<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- - SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000
OR
_ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 33-86780
PRUCO LIFE INSURANCE COMPANY
IN RESPECT OF
PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT
-----------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
ARIZONA 22-1944557
- ------------------------------- -------------------------------
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
213 WASHINGTON STREET, NEWARK, NEW JERSEY 07102-2992
-----------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(800) 778-2255
-----------------------------------------------------
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES X NO
---- ----
<PAGE>
PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT
(REGISTRANT)
INDEX
<TABLE>
<CAPTION>
Page
PART I - FINANCIAL INFORMATION ----
<S> <C>
Item 1. Financial Statements (Unaudited)
A. PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT
Statements of Net Assets - March 31, 2000 and December 31, 1999 3
Statements of Operations - Three Months Ended March 31, 2000 and 1999 3
Statements of Changes in Net Assets - Three Months Ended March 31, 2000 and 1999 3
Notes to the Financial Statements of the Account 4
B. THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
Consolidated Statements of Assets and Liabilities - March 31, 2000 and December 31, 1999 6
Consolidated Statements of Operations - Three Months Ended March 31, 2000 and 1999 7
Consolidated Statements of Changes in Net Assets - Three Months Ended March 31, 2000 and 1999 8
Consolidated Statements of Cash Flows - Three Months Ended March 31, 2000 and 1999 9
Consolidated Schedules of Investments - March 31, 2000 and December 31, 1999 10
Notes to the Financial Statements of the Partnership 15
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 16
Item 3. Quantitative and Qualitative Disclosures About Market Risks 20
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 21
Item 6. Exhibits and Reports on Form 8-K 21
Signature Page 22
</TABLE>
2
<PAGE>
PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT
<TABLE>
<CAPTION>
STATEMENTS OF NET ASSETS
March 31, 2000 and December 31, 1999
MARCH 31, 2000
(UNAUDITED) DECEMBER 31, 1999
-------------------- --------------------
<S> <C> <C>
ASSETS
Investment in The Prudential Variable Contract
Real Property Partnership (Note 2) $ 118,147,806 $ 117,725,227
-------------------- --------------------
Net Assets $ 118,147,806 $ 117,725,227
==================== ====================
NET ASSETS, representing:
Equity of contract owners (Note 3) $ 77,904,605 $ 79,329,065
Equity of Pruco Life Insurance Company 40,243,201 38,396,162
-------------------- --------------------
$ 118,147,806 $ 117,725,227
==================== ====================
<CAPTION>
STATEMENTS OF OPERATIONS
For the three months ended March 31, 2000 and 1999
2000 1999
-------------------- --------------------
<S> <C> <C>
INVESTMENT INCOME
Net investment income from Partnership operations $ 1,986,366 $ 978,263
-------------------- --------------------
EXPENSES
Charges to contract owners for assuming mortality risk and
expense risk and for administration 121,525 128,466
-------------------- --------------------
NET INVESTMENT INCOME 1,864,841 849,797
-------------------- --------------------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net change in unrealized loss on investments in Partnership (1,623,497) (831,327)
Realized gain on sale of investments in Partnership 59,710 243,621
-------------------- --------------------
NET LOSS ON INVESTMENTS (1,563,787) (587,706)
-------------------- --------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ 301,054 $ 262,091
==================== ====================
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
For the three months ended March 31, 2000 and 1999
2000 1999
-------------------- --------------------
<S> <C> <C>
OPERATIONS
Net investment income $ 1,864,841 849,797
Net change in unrealized loss on investments in Partnership (1,623,497) (831,327)
Realized gain on sale of investments in Partnership 59,710 243,621
-------------------- --------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS 301,054 262,091
-------------------- --------------------
CAPITAL TRANSACTIONS
Net withdrawals by contract owners (Note 4) (1,583,256) (2,443,406)
Net contributions by Pruco Life Insurance Company 1,704,781 2,571,871
-------------------- --------------------
NET INCREASE IN NET ASSETS
RESULTING FROM CAPITAL TRANSACTIONS 121,525 128,465
-------------------- --------------------
TOTAL INCREASE IN NET ASSETS 422,579 390,556
NET ASSETS
Beginning of period 117,725,227 119,784,179
-------------------- --------------------
End of period $ 118,147,806 $ 120,174,735
==================== ====================
</TABLE>
3
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT
MARCH 31, 2000
(UNAUDITED)
NOTE 1: BASIS OF PRESENTATION
The Pruco Life Variable Contract Real Property Account ("Real Property Account")
is used to fund benefits under certain variable life insurance and variable
annuity contracts issued by Pruco Life Insurance Company. These products are
Variable Appreciable Life ("VAL"), Variable Life ("VLI"), Discovery Plus
("SPVA"), and Discovery Life Plus ("SPVL").
The accompanying unaudited financial statements included herein have been
prepared in accordance with the requirements of Form 10-Q and accounting
principles generally accepted in the United States for interim financial
information. In the opinion of management, all adjustments (consisting of normal
recurring adjustments) considered necessary for a fair presentation have been
included. Operating results for the three months ended March 31, 2000 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 2000. For further information, refer to the financial statements
and notes thereto included in the Real Property Account's December 31, 1999
Annual Report on Form 10K.
NOTE 2: INVESTMENT INFORMATION FOR THE PRUDENTIAL VARIABLE CONTRACT REAL
PROPERTY PARTNERSHIP
The investment in The Prudential Variable Contract Real Property Partnership
(the "Partnership") is based on the Real Property Account's proportionate
interest of the Partnership's market value. At March 31, 2000 and December 31,
1999, the Real Property Account's interest in the Partnership was 56.0% or
5,644,214 shares.
