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 March 31, 2007

OR

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

Commission file number 033-20018

PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY

in respect of

PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT

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

213 Washington Street, Newark, New Jersey 07102-2992
(Address of principal executive offices) (Zip Code)

(973) 802-6000

     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 NOo

     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):

     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

 

 

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

		Page
Forward Looking Statement Disclosure			3
Part I — Financial Information
Item 1. Financial Statements (Unaudited)
A. PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT
Statements of Net Assets – March 31, 2007 and December 31, 2006			4
Statements of Operations – Three Months Ended March 31, 2007 and 2006			4
Statements of Changes in Net Assets – Three Months Ended March 31, 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 – March 31, 2007 and December 31, 2006			8
Consolidated Statements of Operations – Three Months Ended March 31, 2007 and 2006			9
Consolidated Statements of Changes in Net Assets–Three Months Ended March 31, 2007 and 2006			10
Consolidated Statements of Cash Flows – Three Months Ended March 31, 2007 and 2006			11
Consolidated Schedules of Investments – March 31, 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			17
Item 3. Quantitative and Qualitative Disclosures About Market Risk			26
Item 4. Controls and Procedures			27
Part II — Other Information
Item 1A. Risk Factors			27
Item 4. Submission of Matters to a Vote of Security Holders			27
Item 6. Exhibits			27
Signatures			28

Forward-Looking Statement Disclosure

Some 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, may 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) economic, political, currency and other risks relating to our international operations; (11) regulatory or legislative changes; (12) adverse determinations in litigation or regulatory matters and our exposure to contingent liabilities, including in connection with our divestiture or winding down of businesses; (13) 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; (15) ineffectiveness of risk management policies and procedures in identifying, monitoring and managing risks; (15) effects of acquisitions, divestitures and restructurings, including possible difficulties in integrating and realizing the projected results of acquisitions; and (16) 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

STATEMENTS OF NET ASSETS

March 31, 2007 and December 31, 2006

		March 31, 2007
		(unaudited)				December 31, 2006
ASSETS
Investment in The Prudential Variable Contract Real Property Partnership		$	10,191,413			$	9,975,186
Net Assets		$	10,191,413			$	9,975,186
NET ASSETS, representing:
Equity of contract owners		$	7,672,279			$	7,511,015
Equity of Pruco Life Insurance Company of New Jersey			2,519,134				2,464,171
		$	10,191,413			$	9,975,186
Units outstanding			3,318,633				3,313,818
Portfolio shares held			294,526				294,526
Portfolio net asset value per share		$	34.60			$	33.87

STATEMENTS OF OPERATIONS

For the three months ended March 31, 2007 and 2006

		1/1/2007-3/31/2007				1/1/2006-3/31/2006
		(unaudited)				(unaudited)
INVESTMENT INCOME
Net investment income from Partnership operations		$	117,149			$	117,380
EXPENSES
Charges to contract owners for assuming mortality risk and expense risk and for administration			10,804				9,814
NET INVESTMENT INCOME			106,345				107,566
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net change in unrealized gain (loss) on investments from Partnership			83,865				287,365
Net realized gain (loss) on sale of investments from Partnership			15,213				(127	)
NET GAIN (LOSS) ON INVESTMENTS			99,078				287,238
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		$	205,423			$	394,804

STATEMENTS OF CHANGES IN NET ASSETS

For the three months ended March 31, 2007 and 2006

		1/1/2007-3/31/2007				1/1/2006-3/31/2006
		(unaudited)				(unaudited)
OPERATIONS
Net investment income		$	106,345			$	107,566
Net change in unrealized gain (loss) on investments in Partnership			83,865				287,365
Net realized gain (loss) on sale of investments in Partnership			15,213				(127	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS			205,423				394,804
CAPITAL TRANSACTIONS
Net contributions (withdrawals) by contract owners			8,935				(71,283	)
Net contributions (withdrawals) by Pruco Life Insurance Company of New Jersey			1,869				81,097
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS			10,804				9,814
TOTAL INCREASE (DECREASE) IN NET ASSETS			216,227				404,618
NET ASSETS
Beginning of period			9,975,186				8,924,959
End of period		$	10,191,413			$	9,329,577

