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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

(MARK ONE)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2004
------------------

OR

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

COMMISSION FILE NUMBER 33-20083

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

IN RESPECT OF

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY ACCOUNT
- --------------------------------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

NEW JERSEY 22-1211670
- -------------------------------- ---------------------------------
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)


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

(973) 802-6000
--------------------------------------------------
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)


INDICATE BY CHECK MARK WHETHER THE REGISTRANT: (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES [X] NO [ ]


- --------------------------------------------------------------------------------

INDICATE BY CHECK MARK WHETHER THE REGISTRANT IS AN ACCELERATED FILER (AS
DEFINED IN RULE 12B-2 OF THE EXCHANGE ACT) YES [ ] NO [X]


- --------------------------------------------------------------------------------

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THE PRUDENTIAL VARIABLE CONTRACT
REAL PROPERTY ACCOUNT
(REGISTRANT)


INDEX
-------


PAGE
----

Forward-Looking Statements................................................................................... 3

PART I--FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)
A THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY ACCOUNT

Statements of Net Assets--September 30, 2004 and December 31, 2003................................... 4

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

Statements of Changes in Net Assets--
Nine and Three Months Ended September 30, 2004 and 2003............................................. 4

Notes to the Financial Statements of the Real Property Account...................................... 5
B. THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

Consolidated Statements of Assets and Liabilities--
September 30, 2004 and December 31, 2003............................................................ 8

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

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

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

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

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

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

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

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

PART II--OTHER INFORMATION

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

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

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



2


FORWARD-LOOKING STATEMENTS

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


3



FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY ACCOUNT



STATEMENTS OF NET ASSETS
September 30, 2004 and December 31, 2003 SEPTEMBER 30, 2004
(UNAUDITED) DECEMBER 31, 2003
--------------- -----------------

ASSETS
Investment in The Prudential Variable Contract
Real Property Partnership ...................... $78,402,481 $73,648,634
----------- -----------
Net Assets ....................................... $78,402,481 $73,648,634
=========== ===========
NET ASSETS, representing:
Equity of contract owners ........................ $55,330,619 $53,573,623
Equity of the Prudential Insurance Company
of America ..................................... 23,071,862 20,075,011
----------- -----------
$78,402,481 $73,648,634
=========== ===========
Units outstanding ................................ 38,629,173 38,384,745
=========== ===========
Portfolio shares held ............................ 2,986,942 2,986,942
Portfolio net asset value per share .............. $ 26.25 $ 24.66

STATEMENTS OF OPERATIONS
For the nine and three months ended
September 30, 2004 and 2003 1/1/2004-9/30/2004 1/1/2003-9/30/2003 7/1/2004-9/30/2004 7/1/2003-9/30/2003
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
------------------- ------------------ ------------------ --------------------

INVESTMENT INCOME
Net investment income from
Partnership operations ........................... $ 2,293,970 $ 2,692,857 $ 807,541 $ 747,915
----------- ----------- ----------- -----------
EXPENSES
Charges to contract owners for assuming
mortality risk and expense risk and
for administration ............................. 322,951 318,604 110,489 107,090
----------- ----------- ----------- -----------
NET INVESTMENT INCOME ............................ 1,971,019 2,374,253 697,052 640,825
----------- ----------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net change in unrealized gain (loss)
on investments in Partnership .................. 2,459,877 (2,773,937) 1,265,423 (813,884)
Net realized gain (loss) on sale of
investments in Partnership ..................... 0 188,216 0 0
----------- ----------- ----------- -----------
NET GAIN (LOSS) ON INVESTMENTS ................... 2,459,877 (2,585,721) 1,265,423 (813,884)
----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS ............... $ 4,430,896 $ (211,468) $ 1,962,475 $ (173,059)
=========== =========== =========== ===========
STATEMENTS OF CHANGES IN NET ASSETS
For the nine and three months ended
September 30, 2004 and 2003 1/1/2004-9/30/2004 1/1/2003-9/30/2003 7/1/2004-9/30/2004 7/1/2003-9/30/2003
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
------------------- ------------------ ------------------ --------------------
OPERATIONS
Net investment income $ 1,971,019 $ 2,374,253 $ 697,052 $ 640,825
Net change in unrealized gain (loss) on
investments in Partnership 2,459,877 (2,773,937) 1,265,423 (813,884)
Net realized gain (loss) on sale of
investments in Partnership 0 188,216 0 0
----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING FROM
OPERATIONS 4,430,896 (211,468) 1,962,475 (173,059)
----------- ----------- ----------- -----------
CAPITAL TRANSACTIONS
Net withdrawals by contract owners (1,301,472) (824,304) (318,059) (528,774)
Net contributions (withdrawals) by The
Prudential Insurance Company of America 1,624,423 1,142,908 428,548 635,864
----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING FROM
CAPITAL TRANSACTIONS 322,951 318,604 110,489 107,090
----------- ----------- ----------- -----------
TOTAL INCREASE (DECREASE) IN
NET ASSETS 4,753,847 107,136 2,072,964 (65,969)
NET ASSETS
Beginning of period 73,648,634 74,450,070 76,329,517 74,623,175
----------- ----------- ----------- -----------
End of period $78,402,481 $74,557,206 $78,402,481 $74,557,206
=========== =========== =========== ===========




