<PAGE>
The Prudential
Variable Contract
Real Property
Partnership
[PHOTO]
The Westpark Building
Annual Report to
Contract Owners
December 31, 1997
[LOGO] Prudential
The Prudential Insurance Company of America
751 Broad Street
Newark, NJ 07102-3777
<PAGE>
[LOGO]
================================================================================
This Report may be used with the public only when preceded or accompanied by
current prospectuses for The Real Property Account, the applicable variable life
or variable annuity product, and the current Performance Data Update for the
applicable product. The Performance Data Update shows historical investment
performance after the deduction of investment management fees,
investment-related expenses and the product's Mortality and Expense Risk Charge.
For the variable life insurance products, additional contract charges include
the cost of insurance, administrative, sales and any applicable withdrawal or
surrender charges. These charges will reduce the rates of return shown on the
Performance Data Update. For the variable annuity products, the Performance Data
Update provides returns that are net of all contract charges, including
applicable surrender or withdrawal charges. The prospectuses contain more
information concerning charges and expenses, including hypothetical performance
illustrations that show the effects of performance on various assumptions, and
should be read carefully before you invest or send money.
Variable life and variable annuity products are offered by Pruco Securities
Corp., a subsidiary of The Prudential Insurance Company of America. Both are
located at 751 Broad Street, Newark, NJ 07102-3777.
<PAGE>
================================================================================
Table of Contents
NOTE: ** The inside back cover provides important toll-free
telephone numbers for customer service.
<TABLE>
<CAPTION>
Page
<S> <C>
Letter to Contract Owners
Summarizes the results of The Prudential Variable Contract Real Property Partnership .............2
Financial Statements of The Prudential Variable Contract Real Property Partnership ......................5
Schedule of Investments
Lists the holdings of The Prudential Variable Contract Real Property Partnership .................9
Notes to Financial Statements of The Prudential Variable Contract Real Property Partnership ............12
Report of Independent Accountants ......................................................................17
Board of Directors .....................................................................................19
</TABLE>
1
<PAGE>
Year Ended December 31, 1997
Letter
To Contract Owner
Dear Contract Owner:
This Annual Report for the Prudential Variable Contract Real Property
Partnership (the Partnership) presents a summary of the activities and results
for the Partnership during 1997.
The Partnership generated a total return, after fees of 11.29% in 1997, the best
calendar year total return in the Partnership's history. This return was
comprised of a 6.99% income return and a 4.30% appreciation return.
The Partnership was an active investor, completing five acquisitions and one
disposition transaction during the year. Strong income returns from existing
assets were offset by lower returns from new industrial properties still in
lease-up and were further affected by high cash balances carried early in the
year to fund 1997 acquisitions. Our stock position in Meridian Industrial Trust,
which also provided lower income returns, produced a significant value gain
which was reflected in the overall appreciation return. An advantageous purchase
of the land beneath the Pomona CA, industrial property, positive market
conditions in the Southeast apartment market, and significant leasing activity
at the Partnership's Atlanta retail center were additional factors which
contributed to the appreciation return.
During 1997, the overall real estate market performed well. On a comparative
basis, the National Council of Real Estate Investment Fiduciaries (NCREIF)
Property Index (the Index) returned 13.74% before management fees. The Index is
a widely used index of commercial real estate performance within the United
States. For 1997, the Partnership's appreciation return of 4.30% (after fees)
was comparable to the Index's appreciation return of 4.37% (before fees). The
Partnership's income return of 6.99% (after fee) lagged the Index's income
return of 9.07% (before fee) due to the factors discussed above. Over the longer
term, the Partnership's total return (after fees) has outperformed the total
return (before fees) reported by the Index for the five and ten year periods
through year end 1997.
2
<PAGE>
The demand and supply fundamentals of real estate generally favor investors
right now. Low interest rates prevailing in the capital markets make real estate
even more attractive. In 1998, the office building market is expected to perform
especially well as absorption, fueled by job creation, continues to outpace the
new supply of space. The Partnership is positioned to benefit from this trend as
the Lisle, IL, office building is re-tenanted at favorable market rates.
In the public market, the Real Estate Investment Trust (REIT) sector is expected
to produce attractive returns in 1998 as investors concentrate on earnings
growth. The Partnership acquired its first REIT investment in 1997 and will
consider additional investment in this sector during 1998 if such investment is
expected to have a positive impact on overall portfolio performance.
We appreciate your investment in The Prudential Variable Contract Real Property
Partnership. The Partnership seeks to provide the highest quality real estate
investment option consistent with its objectives. We encourage you to consult
with your Pruco Securities Registered Representative to assist in providing for
your financial security.
Sincerely,
/s/ Terry McHugh
Terry McHugh
Vice President
The Prudential Insurance Company of America
================================================================================
Important Note
Investing in commercial real estate is a type of sector investment. Sector
investing carries higher risks than investments in a broadly diversified
portfolio.
The rates of return quoted on the following pages reflect deduction of
investment management fees and investment-related expenses but not product
charges. They reflect the reinvestment of any income and capital gain
distributions. They are not an estimate or a guarantee of future performance.
Contract unit values increase or decrease based on the performance of the
Account. Changes in contract values depend not only on the investment
performance of the Account, but also on the insurance and administrative
charges, applicable sales charges, and the Mortality and Expense Risk Charge
applicable under the contract. These contract charges significantly reduce the
dollar amount of any net gains and increase the dollar amount of any net losses.
Your Prudential Representative/Pruco Securities Registered Representative can
provide you with actual rates of return for your type of variable life insurance
or annuity contract, and can show you a personalized illustration of how
insurance charges affect the returns you experience.