The number of shares (rounded) held by the Real Property Account in the
Partnership, the Partnership net asset value per share (rounded) and the
aggregate cost of investments in the Real Property Account's shares held at
March 31, 2000 and December 31, 1999 were as follows:
<TABLE>
<CAPTION>
MARCH 31, 2000
(UNAUDITED) DECEMBER 31, 1999
--------------- -----------------
<S> <C> <C>
NUMBER OF SHARES (ROUNDED): 5,644,214 5,644,214
NET ASSET VALUE PER SHARE (ROUNDED): $20.93 $20.86
COST: $60,925,820 $60,925,820
</TABLE>
NOTE 3: CONTRACT OWNER EQUITY INFORMATION
Contract owner equity at March 31, 2000 and December 31, 1999 by product, were
as follows:
<TABLE>
<CAPTION>
MARCH 31, 2000
(UNAUDITED) DECEMBER 31, 1999
--------------- -----------------
<S> <C> <C>
VAL $68,300,096 $69,589,863
VLI 4,928,618 4,928,611
SPVA 519,967 538,545
SPVL 4,155,924 4,272,046
--------- ---------
TOTAL $77,904,605 $79,329,065
=========== ============
</TABLE>
4
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT
MARCH 31, 2000
(UNAUDITED)
NOTE 4: NET WITHDRAWALS BY CONTRACT OWNERS
Net withdrawals by contract owners for the real estate investment option in
Pruco Life Insurance Company's variable insurance and variable annuity products
for the three months ended March 31, 2000 and 1999, were as follows:
<TABLE>
<CAPTION>
MARCH 31,
2000 1999
---- (UNAUDITED) ----
<S> <C> <C>
VAL $1,433,318 $1,872,896
VLI 13,402 73,018
SPVA 18,800 59,747
SPVL 117,736 437,745
------- -------
TOTAL $1,583,256 $2,443,406
========== ==========
</TABLE>
5
<PAGE>
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
MARCH 31, 2000
(UNAUDITED) DECEMBER 31, 1999
------------------------- -------------------------
<S> <C> <C>
ASSETS
REAL ESTATE INVESTMENTS - At estimated market value:
Real estate and improvements
(cost: 3/31/2000 -- $191,416,007; 12/31/1999 -- $190,007,568) $169,398,225 $171,154,516
Real estate partnerships (cost: 3/31/2000 -- $5,356,339;
12/31/1999 -- $5,187,126) 4,756,035 4,506,257
Real estate investment trusts (cost: 3/31/2000 -- $31,391,740;
12/31/1999 -- $32,535,158) 29,676,501 29,727,085
------------------------- -------------------------
Total real estate investments 203,830,761 205,387,858
MARKETABLE SECURITIES - At estimated market value
(cost: 3/31/2000 -- $1,825,483; 12/31/1999 -- $2,805,493) $1,820,690 $2,797,008
CASH AND CASH EQUIVALENTS 17,647,326 13,972,669
DIVIDEND RECEIVABLE 114,585 131,542
OTHER ASSETS (net of allowance for uncollectible
accounts: 3/31/2000 -- $39,000; 12/31/1999 -- $179,000) 2,416,143 2,853,576
------------------------- -------------------------
Total assets 225,829,505 225,142,653
------------------------- -------------------------
LIABILITIES
MORTGAGE LOAN PAYABLE 10,160,361 10,184,662
ACCOUNTS PAYABLE AND ACCRUED EXPENSES 2,624,173 2,967,614
DUE TO AFFILIATES 866,145 869,477
OTHER LIABILITIES 719,263 525,892
MINORITY INTEREST 482,022 372,068
------------------------- -------------------------
Total liabilities 14,851,964 14,919,713
------------------------- -------------------------
INVESTMENT COMMITMENTS
Partners' equity 210,977,541 210,222,940
------------------------- -------------------------
TOTAL LIABILITIES AND PARTNERS' EQUITY $ 225,829,505 $ 225,142,653
========================= =========================
NUMBER OF SHARES OUTSTANDING AT END OF PERIOD 10,078,921 10,078,921
========================= =========================
SHARE VALUE AT END OF PERIOD $20.93 $20.86
========================= =========================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE>
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, 2000 MARCH 31, 1999
---------------------- ---------------------
<S> <C> <C>
INVESTMENT INCOME:
Revenue from real estate and improvements $5,861,463 $3,626,962
Equity in income of real estate partnerships 169,213 0
Dividend Income 353,751 167,275
Interest on short-term investments 247,748 626,633
---------------------- ---------------------
Total investment income 6,632,175 4,420,870
---------------------- ---------------------
EXPENSES:
Investment management fee 668,314 670,744
Real estate taxes 657,399 567,745
Administrative 616,858 468,802
Operating 954,641 925,256
Interest 176,107 0
Minority interest 11,785 0
---------------------- ---------------------
Total investment expenses 3,085,104 2,632,547
---------------------- ---------------------
NET INVESTMENT INCOME 3,547,071 1,788,323
---------------------- ---------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net proceeds from real estate investments sold
or converted 3,730,550 12,000,003
Less: Cost of real estate investments sold
or converted 4,543,603 10,000,005
Realization of prior periods' unrealized
(loss) gain on real estate investments
sold or converted (919,678) 1,554,644
---------------------- ---------------------
Net gain realized on real estate
investments sold or converted 106,625 445,354
---------------------- ---------------------
Change in unrealized loss on real estate
investments (2,911,009) (1,592,943)
Minority interest in unrealized loss on
investments 11,914 0
---------------------- ---------------------
Net unrealized loss on real estate investments (2,899,095) (1,592,943)
---------------------- ---------------------
NET REALIZED AND UNREALIZED
LOSS ON INVESTMENTS (2,792,470) (1,147,589)
---------------------- ---------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $754,601 $640,734
====================== =====================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE>
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, 2000 MARCH 31, 1999
------------------------ ------------------------
<S> <C> <C>
NET INCREASE IN NET ASSETS
