PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT, POS AM, 1999-02-10

PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT
POS AM, 1999-02-10

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AS FILED WITH THE SEC ON ____________________. REGISTRATION NO. 33-86780

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------

FORM S-1

POST-EFFECTIVE AMENDMENT NO. 5

REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933

PRUCO LIFE INSURANCE COMPANY

IN RESPECT OF

PRUCO LIFE VARIABLE CONTRACT
REAL PROPERTY ACCOUNT
(Exact Name of Registrant)

C/O PRUCO LIFE INSURANCE COMPANY

213 WASHINGTON STREET
NEWARK, NEW JERSEY 07102-2992
(800) 437-4016
(Address and telephone number of principal executive offices)

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

THOMAS C. CASTANO
ASSISTANT SECRETARY
PRUCO LIFE INSURANCE COMPANY
213 WASHINGTON STREET
NEWARK, NEW JERSEY 07102-2992
(800) 437-4016
(Name, address, and telephone number of agent for service)

Copy to:
JEFFREY C. MARTIN
SHEA & GARDNER
1800 MASSACHUSETTS AVENUE, N.W.
WASHINGTON, D.C. 20036

-----------------------
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CROSS REFERENCE SHEET

(AS REQUIRED BY FORM S-1)

S-1 ITEM NUMBER AND CAPTION LOCATION
- --------------------------- --------
<S> <C>

1. Forepart of the Registration Statement and
Outside Front Cover Page of Prospectus........ Cover

2. Inside Front and Outside Back Cover Pages of
Propectus..................................... Inside Front Cover

3. Summary Information, Risk Factors and Ratio of
Earnings to Fixed Charges..................... Prospectus Cover; Summary; Risk Factors

4. Use of Proceeds............................... Investment Policies; Current Real Estate-Related
Investments; Management's Discussion and Analysis of
Financial Condition and Results of Operations

5. Determination of Offering Price............... Not Applicable

6. Dilution......................................
Not Applicable

7. Selling Security Holders...................... Not Applicable

8. Plan of Distribution.......................... Distribution of the Contracts

9. Description of Securities to be Registered.... Prospectus Cover; General Information about Pruco Life
Insurance Company, Pruco Life Variable Contract Real
Property Account, The Prudential Variable Contract Real
Property Partnership, and The Investment Manager; The
Real Property Account's Unavailability to Certain
Contracts; Valuation of Contract Owners' Participating
Interests; Charges; Restrictions on Withdrawals;
Restrictions on Contract Owners' Investment in the Real
Property Account

10. Interests of Named Experts and Counsel....... Not Applicable

11. Information With Respect to the
Registrant................................... General Information about Pruco Life Insurance Company,
Pruco Life Variable Contract Real Property Account, The
Prudential Variable Contract Real Property Partnership,
and The Investment Manager; Investment Policies; Current
Real Estate-Related Investments; Management's Discussion
and Analysis of Financial Condition and Results of
Operations; Per Share Investment Income and Capital
Changes; Investment Restrictions; Conflicts of Interest;
Valuation of Contract Owners' Participating Interests;
Financial Statements; Litigation; State Regulation;
Federal Income Tax Considerations
12. Disclosure of Commission Position on Indemni-
fication for Securities Act Liabilities...... Not Applicable

</TABLE>
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PART I

INFORMATION REQUIRED IN PROSPECTUS
<PAGE>

PROSPECTUS

MAY 1, 1999

PRUCO LIFE
VARIABLE CONTRACT
REAL PROPERTY ACCOUNT

This prospectus describes the real estate investment option that Pruco Life
Insurance Company ("Pruco Life"), a stock life insurance company that is a
wholly-owned subsidiary of The Prudential Insurance Company of America
("Prudential"), offers under certain variable life insurance and variable
annuity contracts (the "Contracts") it issues. This prospectus is attached to
the Contract prospectuses, which describes the Contracts. Although the Contract
terms vary, each allows their owners to allocate their net premiums or purchase
payments to the Pruco Life Variable Contract Real Property Account (the "Real
Property Account"), a separate account of Pruco Life.

The assets of the Real Property Account are invested entirely through The
Prudential Variable Contract Real Property Partnership (the "Partnership") which
is a general partnership that was established by Pruco Life, Prudential and
Pruco Life Insurance Company of New Jersey ("Pruco Life of New Jersey"). The
Partnership invests the assets allocated to the real property investment option
under the Contracts issued by those companies. Through the Partnership, the
Real Property Account assets are invested primarily (at least 65%) in direct
ownership interests in income-producing real property, participating mortgage
loans originated by the Partnership, and real property sale-leaseback
transactions negotiated by Prudential on behalf of the Partnership. The large
majority of these real estate investments will be in direct ownership interests
in real estate. The Partnership has approximately 10% of its assets held in
cash or invested in liquid securities and instruments. The remainder of the
Partnership's assets may be invested in other types of real estate-related
investments. The portion of the Contract owner's Contract Fund allocated to
the Real Property Account, will vary with the performance of the Real Property
Account's investments through the Partnership.

THIS OFFERING INVOLVES CERTAIN RISK FACTORS. INVESTMENT IN THE REAL PROPERTY
ACCOUNT INVOLVES A SIGNIFICANT DEGREE OF RISK, ATTRIBUTABLE IN PART TO THE FACT
THAT THE ASSETS HELD IN THE PARTNERSHIP MAY NOT BE READILY SALABLE ON
COMMERCIALLY REASONABLE TERMS. SEE RISK FACTORS, PAGE 10. MOST OF THE ASSETS
OF THE REAL PROPERTY ACCOUNT AND PARTNERSHIP MAY NOT BE AS LIQUID AS THE
INVESTMENTS GENERALLY MADE BY VARIABLE LIFE INSURANCE AND VARIABLE ANNUITY
SEPARATE ACCOUNTS (SEE LIQUIDITY OF INVESTMENTS, PAGE 10) AND THE ABILITY OF THE
CONTRACT OWNER TO WITHDRAW OR TRANSFER PORTIONS OF HIS OR HER CONTRACT FUND
ALLOCATED TO THE REAL PROPERTY ACCOUNT MAY BE SUBJECT TO CERTAIN RESTRICTIONS.
SEE RESTRICTIONS ON WITHDRAWALS, PAGE 16. MOREOVER, THE INVESTMENTS AND
OPERATION OF THE REAL PROPERTY ACCOUNT AND PARTNERSHIP MAY BE SUBJECT TO CERTAIN
CONFLICTS OF INTEREST. SEE CONFLICTS OF INTEREST, PAGE 12.

PLEASE READ THIS PROSPECTUS AND KEEP IT FOR FUTURE REFERENCE. IT IS ATTACHED TO
A CURRENT PROSPECTUS FOR THE RELATED VARIABLE CONTRACT.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION OF THE CONTRARY IS A
CRIMINAL OFFENSE.

PRUCO LIFE INSURANCE COMPANY
213 Washington Street
Newark, New Jersey 07102-2992
Telephone: (800) 437-4016

PRPA-1 Ed 5-99
<PAGE>

PROSPECTUS CONTENTS

PAGE

PER SHARE INVESTMENT INCOME, CAPITAL CHANGES AND SELECTED RATIOS.............. 1

SUMMARY....................................................................... 2

GENERAL INFORMATION ABOUT PRUCO LIFE INSURANCE COMPANY, PRUCO LIFE VARIABLE
CONTRACT REAL PROPERTY ACCOUNT, THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY
PARTNERSHIP, AND THE INVESTMENT MANAGER....................................... 3
PRUCO LIFE INSURANCE COMPANY................................................. 3
PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT........................... 3
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP................... 4
THE INVESTMENT MANAGER....................................................... 4

INVESTMENT POLICIES........................................................... 5
OVERVIEW..................................................................... 5
INVESTMENT IN DIRECT OWNERSHIP INTERESTS IN REAL ESTATE...................... 5
INVESTMENTS IN MORTGAGE LOANS................................................ 6
INVESTMENTS IN SALE-LEASEBACKS............................................... 7
GENERAL INVESTMENT AND OPERATING POLICIES.................................... 8

CURRENT REAL ESTATE-RELATED INVESTMENTS....................................... 9
PROPERTIES................................................................... 9

RISK FACTORS..................................................................10
LIQUIDITY OF INVESTMENTS.....................................................10
GENERAL RISKS OF REAL PROPERTY INVESTMENTS...................................11
RELIANCE ON THE PARTNERS AND THE INVESTMENT MANAGER..........................12

INVESTMENT RESTRICTIONS.......................................................12

CONFLICTS OF INTEREST.........................................................13

THE REAL PROPERTY ACCOUNT'S UNAVAILABILITY TO CERTAIN CONTRACTS...............15

VALUATION OF CONTRACT OWNERS' PARTICIPATING INTERESTS.........................15

BORROWING BY THE PARTNERSHIP..................................................17

CHARGES.......................................................................17

RESTRICTIONS ON WITHDRAWALS...................................................17

RESTRICTIONS ON CONTRACT OWNERS' INVESTMENT IN THE REAL PROPERTY ACCOUNT......18

FEDERAL INCOME TAX CONSIDERATIONS.............................................18

DISTRIBUTION OF THE CONTRACTS.................................................18

STATE REGULATION..............................................................19

ADDITIONAL INFORMATION........................................................19

EXPERTS.......................................................................19

LITIGATION....................................................................19

YEAR 2000 COMPLIANCE..........................................................19
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REPORTS TO CONTRACT OWNERS....................................................21

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS....................................................................21
LIQUIDITY AND CAPITAL RESOURCES..............................................21
RESULTS OF OPERATIONS........................................................22

FINANCIAL STATEMENTS..........................................................27

FINANCIAL STATEMENTS OF PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT....A1

FINANCIAL STATEMENTS OF THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY
PARTNERSHIP...................................................................B1

Pruco Life is subject to the informational requirements of the Securities
Exchange Act of 1934 and in accordance therewith files reports and other
information with the Securities and Exchange Commission. All reports and
information filed by the Pruco Life can be inspected and copied at the Public
Reference Section of the Commission at 450 Fifth Street, Room 1024, N.W.,
Washington, D.C. 20549, and at certain of its regional offices: Midwestern
Regional Office, CitiCorp Center, 500 West Madison Street, Suite 1400, Chicago,
IL 60661-2511; Northeastern Regional Office SEC, 7 World Trade Center, Suite
1300, New York, NY 10048.

<PAGE>

PER SHARE INVESTMENT INCOME, CAPITAL CHANGES AND SELECTED RATIOS

TO BE FILED WITH POST-EFFECTIVE AMENDMENT

1 - Real Property
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SUMMARY

This prospectus describes the Real Property Account, which is a separate account
of Pruco Life created pursuant to Arizona insurance law. See PRUCO LIFE
INSURANCE COMPANY, page 3 and PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY
ACCOUNT, page 3. Under that law, the assets of the Real Property Account are
not chargeable with liabilities arising out of any other business of Pruco Life.
Owners of certain variable life insurance and variable annuity contracts issued
by Pruco Life may allocate a portion of their net premiums or purchase payments,
or transfer a portion of the total amount invested under their Contracts (known
as the "Contract Fund"), to the Real Property Account, and values and benefits
under the Contracts will thereafter reflect the investment experience of the
Real Property Account. Contract owners, not Pruco Life, bear the risks and
rewards of the investment performance of the Real Property Account to the extent
of the Contract owner's Contract Fund invested in the Real Property Account.
This prospectus is attached to and should be read in conjunction with the
prospectus for the Contract you selected.

The Real Property Account assets are invested primarily in income-producing real
estate through the Partnership. See THE PRUDENTIAL VARIABLE CONTRACT REAL
PROPERTY PARTNERSHIP, page 4. Prudential, the parent of Pruco Life and a mutual
insurance company organized under the laws of New Jersey, is the investment
manager of the Partnership. See THE INVESTMENT MANAGER, page 4. The
Partnership invests at least 65% of its assets in direct ownership interests in
(1) income-producing real estate; (2) participating mortgage loans (mortgages
providing for participation in the revenues generated by, or the appreciation
of, the underlying property, or both) originated for the Partnership; and (3)
real property sale-leasebacks negotiated by Prudential on behalf of the
Partnership. The large majority of these real estate investments will be in
direct ownership interests in income producing real estate, such as office
buildings, shopping centers, apartments, industrial properties or hotels. The
Partnership may also invest up to 5% of its assets in direct ownership interests
in agricultural land. Approximately 10% of the Partnership's assets will be
held in cash or invested in liquid instruments and securities. The remainder of
the Partnership's assets may be invested in other types of real estate-related
investments, including non-participating mortgage loans and real estate
investment trusts. The investment objectives of the Partnership are to: (1)
preserve and protect the Partnership's capital; (2) compound income by
reinvesting investment cash flow; and (3) over time, increase the income amount
through appreciation in the value of permitted investments and, to a lesser
extent, through mortgage loans and sale-leaseback transactions. See INVESTMENT
POLICIES, page 5. There is no assurance that the Partnership's objectives will
be attained.

Investment in the Real Property Account, and thereby, participation in the
investment experience of the Partnership, involves significant risks. See RISK
FACTORS, page 10. These include the risk of fluctuating real estate values and
the risk that the appraised or estimated values of the Partnership's real
property investments will not be realized upon their disposition. Many of the
Partnership's real estate investments will not be quickly convertible into cash
through disposition on commercially reasonable terms. Therefore, the Real
Property Account should be viewed as a long-term investment. See RESTRICTIONS
ON WITHDRAWALS, page 16. For other risk factors associated with the Real
Property Account, see RISK FACTORS, page 10.

Pruco Life has taken steps to ensure that the Real Property Account and
Partnership will be sufficiently liquid to satisfy all withdrawal or loan
requests promptly (within seven days), see LIQUIDITY OF INVESTMENTS, page 10.
Prudential's management of the Partnership is subject to certain conflicts of
interest, including the possible acquisition of properties from affiliates. See
CONFLICTS OF INTEREST, page 12.

Prudential charges the Partnership a daily investment management fee which
amounts to 1.25% per year of the average daily gross assets of the Partnership.
The Partnership also compensates Prudential for providing certain accounting and
administrative services. See CHARGES, page 16.

