The Prudential Series Fund

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
For Years Ended December 31, 2008, 2007, and 2006
Note 6: Investment Level Debt (continued)
As of December 31, 2008 principal amounts of mortgage loans payable on wholly owned properties and consolidated
partnerships are payable as follows:
Year Ending December 31,
(in 000's)
2009 $
9,277
2010 15,609
2011 604
2012 646
2013 9,463
Thereafter 4,475
Total Principal Balance Outstanding $
40,074
Premium (Discount) (26)
Principal Balance Outstanding, net of premium (discount) $
40,048
The mortgage loans payable of wholly owned properties and consolidated partnerships are secured by real estate investments
with an estimated fair value of $84.7 million.
Based on borrowing rates available to the Partnership at December 31, 2008 for loans with similar terms and average maturities,
the Partnership’s mortgages on wholly owned properties and consolidated partnerships have an estimated fair value of
approximately $40 million, and a carrying value of $40 million. Different assumptions or changes in future market conditions
could significantly affect estimated fair value.
Note 7: Financing, Covenant, and Repayment Risks:
In the normal course of business, the Partnership enters into loan agreements with certain lenders to finance its real estate
investment transactions. Unfavorable economic conditions could increase related borrowing costs, limit access to the capital
markets or result in a decision by lenders not to extend credit to the Partnership. There is no guarantee that the Partnership’s
borrowing arrangements or ability to obtain leverage will continue to be available, or if available, will be available on terms and
conditions acceptable to the Partnership. Further, these loan agreements contain, among other conditions, events of default and
various covenants and representations. In the normal course of business, the Partnership may be in the process of renegotiating
terms for loans outstanding that have passed their maturity dates. At December 31, 2008, the Partnership had no outstanding
matured loans.
A decline in market value of the Partnership’s assets may also have particular adverse consequences in instances where the
Partnership borrowed money based on the fair value of specific assets. A decrease in market value of these assets may result in
the lender requiring the Partnership to post additional collateral or otherwise repay these loans.
In the event the Partnership’s current investment obligations are not refinanced or extended when they become due and/or the
Partnership is required to repay such borrowings and obligations, management anticipates that the repayment of these obligations,
will be provided by operating cash flow, new debt refinancing, and real estate investment sales.
B-15 Real Property