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

NOTES TO THE FINANCIAL STATEMENTS OF

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 March 31, 2007 and for the three months ended March 31, 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 to 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 March 31, 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 Contributions (Withdrawals) by Contract Owners

Net contract owner contributions (withdrawals) for the real estate investment option in Pruco Life of New Jersey’s variable insurance and variable annuity products for the three months ended March 31, 2007 and 2006, were as follows:

		Three months ended
		March 31,
		(Unaudited)
		2007				2006
VAL		$	17,970			$	(41,721	)
VLI			(1,759	)			(11,950	)
SPVA			0				(17,223	)
SPVL			(7,276	)			(389	)
TOTAL		$	8,935			$	(71,283	)

Note 6: Partnership Distributions

As of March 31, 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 March 31, 2007 and December 31, 2006 were as follows:

		March 31, 2007				December 31, 2006
		(Unaudited)
Units Outstanding:			3,318,633				3,313,818
Unit Value:			2.68498 to 3.22309				2.63621 to 3.15740

Note 8: Financial Highlights

The range of total return for the three months ended March 31, 2007 and 2006 was as follows:

		Three months ended
		March 31,
		(Unaudited)
		2006				2007
Total Return		1.85% to 2.08%				4.21% to 4.44%

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

		March 31, 2007
		(Unaudited)				December 31, 2006
ASSETS
REAL ESTATE INVESTMENTS – At estimated market value:
Real estate and improvements (cost: 3/31/2007 - $188,136,622; 12/31/2006 - $199,124,056)		$	202,461,712			$	214,444,568
Real estate partnerships and preferred equity investments (cost: 3/31/2007 - $22,339,907; 12/31/2006 - $22,334,823)			17,977,922				17,941,039
Other real estate investments (cost: 3/31/2007 - $2,950,191; 12/31/2006 - $2,857,851)			2,950,191				2,857,851
Total real estate investments			223,389,825				235,243,458
CASH AND CASH EQUIVALENTS			50,136,851				33,399,532
OTHER ASSETS, NET			3,137,362				3,493,829
Total assets		$	276,664,038			$	272,136,819
LIABILITIES & PARTNERS’ EQUITY
INVESTMENT LEVEL DEBT		$	32,565,578			$	32,710,488
ACCOUNTS PAYABLE AND ACCRUED EXPENSES			2,614,096				3,091,930
DUE TO AFFILIATES			837,447				789,889
OTHER LIABILITIES			877,228				876,487
MINORITY INTEREST			5,890,980				5,751,441
Total liabilities		$	42,785,329			$	43,220,235
COMMITMENTS AND CONTINGENCIES
PARTNERS’ EQUITY			233,878,709				228,916,584
Total liabilities and partners’ equity		$	276,664,038			$	272,136,819
NUMBER OF SHARES OUTSTANDING AT END OF PERIOD			6,758,960				6,758,960
SHARE VALUE AT END OF PERIOD		$	34.60			$	33.87

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

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

		For the Three Months Ended March 31,
		2007				2006
INVESTMENT INCOME:
Revenue from real estate and improvements		$	6,488,231			$	5,858,589
Equity in income of real estate partnerships			299,380				391,255
Interest and equity income on mortgage and other loans receivable			—				125,510
Income from other real estate investments			92,340				—
Interest on short-term investments			531,674				463,767
Total investment income			7,411,625				6,839,121
INVESTMENT EXPENSES:
Operating			1,723,979				1,485,963
Investment management fee			810,632				739,816
Real estate taxes			511,886				526,103
Administrative			984,469				932,771
Interest expense			677,921				448,686
Minority interest			14,343				4,340
Total investment expenses			4,723,230				4,137,679
NET INVESTMENT INCOME			2,688,395				2,701,442
REALIZED AND UNREALIZED GAIN (LOSS) ON REAL ESTATE INVESTMENTS:
Net proceeds from real estate investments sold			14,649,241				(2,919	)
Less: Cost of real estate investments sold			11,286,691				—
Realization of prior years’ unrealized gain (loss) on real estate investments sold			3,013,440				—
NET GAIN (LOSS) REALIZED ON REAL ESTATE INVESTMENTS SOLD			349,110				(2,919	)
Change in unrealized gain (loss) on real estate investments			2,049,817				8,066,106
Less: Minority interest in unrealized gain (loss) on real estate investments			125,197				1,452,555
Net unrealized gain (loss) on real estate investments			1,924,620				6,613,551
NET REALIZED AND UNREALIZED GAIN (LOSS) ON REAL ESTATE INVESTMENTS			2,273,730				6,610,632
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		$	4,962,125			$	9,312,074

