SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C.  20549


                                 FORM 10-K


               Annual Report Pursuant to Section 13 or 15(d)
                  of the Securities Exchange Act of 1934


For the fiscal year                     Commission file number 0-16253
ended December 31, 1995


                     JMB MORTGAGE PARTNERS, LTD. - III
          (Exact name of registrant as specified in its charter)


         Illinois                                   36-3346551
(State of organization)                   (IRS Employer Identification No.)


  900 N. Michigan Ave., Chicago, IL                   60611
(Address of principal executive office)             (Zip Code)


Registrant's telephone number, including area code 312/915-1987


Securities registered pursuant to Section 12(b) of the Act:

                                                   Name of each exchange on
   Title of each class                               which registered      
   -------------------                             ------------------------
           None                                              None          


Securities registered pursuant to Section 12(g) of the Act:

                       LIMITED PARTNERSHIP INTERESTS
                             (Title of class)


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    

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment of this Form 10-K    X

State the aggregate market value of the voting stock held by nonaffiliates
of the registrant.  Not applicable.

Documents incorporated by reference:  None



                             TABLE OF CONTENTS



                                                             Page
                                                             ----
PART I

Item 1.      Business. . . . . . . . . . . . . . . . . . . .    1

Item 2.      Properties. . . . . . . . . . . . . . . . . . .    4

Item 3.      Legal Proceedings . . . . . . . . . . . . . . .    6

Item 4.      Submission of Matters to a 
             Vote of Security Holders. . . . . . . . . . . .    6


PART II

Item 5.      Market for the Partnership's 
             Limited Partnership Interests and 
             Related Security Holder Matters . . . . . . . .    6

Item 6.      Selected Financial Data . . . . . . . . . . . .    7

Item 7.      Management's Discussion and 
             Analysis of Financial Condition and 
             Results of Operations . . . . . . . . . . . . .   10

Item 8.      Financial Statements and 
             Supplementary Data. . . . . . . . . . . . . . .   15

Item 9.      Changes in and Disagreements 
             with Accountants on Accounting 
             and Financial Disclosure. . . . . . . . . . . .   41


PART III

Item 10.     Directors and Executive Officers 
             of the Partnership. . . . . . . . . . . . . . .   41

Item 11.     Executive Compensation. . . . . . . . . . . . .   44

Item 12.     Security Ownership of Certain 
             Beneficial Owners and Management. . . . . . . .   44

Item 13.     Certain Relationships and 
             Related Transactions. . . . . . . . . . . . . .   46


PART IV

Item 14.     Exhibits, Financial Statement Schedules,
             and Reports on Form 8-K . . . . . . . . . . . .   46


SIGNATURES   . . . . . . . . . . . . . . . . . . . . . . . .   48











                                     i





                                  PART I


ITEM 1.  BUSINESS

     All references to "Notes" are to Notes to Consolidated Financial
Statements contained in this report.

     The registrant, JMB Mortgage Partners, Ltd. - III (the "Partnership"),
is a limited partnership formed in 1985 and currently governed by the
Revised Uniform Limited Partnership Act of the State of Illinois to make
first mortgage loans and senior land purchase-leasebacks/leasehold mortgage
loans and, to a lesser extent, wrap-around and junior mortgage loans and
land purchase-leaseback arrangements on a subordinated basis.  On July 24,
1985, the Partnership commenced an offering of $50,000,000 (subject to
increase by up to $50,000,000) in Limited Partnership Interests (the
"Interests") pursuant to a Registration Statement on Form S-11 under the
Securities Act of 1933 (Registration No. 0- 016253).  On May 12, 1986, the
Partnership increased the amount of Interests offered in the amount of
$25,000,000 and extended the period of the offering thereof to August 31,
1986 pursuant to a Registration Statement on form S-11 under the Securities
Act of 1933 (Registration No. 33-5584).  A total of 65,232.69 Interests
have been sold to the public at an offering price of $1,000 per Interest
before certain discounts for volume purchases (fractional interests are due
to Distribution Reinvestment Program).  The holders were admitted during
the fiscal year ended October 31, 1986.  The offering terminated August 31,
1986.  No Limited Partner has made any additional capital contribution
after such date.  The Limited Partners of the Partnership share in their
portion of the benefits of ownership of the Partnership's mortgage
investments according to the number of Interests held.

     The Partnership is engaged solely in the business of investing in real
estate, such as residential garden apartment complexes and smaller
commercial properties through participating first mortgage loans and
certain other mortgage investments.  The Partnership's mortgage investments
are located throughout the nation and it has no mortgage investments
located outside of the United States.  A presentation of information about
industry segments, geographic regions, raw materials or seasonality is not
applicable and would not be material to an understanding of the
Partnership's business taken as a whole.  Pursuant to the Partnership
Agreement, the Partnership is required to terminate no later than December
31, 2035.  The Partnership is self-liquidating in nature.  At disposition
of a particular mortgage investment or property through sale, repayment or
maturity of such investment, the net proceeds, if any, are generally
distributed or reinvested in existing mortgage investments or properties
held, rather than invested in acquiring additional mortgage investments. 
The marketplaces in which the portfolio operates and real estate markets in
general are in a recovery mode.  The Partnership currently expects to
conduct an orderly liquidation of its remaining investment portfolio as
quickly as practicable and to wind up its affairs no later than December
31, 1999 barring any unforeseen economic developments including the
inability to sell the Franklin Farm Village Center note prior to its
maturity in 2001.



<TABLE>

     The Partnership has made mortgage investments in the properties listed below.

<CAPTION>

                                                                         
                                                                     ORIGINAL
                                                                     INVESTED
                                                  DATE OF             CAPITAL
      PROPERTY                  SIZE            INVESTMENT        PERCENTAGE (a)      TYPE OF INVESTMENT
----------------------       ----------       ---------------     ---------------     ---------------------
<S>                         <C>              <C>                 <C>                  <C>

1. Spring Hill 
   Fashion Center
   shopping center
   West Dundee, 
   Illinois. . . . . . .      125,198 
                               sq.ft.         February, 1986            6%            Fee ownership of land and
                                                                                      improvements (through joint
                                                                                      venture partnership) (d)
2. Shoppes at Rivergate
   shopping center
   Goodlettsville 
   (Nashville),
   Tennessee . . . . . .       169,000
                               sq. ft.        September, 1987           23%           Participating first mortgage
                                                                                      loan
3. Calibre Pointe 
   Apartments
   Atlanta, Georgia. . .         214
                                units         September, 1987           16%           Fee ownership of land and
                                                                                      improvements (through joint
                                                                                      venture partnership) (b),
                                                                                      (e), (f)
4. North Rivers Market
   shopping center
   North Charleston,
   South Carolina. . . .      204,779 
                               sq. ft.        December, 1987            22%           Fee ownership of land and,
                                                                                      improvements (through joint
                                                                                      venture partnership) (c),
                                                                                      (d), (f)
5. Riverpoint Center 
   shopping center
   Chicago, Illinois . .      196,080 
                               sq. ft.         August, 1987             24%           Participating first mortgage
                                                                                      loan
6. Franklin Farm 
   Village
   Center shopping 
   center
   Fairfax County, 
   Virginia. . . . . . .      104,000 
                               sq. ft.        December, 1991            9%            Participating first mortgage 
                                                                                      loan

<FN>
------------
   (a) The computation of this percentage for investments held at December 31, 1995 does not include amounts
invested from sources other than the original net proceeds of the public offering as described above and in Item 7.

   (b) Reference is made to Note 2(a) filed with this annual report for a description of the events resulting in the
Partnership, through a joint venture, obtaining legal title to this property in December, 1991.

   (c) Reference is made to Notes 2(b) and 5(c) filed with this annual report for a description of the events
resulting in the Partnership accounting for its investment as a joint venture investment in real estate effective
September 1, 1992.

   (d) Reference is made to Notes 2(c) and 5(a) filed with this annual report for a description of the events
resulting in the Partnership, through a joint venture, accounting for this investment as in-substance foreclosed at
January 1, 1995 and subsequently taking title to the property in May, 1995.

   (e) Reference is made to Item 8 - Schedule III filed with this annual report for further information concerning 
real estate taxes and depreciation.

   (f) Reference is made to Item 6 - Selected Financial Data and Note 6 for additional operating and lease
expiration data concerning this investment property.


</TABLE>


     The Partnership's agreements for these mortgage investments were made
during the years 1991, 1989, 1988, 1987 and 1986.  The Partnership's
participating first mortgage loan on the Spring Hill Fashion Center
shopping center in West Dundee, Illinois including a description of the
events resulting in the Partnership, through a joint venture, obtaining
legal title to the property in May 1995 is described in Notes 2(c) and 5(a)
which description is hereby incorporated herein by reference.  The
Partnership's participating first mortgage loan on the Shoppes at Rivergate
shopping center in Goodlettsville (Nashville), Tennessee is described in
Note 5(b).  The Partnership's participating first mortgage loan on the
Calibre Pointe Apartments in Atlanta, Georgia including a description of
the events resulting in the Partnership, through a joint venture, obtaining
legal title to the property in December 1991 is described in Note 2(a)
which description is hereby incorporated herein by reference.  The
Partnership's participating first mortgage loan on the North Rivers Market
Shopping Center in North Charleston, South Carolina including the
subsequent acquisition of the underlying collateral is described in Notes
2(b) and 5(c), which description is hereby incorporated herein by
reference.  The Partnership's participating first mortgage loan secured by
the Riverpoint Center shopping center, located in Chicago, Illinois is
described in Note 5(d), which description is hereby incorporated herein by
reference.  The Partnership's fundings of a participating first mortgage
loan secured by Franklin Farm Village Center, located in Fairfax County,
Virginia are described in Note 5(e), which description is hereby
incorporated herein by reference.

