<PAGE>
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 [FEE REQUIRED]
For the quarterly period ended September 30, 1998
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- --- SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
Commission file number 33-86780
PRUCO LIFE INSURANCE COMPANY
in respect of
PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Arizona 22-1944557
- ------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
213 Washington Street, Newark, New Jersey 07102-2992
----------------------------------------------------
(Address of principal executive offices) (Zip Code)
(800) 445-4571
----------------------------------------------------
(Registrant's Telephone Number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO
--- ---
<PAGE>
PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT
(Registrant)
Page
----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
A. PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT
Statements of Net Assets - September 30, 1998 and
December 31, 1997 3
Statements of Operations and Changes In Net Assets -
Nine Months Ended September 30, 1998 and 1997 3
Notes to the Financial Statements 4
B. THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
Statements of Assets and Liabilities - September 30,
1998 and December 31, 1997 6
Statements of Operations - Nine and Three Months Ended
September 30, 1998 and 1997 7
Statements of Changes in Net Assets - Nine Months Ended
September 30, 1998 and Year Ended December 31, 1997 8
Statements of Cash Flows - Nine Months Ended September
30, 1998 and 1997 9
Schedule of Investments - September 30, 1998 and
December 31, 1997 10
Notes to the Financial Statements 13
Per Share Information 14
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 15
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 18
Item 2. Changes in Securities 18
Item 3. Defaults Upon Senior Securities 18
Item 4. Submission of Matters to a Vote of Security Holders 18
Item 5. Other Information 18
Item 6. Exhibits and Reports on Form 8-K 18
Signature Page 19
2
<PAGE>
FINANCIAL STATEMENTS OF
PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT
STATEMENTS OF NET ASSETSMENT OF NET ASSETS
<TABLE>
<CAPTION>
September 30, 1998
(Unaudited) December 31, 1997
----------------------- ------------------------
<S> <C> <C>
Investment in shares of The Prudential Variable Contract
Real Property Partnership (Note 3) $ 115,859,394 $ 109,495,293
----------------------- ------------------------
----------------------- ------------------------
NET ASSETS, representing:
Equity of Contract Owners (Note 4) $ 85,409,649 $ 86,228,329
Equity of Pruco Life Insurance Company 30,449,745 23,266,964
----------------------- ------------------------
$ 115,859,394 $ 109,495,293
----------------------- ------------------------
----------------------- ------------------------
<CAPTION>
STATEMENTS OF OPERATIONS AND CHANGES IN NET ASSETS
Nine Months Ended
September 30,
(Unaudited)
-----------------------------------------------------
1998 1997
----------------------- ------------------------
<S> <C> <C>
INVESTMENT INCOME:
Net Investment Income from Partnership Operations $ 5,510,557 $ 5,671,569
EXPENSES:
Charges to Contract Owners for Assuming Mortality Risk and
Expense Risk and for Administration (Note 5) 400,533 405,209
----------------------- ------------------------
NET INVESTMENT INCOME 5,110,024 5,266,360
----------------------- ------------------------
Net Change in Unrealized Gain on Investments in Partnership 807,887 2,997,746
Net Realized Gain (Loss) on Sale of Investments in Partnership 45,656 (134,194)
----------------------- ------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 5,963,568 $ 8,129,912
----------------------- ------------------------
----------------------- ------------------------
CAPITAL TRANSACTIONS:
Net Withdrawals by Contract Owners (Note 6) (5,233,959) (6,734,009)
Net Contributions by Pruco Life Insurance Company 5,634,492 7,139,218
----------------------- ------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM CAPITAL TRANSACTIONS 400,533 405,209
----------------------- ------------------------
TOTAL INCREASE IN NET ASSETS $ 6,364,101 $ 8,535,121
NET ASSETS:
Beginning of period $ 109,495,293 $ 98,385,259
----------------------- ------------------------
End of period $ 115,859,394 $ 106,920,380
----------------------- ------------------------
----------------------- ------------------------
</TABLE>
3
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT
For the Period Ended September 30, 1998
NOTE 1: GENERAL
Pruco Life Variable Contract Real Property Account (the "Real Property Account")
was established on August 27, 1986 and commenced business September 5, 1986.
Pursuant to Arizona law, the Real Property Account was established as a separate
investment account of Pruco Life Insurance Company ("Pruco Life"), a
wholly-owned subsidiary of The Prudential Insurance Company of America
("Prudential"). The assets of the Real Property Account are segregated from
Pruco Life's other assets. The Real Property Account is used to fund benefits
under certain variable life insurance and variable annuity contracts issued by
Pruco Life. These products are Variable Appreciable Life Insurance ("VAL"),
Variable Life Insurance ("VLI"), Discovery Life ("SPVA"), and Discovery Life
Plus ("SPVL").
The assets of the Real Property Account are invested in The Prudential Variable
Contract Real Property Partnership (the "Partnership"). The Partnership is
organized under New Jersey law and is registered under the Securities Act of
1933. The Partnership is the investment vehicle for assets allocated to the
real property option under certain variable life insurance and annuity
contracts. The Real Property Account, along with The Prudential Variable
Contract Real Property Account and the Pruco Life of New Jersey Variable
Contract Real Property Account, are the sole investors in the Partnership.
The investment in the Partnership is based on the Real Property Account's
proportionate interest of the Partnership's market value. At September 30, 1998
the Real Property Account's interest in the Partnership was 49.9% or 5,909,533
shares.
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: SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited financial statements of the Real Property Account
have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to
Form 10-Q. In the opinion of management, all adjustments (consisting of
normal recurring adjustments) considered necessary for a fair presentation
of the Real Property Account's financial position and results of operations
have been included. Interim results are not necessarily indicative of
results for a full year. These statements should be read in conjunction with
the financial statements and notes thereto for the year ended December 31,
1997 included in the Real Property Account's Annual Report on Form 10-K for
that year.