- --------------------------------------------------------------------------------
3
<PAGE>
Real Property Partnership
The year ended December 31, 1997 was one of the most dynamic in the
Partnership's history. The Partnership completed five acquisitions valued over
$36 million and sold its interest in a co-investment in six properties for
approximately $6.3 million. These transactions, which included the Partnership's
first investment in stock of a Real Estate Investment Trust (REIT), translated
into a record setting year as the Partnership earned the highest calendar year
return in its history.
The Partnership acquired a 182,500 square foot warehouse in Salt Lake City, UT,
and a 277,500 square foot distribution facility in Aurora, CO, upon completion
of construction. The primary objective for both of these properties during 1998
will be to attract a strong tenant base. The Partnership also exercised an
option to purchase the land under the existing Pomona, CA industrial complex.
The acquisition of a 97,378 square foot office building located in Brentwood,
TN, is the Partnership's second such investment in this market.
The Partnership acquired 506,894 shares of Meridian Industrial Trust (Meridian)
for approximately $10 million. As of December 31, 1997 the value of the
Partnership's shares was approximately $12.5 million. Meridian is an equity real
estate investment trust in the business of owning and operating industrial
properties nationwide. Meridian was the purchaser of our interest in the six
industrial properties sold during 1997. This purchase was part of a larger
overall transaction through which our opportunity to invest in the stock of
Meridian was created. The Partnership will consider additional investments in
REIT stocks in 1998 if expected returns have a positive impact on overall
portfolio performance.
As of December 31, 1997, the Partnership's net assets consisted of:
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
<TABLE>
<CAPTION>
<S> <C>
o Office Buildings 29.2%
o Industrial 23.7%
[PIE CHART APPEARS HERE]
o Residential 20.8%
o Retail 13.3%
o Cash/Marketable
Securities/Other 13.0%
Source: Prudential.
</TABLE>
================================================================================
Average Annual Returns Through December 31, 1997
<TABLE>
<CAPTION>
One Three Five Ten Since
Year Years Years Years Inception
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Real Property Partnership (1) 11.29% 8.57% 8.04% 5.61% 5.61%
- ------------------------------------------------------------------------------------------
NCREIF Index (2) 13.74% 10.49% 7.79% 4.74% N/A
</TABLE>
Real Property Partnership Inception date: 11/26/86.
(1) Past performance is not predictive of future results. Partnership
performance does not reflect Separate Account expenses or other product
charges. Contract values when redeemed, may be worth more or less than
their original cost.
(2) The National Council of Real Estate Investment Fiduciaries (NCREIF)
Property Index is comprised of the NCREIF Classic Index (unleveraged) and
the NCREIF Leverage Property Database. All properties have been acquired on
behalf of tax exempt institutions and held in a fiduciary environment. The
universe includes: Wholly owned and joint venture investments, existing
properties only (i.e. no development projects), and only investment-grade
(non agricultural) income producing properties (apartments, hotels, office,
retail, office showroom/research and development, and warehouses.) Each
property's return is weighted by its market value and income and capital
changes are also calculated. Properties that are sold are removed from the
Index in the quarter the sale takes place. Each property's market value is
determined by real estate appraisal methodology, consistently applied.
- --------------------------------------------------------------------------------
Q&A
PHOTO
Portfolio Manager
Terry McHugh
================================================================================
Q. What is a REIT?
A. Real Estate Investment Trust (REIT) is an ownership vehicle created to allow
investors to pool their capital to own commercial real estate. The central
feature of this vehicle is an exemption from income taxes at the corporate level
as long as it meets specific provisions of the Internal Revenue Code. Two key
provisions are that at least 75% of its assets must be invested in real estate,
cash or government securities and at least 95% of the REIT's taxable earnings
must be paid as dividends. REITs may operate as public companies or may be
privately held. REITs offer investors an opportunity to avoid double taxation,
to limit liability, and in the case of a public REIT, to achieve improved
liquidity over direct real estate investment.
Q. Can the Real Property Partnership invest in REITs?
A. Yes, the Partnership does have the ability to invest in REITs. The
prospectuses which govern the Partnership's investment policies allow for up to
25% of its assets to be invested in REITs. During 1997 the Partnership made its
first such investment, acquiring 506,894 shares of Meridian Industrial Trust,
Inc. (NYSE:MDN) for $10 million. As of December 31, 1997, these shares were
valued at $12.5 million, representing 5.62% the of the partnership's assets.