     The properties including those securing the Partnership's mortgage
investments are subject to competition from similar types of properties
(including, in certain areas, properties owned or advised by affiliates of
the General Partners) in the respective vicinities in which they are
located.  Such competition is generally for the retention of existing
tenants.  Additionally, the properties including those securing the
Partnership's mortgage are in competition for new tenants in markets where
significant vacancies are present.

     Reference is made to Item 7 below for discussion of competitive
conditions and future plans of the properties including those securing the
Partnership's mortgage investments.  Approximate occupancy levels for the
properties owned by the Partnership are set forth in the table in Item 2
below to which reference is made.  The Partnership maintains the
suitability and competitiveness of its owned properties in its markets
primarily on the basis of effective rents, tenant allowances and service
provided to tenants.  In the opinion of the Corporate General Partner of
the Partnership, all of the properties securing the Partnership's mortgage
investments and all of the investment properties held at December 31, 1995
are adequately insured.

     Reference is made to Note 6 for a schedule for minimum lease payments
to be received in the next five years and the aggregate thereafter, under
leases in effect at the Partnership's properties as of December 31, 1995.

     The Partnership has no employees other than personnel performing on-
site duties at the North Rivers Market Shopping Center, none of whom are
officers or directors of the Corporate General Partner of the Partnership.

     The terms of transactions between the Partnership, the General
Partners, and their affiliates are set forth in Item 11 below to which
reference is hereby made for a description of such terms and transactions.

ITEM 2.  PROPERTIES

     The Partnership has made real estate/mortgage investments in the six
properties referred to under Item 1 above, to which reference is hereby
made for a description of said investments.

   The following is a listing of principle business and approximate
occupancy levels by quarter during fiscal years 1995 and 1994 for the
Partnership's investment properties owned in the Consolidated Financial
Statements during 1995.


<TABLE>
<CAPTION>
                                                                 1994                        1995           
                                                       -------------------------   -------------------------
                                                        At     At     At     At     At     At     At     At 
                                 Principal Business    3/31   6/30   9/30  12/31   3/31   6/30   9/30  12/31
                                 ------------------    ----   ----   ----  -----   ----   ----  -----  -----
<S>                              <C>                  <C>    <C>    <C>   <C>     <C>    <C>   <C>    <C>   
1. Calibre
    Pointe Apartments
    Atlanta, Georgia . . . . .   Residential            96%    97%    99%    97%    98%    90%    98%    96%

2.  North Rivers Market
    Shopping Center. . . . . .   Retail                 88%    88%    87%    88%    80%    80%    80%    88%

3.  Spring Hill Fashion
      Center
    West Dundee, 
      Illinois . . . . . . . .   Retail                 N/A    N/A    N/A    N/A    94%    94%    92%    75%

<FN>
----------------

     An "N/A" indicates that the property was not owned or reflected as owned by the Partnership at the end of the
quarter.

     Reference is made to Item 6, Item 7 and Note 6, for further information regarding property occupancy,
competitive conditions and tenant leases at the Partnership's investment properties.

</TABLE>



ITEM 3.  LEGAL PROCEEDINGS

     The Partnership is not subject to any pending material legal
proceedings.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     There were no matters submitted to a vote of security holders during
fiscal years 1994 and 1995.


                                  PART II

ITEM 5.  MARKET FOR THE PARTNERSHIP'S LIMITED PARTNERSHIP INTERESTS 
         AND RELATED SECURITY HOLDER MATTERS

     As of December 31, 1995, there were 12,122 record holders of Interests
of the Partnership.  There is no public market for Interests and it is not
anticipated that a public market for Interests will develop.  Upon request,
the Corporate General Partner may provide information relating to a
prospective transfer of Interests to an investor desiring to transfer his
Interest.  The price to be paid for the Interests as well as any other
economic aspects of the transaction will be subject to negotiation by the
investor.  There are certain conditions and restrictions on the transfer of
Interests, including, among other things, the requirements that the
substitution of a transferee of Interests as a Limited Partner of the
Partnership be subject to the written consent of the Corporate General
Partner.  The rights of a transferee of Interests who does not become a
substituted Limited Partner will be limited to the rights to receive his
share of profits or losses and cash distributions from the Partnership, and
such transferee will not be entitled to vote such Interests.  No transfer
will be effective until the first day of the next succeeding calendar
quarter after the requisite transfer form satisfactory to the Corporate
General Partner has been received by the Corporate General Partner.  The
transferee consequently will not be entitled to receive any cash
distributions or any allocable share of profits or losses for tax purposes
until such succeeding calendar quarter.  Profits or losses from operations
of the Partnership for a calendar year in which a transfer occurs will be
allocated between the transferor and the transferee based upon the number
of quarterly periods in which each was recognized as the holder of
Interests, without regard to the results of Partnership's operations during
particular quarterly periods and without regard to whether cash
distributions were made to the transferor or transferee.  Profits or losses
arising from the sale or other disposition of Partnership properties will
be allocated to the recognized holder of the Interests as of the last day
of the quarter in which the Partnership recognized such profits or losses. 
Cash distributions to a holder of Interests arising from the sale or other
disposition of Partnership properties will be distributed to the recognized
holder of the Interests as of the last day of the quarterly period with
respect to which distribution is made.

     Reference is made to Item 6 below for a discussion of cash
distributions made to the Limited Partners.



<TABLE>
ITEM 6.  SELECTED FINANCIAL DATA

                                         JMB MORTGAGE PARTNERS, LTD. - III
                                              (A LIMITED PARTNERSHIP)
                                             AND CONSOLIDATED VENTURES

                             YEARS ENDED DECEMBER 31, 1995, 1994, 1993, 1992 AND 1991

                                   (NOT COVERED BY INDEPENDENT AUDITORS' REPORT)



<CAPTION>
                                 1995            1994            1993          1992            1991   
                            -------------    ------------    -----------   ------------    -----------
<S>                        <C>              <C>             <C>           <C>             <C>         
Total revenues . . . . . .    $ 7,138,723       7,191,836      7,307,813      6,493,660      5,147,802
                              ===========     ===========    ===========     ==========    ===========
Venture Partners'
share of ventures 
operations . . . . . . . .    $  (144,192)        663,684        548,981        338,799         28,409
                              ===========     ===========    ===========     ==========    ===========
Net earnings . . . . . . .    $ 2,409,947       4,182,722      2,927,657        921,124      1,526,208
                              ===========     ===========    ===========     ==========    ===========
Net earnings per 
Interest (b) . . . . . . .    $     28.61           58.52          37.73           7.09          18.83
                              ===========     ===========    ===========     ==========    ===========
Total assets . . . . . . .    $62,807,092      68,386,716     66,690,305     66,556,168     64,280,079
                              ===========     ===========    ===========     ==========    ===========
Cash distributions 
per Interest (c) . . . . .    $     75.00           50.27          40.00          40.00          56.89
                              ===========     ===========    ===========     ==========    ===========

<FN>
---------------

   (a)   The above selected financial data should be read in conjunction with the consolidated financial
statements and the related notes appearing elsewhere in this annual report. 

   (b)   The net earnings per Interest are based upon the number of Interests outstanding at the end of each
period (65,237.69).

   (c)   Cash distributions from the Partnership are generally not equal to Partnership income (loss) for
financial reporting or Federal income tax purposes.  Each partner's taxable income from the Partnership in each
year is equal to his allocable share of the taxable income of the Partnership, without regard to the cash
generated or distributed by the Partnership.  Accordingly, cash distributions to the Limited Partners since the
inception of the Partnership have not resulted in taxable income to such Limited Partners and have therefore
represented a return of capital. 

</TABLE>


<TABLE>

SIGNIFICANT PROPERTY - SELECTED RENTAL AND OPERATING DATA AS OF DECEMBER 31, 1995

<CAPTION>

Property
--------

North Rivers        a)   The gross leasable area ("GLA") occupancy rate and average base rent 
Market                   per square foot as of December 31 for each of the last five years 
                         were as follows:

                                                       GLA              Avg. Base Rent Per
                          December 31,            Occupancy Rate        Square Foot (1)
                          ------------            --------------        ------------------
<S>                 <C>   <C>                     <C>                   <C>
                          1991 . . . . . . .             N/A                      N/A
                          1992 . . . . . . .             84%                    10.00
                          1993 . . . . . . .             85%                     6.70
                          1994 . . . . . . .             88%                     7.86
                          1995 . . . . . . .             88%                     8.31
<FN>
------------
                               An "N/A" indicates that the property was not owned by the Partnership 
                          at the end of the period.

                               (1)  Average base rent per square foot is based on GLA occupied as of 
                          December 31 of each year.
</TABLE>
<TABLE>
<CAPTION>
                                                                   Base Rent   Scheduled Lease  Lease
                    b)      Significant Tenants       Square Feet  Per Annum   Expiration Date  Renewal Options
                            -------------------       -----------  ---------   ---------------  ---------------
<S>                 <C>     <C>                       <C>          <C>         <C>              <C>
                            T.J. Maxx                   27,000     $ 175,500      1/1998          N/A
                            (Discount Clothing Store)

                            Marshall's                  27,000       189,000      1/1998          N/A
                            (Discount Clothing Store)

                            Phar-Mor, Inc.              37,500       253,125      1/1998          N/A
                            (Pharmacy/Discount Store)

</TABLE>


<TABLE>
<CAPTION>
                    c)      The following table sets forth certain
                            information with respect to the expiration
                            of leases for the next five years at the
                            North Rivers Market.