FROM OPERATIONS:
Net investment income $3,547,071 $1,788,323
Net realized gain on real estate investments sold
or converted 106,625 445,354
Change in unrealized loss on real estate investments (2,899,095) (1,592,943)
------------------------ ------------------------
Net increase in net assets resulting from operations 754,601 640,734
------------------------ ------------------------
NET DECREASE IN NET ASSETS
FROM CAPITAL TRANSACTIONS:
Withdrawals by partners
(3/31/2000 -- 0 shares; 3/31/1999 -- 1,482,233 shares) 0 (30,000,000)
------------------------ ------------------------
Net decrease in net assets resulting from
capital transactions 0 (30,000,000)
------------------------ ------------------------
NET INCREASE (DECREASE) IN NET ASSETS 754,601 (29,359,266)
NET ASSETS - Beginning of period 210,222,940 240,160,397
------------------------ ------------------------
NET ASSETS - End of period $210,977,541 $210,801,131
======================== ========================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE>
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, 2000 MARCH 31, 1999
------------------------- -------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net increase in net assets resulting from operations $754,601 $640,734
Adjustments to reconcile net increase in net assets resulting
from operations to net cash flows from operating activities:
Net realized and unrealized loss on investments 2,792,470 1,147,589
Equity in income of real estate partnership's
operations in excess of distributions (169,212) 0
Minority interest from operating activities 11,785 0
Bad debt expense 20,272 10,781
Decrease (Increase) in:
Dividend receivable 16,957 167,275
Other assets 417,161 1,350,821
(Decrease) Increase in:
Accounts payable and accrued expenses (343,441) (201,364)
Due to affiliates (3,332) (835,759)
Other liabilities 193,371 (12,771)
------------------------- -------------------------
Net cash flows from operating activities 3,690,632 2,267,306
------------------------- -------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Improvements and additional costs on prior purchases:
Net proceeds from real estate investments sold 3,730,550 43,641
Acquisition of real estate investment trust (3,400,186) 0
Additions to real estate owned (1,408,439) (287,806)
Sale of marketable securities, net 976,318 10,753,885
------------------------- -------------------------
Net cash flows from investing activities (101,757) 10,509,720
------------------------- -------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on mortgage loan payable (24,301) 0
Withdrawals by partners 0 (30,000,000)
Contributions from minority interest partners 110,083 0
------------------------- -------------------------
Net cash flows from financing activities 85,782 (30,000,000)
------------------------- -------------------------
NET CHANGE IN CASH AND CASH EQUIVALENTS 3,674,657 (17,222,974)
CASH AND CASH EQUIVALENTS - Beginning of period 13,972,669 58,578,848
------------------------- -------------------------
CASH AND CASH EQUIVALENTS - End of period $17,647,326 $41,355,874
========================= =========================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the quarter for interest $176,107 $0
========================= =========================
SUPPLEMENTAL DISCLOSURE OF NON-CASH
INVESTING ACTIVITY:
Exchange of shares of Meridian real estate investment trust
for shares of ProLogis real estate investment trust shares $0 $10,942,566
========================= =========================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE>
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
CONSOLIDATED SCHEDULE OF INVESTMENTS
<TABLE>
<CAPTION>
MARCH 31,2000
(UNAUDITED) DECEMBER 31,1999
----------------------------- -------------------------------
ESTIMATED ESTIMATED
MARKET MARKET
COST VALUE COST VALUE
----------------------------------------------------------------
REAL ESTATE AND IMPROVEMENTS (Percent of Net Assets) 80.3% 81.4%
Location Description
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Lisle, IL Office Building $22,193,122 $14,017,291 $22,075,782 $13,895,122
Atlanta, GA Garden Apartments 15,651,704 16,204,860 15,646,846 16,104,268
Roswell, GA Retail Shopping Center 32,438,018 27,004,476 32,394,853 27,000,939
Morristown, NJ Office Building 20,370,990 11,856,783 20,116,694 12,337,499
Bolingbrook, IL Warehouse 8,948,028 6,600,000 8,948,028 7,000,000
Raleigh, NC Garden Apartments 15,833,928 17,000,000 15,833,928 17,004,623
Nashville, TN Office Building 8,513,745 10,003,835 8,509,908 10,000,000
Oakbrook Terrace, IL Office Complex 12,945,366 14,200,000 12,945,366 14,200,000
Beaverton, OR Office Complex 10,768,811 9,100,000 10,768,811 10,400,866
Salt Lake City, UT Industrial Building 5,640,709 5,700,050 5,640,709 5,703,419
Aurora, CO Industrial Building 10,130,644 9,810,930 10,119,072 10,520,780
Brentwood, TN Office Complex 9,606,828 9,500,000 9,606,828 9,537,000
*Jacksonville, FL Garden Apartments 18,374,114 18,400,000 17,400,743 17,450,000
================================================================
$191,416,007 $169,398,225 $190,007,568 $171,154,516
================================================================
<CAPTION>
REAL ESTATE PARTNERSHIPS (PERCENT OF NET ASSETS) 2.3% 2.1%
Location Description
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
================================================================
Kansas City, KS; MO Retail Shopping Center $5,356,339 $4,756,035 $5,187,126 $4,506,257
================================================================
</TABLE>
* Real estate partnership accounted for by the consolidated method.