NOTE 3: INVESTMENT INFORMATION FOR THE PRUDENTIAL VARIABLE CONTRACT REAL
PROPERTY PARTNERSHIP
As of September 30, 1998, the investment in the Partnership of $115,859,394 was
derived from the share value of $19.605537 and 5,909,533 shares outstanding.
The aggregate cost of investments in the Account was $63,772,991.
4
<PAGE>
NOTE 4: CONTRACT OWNER UNIT INFORMATION
Outstanding Contract owner units, unit values and total value of Contract owner
equity at September 30, 1998 were as follows:
<TABLE>
<CAPTION>
VAL VLI SPVA SPVL TOTAL
----- ----- ------ ------ -------
<S> <C> <C> <C> <C> <C>
CONTRACT OWNER UNITS OUTSTANDING: 40,784,364 2,691,256 548,099 2,922,564 46,946,283
UNIT VALUE: $ 1.82617 $ 1.88120 $ 1.69065 $ 1.69065
CONTRACT OWNER EQUITY: $ 74,479,181 $ 5,062,791 $ 926,644 $ 4,941,033 $ 85,409,649
</TABLE>
NOTE 5: MORTALITY RISK AND EXPENSE RISK CHARGES
Mortality risk and expense charges are determined daily using an effective
annual rate of 0.6%, 0.35%, 0.9% and 0.9% for VAL, VLI, SPVA and SPVL,
respectively. Mortality risk is that life insurance and annuity contract owners
may not live as long as estimated or annuitants may live longer than estimated
and expense risk is that the cost of issuing and administering the policies may
exceed the estimated expenses. Of the $400,533 of charges to contract owners,
$384,770 represented mortality risk and expense risk charges.
NOTE 6: NET WITHDRAWALS BY CONTRACT OWNERS
Contract owner activity for the Pruco Life products for the period ended
September 30, 1998, were as follows:
<TABLE>
<CAPTION>
VAL VLI SPVA SPVL TOTAL
----- ----- ------ ------ -------
<S> <C> <C> <C> <C> <C>
CONTRACT OWNER NET PAYMENTS: $ 4,658,365 $ 360,754 $ (342) $ (2,009) $ 5,016,769
POLICY LOANS: (1,834,619) (62,198) 0 (167,287) (2,064,104)
POLICY LOAN REPAYMENTS AND INTEREST: 1,349,976 63,121 0 92,336 1,505,433
SURRENDERS, WITHDRAWALS, AND DEATH
BENEFITS: (3,405,307) (249,802) (327,568) (301,007) (4,283,684)
NET TRANSFERS FROM/TO OTHER
SUBACCOUNTS OR FIXED RATE OPTIONS: (2,500,760) (102,435) 7,921 (102,917) (2,698,190)
ADMINISTRATIVE AND OTHER CHARGES: (2,544,831) (139,128) 0 (26,223) (2,710,181)
------------ ---------- ---------- ----------- ------------
NET WITHDRAWALS $ (4,277,175) $ (129,686) $ (319,989) $ (507,107) $ (5,233,958)
------------ ---------- ---------- ----------- ------------
------------ ---------- ---------- ----------- ------------
</TABLE>
NOTE 7: UNIT ACTIVITY
Transactions in units for the period ended September 30, 1998 were as follows:
<TABLE>
<CAPTION>
VAL VLI SPVA SPVL
----- ----- ------ -------
<S> <C> <C> <C> <C>
CONTRACT OWNER CONTRIBUTIONS: 3,591,007.371 242,846.506 13,025.203 80,007.307
CONTRACT OWNER REDEMPTIONS: (6,002,821.041) (313,694.966) (209,018.128) (391,213.641)
</TABLE>
5
<PAGE>
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
STATEMENTS OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
SEPTEMBER 30, 1998
(UNAUDITED) DECEMBER 31, 1997
------------------ -----------------
<S> <C> <C>
ASSETS
REAL ESTATE INVESTMENTS - At estimated market value:
Real estate and improvements
(cost: 9/30/98 -- $205,915,931; 12/31/97 -- $201,670,248) $188,828,300 $181,317,624
Real estate investment trust (cost: 9/30/98 -- $10,000,005;
12/31/97 -- $10,000,005) 10,878,579 12,523,805
------------------ -----------------
Total real estate investments 199,706,879 193,841,429
MARKETABLE SECURITIES - At estimated market value
(cost: 9/30/98 -- $4,850,000; 12/31/97 -- $13,939,000) 4,869,938 13,971,421
CASH AND CASH EQUIVALENTS 28,701,553 12,880,560
DIVIDEND RECEIVABLE 0 146,999
OTHER ASSETS (net of allowance for uncollectible
accounts: 9/30/98 -- $86,000; 12/31/97 -- $68,000) 2,375,487 1,904,726
------------------ -----------------
TOTAL ASSETS $235,653,857 $222,745,135
------------------ -----------------
------------------ -----------------
LIABILITIES AND PARTNERS' EQUITY
ACCOUNTS PAYABLE AND ACCRUED EXPENSES $1,947,971 $1,842,027
DUE TO AFFILIATES 790,533 832,922
OTHER LIABILITIES 623,924 538,413
------------------ -----------------
Total liabilities 3,362,428 3,213,362
------------------ -----------------
Partners' equity 232,291,429 219,531,773
------------------ -----------------
TOTAL LIABILITIES AND PARTNERS' EQUITY $235,653,857 $222,745,135
------------------ -----------------
------------------ -----------------
NUMBER OF SHARES OUTSTANDING AT END OF PERIOD 11,848,275 11,848,275
------------------ -----------------
------------------ -----------------
SHARE VALUE AT END OF PERIOD $19.61 $18.53
------------------ -----------------
------------------ -----------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGE 13
6
<PAGE>
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------------------- ---------------------------------
1998 1997 1998 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Revenue from real estate and improvements $18,389,369 $17,128,834 $6,023,458 $6,030,739
Income from interest in properties 33,463 435,296 0 132,272
Dividend income from real estate investment trust 334,550 0 167,275 0
Interest on short-term investments 1,089,040 1,905,560 414,888 637,655
------------- ------------- ------------- -------------
Total investment income 19,846,422 19,469,690 6,605,621 6,800,666
------------- ------------- ------------- -------------