                                                                                Annualized         Percent of
                                             Number of         Approx. Total    Base Rent          Total 1995
                            Year Ending      Expiring          GLA of Expiring  of Expiring        Base Rent
                            December 31,     Leases(1)(2)      Leases (1)(2)    Leases             Expiring(2)
                            ------------     ------------      ---------------  -----------        ----------
<S>                 <C>     <C>              <C>               <C>              <C>                <C>
                             1996                  2                2,781           28,930            1.98%
                             1997                  6               21,416          261,636           17.94%
                             1998                 11               98,773          765,066           52.47%
                             1999                  1                3,274           32,740            2.25%
                             2000                  3               11,679          103,413            7.09%

<FN>

                    (1)  Excludes leases that expire in 1996 for which renewal leases or leases with 
                         replacement tenants have been executed as of March 25, 1996.

                    (2)  Includes anchors which lease space, but not anchors which own their own space.

</TABLE>


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 
         AND RESULTS OF OPERATIONS

LIQUIDITY AND CAPITAL RESOURCES

     At December 31, 1995, the Partnership had cash and cash equivalents of
approximately $7,538,476.  Such funds will be utilized for future
distributions to partners, for working capital reserves and for additional
amounts expected to be funded under the participating first mortgage loan
secured by Franklin Farm Village Center, located in Fairfax County,
Virginia as described in Note 5(e).  In the second quarter of 1995, the
Partnership's consolidated ventures distributed approximately $5,838,000 to
the Partnership and Mortgage Partners-IV ($3,744,000 and $2,094,000,
respectively).  These amounts represent previously undistributed operating
cash flows from Calibre Associates and North Rivers Market Associates.  The
Partnership and its consolidated ventures have currently budgeted in 1996
approximately $225,000 for capital expenditures.  The Partnership's share
of such items is currently budgeted to be approximately $149,000.  Actual
amounts expended in 1996 may vary depending on a number of factors
including actual leasing activity, results of property operations,
liquidity considerations and other market conditions over the course of the
year.  The sources of capital for such items and for future short-term and
long-term liquidity and distributions to the Limited and General Partners
are expected to be from the collection of interest and repayment of
principal of the Partnership's participating first mortgage loan
investments.  However, reference is made to Notes 5(b) and 5(d) concerning
the suspension of certain interest accruals and the provisions for loan
losses on the loans secured by Shoppes at Rivergate and Riverpoint Shopping
Center, located in Goodlettsville, Tennessee and Chicago, Illinois
respectively.

     Additional sources of both short-term and long-term liquidity and
distributions are expected to be from net cash generated by the
Partnership's investment properties, the Calibre Pointe Apartments and the
North Rivers Market Shopping Center, and from the sale of such investments.

Reference is made to Note 2 for a description of the events resulting in
the Partnership, through a joint venture, obtaining legal title to these
properties and also to the Partnership's disclosure of certain property
lease expirations in Item 6.  The operations of the properties are expected
to provide a current return which is significantly less than the scheduled
interest payments due under the original mortgage loans.

     An additional source of both short-term and long-term future liquidity
and distributions is expected to be from net cash generated by the Spring
Hill Fashion Center investment property and from the sale of such
investment.  Reference is made to Notes 2(c) and 5(a) regarding the default
by the borrower of the loan secured by Spring Hill Fashion Center, the
drawing by the lenders (including the Partnership) of the two $250,000
letters of credit that were additionally securing this loan, and the
January 1, 1995 assumption of property management at the Spring Hill
Fashion Center by an affiliate of the General Partners of the lenders. 
Effective as of the management takeover date (January 1, 1995), the
Partnership considered the mortgage loan to be in-substance foreclosed and
has accounted for its investment as an investment in a joint venture on the
equity method.  In early May 1995, the lenders obtained legal title to the
property pursuant to a deed in lieu of foreclosure.  For financial
reporting purposes, the Partnership did not recognize any gain or loss from
this transaction as a result of the Partnership's previously recorded
provisions for loan loss (see Note 5(a)).  The operations of this property
are expected to provide a current return which would be significantly less
than the scheduled interest payments due under the original mortgage loan. 
Occupancy at the Spring Hill Fashion Center was 75% at December 31, 1995
due to a major tenant, which occupied approximately 24% of the leasable
space at the property and which was operating under Chapter 11 bankruptcy
protection, not exercising its renewal option when its current lease
expired in October 1995 and vacating its space.  The Partnership has
executed a ten-year lease (which commenced in February 1996) with a
replacement tenant for this space.

     The Partnership continues to examine a potential sale of the Calibre
Pointe Apartments given the favorable market conditions that exist in the
Atlanta market.

     In May 1995, a tornado touched down in Goodlettsville, Tennessee and
severely damaged a significant percentage (17% or 29,000 square feet) of
the Shops at Rivergate.  The portion of the shopping center undamaged by
the tornado has continued to operate.  The damage portion of the center
will be repaired, but none of the tenants affected by the tornado have been
able to reopen.  It is expected that substantially all of the loss,
including any loss caused by business interruption, will be covered by the
borrower's insurance.  The borrower has started rebuilding the damaged
portions of the center with funds provided by the insurance company.  Total
costs to repair the center are estimated to be approximately $1,200,000 of
which approximately $450,000 has been spent as of December 31, 1995. 
Therefore, as of the date of this report, the borrower is current with all
payments due to the Partnership.  Due to these facts, the Partnership has
not provided for any additional loan loss as a result of the tornado.  As a
result of the damage, one of the tenants exercised a right to terminate its
lease.  None of the other tenants affected by the tornado have this right. 
However, there can be no assurances that the damage caused by the tornado
will not have an adverse impact on the loan or the center as collateral for
the loan.

     In June, 1994 the Lenders (including the Partnership) received a
partial return in the amount of $322,907 of the original principal funding
(of which the Partnership's share was $108,933) of the mortgage loan at
Franklin Farm Village Center.  These funds relate to an "earn down"
provision in the original purchase agreement between the borrower and the
seller.  Due to a major tenant not generating a certain level of sales in
1993, the seller was required to return a portion of the sale price it had
received in 1991 at closing.  The borrower subsequently remitted the
proceeds back to the Lenders as required by the terms of the loan
agreement.  The Lenders will retain these proceeds due to the possibility
of the borrower requesting future additional fundings per the original loan

agreement as discussed in Note 5(e).  In November 1994, the Lenders
finalized an agreement with the borrower to fund the acquisition of an
outparcel and improvements adjacent to the center.  The Lenders provided
permanent financing of approximately $659,000 (of which the Partnership's
share was approximately $222,000), including 90% of the closing costs,
toward the acquisition by the borrower of the outparcel land and
improvements.  The loan bears basic interest payable monthly at the rate of
9% per annum for the first four loan years of this funding and 10% per
annum thereafter through maturity in November, 2001.  This represented the
second subsequent funding on this mortgage loan, which leaves approximately
$1,791,000 (of which the Partnership's share is approximately $604,000)
available to the Borrower to fund future expansion or purchase options. 
One of the center's tenants, a major oil company, continues to explore the
extent of the possible damage caused by a leak at one of its gasoline pumps
in late 1993.  The borrower is monitoring the situation closely and does
not believe it will have a material impact on the value of the center. 
Therefore, no provision for loan loss has been established at this time. 
However, there can be no assurances that the gasoline leak, as reported,
will not have a material impact on the value of the Lenders' security in
the future.  As of the date of this report, no amounts currently due from
the borrower of this loan are in arrears.

     Occupancy of North Rivers Market Shopping Center in North Charleston,
South Carolina was 88% at December 31, 1995.  The Partnership, through a
joint venture obtained title to this property in May 1993.  Phar Mor, a
major tenant at the center filed for protection under Chapter 11 of the
bankruptcy code.  The Phar Mor store at the center has continued to operate
since its bankruptcy filing and has been current on all rent payments due
subsequent to filing.  The manager is aggressively attempting to lease the
vacant space in the center. However, the competitiveness of the market
given the Naval facility closings in the nearby area is expected to make it
difficult to lease space in the center, thereby extending the period of
time it will take to complete the lease-up of the center and result in a
decrease in cash flow from operations over the near term.  Hechinger's, who
vacated its store, which it owns, in 1989 continues to attempt to lease the
remaining vacancy in its store to other suitable retailers.  However, in
early 1995,  a tenant (Sportstown) that occupied part of the vacated
Hechinger's space filed for protection under Chapter 11 of the bankruptcy
code.  They have sublet their space to Sports Authority which opened in
late 1995.

     As a result of the vacancies at the property and the competitiveness
of the market described above, there is uncertainty as to the Partnership's
ability to recover the net carrying value of the North Rivers market
investment property, over its revised expected holding period.  As a
result, the Partnership, as a matter of prudent accounting practice,
recorded a provision for value impairment of $2,300,000 (of which $770,000
has been allocated to the venture partner, such provision, made as of
September 30, 1995 was recorded to reduce the net carrying value of North
Rivers Market to its then estimated fair value.