10
<PAGE>
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
SCHEDULE OF INVESTMENTS
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31, 2000
-------------------------------------------
REAL ESTATE INVESTMENT TRUST (PERCENT OF NET ASSETS) 14.1%
ESTIMATED
MARKET
COST VALUE
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Prologis REIT Shares (386,208 shares) $7,579,332 $7,434,504
AMB Property Corp (42,100 shares) 933,851 905,150
Alexandria Real Est Equities (25,600 shares) 726,957 768,000
Apartment Inv & Mgmt Co - Class A (23,900 shares) 945,347 912,681
Centerpoint Properties Corp (18,600 shares) 632,302 677,738
Cousins Properties (25,600 shares) 919,307 942,400
Equity Office Properties Trust (32,400 shares) 901,571 814,050
Equity Residential Property Trust - -
Excel Legacy Corp (322,300 shares) 1,479,431 1,087,763
Franchise Finance Cp Amer (37,800 shares) 910,018 878,850
Frontline Capital Growth (15,700 shares) 190,729 690,800
General Growth Properties (13,600 shares) 512,353 413,950
Intrawest Corporation (76,100 shares) 1,258,575 1,284,188
MeriStar Hospitality Corp (27,500 shares) 441,326 479,531
MeriStar Hotels & Resorts Inc. (239,100 shares) 875,818 702,356
Mission West Properties (133,200 shares) 1,068,474 1,140,525
Philips International Realty (68,500 shares) 1,129,948 1,138,813
Post Properties (11,800 shares) 455,733 475,688
Prime Hospitality Corp. (104,700 shares) 1,222,556 759,075
Public Storage, Common (43,700 shares) 1,193,963 917,700
Public Storage, Preferred (10,500 shares) 210,330 206,061
Reckson Service Industries - -
Reckson Assoc Realty Corp (32,500 shares) 805,151 609,375
Spieker Properties (12,000 shares) 426,078 534,000
Starwood Hotels and Resorts (85,200 shares) 2,710,715 2,236,500
Sun Communities Inc. - -
Vornado Realty Trust (49,800 shares) 1,812,956 1,668,300
Sun International Hotels Ltd (12,100 shares) 256,539 235,950
Boardwalk Equities, Inc. (186,100 shares) 1,792,380 1,762,553
-------------------------------------------
$31,391,740 $29,676,501
===========================================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
11
<PAGE>
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
SCHEDULE OF INVESTMENTS
<TABLE>
<CAPTION>
DECEMBER 31, 1999
--------------------------------------------
REAL ESTATE INVESTMENT TRUST (PERCENT OF NET ASSETS) 14.1%
ESTIMATED
MARKET
COST VALUE
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Prologis REIT Shares (386,208 shares) $7,579,332 $7,434,504
AMB Property Corp (42,100 shares) 933,851 839,369
Alexandria Real Est Equities (30,800 shares) 874,221 979,825
Apartment Inv & Mgmt Co - Class A (16,500 shares) 672,953 656,906
Centerpoint Properties Corp (16,200 shares) 544,308 581,175
Cousins Properties (24,800 shares) 890,459 841,650
Equity Office Properties Trust (32,400 shares) 901,571 797,850
Equity Residential Property Trust (13,100 shares) 623,573 559,206
Excel Legacy Corp (322,300 shares) 1,479,431 1,067,619
Franchise Finance Cp Amer (25,500 shares) 620,027 610,406
General Growth Properties (13,600 shares) 512,353 380,800
Intrawest Corporation (76,100 shares) 1,258,575 1,317,481
MeriStar Hotels & Resorts Inc. (239,100 shares) 875,818 851,794
Mission West Properties (116,800 shares) 938,124 905,200
Philips International Realty (63,700 shares) 1,052,331 1,047,069
Prime Hospitality Corp. (112,500 shares) 1,320,524 991,406
Public Storage (45,100 shares) 1,269,884 1,023,206
Reckson Service Industries (18,200 shares) 221,041 1,135,225
Reckson Assoc Realty Corp (52,200 shares) 1,299,227 1,070,100
Spieker Properties (12,000 shares) 426,078 437,250
Starwood Hotels and Resorts (87,200 shares) 3,027,806 2,049,200
Sun Communities Inc. (16,700 shares) 606,047 537,531
Vornado Realty Trust (51,800 shares) 1,930,911 1,683,500
Sun International Hotels Ltd (30,900 shares) 1,116,266 598,688
Boardwalk Equities, Inc. (146,800 shares) 1,560,447 1,330,125
--------------------------------------------
$32,535,158 $29,727,085
============================================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
12
<PAGE>
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
SCHEDULE OF INVESTMENTS
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31, 2000
---------------------------------------------------------------
NET ESTIMATED
FACE AMOUNT COST MARKET VALUE
----------------- ------------------ -------------------
<S> <C> <C> <C>
MARKETABLE SECURITIES (PERCENT OF NET ASSETS) 0.9%
Ford Motor Credit Co., 7.50%, April 6, 2000 $150,000 $151,779 $151,158
CIT Group Inc., 6.80%, April 17, 2000 500,000 503,765 502,501
Associates Corp of North America, 6.71%, June 1, 2000 1,160,000 1,169,939 1,167,031
----------------- ------------------ -------------------
TOTAL MARKETABLE SECURITIES $1,810,000 $1,825,483 $1,820,690
================= ================== ===================
CASH AND CASH EQUIVALENTS (PERCENT OF NET ASSETS) 8.4%
Southern California Edison, 5.85%, April 3, 2000 $425,000 $423,204 $423,204
UBS Fin Del LLC, 6.375%, April 3, 2000 218,000 217,884 217,884
AT&T Corp., 5.85%, April 4, 2000 500,000 497,806 497,806
General Electric Capital Corp., 5.85%, April 4, 2000 400,000 398,245 398,245
Metlife Funding Inc., 5.85%, April 4, 2000 339,000 337,513 337,513
Pepsico Inc., 6.07%, April 4, 2000 806,000 805,456 805,456
Procter & Gamble Co., 5.85%, April 4, 2000 650,000 645,775 645,775
Salomon Smith Barney Hldgs Inc., 5.85%, April 4, 2000 800,000 794,800 794,800
Homeside Lending Inc., 5.87%, April 5, 2000 865,000 861,051 861,051
Clorox Co., 5.90%, April 10, 2000 150,000 149,140 149,140
First Tennesse, N.A., 5.93%, April 10, 2000 800,000 799,946 799,946
Merrill Lynch & Co., Inc., 6.04%, April 10, 2000 879,000 876,198 876,198
Bell Atlantic Network Funding, 6.05%, April 11, 2000 205,000 204,139 204,139
General Electric Capital Corp, 6.09%, April 12, 2000 113,000 112,732 112,732