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


4


NOTES TO THE FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY ACCOUNT
SEPTEMBER 30, 2004
(UNAUDITED)

NOTE 1: GENERAL

The Prudential Variable Contract Real Property Account ("Account") was
established on November 20, 1986 by resolution of the Board of Directors of The
Prudential Insurance Company of America ("Prudential"), which is a wholly-owned
subsidiary of Prudential Financial, Inc. ("PFI") as a separate investment
account pursuant to New Jersey law and is registered under the Securities Act of
1933. The assets of the Account are segregated from Prudential's other assets.
The Account is used to fund benefits under certain variable life insurance and
variable annuity contracts issued by Prudential. These products are Variable
Appreciable Life ("PVAL and PVAL $100,000+ Face Value"), Discovery Plus
("PDISCO+"), and Variable Investment Plan ("VIP").

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 variable annuity contracts. The Account, along with
the Pruco Life Variable Contract Real Property Account and the Pruco Life of New
Jersey Variable Contract Real Property Account, are the sole investors in the
Partnership. These financial statements should be read in conjunction with the
financial statements of the Partnership.

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

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. BASIS OF ACCOUNTING

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

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

B. INVESTMENT IN PARTNERSHIP INTEREST

The investment in the Partnership is based on the Account's proportionate
interest of the Partnership's market value. At September 30, 2004 and December
31, 2003 the Account's interest in the Partnership was 40.6% or 2,986,942
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 THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

Prudential maintains a position in the Account for liquidity purposes, including
unit purchases and redemptions, Partnership share transactions, and expense
processing. The position does not affect contract owners' accounts or the
related unit values.


5



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 1.2%, 0.9%, 0.6% and 1.2% for PDISCO+, PVAL, PVAL $100,000 + face
value, and VIP, respectively. Mortality risk is that life insurance contract
owners may not live as long as estimated or annuitants may live longer than
estimated and expense risk is that the cost of issuing and administering the
policies may exceed related charges by Prudential. The mortality risk and
expense risk charges are assessed through reduction in unit values.

B. 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 PVAL and PVAL $100,000 + face value
are (1) state premium taxes; (2) sales charges, up to 0.50%, which are deducted
in order to compensate Prudential for the cost of selling the contract and (3)
transaction costs which are deducted from each premium payment to cover premium
collection and processing costs. Contracts are also subject to monthly charges
for the costs of administering the contract to compensate Prudential for the
guaranteed minimum death benefit risk. These charges are assessed through the
redemption of units.

C. DEFERRED SALES CHARGE

A deferred sales charge, applicable to PVAL and PVAL $100,000 + face value, and
not to exceed 50%, is imposed upon surrenders of certain variable life insurance
contracts to compensate Prudential 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. No sales charge will be imposed after the tenth
year of the contract. No sales charge will be imposed on death benefits.

Also a deferred sales charge is imposed upon the withdrawals of certain purchase
payments to compensate Prudential for sales and other marketing expenses for
PDISCO+ and VIP. The amount of any sales charge will depend on the amount
withdrawn and the number of contract years that have elapsed since the contract
owner or annuitant made the purchase payments deemed to be withdrawn. No sales
charge is made against the withdrawal of investment income. A reduced sales
charge is imposed in connection with the withdrawal of a purchase payment to
effect an annuity if three or more contract years have elapsed since the
contract date, unless the annuity effected is an annuity certain. No sales
charge is imposed upon death benefit payments or upon transfers made between
subaccounts. A deferred sales charge is assessed through the redemption of
units.