The portion of your Contract Fund allocated to the Real Property Account is
subject to the same Contract charges as the portion of your Contract Fund
allocated to The Prudential Series Fund, Inc. (the "Series Fund"). The Series
Fund is the underlying funding vehicle for the other variable investment
options available to Contract owners. You should read the Contract prospectus
for a description of those charges. The Real Property Account is currently
available to purchasers of Pruco Life's Variable APPRECIABLE LIFE(R) Insurance
Contracts, Variable Life Insurance Contracts, DISCOVERY(R) Life Plus Contracts,
and DISCOVERY(R)Plus Contracts. It is not available on Contracts that are
purchased in connection with IRAs, Section 403(b) annuities, and other tax-
qualified plans, that are subject to the Employee Retirement Income Security Act
of 1974 ("ERISA") or to the prohibited transaction excise tax provisions of the
Internal Revenue Code. See THE REAL PROPERTY ACCOUNT'S UNAVAILABILITY TO CERTAIN
CONTRACTS, page 14. For example, a VARIABLE APPRECIABLE LIFE Contract owner who
elects to invest part of his or her net premiums in the Pruco Life Variable
Appreciable Account and part in the Real Property Account will be

2 - Real Property
<PAGE>

subject to the same (1) monthly sales load charges; (2) risk charges; (3)
administrative charges; (4) insurance charges; and (5) contingent deferred sales
charges without regard to what portion is invested in the Pruco Life Variable
Appreciable Account and what portion is invested in the Real Property Account.
The Real Property Account has established different subaccounts, relating to the
different types of variable Contracts that may participate in the Real Property
Account. These subaccounts provide the mechanism and maintain the records
whereby these different Contract charges are made.

THIS PROSPECTUS MAY ONLY BE OFFERED IN JURISDICTIONS IN WHICH THE OFFERING IS
LAWFUL. NO PERSON IS AUTHORIZED TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH
THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS.

GENERAL INFORMATION ABOUT PRUCO LIFE INSURANCE COMPANY, PRUCO LIFE VARIABLE
CONTRACT REAL PROPERTY ACCOUNT, THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY
PARTNERSHIP, AND THE INVESTMENT MANAGER

PRUCO LIFE INSURANCE COMPANY

Pruco Life Insurance Company ("Pruco Life") is a stock life insurance company,
organized in 1971 under the laws of the State of Arizona. It is licensed to
sell life insurance and annuities in the District of Columbia, Guam, and in all
states except New York. These Contracts are not offered in any state in which
the necessary approvals have not yet been obtained.

Pruco Life is a wholly-owned subsidiary of Prudential, a mutual insurance
company founded in 1875 under the laws of the State of New Jersey. Prudential
is currently considering reorganizing itself into a stock company. This form of
reorganization, known as demutualization, is a complex process that could take
two years to complete. No plan of demutualization has been adopted yet by the
Company's Board of Directors. Any plan of reorganization adopted by the Board
of Directors would have to be approved by qualified policyholders and
appropriate state insurance regulators. Throughout the process, there will be a
continuing evaluation by the Board of Directors and management of the Company as
to the desirability of demutualization. The Board of Directors, in its
discretion, may choose not to demutualize or to delay demutualization for a
time.

Should Prudential convert to a stock company, the allocation of stock, cash or
other benefits to policyholders and Contract owners would be made in accordance
with procedures set forth in the plan of demutualization. In recent
demutualizations, policyholders and contract owners of the converting mutual
insurer have been eligible to receive consideration while policyholders and
contract owners of the insurer's stock subsidiaries have not. It has not yet
been determined whether any exceptions to that general approach will be made
with respect to policyholders and Contract owners of Prudential's subsidiaries,
including the Pruco Life insurance companies.

As of December 31, 1998, Prudential has invested over ___ million in Pruco Life
in connection with Pruco Life's organization and operation. Prudential intends
to make additional capital contributions to Pruco Life as needed to enable it to
meet its reserve requirements and expenses in connection with its business.
However, Prudential is under no obligation to make such contributions and its
assets do not back the benefits payable under the Contract. Pruco Life's
consolidated financial statements appear in either the attached Contract
prospectus or in the statement of additional information for the Contract
prospectus, which is available upon request.

PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT

The Pruco Life Variable Contract Real Property Account (the "Real Property
Account") was established on August 27, 1986 under Arizona law as a separate
investment account. The Account meets the definition of a "separate account"
under the federal securities laws. The Real Property Account holds assets that
are separated from all of Pruco Life's other assets. The Real Property Account
is used only to support those variable benefits payable under the Contracts that
are funded by the real estate investment option.

The Contract obligations to Contract owners and beneficiaries are general
corporate obligations of Pruco Life. Pruco Life is also the legal owner of the
Real Property Account assets. Pruco Life will maintain assets in the Real
Property Account with a total market value at least equal to the amounts
credited under the real estate option to all the

3 - Real Property
<PAGE>

Contracts participating in the Real Property Account. These assets may not be
charged with liabilities which arise from any other business that Pruco Life
conducts. In addition to these assets, the Real Property Account's assets may
include funds contributed by Pruco Life, and reflect any accumulations of the
charges Pruco Life makes against the Real Property Account, see VALUATION
CONTRACT OWNER'S PARTICIPATING INTERESTS, page 15.

Pruco Life will bear the risks and rewards of the Real Property Account's
investment experience to the extent of its investment in the Real Property
Account. Pruco Life may withdraw or redeem its investment in the Real Property
Account at any time. We will not make any such redemption if it will have a
materially adverse impact on the Real Property Account. Accumulations of
charges will be withdrawn on a regular basis.

Unlike the other separate accounts funding the Contracts, the Real Property
Account is not registered with the Securities and Exchange Commission ("SEC")
under the Investment Company Act of 1940 as an investment company. For state law
purposes the Real Property Account is treated as a part or division of Pruco
Life. Contract owners have no voting rights with respect to the Real Property
Account. The Real Property Account is under the control and management of Pruco
Life. The Board of Directors and officers of Pruco Life are responsible for
the management of the Real Property Account. No salaries of Pruco Life
personnel are paid by the Real Property Account. Information regarding the
directors and officers of Pruco Life is contained in the attached prospectus for
the Contract. The financial statements of the Real Property Account begin on
page A1.

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

All amounts allocated to the Real Property Account are invested through The
Prudential Variable Contract Real Property Partnership (the "Partnership"), a
general partnership organized under New Jersey law on April 29, 1988. The only
partners in the Partnership (collectively, the "Partners") are Prudential, Pruco
Life and Pruco Life Insurance Company of New Jersey ("Pruco Life of New
Jersey"), an indirect wholly-owned subsidiary of Prudential. The Partnership
was established so the assets allocated to the real estate investment options
under variable life insurance and variable annuity contracts issued by these
three companies could be invested in a commingled pool. This was done to
provide greater diversification of investments and lower transaction costs than
would be possible if the assets were separately invested by each company. All
amounts allocated to the Real Property Account are contributed by Pruco Life to
the Partnership. Pruco Life's general partnership interest in the Partnership
is held in the Real Property Account.

The initial contributions to the Partnership were made on April 29, 1988.
Prudential contributed $100,000 in cash to the Partnership; Pruco Life of New
Jersey contributed $100,000 in cash to the Partnership; and Pruco Life
contributed the real estate and other assets held in its real estate separate
account, which had been actively investing in real estate for more than a year.
Those assets had an estimated market value of $91,538,737 on that date. Each
Partner is entitled to its prospective proportionate share of all income, gains,
and losses of the Partnership.

The Partnership assets are valued on each business day. The value of each
Partner's interest will fluctuate with the investment performance of the
Partnership. In addition, the Partners' interests are proportionately
readjusted, at the current value, on each day when a Partner makes a
contribution to, or withdrawal from, the Partnership. When you choose to
allocate a portion of your net premiums or purchase payments, or transfer a
portion of Contract Fund, to the Real Property Account, Pruco Life will
contribute that amount to the Partnership as a capital contribution. It will
correspondingly increase the Real Property Account's interest in the
Partnership. Values and benefits under the Contract will thereafter vary with
the performance of the Partnership's investments. For more information on how
the value of your interest in the Real Property Account and the value of the
Partnership's investments are calculated, see VALUATION OF CONTRACT OWNERS'
PARTICIPATING INTERESTS, page 14.

Contract owners have no voting rights with respect to the Partnership
operations. The financial statements of the Partnership begin on page B1.

THE INVESTMENT MANAGER

The Partnership has retained Prudential to act as investment manager of the
Partnership. Prudential, on behalf of its general account and separate
accounts, is one of the largest real estate investors in North America.

Currently, Prudential directly and through affiliates invests in and manages
real estate equities and mortgages for its general account and for several
separate accounts. Prudential and its affiliates also participate in real
estate ventures through public and private partnerships. As of December 31,
1998, Prudential owned or controlled $ billion of net domestic real estate
mortgages and equities of which $ billion is in the general account, $
billion is in separate

4 - Real Property
<PAGE>

accounts and $ billion is in subsidiaries. Statement value for general account
assets is recorded at depreciated cost and for separate account assets at market
value. For a discussion of how the Partnership's real estate-related investments
are valued, see VALUATION OF CONTRACT OWNERS' PARTICIPATING INTERESTS, page
14.

Prudential has organized its real estate activities into separate business units
within Prudential's Private Asset Management Group. Prudential Real Estate
Investors (PREI) is the unit responsible for the investments of the Real
Property Partnership. Currently, PREI's investment staff is separate and
distinct from the staff handling Prudential's general account real estate
activities although Prudential may, in the near future, consolidate many of the
general account investment management activities under PREI.

PREI provides investment management services on a domestic basis and also acts
as part of a global team providing these services to institutional investors
worldwide. PREI is headquartered in Parsippany, New Jersey and has 4 field
offices across the United States. As of December 31, 1998, PREI had under
management approximately million net rentable square feet of office real
estate, million net rentable square feet of industrial real estate,
million net rentable square feet of retail real estate, hotel rooms and
multifamily residential units.

Various divisions of Prudential, such as the general account real estate
operation and the general account mortgage operation, may provide PREI with
services that may be required in connection with the Partnership's investment
management agreement. The mortgage operation currently manages a portfolio of
mortgage loans totaling approximately $ billion.

INVESTMENT POLICIES

OVERVIEW

The Partnership has an investment policy of investing at least 65% of its assets
in direct ownership interests in income-producing real estate, participating
mortgage loans originated for the Partnership, and real property sale-leasebacks
negotiated by Prudential on behalf of the Partnership. It is expected that the
largest portion of these real estate investments will be in direct ownership
interests (including fee interests, leaseholds interests, and interests in
entities holding such interests) in income-producing real estate. The
Partnership may also invest up to 5% of its assets in direct ownership interests
in agricultural land. Approximately 10% of the Partnership's assets will
ordinarily be held in cash or invested in liquid instruments and securities,
although the Partners reserve discretion to increase this amount to meet
partnership liquidity requirements, for example. The remainder of the
Partnership's assets may be invested in other types of real estate-related
investments, including non-participating mortgage loans and real estate
investment trusts.

INVESTMENT IN DIRECT OWNERSHIP INTERESTS IN REAL ESTATE

ACQUISITION. The Partnership's principal investment policy involves acquiring
direct ownership interests in existing (including newly constructed) income-
producing real estate, including office buildings, shopping centers, apartment
buildings, industrial properties, and hotels. The Partnership may also invest
up to 5% of its assets in direct ownership interests in agricultural land.
Property acquisitions will generally be carried out by the real estate
acquisition offices in PREI's network of field offices located in Parsippany,
New Jersey, Atlanta, Georgia, Chicago, Illinois and Los Angeles, California. A
field office or an affiliate of Prudential supervises the management of
properties in all of Prudential's accounts.

Proposals to acquire properties for the Partnership are usually originated by a
field office. They are reviewed and approved by the Investment Management
Committee of PREI. Depending upon the size of the acquisition and other
factors, a proposed real estate investment may also be submitted for review to
the Finance Committee of the Board of Directors of Prudential.

Although percentage limitations on the type and location of properties that may
be acquired by the Partnership have not been established, the Partnership plans
to diversify its investments through the type of property acquired and its
geographic location. The Partnership's investments will be maintained to meet
the Internal Revenue Code diversification requirements. See GENERAL INVESTMENT
AND OPERATING POLICIES, page 8.

In order for the Partnership to meet its stated objectives, it will have to
acquire properties that generate more cash than needed to pay its gross
operating expenses. To do this, a substantial portion of the Partnership's
assets will be invested in properties with operating histories that include
established rent and expense schedules. However, the

5 - Real Property
<PAGE>

Partnership may also acquire recently constructed properties that may be subject
to agreements with sellers providing for certain minimum levels of income. Upon
the expiration of or default under these agreements, there is no assurance that
the Partnership will maintain the level of operating income necessary to produce
the return it was previously experiencing. The Partnership may purchase real
property from Prudential or its affiliates under certain conditions. See
CONFLICTS OF INTEREST, page 12.

The property acquired by the Partnership is usually real estate which is ready
for use. Accordingly, the Partnership is not usually subject to the development
or construction risks inherent in the purchase of unimproved real estate. From
time to time, however, the Partnership may invest in a developmental real estate
project that is consistent with the Partnership's objectives. The Partnership
will then be subject to those risks.

The Partnership will often own the entire fee interest in an acquired property,
but it may also hold other direct ownership interests. These include, but are
not limited to, partnership interests, limited liability company interests,
leaseholds, and tenancies in common.

PROPERTY MANAGEMENT AND LEASING SERVICES. The Partnership usually retains a
management company operating in the area of a property to perform local property
management services. A field office or other affiliate of Prudential will
usually: (1) supervise and monitor the performance of the local management
company; (2) determine and establish the required accounting information to be
supplied; (3) periodically inspect the property; (4) review and approve property
operating budgets; and (5) review actual operations to ensure compliance with
budgets. In addition to day-to-day management of the property, the local
management company will have responsibility for: (1) supervision of any on-site
personnel; (2) negotiation of maintenance and service contracts; (3) major
repair advice; (4) replacements and capital improvements; (5) the review of
market conditions to recommend rent schedule changes; and (6) creation of
marketing and advertising programs to obtain and maintain good occupancy rates
by responsible tenants. The local management company fees will reduce the cash
flow from the property to the Partnership.

The Partnership usually retains a leasing company to perform leasing services on
any property with actual or projected vacancies. The leasing company will
coordinate with the property management company to provide marketing and leasing
services for the property. When the property management company is qualified to
handle leasing, it may also be hired to provide leasing services. Leasing
commissions and expenses will reduce the cash flow from the property to the
Partnership.