EXPENSES:
Investment management fee 2,121,474 1,944,966 729,999 665,169
Real estate taxes 1,966,995 1,637,441 621,679 544,674
Administrative 1,675,453 1,968,776 661,309 1,051,041
Operating 3,034,149 2,327,218 1,122,368 839,290
Interest 0 220,118 0 31,892
------------- ------------- ------------- -------------
Total investment expenses 8,798,071 8,098,519 3,135,355 3,132,066
------------- ------------- ------------- -------------
NET INVESTMENT INCOME 11,048,351 11,371,171 3,470,266 3,668,600
------------- ------------- ------------- -------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net proceeds from real estate investments
sold 0 6,272,330 0 6,272,330
Less: Cost of real estate investments sold (91,538) 6,824,539 (91,538) 6,820,907
Realization of prior periods' unrealized
gain on real estate investments sold 0 (283,157) 0 79,343
------------- ------------- ------------- -------------
Net gain (loss) realized on real estate
investments sold 91,538 (269,052) 91,538 (627,920)
------------- ------------- ------------- -------------
Change in unrealized gain on real estate
investments 1,619,767 6,010,306 1,834,675 5,196,196
------------- ------------- ------------- -------------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS 1,711,305 5,741,254 1,926,213 4,568,276
------------- ------------- ------------- -------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $12,759,656 $17,112,425 $5,396,479 $8,236,876
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGE 13
7
<PAGE>
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30, 1998 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1997
------------------ -----------------
<S> <C> <C>
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS:
Net investment income $11,048,351 $13,789,747
Net realized gain on real estate investments sold 91,538 306,040
Net unrealized gain from real estate investments 1,619,767 8,179,192
------------------ -----------------
NET INCREASE IN NET ASSETS 12,759,656 22,274,979
NET ASSETS - Beginning of period 219,531,773 197,256,794
------------------ -----------------
NET ASSETS - End of period $232,291,429 $219,531,773
------------------ -----------------
------------------ -----------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGE 13
8
<PAGE>
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, 1998 SEPTEMBER 30, 1997
------------------ ------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net increase in net assets resulting from operations $12,759,656 $17,112,425
Adjustments to reconcile net increase in net assets resulting
from operations to net cash flows from operating activities:
Net realized and unrealized gain on investments (1,711,305) (5,741,254)
Bad debt expense 18,050 2,494
Decrease (Increase) in:
Dividend receivable 146,999 0
Other assets (488,811) (668,508)
Increase (Decrease) in:
Obligations under capital lease 0 (197,677)
Accounts payable and accrued expenses 105,944 (14,200)
Due to affiliates (42,389) 708,934
Other liabilities 85,511 75,408
------------------ ------------------
Net cash flows from operating activities 10,873,655 11,277,622
------------------ ------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net proceeds from real estate investments sold 0 6,272,330
Acquisition of real estate 0 (13,958,719)
Acquisition of real estate investment trust 0 (10,000,005)
Improvements and additional costs on prior purchases:
Additions to real estate (4,245,683) (615,763)
Distribution (contribution) from/to interest in properties 91,538 (695,014)
Sale of marketable securities 9,101,483 9,392,405
------------------ ------------------
Net cash flows from investing activities 4,947,338 (9,604,766)
------------------ ------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on capital lease obligation 0 (3,875,000)
------------------ ------------------
Net cash flows from financing activities 0 (3,875,000)
------------------ ------------------
NET CHANGE IN CASH AND CASH EQUIVALENTS 15,820,993 (2,202,144)
CASH AND CASH EQUIVALENTS - Beginning of period 12,880,560 20,738,204
------------------ ------------------
CASH AND CASH EQUIVALENTS - End of period $28,701,553 $18,536,060
------------------ ------------------
------------------ ------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGE 13
9
<PAGE>
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
SCHEDULE OF INVESTMENTS
<TABLE>
<CAPTION>
September 30, 1998 (Unaudited) December 31, 1997
----------------------------------- ------------------------------
ESTIMATED ESTIMATED
MARKET MARKET
COST VALUE COST VALUE
----------------------------------------------------------------------
REAL ESTATE AND IMPROVEMENTS (PERCENT OF NET ASSETS) 81.3% 82.6%
Location Description
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Lisle, IL Office Building $20,771,150 $12,250,770 $17,916,983 $10,278,959
Atlanta, GA Garden Apartments 15,469,796 15,500,000 15,446,293 15,100,000
Pomona, CA Warehouse 23,777,351 20,000,000 23,637,049 19,504,612
Roswell, GA Retail Shopping Center 32,123,451 28,416,505 31,858,198 29,547,042
Morristown, NJ Office Building 19,333,381 11,626,069 18,931,914 10,805,918
Bolingbrook, IL Warehouse 8,948,028 7,000,000 8,948,028 7,100,000
Farmington Hills, MI Garden Apartments 13,657,382 16,400,000 13,641,971 14,805,258