D. PARTIAL WITHDRAWAL CHARGE

A charge is imposed by Prudential on partial withdrawals of the cash surrender
value for PVAL and PVAL $100,000 + face value. A charge equal to the lesser of
$15 or 2% will be made in connection with each partial withdrawal of the cash
surrender value of a contract. A charge is assessed through the redemption of
units.

E. ANNUAL MAINTENANCE CHARGE

An annual maintenance charge, applicable to PDISCO+ and VIP, of $30 will be
deducted if and only if the contract fund is less than $10,000 on a contract
anniversary or at the time a full withdrawal is effected, including a withdrawal
to effect an annuity. The charge is made by reducing accumulation units credited
to a contract owner's account.

NOTE 4: TAXES

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

6



NOTE 5: NET WITHDRAWALS BY CONTRACT OWNERS


Net contract owner withdrawals for the real estate investment option in The
Prudential Insurance Company of America's variable insurance and variable
annuity products for the nine and three months ended September 30, 2004 and
2003, were as follows:




NINE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2004 2003 2004 2003
---------- -------- -------- --------
(UNAUDITED) (UNAUDITED)

PDISCO+/VIP $ 150,912 $391,174 $(36,788) $261,122
PVAL/PVAL $100,000+
FACE VALUE 1,150,560 433,130 354,847 267,652
---------- -------- -------- --------
TOTAL $1,301,472 $824,304 $318,059 $528,774
========== ======== ======== ========


NOTE 6: PARTNERSHIP DISTRIBUTIONS

As of September 30, 2004, the Partnership had made no current year
distributions. For the year ended December 31, 2003, the Partnership made
distributions of $6.9 million. The Prudential Account's share of these
distributions was $2.5 million.

NOTE 7: UNIT INFORMATION

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

SEPTEMBER 30, 2004
(UNAUDITED) DECEMBER 31, 2003
------------------ ------------------
UNITS OUTSTANDING: 38,629,173 38,384,745
UNIT VALUE: 1.93965 to 2.10636 1.83832 to 1.98753

NOTE 8: FINANCIAL HIGHLIGHTS


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

NINE MONTHS ENDED
SEPTEMBER 30,
2004 2003
------------ ------------
(UNAUDITED)

TOTAL RETURN 5.51% to 5.98% -0.75% to -0.31%


7



THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES


SEPTEMBER 30, 2004
(UNAUDITED) DECEMBER 31, 2003
------------------ ------------------

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

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


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


8



THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)


NINE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------------------- ---------------------------------
2004 2003 2004 2003
------------ ------------ ------------ ------------

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


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


9



THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
(UNAUDITED)


NINE MONTHS ENDED SEPTEMBER 30,
2004 2003
------------ ------------

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


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


10



THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)


NINE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, 2004 SEPTEMBER 30, 2003
--------------------- -----------------

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

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

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

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

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


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


11


THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

CONSOLIDATED SCHEDULES OF INVESTMENTS



TOTAL
RENTABLE
SQUARE FEET SEPTEMBER 30, 2004
UNLESS (UNAUDITED) DECEMBER 31, 2003
OTHERWISE ------------------------ --------------------------
INDICATED ESTIMATED ESTIMATED
PROPERTY NAME OWNERSHIP CITY, STATE (UNAUDITED) COST MARKET VALUE COST MARKET VALUE
- ------------- ----------- ------------- ----------- -------- ------------ ----------- -----------

REAL ESTATE INVESTMENTS

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

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


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

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



12




THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

CONSOLIDATED SCHEDULES OF INVESTMENTS



SEPTEMBER 30, 2004
(UNAUDITED) DECEMBER 31, 2003
------------------------- --------------------------
FACE ESTIMATED ESTIMATED
AMOUNT COST MARKET VALUE COST MARKET VALUE
---------- ----------- ----------- ----------- ------------