     The Silo Electronic store (12,100 sq. ft.) at Riverpoint Center
vacated its space in the third quarter 1995, and the borrower is pursuing
its legal remedies regarding the remaining amounts due.  The borrower has
re-leased the space to a book store for three months at a substantially
lower rent.  The borrowers subsequently leased the space to the GAP/Old
Navy Store, at a substantially lower rent, for five years with rent
commencing on July 1, 1996.  As a result, the borrower has notified the
lender that it is experiencing financial difficulties and has approached
the Lenders regarding a loan modification.  The lenders and borrowers have
reached an agreement in principal to defer payment of debt service payments
for a certain period of time.  However, there can be no assurance that such
agreement will be finalized under these terms or any others.  Based upon
the lender's financial difficulties discussed above, there is uncertainty
as to the Partnership's ability to recover the principal balance of the
loan.  As a result, the Partnership, as a matter of prudent accounting
practice, recorded a provision for loan loss of $175,165 as of December 31,
1995.  Such provision, in addition to a provision recorded at December 31,
1991, was recorded to reduce the net carrying value of the loan to the then
estimated fair value of the loan collateral.  In addition, the Partnership
is recognizing interest income only as collected.  As of the date of this
report, certain escrow payments are due to the Lender; however, the
borrower is current in its monthly debt service payments.

     Based upon the determination of the Corporate General Partner, the
Partnership has, commencing with the fourth quarter of 1994, increased the
distribution to $15.00 per $1,000 Interest per quarter from its previous
level of $12.50 per $1,000 Interest.  In an effort to reduce partnership
operating expenses, the Partnership has elected to make a semi-annual
operating distribution each year beginning in November 1995.

     After reviewing the properties and competitive market places in the
portfolio, the General Partners of the Partnership expect to be able to
liquidate the remaining assets as quickly as practicable.  Therefore, the
affairs of the Partnership are expected to be wound up no later than 1999,
barring unforeseen economic developments including the inability to sell
the Franklin Farm Village Center note prior to its maturity in 2001.

RESULTS OF OPERATIONS

     The aggregate decrease in cash and cash equivalents and short-term
investments, and the related decrease in venture partner's equity in
ventures at December 31, 1995 as compared to December 31, 1994 is primarily
due to the payment in 1995 of approximately $2,094,000 to Mortgage
Partners-IV for its share of previously undistributed cash flows related to
the Calibre Pointe Apartments and North Rivers Market Shopping Center. 
Additionally the decrease in short-term investments at December 31, 1995 as
compared to December 31, 1994 is due to a decrease of the Partnership's
U.S. Government obligations classified as short-term investments at
December 31, 1995 rather than as cash at December 31, 1994.  (Reference is
made to Note 1).

     The increase in interest and other receivables at December 31, 1995 as
compared to December 31, 1994 is primarily due to the timing of collection
of rents at Calibre Pointe Apartments. 

     The increase in amounts due from affiliates at December 31, 1995 as
compared to December 31, 1994 is due to the Partnership's receivable of
approximately $251,000 from the other participating lender (Mortgage
Partners-IV) representing interest earned on the loan secured by Franklin
Farm Village Center.

     The decrease in land and building and improvements at December 31,
1995 as compared to December 31, 1994 are the result of the provision for
value impairment of $2,300,000 recorded at the North Rivers Market property
at September 31, 1995.  Reference is made to Note 2(b).

     The decrease in mortgage notes receivable and the related increase in
the Partnerships' investment in venture at December 31, 1995 as compared to
December 31, 1994 is primarily due to the foreclosure of the former loan
secured by the Spring Hill Fashion Center.  Reference is made to Notes 2(c)
and 5(a).

     Deferred interest receivable increased at December 31, 1995 as
compared to December 31, 1994 is a result of the continuing deferral of
additional interest earned under the terms of the mortgage loan receivable
secured by the Franklin Farms Village Center (Note 5(e)).

    The decrease in amounts due to affiliates at December 31, 1995 as
compared to December 31, 1994 is primarily attributable to the
Partnership's payment of $337,250 to the other two participating lenders in
1995.  Such amounts represent their share of the drawn letters of credit
(totaling $500,000) in December 1994 in connection with the loan secured by
the Spring Hill Fashion Center.  Reference is made to Note 5(a).

     The increase in other liabilities at December 31, 1995 as compared to
December 31, 1994 is primarily due to deposits held for real estate taxes
for the Shoppes at Rivergate.

     Interest income decreased for the twelve months ended December 31,
1995 as compared to December 31, 1994 primarily due to a lower average
investment in U.S. Government obligations due to the payment of previously
undistributed cash flows to the venture partner in the second quarter as
discussed above and the 1995 recording of the Spring Hill loan as in
investment in unconsolidated venture (Note 2(a)).  The decrease in interest
income for 1994 as compared to 1993 is primarily the result of recognizing
additional interest only as received in 1994 on the loan secured by the
Shoppes at Rivergate.

     The increase in rental income for the year ended December 31, 1995 as
compared to December 31, 1994 is primarily due to tenant billing
adjustments made in the third quarter of 1995 related to tenant recoveries
at the North Rivers Market Shopping Center and an increase in average rents
at the Calibre Pointe Apartments.  The increase in rental income for 1994
as compared to 1993 is primarily due to the increase in effective rents at
Calibre Pointe Apartments and North Rivers Market Shopping Center. 
Reference is made to Item 2.

     The increase in general and administrative expenses for the year ended
December 31, 1995 as compared to December 31, 1994 and 1993 is primarily
due to the increase in reimbursable costs to affiliates of the General
Partners in 1995, and approximately $100,000 of salary reimbursement paid
in 1995 related to 1994 and 1995.  Reference is made to Note 7.

     The decrease in venture partner's share of ventures' operations for
the year ended December 31, 1995 as compared to December 31, 1994 is
primarily due to the $770,000 portion of the North Rivers Market value
impairment allocated to the venture partner at September 30, 1995. 
Reference is made to Note 2(b).  The increase in venture partner's share of
ventures' operations for the year ended December 31, 1994 as compared to
December 31, 1993 is due primarily to the increase in effective rents at
the Calibre Pointe Apartments and higher occupancies at the Calibre Pointe
Apartments and the North Rivers Market Shopping Center.  Reference is made
to Item 2.

INFLATION

     Due to the decrease in the level of inflation in recent years,
inflation generally has not had a material effect on the operations of the
Partnership.  Inflation is not expected to significantly impact future
operations due to the expected liquidation of the Partnership by 1999.

     Revenues relating to the participating first mortgage loans made by
the Partnership is the major item of income of the Partnership.  Such loans
provide for participation by the Partnership in subsequent increases in
annual gross rental receipts over base amounts of the properties securing
such loans and for participation in subsequent increases in the value of
such properties in excess of specified amounts, which would offset the
impact of inflation and increased interest rates on the future loan values
of the Partnership's investments.

     With respect to the properties owned by the Partnership through joint
ventures, to the extent that inflation in future periods would have an
adverse impact on property operating expenses, the effect would generally
be offset by amounts recovered from tenants as many of the long-term leases
at the Partnership's commercial properties have escalation clauses covering
increases in the cost of operating and maintaining the properties as well
as real estate taxes.  Therefore, there should be little effect on net
operating earnings if the properties remain substantially occupied.  In
addition, substantially all of the leases at the Partnership's shopping
center investments contain provisions which entitle the property owner to
participate in gross receipts of tenants above fixed minimum amounts.






ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


                     JMB MORTGAGE PARTNERS, LTD. - III
                          (A LIMITED PARTNERSHIP)
                         AND CONSOLIDATED VENTURES

                                   INDEX


Independent Auditors' Report


Consolidated Balance Sheets, December 31, 1995 and 1994


Consolidated Statements of Operations, years ended 
  December 31, 1995, 1994 and 1993


Consolidated Statements of Partners' Capital Accounts (Deficits), 
  years ended December 31, 1995, 1994 and 1993


Consolidated Statements of Cash Flows, years ended December 31, 
  1995, 1994 and 1993


Notes to Consolidated Financial Statements

                                                          Schedule
                                                          --------
Consolidated Real Estate and Accumulated
  Depreciation                                               III


SCHEDULES NOT FILED:

     All schedules other than the one indicated in the index have been
omitted as the required information is inapplicable or the information is
presented in the financial statements or related notes.












                       INDEPENDENT AUDITORS' REPORT



The Partners
JMB MORTGAGE PARTNERS, LTD. - III:

     We have audited the consolidated financial statements of JMB Mortgage
Partners, Ltd. - III (a limited partnership) and consolidated ventures as
listed in the accompanying index.  In connection with our audits of the
consolidated financial statements, we also have audited the financial
statement schedule as listed in the accompanying index.  These consolidated
financial statements and financial statement schedule are the
responsibility of the General Partners of the Partnership.  Our
responsibility is to express an opinion on  these consolidated financial
statements and financial statement schedule 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 the General Partners of the
Partnership, as well as evaluating the overall financial statement
presentation.  We believe that our audits provide a reasonable basis for
our opinion.

     In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
JMB Mortgage Partners, Ltd. - III at December 31, 1995 and 1994, and the
results of their operations and their cash flows for each of the years in
the three-year period ended December 31, 1995, in conformity with generally
accepted accounting principles.  Also in our opinion, the related financial
statement schedule,  when considered in relation to basic consolidated
financial statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.