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

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

		For the Three Months Ended March 31,
		2007				2006
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS:
Net investment income		$	2,688,395			$	2,701,442
Net gain (loss) realized on real estate investments sold			349,110				(2,919	)
Net unrealized gain (loss) from real estate investments			1,924,620				6,613,551
Increase (decrease) in net assets resulting from operations			4,962,125				9,312,074
NET ASSETS — Beginning of period			228,916,584				205,402,851
NET ASSETS — End of period		$	233,878,709			$	214,714,925

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

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

		For the Three Months Ended March 31,
		2007				2006
CASH FLOWS FROM OPERATING ACTIVITIES:
Net increase in net assets from operations		$	4,962,125			$	9,312,074
Adjustments to reconcile net increase in net assets to net cash from operating activities
Net realized and unrealized loss (gain)			(2,273,730	)			(6,610,632	)
Amortization of deferred financing costs			238,710				—
Distributions in excess of (less than) equity in income of real estate partnerships’ operations			(5,084	)			(267,543	)
Minority interest in consolidated partnerships			14,343				4,340
Bad debt expense			281				52,358
(Increase) Decrease in accrued interest included in other real estate investments			(92,340	)			—
(Increase) decrease in:
Other assets			117,476				388,460
Increase (decrease) in:
Accounts payable and accrued expenses			(477,834	)			(160,061	)
Due to affiliates			47,558				(7,702	)
Other liabilities			741				135,024
Net cash flows from (used in) operating activities			2,532,246				2,846,318
CASH FLOWS FROM INVESTING ACTIVITIES:
Net proceeds from real estate investments sold			14,649,241				(2,919	)
Additions to real estate and improvements			(299,258	)			(162,701	)
Contributions to real estate partnerships			—				(7,289,487	)
Collection of mortgage loan receivable			—				4,277,769
Net cash flows from (used in) investing activities			14,349,983				(3,177,338	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on investment level debt			(144,910	)			(135,450	)
Net cash flows from (used in) financing activities			(144,910	)			(135,450	)
NET CHANGE IN CASH AND CASH EQUIVALENTS			16,737,319				(466,470	)
CASH AND CASH EQUIVALENTS — Beginning of period			33,399,532				45,467,485
CASH AND CASH EQUIVALENTS — End of period		$	50,136,851			$	45,001,015
DISCLOSURE OF SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest		$	724,038			$	438,372