Raleigh, NC Garden Apartments 15,818,112 16,500,000 15,804,860 16,525,751
Nashville, TN Office Building 8,648,015 10,156,469 8,613,828 9,611,329
Oakbrook Terrace, IL Office Complex 12,725,366 15,750,000 12,725,366 14,100,000
Beaverton, OR Office Complex 10,728,617 11,200,000 10,728,285 10,700,000
Salt Lake City, UT Industrial Building 5,388,134 5,350,000 5,388,134 5,350,000
Aurora, CO Industrial Building 8,985,437 9,178,487 8,540,585 8,400,000
Brentwood, TN Office Complex 9,541,711 9,500,000 9,488,755 9,488,755
-------------------------------------------------------------------------
$205,915,931 $188,828,300 $201,670,248 $181,317,624
-------------------------------------------------------------------------
-------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUST (PERCENT OF NET ASSETS) 4.7% 5.7%
- -------------------------------------------------------------------------------------------------------------------------
Meridian REIT Shares (506,894 shares) $10,000,005 $10,878,579 $10,000,005 $12,523,805
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
SEPTEMBER 30, 1998 DECEMBER 31, 1997
-------------------------------- ---------------------------------
ESTIMATED ESTIMATED
FACE MARKET FACE MARKET
AMOUNT VALUE AMOUNT VALUE
-------------------------------------------------------------------------
MARKETABLE SECURITIES (PERCENT OF NET ASSETS) 2.1% 6.4%
(See pages 11 to 12 for details)
Description
- -------------------------------------------------------------------------------------------------------------------------
Marketable Securities $4,850,000 $4,869,938 $13,939,000 $13,971,421
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
CASH AND CASH EQUIVALENTS (PERCENT OF NET ASSETS) 12.4% 5.9%
(See pages 11 to 12 for details)
Description
- -------------------------------------------------------------------------------------------------------------------------
Commercial Paper and Cash $28,783,543 $28,701,553 $12,918,158 $12,880,560
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGE 13
10
<PAGE>
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
SCHEDULE OF INVESTMENTS
(UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30, 1998
-------------------------------------------------
FACE ESTIMATED
AMOUNT MARKET VALUE
------------------ ------------------
MARKETABLE SECURITIES (PERCENT OF NET ASSETS) 2.1%
Corestates Bank, N.A., 5.53%, October 16, 1998 $1,000,000 $1,000,000
Federal Home Loan Banks, 5.76%, December 29, 1998 150,000 150,104
American Express Credit Corp., 7.375%, February 1, 1999 325,000 329,342
Canadian Imperial Bank of Commerce, 5.55%, February 10, 1999 1,000,000 999,520
Federal National Mortgage Assoc., 5.33%, February 12, 1999 100,000 99,703
International Lease Finance Corp., 7.50%, March 1, 1999 500,000 508,250
General Motors Acceptance Corp., 6.04%, March 19, 1999 1,000,000 1,003,480
International Lease Finance Corp., 6.625%, April 1, 1999 375,000 377,419
CIT Group Holdings, Inc., 6.375%, May 21, 1999 400,000 402,120
------------------ ------------------
TOTAL MARKETABLE SECURITIES $4,850,000 $4,869,938
------------------ ------------------
------------------ ------------------
CASH AND CASH EQUIVALENTS (PERCENT OF NET ASSETS) 12.4%
Xerox Capital (Europe), 5.75%, October 1, 1998 $1,601,000 $1,600,744
Ford Motor Credit Co., 5.456%, October 5, 1998 1,000,000 998,940
General Electric Capital Corp., 5.546%, October 6, 1998 479,000 477,602
General Motors Acceptance Corp., 5.566%, October 6, 1998 564,000 562,348
GTE Funding, Inc., 5.612%, October 6, 1998 160,000 159,652
John Deere Capital Corp, 5.536%, October 6, 1998 1,569,000 1,564,429
Sears Roebuck Acceptance Corp, 5.568%, October 6, 1998 928,000 924,853
American Express Credit Corp, 5.54%, October 7, 1998 1,141,000 1,136,276
Caterpillar Financial Svcs Corp, 5.56%, October 7, 1998 1,575,000 1,571,601
Commercial Credit Co., 5.549%, October 7, 1998 1,536,000 1,524,951
International Lease Finance Corp., 5.61%, October 8, 1998 700,000 698,367
Sears Roebuck Acceptance Corp, 5.557%, October 9, 1998 655,000 652,883
Chrysler Financial Corp., 5.546%, October 13, 1998 219,000 218,361
Walt Disney Company, 5.568%, October 13, 1998 1,582,000 1,576,878
Associates Corp of North America, 5.549%, October 14, 1998 1,583,000 1,577,407
Bell Atlantic Fin Services Inc., 5.31%, October 14, 1998 1,570,000 1,566,764
Nat'l Rural Util Cooperative Fin Corp, 5.539%, October 14, 1998 580,000 577,955
American General Finance Corp, 5.292%, October 15, 1998 1,589,000 1,585,271
Chrysler Financial Corp., 5.365%, October 15, 1998 125,000 124,628
Ford Motor Credit Co., 5.56%, October 15, 1998 133,000 131,960
Lucent Technologies, 5.54%, October 16, 1998 253,000 252,069
CIT Group Holdings Inc, 5.265%, October 19, 1998 1,189,000 1,185,532
General Electric Capital Corp., 5.38%, October 20, 1998 1,101,000 1,096,902
Bank of America N.T. & S.A., 5.55%, October 21, 1998 1,500,000 1,500,000
Norwest Financial Inc., 5.56%, October 21, 1998 1,579,000 1,572,196
Cigna Corp, 5.4%, October 22, 1998 1,580,000 1,573,625
Countrywide Home Loans, 5.4%, October 28, 1998 710,000 706,817
------------------ ------------------
TOTAL CASH EQUIVALENTS 27,201,000 27,119,010
CASH 1,582,543 1,582,543
------------------ ------------------