- --------------------------------------------------------------------------------
4
<PAGE>
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
STATEMENTS OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
DECEMBER 31, 1997 DECEMBER 31, 1996
----------------- -----------------
ASSETS
<S> <C> <C>
REAL ESTATE INVESTMENTS - At estimated market value:
Real estate and improvements
(cost: 12/31/97 -- $201,670,248; 12/31/96 -- $177,082,291) $181,317,624 $151,074,276
Interest in properties at estimated market value
(cost:12/31/97--$0; 12/31/96--$6,133,157) 0 5,850,000
Real estate investment trust (cost: 12/31/97 -- $10,000,005;
12/31/96 -- $0) 12,523,805 0
------------- -------------
Total real estate investments 193,841,429 156,924,276
MARKETABLE SECURITIES - At estimated market value
(cost: 12/31/97 -- $13,939,000; 12/31/96 -- $24,345,000) 13,971,421 24,426,644
CASH AND CASH EQUIVALENTS 12,880,560 20,738,204
DIVIDEND RECEIVABLE 146,999 0
ACCRUED INVESTMENT INCOME AND OTHER ASSETS
(net of allowance for uncollectible accounts: 12/31/97 --
$68,000; 12/31/96 -- $56,000) 1,904,726 2,066,916
------------- -------------
Total assets $222,745,135 $204,156,040
============= =============
LIABILITIES AND PARTNERS' EQUITY
OBLIGATION UNDER CAPITAL LEASE 0 $4,072,677
ACCOUNTS PAYABLE AND ACCRUED EXPENSES $1,842,027 1,640,360
DUE TO AFFILIATES 832,922 719,200
OTHER LIABILITIES 538,413 467,009
------------- -------------
Total liabilities 3,213,362 6,899,246
------------- -------------
PARTNERS' EQUITY 219,531,773 197,256,794
------------- -------------
TOTAL LIABILITIES AND PARTNERS' EQUITY $222,745,135 $204,156,040
============= =============
NUMBER OF SHARES OUTSTANDING AT END OF PERIOD 11,848,275 11,848,275
============= =============
SHARE VALUE AT END OF PERIOD $18.53 $16.65
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------
1997 1996 1995
----------- ------------ ------------
INVESTMENT INCOME:
<S> <C> <C> <C>
Revenues from real estate and improvements $21,582,968 $22,799,694 $19,827,044
Income from interest in properties 435,296 606,558 638,183
Dividend income from real estate investment trusts 158,184 0 0
Interest on short-term investments 2,305,364 2,134,386 2,660,865
------------ ------------ ------------
Total investment income 24,481,812 25,540,638 23,126,092
------------ ------------ ------------
EXPENSES:
Investment management fee 2,640,470 2,494,229 2,341,878
Real estate taxes 2,208,972 2,367,404 1,938,090
Administrative expense 2,326,155 1,865,433 1,795,092
Operating expense 3,296,350 2,904,620 1,870,183
Interest expense 220,118 489,434 460,578
------------ ------------ ------------
Total investment expenses 10,692,065 10,121,120 8,405,821
------------ ------------ ------------
NET INVESTMENT INCOME 13,789,747 15,419,518 14,720,271
------------ ------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net proceeds from real estate investments
sold 6,297,422 20,497,789 0
Less: Cost of real estate investments sold 6,274,539 26,610,932 0
Realization of prior years' unrealized
gain on real estate investments sold (283,157) (4,539,996) 0
------------ ------------ ------------
Net gain (loss) realized on real estate
investments sold 306,040 (1,573,147) 0
------------ ------------ ------------
Change in unrealized gain (loss) on real estate
investments 8,179,192 (3,211,436) 661,623
------------ ------------ ------------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS 8,485,232 (4,784,583) 661,623
------------ ------------ ------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $22,274,979 $10,634,935 $15,381,894
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------
1997 1996 1995
------------ ------------ -----------
<S> <C> <C> <C>
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS:
Net investment income $13,789,747 $15,419,518 $14,720,271
Net gain (loss) realized on real estate
investments sold 306,040 (1,573,147) 0
Net unrealized gain (loss) from real estate
investments 8,179,192 (3,211,436) 661,623
------------- ------------- -------------
Net increase in net assets resulting from
operations 22,274,979 10,634,935 15,381,894
------------- ------------- -------------
NET DECREASE IN NET ASSETS RESULTING
FROM CAPITAL TRANSACTIONS:
Withdrawals by partners
( Shares: 1997 -- 0; 1996 -- 188,409;
1995 -- 204,350) 0 (3,000,000) (3,000,000)
------------- ------------- -------------
Net decrease in net assets resulting from
capital transactions 0 (3,000,000) (3,000,000)
------------- ------------- -------------
NET INCREASE IN NET ASSETS 22,274,979 7,634,935 12,381,894
NET ASSETS - Beginning of year 197,256,794 189,621,859 177,239,965
------------- ------------- -------------
NET ASSETS - End of year $219,531,773 $197,256,794 $189,621,859
============= ============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------
1997 1996 1995
----------- ----------- ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net increase in net assets resulting from operations $22,274,979 $10,634,935 $15,381,894
Adjustments to reconcile net increase in net assets
resulting from operations to net cash provided by
operating activities:
Net realized and unrealized (gain) loss on
investments (8,485,232) 4,784,583 (661,623)
(Increase) decrease in:
Dividend receivable (146,999) 0 0
Accrued investment income and other assets 162,190 (323,611) 474,790
(Decrease) increase in:
Obligation under capital lease (72,677) 190,256 77,585
Accounts payable and accrued expenses 201,667 (502,254) 1,337,548
Due to affiliates 113,722 36,405 58,589
Other liabilities 71,404 (197,060) 18,156
------------ ------------ ------------
Net cash flows from operating activities 14,119,054 14,623,254 16,686,939
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net proceeds from real estate investments