Prudential may, on behalf of the Partnership, hire an affiliate to perform
property management or leasing services. The affiliate's services must be
provided on terms competitive with unaffiliated entities performing similar
services in the same geographic area. See CONFLICTS OF INTEREST, page 12.

Annually, the field office which oversees the management of each property owned
by the Partnership will, together with the local property management firm,
develop a business plan and budget for each property. It will consider, among
other things, the projected rollover of individual leases, necessary capital
expenditures and any expansion or modification of the use of the property. The
approval of an officer of PREI is required. The field office will also
periodically report the operating performance of the property to PREI.

INVESTMENTS IN MORTGAGE LOANS

TYPES OF MORTGAGE LOANS. The Partnership is authorized to invest in mortgage
loans, including conventional mortgage loans that may pay fixed or variable
rates of interest and mortgage loans that have a "participation" (as defined
below). The Partnership will not make mortgage loans to Prudential
affiliates.

The Partnership intends to give mortgage loans on: (1) commercial properties
(such as office buildings, shopping centers, hotels, industrial properties, and
office showrooms); (2) agricultural properties; and (3) residential properties
(such as garden apartment complexes and high-rise apartment buildings). These
loans are usually secured by properties with income-producing potential based on
historical or projected data. Usually, they are not personal obligations of the
borrower and are not insured or guaranteed.

1. FIRST MORTGAGE LOANS. The Partnership will primarily make first mortgage
loans secured by mortgages on existing income-producing property. These loans
may provide for interest-only payments and a balloon payment at maturity.

2. WRAPAROUND MORTGAGE LOANS. The Partnership also may make wraparound mortgage
loans on income-producing properties which are already mortgaged to
unaffiliated entities. A wraparound mortgage loan is a mortgage with a
principal amount equal to the outstanding balance of the prior existing mortgage
plus the amount to be advanced by

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the lender under the wraparound mortgage loan, thereby providing the property
owner with additional funds without disturbing the existing loan. The terms of
wraparound mortgage loans made by the Partnership require the borrower to make
all principal and interest payments on the underlying loan to the Partnership,
which will then pay the holder of the prior loan. Because the existing first
mortgage loan is preserved, the lien of the wraparound mortgage loan is junior
to it. The Partnership will make wraparound mortgage loans only in states where
local applicable foreclosure laws permit a lender, in the event of the
borrower's default, to obtain possession of the property which secures the
loan.

3. JUNIOR MORTGAGE LOANS. The Partnership may also invest in other junior
mortgage loans. Junior mortgage loans will be secured by mortgages which are
subordinate to one or more prior liens on the real property. They will
generally, but not in all cases, provide for repayment in full prior to the end
of the amortization period of the senior mortgages. Recourse on such loans will
include the real property encumbered by the Partnership's mortgage and may also
include other collateral or personal guarantees by the borrower.

The Partnership will generally make junior or wraparound mortgage loans only if
the senior mortgage, when combined with the amount of the Partnership's mortgage
loan, would not exceed the maximum amount which the Partnership would be willing
to commit to a first mortgage loan and only under such circumstances and on such
property as to which the Partnership would otherwise make a first mortgage loan.

4. PARTICIPATIONS. The Partnership may make mortgage loans which, in addition
to charging a base rate of interest, will include provisions permitting the
Partnership to participate (a "participation") in the economic benefits of the
underlying property. The Partnership would receive a percentage of: (1) the
gross or net revenues from the property operations; and/or (2) the increase in
the property value realized by the borrower, such as through sale or refinancing
of the property. These arrangements may also grant the Partnership an option to
acquire the property or an undivided interest in the property securing the loan.
When the Partnership negotiates the right to receive additional interest in the
form of a percentage of the gross revenues or otherwise, the fixed cash return
to the Partnership from that investment will generally be less than would
otherwise be the case. It is expected that the Partnership will be entitled to
percentage participations when the gross or net revenues from the property
operations exceed a certain base amount. This base amount may be adjusted if
real estate taxes or similar charges are increased. The form and extent of the
additional interest that the Partnership receives will vary with each
transaction depending on: (1) the equity investment of the owner or developer of
the property; (2) other financing or credit obtained by the owner or developer;
(3) the fixed base interest rate on the mortgage loan by the Partnership; (4)
any other security arrangement; (5) the cash flow and pro forma cash flow from
the property; and (6) market conditions.

The Partnership intends to use this additional interest as a hedge against
inflation. It assumes that as prices increase in the economy, the rental prices
on properties, such as shopping centers or office buildings, will increase and
there should be a corresponding increase in the property value. There is no
assurance that additional interest or increased property values will be
received. In that event, the Partnership will be entitled to receive only the
fixed portion of its return.

STANDARDS FOR MORTGAGE LOAN INVESTMENTS. In making mortgage loans, the
investment manager will consider relevant real property and financial factors,
including: (1) the location, condition, and use of the underlying property; (2)
its operating history; (3) its future income-producing capacity; and (4) the
quality, experience, and creditworthiness of the unaffiliated borrower.

Before the Partnership makes a mortgage loan, the investment manager analyzes
the fair market value of the underlying real estate. In general, the amount of
each mortgage loan made by the Partnership will not exceed, when added to the
amount of any existing indebtedness, 80% of the estimated or appraised value of
the property mortgaged.

DEALING WITH OUTSTANDING LOANS. The Partnership may sell its mortgage loans
prior to maturity if it is deemed advisable by the investment manager and
consistent with the Partnership's investment objectives. The investment manager
may also: (1) extend the maturity of any mortgage loan made by the Partnership;
(2) consent to a sale of the property subject to a mortgage loan or finance the
purchase of a property by making a new mortgage loan in connection with the sale
of a property (either with or without requiring the repayment of the mortgage
loan); (3) renegotiate the terms of a mortgage loan; and (4) otherwise deal with
the mortgage loans of the Partnership.

INVESTMENTS IN SALE-LEASEBACKS

A portion of the Partnership's investments may consist of real property sale-
leaseback transactions ("leasebacks"). In

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this type of transaction, the Partnership will purchase land and income-
producing improvements on the land and simultaneously lease the land and
improvements, generally to the seller, under a long-term lease. Leasebacks may
be for very long periods and may provide for increasing payments from the
lessee.

Under the terms of the leaseback, the tenant will operate, or provide for the
operation of, the property and generally be responsible for the payment of all
costs, including: (1) taxes; (2) mortgage debt service; (3) maintenance and
repair of the improvements; and (4) insurance. In some cases, the Partnership
may also grant the lessee an option to acquire the land and improvements from
the Partnership after a period of years. The option exercise price would be
based on the fair market value of the property, as encumbered by the lease, the
increase in the gross revenues from the property or other objective criteria
reflecting the increased value of the property.

In some leaseback transactions, the Partnership may only purchase the land under
an income-producing building and lease the land to the building owner. In such
cases, the Partnership may seek, in addition to base rents in its leasebacks,
participations in the gross revenues from the building in a form such as a
percentage of the gross revenues of the lessee above a base amount (which may be
adjusted if real property taxes increase or for other events). The Partnership
may invest in leasebacks which are subordinate to other interests in the land,
buildings, and improvements, such as a first mortgage, other mortgage, or lien.
In those situations, the Partnership's leaseback interest will be subject to
greater risks.

The Partnership will only acquire a property for a leaseback transaction if the
purchase price is equal to not more than 100% of the estimated or appraised
property value. The Partnership may dispose of its leasebacks when deemed
advisable by the investment manager and consistent with the Partnership's
investment objectives.

GENERAL INVESTMENT AND OPERATING POLICIES

The Partnership does not intend to invest in any direct ownership interests in
properties, mortgage loans or leasebacks in order to make short-term profits
from their sale. Although in exceptional cases, the investment manager may
decide to do so in the best interests of the Partnership. The Partnership may
dispose of its investments whenever necessary to meet its cash requirements or
when it is deemed to be desirable by the investment manager because of market
conditions or otherwise. The Partnership will reinvest any proceeds from the
disposition of assets (and any cash flow from operations) which are not
necessary for the Partnership's operations and which are not withdrawn by the
Partners in order to make distributions to investors pursuant to the variable
contracts issued by the Partners, or to Prudential to return its equity
interests pursuant to this prospectus. The proceeds will be reinvested in
investments consistent with the Partnership's investment objectives and
policies.

In making investments in properties, mortgage loans, leasebacks or other real
estate investments, the Partnership will rely on the investment manager's
analysis of the investment and will not receive an independent appraisal prior
to acquisition. The Partnership expects, however, that all the properties it
owns, and most mortgage loans it holds, will be appraised or valued annually by
an independent appraiser who is a member of a nationally recognized society of
appraisers. Each appraisal will be maintained in the Partnership records for at
least five years. It should be noted that appraised values are opinions and, as
such, may not represent the true worth or realizable value of the property being
appraised.

The Partnership usually purchases properties on an unleveraged basis. The
properties acquired will typically be free and clear of mortgage debt
immediately after their acquisition. The Partnership may, however, acquire
properties subject to existing mortgage loans. In addition, the Partnership may
mortgage or acquire properties partly with the proceeds of purchase money
mortgage loans, up to 75% of the property value. Although this is not usually
done, the Partnership may do so if the investment manager decides that it is
consistent with its investment objectives. When the Partnership mortgages its
properties, it bears the expense of mortgage payments. See BORROWING BY THE
PARTNERSHIP, page 16.

The Partnership may also invest a portion of its assets in real estate limited
partnerships, limited liability companies, real estate investment trusts, and
other vehicles whose underlying investment is in real estate.

The Partnership's investments will be maintained in order to meet the
diversification requirements set forth in regulations under the Internal Revenue
Code (the "Code") relating to the investments of variable life insurance and
variable annuity separate accounts. In order to meet the diversification
requirements under the regulations, the Partnership will meet the following
test: (1) no more than 55% of the assets will be invested in any one investment;
(2) no more than 70% of the assets will be invested in any two investments; (3)
no more than 80% of the assets will be invested in any three investments; and
(4) no more than 90% of the assets will be invested in any four
investments.

8 - Real Property
<PAGE>

All interests in the same real property project are treated as a single
investment. The Partnership must meet the above test within 30 days of the end
of each calendar quarter. To comply with the diversification requirements of
the State of Arizona, the Partnership will limit additional investments in any
one parcel or related parcels to an amount not exceeding 10% of Partnership
assets.

In managing the assets of the Partnership, Prudential will use its discretion in
determining whether to foreclose on defaulting borrowers or to evict defaulting
tenants. Prudential will decide which course of action is in the best interests
of the Partnership in maintaining the value of the investment.

Property management services are usually required for the Partnership's
investments in properties which are owned and operated by the Partnership but
usually will not be needed for mortgage loans owned by the Partnership, except
for mortgage servicing. It is possible, however, that these services will be
necessary or desirable in exercising default remedies under a foreclosure on a
mortgage loan. Prudential may engage, on behalf of the Partnership, affiliated
or unaffiliated entities to provide these additional services to the
Partnership. Prudential may engage its affiliates to provide property
management, property development services, loan servicing or other services if
and only if the fees paid to an affiliate do not exceed the amount that would be
paid to an independent party for similar services rendered in the same
geographic area. See CONFLICTS OF INTEREST, page 12.

Prudential will manage the Partnership so that the Real Property Account will
not be subject to registration under the Investment Company Act of 1940. This
requires monitoring the proportion of the Partnership's assets to be placed in
various investments.

CURRENT REAL ESTATE-RELATED INVESTMENTS

The current principal real estate-related investments held by the Partnership
are described below. Many of these investments were originated by, and
previously held in, The Prudential Real Property Account of Pruco Life Insurance
Company (the former name of the Real Property Account). Prior to the formation
of the Partnership, the Real Property Account followed the same investment
policies as those followed by the Partnership. Pruco Life contributed the
assets held in the Real Property Account to the Partnership as its initial
capital contribution to the Partnership.

PROPERTIES

1. OFFICE FACILITY IN LISLE, ILLINOIS
The property is a four-story office building on 5.6 acres of land. It was
constructed in 1985 and contains approximately 102,000 square feet of leasable
space. The facility is located at 750 Warrenville Road in the Corporetum Office
Park in Lisle, Illinois, 25 miles west of downtown Chicago. At December 31,
1997 the property was 37% leased.

2. APARTMENT COMPLEX IN ATLANTA, GEORGIA
Brookwood Valley Apartments is a garden apartment complex located approximately
3 miles north of downtown Atlanta. It consists of eight three-story buildings
containing a total of 240 units. Construction of the 7.1 acre site was
completed in 1987. At December 31, 1997 the property was 99% leased.

3. WAREHOUSE FACILITY IN POMONA, CALIFORNIA
The Partnership owns six industrial buildings on approximately 28 acres in
Pomona, California. The site is approximately 30 miles east of downtown Los
Angeles. The buildings were constructed between 1982 and 1984 and contain
approximately 531,000 square feet of leasable space. The property was 100%
leased at December 31, 1997. The land, previously a ground lease, was
purchased in 1997.

4. SHOPPING CENTER IN ROSWELL, GEORGIA
King's Market shopping center was constructed in 1988. It is located
approximately 22 miles north of downtown Atlanta on a 30 acre site. It contains
approximately 300,000 square feet of rentable space. At December 31, 1997 it
was 96% leased.

5. OFFICE FACILITY IN MORRISTOWN, NEW JERSEY
This four-story suburban office building was constructed in 1981 and contains
83,000 rentable square feet. It is located on a 5.1 acre site, approximately 30
miles west of New York City. At December 31, 1997 it was 99% leased.

6. WAREHOUSE FACILITY IN BOLINGBROOK, ILLINOIS
This single-story warehouse was completed in 1989. It contains 224,640 rentable
square feet. It is located approximately 20 miles southwest of downtown
Chicago. The entire facility is leased to the Gillette Company under a

9 - Real Property
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lease expiring in October, 2000.

7. APARTMENT COMPLEX IN FARMINGTON HILLS, MICHIGAN
Indian Creek Apartments consists of fifteen two-story buildings containing 156
two-bedroom and 40 one-bedroom units. It was constructed in 1988 and is located
approximately 20 miles northwest of Detroit. At December 31, 1997, the property
was 93% leased.

8. APARTMENT COMPLEX IN RALEIGH, NORTH CAROLINA
Dunhill Trace consists of fourteen two and three story apartment buildings. It
was constructed and acquired in June, 1995 and located on a 16.2 acre site in
Northwest Raleigh, North Carolina. At December 31, 1997 it was 91% leased.