NIKE Inc., 6.00%, April 12, 2000 797,000 793,546 793,546
Bell Atlantic Network Funding, 6.05%, April 13, 2000 186,000 185,156 185,156
Pitney Bowes Credit Corp., 6.02%, April 13, 2000 340,000 338,465 338,465
J. P. Morgan and Co., Inc., 6.10%, April 14, 2000 520,000 517,973 517,973
Countrywide Home Loans., 6.12%, April 18, 2000 864,000 860,769 860,769
Paccar Financial Corp., 6.05%, April 18, 2000 860,000 856,965 856,965
E.I. Du Pont De Nemours & Co., Inc., 6.03%, April 24, 2000 600,000 597,287 597,287
PPG Industries., 6.06%, April 24, 2000 702,000 699,164 699,164
Federal Home Loan Mortgage Corp., 6.00%, April 25, 2000 1,357,000 1,350,441 1,350,441
General Mills Inc., 6.02%, April 26, 2000 860,000 855,686 855,686
Federal Home Loan Mortgage Corp., 6.09%, May 4, 2000 119,000 118,295 118,295
General Electric Capital Corp., 6.08%, May 10, 2000 100,000 99,308 99,308
General Motors Acceptance Corp., Inc., 6.06%, May 15, 2000 758,000 752,003 752,003
J.P. Morgan and Co., Inc., 6.10%, May 22, 2000 350,000 346,323 346,323
----------------- ------------------ -------------------
TOTAL CASH EQUIVALENTS 15,563,000 15,495,270 15,495,270
CASH 2,152,056 2,152,056 2,152,056
----------------- ------------------ -------------------
TOTAL CASH AND CASH EQUIVALENTS $17,715,056 $17,647,326 $17,647,326
================= ================== ===================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
13
<PAGE>
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
SCHEDULE OF INVESTMENTS
<TABLE>
<CAPTION>
DECEMBER 31, 1999
----------------------------------------------------------------
NET ESTIMATED
FACE AMOUNT COST MARKET VALUE
------------------- ----------------- -------------------
<S> <C> <C> <C>
MARKETABLE SECURITIES (Percent of Net Assets) 1.3%
J.P. Morgan and Co., Inc., 5.96%, March 13, 2000 $995,000 $980,010 $980,010
Ford Motor Credit Co., 7.50%, April 6, 2000 150,000 151,779 150,654
CIT Group Inc., 6.80%, April 17, 2000 500,000 503,765 501,487
Associates Corp of North America, 6.71%, June 1, 2000 1,160,000 1,169,939 1,164,857
------------------- ----------------- -------------------
TOTAL MARKETABLE SECURITIES $2,805,000 $2,805,493 $2,797,008
=================== ================= ===================
CASH AND CASH EQUIVALENTS (PERCENT OF NET ASSETS) 6.6%
Duke Energy Corp., 5.00%, January 3, 2000 $550,000 $549,771 $549,771
Bell Atlantic Financial Services, 5.20%, January 7, 2000 672,000 671,321 671,321
Household Finance Corp, 5.93%, January 18, 2000 990,000 983,314 983,314
Ford Motor Credit Co., 6.00%, January 21, 2000 847,000 840,789 840,789
American Express Cr. Corp., 6.02%, January 26, 2000 999,000 990,981 990,981
Procter & Gamble Co., 6.00%, January 26, 2000 200,000 197,867 197,867
Goldman Sachs Group L.P., 6.43%, January 31, 2000 1,000,000 991,963 991,963
Countrywide Home Loans, 6.00%, February 3, 2000 990,000 980,595 980,595
Merrill Lynch & Co., Inc., 5.98%, February 3, 2000 990,000 980,626 980,626
Unifunding Inc., 6.05%, February 3, 2000 900,000 892,135 892,135
Metlife Funding Inc., 5.90%, February 4, 2000 841,000 832,730 832,730
General Electric Cap Corp., 5.95%, February 10, 2000 350,000 346,182 346,182
GTE Funding, Inc., 6.10%, February 10, 2000 1,000,000 990,681 990,681
E.I. Du Pont De Nemours & Co. Inc., 6.00%, February 11, 2000 250,000 246,667 246,667
General Electric Capital Corp., 5.92% March 1, 2000 406,000 400,258 400,258
------------------- ----------------- -------------------
TOTAL CASH EQUIVALENTS 10,985,000 10,895,880 10,895,880
CASH 3,076,789 3,076,789 3,076,789
------------------- ----------------- -------------------
TOTAL CASH AND CASH EQUIVALENTS $14,061,789 $13,972,669 $13,972,669
=================== ================= ===================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
14
<PAGE>
NOTES TO FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(UNAUDITED)
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited financial statements included herein have been
prepared in accordance with the requirements of Form 10-Q and accounting
principles generally accepted in the United States for interim financial
information. In the opinion of management, all adjustments (consisting of normal
recurring adjustments) considered necessary for a fair presentation have been
included. Operating results for the three months ended March 31, 2000 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 2000. For further information, refer to the financial statements
and notes thereto included in each Partner's December 31, 1999 Annual Report on
Form 10K.
NOTE 2: COMMITMENT FROM PARTNER
In 1986, Prudential committed to fund up to $100 million to enable the
Partnership to acquire real estate investments. Contributions to the Partnership
under this commitment were utilized for property acquisitions, and returned to
Prudential on an ongoing basis from the contract owners' net contributions and
other available cash. The amount of the commitment is reduced by $10 million for
every $100 million in current value net assets of the Partnership. Thus, with
$226 million in net assets, the commitment has been automatically reduced to $80
million. As of March 31, 2000, Prudential's equity interest in the Partnership,
on a cost basis, under this commitment was $35.8 million. Prudential does not
intend to make contributions during the 2000 fiscal year and will begin to phase
out this commitment over the next several years.
NOTE 3: RELATED TRANSACTIONS
Pursuant to an investment management agreement, Prudential charges the
Partnership a daily investment management fee at an annual rate of 1.25% of the
average daily gross asset valuation of the Partnership. For the three months
ended March 31, 2000 and 1999 management fees incurred by the Partnership were
$668,314 and $670,744 respectively.
