Property Account.

Item 6. Exhibits


			31.1			Section 302 Certification of the Chief Executive Officer.

			31.2			Section 302 Certification of the Chief Financial Officer.

			32.1			Section 906 Certification of the Chief Executive Officer.

			32.2			Section 906 Certification of the Chief Financial Officer.


			June 30, 2007
			(Unaudited)					December 31, 2006
					Estimated					Estimated
	Face Amount		Cost		Market Value			Cost		Market Value
CASH AND CASH EQUIVALENTS — Percentage of Net Assets						14.6	%				14.6	%

Federal Home Loan Bank, zero coupon bond, July 2, 2007	$	10,582,589	$	10,582,589	$	10,582,589		$	7,245,028	$	7,245,028
Federal Home Loan Bank, zero coupon bond, July 18, 2007		22,944,044		22,944,044		22,944,044			24,914,167		24,914,167


Total Cash Equivalents				33,526,633		33,526,633			32,159,195		32,159,195

Cash				1,551,943		1,551,943			1,240,337		1,240,337


Total Cash and Cash Equivalents			$	35,078,576	$	35,078,576		$	33,399,532	$	33,399,532



	By:	/s/ Scott D. Kaplan
		Scott D. Kaplan
		President and Director (Principal Executive Officer)


		Page
Forward Looking Statement Disclosure			3
Part I — Financial Information
Item 1.	Financial Statements (Unaudited)
A. PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT
	Statements of Net Assets – June 30, 2007 and December 31, 2006		4
	Statements of Operations – Six and Three Months Ended June 30, 2007 and 2006		4
	Statements of Changes in Net Assets – Six and Three Months Ended June 30, 2007 and 2006		4
	Notes to the Financial Statements of the Real Property Account		5
B. THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
	Consolidated Statements of Assets and Liabilities – June 30, 2007 and December 31, 2006		8
	Consolidated Statements of Operations – Six and Three Months Ended June 30, 2007 and 2006		9
	Consolidated Statements of Changes in Net Assets–Six Months Ended June 30, 2007 and 2006		10
	Consolidated Statements of Cash Flows – Six Months Ended June 30, 2007 and 2006		11
	Consolidated Schedules of Investments – June 30, 2007 and December 31, 2006		12
	Notes to Consolidated Financial Statements of the Partnership		14
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		27
Item 4.	Controls and Procedures		28
Part II — Other Information
Item 1A.	Risk Factors		28
Item 4.	Submission of Matters to a Vote of Security Holders		28
Item 6.	Exhibits		28
Signatures			29