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

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

										March 31, 2007
										Total Rentable
										Square Feet				March 31, 2007
										Unless Otherwise				(Unaudited)								December 31, 2006
		March 31, 2007								Indicated								Estimated Market								Estimated Market
Property Name		Ownership				City, State				(Unaudited)				Cost				Value				Cost				Value
OFFICES
750 Warrenville		WO				Lisle, IL					103,193			$	24,522,399			$	11,500,000			$	24,517,391			$	10,700,000
Summit @ Cornell Oaks		WO				Beaverton , OR					72,109				12,178,134				12,500,000				12,091,490				12,500,000
Westpark		WO				Nashville, TN					97,199				11,033,804				12,800,000				11,033,804				12,800,000
Financial Plaza		WO				Brentwood, TN					98,049				12,333,151				13,200,000				12,333,152				13,500,000
						Offices % as of 3/31/2007					21	%			60,067,488				50,000,000				59,975,837				49,500,000
APARTMENTS
Brookwood Apartments		WO				Atlanta, GA				240 Units					19,058,781				20,100,000				18,918,016				20,100,000
Dunhill Trace Apartments		WO				Raleigh, NC				250 Units					16,290,082				20,400,000				16,287,767				20,400,000
						Apartments % as of 3/31/2007					17	%			35,348,863				40,500,000				35,205,783				40,500,000
RETAIL
King’s Market		WO				Rosewell, GA					314,358				37,784,070				30,000,000				37,775,326				28,400,000
Hampton Towne Center		WO				Hampton, VA					174,540				18,042,611				26,100,000				18,042,611				26,000,000
White Marlin Mall		CJV				Ocean City, MD					186,016				15,556,300				22,900,000				15,538,779				22,900,000
Kansas City Portfolio		EJV				Kansas City, KS;MO					487,660				7,902,515				3,540,530				7,816,531				3,422,747
Westminster Crossing East, LLC		CJV				Westminster, MD					89,890				12,388,625				17,861,712				12,358,340				17,744,568
CARS Preferred Equity		PE				Various					N/A				14,437,392				14,437,392				14,518,292				14,518,292
						Retail % as of 3/31/2007					49	%			106,111,513				114,839,634				106,049,879				112,985,607
INDUSTRIAL
Smith Road		WO				Aurora, CO					277,930				—				—				11,286,560				14,300,000
						Industrial % as of 3/31/2007					0	%			—				—				11,286,560				14,300,000
HOTEL
Portland Crown Plaza		CJV				Portland, OR				161 Rooms					8,948,665				15,100,000				8,940,820				15,100,000
						Hotel % as of 3/31/2007					6	%			8,948,665				15,100,000				8,940,820				15,100,000
OTHER REAL ESTATE INVESTMENTS
Westminster East		Eloan				Westminster, MD									2,950,191				2,950,191				2,857,851				2,857,851
						Other Real Estate Investments % as of 3/31/2007					1	%			2,950,191				2,950,191				2,857,851				2,857,851
Total Real Estate Investments as a Percentage of Net Assets as of 3/31/2007											96	%		$	213,426,720			$	223,389,825			$	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 the equity method
Eloan — Mezzanine loan accounted for under the equity method

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

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
CONSOLIDATED SCHEDULE OF INVESTMENTS

						March 31, 2007
						(Unaudited)								December 31, 2006
										Estimated								Estimated
		Face Amount				Cost				Market Value				Cost				Market Value
CASH AND CASH EQUIVALENTS — Percentage of Net Assets											21.4	%							14.6	%
Federal Home Loan Bank, 0 coupon bond, April 2, 2007		$	9,258,740			$	9,258,740			$	9,258,740			$	7,245,028			$	7,245,028
Federal Home Loan Bank, 0 coupon bond, April 13, 2007			39,931,167				39,931,167				39,931,167				24,914,167				24,914,167
Total Cash Equivalents							49,189,907				49,189,907				32,159,195				32,159,195
Cash							946,944				946,944				1,240,337				1,240,337
Total Cash and Cash Equivalents						$	50,136,851			$	50,136,851			$	33,399,532			$	33,399,532

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF

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 three months ended March 31, 2007 are not necessarily indicative of the results that may be expected for the year ended December 31, 2007. For further information, refer to the audited consolidated financial statements and notes thereto included in each partner’s Annual Report on Form 10-K for the Year Ended December 31, 2006.

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

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

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

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” This Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and requires additional disclosures about fair value measurements. This Statement does not require any new fair value measurements, but the application of this Statement could change current practices in determining fair value. 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.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities,” including an amendment of FASB Statement No. 115. This statement provides partnerships with an option to report selected financial assets and liabilities at fair value. 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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
March 31, 2007 and 2006
(Unaudited)

Note 2: Related Party Transactions

Pursuant to an investment management agreement, Prudential Investment Management, Inc. (“PIM”), which is an indirect wholly-owned subsidiary of Prudential Financial Inc., 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 three months ended March 31, 2007 and 2006 investment management fees incurred by the Partnership were $810,632 and $739,816, respectively.

The Partnership also reimburses PIM for certain administrative services rendered by PIM. The amounts incurred for the three months ended March 31, 2007 and 2006 were $29,041 and $36,732, respectively, and are classified as administrative expense in the Consolidated Statements of Operations.

Note 3: Commitments and Contingencies

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

Purchase commitments include forward commitments without conditions waived, commitments to purchase real estate and/or fund additional expenditures on previously acquired properties and loan take out agreements. Certain purchases of real estate are contingent on a developer building the real estate according to plans and specifications outlined in the pre-sale agreement or the property achieving a certain level of leasing. It is anticipated that funding will be provided by operating cash flow, real estate investment sales and deposits from the Partnership.