9. OFFICE FACILITY IN NASHVILLE, TENNESSEE
Westpark is a 97,000 square foot office center located in suburban Nashville,
Tennessee. The property was constructed in 1982. At December 31, 1997 the
building was 100% leased.

10. OFFICE FACILITY IN OAKBROOK TERRACE, ILLINOIS
Oakbrook Terrace Corporate Center is a 123,000 square foot building located in a
western suburb of Oakbrook Terrace, Illinois. At December 31, 1997 the
property is 100% leased.

11. OFFICE FACILITY IN BEAVERTON, OREGON
This three story office building was completed in 1995. It contains
approximately 72,000 square feet of rentable space. The building is located on
a 3.89 acre land parcel in Beaverton, Oregon. At December 31, 1997 the building
was 100% leased.

12. WAREHOUSE CENTER IN SALT LAKE CITY, UTAH
This one story warehouse-distribution facility was completed in 1997. It
contains approximately 182,500 square feet of rentable space. The building is
located on a 9.605 acre land parcel in Salt Lake City, Utah. At December 31,
1997 the building was vacant.

13. DISTRIBUTION CENTER IN AURORA, COLORADO
This industrial complex consists of two separate buildings completed in 1997.
It contains approximately 278,000 square feet of rentable space. The building
is located on an approximate 16 acre land parcel in Aurora, Colorado. At
December 31, 1997 the building was vacant.

14. OFFICE FACILITY IN BRENTWOOD, TENNESSEE
This two story office facility was completed in 1987. It contains approximately
97,000 square feet of rentable space. The building is located on a 6.96 acre
land parcel in Brentwood, Tennessee. At December 31, 1997 the building was 100%
leased.

RISK FACTORS

There are certain risk factors that you should consider before allocating a
portion of your net premiums or purchase payments, or transferring a portion of
your Contract Fund, to the Real Property Account. These include valuation
risks, see VALUATION OF CONTRACT OWNERS' PARTICIPATING INTERESTS, page 14,
certain conflicts of interest, see CONFLICTS OF INTEREST, page 12, as well as
the following risks:

LIQUIDITY OF INVESTMENTS

Because the Real Property Account will, through the Partnership, invest
primarily in real estate, its assets will not be as liquid as the investments
generally made by separate accounts of life insurance companies funding variable
life insurance and variable annuity contracts. The Partnership will, however,
hold approximately 10% of its assets in cash and liquid securities. The primary
purposes for such investments are to meet the expenses involved in the operation
of the Partnership and to allow it to have sufficient liquid assets to meet any
requests for withdrawals from the Real Property Account. Such withdrawals would
be made in order to meet requested or required payments under the Contracts.
The Partnership may also borrow funds to meet liquidity needs. See BORROWING BY
THE PARTNERSHIP, page 16.

10 - Real Property
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Pruco Life and Prudential have taken steps to ensure that the Partnership will
be liquid enough to meet all anticipated withdrawals by the Partners to meet the
separate accounts' liquidity requirements. It is possible that the Partnership
may need to dispose of a real property or mortgage loan investment promptly in
order to meet such withdrawal requests.

GENERAL RISKS OF REAL PROPERTY INVESTMENTS

By participating in the Real Property Account and thereby in the investment
performance of the Partnership, you will be subject to many of the risks of real
property investments. These include:

1. RISKS OF OWNERSHIP OF REAL PROPERTIES. The Partnership will be subject to
the risks inherent in the ownership of real property such as fluctuations in
occupancy rates and operating expenses and variations in rental schedules. It
may be adversely affected by general and local economic conditions, the supply
of and demand for properties of the type in which the Partnership invests,
zoning laws, and real property tax rates. Operation of property in which the
Partnership invests will primarily involve rental of that property to tenants.
The financial failure of a tenant resulting in the termination of their lease
might cause a reduction in the cash flow to the Partnership. If a lease is
terminated, there is no assurance that the Partnership will be able to find a
new tenant for the property on terms as favorable to the Partnership as those
from the prior tenant. Investments in hotels are subject to additional risk
from the daily turnover and fluctuating occupancy rates of hotel rooms and the
absence of long-term tenants.

The Partnership's properties will also be subject to the risk of loss due to
certain types of property damage (such as from nuclear power plant accidents and
wars) which are either uninsurable or not economically insurable.

2. RISKS OF MORTGAGE LOAN INVESTMENTS. The Partnership's mortgage loan
investments will be subject to the risk of default by the borrowers. In this
event the Partnership would have the added responsibility of foreclosing on or
pursuing other remedies on the underlying properties to protect the value of its
mortgage loans. A borrower's ability to meet its mortgage loan payments will be
dependent upon the risks generally inherent to the ownership of real property.
Mortgage loans made by the Partnership will generally not be personal
obligations of the borrowers. The Partnership will only rely on the value of
the underlying property for its security. Mechanics', materialmen's,
government, and other liens may have or obtain priority over the Partnership's
security interest in the property.

In addition, the Partnership's mortgage loan investments will be subject to
prepayment risks. If the terms of the mortgage loans permit, mortgagors may
prepay the loans, thus possibly changing the Partnership's return.

Junior mortgage loans (including wraparound mortgage loans) will be subject to
greater risk than first mortgage loans, since they will be subordinate to liens
of senior mortgagees. In the event a default occurs on a senior mortgage, the
Partnership may be required to make payments or take other actions to cure the
default (if it has the right to do so) in order to prevent foreclosure on the
senior mortgage and possible loss of all or portions of the Partnership's
investment. "Due on sale" clauses included in some senior mortgages,
accelerating the amount due under the senior mortgage in the case of sale of the
property, may be applied to the sale of the property upon foreclosure by the
Partnership of its junior mortgage loan.

The risk of lending on real estate increases as the proportion which the amount
of the mortgage loan bears to the fair market value of the real estate
increases. The Partnership usually does not make mortgage loans of over 80% of
the estimated or appraised value of the property that secures the loan. There
can be no assurance, that in the event of a default, the Partnership will
realize an amount equal to the estimated or appraised value of the property on
which a mortgage loan was made.

Mortgage loans made by the Partnership may be subject to state usury laws.
These laws impose limits on interest charges and possible penalties for
violation of those limits, including restitution of excess interest,
unenforceability of debt, and treble damages. The Partnership does not intend
to make mortgage loans at usurious rates of interest. Uncertainties in
determining the legality of interest rates and other borrowing charges under
some statutes could result in inadvertent violations, in which case the
Partnership could incur the penalties mentioned above.

3. RISKS WITH PARTICIPATIONS. The Partnership may seek to invest in mortgage
loans and leasebacks with participations, which will provide the Partnership
with both fixed interest and additional interest based upon gross revenues, sale
proceeds, and/or other variable amounts. If the interest income received by
the Partnership is based, in part, on a percentage of the gross revenues or sale
proceeds of the underlying property, the Partnership's income will depend on the
success in the leasing of the underlying property, the management and operation
of such property by the borrower or lessee and upon the market value of the
property upon ultimate disposition. If the Partnership

11 - Real Property
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negotiates a mortgage loan with a lower fixed interest rate and an additional
percentage of the gross revenues or eventual sale proceeds of the underlying
property, and the underlying property fails to generate increased revenues or to
appreciate, the Partnership will have foregone a potentially greater fixed
return without receiving the benefit of appreciation. State laws may limit
participations. In the event of the borrower's bankruptcy, it is possible that
as a result of the Partnership's interest in the gross revenues or sale
proceeds, a court could treat the Partnership as a partner or joint venturer
with the borrower, and the Partnership could lose the priority its security
interest would have been given, or be liable for the borrower's debts. The
Partnership will structure its participations to avoid being characterized as a
partner or joint venturer with the borrower.

4. RISKS WITH SALE-LEASEBACK TRANSACTIONS. Leaseback transactions typically
involve the acquisition of land and improvements thereon and the leaseback of
such land and improvements to the seller or another party. The value of the
land and improvements will depend, in large part, on the performance and
financial stability of the lessee and its tenants, if any. The tenants' leases
may have shorter terms than the leaseback. Therefore, the lessee's future
ability to meet payment obligations to the Partnership will depend on its
ability to obtain renewals of such leases or new leases upon satisfactory terms
and the ability of the tenants to meet their rental payments to the lessee.

PREI investigates the stability and creditworthiness of lessees in all
commercial properties it may acquire, including leaseback transactions.
However, a lessee in a leaseback transaction may have few, if any, assets. The
Partnership will therefore rely for its security on the value of the land and
improvements. When the Partnership's leaseback interest is subordinate to other
interests in the land or improvements, such as a first mortgage or other lien,
the Partnership's leaseback will be subject to greater risk. A default by a
lessee or other premature termination of the leaseback may result in the
Partnership being unable to recover its investment unless the property is sold
or leased on favorable terms. The ability of the lessee to meet its obligations
under the leaseback, and the value of a property, may be affected by a number of
factors inherent in the ownership of real property which are described above.
Furthermore, the long-term nature of a leaseback may, in the future, result in
the Partnership receiving lower average annual rentals. However, this risk may
be lessened if the Partnership obtains participations in connection with its
leasebacks.

RELIANCE ON THE PARTNERS AND THE INVESTMENT MANAGER

You do not have a vote in determining the policies of the Partnership or the
Real Property Account. You also have no right or power to take part in the
management of the Partnership or the Real Property Account. The investment
manager alone, subject to the supervision of the Partners, will make all
decisions with respect to the management of the Partnership, including the
determination as to what properties to acquire, subject to the investment
policies and restrictions. Although the Partners have the right to replace
Prudential as the investment manager, it should be noted that Pruco Life is a
direct wholly-owned subsidiary of Prudential, and Pruco Life of New Jersey is an
indirect wholly-owned subsidiary of Prudential.

The Partnership will compete in the acquisition of its investments with many
other individuals and entities engaged in real estate activities, including the
investment manager and its affiliates. See CONFLICTS OF INTEREST, page 12.
There may be intense competition in obtaining properties or mortgages in which
the Partnership intends to invest. Competition may result in increased costs of
suitable investments.

Since the Partnership will continuously look for new investments, you will not
be able to evaluate the economic merit of many of the investments which may be
acquired by the Partnership. You must depend upon the ability of the investment
manager to select investments.

INVESTMENT RESTRICTIONS

The Partnership has adopted certain restrictions relating to its investment
activities. These restrictions may be changed, if the law permits, by the
Partners. Pursuant to these restrictions, the Partnership will not:

1. Make any investments not related to real estate, other than short-term or
intermediate-term debt instruments.

2. Engage in underwriting of securities issued by others.

3. Invest in securities issued by any investment company.

4. Sell securities short.

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<PAGE>

5. Purchase or sell oil, gas, or other mineral exploration or development
programs.

6. Make loans to the Partners, any of their affiliates, or any investment
program sponsored by such parties.

7. Enter into leaseback transactions in which the lessee is Prudential, Pruco
Life, Pruco Life of New Jersey, their affiliates, or any investment program
sponsored by such parties.

8. Borrow more than 50% of the value of the assets of the Partnership (based
upon periodic valuations and appraisals). See VALUATION OF CONTRACT OWNERS'
PARTICIPATING INTERESTS, page 14.

CONFLICTS OF INTEREST

Prudential, as the investment manager, will be subject to various conflicts of
interest in managing the Partnership. Prudential invests in real estate
equities and mortgages for its own general account and for third parties,
including through separate accounts established for the benefit of qualified
pension and profit-sharing plans. Prudential also manages, or advises in the
management of, real estate equities and mortgages owned by other persons. In
addition, affiliates of Prudential are general partners in publicly offered
limited partnerships that invest in real estate equities and mortgage loans.
Prudential and its affiliates may engage in business activities which will be
competitive with the Partnership. Moreover, the Partnership may purchase
properties from Prudential or its affiliates.

The conflicts involved in managing the Partnership include:

1. LACK OF INDEPENDENT NEGOTIATIONS BETWEEN THE PARTNERSHIP AND PRUDENTIAL. All
agreements and arrangements relating to compensation between the Partnership and
Prudential or any affiliate of Prudential will not be the result of arm's-length
negotiations.

2. COMPETITION BY THE PARTNERSHIP WITH PRUDENTIAL'S AFFILIATES FOR ACQUISITION
AND DISPOSITION OF INVESTMENTS. Prudential and its affiliates are involved in
numerous real estate investment activities for Prudential's general account, its
separate accounts, and other entities. They may involve investment policies
comparable to the Partnership's and may compete with the Partnership for the
acquisition and disposition of investments. Moreover, additional accounts or
affiliated entities may be formed in the future with investment objectives
similar to those of the Partnership. In short, existing or future real estate
investment accounts or entities managed or advised by Prudential or its
affiliates may have the same management as the Partnership and may be in
competition with the Partnership regarding real property investments, mortgage
loan investments, leasebacks, and the management and sale of such investments.
Prudential and its affiliates are not obligated to present to the Partnership
any particular investment opportunity, regardless of whether the opportunity
would be suitable for investment by the Partnership.

Prudential and its affiliates have, however, adopted procedures to distinguish
between equity investments available for the Partnership as opposed to the other
programs and entities described above. If investment accounts or entities
managed by Prudential or its affiliates have investment objectives and policies
similar to the Partnership and are in the market to acquire properties or make
investments at the same time as the Partnership, the following procedures will
be followed to resolve any conflict of interest. The Investment Allocation
Procedure ("IAP") has been established to provide a reasonable and fair
procedure for allocating real estate investments among the several accounts
managed by Prudential Real Estate Investors ("PREI"). The IAP is administered by
an Allocation Committee composed of the Managing Directors, Portfolio
Management. Allocation decisions are made by vote of the Allocation Committee,
and are approved by the Chief Executive Officer of PREI ("CEO"). Sufficient
information on each investment opportunity is distributed to all portfolio
managers, who each indicate to the Allocation Committee their account's interest
in the opportunity. Based on such expressions of interest, the Allocation
Committee allocates the investment opportunity to an account (and may also
determine a back-up account or accounts to receive the allocation in the event
the account, which is first allocated the opportunity, fails to pursue the
investment for any reason) after giving appropriate consideration to the
following factors and with the goal of providing each account a fair allotment
of investment opportunities: (1) the investment opportunity's conformity with
an account's investment criteria and objectives (including property type, size
and location, diversification, anticipated returns, investment structure, etc.);
(2) the amount of funds available for investment (in total and by property type)
by an account; (3) the length of time such funds (in total and by property type)
have been available for investment; (4) any limitations or restrictions upon the
availability of funds for investment; (5) the absolute and relative (to amount
of funds available) amount of funds invested and committed for the account; (6)
whether funds available for investment are discretionary or non-discretionary,
particularly in relation to the timing of the investment opportunity; (7) an
account's prior dealings or investments with the seller, developer, lender or
other counterparty; and (8) other factors which the Allocation Committee feel
should be considered in fairness to all accounts participating in the IAP.