The Partnership also reimburses Prudential for certain administrative services
rendered by Prudential. The amounts incurred for the three months ended March
31, 2000 and 1999 were $29,157 and $29,032 respectively, and are classified as
administrative expenses in the Consolidated Statements of Operations.
NOTE 4: INVESTMENT IN REAL ESTATE INVESTMENT TRUST (REIT)
On March 30, 1999, the Partnership exchanged 506,894 shares of Meridian REIT for
557,583 shares of ProLogis REIT, fair value of $10,942,566, and receivable of
$1,013,796 (or total fair value of $11,956,362) as a result of ProLogis'
acquisition of Meridian. Management continued applying a 3% discount to the
market value of the ProLogis REIT shares through June 29, 1999 because of the
restriction which limits the number of shares that can be publicly traded during
any six month period to 30% of the total shares originally acquired. The
application of the 3% discount was discontinued on June 30, 1999 because this
restriction no longer applied.
15
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
All of the assets of the Real Property Account (the "Account") are invested in
The Prudential Variable Contract Real Property Partnership (the "Partnership").
Correspondingly, the liquidity, capital resources and results of operations for
the Real Property Account are contingent upon the Partnership. Therefore, all of
management's discussion of these items is at the Partnership level. The Partners
in the Partnership are The Prudential Insurance Company of America, Pruco Life
Insurance Company, and Pruco Life Insurance Company of New Jersey (collectively,
the "Partners").
The following analysis of the liquidity and capital resources and results of
operations of the Partnership should be read in conjunction with the Financial
Statements and the related Notes to the Financial Statements included elsewhere
herein.
(a) LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2000, the Partnership's liquid assets consisting of cash, cash
equivalents and marketable securities were $19.5 million, an increase of $2.7
million from December 31, 1999. This increase was due primarily to the sale of
REIT shares during the first quarter of 2000 and operations of the Partnership's
properties. Sources of liquidity include net cash flow from property operations,
interest from short-term investments, and dividends from REIT shares.
The Partnership's investment policy allows up to 30% investment in cash and
short-term obligations, although the Partnership generally holds approximately
10% of its assets in cash or liquid instruments. At March 31, 2000, 9% of the
Partnership's assets consisted of cash, cash equivalents and marketable
securities.
In 1986, Prudential committed to fund up to $100 million to enable the
Partnership to acquire real estate investments. Contributions to the Partnership
under this commitment have been utilized for property acquisitions, and returned
to Prudential on an ongoing basis from contract owners' net contributions and
other available cash. The amount of the commitment is reduced by $10 million for
every $100 million in current value net assets of the Partnership. Thus, with
$226 million in net assets, the commitment has been automatically reduced to $80
million. As of March 31, 2000, Prudential's equity interest in the Partnership,
on a cost basis, under this commitment was $35.8 million. Prudential does not
intend to make any contributions during the 2000 fiscal year and will begin to
phase out this commitment over the next several years.
The Partners made $36 million in withdrawals during 1999 from excess cash.
Additional withdrawals may be made by the Partners during 2000, taking into
consideration anticipated cash needs of the Partnership including potential
property acquisitions, property dispositions and capital expenditures.
Management anticipates that its current liquid assets and ongoing cash flow from
operations will satisfy the Partnership's needs over the next twelve months and
the foreseeable future.
During the first quarter 2000, the Partnership spent approximately $1.4 million
in capital expenditures. Approximately $1.0 million were associated with
construction costs pertaining to the apartment complex located in Jacksonville,
FL. The balance was associated with leasing activity at the office properties
located in Morristown, NJ and Lisle, IL.
(b) RESULTS OF OPERATIONS
The following is a brief discussion of the Partnership's results of operations
for the quarters ended March 31, 2000 and 1999.
16
<PAGE>
MARCH 31, 2000 VS. MARCH 31, 1999
The following table presents a comparison of the Partnership's sources of net
investment income, and realized and unrealized gains or losses by investment
type, for the three months ended March 31, 2000 and March 31, 1999.
<TABLE>
<CAPTION>
QUARTER ENDED MARCH 31,
2000 1999
--------------- ----------------
<S> <C> <C>
NET INVESTMENT INCOME:
Office properties $1,579,739 $1,066,496
Apartment complexes 912,454 384,451
Retail property 707,880 689,146
Industrial properties 377,080 85,250
Income from interest in properties 169,213 -
Dividend income from real estate
investment trusts 353,751 167,275
Other (including interest income,
investment mgt fee, etc.) (553,046) (604,295)
--------------- ----------------
TOTAL NET INVESTMENT INCOME $3,547,071 $1,788,323
=============== ================
<CAPTION>
QUARTER ENDED MARCH 31,
2000 1999
--------------- ----------------
<S> <C> <C>
REALIZED GAIN ON INVESTMENTS:
Industrial properties $0 43,641
Real estate investment trusts 106,625 401,713
UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Office properties (2,068,051) (1,323,279)
Apartment complexes 79,652 (65,370)
Retail property (39,629) (149,176)
Industrial properties (1,124,790) (200,090)
Interest in properties 80,566 -
Real estate investment trusts 173,157 144,972
TOTAL REALIZED AND UNREALIZED (LOSS) --------------- ----------------
ON INVESTMENTS: ($2,792,470) ($1,147,589)
=============== ================
</TABLE>
The Partnership's net investment income for the quarter ended March 31, 2000 was
$3.5 million, an increase of $1.8 million from the corresponding quarter in the
prior year. This increase was primarily the result of the following factors; the
acquisitions of a controlling interest in an apartment complex in Jacksonville,
FL and an equity investment in a retail portfolio located in the Kansas City, MO
area during the third quarter 1999. Additionally, occupancy increased at the
industrial property located in Aurora, CO and the office complex located in
Morristown, NJ.
17
<PAGE>
Revenue from real estate properties was $5.9 million, for the first three months
of 2000. An increase of $2.2 million, or 61.6%, from $3.6 million in the
corresponding period 1999, mainly as a result of the acquisition of the
controlling interest in a Jacksonville, FL apartment complex and increased
occupancy previously discussed.