As of March 31, 2007, the Partnership had the following outstanding purchase commitments:

		Commitments
Property Type		(000’s)
Other		$	20,805

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
March 31, 2007 and 2006
(Unaudited)

Note 4: Financial Highlights

		For The Three Months Ended March 31,
		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			0.52				0.50				0.36				0.35				0.39
Investment Management fee			(0.12	)			(0.11	)			(0.09	)			(0.09	)			(0.08	)
Net realized and unrealized gain (loss) on investments			0.33				0.95				0.36				(0.08	)			(0.49	)
Net Increase in Net Assets Resulting from Operations			0.73				1.34				0.63				0.18				(0.18	)
Net Asset Value, end of period		$	34.60			$	30.93			$	26.78			$	24.84			$	23.93
Total Return, before Management Fee (a):			2.53	%			4.89	%			2.79	%			1.10	%			(.45	%)
Ratios/Supplemental Data:
Net Assets, end of period (in millions)		$	234			$	215			$	191			$	183			$	183
Ratios to average net assets (b):
Total Portfolio Level Expenses			0.38	%			0.36	%			0.36	%			0.35	%			0.31	%
Investment Income before Management Fee			1.53	%			1.68	%			1.43	%			1.41	%			1.60	%

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 March 31, 2007, the Partnership’s liquid assets, consisting of cash and cash equivalents, were approximately $50.1 million, an increase of approximately $16.7 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, as described below, and the cash flows from the Partnership’s operating activities of approximately $2.5 million. Sources of liquidity included net cash flow from property operations, sales, financings 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 March 31, 2007, approximately 18.1% of the Partnership’s total assets consisted of cash and cash equivalents.

Dispositions for the three months ended March 31, 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.

During the three months ended March 31, 2007, the Partnership spent approximately $0.3 million on capital improvements to various existing properties. Approximately $0.1 million was associated with leasing expenses at the office property in Beaverton, Oregon and approximately $0.1 million funded the renovation of an apartment complex in Atlanta, Georgia. The remaining $0.1 million was associated with minor capital improvements and transaction costs associated with leasing expenses of various other properties.

(b) Results of Operations

The following is a comparison of the Partnership’s results of operations for the three-month periods ended March 31, 2007, and 2006.

Net Investment Income Overview

The Partnership’s net investment income for the quarter ended March 31, 2007 was approximately $2.7 million, unchanged from the prior year period. The retail sector investments posted an increase of approximately $0.2 million from the prior year period. Offsetting this increase was a decrease in net investment income in the apartment and industrial sector investments of approximately $0.1 million and $0.1 million, respectively, from the prior year period. Other net investment income remained unchanged for the quarter ended March 31, 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 $0.3 million for the quarter ended March 31, 2007, compared to a slight aggregate net realized loss for the prior year period. The net realized gain of approximately $0.3 million was attributable to the industrial sector investment.

The Partnership recorded an aggregate net unrealized gain of approximately $1.9 million for the quarter ended March 31, 2007, compared to an aggregate net unrealized gain of $6.6 million for the prior year period. The aggregate net unrealized gain for the quarter ended March 31, 2007 was attributable to valuation gains in the office and retail sector investments. Partially offsetting these gains was a net unrealized loss of approximately $0.1 million recorded in the apartment sector investments. In addition the hotel sector investment recorded a slight unrealized loss for the quarter ended March 31, 2007. 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 three-month periods ended March 31, 2007, and 2006.

		Three Months Ended March 31,
		2007				2006
Net Investment Income:
Office properties		$	852,515			$	823,847
Apartment properties			141,603				261,496
Retail properties			1,666,350				1,484,989
Industrial property			113,561				195,933
Hotel property			255,673				278,301
Land			—				(43,508	)
Other (including interest income, investment mgt fee, etc.)			(341,307	)			(299,616	)
Total Net Investment Income		$	2,688,395			$	2,701,442
Net Realized Gain (Loss) on Real Estate Investments:
Land		$	—			$	(2,919	)
Industrial property			349,110				—
Total Net Realized Gain (Loss) on Real Estate Investments			349,110				(2,919	)
Net Unrealized Gain (Loss) on Real Estate Investments:
Office properties			408,348				2,122,136
Apartment properties			(143,081	)			(72,246	)
Retail properties			1,665,629				18,996
Industrial property			—				743,833
Hotel property			(6,276	)			3,800,832
Total Net Unrealized Gain (Loss) on Real Estate Investments			1,924,620				6,613,551
Net Realized and Unrealized Gain (Loss) on Real Estate Investments		$	2,273,730			$	6,610,632