                                          KPMG PEAT MARWICK LLP


Chicago, Illinois
March 25, 1996




<TABLE>
                                         JMB MORTGAGE PARTNERS, LTD. - III
                                              (A LIMITED PARTNERSHIP)
                                             AND CONSOLIDATED VENTURES

                                            CONSOLIDATED BALANCE SHEETS

                                            DECEMBER 31, 1995 AND 1994

                                                      ASSETS
                                                      ------
<CAPTION>
                                                                                 1995               1994    
                                                                             ------------       ----------- 
<S>                                                                         <C>                <C>          
Current assets:
  Cash and cash equivalents (note 1) . . . . . . . . . . . . . . . . . .     $  7,538,476        10,278,236 
  Short-term investments (note 1). . . . . . . . . . . . . . . . . . . .            --              393,123 
  Interest and other receivables . . . . . . . . . . . . . . . . . . . .          340,674           329,057 
  Due from affiliates. . . . . . . . . . . . . . . . . . . . . . . . . .          251,872             --    
  Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . .           28,769            28,769 
                                                                              -----------       ----------- 
          Total current assets . . . . . . . . . . . . . . . . . . . . .        8,159,791        11,029,185 
                                                                              -----------       ----------- 
Investment properties (note 2) - Schedule III:
  Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        9,561,468        10,434,411 
  Building and improvements. . . . . . . . . . . . . . . . . . . . . . .       13,743,821        14,933,079 
                                                                              -----------       ----------- 
                                                                               23,305,289        25,367,490 

  Less accumulated depreciation. . . . . . . . . . . . . . . . . . . . .       (2,321,280)       (1,683,840)
                                                                              -----------       ----------- 

          Total investment properties, 
            net of accumulated depreciation. . . . . . . . . . . . . . .       20,984,009        23,683,650 

Mortgage notes receivable (net of allowance for 
  loan loss of $175,165 in 1995 and $99,000 in 1994 
  (note 5)). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       29,221,861        32,518,098 
Deferred interest receivable (net of allowance for 
  loan loss of $1,866,386 in 1995 and $2,225,217 
  in 1994 (note 5)). . . . . . . . . . . . . . . . . . . . . . . . . . .        1,096,251           935,250 
Investment in unconsolidated venture, at equity 
  (note 5(a)). . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        3,159,812             --    
Deferred costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          185,368           220,533 
                                                                              -----------       ----------- 
                                                                              $62,807,092        68,386,716 
                                                                              ===========       =========== 



                                         JMB MORTGAGE PARTNERS, LTD. - III
                                              (A LIMITED PARTNERSHIP)
                                             AND CONSOLIDATED VENTURES

                                      CONSOLIDATED BALANCE SHEETS - CONTINUED

                               LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)

                                                                                  1995              1994    
                                                                              -----------       ----------- 
Current liabilities:
  Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . .      $    88,880           470,813 
  Accrued real estate taxes. . . . . . . . . . . . . . . . . . . . . . .          148,139           143,943 
  Other current liabilities. . . . . . . . . . . . . . . . . . . . . . .          205,309           139,349 
                                                                              -----------       ----------- 
          Total current liabilities. . . . . . . . . . . . . . . . . . .          442,328           754,105 

Tenant security deposits . . . . . . . . . . . . . . . . . . . . . . . .           34,073            37,638 
                                                                              -----------       ----------- 

Commitments and contingencies (notes 2, 3, 5 and 6)

          Total liabilities. . . . . . . . . . . . . . . . . . . . . . .          476,401           791,743 
                                                                              -----------       ----------- 

Venture partner's equity in ventures (note 2). . . . . . . . . . . . . .        8,199,483        10,437,237 

Partners' capital accounts (deficits) (note 3):
 General partners:
   Capital contributions . . . . . . . . . . . . . . . . . . . . . . . .            1,000             1,000 
   Cumulative net earnings . . . . . . . . . . . . . . . . . . . . . . .        2,948,423         2,404,776 
   Cumulative cash distributions . . . . . . . . . . . . . . . . . . . .       (3,071,447)       (2,527,800)
                                                                              -----------       ----------- 
                                                                                 (122,024)         (122,024)
                                                                              -----------       ----------- 
 Limited partners (65,237.69 interests):
   Capital contributions, net offering costs . . . . . . . . . . . . . .       57,758,561        57,758,561 
   Cumulative net earnings . . . . . . . . . . . . . . . . . . . . . . .       32,031,226        30,164,926 
   Cumulative cash distributions . . . . . . . . . . . . . . . . . . . .      (35,536,555)      (30,643,727)
                                                                              -----------       ----------- 
                                                                               54,253,232        57,279,760 
                                                                              -----------       ----------- 
          Total partners' capital accounts (deficits). . . . . . . . . .       54,131,208        57,157,736 
                                                                              -----------      ------------ 
                                                                              $62,807,092        68,386,716 
                                                                              ===========      ============ 


<FN>
                           See accompanying notes to consolidated financial statements.
</TABLE>


<TABLE>
                                         JMB MORTGAGE PARTNERS, LTD. - III
                                              (A LIMITED PARTNERSHIP)
                                             AND CONSOLIDATED VENTURES

                                       CONSOLIDATED STATEMENTS OF OPERATIONS

                                   YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

<CAPTION>
                                                               1995             1994              1993     
                                                           ------------     ------------      ------------ 
<S>                                                       <C>              <C>               <C>           
Income:
  Interest income. . . . . . . . . . . . . . . . . . .      $ 3,380,691        3,528,639         3,761,144 
  Rental income. . . . . . . . . . . . . . . . . . . .        3,758,032        3,663,197         3,546,669 
                                                            -----------      -----------       ----------- 
                                                              7,138,723        7,191,836         7,307,813 
                                                            -----------      -----------       ----------- 
Expenses:
  Depreciation . . . . . . . . . . . . . . . . . . . .          637,440          638,079           628,479 
  Property operating expenses. . . . . . . . . . . . .        1,405,999        1,318,139         1,420,858 
  Mortgage investment servicing fees (note 7). . . . .           76,176           81,276            80,861 
  Professional services. . . . . . . . . . . . . . . .           84,293           63,392            82,255 
  Amortization of deferred costs . . . . . . . . . . .           43,148           33,470            46,453 
  General and administrative . . . . . . . . . . . . .          364,905          112,074           158,574 
  Provision for loan losses (note 5) . . . . . . . . .          175,165           99,000         1,413,695 
  Provision for value impairment . . . . . . . . . . .        2,300,000            --                --    
                                                            -----------      -----------       ----------- 
                                                              5,087,126        2,345,430         3,831,175 
                                                            -----------      -----------       ----------- 
          Operating earnings . . . . . . . . . . . . .        2,051,597        4,846,406         3,476,638 

Partnership's share of operations of 
  unconsolidated venture (note 5(a)) . . . . . . . . .          214,158            --                 --   
Venture partner's share of ventures' 
  operations (note 2). . . . . . . . . . . . . . . . .          144,192         (663,684)         (548,981)
                                                            -----------      -----------       ----------- 

          Net earnings . . . . . . . . . . . . . . . .      $ 2,409,947        4,182,722         2,927,657 
                                                            ===========      ===========       =========== 
          Net earnings per limited
            partnership interest (note 1). . . . . . .      $     28.61            58.52             37.73 
                                                            ===========      ===========       =========== 




<FN>
                           See accompanying notes to consolidated financial statements.
</TABLE>


<TABLE>
                                         JMB MORTGAGE PARTNERS, LTD. - III
                                              (A LIMITED PARTNERSHIP)
                                             AND CONSOLIDATED VENTURES

                         CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS (DEFICITS)

                                   YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993


<CAPTION>
                                                                    GENERAL PARTNERS                    
                                             ---------------------------------------------------------- 
                                                   NET             NET            CASH     
                                             CONTRIBUTIONS      EARNINGS     DISTRIBUTIONS       TOTAL  
                                             -------------   -------------   -------------    --------- 
<S>                                         <C>             <C>             <C>              <C>        
Balance at December 31, 1992 . . . . . . .         $1,000        1,573,762      (1,555,417)      19,345 

Net earnings (note 3). . . . . . . . . . .           --            466,065           --         466,065 
Cash distributions ($40 per
 limited partnership interest) . . . . . .           --             --            (607,434)    (607,434)
                                                   ------      -----------      ----------    --------- 

Balance at December 31, 1993                        1,000        2,039,827      (2,162,851)    (122,024)

Net earnings (note 3). . . . . . . . . . .            --           364,949           --         364,949 
Cash distributions ($50.27 per
 limited partnership interest) . . . . . .            --            --            (364,949)    (364,949)
                                                   ------      -----------      ----------    --------- 

Balance at December 31, 1994 . . . . . . .          1,000        2,404,776      (2,527,800)    (122,024)

Net earnings (note 3). . . . . . . . . . .            --           543,647           --         543,647 
Cash distributions ($75 per
 limited partnership interest) . . . . . .            --             --           (543,647)    (543,647)
                                                    ------     -----------      ----------    --------- 

Balance at December 31, 1995 . . . . . . .          $1,000       2,948,423      (3,071,447)    (122,024)
                                                    ======     ===========      ==========    ========= 





                                         JMB MORTGAGE PARTNERS, LTD. - III
                                              (A LIMITED PARTNERSHIP)
                                             AND CONSOLIDATED VENTURES

                   CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS (DEFICITS) - CONCLUDED




                                                               LIMITED PARTNERS (NOTE 1)                
                                             ---------------------------------------------------------- 
                                                   NET              NET           CASH     
                                              CONTRIBUTIONS      EARNINGS    DISTRIBUTIONS      TOTAL   
                                              -------------   -------------  -------------   ---------- 

Balance at December 31, 1992 . . . . . . .      $57,758,561      23,885,561    (24,754,644)  56,889,478 

Net earnings (note 3). . . . . . . . . . .           --           2,461,592          --       2,461,592 
Cash distributions ($40 per
 limited partnership interest) . . . . . .           --               --        (2,609,507)  (2,609,507)
                                                -----------     -----------   ------------  ----------- 

Balance at December 31, 1993                     57,758,561      26,347,153    (27,364,151)  56,741,563 

Net earnings (note 3). . . . . . . . . . .           --           3,817,773          --       3,817,773 
Cash distributions ($50.27 per
 limited partnership interest) . . . . . .           --               --        (3,279,576)  (3,279,576)
                                                -----------     -----------   ------------  ----------- 