sold 6,297,422 20,497,789 0
Acquisition of real estate property (23,417,474) (10,713,722) (36,774,343)
Acquisition of real estate investment trust (10,000,005) 0 0
Improvements and additional costs on prior purchases:
Additions to real estate owned (1,311,864) (997,893) (1,050,197)
Additions to real estate partnerships 0 0 (24,415)
Sale (purchase) of marketable securities 10,455,223 (13,894,489) 5,292,044
------------ ------------ ------------
Net cash flows from investing activities (17,976,698) (5,108,315) (32,556,911)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Withdrawals by partners 0 (3,000,000) (3,000,000)
Principal payments on capital lease obligation (4,000,000) 0 0
------------ ------------ ------------
Net cash flows from financing activities (4,000,000) (3,000,000) (3,000,000)
------------ ------------ ------------
NET CHANGE IN CASH AND CASH
EQUIVALENTS (7,857,644) 6,514,939 (18,869,972)
CASH AND CASH EQUIVALENTS - Beginning of year 20,738,204 14,223,265 33,093,237
------------ ------------ ------------
CASH AND CASH EQUIVALENTS - End of year $12,880,560 $20,738,204 $14,223,265
============ ============ ============
SUPPLEMENTAL INFORMATION:
Cash paid during the year for interest $220,118 $376,450 $376,450
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
SCHEDULE OF INVESTMENTS
<TABLE>
<CAPTION>
DECEMBER 31,1997 DECEMBER 31, 1996
------------------------------- -----------------------------
ESTIMATED ESTIMATED
MARKET MARKET
COST VALUE COST VALUE
------------------------------------------------------------------
REAL ESTATE AND IMPROVEMENTS (PERCENT OF NET ASSETS) 82.6% 76.6%
Location Description
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Lisle, IL Office Building $ 17,916,983 $ 10,278,959 $ 17,524,421 $ 9,900,000
Atlanta, GA Garden Apartments 15,446,293 15,100,000 15,396,738 13,707,814
Pomona, CA Warehouse 23,637,049 19,504,612 23,456,751 17,553,849
Roswell, GA Retail Shopping Center 31,858,198 29,547,042 31,754,073 28,333,818
Morristown, NJ Office Building 18,931,914 10,805,918 18,797,224 10,113,986
Bolingbrook, IL Warehouse 8,948,028 7,100,000 8,948,028 7,100,000
Farmington Hills, MI Garden Apartments 13,641,971 14,805,258 13,623,952 14,706,400
Raleigh, NC Garden Apartments 15,804,860 16,525,751 15,762,951 16,854,252
Nashville, TN Office Building 8,613,828 9,611,329 8,379,326 8,800,436
Oakbrook Terrace, IL Office Complex 12,725,366 14,100,000 12,725,105 13,290,000
Beaverton, OR Office Complex 10,728,285 10,700,000 10,713,722 10,713,721
Salt Lake City, UT Industrial Building 5,388,134 5,350,000 0 0
Aurora, CO Industrial Building 8,540,585 8,400,000 0 0
Brentwood, TN Office Complex 9,488,755 9,488,755 0 0
===================================================================
$201,670,248 $181,317,624 $177,082,291 $151,074,276
===================================================================
INTEREST IN PROPERTIES (PERCENT OF NET ASSETS) 0.0% 3.0%
Location Description
- ---------------------------------------------------------------------------------------------------------------------------------
Jacksonville, FL Warehouse/Distribution $0 $0 $1,317,453 $1,225,000
Jacksonville, FL Warehouse/Distribution 0 0 1,002,448 1,000,000
Jacksonville, FL Warehouse/Distribution 0 0 1,442,894 1,325,000
Jacksonville, FL Warehouse/Distribution 0 0 2,370,362 2,300,000
------------- ------------- ------------- -------------
$0 $0 $6,133,157 $5,850,000
============= ============= ============= =============
REAL ESTATE TRUST (PERCENT OF NET ASSETS) 5.7% 0.0%
- ---------------------------------------------------------------------------------------------------------------------------------
Meridian REIT Shares (506,894 shares) $10,000,005 $12,523,805 $0 $0
============= ============= ============= ==============
<CAPTION>
DECEMBER 31,1997 DECEMBER 31, 1996
----------------------------- -------------------------
ESTIMATED ESTIMATED
FACE MARKET FACE MARKET
AMOUNT VALUE AMOUNT VALUE
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
MARKETABLE SECURITIES (PERCENT OF NET ASSETS) 6.4% 12.4%
(See pages F-14 to F-15 for details)
Description
- -----------------------------------------------------------------------------------------------------------------------------------
Marketable Securities $13,939,000 $13,971,421 $24,345,000 $24,426,644
============ ============ ============ ============
CASH AND CASH EQUIVALENTS (PERCENT OF NET ASSETS) 5.9% 10.5%
(See pages F-14 to F-15 for details)
Description
- -----------------------------------------------------------------------------------------------------------------------------------
Commercial Paper and Cash $12,918,158 $12,880,560 $20,804,826 $20,738,204
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
SCHEDULE OF INVESTMENTS
<TABLE>
<CAPTION>
DECEMBER 31, 1997
-------------------------------
FACE ESTIMATED
AMOUNT MARKET VALUE
------------ -------------
<S> <C> <C>
MARKETABLE SECURITIES (PERCENT OF NET ASSETS) 6.4%
International Lease Finance Corp., 5.92%, January 15, 1998 $ 500,000 $ 499,083
Smith Barney Holding Inc., 5.70%, January 28, 1998 1,304,000 1,285,475
Suntrust Banks, 8.875%, February 1, 1998 1,500,000 1,517,880
Chase Manhattan Bank, 5.75%, February 10, 1998 2,000,000 2,000,000
Beneficial Corp., 9.125%, February 15, 1998 700,000 705,948
Citicorp, 10.15%, February 15, 1998 200,000 207,324
General Motors Acceptance Corp., 5.9%, February 19, 1998 985,000 994,545
General Motors Acceptance Corp., 5.9875%, February 23, 1998 1,300,000 1,299,363
American General Finance Corp., 7.25%, March 1, 1998 500,000 507,880
Commercial Credit Co., 5.7%, March 1, 1998 375,000 375,199
Associates Corp. of North America, 7.3%, March 15, 1998 400,000 406,635
International Lease Finance Corp., 5.75%, March 15, 1998 400,000 399,940