TOTAL CASH AND CASH EQUIVALENTS $28,783,543 $28,701,553
------------------ ------------------
------------------ ------------------
SEE NOTES TO FINANCIAL STATEMENTS ON PAGE 13
11
<PAGE>
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1997
--------------------------------------------
FACE ESTIMATED
AMOUNT MARKET VALUE
------------------ ------------------
<S> <C> <C>
MARKETABLE SECURITIES (PERCENT OF NET ASSETS) 6.4%
International Lease Finance Corp., 5.92%, January 15, 1998 $500,000 $499,083
Smith Barney Holding Inc., 5.70%, January 28, 1998 1,304,000 1,285,475
Suntrust Banks, 8.875%, February 1, 1998 1,500,000 1,517,880
Chase Manhattan Bank, 5.75%, February 10, 1998 2,000,000 2,000,000
Beneficial Corp., 9.125%, February 15, 1998 700,000 705,948
Citicorp, 10.15%, February 15, 1998 200,000 207,324
General Motors Acceptance Corp., 5.9%, February 19, 1998 985,000 994,545
General Motors Acceptance Corp., 5.9875%, February 23, 1998 1,300,000 1,299,363
American General Finance Corp., 7.25%, March 1, 1998 500,000 507,880
Commercial Credit Co., 5.7%, March 1, 1998 375,000 375,199
Associates Corp. of North America, 7.3%, March 15, 1998 400,000 406,635
International Lease Finance Corp., 5.75%, March 15, 1998 400,000 399,940
Morgan Guaranty Trust Co., 5.85%, March 16, 1998 500,000 499,855
Royal Bank of Canada, 5.91%, June 17, 1998 2,000,000 1,998,853
FCC National Bank, 5.75281%, July 2, 1998 1,025,000 1,024,202
General Mills Inc., 5.38%, July 8, 1998 250,000 249,238
------------------ ------------------
TOTAL MARKETABLE SECURITIES $13,939,000 $13,971,421
------------------ ------------------
------------------ ------------------
CASH AND CASH EQUIVALENTS (PERCENT OF NET ASSETS) 5.9%
Barnett Bank, Inc., 6.70%, January 2, 1998 $1,235,000 $1,234,540
American Greetings Corp., 6.26%, January 5, 1998 1,250,000 1,247,179
Xerox Capital, 5.85%, January 6, 1998 1,000,000 995,775
Nike Inc., 6.10%, January 8, 1998 1,215,000 1,213,353
Paccar Financial Corp., 5.85%, January 9, 1998 1,000,000 996,100
Pitney Bowes Credit Corp., 6.00%, January 13, 1998 750,000 747,375
Merrill Lynch & Co., Inc. 5.85%, January 15, 1998 1,000,000 994,313
Bank of Montreal, 5.90%, January 16, 1998 1,000,000 1,000,000
Countrywide Home Loan, Inc., 5.85%, January 22, 1998 1,000,000 993,175
General Electric Capital Corp., 5.74%, February 9, 1998 1,000,000 990,593
------------------ ------------------
TOTAL CASH EQUIVALENTS 10,450,000 10,412,402
CASH 2,468,158 2,468,158
------------------ ------------------
TOTAL CASH AND CASH EQUIVALENTS $12,918,158 $12,880,560
------------------ ------------------
------------------ ------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGE 13
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS OF
PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
SEPTEMBER 30, 1998
(UNAUDITED)
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements included herein have been prepared in accordance with
generally accepted accounting principles for interim financial information. In
the opinion of management, all adjustments (consisting of normal recurring
adjustments) considered necessary for a fair presentation have been included.
Operating results for the nine months ended September 30, 1998 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 1998. For further information, refer to the financial statements
and notes thereto included in each Partner's December 31, 1997 Annual Report on
Form 10K.
NOTE 2: COMMITMENT FROM PARTNER
On January 9, 1990, Prudential committed to fund up to $100 million to enable
the Partnership to take advantage of opportunities to acquire attractive real
property investments whose cost is greater than the Partnership's then available
cash. Contributions to the Partnership under this commitment are utilized for
property acquisitions and returned to Prudential on an ongoing basis from
Contract owners' net contributions. Also, the amount of the commitment is
reduced by $10 million for every $100 million in estimated market value net
assets of the Partnership. The amount available under this commitment for
property purchases as of September 30, 1998 is approximately $44.2 million.
NOTE 3: RELATED PARTY TRANSACTIONS
Pursuant to an investment management agreement, Prudential charges the
Partnership a daily investment management fee at an annual rate of 1.25% of the
average daily gross asset valuation of the Partnership. For the nine months
ended September 30, 1998 and 1997 management fees incurred by the Partnership
were $2,121,474 and $1,944,966, respectively.
The Partnership also reimburses Prudential for certain administrative services
rendered by Prudential. The amounts incurred for the nine months ended
September 30, 1998, and 1997 were $87,096 and $86,313, respectively, and are
classified as Administrative Expenses in the Statements of Operations.
NOTE 4: OTHER ASSETS
Cash of $115,850 and $128,089 at September 30, 1998 and December 31, 1997,
respectively, was maintained by the properties for tenant security deposits and
is included in Other Assets on the Statements of Assets and Liabilities.
NOTE 5: SUBSEQUENT EVENTS
On October 8, 1998 the Partnership sold an apartment complex in Farmington
Hills, MI for a selling price of $16.9 million resulting in a realized gain of
$1.8 million.