Balance at December 31, 1994 . . . . . . .       57,758,561      30,164,926    (30,643,727)  57,279,760 

Net earnings (note 3). . . . . . . . . . .           --           1,866,300          --       1,866,300 
Cash distributions ($75 per
 limited partnership interest) . . . . . .           --               --        (4,892,828)  (4,892,828)
                                                -----------     -----------   ------------  ----------- 

Balance at December 31, 1995 . . . . . . .      $57,758,561      32,031,226    (35,536,555)  54,253,232 
                                                ===========     ===========   ============  =========== 










<FN>
                           See accompanying notes to consolidated financial statements.
</TABLE>


<TABLE>                                  JMB MORTGAGE PARTNERS, LTD. - III
                                               (LIMITED PARTNERSHIP)
                                             AND CONSOLIDATED VENTURES

                                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<CAPTION>
                                                                1995            1994               1993    
                                                            -----------      -----------       ----------- 
<S>                                                        <C>              <C>               <C>          
Cash flows from operating activities:
 Net earnings. . . . . . . . . . . . . . . . . . . . .      $ 2,409,947        4,182,722         2,927,657 
 Items not requiring cash or cash equivalents:
   Depreciation. . . . . . . . . . . . . . . . . . . .          637,440          638,079           628,479 
   Amortization of deferred costs. . . . . . . . . . .           43,148           33,470            46,453 
   Provision for loan losses (note 5(a)) . . . . . . .          175,165           99,000         1,413,695 
   Provision for value impairment. . . . . . . . . . .        2,300,000            --                --    
   Partnership's share of operations of 
    unconsolidated venture, net of distributions . . .          (35,133)           --                --    
   Venture partners' share of ventures'
    operations (note 2). . . . . . . . . . . . . . . .         (144,192)         663,684           548,981 
Changes in:
  Interest and other receivables . . . . . . . . . . .          (11,618)          65,894           173,509 
  Prepaid expenses . . . . . . . . . . . . . . . . . .            --             (18,641)          (10,128)
  Deferred interest receivable (note 5). . . . . . . .         (161,001)        (106,821)         (474,856)
  Accounts payable . . . . . . . . . . . . . . . . . .         (381,933)         342,171            93,376 
  Amounts due from affiliates. . . . . . . . . . . . .         (251,872)           --                --    
  Accrued real estate taxes. . . . . . . . . . . . . .            4,196          143,943          (172,122)
  Other current liabilities. . . . . . . . . . . . . .           65,960            1,229           (55,138)
  Tenant security deposits . . . . . . . . . . . . . .           (3,565)           7,187             8,324 
                                                            -----------      -----------       ----------- 
          Net cash provided by operating activities. .        4,646,542        6,051,917         5,128,230 
                                                            -----------      -----------       ----------- 
Cash flows from investing activities:
  Partnership's distributions to venture partners. . .       (2,093,561)           --                --    
  Net sales and maturities (purchases)
   of short-term investments . . . . . . . . . . . . .          393,123        7,350,531        (2,671,674)
  Additions to investment properties . . . . . . . . .         (237,799)        (200,508)         (296,256)
  Partnership's contributions to uncon-
   solidated venture . . . . . . . . . . . . . . . . .             --           (222,416)         (231,784)
  Cost in conjunction with investment in
   unconsolidated venture. . . . . . . . . . . . . . .           (3,607)            --                --   
  Payment of deferred costs. . . . . . . . . . . . . .           (7,983)          (3,579)          (16,767)
  Receipt of mortgage note receivable
   (note 5(a)) . . . . . . . . . . . . . . . . . . . .                            44,694             --    
  Collection of principal on mortgage notes
   receivable (note 5(e)). . . . . . . . . . . . . . .            --             108,932             --    
                                                            -----------      -----------       ----------- 
          Net cash provided by (used in) 
            investing activities . . . . . . . . . . .       (1,949,827)       7,077,654        (3,216,481)
                                                            -----------      -----------       ----------- 


                                         JMB MORTGAGE PARTNERS, LTD. - III
                                               (LIMITED PARTNERSHIP)
                                             AND CONSOLIDATED VENTURES

                                 CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED


                                                                1995            1994               1993    
                                                            -----------      -----------       ----------- 

Cash flows from financing activities:
  Distributions to limited partners. . . . . . . . . .       (4,892,828)      (3,279,576)       (2,609,507)
  Distributions to general partners. . . . . . . . . .         (543,647)        (364,949)         (607,434)
                                                            -----------      -----------       ----------- 

          Net cash used in financing activities. . . .       (5,436,475)      (3,644,525)       (3,216,941)
                                                            -----------      -----------       ----------- 
          Net increase (decrease) in cash and 
            cash equivalents . . . . . . . . . . . . .       (2,739,760)       9,485,046        (1,305,192)

          Cash and cash equivalents,
            beginning of year. . . . . . . . . . . . .       10,278,236          793,190         2,098,382 
                                                            -----------      -----------       ----------- 
          Cash and cash equivalents,
            end of year. . . . . . . . . . . . . . . .      $ 7,538,476       10,278,236           793,190 
                                                            ===========      ===========       =========== 
Supplemental disclosure of cash flow information:
  Cash paid for mortgage and other interest. . . . . .      $     --                --                --   
                                                            ===========      ===========       =========== 
  Non-cash investing and financing activities:
    Balance due on mortgage notes receivable
      (net of allowance for loan loss of
      $534,000) (note 2(c)). . . . . . . . . . . . . .      $ 3,121,072             --                --   
    Capitalized costs. . . . . . . . . . . . . . . . .            3,607             --                --   
                                                            -----------      -----------       ----------- 
          Net carrying value of investment 
            property (reflected as investment
            in unconsolidated venture
            (note 2(c)). . . . . . . . . . . . . . . .      $ 3,124,679             --                --   
                                                            ===========      ===========       =========== 







<FN>
                           See accompanying notes to consolidated financial statements.
</TABLE>


                     JMB MORTGAGE PARTNERS, LTD. - III
                          (A LIMITED PARTNERSHIP)
                         AND CONSOLIDATED VENTURES

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

               YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993



(1)  OPERATIONS AND BASIS OF ACCOUNTING

     The Partnership holds an investment portfolio of first mortgage loans
(through joint ventures) and an equity investment portfolio of United
States real estate.  Business activities consist of collections of interest
and principal on such loans and, with respect to its equity investments,
rentals to a wide variety of commercial and retail companies, and the
ultimate sale or disposition of such real estate.  The Partnership
currently expects to conduct an orderly liquidation of its remaining
investment portfolio and wind up its affairs as soon as practicable.

     For financial reporting purposes, effective January 1, 1995, the
mortgage loan secured by the Spring Hill Fashion Center was determined to
have been in-substance foreclosed and was reclassified as an investment in
a joint venture in real estate on the equity method at its estimated fair
value.  In early May 1995, the lenders (including the Partnership) obtained
legal title to the property (see note 3(d)).  Accordingly, the accompanying
financial statements do not include the accounts of the JMB/Spring Hill
Associates ("Spring Hill") venture.

     The accompanying consolidated financial statements include the
accounts of the Partnership and its ventures, Calibre Pointe Associates and
North Rivers Market Associates (note 2).  The effect of all the
transactions between the Partnership and its ventures has been eliminated
in the consolidated financial statements.  The Partnership currently
expects to conduct an orderly liquidation of the remaining investment
portfolio as quickly as practicable and wind up its affairs not later than
December 31, 1999 barring unforeseen economic developments including the
inability to sell the Franklin Farm Village Center note prior to its
maturity in 2001.

     The Partnership records are maintained on the accrual basis of
accounting as adjusted for Federal income tax reporting purposes.  The
accompanying consolidated financial statements have been prepared from such
records after making appropriate adjustments to present the Partnership's
accounts in accordance with generally accepted accounting principles
("GAAP") and to consolidate the accounts of the ventures as described
above.  Such GAAP and consolidation adjustments are not recorded in the
records of the Partnership.  The net effect of these items for the years
ended December 31, 1995 and 1994 is summarized as follows:






<TABLE>


<CAPTION>
                                                       1995                               1994             
                                                     ------------------------------------------------------------- 
                                                             TAX BASIS  
                                          GAAP BASIS        (Unaudited)       GAAP BASIS        TAX BASIS  
                                         ------------       -----------     ------------       ----------- 
<S>                                     <C>                 <C>             <C>                <C>         
Total assets . . . . . . . . . . . .      $62,807,092        67,576,032       68,386,716        69,014,460 
Partners' capital accounts
 (deficits) (note 3):
  General partners . . . . . . . . .         (122,024)            --            (122,024)         (154,665)
  Limited partners . . . . . . . . .       54,253,232        67,401,731       57,279,760        68,685,599 

Net earnings (note 3):
  General partners . . . . . . . . .          543,647           698,313          364,949           364,949 
  Limited partners . . . . . . . . .        1,866,300         3,608,960        3,817,773         4,600,365 

Net earnings per
  Limited partnership
   interest. . . . . . . . . . . . .            28.61             55.32            58.52             70.52 
                                           ==========        ==========       ==========        ========== 


</TABLE>



     The net earnings per limited partnership interest is based upon the
number of Interests outstanding at the end of the period (65,237.69).

     Certain reclassifications have been made to the 1994 and 1993
consolidated financial statements in order to conform with the 1995
presentation.