Morgan Guaranty Trust Co., 5.85%, March 16, 1998 500,000 499,855
Royal Bank of Canada, 5.91%, June 17, 1998 2,000,000 1,998,853
FCC National Bank, 5.75281%, July 2, 1998 1,025,000 1,024,202
General Mills Inc., 5.38%, July 8, 1998 250,000 249,238
------------ ------------
TOTAL MARKETABLE SECURITIES $13,939,000 $13,971,421
============ ============
CASH AND CASH EQUIVALENTS (PERCENT OF NET ASSETS) 5.9%
Barnett Bank, Inc., 6.70%, January 2, 1998 $1,235,000 $1,234,540
American Greetings Corp., 6.26%, January 5, 1998 1,250,000 1,247,179
Xerox Capital, 5.85%, January 6, 1998 1,000,000 995,775
Nike Inc., 6.10%, January 8, 1998 1,215,000 1,213,353
Paccar Financial Corp., 5.85%, January 9, 1998 1,000,000 996,100
Pitney Bowes Credit Corp., 6.00%, January 13, 1998 750,000 747,375
Merrill Lynch & Co., Inc. 5.85%, January 15, 1998 1,000,000 994,313
Bank of Montreal, 5.90%, January 16, 1998 1,000,000 1,000,000
Countrywide Home Loan, Inc., 5.85%, January 22, 1998 1,000,000 993,175
General Electric Capital Corp., 5.74%, February 9, 1998 1,000,000 990,593
------------ ------------
TOTAL CASH EQUIVALENTS 10,450,000 10,412,402
CASH 2,468,158 2,468,158
------------ ------------
TOTAL CASH AND CASH EQUIVALENTS $12,918,158 $12,880,560
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
10
<PAGE>
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
SCHEDULE OF INVESTMENTS
<TABLE>
<CAPTION>
DECEMBER 31, 1996
----------------------------
FACE ESTIMATED
AMOUNT MARKET VALUE
------------ ------------
<S> <C> <C>
MARKETABLE SECURITIES (PERCENT OF NET ASSETS) 12.4%
PNC Bank, 5.48%, January 6, 1997 $2,200,000 $2,199,643
Wells Fargo, 5.54%, January 28, 1997 2,300,000 2,300,446
Sears Roebuck Acceptance Corp, 7.48%, February 19, 1997 100,000 102,187
General Motors Acceptance Corp, 5.88%, February 27, 1997 105,000 107,143
Sears Roebuck Acceptance Corp,7.72%, February 27, 1997 800,000 812,000
Dean Witter Discover & Co., 5.75%, March 6,1997 500,000 500,387
General Motors Acceptance Corp, 5.74%, March 18, 1997 1,200,000 1,201,344
Sears Discover Credit Corp, 7.81%, March 18, 1997 1,150,000 1,164,548
American Home Products, 6.88%, April 15, 1997 2,000,000 2,019,323
Ford Motor Credit, 5.90%, May 5, 1997 1,400,000 1,405,337
Ford Motor Credit, 5.90%, May 5, 1997 350,000 350,875
Ford Motor Credit, 9.15%, May 7, 1997 500,000 515,010
Key Bank NA, 5.58%, May 14, 1997 900,000 899,130
American Express Centurion Bank, 5.58%, June 10, 1997 2,300,000 2,299,862
Associates Corp of North America, 7.05%, June 30, 1997 600,000 604,766
Bank One Columbus, 5.58%, July 1, 1997 1,110,000 1,108,812
Associates Corp of North America, 5.88%, August 15, 1997 1,230,000 1,230,744
Key Bank of New York, 4.82%, September 4, 1997 1,300,000 1,298,740
Bank One Milwaukee, NA, 5.26%, October 8, 1997 1,000,000 1,002,870
Morgan Guaranty Trust Co., 5.38%, November 14, 1997 1,000,000 999,271
Norwest Financial Inc., 6.50%, November 15, 1997 300,000 302,286
Norwest Corp., 5.55%, November 21, 1997 2,000,000 2,001,922
------------ ------------
TOTAL MARKETABLE SECURITIES $24,345,000 $24,426,644
============ ============
CASH AND CASH EQUIVALENTS (PERCENT OF NET ASSETS) 10.5%
Gateway Fuel Corp, 7.15%, January 2, 1997 $2,177,000 $2,176,135
Bell Atlantic Financial Services, 5.50%, January 14, 1997 2,650,000 2,638,664
Pioneer Hi-Bred Intl, 5.47%, January 15, 1997 1,200,000 1,194,712
Bank of Montreal, 5.43%, January 27, 1997 2,300,000 2,300,000
Canadian Imperial Bank, 5.39%, January 27, 1997 2,400,000 2,400,000
HJ Heinz Co., 5.46%, January 29, 1997 2,370,000 2,354,184
General Electric Capital Corp, 5.34%, February 3, 1997 2,300,000 2,279,871
Bankers Trust Co., 5.35%, February 20, 1997 2,000,000 2,007,723
Colonial PL Co Note, 5.60%, February 21, 1997 800,000 792,658
Colonial PL Co Note, 5.35%, March 4, 1997 783,000 773,109
General Electric Capital Corp., 5.45%, March 14, 1997 300,000 296,321
------------ ------------
TOTAL CASH EQUIVALENTS 19,280,000 19,213,378
CASH 1,524,826 1,524,826
------------ ------------
TOTAL CASH AND CASH EQUIVALENTS $20,804,826 $20,738,204
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS OF
PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
For Years Ended December 31, 1997, 1996 and 1995
General
On April 29, 1988, Prudential Variable Contract Real Property Partnership (the
"Partnership"), a general partnership organized under New Jersey law, was formed
through an agreement among Prudential Insurance Company of America
("Prudential"), Pruco Life Insurance Company ("Pruco Life"), and Pruco Life
Insurance Company of New Jersey ("Pruco Life of New Jersey"). The Partnership
was established as a means by which assets allocated to the real estate
investment option under certain variable life insurance and variable annuity
contracts issued by the respective companies could be invested in a commingled
pool. The partners in the Partnership are Prudential, Pruco Life and Pruco Life
of New Jersey.
The Partnership has a policy of investing at least 65% of its assets in direct
ownership interests in income-producing real estate and participating mortgage
loans.
The Partnership's investments are valued on a daily basis, consistent with the
Partnership Agreement. On each day during which the New York Stock Exchange is
open for business, the net assets of the Partnership are valued using the
estimated market value of its investments as described in Notes 1A and 1B below,
plus an estimate of net investment income from operations reduced by any
liabilities of the Partnership.
The periodic adjustments to property values described in Notes 1A and 1B below
and the corrections of previous estimates of net investment income are made on a
prospective basis. There can be no assurance that all such adjustments and
estimates will be made timely.