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If an account which has been allocated an investment opportunity does not
proceed with the acquisition, and either ( i ) no back-up account has been
determined by the Allocation Committee, or (ii) all accounts which were deemed
back-up accounts do not proceed with the acquisition, the opportunity may be
reallocated to another account by the Allocation Committee. If an investment
opportunity is appropriate for more than one account, the Allocation Committee
may (subject to the CEO's approval) permit the sharing of the investment among
accounts which permit such sharing. Such division of the investment opportunity
may be accomplished by separating properties (in a multi-property investment),
by co-investment, or otherwise.

3. COMPETITION WITH THE PARTNERSHIP FROM AFFILIATES FOR THE TIME AND SERVICES OF
COMMON OFFICERS, DIRECTORS, AND MANAGEMENT PERSONNEL. As noted above,
Prudential and its affiliates are involved in numerous real estate investment
activities. Accordingly, many of the personnel of Prudential and its affiliates
who will be involved in performing services for the Partnership have competing
demands on their time. Conflicts of interest may arise with respect to
allocating time among such entities and the Partnership. The directors and
officers of Prudential and affiliates will determine how much time will be
devoted to the Partnership affairs. Prudential believes it has sufficient
personnel to meet its responsibilities to all entities to which it is
affiliated.

4. COMPETITIVE PROPERTIES. Some properties of affiliates may be competitive
with Partnership properties. Among other things, the properties could be in
competition with the Partnership's properties for prospective tenants.

5. LESSEE POSITION. It is possible that Prudential or its affiliates may be a
lessee in one or more of the properties owned by the Partnership. The terms of
such a lease will be competitive with leases with non-affiliated third parties.
The Partnership limits the amount of space that an affiliate of Prudential may
rent in a property owned by the Partnership.

6. USE OF AFFILIATES TO PERFORM ADDITIONAL SERVICES FOR THE PARTNERSHIP. The
Partnership may engage Prudential affiliates to provide additional services to
the Partnership, such as real estate brokerage, mortgage servicing, property
management, leasing, property development, and other real estate-related
services. The Partnership may utilize the services of such affiliates and pay
their fees, as long as the fees paid to an affiliate do not exceed the amount
that would be paid to an independent party for similar services rendered in the
same geographic area.

7. JOINT VENTURES WITH AFFILIATES. The Partnership may enter into investments
through joint ventures with Prudential, its affiliates, or investment programs
they sponsor. The Partnership may enter into such a joint venture investment
with an affiliate only if the following conditions are met: (1) the affiliate
must have investment objectives substantially identical to those of the
Partnership; (2) there must be no duplicative property management fee, mortgage
servicing fee or other fees; (3) the compensation payable to the sponsor of the
affiliate must be no greater than that payable to the Partnership's investment
manager; (4) the Partnership must have a right of first refusal to buy if such
affiliate wishes to sell the property held in the joint venture; and (5) the
investment of the Partnership and the affiliate in the joint venture must be
made on the same terms and conditions (although not the same percentage). In
connection with such an investment, both affiliated parties would be required to
approve any decision concerning the investment. Thus, an impasse may result in
the event the affiliated joint venture partners disagree. However, in the event
of a disagreement regarding a proposed sale or other disposition of the
investment, the party not desiring to sell would have a right of first refusal
to purchase the affiliated joint venture partner's interest in the investment.
If this happens, it is possible that in the future the joint venture partners
would no longer be affiliated. In the event of a proposed sale initiated by the
joint venture partner, the Partnership would also have a right of first refusal
to purchase the joint venture partner's interest in the investment. The
exercise of a right of first refusal would be subject to the Partnership's
having the financial resources to effectuate such a purchase.

If the Partnership invests in joint venture partnerships which own properties,
instead of investing directly in the properties themselves, they may be subject
to risks not otherwise present. These risks include risks associated with the
possible bankruptcy of the Partnership's co-venturer or such co-venturer at any
time having economic or business interests or goals which are inconsistent with
those of the Partnership.

8. PURCHASE OF REAL PROPERTY FROM PRUDENTIAL OR AFFILIATES. The Partnership may
acquire properties owned by Prudential or its affiliates, subject to compliance
with special conditions designed to minimize the conflicts of interests. The
Partnership may purchase property satisfying the Partnership's investment
objectives and policies from an affiliate only if: (1) the applicable insurance
regulators approve the Partnership's acquisition of real property from
Prudential or affiliates to the extent such approval is required under
applicable insurance regulations; (2) the Partnership acquires the property at a
price not greater than the appraised value, with the appraisal being conducted
by a qualified, unaffiliated appraiser; (3) a qualified and independent real
estate adviser (other than the appraiser)

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reviews the proposed acquisition and provides a letter of opinion that the
transaction is fair to the Partnership; and (4) the affiliate has owned the
property at least two years, the cost paid by the affiliate is established, and
any increase in the proposed purchase price over the cost to the affiliate is,
in the opinion of the independent real estate adviser, explicable by material
factors (including the passage of time) that have increased the value of the
property.

THE REAL PROPERTY ACCOUNT'S UNAVAILABILITY TO CERTAIN CONTRACTS

Pruco Life has determined that it is in the best interest of Contract owners
participating in the Real Property Account to provide the Real Property Account
with the flexibility to engage in transactions that may be prohibited if the
Real Property Account accepts funds under Contracts subject to ERISA or the
prohibited transaction excise tax provisions of the Internal Revenue Code.

Accordingly, owners of Pruco Life Contracts that are purchased in connection
with (1) IRAs; (2) tax deferred annuities subject to Section 403(b) of the Code;
(3) other employee benefit plans which are subject to ERISA; or (4) prohibited
transaction excise tax provisions of the Code, may not select the Real Property
Account as one of the investment options under their Contract. By not offering
the Real Property Account as an investment option under such contracts, Pruco
Life is able to comply with state insurance law requirements that policy loans
be made available to Contract owners.

VALUATION OF CONTRACT OWNERS' PARTICIPATING INTERESTS

A Contract owner's interest in the Real Property Account will initially be the
amount they allocated to the Real Property Account. Thereafter, that value will
change daily. The value of a Contract owner's interest in the Real Property
Account at the close of any day is equal to its amount at the close of the
preceding day, multiplied by the "net investment factor" for that day arising
from the Real Property Account's participation in the Partnership, plus any
additional amounts allocated to the Real Property Account by the Contract owner,
and reduced by any withdrawals by the Contract owner from the Real Property
Account and by the applicable Contract charges recorded in that Contract's
subaccount. Some of the charges will be made: (1) daily; (2) on the Contract's
monthly anniversary date; (3) at the end of each Contract year; and (4) upon
withdrawal or annuitization. Periodically Pruco Life will withdraw from the
Real Property Account an amount equal to the aggregate charges recorded in the
subaccounts.

The "net investment factor" is calculated on each business day by dividing the
value of the net assets of the Partnership at the end of that day (ignoring, for
this purpose, changes resulting from new contributions to or withdrawals from
the Partnership) by the value of the net assets of the Partnership at the end of
the preceding business day. The value of the net assets of the Partnership at
the end of any business day is equal to the sum of all cash held by the
Partnership plus the aggregate value of the Partnership's short-term and
intermediate-term debt instruments, the individual real properties and the other
real estate-related investments owned by the Partnership, determined in the
manner described below, and an estimate of the accrued net operating income
earned by the Partnership from properties and other real estate-related
investments, reduced by the liabilities of the Partnership, including the daily
investment management fee and certain other expenses attributable to the
operation of the Partnership. See CHARGES, page 16.

The Partnership's short-term debt investments (obligations of one year's
maturity or less) will be the same type that may be held by the Series Fund's
Money Market Portfolio and will be valued on an amortized cost basis. This
means that each obligation will be valued initially at its purchase price and
thereafter by amortizing any discount or premium uniformly to maturity. This
valuation method usually results in a value that is extremely close to market
value. In the event of a sizable change in interest rates, the value determined
by this method may be more or less than market value. If this should occur, the
Partners will consider whether an appropriate adjustment should be made in the
valuation of these obligations. The Partnership's intermediate-term bonds will
be the same type that may be held by the Series Fund's Diversified Bond
Portfolio and will be valued utilizing an independent pricing service. The
pricing service considers such factors as security prices, yields, maturities,
call features, ratings, and developments relating to specific securities in
arriving at securities valuations.

The value of the individual real properties and other real estate-related
investments, including mortgages, acquired by the Partnership will be determined
as follows. Each property or other real estate-related investment acquired by
the Partnership will initially be valued at its purchase price. In acquiring a
property or other real estate-related investment,

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Prudential will not obtain an independent appraisal but will instead rely on its
own analysis of the investment's fair market value. Thereafter, all properties
and most real estate-related investments will ordinarily be appraised by an
independent appraiser at least annually. At least every three months, Prudential
will review each property or other real estate-related investments and adjust
its valuation if it concludes there has been a change in the value of the
property or other real estate-related investment since the last valuation. The
revised value will remain in effect and will be used in each day's calculation
of the value of the Partnership's assets until the next review or appraisal. It
should be noted that appraisals are only estimates and do not necessarily
reflect the realizable value of an investment.

The estimated amount of the net operating income of the Partnership from
properties and other real estate-related investments will be based on estimates
of revenues and expenses for each property and other real estate-related
investments. Annually, Prudential will prepare a month-by-month estimate of the
revenues and expenses ("estimated net operating income") for each property and
other real estate-related investments owned by the Partnership. Each day
Prudential will add to the value of the assets, as determined above, a
proportionate part of the estimated net operating income for the month. In
effect, Prudential will establish a daily accrued receivable of the estimated
net operating income from each property and other real estate-related
investments owned by the Partnership (the "daily accrued receivable"). On a
monthly basis, the Partnership will receive a report of actual operating results
for each property and other real estate-related investments ("actual net
operating income"). Such actual net operating income will be recognized on the
books of the Partnership and the amount of the then-outstanding daily accrued
receivable will be correspondingly adjusted. In addition, as cash from a
property or other real estate-related investment is actually received by the
Partnership, receivables and other accounts will be appropriately adjusted.
Periodically, but at least every three months, Prudential will review its
prospective estimates of net operating income in light of actual experience and
make an adjustment to such estimates if circumstances indicate that such an
adjustment is warranted. Prudential follows this practice of accruing estimated
net operating income from properties and other real estate-related investments
because net operating income from such investments is generally received on an
intermittent rather than daily basis, and the Partners believe it is more
equitable to participating Contract owners if such net operating income is
estimated and a proportionate amount is recognized daily. Because the daily
accrual of estimated net operating income is based on estimates that may not
turn out to reflect actual revenue and expenses, Contract owners will bear the
risk that this practice will result in the undervaluing or overvaluing of the
Partnership's assets.

Prudential may adjust the value of any asset held by the Partnership based on
events that have increased or decreased the realizable value of a property or
other real estate-related investment. For example, adjustments may be made for
events indicating an impairment of a borrower's or a lessee's ability to pay any
amounts due or events which affect the property values of the surrounding area.
There can be no assurance that the factors for which an adjustment may be made
will immediately come to the attention of Prudential. Additionally, because the
evaluation of such factors may be subjective, there can be no assurance that
such adjustments will be timely made in all cases where the value of the
Partnership's investments may be affected. All adjustments made to the
valuation of the Partnership's investments, including adjustments to estimated
net operating income, the daily accrued receivable, and adjustments to the
valuation of properties and other real estate-related investments, will be on a
prospective basis only.

The above method of valuation of the Partnership's assets may be changed,
without the consent of Contract owners, should the Partners determine that
another method would more accurately reflect the value of the Partnership's
investments. Changes in the method of valuation could result in a change in the
Contract Fund values which may have either an adverse or beneficial effect on
Contract owners. Information concerning any material change in the valuation
method will be given to all Contract owners in the annual report of the
operations of the Real Property Account.

Although the above-described valuation methods have been adopted because the
Partners believe they will provide a reasonable way to determine the fair market
value of the Partnership's investments, there may well be variations between the
amount realizable upon disposition and the Partnership's valuation of such
assets. Contract owners may be either favorably or adversely affected if the
valuation method results in either overvaluing or undervaluing the Partnership's
investments. If a Contract owner invests in the Real Property Account at a time
in which the Partnership's investments are overvalued, the Contract owner will
be credited with less of an interest than if the value had been correctly
stated. A Contract owner withdrawing from the Real Property Account during such
time will receive more than he or she would if the value had been correctly
stated, to the detriment of other Contract owners. The converse situation will
exist if the Partnership's assets are undervalued.

16 - Real Property
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BORROWING BY THE PARTNERSHIP

The Partnership may borrow for Partnership purposes, including to meet its
liquidity requirements, subject to a maximum debt to value ratio of 50% based on
the aggregate value of all Partnership assets. The Partnership will bear the
cost of all such borrowings. The Real Property Account, and Contract owners
participating in it, will bear a portion of any borrowing costs equal to their
percentage interest in the Partnership. Moreover, although the Partnership will
generally make unleveraged investments, it reserves the right to borrow up to
75% of the value of a property (with the value of a property determined as
explained under VALUATION OF CONTRACT OWNERS' PARTICIPATING INTERESTS, page 14).
Increasing the Partnership's assets through leveraged investments would increase
the compensation paid to Prudential since its investment management fee is a
percentage of the Partnership's gross assets. Any borrowing by the Partnership
would increase the Partnership's risk of loss. It could also inhibit the
Partnership from achieving its investment objectives because the Partnership's
payments on any loans would have to be made regardless of the profitability of
its investments.
CHARGES

Pursuant to an investment management agreement, Prudential charges the
Partnership a daily investment management fee which is equal to an effective
annual rate of 1.25% of the average daily gross assets of the Partnership.
Certain other expenses and charges attributable to the operation of the
Partnership are also charged against the Partnership. In acquiring an
investment, the Partnership may incur various types of expenses paid to third
parties, including but not limited to, brokerage fees, attorneys' fees,
architects' fees, engineers' fees, and accounting fees. After acquisition of an
investment, the Partnership will incur recurring expenses for the preparation of
annual reports, periodic appraisal costs, mortgage servicing fees, annual audit
charges, accounting and legal fees, and various administrative expenses. These
expenses will be charged against the Partnership's assets. Some of these
operating expenses represent reimbursement of Prudential for the cost of
providing certain services necessary to the operation of the Partnership, such
as daily accounting services, preparation of annual reports, and various
administrative services. Prudential charges the Partnership mortgage loan
servicing fees pursuant to the standards outlined in item 6 under CONFLICTS OF
INTEREST, page 12. In addition to the various expenses charged against the
Partnership's assets, other expenses such as insurance costs, taxes, and
property management fees will ordinarily be deducted from rental income, thereby
reducing the gross income of the Partnership.