13
<PAGE>
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
PER SHARE INFORMATION (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
01/01/98 07/01/98 01/01/97 01/01/96 01/01/95 01/01/94 01/01/93
to to to to to to to
09/30/98 09/30/98 12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
---------- ---------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue from real estate and improvements $ 1.5521 $ 0.5084 $ 1.8216 $ 1.9173 $ 1.6387 $ 1.2754 $ 1.1659
Income from interest in properties $ 0.0029 $ 0.0000 $ 0.0367 $ 0.0510 $ 0.0527 $ 0.1838 $ 0.2139
Interest on mortgage loans $ 0.0000 $ 0.0000 $ 0.0000 $ 0.0000 $ 0.0000 $ 0.0082 $ 0.0755
Dividend income from real estate investment
trusts $ 0.0282 $ 0.0141 $ 0.0134 $ 0.0000 $ 0.0000 $ 0.0000 $ 0.0000
Interest on short-term investments $ 0.0919 $ 0.0350 $ 0.1946 $ 0.1795 $ 0.2199 $ 0.1226 $ 0.0549
--------- --------- --------- ---------- ---------- ---------- ----------
TOTAL INVESTMENT INCOME $ 1.6751 $ 0.5575 $ 2.0663 $ 2.1478 $ 1.9113 $ 1.5900 $ 1.5102
--------- --------- --------- ---------- ---------- ---------- ----------
--------- --------- --------- ---------- ---------- ---------- ----------
Investment management fee $ 0.1790 $ 0.0617 $ 0.2229 $ 0.2097 $ 0.1936 $ 0.1786 $ 0.1673
Real estate taxes $ 0.1660 $ 0.0525 $ 0.1864 $ 0.1991 $ 0.1602 $ 0.1399 $ 0.1465
Administrative $ 0.1414 $ 0.0558 $ 0.1963 $ 0.1569 $ 0.1484 $ 0.1103 $ 0.1187
Operating $ 0.2561 $ 0.0947 $ 0.2782 $ 0.2442 $ 0.1546 $ 0.1332 $ 0.1209
Interest $ 0.0000 $ 0.0000 $ 0.0186 $ 0.0412 $ 0.0381 $ 0.0255 $ 0.0236
--------- --------- --------- ---------- ---------- ---------- ----------
TOTAL INVESTMENT EXPENSES $ 0.7426 $ 0.2647 $ 0.9024 $ 0.8511 $ 0.6949 $ 0.5875 $ 0.5770
--------- --------- --------- ---------- ---------- ---------- ----------
--------- --------- --------- ---------- ---------- ---------- ----------
NET INVESTMENT INCOME $ 0.9326 $ 0.2929 $ 1.1639 $ 1.2967 $ 1.2164 $ 1.0025 $ 0.9332
--------- --------- --------- ---------- ---------- ---------- ----------
--------- --------- --------- ---------- ---------- ---------- ----------
Net gain (loss) realized on real estate
investments sold $ 0.0077 $ 0.0077 $ 0.0258 $ (0.1323) $ 0.0000 $ (0.0966)$ (0.1816)
Change in unrealized gain on real estate
investments sold $ 0.1367 $ 0.1548 $ 0.6903 $ (0.2695) $ 0.0581 $ 0.2169 $ 0.0152
--------- --------- --------- ---------- ---------- ---------- ----------
NET REALIZED AND UNREALIZED
GAIN/(LOSS) ON INVESTMENTS $ 0.1444 $ 0.1625 $ 0.7162 $ (0.4018) $ 0.0581 $ 0.1203 $ (0.1664)
--------- --------- --------- ---------- ---------- ---------- ----------
Net increase in share value $ 1.0769 $ 0.4554 $ 1.8800 $ 0.8949 $ 1.2745 $ 1.1228 $ 0.7668
Share Value at beginning of period $ 18.5286 $ 19.1501 $ 16.6486 $ 15.7537 $ 14.4792 $ 13.3564 $ 12.5896
--------- --------- --------- ---------- ---------- ---------- ----------
Share Value at end of period $ 19.6055 $ 19.6055 $ 18.5286 $ 16.6486 $ 15.7537 $ 14.4792 $ 13.3564
--------- --------- --------- ---------- ---------- ---------- ----------
--------- --------- --------- ---------- ---------- ---------- ----------
Ratio of expenses to average net assets 3.92% 1.37% 5.16% 5.26% 4.62% 4.27% 4.44%
Ratio of net investment income to
average net assets 4.93% 1.51% 6.66% 8.01% 8.08% 7.29% 7.17%
Number of shares outstanding at
end of period (000's) 11,848 11,848 11,848 11,848 12,037 12,241 13,031
</TABLE>
ALL CALCULATIONS ARE BASED ON AVERAGE MONTH-END SHARES OUTSTANDING WHERE
APPLICABLE.
PER SHARE INFORMATION PRESENTED HEREIN IS SHOWN ON A BASIS CONSISTENT WITH THE
FINANCIAL STATEMENTS AS DISCUSSED IN NOTE 1 .
14
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
All of the assets of Prudential Variable Contract 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").
(a) LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 1998, the Partnership's liquid assets consisting of cash,
cash equivalents and marketable securities (excluding the Partnership's shares
in Meridian Industrial Trust REIT) were $33.6 million; an increase of $6.7
million from $26.9 million as of December 31, 1997. The increase is due
primarily to cash received from the operations of the Partnership's properties
and interest income received from short-term investments partially offset by
capital additions to real estate of $4.2 million.
The Partnership will generally invest 10-15% of its assets in cash and
short-term obligations to maintain liquidity; however, its investment policy
allows up to 30% investments in cash and short-term obligations. At September
30, 1998, 14.24% of the Partnership's assets consisted of cash, cash equivalents
and marketable securities (excluding the REIT shares).
Prudential has committed to fund up to $100 million to enable the Partnership to
acquire real estate investments. Contributions to the Partnership under this
commitment are utilized for property acquisitions and returned to Prudential on
an ongoing basis from Contract owners' net contributions. The amount of the
commitment is reduced by $10 million for every $100 million in current value net
assets of the Partnership. The amount available for future investment is
approximately $44 million as of September 30, 1998.
Withdrawals from cash may be made during the remainder of 1998 based upon the
needs of the Partnership including potential property acquisitions and
dispositions and capital expenditures. As of September 30, 1998, and currently,
the Partnership has adequate liquidity.
(b) RESULTS OF OPERATIONS
The Partnership's net investment income for the first nine months of 1998 was
$11.0 million, level with $11.4 million for the corresponding period of 1997.
This relative unchanged result was due to increased expenses and revenues.
Increased expenses were primarily due to late 1997 property acquisitions
(revenues remained flat for these properties because occupancy rates were 0%),
offset by the 1997 purchase of the capitalized land lease which resulted in the
current year decrease in interest expense. Increased revenues were primarily
due to the late 1997 acquisition of the Meridian REIT which resulted in 1998
dividend income offset by a decrease in interest on short-term investment
interest due to a smaller balance held in Cash and Cash Equivalents through the
first nine months of 1998.