Income from interest in properties increased $169,213 or 100% during the first
quarter of 2000, as a result of the Partnership's equity investment interest in
the retail portfolio located in the Kansas City, MO area.
Dividend income from real estate investment trusts amounted to approximately
$0.4 million for the quarter ended March 31, 2000, an increase of approximately
$0.2 million, or 111.5%, compared to the corresponding quarter in 1999. This
increase was primarily due to an increase in the amount invested in REIT stocks.
Interest on short-term investments decreased approximately $0.4 million or 60.5%
for the quarter ended March 31, 2000 due primarily to a significantly lower
average cash balance during the quarter ended March 31, 2000 compared to the
prior corresponding period. Cash and cash equivalents maintained during the
first quarter of 2000 averaged approximately $15.8 million when compared to the
first quarter of 1999 when the average cash and cash equivalents were
approximately $40.0 million.
Real estate taxes increased $89,654 or 15.8% for the first quarter ended 2000,
primarily as a result of the acquisition of the controlling interest in an
apartment complex located in Jacksonville, FL.
Administrative expenses increased $148,056, or 31.6%, for the first three months
of 2000 over the corresponding period 1999. This increase was primarily due to
the acquisition of the controlling interest in an apartment complex located in
Jacksonville, FL coupled with higher expense levels experienced by the office
property located in Morristown, NJ.
Interest expense increased $176,107, or 100%, in the first three months of 2000
compared to the corresponding period of 1999, as a result of the Partnership's
controlling interest in the apartment complex located in Jacksonville, FL, which
was acquired subject to $10.2 million in debt.
Minority interest in consolidated partnership increased $11,785, or 100%, as a
result of the Partnership's controlling joint venture investment in the
apartment complex located in Jacksonville, FL.
OFFICE PROPERTIES
Net investment income from property operations for the office sector increased
approximately $513,000, or 48.1%, for the quarter ended March 31, 2000 when
compared to the corresponding period in 1999. This was primarily due to
increased occupancy at the buildings.
The six office properties owned by the Partnership experienced a net unrealized
loss of approximately $2.1 million during the first three months of 2000,
compared to a net unrealized loss of $1.3 million in the corresponding period
1999. The majority of this change in net unrealized loss, or $0.8 million, was
due to the office property located in Beaverton, OR. This decrease was due to
higher vacancy in the sub-market coupled with the loss of a major tenant at the
office complex. The increase in unrealized gain, or $0.5 million, from the
Lisle, IL property was offset by the increase in unrealized loss, or $0.5
million, from the Morristown, NJ property when comparing first quarter 2000 to
the corresponding period in 1999. The office property in Morristown, NJ is
currently being marketed for sale.
Occupancy at the Beaverton, OR, Oakbrook Terrace, IL, and one of the Brentwood,
TN properties remained unchanged from March 31, 1999 at 100%. Occupancy at the
Morristown, NJ property increased from 85% at March 31, 1999 to 100% at March
31, 2000 while occupancy at the Lisle, IL office property decreased from 96% at
March 31, 1999 to 80% at March 31, 2000. Occupancy at the other Brentwood, TN
18
<PAGE>
property owned by the Partnership decreased from 100% at March 31, 1999 to 56%
at March 31, 2000. As of March 31, 2000 all vacant spaces were being marketed.
APARTMENT COMPLEXES
Net investment income from property operations for the apartment sector was $0.9
million for the first three months in 2000, an increase of $0.5 million, or
137.3%, when compared the corresponding period in 1999. This increase was
primarily due to the acquisition of the controlling interest in the apartment
complex located in Jacksonville, FL.
The apartment complexes owned by the Partnership experienced a net unrealized
gain of $79,652 in the first quarter of 2000 and a net unrealized loss of
$65,370 in the first quarter of 1999. The majority of the first quarter 2000 net
unrealized gain and the first quarter 1999 net unrealized loss was due to the
Atlanta, GA property.
The occupancy at the Atlanta, GA complex decreased from 97% at March 31, 1999 to
95% at March 31, 2000. Occupancy at the apartment complex in Raleigh, NC
decreased from 94% at March 31, 1999 to 93% at March 31, 2000. Occupancy at the
Jacksonville, FL apartment complex was 86% at March 31, 2000. As of March 31,
2000, all available vacant spaces were being marketed.
RETAIL PROPERTIES
Net investment income for the Partnership's retail property located in Roswell,
GA was approximately $0.7 million for both the three months ended March 31, 2000
and 1999.
The retail property experienced a net unrealized loss of $39,629 and $149,176 in
the first three months of 2000 and 1999, respectively. The net realized losses
in both years were the result of capital expenditures which did not increase the
market value of the property.
On September 30, 1999, the Partnership invested in an equity joint venture of
retail centers located in the Kansas City, MO area. This equity joint venture
investment required the Partnership to contribute $5.1 million to the investment
and the Partner to contribute $1.7 million. There is approximately $21.0 million
in debt on these retail centers. During the three months ended March 31, 2000,
income from this investment amounted to $169,213. This equity investment
experienced a net unrealized gain in the first quarter 2000 of $80,566,
primarily due to increased leasing activity and lease renewals at one of the
five centers.
Occupancy at the shopping center located in Roswell, GA decreased from 98% at
March 31, 1999 to 97% at March 31, 2000. The retail portfolio located in Kansas
City, KS and MO had an average occupancy of 93% at March 31, 2000. As of March
31, 2000, all vacant spaces were being marketed.
INDUSTRIAL PROPERTIES
Net investment income from property operations for the industrial properties
increased from $85,250 in the first quarter 1999 to $377,080 in the
corresponding period 2000. The majority of this 342.3% increase was a result of
increased occupancy at the property in Aurora, CO.
The three industrial properties owned by the Partnership experienced a net
unrealized loss of approximately $1.1 million during the first quarter of 2000
compared to a net unrealized loss of approximately $0.2 million in 1999. The
majority of the decrease was attributable to the Aurora, CO industrial property.