As explained earlier, charges to the Contracts will be recorded in the
corresponding subaccounts of the Real Property Account. From time to time,
Pruco Life will withdraw from the Real Property Account an amount equal to the
aggregate amount of these charges. Aside from the charges to the Contracts,
Pruco Life does not charge the Real Property Account for the expenses involved
in the Real Property Account's operations. The Real Property Account will
however bear its proportionate share of the charges made to the Partnership as
described above.

The Partnership is not a taxable entity under the provisions of the Internal
Revenue Code. The income, gains, and losses of the Partnership are attributed,
for federal income tax purposes, to the Partners in the Partnership. The
earnings of the Real Property Account are, in turn, taxed as part of the
operations of Pruco Life. Pruco Life is currently not charging the Real Property
Account for company federal income taxes. Pruco Life may make such a charge in
the future.

Under current laws Pruco Life may incur state and local taxes (in addition to
premium taxes) in several states. At present, Pruco Life does not charge these
taxes against the Contracts or the Real Property Account, but Pruco Life may
decide to charge the Real Property Account for such taxes in the future.

RESTRICTIONS ON WITHDRAWALS

Before allocating any portion of your net premium or purchase payments, or
transferring any portion of your Contract Fund, to the Real Property Account,
you should be aware that withdrawals from the Real Property Account may have
greater restrictions than the other variable investment options available under
the Contracts. Pruco Life reserves the right to restrict transfers into or out
of the Real Property Account. Apart from the limitations on transfers out of
the Real Property Account described below, Pruco Life will only restrict
transfers out of the Real Property Account if there is insufficient cash
available to meet Contract owners' requests and prompt disposition of the
Partnership's investments to meet such requests could not be made on
commercially reasonable terms.

Pruco Life will pay any death benefit, cash surrender value, withdrawal or loan
proceeds within seven days after receipt at a Pruco Life Service Office of all
the documents required for such a payment. Other than the death benefit,

17 - Real Property
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which is determined as of the date of death for life insurance products, the
amount will be determined as of the date of receipt of the request.

The funds necessary to pay any death benefit, cash surrender value, withdrawal
or loan proceeds funded by the Real Property Account will normally be obtained,
first, from any cash flows into the Real Property Account on the day the funds
are required. If, on the day the funds are required, cash flows into the Real
Property Account are less than the amount of funds required, Pruco Life will
seek to obtain such funds by withdrawing a portion of its interest in the
Partnership. The Partnership will normally obtain funds to meet such a
withdrawal request from its net operating income and from the short-term and
intermediate-term debt obligations it holds. If the Partners determine that
these sources are insufficient to meet anticipated withdrawals from the
Partnership, the Partnership may use a line of credit or otherwise borrow up to
50% of the value of the Partnership's assets. See BORROWING BY THE PARTNERSHIP,
page 16. If the Partners determine that such a borrowing by the Partnership
would not serve the best interests of Contract owners, Pruco Life may, in the
event of a Contract loan or withdrawal, rather than take the amount of any loan
or withdrawal request proportionately from all investment options under the
Contract (including the Real Property Account), take any such loan or withdrawal
first from the other investment options under the Contract.

Transfers from the Real Property Account to the other investment options
available under the Contract are currently permitted only during the 30-day
period beginning on the Contract anniversary. The maximum amount that may be
transferred out of the Real Property Account each year is the greater of: (a)
50% of the amount invested in the Real Property Account or (b) $10,000. Such
transfer requests received prior to the Contract anniversary will be effected on
the Contract anniversary. Transfer requests received within the 30-day period
beginning on the Contract anniversary will be effected as of the end of the
valuation period in which a proper written request or authorized telephone
request is received. The "valuation period" means the period of time from one
determination of the value of the amount invested in the Real Property Account
to the next. Such determinations are made when the value of the assets and
liabilities of the Partnership is calculated, which is generally at 4:15 p.m.
Eastern time on each day during which the New York Stock Exchange is open.
Transfers into or out of the Real Property Account are also subject to the
general limits under the Contracts.

RESTRICTIONS ON CONTRACT OWNERS' INVESTMENT IN THE REAL PROPERTY ACCOUNT

As explained earlier, identification and acquisition of real estate investments
meeting the Partnership's investment objectives is a time-consuming process.
Because the Real Property Account and the Partnership are managed so they will
not become investment companies subject to the Investment Company Act of 1940,
the portion of the Partnership's assets that may be invested in securities, as
opposed to non-securities real estate investments, is strictly limited. For
these reasons, Pruco Life reserves the right to restrict or limit Contract
owners' allocation of funds to the Real Property Account. Any such restrictions
are likely to take the form of restricting the timing, amount and/or frequency
of transfers into the Real Property Account and/or precluding Contract owners
who have not previously selected the Real Property Account from allocating a
portion of their net premiums or purchase payments to the Real Property
Account.

FEDERAL INCOME TAX CONSIDERATIONS

The federal income tax treatment of Contract benefits is described briefly in
the attached prospectus for the particular Contract you selected. Pruco Life
believes that the same principles will apply with respect to Contracts funded in
whole or part by the Real Property Account. The Partnership's conformity with
the diversification standards for the investments of variable life insurance and
variable annuity separate accounts is essential to ensure that treatment. See
GENERAL INVESTMENT AND OPERATING POLICIES, page 8. Pruco Life urges you to
consult a qualified tax adviser.

Under the Internal Revenue Code, the Partnership is not a taxable entity and any
income, gains or losses of the Partnership are passed through to the Partners,
including Pruco Life, with respect to the Real Property Account. The Real
Property Account is not a separate taxpayer for purposes of the Internal Revenue
Code. The earnings of the Real Property Account are taxed as part of the
operations of Pruco Life. No charge is currently being made to the Real
Property Account for company federal income taxes. We may make such a charge in
the future, see CHARGES, page 16.

DISTRIBUTION OF THE CONTRACTS

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As explained in the attached prospectus for the Contracts, Pruco Securities
Corporation, an indirect, wholly-owned subsidiary of Prudential, acts as the
principal underwriter of the Contracts. Consult that prospectus for information
about commission scales and other facts relating to sale of the Contracts.

STATE REGULATION

Pruco Life is subject to regulation and supervision by the Department of
Insurance of the State of Arizona, which periodically examines its operations
and financial condition. It is also subject to the insurance laws and
regulations of all jurisdictions in which it is authorized to do business.

Pruco Life is required to submit annual statements of its operations, including
financial statements, to the insurance departments of the various jurisdictions
in which it does business to determine solvency and compliance with local
insurance laws and regulations.

In addition to the annual statements referred to above, Pruco Life is required
to file with Arizona and other jurisdictions a separate statement with respect
to the operations of all its variable contract accounts, in a form promulgated
by the National Association of Insurance Commissioners.

ADDITIONAL INFORMATION

Pruco Life has filed a registration statement with the SEC under the Securities
Act of 1933, relating to the offering described in this prospectus. This
prospectus does not include all of the information set forth in the registration
statement. Certain portions have been omitted pursuant to the rules and
regulations of the SEC. The omitted information may, however, be obtained from
the SEC's principal office in Washington, D.C., upon payment of a prescribed
fee.

Further information may also be obtained from Pruco Life. The address and
telephone number are on the cover of this prospectus.

EXPERTS

The financial statements of the Real Property Account and the Partnership
included in this prospectus, the per share information included on page 1 of
this prospectus, and the related financial statement schedules included
elsewhere in the registration statement have been audited by
PricewaterhouseCoopers LLP, independent accountants. Pruco Life is relying on
PricewaterhouseCoopers' reports, which are given on their authority as
accounting and auditing experts. PricewaterhouseCoopers LLP's principal
business address is 1177 Avenue of the Americas, New York, New York 10036.

LITIGATION

No litigation is pending, and no litigation is known to be contemplated by
governmental authorities, that would have an adverse material effect upon the
Real Property Account or the Partnership.

YEAR 2000 COMPLIANCE

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

19 - Real Property
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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.

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. The
expenses of Prudential's Year 2000 compliance are allocated across its various
businesses, including those businesses not engaged in providing services to
Contract owners. The Year 2000 costs incurred to date are not material to
Prudential's operations and financial condition and are not expected to have a
material impact on its ability to meet its contractual commitments.

YEAR 2000 RISKS AND CONTINGENCY PLANNING

The major portion of the 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.

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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 Company is unable to determine at this time whether
the consequences of Year 2000 failures will have a material adverse effect on
the Company'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 Company's
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.

REPORTS TO CONTRACT OWNERS

If you allocate a portion of your Contract Fund to the Real Property Account,
Pruco Life will mail you an annual report containing audited financial
statements for the Partnership and an annual statement showing the status of
your Contract Fund and any other information that may be required by applicable
regulation or law.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

The following discussion covers the operations of The Prudential Variable
Contract Real Property Partnership and should be considered in conjunction with
the PER SHARE TABLE appearing on page 1 - REAL PROPERTY and the financial
statements and notes thereto, commencing on page B1 - REAL PROPERTY.

LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 1997, the Partnership's liquid assets consisting of cash,
cash equivalents and marketable securities (excluding the Partnership's shares
in Meridian Industrial Trust REIT) were $26,851,981. This is a decrease of
$18,312,867 from $45,164,848 at December 31, 1996. The decrease is due
primarily to the acquisition of five real estate investments in 1997 totaling
$37,417,479. This decrease was partially offset by: (1) the sale of the
Partnership's interest in a portfolio of industrial properties located in
Jacksonville, FL for net proceeds of $6,272,330, (2) operations of the
Partnership's properties, and (3) interest income received from the
Partnership's short term investments. Sources of liquidity include net cash
flow from property operations, interest from short term investments, and
dividends on REIT shares.

Prudential has committed to fund up to $100 million to enable the Partnership to
acquire real estate investments. Contributions to the Partnership under this
commitment are utilized for property acquisitions, and returned to Prudential on
an ongoing basis from Contract owners' net contributions. The amount of the
commitment is reduced by $10 million for every $100 million in current value net
assets of the Partnership. The amount available for future investment is
approximately $47 million as of December 31, 1997.

The Partnership will generally invest 10-15% of its assets in cash and short-
term obligations to maintain liquidity; however, its investment policy allows up
to 30% investment in cash and short term obligations. At December 31, 1997,
12.06% of the Partnership's assets consisted of cash, cash equivalents and
marketable securities (excluding REIT shares).

The Partners made no withdrawals in 1997. Withdrawals may be made during 1998
based upon the percentage of assets invested in short term obligations. The
withdrawals should also take into consideration anticipated cash needs of the
Partnership including potential property acquisitions, property dispositions and
capital expenditures. Management anticipates that current liquid assets and
ongoing cash flows from operations will satisfy the Partnership's needs over the
next twelve months and the foreseeable future.

21 - Real Property
<PAGE>

In 1997, the Partnership made acquisitions aggregating $37,417,479 consisting of
the following: an industrial building in Salt Lake City, UT for $5,388,134; an
industrial complex in Aurora, CO for $8,540,585; land under an existing
industrial complex already owned by the Partnership in Pomona, CA for
$4,000,000; an office building in Brentwood, TN for $9,488,755; and 506,894
shares of Meridian Industrial REIT for $10,000,005. These acquisitions were
funded entirely by the Partnership's cash reserves.

During 1997, the Partnership made $1,311,864 in capital expenditures for tenant
alterations, leasing commissions, land improvements and building improvements.
The most significant transaction was $378,959 for tenant alterations and leasing
commissions at the office property located in Lisle, IL, which related to a new
lease signed with Pitney Bowes. Other significant capital expenditures included
tenant alterations and leasing commissions throughout the properties owned by
the Partnership. The office property located in Brentwood, TN accounted for
$212,983 of the total tenant alterations and leasing commissions. Approximately
$104,000 was for tenant alterations and leasing commissions related to a new
lease with Service Experts.

Budgeted capital expenditures for 1998 are approximately $8.5 million. Of this
amount, $7.3 million is budgeted for tenant improvements and leasing
commissions. Four of the Partnership's properties account for the majority of
these leasing related capital expenditures. The Lisle, IL office property is
budgeted to expend $3.2 million in leasing related capital expenditures. This
property, which was previously leased in its entirety to a single tenant, is
expected to require $2.8 million in tenant improvements, and $0.5 million in
leasing commissions to re-establish 100% occupancy. At the Salt Lake City, UT
industrial property, management anticipates $1.0 million of capital to be
expended in its effort to lease the currently vacant property. Of the total
capital to be expended at this property, $0.8 million is projected for tenant
improvements and $0.2 million is anticipated for leasing commissions. At the
Aurora, CO industrial property, management anticipates spending $1.7 million in
its effort to lease this vacant property. Of the total capital to be expended
$1.4 million is projected for tenant improvements and $0.3 million is
anticipated for leasing commissions. Management anticipates expending $0.9
million for leasing related capital expenditures at the Morristown, NJ office
building. It is anticipated that Smith Barney, a major tenant in the building,
will vacate their offices. To secure a new tenant, $0.5 million in tenant
improvements, and $0.4 million in leasing commissions will be necessary. All of
these projected expenditures relate to prospective leases and are based upon
reasonable costs. The actual amount of such expenditures will depend upon the
number of new leases signed, the actual needs of the particular construction or
repair, and the timing of lease executions.

Other major capital projects planned for 1998 include the following:
reconstruction of the lobby and common areas at the Lisle, IL office building
($0.6 million); refurbishment and upgrading the heating ventilation and air
conditioning system at this same property ($0.2 million); residing and painting
the exterior on the Atlanta, GA residential community ($0.1 million); and
reconfiguration of the traffic flow in and around the Atlanta, GA retail
property ($0.1 million).