CASH AND CASH EQUIVALENTS--
Federal Home Loan Mortgage Corp., 4.621%, October 1, 2004 ..... $ 2,900,000 $ 2,901,350 $ 2,901,350 $ -- $ --
Federal Home Loan Bank, 10.159%, October 1, 2004 .............. 9,625,000 9,624,599 9,624,599 -- --
Federal National Mortgage Association, 10.205%, October 1, 2004 5,000,000 4,996,289 4,996,289 -- --
Federal National Mortgage Association, 1.746%, November 4, 2004 6,700,000 6,686,242 6,686,242 -- --
Federal National Mortgage Assoc., 1.06%, February 4, 2004 ..... 5,974,000 -- -- 5,967,907 5,967,907
Federal Home Loan Mortgage Corp., 0.88%, January 2, 2004 ...... 12,331,000 -- -- 12,330,520 12,330,520
----------- ----------- ----------- -----------
TOTAL CASH EQUIVALENTS ........................................ 24,208,480 24,208,480 18,298,427 18,298,427
CASH .......................................................... 1,211,479 1,211,479 603,387 603,387
----------- ----------- ----------- -----------
TOTAL CASH AND CASH EQUIVALENTS ............................... $25,419,959 $25,419,959 $18,901,814 $18,901,814
=========== =========== =========== ===========
PERCENTAGE OF NET ASSETS ...................................... 13.1% 10.4%




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


13



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF

PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

SEPTEMBER 30, 2004 AND 2003

(UNAUDITED)

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

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

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

NOTE 2: RELATED PARTY TRANSACTIONS

Pursuant to an investment management agreement, Prudential Investment
Management, L.L.C. ("PIM") charges the Partnership a daily investment management
fee at an annual rate of 1.25% of the average daily gross asset valuation of the
Partnership. For the nine months ended September 30, 2004 and 2003 investment
management fees incurred by the Partnership were $1,958,091 and $1,838,933
respectively. For the three months ended September 30, 2004 and 2003 investment
management fees incurred by the Partnership were $674,159 and $652,741
respectively.

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

NOTE 3: FORWARD CONTRACTS OBLIGATIONS

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

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


14



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF

PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

SEPTEMBER 30, 2004 AND 2003

(UNAUDITED)

NOTE 4: COMMITMENTS AND CONTINGENCIES

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

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

NOTE 5: FINANCIAL HIGHLIGHTS



FOR THE NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------------------------------------
2004 2003 2002 2001 2000
------ ------ ------ ------ ------

PER SHARE(UNIT) OPERATING PERFORMANCE:
Net Asset Value, beginning of period .......................... $24.66 $24.11 $23.82 $22.74 $20.86
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Investment income, before management fee ...................... 1.04 1.12 1.20 1.25 1.23
Management fee ................................................ (0.27) (0.24) (0.23) (0.22) (0.21)
Net realized and unrealized gain (loss) on investments ........ 0.82 (0.84) (0.85) (0.00) 0.05
------ ------ ------ ------ ------
Net Increase in Net Assets Resulting from Operations ....... 1.59 0.04 0.12 1.03 1.07
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD ................................ $26.25 $24.15 $23.94 $23.77 $21.93
====== ====== ====== ====== ======
TOTAL RETURN, BEFORE MANAGEMENT FEE (a): ...................... 7.58% 1.15% 1.44% 5.56% 6.16%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (in millions) ....................... $193 $185 $188 $216 $213
Ratios to average net assets (b):
Management Fee ........................................ 1.06% 1.00% 0.95% 0.97% 0.96%
Investment Income, before Management Fee .............. 4.13% 4.62% 5.15% 5.56% 5.80%



(a) Total Return, before management fee is calculated by linking quarterly
returns which are calculated using the formula below:
Net Investment Income + Net Realized and Unrealized Gains/(Losses)
-----------------------------------------------------------------------
Beginning Net Asset Value + Time Weighted Contributions -- Time Weighted
Distributions

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


15



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

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

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

(A) LIQUIDITY AND CAPITAL RESOURCES

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

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

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

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

(B) RESULTS OF OPERATIONS

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


16




SEPTEMBER 30, 2004 VS. SEPTEMBER 30, 2003


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



NINE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------------------- ---------------------------------
2004 2003 2004 2003
------------ ------------ ------------ ------------