Shares of the Partnership are sold to Prudential Variable Contract Real Property
Account, Pruco Life Variable Contract Real Property Account and Pruco Life of
New Jersey Variable Contract Real Property Account (the "Real Property
Accounts") at the current share value of the Partnership's net assets. Share
value is calculated by dividing the estimated market value of net assets of the
Partnership as determined below by the number of shares outstanding. A Contract
owner participates in the Partnership through interests in the Real Property
Accounts.
Note 1: Summary Of Significant Accounting Policies
A: Real Estate Owned and Interest in Properties - The
Partnership's investments in real estate owned and interests
in properties are initially valued at their purchase price.
Thereafter, real estate investments are reported at their
estimated market values based upon appraisal reports prepared
by independent real estate appraisers (members of the
Appraisal Institute) which are ordinarily obtained on an
annual basis. The property valuations are reviewed internally
at least every three months and adjusted if there has been a
change in the value of the property since the last valuation.
The Chief Appraiser of Prudential Insurance Company
Comptroller's Department Valuation Unit (Valuation Unit) is
responsible to assure that the valuation process provides
independent and accurate market value estimates. In the
interest of maintaining and monitoring the independence and
accuracy of the appraisal process, the Comptroller of
Prudential has appointed a third party firm to act as the
Appraisal Management Firm. The Appraisal Management Firm,
among other responsibilities, approves the selection and
scheduling of external appraisals; reviews and provides
comments on a sample of external
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS OF
PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
For Years Ended December 31, 1997, 1996 and 1995
and internal appraisals; assists in developing policies and
procedures and assists in the evaluation of the performance
and competency of external appraisers. The real estate
valuations are reviewed quarterly by the Valuation Unit and
adjusted if there has been any significant changes in
circumstances related to the real estate since the most recent
independent appraisal.
The purpose of an appraisal is to estimate the market value of
real estate as of a specific date. Market value has been
defined as the most probable price for which the appraised
real estate will sell in a competitive market under all
conditions requisite to fair sale, with the buyer and seller
each acting prudently, knowledgeably, and for self interest,
and assuming that neither is under undue duress. The estimate
of market value generally is a correlation of three
approaches, all of which require the exercise of subjective
judgment. The three approaches are: (1) current cost of
reproducing the real estate less deterioration and functional
and economic obsolescence; (2) discounting of a series of
income streams and reversion at a specified yield or by
directly capitalizing a single year income estimate by an
appropriate factor; and (3) value indicated by recent sales of
comparable properties in the market space. In the
reconciliation of these three approaches, the one most heavily
relied upon is the one then recognized as the most appropriate
by the independent appraiser for the type of real estate in
the market.
As described above, the estimated market value of real estate
and real estate related assets are determined through an
appraisal process. These estimated market values may vary
significantly from the prices at which the real estate
investments would sell since market prices of real estate
investments can only be determined by negotiation between a
willing buyer and seller. Although the estimated market values
represent subjective estimates, management believes these
estimated market values are reasonable approximations of
market prices and the aggregate value of investments in real
estate is fairly presented as of December 31, 1997 and 1996.
B: Investments in Real Estate Investment Trusts - Shares of real
estate investment trusts (REITs) are generally valued at their
quoted market price at December 31, 1997. These values may be
discounted for restrictions, if any, on the future sale of
these shares, such as, lockout periods or limitations on the
number of shares which may be sold in a given time period. Any
such discounts are determined by the Valuations Unit.
C: Revenue Recognition - Rent from real estate is recognized when
billed. Revenue from certain real estate investments is net of
all or a portion of related real estate expenses and taxes, as
lease arrangements vary as to responsibility for payment of
these expenses between tenants and the Partnership. Since real
estate is stated at estimated market value, net income is not
reduced by depreciation expense. Dividend income is accrued at
the ex-dividend date.
D: Cash and Cash Equivalents - For purposes of the statement of
cash flows, all short-term investments with a maximum maturity
of three months and investments in money market funds with a
maximum weighted average maturity of three months are
considered to be cash
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS OF
PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
For Years Ended December 31, 1997, 1996 and 1995
equivalents. Cash equivalents are carried at market value.
Cash of $128,089 and $144,314 at December 31, 1997 and 1996,
respectively, was maintained by the properties for tenant
security deposits and is included in Other Assets on the
Statements of Assets and Liabilities.
E: Marketable Securities - Marketable securities are highly
liquid investments with maturities of more than three months
when purchased and are carried at market value.
F: Federal Income Taxes - The Partnership is not a taxable entity
under the provisions of the Internal Revenue Code. The income
and capital gains and losses of the Partnership are
attributed, for federal income tax purposes, to the Partners
in the Partnership. The Partnership may be subject to state
and local taxes in jurisdictions in which it operates.
G: Management's Use of Estimates in the Financial Statements -
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from
those estimates.
Note 2: Obligation Under Capital Lease
The Partnership maintained an interest in a leasehold estate consisting of six
one-story industrial warehouse buildings located in Pomona, California. In
conjunction with this interest, the Partnership assumed assignment of a ground
lease agreement expiring in November 2078 with no renewal options. The annual
ground lease payments after November 1994, and for each 10 year increment
thereafter, were subject to increase 50% of the increase in the Consumer Price
Index during the previous period. In 1995, the annual ground lease payment
increased by $126,450 to $376,450. The ground lease contained a purchase option
that exercisable from November 1994 to November 1997 at a fixed price of
$4,000,000. In August 1997, the Partnership exercised this purchase option.