RESULTS OF OPERATIONS

The following is a brief comparison of the Partnership's results of operations
for the years ended December 31, 1997, 1996 and 1995.

1997 VS. 1996

The Partnership's net investment income for 1997 was $13,789,747, a decrease of
$1,629,771 from net investment income of $15,419,518 in 1996. This decrease is
the result of the factors discussed below.

Income from property operations, including income from interest in properties,
was $14,651,366 in 1997, a decrease of $1,410,043 from $16,061,406 in 1996.
This decrease, in income, was primarily due to the results of sales of two
portfolio properties, and an increased vacancy in a third property. Decrease in
income for $1,646,337 resulted from the sales of the Flint, MI office park, and
the Azusa, CA industrial center; while an increased vacancy in the Lisle, IL
office property accounted for another $673,119. The effects of the decrease in
income from these properties were partially offset by $342,829 due to the
acquisitions of a new office property in Brentwood, TN and 506,894 REIT shares.

Rent from properties was $21,582,968 in 1997, a decrease of $1,216,726 from
$22,799,694 in 1996. The majority of this decrease is attributable to
properties held for a full year in 1996 and sold during 1997. Also contributing
to the decrease was a decrease in rent collected at the Lisle, IL office
property which became 100% vacant in the fourth quarter.

22 - Real Property
<PAGE>

Income from interest in properties relates to the Partnership's 50% co-
investment in several warehouse properties (the Unit warehouses). Income from
this source decreased from $606,558 in 1996 to $435,296 in 1997, for a total
decrease of $171,262. The primary reason for the decrease was due to the sale
of the Partnership's interest in these properties on September 30, 1997.

Dividend income from real estate investment trusts totaled $158,154. The
506,894 shares of Meridian Industrial REIT were acquired on September 24, 1997.

Administrative expenses on the Statement of Operations includes property
operations and the administration of the Partnership. Property administrative
expenses in 1997 were $2,009,449, an increase of $355,564 from $1,653,885 in
1996. This increase was primarily due to the acquisition of three new
properties, plus a full year of administrative expenses for a property acquired
at the end of 1996.

Property operating expenses for 1997 were $3,296,350, an increase of $391,730
from $2,904,620 in 1996. In 1997, this increase was primarily due to a full
year ownership of the office property in Beaverton, OR and expenses incurred for
new acquisitions, including the industrial buildings in Salt Lake City, UT and
Aurora, CO. These three properties contributed $274,530 to the increased
operating expenses. The acquisition of the office building in Brentwood, TN
contributed $103,234.

Real estate taxes for 1997 were $2,208,972, a decrease of $158,432 from
$2,367,404 in 1996. This decrease was primarily due to the sale of the office
building located in Flint, MI in December 1996, which resulted in a decrease of
$162,701; and the sale of the industrial property in Azusa, CA in April 1996,
which resulted in a decrease of $51,149. These decreases were partially offset
by increased real estate taxes at the office property in Oakbrook Terrace, IL of
$50,513, and an increase of $40,908 at the industrial property in Bolingbrook,
IL.

Administrative expense related to the Partnership was $316,705 in 1997, an
increase of $105,157 from $211,548 in 1996.

The investment management fee for 1997 was $2,640,470, an increase of $146,241
from the 1996 management fee of $2,494,229. This fee is computed at 1.25% of
gross assets which were significantly higher in 1997 than 1996.

The following is a comparison of the Partnership's property results of
operations and realized and unrealized gains or losses, by investment type, for
the twelve months ended December 31, 1997 and December 31, 1996.

OFFICE PROPERTIES

Net investment income from property operations for the office properties in 1997
was $5,329,310. This was a decrease of $488,187 (8.4%) from $5,817,497 in 1996.
The decrease was primarily due to the sale of an office building in Flint, MI
which accounts for $1,001,711 of the decrease; and lowered rental income at the
Lisle, IL office property which accounts for $673,119 of the decrease. These
factors are offset by owning an office building in Beaverton, OR for a full year
($833,643), and the acquisition of the second office property in Brentwood, TN
($194,851). For office properties held for the comparable period, net
investment income increased by $318,674 (6.5%) from $4,877,349 in 1996, to
$5,196,023 in 1997.

The office properties owned by the Partnership experienced a net unrealized gain
of $1,897,749 in 1997. The largest net unrealized gain was attributable to the
office property in Oakbrook Terrace, IL and was due to the improving office
market conditions in suburban Chicago. The Morristown, NJ and the Brentwood, TN
office properties also experienced net unrealized gains of $557,241 and
$576,381, respectively. Unrealized losses of $28,285 at the Summit Building in
Beaverton, OR , and $13,602 at the Lisle, IL office property offset these
gains.

The Partnership acquired a second office property in Brentwood, TN. The 97,378
square foot suburban office building was acquired on September 15, 1997 for
$9,488,755. This property was 100% occupied at the time of acquisition.

Occupancy at the Beaverton, OR, Oakbrook Terrace, IL and Brentwood, TN
properties remained unchanged from December 31, 1996 at 100%. Occupancy at the
Morristown, NJ property increased from 93% to 100%, while occupancy dropped from
100% at the Lisle, IL office property at December 31, 1996 to 37% at year end
1997. As of December 31, 1997, all vacant spaces are being marketed.

APARTMENT COMPLEXES

23 - Real Property
<PAGE>

Net investment income from apartment property operations was $3,888,263 in 1997,
a decrease of $37,487 from $3,925,750 in 1996.

The three apartment communities owned by the Partnership experienced a net
unrealized gain of $1,053,061 during 1997. The Atlanta, GA property was the
largest contributor to the gain as it appreciated $1,392,186. This gain was
attributable to increased rental rates and occupancy. The Farmington Hills, MI
property also had a net unrealized gain of $80,839 due to increased rental
rates. The Raleigh, NC community had a net unrealized loss of $328,481 due to
the appraisal assumptions concerning above market rentals expiring and
subsequently renewing at lower market rates.

Weighted average occupancy at the Partnership's residential communities
increased from 93.1%, as of December 31, 1996, to 94.3% as of December 31, 1997.
The occupancy at the Atlanta, GA and Farmington Hills, MI communities improved
from 93% and 89%, respectively, as of December 31, 1996 to 99% and 93%,
respectively, at year end 1997. The occupancy at the Raleigh, NC community
slipped from 97% at the end of 1996 to 91% as of December 31, 1997.

RETAIL PROPERTIES

Net investment income for the Partnership's retail properties decreased to
$2,758,995 in 1997, from $3,129,390 in 1996. This decrease was primarily due to
decreased occupancy at the shopping center earlier in the year. Revenues
decreased by $299,474 and expenses increased by $70,920 from the prior year.

The retail center had an unrealized gain of $1,109,099. This was a result of
changes in the assumed capital needs of the property, and the leasing of vacant
spaces in the third and fourth quarters which stabilized future cash flows and
brought occupancy back up to 96%.

The shopping center was 96% occupied as of December 31, 1997, unchanged from the
prior year. Currently, there are three vacant suites. All vacant spaces are
being marketed.

INDUSTRIAL PROPERTIES

Net investment income from industrial property operations was $2,526,820 in
1997, a decrease of $661,949 from $3,188,769 in 1996. The primary reason for
the decline was the sale of the industrial complex in Azusa, CA, in April 1996,
which accounted for $644,625 of the decrease. The sale of the Partnership's
investment in the Jacksonville, FL industrial properties, in September 1997,
also contributed to the decline in net investment income. For properties held
for comparable periods in 1996 and 1997, net investment income increased from
$1,941,812 to $2,042,184, respectively.

The Partnership acquired three industrial properties in 1997. The first
acquisition was a 182,500 square foot building in Salt Lake City, UT for
$5,388,134. The second acquisition was a two building 277,500 square foot
facility in Aurora, CO for $8,540,585. As of December 31, 1997, both properties
were vacant. The third acquisition was land under the Partnership's existing
Pomona CA, industrial complex. The Partnership acquired the land under a
purchase option for $4,000,000.

The industrial properties (including the recently purchased land) had $1,901,523
of net unrealized appreciation in 1997. The largest single gain of $1,740,917
was attributable to the purchase of the land under the Pomona, CA property. The
Salt Lake City, UT and Aurora, CO properties experienced $38,133 and $140,585
negative net appreciation as a result of softer market conditions.

As of December 31, 1997, occupancy at the Partnership's Pomona, CA and
Bolingbrook, IL, industrial properties remained unchanged from December 31, 1996
at 100%. As of December 31, 1997, both the Salt Lake City, UT and Aurora, CO
properties were 100% vacant. As of December 31, 1997, all vacant spaces were
being marketed.

The Partnership sold its interest in the Jacksonville, FL warehouses for net
sales proceeds of $6.3 million, resulting in a gain of $284,581.

The Partnership also acquired 506,894 shares of Meridian Industrial Trust for
$10,000,005 on September 24, 1997. Meridian is a self administered and self-
managed equity real estate investment trust engaged in owning, operating, and
leasing high quality, modern industrial properties nationwide. As of December
31, 1997, these shares experienced a $2,523,800 net unrealized gain and
generated $147,978 in net investment income these shares were purchased in a
private transaction at a favorable, below-market price.

24 - Real Property
<PAGE>

1996 VS. 1995

The Partnership's net investment income for 1996 was $15,419,518, an increase of
$699,247 (4.8%) from net investment income of $14,720,271 in 1995. The increase
was primarily due to higher net income from property operations ($1,455,941),
offset by a higher management fee ($152,351) and lower interest income from
short-term investments ($526,479).

Income from property operations, including income from interest in properties,
was $16,061,409 for 1996. This was an increase of $980,119 (6.5%) from
$15,081,290, in 1995. This was primarily due to increased rent from properties
(approximately $2,973,000). The increase was offset by increased operating
expenses (approximately $1,034,000) and real estate taxes (approximately
$429,000).

Rent from properties for 1996 increased by $2,972,650 (15.0%) to $22,799,694
from $19,827,044 for 1995. A large portion of this was the result of properties
that were acquired during 1995 and held for the full year of 1996. This
increase in revenue totaled approximately $4,367,000. These additional revenues
were primarily offset by the sale of the Azusa industrial building which
resulted in approximately $1,092,000 reduction in revenues from last year and
the Roswell, GA shopping center which accounted for a decrease of approximately
$214,000 due to lower percentage rents in 1996 and decreased occupancy.

Income from interest in properties relates to the Partnership's 50% co-
investment in several warehouses (the Unit warehouses). Income from this source
decreased approximately $31,624 (4.9%) from $638,183 in 1995 to $606,558 in
1996. The reduction is the result of GATX vacating a portion of its space in
October and the space not being re-leased.

Administrative expenses on the Statement of Operations includes property
operations and the administration of the Partnership. Property administrative
expenses for 1996 were $1,653,934. This was $78,271 (5.0%) higher than the
$1,575,663 for 1995. The increase was primarily due to a full year of
administrative expenses of approximately $234,000 from the Nashville, TN office
building, Oakbrook Terrace, IL office facility and the Raleigh, NC apartment
complex. The increase was partially offset by the sale of two 1996 properties
totaling approximately $130,000.

Property operating expenses for 1996 were $2,904,620 compared to $1,870,183 for
1995, an increase of $1,034,437 (55%). This increase was primarily due to a
full year of operating expenses totaling approximately $943,000 related to the
Raleigh, Oakbrook Terrace and Nashville properties, all of which were acquired
in 1995. Increases were also due to the Morristown office property incurring
window repairs of approximately $21,000, and an increase to its grounds contract
for approximately $59,000 offset by lower repairs and maintenance expenses
totaling $23,000. The Atlanta and the Farmington Hills apartments had increases
totaling approximately $57,000 for 1996 apartment make-ready due to higher
turnover as compared to 1995.

Real estate taxes for 1996 were $2,367,404, an increase of $429,314 (22.2%) from
$1,938,090 for 1995. The increase was primarily due to a full year of real
estate tax expenses totaling approximately $572,000 related to the Raleigh,
Oakbrook Terrace and Nashville properties. At the Morristown office building,
real estate taxes increased by approximately $32,000. These increases were
offset by decreases of approximately $106,000, as a result of the Azusa and
Flint properties being sold in 1996. Real estate taxes at the Farmington Hills
apartments decreased approximately $26,000 due to last year's tax appeal.

Administrative expenses related to the Partnership totaled $211,499 for 1996.
This is an increase of $7,930 (3.6%) from $219,429 for 1995.

The investment management fee for 1996 was $2,494,229. This was $152,351
(6.5%) higher than the 1995 fee of $2,341,878. The fee is computed at 1.25% of
gross assets. During 1996, gross assets were slightly higher than the prior
year due to cash flows retained by the Partnership and increased market values
of the real estate investments.

The following is a brief comparison of the Partnership's property results of
operations and realized and unrealized gains or losses, by investment type, for
the twelve months ended December 31, 1996 and December 31, 1995.

During 1996, the Partnership recognized an unrealized loss of $3,211,436 on its
real estate investments. This represents 1.9% of the value of the investments at
December 31, 1995. The retail center experienced the largest unrealized loss,
of approximately $3,787,000. The offices had a net unrealized loss of
approximately $560,000. The industrial properties had a net unrealized loss of
approximately $75,000 offset by the apartments' net unrealized gains of
approximately $1,210,000.

25 - Real Property
<PAGE>

Occupancy at the Partnership's properties at December 31, 1996 was generally
lower than at December 31, 1995. During 1996, the Partnership acquired a 72,109
square feet office building in Beaverton, Oregon. At December 31, 1996, the
Beaverton office building was 100% occupied by five tenants and there are no
expirations in 1997.

OFFICE PROPERTIES

The Lisle, IL office had an unrealized loss of approximately $1,700,000 (14.7%
of its year-end 1995 value). This was caused by R.R. Donnelley (sole-tenant) not
renewing its lease, which expired September 1997, and the anticipated expenses
that would be incurred in order to re-lease the building in 1997. The Morristown
property experienced an unrealized gain of approximately $409,000 (4.3% of its
December 31, 1995 value), due to improved market conditions in the Northern NJ
market. The Nashville office experienced an unrealized gain of approximately
$166,000. The increase represented 1.9% of its year-end 1995 value. The rise in
value reflects the expectations of continued high occupancy and the potential
for higher rental rates in the future. The Oakbrook Terrace office building had
an increase of $565,000 (4.5% of its December 31, 1995 value). This was the
result of two tenant rent increases that occurred in 1996.