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


NET INVESTMENT INCOME OVERVIEW

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

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



17



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

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

VALUATION OVERVIEW

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

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

OFFICE PORTFOLIO


NET NET
INVESTMENT INVESTMENT UNREALIZED UNREALIZED
INCOME INCOME GAIN/(LOSS) GAIN/(LOSS) OCCUPANCY OCCUPANCY
PROPERTY 09/30/04 09/30/03 09/30/04 09/30/03 09/30/04 09/30/03
- ------------ ----------- ----------- ------------ ------------ --------- ---------

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


NET INVESTMENT INCOME


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


18


UNREALIZED GAIN/LOSS

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

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

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

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

APARTMENT COMPLEXES


NET NET
INVESTMENT INVESTMENT UNREALIZED UNREALIZED
INCOME INCOME GAIN/(LOSS) GAIN/(LOSS) OCCUPANCY OCCUPANCY
PROPERTY 09/30/04 09/30/03 09/30/04 09/30/03 09/30/04 09/30/03
- ------------ ----------- ----------- ------------ ------------ --------- ---------

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


NET INVESTMENT INCOME


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

UNREALIZED GAIN/LOSS


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


19


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

RETAIL PROPERTIES


NET NET
INVESTMENT INVESTMENT UNREALIZED UNREALIZED
INCOME INCOME GAIN/(LOSS) GAIN/(LOSS) OCCUPANCY OCCUPANCY
PROPERTY 09/30/04 09/30/03 09/30/04 09/30/03 09/30/04 09/30/03
- ------------ ----------- ----------- ------------ ------------ --------- ---------

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


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

NET INVESTMENT INCOME


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

UNREALIZED GAIN/LOSS


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

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


20



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

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


INDUSTRIAL PROPERTIES



NET NET UNREALIZED/ UNREALIZED/
INVESTMENT INVESTMENT REALIZED REALIZED
INCOME INCOME GAIN/(LOSS) GAIN/(LOSS) OCCUPANCY OCCUPANCY
PROPERTY 09/30/04 09/30/03 09/30/04 09/30/03 09/30/04 09/30/03
- ------------ ----------- ----------- ------------ ------------ --------- ---------

YEAR TO DATE
Aurora, CO ................... $ 510,737 $ 527,986 $ 12,745 $(1,021,330) 88% 79%
Bolingbrook, IL .............. 2,603 (146) -- -- Sold September 2002
Salt Lake City, UT ........... (1,500) 13,833 -- 466,061 Sold January 2003
----------- ----------- ----------- -----------
$ 511,840 $ 541,673 $ 12,745 $ (555,269)
----------- ----------- ----------- -----------
QUARTER TO DATE
Aurora, CO ................... $ 191,299 $ 119,414 $ (696) $ (313,366)
Bolingbrook, IL .............. -- -- -- --
Salt Lake City, UT ........... (160) (1,958) -- --
----------- ----------- ----------- -----------
$ 191,139 $ 117,456 $ (696) $ (313,366)
----------- ----------- ----------- -----------


NET INVESTMENT INCOME

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

UNREALIZED GAIN/LOSS

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

REALIZED GAIN

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


21




HOTEL PROPERTY
NET NET
INVESTMENT INVESTMENT UNREALIZED UNREALIZED
INCOME INCOME GAIN/(LOSS) GAIN/(LOSS) OCCUPANCY OCCUPANCY
PROPERTY 09/30/04 09/30/03 09/30/04 09/30/03 09/30/04 09/30/03
- ------------ ---------- ----------- ---------- ------------ --------- ---------

YEAR TO DATE
- ------------
Lake Oswego, OR* $402,509 N/A $ 27,966 N/A 76% N/A
QUARTER TO DATE
- --------------
Lake Oswego, OR* $226,826 N/A $144,094 N/A



* Hotel purchased in December 2003

NET INVESTMENT INCOME


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

UNREALIZED GAIN/LOSS

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

OTHER

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

(C) INFLATION

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

CRITICAL ACCOUNTING POLICIES

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

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

VALUATION OF INVESTMENTS

REAL ESTATE INVESTMENTS -- The Partnership's investments in real estate are
initially carried at their purchase price. Subsequently, real estate investments
are reported at their estimated market values based upon appraisal reports
prepared by independent real estate appraisers (members of the Appraisal
Institute or an equivalent organization) within a reasonable amount of time
following acquisition of the real estate and no less


22


frequently than annually thereafter, with independent updates quarterly. The
Chief Real Estate Appraiser of Prudential Investment Management ("PIM") is
responsible to assure that the valuation process provides objective and
reasonable market value estimates.