     Statement of Financial Accounting Standards No. 95 requires the
Partnership to present a statement which classifies receipts and payments
according to whether they stem from operating, investing or financing
activities.  The required information has been segregated and accumulated
according to the classifications specified in the pronouncement.  The
Partnership records amounts held in U.S. Government obligations at cost
which approximates market.  For the purposes of these statements, the
Partnership's policy is to consider all such amounts held with original
maturities of three months or less ($21,075 and $10,077,022 at December 31,
1995 and 1994, respectively) as cash equivalents with any remaining amounts
(generally with original maturities of one year or less) reflected as
short-term investments being held to maturity.

     Deferred costs in connection with mortgage investments are amortized
over the terms of the agreements relating to such mortgage investments
using the straight-line method.

     Statement of Financial Accounting Standards No. 107 ("SFAS 107"),
"Disclosures about Fair Value of Financial Instruments", requires all
entities to disclose the SFAS 107 value of all financial assets and
liabilities for which it is practicable to estimate.  Value is defined in
the Statement as the amount at which the instrument could be exchanged in a
current transaction between willing parties, other than in a forced or
liquidation sale.  The Partnership believes the carrying amount of its
financial instruments classified as current assets and liabilities
approximates SFAS 107 value due to the relatively short maturity of these
instruments.  There is no quoted market value available for any of the
Partnership's other instruments.

     Basic and simple interest income on mortgage notes receivable is being
recognized using the effective interest method which results in a level
effective yield on the outstanding principal balance.  The Partnership is
recognizing interest income only as collected on two of its mortgage loans
(notes 5(b) and (d)).

     Statement of Financial Accounting Standards No. 114, "Accounting by
Creditors for Impairment of a Loan" ("SFAS #114") became effective in
January, 1994.  SFAS #114 provides that the impairment of a collateralized
loan that is considered impaired (as defined) will be recognized by
creating a valuation allowance to the recorded balance of the loan to yield
a net carrying amount of the loan which is equal to the fair value of the
loan collateral.  The Partnership has elected to recognize subsequent
changes in the fair value of the collateral as adjustments to this
valuation allowance.

     Depreciation on the Partnership's investment properties is being
provided over the estimated useful lives of the various components as
follows:

                                                           Years  
                                                          ------  
     Building and improvements - straight-line               30   
     Personal property - straight-line                      5-7   
                                                            ===   

     Maintenance and repair expenses are being charged to operations as
incurred.  Significant betterments and improvements are being capitalized
and depreciated over their estimated useful lives.

     Under the Partnership's impairment policy, provisions for value
impairment are recorded with respect to investment properties pursuant to
Statement of Financial Accounting Standards No. 121.  ("SFAS 121")
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed of".  Therefore, the Partnership does not anticipate
any effect on its consolidated financial statements upon full adoption of
SFAS 121 as required in the first quarter of 1996.  Due to the uncertainty
of the Partnership's ability to recover the net carrying value of the North
Rivers Market investment property through future operations or sale as the
Partnership has shortened its intended holding period for this investment
to no later than 1999, the Partnership, as a matter of prudent accounting
practice and for financial reporting purposes has recorded a provision for
value impairment of $2,300,000 (of which $770,000 has been allocated to the
venture partner).  Such provision, made as of September 30, 1995 was
recorded to reduce the net carrying value of North Rivers Market to its
then estimated fair value.  There can be no assurance that such estimated
fair value of this property would ultimately be obtained by the Partnership
in any future sale or disposition transaction.

     No provision for state or Federal income taxes has been made as the
liability for such taxes is that of the partners rather than the
Partnership.  However, in certain instances, the Partnership has been
required under applicable law to remit directly to the taxing authorities
amounts representing withholding from distributions paid to partners.


(2)  VENTURE AGREEMENTS

     (a)  Calibre Pointe Associates

     In September 1987, the Partnership participated in funding a
$13,250,000 participating first mortgage loan, which was secured by a 214-
unit luxury apartment complex known as Calibre Pointe Apartments located in
Atlanta, Georgia.  The Partnership funded $8,249,980 (a 62.264%
participation) of this loan and $5,000,020 was funded by Mortgage Partners,
Ltd. - IV ("Mortgage Partners - IV"), a partnership affiliated with the
General Partners (jointly the "Lenders").  The general partners of the
borrower personally guaranteed 12-1/2% of the principal amount of the loan.

As additional security for the first mortgage loan, the borrower delivered
to the Lenders, a $250,000 standby letter of credit, upon which the Lenders
were permitted to draw in the event of a loan default.

     Due to competitive market conditions, the borrower did not make all of
its required 1991 monthly interest payments under the terms of the mortgage
note.  Accordingly, the Lenders provided the borrower with a notice of
default.

     The Lenders obtained legal title to the property on December 3, 1991
and an affiliate of the General Partners of the Partnership assumed
management of the property (until December, 1994 when the affiliate sold
certain of its assets and assigned its interest in its contract to an
unaffiliated third party) under an agreement which provided for a fee
computed as a percentage of gross income of the property.  The Lenders
contributed the property to a newly formed joint venture between themselves
(Calibre Pointe Associates) to own and operate the complex.  The terms of
the venture agreement provide in general, that the benefits of ownership,
including tax effects, net cash receipts and sale proceeds are allocated or
distributed as the case may be, between the Partnership and Mortgage
Partners-IV in proportion to their respective capital contributions to the
venture (62.264% by the Partnership).  The Partnership recorded its net
carrying value (including liabilities of the property assumed at
acquisition) in the property contributed to the venture in an amount not in
excess of its then estimated fair value.

     (b)  North Rivers Market Associates

     In December 1987, the Partnership participated in the initial funding
of a non-recourse participating first mortgage loan in the maximum
principal amount of $19,250,000 secured by a first mortgage on a shopping
center known as the North Rivers Market Shopping Center in North
Charleston, South Carolina.  The other lender was Mortgage Partners-IV,
(jointly the "Lenders").  The Lenders' initial funding was $17,350,000, of
which the Partnership's share was $11,536,622 (66.4935% of the loan).  Up
to an additional $1,900,000 was to have been funded by the Lenders, if
certain rental and occupancy levels were achieved.

     Due to the significant vacancy level at the property, the borrower
made only a portion of the required interest payments for the years 1991
and 1992.

     On May 17, 1993, the borrower, pursuant to a deed in lieu of
foreclosure, transferred legal title of the property to North Rivers Market
Associates ("NRMA") to own and operate the complex.  NRMA is a joint
venture in which the Partnership and Mortgage Partners-IV own 66.4935% and
33.5065% each respectively.  The terms of the venture agreement provide in
general that the benefits of ownership, including tax effects, net cash
receipts, sale proceeds, and future contribution obligations are allocated
or distributed, as the case may be, between the Partnership and the venture
partner in proportion to their respective capital accounts.  An affiliate
assumed management of the property under an agreement which provides for a
fee computed as 6% of gross income of the property.  The Partnership
recorded its net carrying value (including liabilities of the property
assumed at acquisition) in the property contributed to the venture in an
amount not in excess of its then estimated fair value.  The Partnership did
not provide for a provision for loan loss for financial reporting purposes,
as a provision was made in 1992.  However, the Partnership recorded a loss
for Federal income tax purposes in the amount of approximately $4,575,000
in 1993.  The Partnership, as a matter of prudent accounting practice, has
recorded a value impairment as of September 30, 1995 in the amount of
$2,300,000 (of which $770,000 has been allocated to the venture partner)
for financial reporting purposes.  Reference is made to Note 1.

     (c)  Spring Hill Fashion Center, West Dundee, Illinois

     Reference is made to note 5(a) concerning the former loan secured by
the Spring Hill Fashion Center located in West Dundee, Illinois.  In early
May 1995, the lenders obtained legal title to the property pursuant to a
deed in lieu of foreclosure.  An affiliate of the lenders took control of
the property's funds in January, 1995 and is currently managing the
property under an agreement which provides for a fee equal to 4% of the
property's gross receipts (such fee excluding compensation for leasing
activity).  Effective as of the management takeover date (January 1, 1995),
the Partnership considered the mortgage loan to be in-substance foreclosed
and has accounted for its investment as an investment in a joint venture on
the equity method.  For financial reporting purposes, the Partnership did
not recognize any gain or loss from this transaction as a result of the
Partnership's previously recorded provisions for loan loss.  The operations
of this property are expected to provide a current return which would be
significantly less than the scheduled interest payments due under the
original mortgage loan.

     The terms of Spring Hill's partnership agreement provide generally
that contributions, distributions, cash flow, sale or refinancing proceeds
and profits and losses will be distributed or allocated to the partners in
their respective ownership percentages (32.55% to the Partnership).

     Occupancy at the shopping center was 75% at December 31, 1995 due to a
major tenant, which occupied approximately 24% of the leasable space at the
property and which was operating under Chapter 11 bankruptcy protection,
not exercising its renewal option when its lease expired in October 1995
and vacating its space.  The Partnership has executed a ten-year lease
(which commenced in February 1996) with a replacement tenant for this space
at rental rates somewhat lower than those of the former tenant.  The
Partnership is actively pursuing the sale of this property.


(3)  PARTNERSHIP AGREEMENT

     Net profits of the Partnership from operations are generally allocated
to the General Partners in an amount equal to the greater of 1% of net
profits or the amount of net cash flow actually distributed to the General
Partners (as described below), with the remaining net profits allocated to
the Limited Partners.  Any net losses from Partnership operations will be
allocated 90% to the Limited Partners and 10% to the General Partners.  Net
profits from the repayment or other disposition of mortgage investments
will generally be allocated first to the General Partners in an amount
equal to the greater of 1% of such net profits or the cash distributions to
the General Partners from the proceeds of such repayment or other
disposition (as described below).  The remaining net profits from the
repayment or other disposition of mortgage investments will be allocated to
the Limited Partners.  Net losses from any disposition of mortgage
investments will be allocated 97% to the Limited Partners and 3% to the
General Partners.