Note 3: Leasing Activity
The Partnership leases space to tenants under various operating lease
agreements. These agreements, without giving effect to renewal options, have
expiration dates ranging from 1997 to 2010. At December 31, 1997, the aggregate
future minimum base rental payments under non-cancelable operating lease by year
are:
Year Ending
December 31, (000'S)
------------ -------
1998 $12,877
1999 11,857
2000 10,221
2001 8,669
2002 6,834
Thereafter 11,916
-------
Total $62,374
=======
14
<PAGE>
NOTES TO FINANCIAL STATEMENTS OF
PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
For Years Ended December 31, 1997, 1996 and 1995
Note 4: Commitment From Partner
On January 9, 1990, Prudential committed to fund up to $100 million to enable
the Partnership to take advantage of opportunities to acquire attractive real
property investments whose cost is greater than the Partnership's then available
cash. Contributions to the Partnership under this commitment are utilized for
property acquisitions and returned to Prudential on an ongoing basis from
Contract owners' net contributions. Also, the amount of the commitment is
reduced by $10 million for every $100 million in estimated market value net
assets of the Partnership. The amount available under this commitment for
property purchases as of December 31, 1997 is approximately $47 million.
Note 5: Related Party Transactions
Pursuant to an investment management agreement, Prudential charges the
Partnership a daily investment management fee at an annual rate of 1.25% of the
average daily gross asset valuation of the Partnership. For the years ended
December 31, 1997, 1996 and 1995 management fees incurred by the Partnership
were $2,640,470; $2,494,229; and $2,341,878, respectively.
The Partnership also reimburses Prudential for certain administrative services
rendered by Prudential. The amounts incurred for the years ended December 31,
1997, 1996 and 1995 were $115,346; $116,818; and $123,919, respectively, and are
classified as administrative expenses in the statements of operations.
The Partnership owned a 50% interest in four warehouse/distribution buildings in
Jacksonville, Florida (the Unit warehouses). The remaining 50% interest was
owned by Prudential and one of its subsidiaries. In September 1997, the Unit
warehouses were sold as part of an industrial package for cash of $12,544,659.
The partnership's share of the proceeds was $6,272,329.
The Partnership has contracted with PREMISYS Real Estate Services, Inc.
(PREMISYS), an affiliate of Prudential, sold by Prudential in 1997, to provide
property management services at the Unit warehouses. The property management fee
earned by PREMISYS, incurred by the Partnership and Prudential for the years
ended December 31, 1997, 1996 and 1995 was $32,175; $36,000; and $31,360,
respectively.
15
<PAGE>
Note 6: Per Share Information (for a share outstanding throughout the year)
<TABLE>
<CAPTION>
01/01/97 01/01/96 01/01/95 01/01/94 01/01/93
TO TO TO TO TO
12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Rent from properties $ 1.8216 $ 1.9173 $ 1.6387 $ 1.2754 $ 1.1659
Income from interest in properties $ 0.0367 $ 0.0510 $ 0.0527 $ 0.1838 $ 0.2139
Interest on mortgage loans $ 0.0000 $ 0.0000 $ 0.0000 $ 0.0082 $ 0.0755
Dividend income from real estate investment trusts $ 0.0134 $ 0.0000 $ 0.0000 $ 0.0000 $ 0.0000
Interest from short-term investments $ 0.1946 $ 0.1795 $ 0.2199 $ 0.1226 $ 0.0549
--------- ---------- ---------- ---------- ----------
INVESTMENT INCOME $ 2.0663 $ 2.1478 $ 1.9113 $ 1.5900 $ 1.5102
========= ========== ========== ========== ==========
Investment management fee $ 0.2229 $ 0.2097 $ 0.1936 $ 0.1786 $ 0.1673
Real estate tax expense $ 0.1864 $ 0.1991 $ 0.1602 $ 0.1399 $ 0.1465
Administrative expenses $ 0.1963 $ 0.1569 $ 0.1484 $ 0.1103 $ 0.1187
Operating expenses $ 0.2782 $ 0.2442 $ 0.1546 $ 0.1332 $ 0.1209
Interest expense $ 0.0186 $ 0.0412 $ 0.0381 $ 0.0255 $ 0.0236
--------- ---------- ---------- ---------- ----------
EXPENSES $ 0.9024 $ 0.8511 $ 0.6949 $ 0.5875 $ 0.5770
========= ========== ========== ========== ==========
NET INVESTMENT INCOME $ 1.1639 $ 1.2967 $ 1.2164 $ 1.0025 $ 0.9332
========= ========== ========== ========== ==========
Net realized loss on investments sold $ 0.0258 ($ 0.1323) $ 0.0000 $ (0.0966) $ (0.1816)
Net unrealized gain/(loss) on investments $ 0.6903 ($ 0.2695) $ 0.0581 $ 0.2169 $ 0.0152
--------- ----------- ---------- ---------- ----------
NET REALIZED AND UNREALIZED
GAIN/(LOSS) ON INVESTMENTS $ 0.7162 ($ 0.4018) $ 0.0581 $ 0.1203 $ (0.1664)
--------- ----------- ---------- ---------- -----------
Net increase/(decrease) in share value $ 1.8800 $ 0.8949 $ 1.2745 $ 1.1228 $ 0.7668
Share Value at beginning of period $ 16.6486 $ 15.7537 $ 14.4792 $ 13.3564 $ 12.5896
---------- --------- --------- --------- ---------
Share Value at end of period $ 18.5286 $ 16.6486 $ 15.7537 $ 14.4792 $ 13.3564
========== ========= ========= ========= =========
Ratio of expenses to average net assets 5.16% 5.26% 4.62% 4.27% 4.44%
Ratio of net investment income to
average net assets 6.66% 8.01% 8.08% 7.29% 7.17%
Number of shares outstanding at
end of period (000's) 11,848 11,848 12,037 12,241 13,031
</TABLE>
All calculations are based on average month-end shares outstanding where
applicable.
Per share information presented herein is shown on a basis consistent with the
financial statements as discussed in Note 1G on page B10.