This loss of approximately $0.4 million was due to more conservative assumptions
regarding rental rates, lease-up time and terminal capitalization rates used by
the appraiser. This is due to
19
<PAGE>
the property's competitive position in the market. The industrial property
located in Bolingbrook, IL also experienced an unrealized loss of $0.4 million
during the first quarter 2000. This loss was due to decreased market rents
caused by softening market conditions. The Salt Lake City, UT property is
currently being marketed for sale.
The occupancy at the Bolingbrook, IL property was 100% at March 31, 2000 and
1999. The occupancy at the Salt Lake City, Utah property remained unchanged at
34% at March 31, 1999 and 2000. The Aurora, CO property's occupancy rate
increased from 62% at March 31, 1999 to 75% at March 31, 2000. As of March 31,
2000, all vacant spaces were being marketed.
REAL ESTATE INVESTMENT TRUSTS
During the first quarter of 2000, the Partnership's investment in REITS
experienced unrealized and realized gains of $173,157 and $106,625,
respectively.
Management applied a 3% discount to the market value of the ProLogis REIT shares
through June 29, 1999 because of a restriction which limited the number of
shares that could be publicly traded during any six month period. This discount
was discontinued on June 30, 1999 because this restriction no longer applied.
OTHER
Other net investment income increased $51,249 during 2000 when compared to the
corresponding period in 1999. Other net investment income includes interest
income from short-term investments, investment management fees, and expenses not
related to property activities.
(c) INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS
Certain of the statements contained in Management's Discussion and Analysis may
be considered forward-looking statements. Words such as "expects", "believes",
"anticipates", "intends", "plans", or variations of such words are generally
part of forward-looking statements. Forward-looking statements are made based
upon management's current expectations and beliefs concerning future
developments and their potential effects upon the Partnership. There can be no
assurance that future developments affecting the Partnership will be those
anticipated by management. There are certain important factors that could cause
actual results to differ materially from estimates or expectations reflected in
such forward-looking statements including without limitation, changes in general
economic conditions, including the performance of financial markets and interest
rates; market acceptance of new products and distribution channels; competitive,
regulatory or tax changes that affect the cost or demand for the Partnership's
products; and adverse litigation results. While the Partnership reassesses
material trends and uncertainties affecting its financial position and results
of operations, it does not intend to review or revise any particular
forward-looking statement referenced in this Management's Discussion and
Analysis in light of future events. The information referred to above should be
considered by readers when reviewing any forward-looking statements contained in
this Management's Discussion and Analysis.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Account and the Partnership are not subject to significant exposure to
market rate risk for changes in interest rates because the Partnership's
financial instruments consist primarily of short-term fixed rate commercial
paper and neither the Account nor the Partnership use derivative financial
instruments. Further, by policy, the Partnership places its investments with
high quality debt security issuers, limits the amount of credit exposure to any
one issuer, limits duration by restricting the term, and holds investments to
maturity except under rare circumstances.
20
<PAGE>
PART II
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Contract owners participating in the Real Property Account have
no voting rights with respect to the Real Property Account.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
4.1 Variable Life Insurance Contract, filed as Exhibit 1.A.
(5)(a) to Pre-Effective Amendment No. 1 to Form S-6,
Registration Statement No. 2-80513, filed February 17,
1983, and incorporated herein by reference.
4.2 Revised Variable Appreciable Life Insurance Contract with
fixed death benefit, filed as Exhibit 1.A.(5)(f) to
Post-Effective Amendment No. 5 to Form S-6, Registration
Statement No. 2-89558, filed July 10, 1986, and
incorporated herein by reference.
4.3 Revised Variable Appreciable Life Insurance Contract with
variable death benefit, filed as Exhibit 1.A.(5)(g) to
Post-Effective Amendment No. 5 to Form S-6, Registration
Statement No. 2-89558, filed July 10, 1986, and
incorporated herein by reference.
4.4 Single Premium Variable Annuity Contract, filed as Exhibit
4(i) to Form N-4, Registration Statement No. 2-99616, filed
August 13, 1985, and incorporated herein by reference.
4.5 Flexible Premium Variable Life Insurance Contract, filed as
Exhibit 1.A.(5) to Form S-6, Registration Statement No.
2-99260, filed July 29, 1985, and incorporated herein by
reference.
b) REPORT ON FORM 8-K
None
21
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
PRUCO LIFE INSURANCE COMPANY
in respect of
Pruco Life Variable
Contract Real Property Account
(Registrant)
------------------------------------------------------------
Date: May 15, 2000 By: /s/
------------------------ -------------------------------
Esther H. Milnes
President and Director
Date: May 15, 2000 By: /s/
------------------------ -------------------------------
Dennis G. Sullivan
Vice President and Chief
Accounting Officer
22
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM STATEMENTS
OF NET ASSETS; STATEMENTS OF OPERATIONS AND CHANGES IN NET ASSETS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000801348
<NAME> PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 118,147,806
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 118,147,806
<TOTAL-LIABILITY-AND-EQUITY> 118,147,806
<SALES> 0
<TOTAL-REVENUES> 1,986,366
<CGS> 0
<TOTAL-COSTS> 121,525
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,864,841
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,864,841
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,864,841
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM STATEMENTS
OF ASSETS & LIABILITIES; STATEMENTS OF OPERATIONS AND IS QUALIFIED BY ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000846581
<NAME> THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 17,647,326
<SECURITIES> 1,820,690
<RECEIVABLES> 0
<ALLOWANCES> 39,000
<INVENTORY> 0
<CURRENT-ASSETS> 225,829,505
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 225,829,505
<CURRENT-LIABILITIES> 14,851,964
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 210,977,541
<TOTAL-LIABILITY-AND-EQUITY> 225,829,505
<SALES> 0
<TOTAL-REVENUES> 6,632,175
<CGS> 0
<TOTAL-COSTS> 3,085,104
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 754,601
<INCOME-TAX> 0
<INCOME-CONTINUING> 754,601
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 754,601
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