OFFICE PROPERTIES

		Net				Net
		Investment				Investment				Unrealized				Unrealized
Three Months Ended		Income/(Loss)				Income/(Loss)				Gain/(Loss)				Gain/(Loss)				Occupancy				Occupancy
March 31,		2007				2006				2007				2006				2007				2006
Property
Lisle, IL		$	70,201			$	98,403			$	794,992			$	600,000				61	%			38	%
Brentwood, TN			273,828				227,999				—				(110,907	)			100	%			93	%
Oakbrook Terrace, IL (1)			—				1,323				—				—				N/A				N/A
Beaverton, OR			245,475				229,068				(86,644	)			1,133,043				89	%			78	%
Brentwood, TN			263,011				267,054				(300,000	)			500,000				100	%			100	%
		$	852,515			$	823,847			$	408,348			$	2,122,136

Net Investment Income

Net investment income for the Partnership’s office properties was approximately $0.9 million for the quarter ended March 31, 2007, relatively unchanged from the prior year period.

Unrealized Gain/(Loss)

The office properties owned by the Partnership recorded an aggregate net unrealized gain of approximately $0.4 million during the quarter ended March 31, 2007, compared to an aggregate net unrealized gain of $2.1 million for the prior year period. The net unrealized gain of $0.4 million for the quarter ended March 31, 2007 was primarily due to continued improving market conditions and increased occupancy at the office property in Lisle, Illinois. Partially offsetting this unrealized gain were net unrealized losses of approximately $0.1 million recorded at the office property in Beaverton, Oregon due to capital expenses including tenant improvements and leasing commissions expended in connection with recent leasing efforts and $0.3 million recorded at the office property in Brentwood, Tennessee due to weakening property fundamentals.

APARTMENT PROPERTIES

		Net				Net
		Investment				Investment				Unrealized				Unrealized
Three Months Ended		Income/(Loss)				Income/(Loss)				Gain/(Loss)				Gain/(Loss)				Occupancy				Occupancy
March 31,		2007				2006				2007				2006				2007				2006
Property
Atlanta, GA		$	42,310			$	114,338			$	(140,765	)		$	(70,189	)			86	%			91	%
Raleigh, NC			81,951				147,158				(2,316	)			(2,057	)			95	%			93	%
Jacksonville, FL (1)			17,342				—				—				—				N/A				N/A
		$	141,603			$	261,496			$	(143,081	)		$	(72,246	)

Net Investment Income

Net investment income for the Partnership’s apartment properties was $0.1 million for the quarter ended March 31, 2007, a decrease of approximately $0.1 million from the prior year period. The decrease in net investment income was primarily due to decreased occupancy at the apartment property in Atlanta, Georgia and increased operating expenses at the apartment property in Raleigh, North Carolina.

Unrealized Gain/(Loss)

The apartment properties owned by the Partnership recorded an aggregate net unrealized loss of approximately $0.1 million for the quarter ended March 31, 2007, compared to an aggregate net unrealized loss of approximately $0.1 million for the prior year period. The aggregate net unrealized loss for the quarter ended March 31, 2007 was primarily due to capital expenditures for property improvements at the apartment properties in Atlanta, Georgia and Raleigh, North Carolina that did not translate into valuation gains.

RETAIL PROPERTIES

		Net				Net
		Investment				Investment				Unrealized				Unrealized
Three Months Ended		Income/(Loss)				Income/(Loss)				Gain/(Loss)				Gain/(Loss)				Occupancy				Occupancy
March 31,		2007				2006				2007				2006				2007				2006
Property
Roswell, GA		$	535,481			$	531,549			$	1,591,257			$	674,414				88	%			94	%
Kansas City, KS; MO (1)			85,986				196,561				31,798				(55,660	)			76	%			81	%
Hampton, VA			320,717				318,723				100,000				(100,000	)			100	%			100	%
Ocean City, MD			146,560				126,501				(144,286	)			(499,758	)			79	%			84	%
Westminster, MD (2)			364,212				—				86,860				—				100	%			N/A
Westminster, MD (3)			—				124,362				—				—				N/A				N/A
CARS Preferred Equity (4)			213,394				187,293				—				—				N/A				N/A
		$	1,666,350			$	1,484,989			$	1,665,629			$	18,996