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

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

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

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

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


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

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

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


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




DEBT (IN $ THOUSANDS), 10/1/2004- ESTIMATED
INCLUDING CURRENT PORTION 12/31/2004 2005 2006 2007 2008 THEREAFTER TOTAL FAIR VALUE
- ------------------------- --------- ----- ---- ----- ----- ---------- ----- ----------

Average Fixed Interest Rate...... 5.07% 5.67% 5.20% 5.18% 5.00% 6.75% 6.24%
Fixed Rate....................... $185 $774 $8,479 $588 $26,091 $16,034 $52,151 $53,547
---------------------------------------------------------------------------------
Total Mortgage Loans Payable..... $185 $774 $8,479 $588 $26,091 $16,034 $52,151 $53,547
---------------------------------------------------------------------------------


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


23



ITEM 4. CONTROLS AND PROCEDURES

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

PART II -- OTHER INFORMATION

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS


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

ITEM 6. EXHIBITS


(A) EXHIBITS

2. Not applicable.

3.1 Amended Charter of The Prudential Insurance Company of America,
filed as Exhibit 3.1 to Form 10-K, Registration Statement No.
33-20083-01, filed March 31, 2003, and incorporated herein by
reference.

3.2 Amended By-Laws of The Prudential Insurance Company of America,
filed as Exhibit 3.2 to Form 10-K, Registration Statement No.
33-20083-01, filed March 31, 2003, and incorporated herein by
reference.

3.3 Resolution of the Board of Directors establishing The Prudential
Variable Contract Real Property Account, filed as Exhibit (3C) to
Form S-1, Registration Statement No. 33-20083, filed February 10,
1988, and incorporated herein by reference.

4.1 Revised Individual Variable Annuity Contract filed as Exhibit (4)(l)
to Post-Effective Amendment No. 25 to Form N-4, Registration
Statement No. 2-80897, filed April 27, 1999, and incorporated herein
by reference.

4.2 Discovery Plus Contract, filed as Exhibit (4)(a) to Post-Effective
Amendment No. 13 to Form N-4, Registration Statement No. 33-25434,
filed April 24, 1998, and incorporated herein by reference.

4.3 Custom VAL (previously named Adjustable Premium VAL) Life Insurance
Contracts with fixed death benefit, filed as Exhibit 1.A.(5) of Form
S-6, Registration Statement No. 33-25372, filed November 4, 1988,
and incorporated herein by reference.

4.4 Custom VAL (previously named Adjustable Premium VAL) Life Insurance
Contracts with variable death benefit, filed as Exhibit 1.A.(5) to
Form S-6, Registration Statement No. 33-25372, filed November 4,
1988, and incorporated herein by reference.

4.5 Variable Appreciable Life Insurance Contracts with fixed death
benefit, filed as Exhibit 1.A.(5) to Pre-Effective Amendment No. 1
to Form S-6, Registration Statement No. 33-20000, filed June 15,
1988, and incorporated herein by reference.

4.6 Variable Appreciable Life Insurance Contracts with variable death
benefit, filed as Exhibit 1.A.(5) to Pre-Effective Amendment No. 1
to Form S-6, Registration Statement No. 33-20000, filed June 15,
1988, and incorporated herein by reference.

24


9. None.

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

10.2 Partnership Agreement of The Prudential Variable Contract Real
Property Partnership filed as Exhibit (10C) to Pre-Effective
Amendment No. 1 to Form S-1, Registration No. 33-20083, filed May 2,
1988, and incorporated herein by reference.

11. Not applicable.

12. Not applicable.

16. None.

18. None.

22. Not applicable.

23. None.

24. Not applicable.

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.

(b) REPORT ON FORM 8-K

None.


25





SIGNATURES

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


THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
IN RESPECT OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY ACCOUNT
- --------------------------------------------------------------------
(REGISTRANT)


Date: November 15, 2004 By: /s/ Richard J. Carbone
-------------- ----------------------
Richard J. Carbone
Chief Financial Officer


26