The Partnership experienced a net unrealized gain for the first nine months
in 1998 of $1.6 million, a decrease of $4.4 from the unrealized gain of $6.0
million in the corresponding period of the prior year. In 1998, the Atlanta,
GA retail center experienced an unrealized loss due to differing appraisal
assumptions regarding the general investment market for this asset, also
experiencing unrealized losses were the portfolio's holdings in Meridian REIT
which is a self-administered and self-managed equity real estate investment
trust. These losses were offset by unrealized gains in the office sector of
the portfolio due to generally higher market rental rates in four of the
portfolios' office centers. The apartment sector added unrealized gains to
the portfolio results. This increase was primarily due to the increased
value of the Farmington Hill, MI apartment complex which was subsequently
sold on October 8, 1998 for a sales price of $16.9 million.
15
<PAGE>
(c) THE YEAR 2000 ISSUE
The Partnership utilizes many of the same business applications, infrastructure
and business partners as Prudential. Prudential has addressed the Year 2000
issue on an enterprise-wide basis. Therefore, it is not possible to
differentiate the Partnership's Year 2000 issue from that of Prudential. The
accompanying discussion of the Year 2000 issue reflects steps taken by
Prudential to mitigate the Year 2000 risks.
Many computer systems are programmed to recognize only the last two digits in a
date. As a result, any computer system that has date-sensitive programming may
recognize a date using "00" as the year 1900 rather than the year 2000. This
problem can affect non-information technology systems that include embedded
technology, such as microprocessors included in "infrastructure" equipment used
for telecommunications and other services as well as computer systems. If this
anomaly is not corrected, the year "00" could cause systems to perform date
comparisons and calculations incorrectly which could in turn affect the accuracy
and compromise the integrity of business records. Business operations could be
interrupted when companies are unable to process transactions, send invoices, or
engage in similar normal business activities.
Prudential established a Company-wide Program Office (CPO) to develop and
coordinate an operating framework for the Year 2000 compliance activities.
Prudential's CPO structured the Year 2000 program into three major components:
Business Applications, Infrastructure and Business Partners. The CPO also
established quality assurance procedures including a certification process to
monitor and evaluate enterprise-wide progress of each component of Prudential's
program for conversion and upgrading of systems for Year 2000 compliance.
BUSINESS APPLICATIONS
The scope of the Business Applications component includes a wide range of
computer systems that directly support Prudential's business operations and
accounting systems. The entire application portfolio was analyzed in 1996 to
determine appropriate Year 2000 readiness strategies (i.e., renovate, replace or
retire). Rigorous testing standards have been employed for all applications
that will not be retired, including those that are newly developed or purchased.
Application replacement and renovation projects follow a similar path toward
Year 2000 compliance. The key project phases include Year 2000 analysis and
design, programming activities, testing, and implementation. Replacement
projects are also tracked until the existing applications are removed from
production. Business application projects are grouped by applications undergoing
renovations, replacements or retirements. At September 30, 1998, the percentage
of business applications (based on application count) in the implementation
phase for Year 2000 compliance for renovation, replacement and retirement are
91%, 62% and 87%, respectively. The interim target date for completing
renovations and retirements is December 1998, with an overall completion date
for Business Applications of June 1999.
INFRASTRUCTURE
The scope of Prudential's Year 2000 Infrastructure initiatives include mainframe
computer system hardware and operating system software, mid-range systems and
servers, telecommunications equipment, buildings and facilities systems,
personal computers, and vendor hardware and software.
Although there are minor differences among these various components, the
approach to Year 2000 readiness for Infrastructure generally involves phases
identified as inventory, assessment, remediation activities (e.g., upgrading
hardware or software), testing and implementation. The interim target date for
completion of Infrastructure initiatives is December 1998 with an overall
completion date for Infrastructure of June 1999.
16
<PAGE>
BUSINESS PARTNERS
Prudential's approach to business partner readiness includes classification of
each partner's status as "critical" or "less critical" and the development of
contingency plans to address the potential that a business partner could
experience a Year 2000 failure. Project phases include inventory, risk
assessment, and contingency planning activities. The interim target date for
highly critical business partner readiness is December 1998 with an overall
completion date for business partner readiness of June 1999.
THE COST OF YEAR 2000 READINESS
Prudential is funding the Year 2000 program from operating cash flows. Some of
the expenses of Prudential's Year 2000 readiness are allocated across its
various businesses and subsidiaries, including the Partnership. Expenses
related to the Year 2000 initiatives allocated to the Partnership part of
systems overhead costs and are included in the Partnership's general and
administrative expenses. The Year 2000 costs allocated to the Partnership to
date are not material to its operations and financial condition. Moreover, the
forecasted allocated Year 2000 costs are not expected to have a material impact
on the Partnership's ability to meet its contractual commitments.
YEAR 2000 RISKS AND CONTINGENCY PLANNING
The major portion of Prudential's transactions are of such volume that they
can only be effectively processed through the use of automated systems.
Therefore, substantially all of Prudential's contingency plans include the
ultimate resolution of any causative technology failures that may be
encountered.
Prudential believes that the Business Application, Infrastructure and Business
Partners components of the Year 2000 project are substantially on schedule.
While management expects that a small number of the projects slated for
completion as of the end of 1998 will not meet this target date, it is
anticipated that these projects will be completed mid-1999 so that these
delays, if experienced, would not have a significant impact on the timing of the
project as a whole. During the course of the Year 2000 program, some
discretionary technology projects have been delayed in favor of the completion
of Year 2000 projects. However, this impact has been minimized by Prudential's
strategic decision to outsource most of the Year 2000 renovation work.