Net Investment Income

Net investment income for the Partnership’s retail properties was approximately $1.7 million for the quarter ended March 31, 2007, an increase of approximately $0.2 million from the prior year period. The increase was mainly due to the additional net investment income received from the Westminster, Maryland retail property that was acquired on June 13, 2006. Partially offsetting this net investment income for the quarter were the loss of rents at the three out of four Kansas City, Kansas and Kansas City, Missouri retail properties that were sold on May 15, 2006 and interest income for the Westminster, Maryland mortgage loan receivable received for the prior year period.

Unrealized Gain/(Loss)

The retail properties owned by the Partnership recorded an aggregate net unrealized gain of $1.7 million for the quarter ended March 31, 2007, compared to a slight net unrealized gain for the prior year period. The unrealized gain for the quarter ended March 31, 2007 was primarily due to continued investor demand at the retail properties in Roswell, Georgia and Hampton, Virginia and strengthening property fundamentals at the remaining retail property in Kansas City, Kansas and Westminster, Maryland. These unrealized gains were partially offset by an unrealized loss of approximately $0.1 million recorded at the retail property in Ocean City, Maryland due to weakening property fundamentals.

INDUSTRIAL PROPERTY

		Net				Net
		Investment				Investment				Realized				Unrealized
Three Months Ended		Income/(Loss)				Income/(Loss)				Gain/(Loss)				Gain/(Loss)				Occupancy				Occupancy
March 31,		2007				2006				2007				2006				2007				2006
Property
Aurora, CO (1)		$	113,561			$	195,933			$	349,110			$	743,833				N/A				78	%

Net Investment Income

Net investment income for the Partnership’s industrial property was $0.1 million for the quarter ended March 31, 2007, a decrease of approximately $0.1 million from the prior year period. The decrease was primarily due to the loss of rent 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 net realized gain of approximately $0.3 million for the quarter ended March 31, 2007, compared to a net unrealized gain of approximately $0.7 million for the prior year period. The net realized gain for the quarter ended March 31, 2007 was due to the sale at a price above market value.

HOTEL PROPERTY

		Net				Net
		Investment				Investment				Unrealized				Unrealized
Three Months Ended		Income/(Loss)				Income/(Loss)				Gain/(Loss)				Gain/(Loss)				Occupancy				Occupancy
March 31,		2007				2006				2007				2006				2007				2006
Property
Lake Oswego, OR		$	255,673			$	278,301			$	(6,276	)		$	3,800,832				68	%			72	%

Net Investment Income

Net investment income for the Partnership’s hotel property was $0.3 million for the quarter ended March 31, 2007, unchanged from the prior year period.

Unrealized Gain/(Loss)

The hotel property owned by the Partnership recorded a slight unrealized loss for the quarter ended March 31, 2007, compared to a net unrealized gain of $3.8 million for the prior year period.

Other

Other net investment income remained unchanged for the quarter ended March 31, 2007 from 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 indirect wholly-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 March 31, 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 35.36% of its investment portfolio as of March 31, 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 March 31, 2007:

Estimated Market Value

Weighted Average

Maturity

(millions)

Interest Rate

Cash and Cash equivalents

0-3 months

$50.1

5.57%

     The table below discloses the Partnership’s debt as of March 31, 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			5.35	%			5.74	%			6.75	%			6.75	%			6.75	%			6.75	%			6.41	%
Fixed Rate		$	444			$	16,090			$	9,277			$	565			$	604			$	5,586			$	32,566			$	32,738
Variable Rate			—				—				—				—				—				—				—				—
Total Mortgage Loans Payable		$	444			$	16,090			$	9,277			$	565			$	604			$	5,586			$	32,566			$	32,738

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 March 31, 2007. Based on such evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of March 31, 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 March 31, 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.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
in respect of
Pruco Life of New Jersey Variable
Contract Real Property Account
(Registrant)