16
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------
February 20, 1998
To the Partners of Prudential
Variable Contract Real Property Partnership
In our opinion, the financial statements listed in the accompanying index
present fairly, in all material respects, the financial position of Prudential
Variable Contract Real Property Partnership (the "Partnership") at December 31,
1997 and 1996, and the results of its operations and its cash flows for the
years then ended, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the management of the
Prudential Insurance Company of America; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audits to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
Price Waterhouse LLP
New York, New York
17
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Partners of
The Prudential Variable Contract Real Property Partnership
Newark, New Jersey
We have audited the accompanying statements of operations, changes in net assets
and cash flows of the Prudential Variable Contract Real Property Partnership
(the "Partnership") for the year ended December 31, 1995 and the per share data
and ratios for each of the three years in the period ended December 31, 1995.
These financial statements and the per share data and ratios are the
responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements and the per share data and
ratios based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and per share data and ratios present
fairly, in all material respects, the results of operations, changes in net
assets and cash flows of The Prudential Variable Contract Real Property
Partnership for the year ended December 31, 1995 and the per share data and
ratios for each of the three years in the period ended December 31, 1995, in
conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Parsippany, New Jersey
March 1, 1996
18
<PAGE>
BOARD OF
DIRECTORS The Prudential Insurance Company of America
<TABLE>
<CAPTION>
FRANKLIN E. AGNEW GLEN H. HINER, JR. RICHARD M. THOMSON
Business Consultant Chairman and CEO, Former Chairman and CEO,
Owens Corning The Toronto-Dominion Bank
<S> <C> <C>
FREDERIC K. BECKER CONSTANCE J. HORNER JAMES A. UNRUH
President, Guest Scholar, Former Chairman and CEO,
Wilentz Goldman and Spitzer The Bookings Institutions Unisys Corporation
JAMES G. CULLEN GAYNOR N. KELLEY P. ROY VAGELOS, M.D.
President and CEO, Former Chairman and CEO, Former Chairman and CEO,
Telcom Group, The Perkins Elmer Corporation Merck & Co., Inc.
Bell Atlantic Corporation
CAROLYNE K. DAVIS BURTON G. MALKIEL STANLEY C. VAN NESS
Former Health Care, Professor, Counselor at Law,
Consultant Princeton University Picco Herbert Kennedy
ROGER A. ENRICO ARTHUR F. RYAN PAUL A. VOLCKER
Chairman and CEO, Chairman, CEO, Consultant
PepsiCo. Inc. and President,
Prudential
ALLAN D. GILMOUR IDA F. S. SCHMERTZ JOSEPH H. WILLIAMS
Former Vice Chairman, Principal, Director,
Ford Motor Company Investment Strategies The Williams Companies
International
WILLIAM H. GRAY CHARLES R. SITTER
President and CEO, Former President,
The College Fund/UNCF Exxon Corporation
JON F. HANSON DONALD L. STAHELI
Chairman, Hampshire Chairman and CEO,
Management Company Continental Grain Company
</TABLE>
BOARD OF
DIRECTORS Pruco Life Insurance Company
Pruco Life Insurance Company of New Jersey
<TABLE>
<CAPTION>
JAMES J. AVERY, JR. MENDEL MELZER I. EDWARD PRICE
Senior Vice President, CFO, and Chief Investment Officer. Senior Vice President and
Chief Actuary, Prudential Prudential Mutual Funds Actuary,
Individual Insurance Group Prudential Individual
Insurance Group
<S> <C> <C>
WILLIAM M. BETHKE ESTHER H. MILNES KIYOFUMI SAKAGUCHI
President, Vice President and Actuary, President,
Prudential Capital Markets Group Prudential Individual Prudential International
Insurance Group Insurance Group
President, Pruco Life and
Pruco Life of New Jersey
IRA J. KLEINMAN
Chief Marketing and Product
Development Officer,
Prudential Individual Insurance
</TABLE>
19
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
20
<PAGE>
================================================================================
The toll-free numbers shown below can be used to make transfers and
reallocations, review how your premiums are being allocated and receive current
investment option values in your contract. Unit values for each investment
option are available to all Contract Owners from the toll-free numbers. The
phone lines are open each business day during the hours shown. Please be sure to
have your contract number available when you call.
================================================================================
If you own a variable life insurance contract, please use the telephone numbers
shown below:
[MAP OF THE UNITED STATES]
1-800-356-4050
8 a.m. - 4 p.m. Eastern Time
1-800-635-9587
8 a.m. - 4 p.m. Eastern Time
================================================================================
If you own a variable annuity contract, please call the following telephone
number:
1-888-778-2888
8 a.m. - 9 p.m. Eastern Time
<PAGE>
[LOGO]
================================================================================
Whether providing insurance protection for home, family and business, or
arranging to cover future education and retirement expenses, Prudential people
have always been able to deliver something more: personal service, quality,
attention to detail and the financial strength of The Rock(R). Since 1875,
Prudential has been helping individuals and families meet their financial needs.
To obtain additional copies of this Annual Report:
In the past, Contract Owners who held several variable contracts at the same
address received multiple copies of this Annual Report. In an effort to lessen
waste and reduce your fund's expenses of postage and printing, we will attempt
to mail only one copy of this report, based on our current records for Contract
Owners with the same last name and same address. No action on your part is
necessary. Upon request, we will furnish you with additional reports. The
toll-free numbers listed on the inside back cover of this report should be used
to request any additional copies of The Prudential Variable Contract Real
Property, Annual Report. Proxy material and tax information will continue to be
sent to each account of record.
P.O. Box 197
Minneapolis, MN 55440-0197
Address Service Requested
------------
Bulk Rate
U.S. Postage
PAID
Prudential
------------
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RPA-AR 12/97 Printed in the U.S.A. PIMV-0398-2904
Cat#64696V1 on recycled paper. MRA-1998-A024618