While Prudential and its subsidiaries believe that they are well positioned to
mitigate its Year 2000 issue, this issue, by its nature contains inherent
uncertainties, including the uncertainty of Year 2000 readiness of third
parties. Consequently, the Partnership is unable to determine at this time
whether the consequences of Year 2000 failures will have a material adverse
effect on the Partnership's results of operations, liquidity or financial
condition. In the worst case, it is possible that any technology failure,
including an internal or external Year 2000 failure, could have a material
impact on the Partnership results of operations, liquidity, or financial
position.
Prudential is enhancing existing business contingency plans to mitigate Year
2000 risk. Current contingency plans include planned responses to the failure
of specific business applications or infrastructure components. These responses
are being reviewed and expected to be finalized by June 1999 to ensure that they
are workable under the special conditions of a Year 2000 failure. The plans are
also being updated to reduce the level of uncertainty about the Year 2000
problem including readiness of Prudential's Business Partners.
The discussion of the Year 2000 Issue herein, and in particular Prudential's
plans to remediate this issue and the estimated costs thereof, are
forward-looking in nature. See cautionary statement below relating to
forward-looking statements.
(d) INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS
Certain of the statements contained in Management's Discussion and Analysis
may be considered forward-looking statements. Words such as "expects,"
"believes," "anticipates," "intends," "plans," or variations of such words
are generally part of forward-looking statements. Forward-looking statements
are made based upon management's current expectations and beliefs concerning
future developments and their potential effects upon the Partnership. There
can be no assurance that future developments affecting the Partnership will
be those anticipated by management. There are certain important factors that
could cause actual results to differ materially from estimates or
expectations reflected in such forward-looking statements including without
limitation, changes in general economic conditions, including the performance
of financial markets and interest rates; market acceptance of new products
and distribution channels; competitive, regulatory or tax changes that affect
the cost or demand for the Partnership's products; and adverse litigation
results. While the Partnership reassesses material trends and uncertainties
affecting its financial condition and results of operations, it does not
intend to review or revise any particular forward-looking statement
referenced in this Management's Discussion and Analysis in light of future
events. The information referred to above should be considered by readers
when reviewing any forward-looking statements contained in this Management's
Discussion and Analysis.
(e) CONTINGENT TRANSACTIONS
The Pomona, CA industrial complex is currently being marketed for sale.
17
<PAGE>
PART II
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
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 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
4.1 Variable Life Insurance Contract, filed as Exhibit 1.A.(5)(a) to
Pre-Effective Amendment No. 1 to Form S-6, Registration Statement
No. 2-80513, filed February 17, 1983, and incorporated herein by
reference.
4.2 Revised Variable Appreciable Life Insurance Contract with fixed
death benefit, filed as Exhibit 1.A.(5)(f) to Post-Effective
Amendment No. 5 to Form S-6, Registration Statement No. 2-89558,
filed July 10, 1986, and incorporated herein by reference.
4.3 Revised Variable Appreciable Life Insurance Contract with
variable death benefit, filed as Exhibit 1.A.(5)(g) to
Post-Effective Amendment No. 5 to Form S-6, Registration
Statement No. 2-89558, filed July 10, 1986, and incorporated
herein by reference.
4.4 Single Premium Variable Annuity Contract, filed as Exhibit 4(i)
to Form N-4, Registration Statement No. 2-99616, filed August 13,
1985, and incorporated herein by reference.
4.5 Flexible Premium Variable Life Contract, filed as Exhibit 1.A.(5)
to Form S-6, Registration
4.6 Statement No. 2-99260, filed July 29, 1985, and incorporated
herein by reference.
18
<PAGE>
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
in respect of
Pruco Life Variable
Contract Real Property Account
---------------------------------------
Date: November 16, 1998 By: /s/ Esther H. Milnes
------------------- ---------------------------
Esther H. Milnes
President and Director
Date: November 16, 1998 By: /s/ James Schlomann
------------------- ---------------------------
James Schlomann
Vice President, Comptroller and
Chief Accounting Officer
19
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM STATEMENT OF
NET ASSETS AND STATEMENTS OF OPERATIONS AND CHANGES IN NET ASSETS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000801348
<NAME> PRUCO LIFE
<SERIES>
<NUMBER> 001
<NAME> PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 0
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 5,909,533
<SHARES-COMMON-PRIOR> 5,909,534
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 115,859,394
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 400,533
<NET-INVESTMENT-INCOME> 5,110,024
<REALIZED-GAINS-CURRENT> 45,656
<APPREC-INCREASE-CURRENT> 807,886
<NET-CHANGE-FROM-OPS> 5,963,568
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 6,364,101
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 18.529
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0.144
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 19.605
<EXPENSE-RATIO> 0.003
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM STATEMENTS
OF ASSETS & LIABILITIES; STATEMENT OF OPERATIONS; STATEMENT OF CHANGES IN NET
ASSETS; STATEMENT OF CASH FLOWS; PER SHARE TABLE; SCHEDULE OF INVESTMENTS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 001
<NAME> THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 215,915,936
<INVESTMENTS-AT-VALUE> 199,706,879
<RECEIVABLES> 2,375,487
<ASSETS-OTHER> 33,571,491
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 235,653,857
<PAYABLE-FOR-SECURITIES> 1,947,971
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,414,457
<TOTAL-LIABILITIES> 3,362,428
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 11,848,275
<SHARES-COMMON-PRIOR> 11,848,275
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 232,291,429
<DIVIDEND-INCOME> 334,550
<INTEREST-INCOME> 1,089,040
<OTHER-INCOME> 18,422,832
<EXPENSES-NET> 8,798,071
<NET-INVESTMENT-INCOME> 11,048,351
<REALIZED-GAINS-CURRENT> 91,538
<APPREC-INCREASE-CURRENT> 1,711,305
<NET-CHANGE-FROM-OPS> 12,759,636
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 12,759,656
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,121,474
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 8,798,071
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 18.529
<PER-SHARE-NII> 0.933
<PER-SHARE-GAIN-APPREC> 0.144
<PER-SHARE-DIVIDEND> 0.028
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 19.605
<EXPENSE-RATIO> 0.039
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