Occupancy at the Lisle, IL office building remained at 100% during 1996. R.R.
Donnelley had given notice they will be vacating their space in 1997. The
Oakbrook Terrace office building continued its 99% occupancy. The Nashville
office building occupancy remained at 99%. During 1996, a total of 25,394
square feet was re-leased, leaving a vacant space of 1,350 square feet. During
1997, at the Nashville office building, 11,966 square feet expired. Occupancy
at the Morristown office decreased from 98% to 93% as of December 31, 1996.
There are four vacant suites totaling 9,583 square feet. During 1996, Mutual of
Omaha renewed their lease of 5,479 square feet and Sprint Spectrum signed a two
month temporary agreement for 4,010 square feet, while Chase Home Mortgage
vacated their suite of 4,010 square feet. During 1997, at the Morristown office
building, a total of 15,753 square feet was up for renewal. All vacant spaces
are currently being marketed.

APARTMENT COMPLEXES

The Partnership's Atlanta apartment complex had an unrealized gain of
approximately $1,083,000 (8.6% of its year-end 1995 value), and the Farmington
Hills apartment complex had an unrealized gain of approximately $477,000 (3.4%
of its year-end 1995 value). These increases were primarily the result of
higher rental rates and occupancy than were previously projected for these
properties. The luxury garden apartment complex in Raleigh had an unrealized
loss of approximately $350,000 (2.0% of its year-end 1995 value). The property
had experienced lowered loss of occupancy but recovered to a December 31, 1996
occupancy of 97%.

Occupancy at the Atlanta and the Farmington Hills apartments decreased from 97%
and 98% at December 31, 1995 to 93% and 88%, in 1996. Occupancy at the Raleigh
apartments increased from 95% at December 31, 1995 to 97% at the end of 1996.
All vacant apartments were being marketed as of December 31, 1996.

RETAIL PROPERTIES

The Partnership's sole retail property in Roswell, GA, had an unrealized loss of
$3,786,554 (11.8% of its December 31, 1995 value). This was due to increased
competition in the local market resulting in downward pressure on rental rates
and occupancy. Occupancy at the Roswell center decreased from 99% at December
31, 1995 to 96% at December 31, 1996, a loss of 3%. During 1996, a total of
10,464 square feet expired and 4,127 square feet was renewed. Shepherd's Staff
Christian Book Store leased 6,100 square feet. Two tenants leasing a total of
6,100 square feet have vacated prior to their lease expiration. At December 31,
1996 a total of 10,464 square feet remained vacant. Several lease proposals were
in negotiation, while all other vacant spaces were being marketed.

INDUSTRIAL PROPERTIES

The Bolingbrook warehouse had the largest unrealized loss of this property type,
approximately $300,000 (4.1% of its year-end 1995 value). Gillette, a tenant of
the entire property, indicated that they needed additional space and will
relocate at the expiration of their lease in 2000. The Pomona property had an
unrealized gain of approximately $175,000 (1.0% of its year-end 1995 value), as
a result of signing leases that maintained the property occupancy at 100%. The
market values of the four Unit warehouses, in which the Partnership owns a 50%
interest at the end of 1996, had an unrealized gain of approximately $50,000
(0.9% of their December 31, 1995 value).

Occupancy at the Pomona warehouse remained at 100%. During 1996, a total of
234,292 square feet expired and was re-leased. The most significant renewal was
SCI signing an amendment to their lease to extend the term for five

26 - Real Property
<PAGE>

years. During 1997, JB Engineering's 49,697 square feet lease expired. Occupancy
at the Bolingbrook warehouse also remained at 100%. Gillette's lease of this
entire facility will expire in the year 2000, at which time they will relocate.
At the Unit warehouses, occupancy decreased from 100% in 1995 to 85% in 1996.
GATX vacated its space in October and the space has not been leased. All vacant
spaces are being marketed as of December 31, 1996.

During 1996, the Partnership sold its Azusa, CA industrial property and its
Flint, MI office building. The sale of these two properties resulted in a
realized loss of $1,573,147. The Flint, MI property had the largest loss of
$1,094,521 (16.7% of its year-end 1995 value). This was the result of both the
uncertain economic outlook and leasing demand in Flint, MI, as well as the
physical condition of the property. The Azusa property had a realized loss of
$478,627 (3.2% of its year-end 1995 value). The gross sales price of the
property was $15,250,000 and the net proceeds were $14,697,789.

FINANCIAL STATEMENTS

Following are financial statements and independent auditors' reports of the Real
Property Account, as well as financial statements and independent auditors'
reports of the Partnership.

27 - Real Property
<PAGE>

FINANCIAL STATEMENTS OF THE PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT

TO BE UPDATED WITH POST-EFFECTIVE AMENDMENT

A1 - Real Property
<PAGE>

FINANCIAL STATEMENTS OF THE PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY
PARTNERSHIP

TO BE UPDATED WITH POST-EFFECTIVE AMENDMENT

B1 - Real Property
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS
<PAGE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Registrant, in conjunction with certain affiliates, maintains insurance on
behalf of any person who is or was a trustee, director, officer, employee, or
agent of the Registrant, or who is or was serving at the request of the
Registrant as a trustee, director, officer, employee or agent of such other
affiliated trust or corporation, against any liability asserted against and
incurred by him or her arising out of his or her position with such trust or
corporation.

Arizona, being the state of organization of Pruco Life Insurance Company
("Pruco"), permits entities organized under its jurisdiction to indemnify
directors and officers with certain limitations. The relevant provisions of
Arizona law permitting indemnification can be found in Section 10-850 et seq. of
the Arizona Statutes Annotated. The text of Pruco's By-law, Article VIII, which
relates to indemnification of officers and directors, is incorporated by
reference to Exhibit 3(ii) to its Form 10-Q, SEC File No. 33-37587, filed August
15, 1997.

Insofar as indemnification for liabilities arising under the Securities Act of
1933 (the "Act") may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

ITEM 15. NOT APPLICABLE

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits
---------
<S> <C>
(1A) Distribution Agreement between Pruco Securities Incorporated by reference to Post-Effective Amendment
Corporation and Pruco Life Insurance Company with No. 14 to Form S-6, Registration Statement No. 2-80513,
respect to the Pruco Life Variable Insurance Account. filed March 1, 1990, on behalf of the Pruco Life Variable
Insurance Account.

(1B) Distribution Agreement between Pruco Securities Incorporated by reference to Form S-6, Registration
Corporation and Pruco Life Insurance Company with Statement No. 2-89558, filed February 21, 1984, on
respect to the Pruco Life Variable Appreciable Account behalf of the Pruco Life Variable Appreciable Account.

(1C) Distribution Agreement between Pruco Securities Incorporated by reference to Form S-1, Registration No.
Corporation and Pruco Life Insurance Company with 33-86780, filed April 9, 1997, on behalf of the Pruco
respect to the Pruco Life Single Premium Variable Life Life Variable Contract Real Property Account.
Account and Pruco Life Single Premium Variable Annuity
Account.

(3A) Articles of Incorporation of Pruco Life Insurance Incorporated by reference to Form S-6, Registration No.
Company, as amended October 19, 1993. 333-07451, filed July 2, 1996, on behalf of the Pruco
Life Variable Appreciable Account.

(3B) By-Laws of Pruco Life Insurance Company, as amended Incorporated by reference to Form 10-Q Registration No.
May 6, 1997. 033-37587, filed August 15, 1997, on behalf of
of the Pruco Life Insurance Company.

</TABLE>

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<PAGE>

<TABLE>
<S> <C>
(3C) Resoultion of the Board of Directors establishing Incorporated by reference to Form S-1, Regisration No.
Pruco Life Variable Real Property Account. 33-86780, filed April 9, 1997, on behalf of the Pruco
Life Variable Contract Real Property Account.

(4A) Variable Life Insurance Contract. Incorporated by reference to Pre-Effective Amendment No.
1 to Form S-6, Registration Statement No. 2-80513, filed
February 17, 1983, on behalf of the Pruco Life Variable
Insurance Account.

(4B)(i) Revised Variable Appreciable Life Insurance Incorporated by reference to Post-Effective Amendment
Contract with fixed death benefit. No. 5 to Form S-6, Registration Statement No. 2-89558,
filed July 10, 1986, on behalf of the Pruco Life
Variable Appreciable Account.

(4B)(ii) Revised Variable Appreciable Life Insurance Incorporated by reference to Post-Effective Amendment
Contract with variable death benefit. No. 5 to Form S-6, Registration Statement No. 2-89558,
filed July 10, 1986, on behalf of the Pruco Life
Variable Appreciable Account.

(4C) Single Premium Variable Annuity Contract. Incorporated by reference to Form S-1, Registration No.
33-86780, filed April 9, 1997, on behalf of the Pruco
Life Variable Contract Real Property Account.

(4D) Flexible Premium Variable Life Insurance Contract. Incorporated by reference to Form S-1, Registration No.
33-86780, filed April 9, 1997, on behalf of the Pruco
Life Variable Contract Real Property Account.

(5) Opinion and Consent of Clifford E. Kirsch, Esq. as To be filed.
to the legality of the securities being registered.

(10A) Investment Management Agreement between The Incorporated by reference to Post-Effective Amendment
Prudential Insurance Company of America and The No. 4 to Registrant's Form S-1, Registration Statement
Prudential Variable Contract Real Property Partnership. No. 33-8698, filed May 2, 1988.

(10B) Service Agreement between The Prudential Insurance Incorporated by reference to Registrant's Form S-1,
Company of America and The Prudential Investment Registration Statement No. 33-8698, filed September 12,1986.

(10C) Partnership Agreement of The Prudential Variable Incorporated by reference to Post-Effective Amendment
Contract Real Property Partnership. No. 4 to Registrant's Form S-1, Registration Statement
No. 33-8698, filed May 2, 1988.

(22) Subsidiary Organizational Chart. Incorporated by reference to Form S-1, Registration No.
33-86780, filed April 9, 1997, on behalf of the Pruco
Life Variable Contract Real Property Account.

(23A) Written consent of PricewaterhouseCoopers LLP, To be filed.
independent accountants.
</TABLE>

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<PAGE>

<S> <C>
(23B) Written consent of Clifford E. Kirsch, Esq. To be filed.

(24) Powers of Attorney:

(A) W. Bethke, Ira J. Kleinman, M. Melzer, Incorporated by reference to Form 10-K,
Registration No. 33-08698, filed
E. Milnes, I. Price March 31, 1997 on behalf of the Pruco
Life Variable Contract Real Property Account.

(B) J. Avery Incorporated by reference to Post-Effective Amendment
No. 2 to Form S-6, Registration No. 333-07451, filed
June 25, 1997 on behalf of the Pruco Life Variable
Appreciable Account.

(C) K. Sakaguchi Incorporated by reference to Pre-Effective Amendment
No. 1 to Form N-4, Registration No. 333-06701, filed
September 12, 1996 on behalf of the Pruco Life Flexible
Premium Variable Annuity Account.

(D) J. Schlomann Incorporated by reference to Form S-1, Registration
Statement No. 33-20018, filed April 9, 1998 on behalf of
the Pruco Life of New Jersey Variable Contract Real
Property Account.

(27) Financial Data Schedules To be filed.

(b) Financial Statement Schedules
-----------------------------

<S>
Schedule III-Real Estate Owned by The Prudential
Variable Contract Real Property Partnership. To be filed.

Schedule IV-Mortgage Loans on Real Estate for The
Prudential Variable Contract Real Property Partnership. Not Applicable.

</TABLE>

ITEM 17. UNDERTAKINGS

Subject to the terms and conditions of Section 15(d) of the Securities Exchange
Act of 1934, the undersigned Registrant hereby undertakes to file with the
Securities and Exchange Commission such supplementary and periodic information,
documents and reports as may be prescribed by any rule or regulation of the
Commission heretofore or hereafter duly adopted pursuant to authority conferred
in that Section.

The undersigned Registrant hereby undertakes (a) to file any prospectuses
required by Section 10(a)(3) of the Securities Act of 1933 as Post-Effective
Amendments to this Registration Statement, (b) that for the purposes of
determining any liability under the 1933 Act, each such Post-Effective Amendment
may be deemed to be a new Registration Statement relating to the securities
offered therein and the offering of such securities at that time may be deemed
to be in the initial bona fide offering thereof, (c) to reflect in the
prospectus any facts or events after the effective date of the registration
statement (or the most recent Post-Effective Amendment thereof) which,
individually or in the aggregate, represent a fundamental change in the
information set forth in the registration statement, (d) to include any material
information with respect to the plan of distribution not previously disclosed in
the registration statement or any material change to such information in the
registration statement, (e) to remove from registration by means of a Post-
Effective Amendment any of the securities being registered which remain unsold
at such time as the offering of such securities may be terminated.

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<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, Pruco Life Insurance
Company has duly caused this Post-Effective Amendment No. 5 to the Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Newark, State of New Jersey, on the 9th day of
February, 1999.

PRUCO LIFE INSURANCE COMPANY

In Respect of

PRUCO LIFE
VARIABLE CONTRACT REAL PROPERTY ACCOUNT

By: /s/ Esther H. Milnes
-------------------------------
Esther H. Milnes
President

Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment No. 5 to the Registration Statement has been signed below by the
following Directors and Officers of Pruco Life Insurance Company in the
capacities indicated on this 9th day of February, 1999.

Signature and Title
-------------------

<S> <C>
/s/ *
- ------------------------------------------------------------
Esther H. Milnes
President and Director

/s/ *
- ------------------------------------------------------------
James M. Schlomann
Chief Accounting Officer and Comptroller

/s/ *
- ------------------------------------------------------------
James J. Avery, Jr.
Director
*By: /s/ Dodie C. Kent
/s/ * --------------------------------
- ------------------------------------------------------------ Dodie C. Kent
William M. Bethke (Attorney-in-Fact)
Director

/s/ *
- ------------------------------------------------------------
Ira J. Kleinman
Director

/s/ *
- ------------------------------------------------------------
Mendel A. Melzer
Director

/s/ *
- ------------------------------------------------------------
I. Edward Price
Director

/s/ *
- ------------------------------------------------------------
Kiyofumi Sakaguchi
Director
</TABLE>

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