     The General Partners are not required to make any capital
contributions except under certain limited circumstances upon dissolution
and termination of the Partnership.  Distributions of "net cash flow" of
the Partnership will be made 90% to the Limited Partners and 10% to the
General Partners, with one-half of such net cash flow distributable to the
General Partners in the first twelve fiscal quarters following the close of
the offering, subordinated to the receipt by the Limited Partners of  a
stipulated return on their "current capital accounts".  Distributions of
"repayment proceeds" will be made 97% to the Limited Partners until the
Limited Partners have received repayment proceeds equal to their
contributed capital plus a stipulated return thereon, with the remainder of
such 97% distribution, subject to the General Partners' receipt of any
deferred share of net cash flow, to be distributed 85% to the Limited
Partners and 15% to the General Partners, with one-quarter of such
repayment proceeds distributable to the General Partners subordinated to
the receipt by the Limited Partners of  a stipulated return on their
current capital accounts.  The remaining 3% of all distributions of
repayment proceeds will be distributed to the General Partners, subject to
certain  limitations.  Of the cumulative distributions of $35,536,555 paid
to the Limited  Partners through December 31, 1995, $1,780,738 represents a
7% return to certain Limited Partners through February 4, 1986 (the date of
the first admittance of the Limited Partners) and a 6.25% return to certain
Limited Partners from February 5, 1986 through August 31, 1986 (the date of
the final admittance of the Limited Partners) during which periods the
Limited Partners subscription proceeds were held in escrow.


(4)  MANAGEMENT AGREEMENT

     Certain of the Partnership's properties were managed by affiliates of
the General Partners or their assignees for fees computed as a percentage
of gross income received by the properties.  In December 1994, one of the
affiliated property managers sold certain of its assets and assigned its
interest in its management contracts to an unaffiliated third party.  In
addition, certain management personnel of the property manager became
management personnel of the purchaser and its affiliates.  The successor to
the affiliated property manager's assets is acting as the property manager
of the Calibre Pointe Apartments after the sale on the same terms that
existed prior to the sale.  An affiliate of the General Partners currently
is acting as the manager of North Rivers Market Shopping Center for a fee
computed as six percent of gross income of the property.


(5)  MORTGAGE NOTES RECEIVABLE

     The Partnership has participated in the funding of six participating
first mortgage loans, for five shopping center properties (Spring Hill
Fashion Center, Shoppes at Rivergate, North Rivers Market, Riverpoint
Center, and Franklin Farm Village Center) and one apartment complex
(Calibre Pointe Apartments).  The Partnership, through joint ventures with
its affiliated lenders has taken title to the underlying collateral for
Spring Hill Fashion Center, North Rivers Market and the Calibre Pointe
Apartments (note 2).  Generally, the remaining mortgage agreements provide
for basic interest payable monthly at certain specified interest rates
along with annual simple accrued interest (deferred until maturity) at
rates ranging from 2% to 3% per annum and for additional interest in an
amount equal to a percentage of the gross receipts of the properties in
excess of certain specified levels and an amount equal to a percentage of
the subsequent increases in the value of the underlying properties in
excess of certain specified levels.  Any payments of additional interest
made by the borrowers will be used to offset, on a dollar-for-dollar basis,
the borrowers' obligations to pay simple accrued interest.

     (a)  Spring Hill Fashion Center, West Dundee, Illinois

     In February 1986, the Partnership committed to participate in the
funding of a participating first mortgage loan in the maximum amount of
$11,000,000 secured by the Spring Hill Fashion Center shopping center
located in West Dundee, Illinois.  Through October 1988, the total amount
funded under this loan was $10,030,000 (of which the Partnership's share
was $3,264,765 (32.55%)).  The other two participating lenders are JMB
Mortgage Partners, Ltd.-I and JMB Mortgage Partners, Ltd.-II (jointly the
"Lenders"), both of which are affiliates of the General Partners of the
Partnership.  As additional security for the first mortgage loan, the
borrower delivered to the lenders, in January 1988, two $250,000
irrevocable and unconditional letters of credit (which were currently to
expire December 31, 1994 and January 15, 1995, respectively), upon which
the lenders could draw in the event a default occurred under the loan.  The
aforementioned letters of credit had been subject to yearly renewal if
certain specified net operating income levels at the property were not
achieved by the borrower.

     Due to the uncertainty of the realization of the simple accrued
interest recognized through November 30, 1991 (approximately $485,800) and
the principal balance of the loan ($3,264,765), the Partnership, as a
matter of prudent accounting practice and to reflect the estimated fair
value of the collateral, had, for financial reporting purposes, suspended
the accrual of the simple accrued interest (which was payable at maturity)
effective December 1, 1991 and made provisions for loan loss of $281,000 in
1992, $154,000 in 1993 and $99,000 in 1994, bringing the total provision
for loan loss to $534,000.

     The borrower defaulted in its scheduled basis interest payments due
under this loan during the fourth quarter of 1994.  Consequently, the
lenders (including the Partnership) drew on the above-mentioned letters of
credit totaling $500,000 in late December, 1994.

     Reference is made to note 2(c) regarding the Partnership obtaining
legal title to this property in early May 1995.

     (b)  Shoppes at Rivergate, Goodlettsville (Nashville), Tennessee

     The Partnership funded a $12,000,000 non-recourse participating first
mortgage loan secured by a portion of a shopping center in Goodlettsville,
Tennessee.  The loan bears basic interest at the rate of 9.0% per annum
through September  1992 and 9.5% per annum through maturity in September
1997, and provides for monthly payments of interest only.  The Partnership
is also entitled to participation in annual gross receipts (as defined) in
excess of $1,337,000.

     Due to the uncertainty of the realization of the simple accrued
interest recognized through December 31, 1993 (approximately $1,920,000)
and the principal balance of the loan ($12,000,000), the Partnership, as a
matter of prudent accounting practice, made a provision for loan loss as of
December 31, 1993 in the amount of $1,260,152.  In addition, effective
December 1, 1993, the Partnership is recognizing interest income only as
collected.  As of the date of this report, no amounts currently due from
the borrower of this loan are in arrears.

     (d)  Riverpoint Center, Chicago, Illinois

     In August, 1989, the Partnership participated in the funding of a non-
recourse participating first mortgage loan in the maximum principal amount
of $29,250,000.  The Partnership had committed to fund a maximum of
$13,050,000 or approximately 44.6% of this loan.  The remaining portion of
the loan was funded by Mortgage Partners-IV, and IDS Life Account RE, the
latter an entity advised by an affiliate of the General Partners (jointly
the "Lenders").  The loan is secured by a first mortgage on a shopping
center known as Riverpoint Center, located in Chicago, Illinois.  The
Lenders' initial funding was $26,000,000 and additional fundings were made
in 1990 and 1991.  The Lenders do not intend to fund any additional amounts
beyond the $28,039,630 ($12,509,989 by the Partnership) now funded.  The
ten-year loan currently bears basic interest at the rate of 8.884% per
annum for the first loan year, 8.75% per annum for loan years two and
three, increasing .50% per annum in the fourth and .25% per annum in the
seventh loan year to a maximum rate of 9.50% per annum, payable monthly in
advance.

     The Silo Electronic store (12,100 sq. ft.) at Riverpoint Center
vacated its space in the third quarter 1995, and the borrower is pursuing
its legal remedies regarding the remaining amounts due.  The borrower has
re-leased the space to a book store for three months at a substantially
lower rent.  The borrowers subsequently leased the space to the GAP/Old
Navy Store, at a lower rent, for five years with rent commencing on July 1,
1996.  As a result, the borrower has notified the lender that it is
experiencing financial difficulties and has approached the Lenders
regarding a loan modification.  The lenders and borrowers have reached an
agreement in principal to defer payment of debt service payments for a
certain period of time.  However, there can be no assurance that such
agreement will be finalized under these terms or any others.  As of the
date of this report, certain escrow payments are due to the Lender;
however, the borrower is current in its monthly debt service payments.

     As a result of the lender's financial difficulties discussed above,
there is uncertainty as to the Partnership's ability to recover the
principal balance of the loan.  As a result, the Partnership, as a matter
of prudent accounting practice, has recorded an additional provision for
loan loss of $175,165 as of December 31, 1995.  Such provision, in addition
to a provision recorded at December 31, 1991, was recorded to reduce the
net carrying value of the loan to the then estimated fair value of the loan
collateral.  In addition, the Partnership is recognizing interest income
only as collected.

     (e)  Franklin Farm Village Center, Fairfax County, Virginia

     In December 1991, the Partnership participated in the funding of a
non-recourse participating first mortgage loan in the maximum principal
amount of $16,600,000.  The Partnership has committed to fund a maximum of
$5,600,000 or approximately 33.7% of the loan.  The other lender is
Mortgage Partners-IV, (jointly the "Lenders").  The loan is secured by a
first mortgage on a shopping center known as Franklin Farm Village Center
(the "Center") located in Fairfax County, Virginia.  The Lenders have
cumulatively funded $14,809,000 as of December 31, 1995 of which the
Partnership's share is approximately $4,996,000.  Up to an additional
$1,791,000 (of which the Partnership's share is $603,000) may be funded if
the borrower elects to pursue certain expansion/purchase options with
respect to the land surrounding the existing center and its parking lot.
There can be no assurance, however, that terms and conditions for
additional subsequent fundings will be met and, therefore, it is possible
that further additional subsequent fundings will not be made or will be
less than the maximum principal amount committed to this loan.

     In June, 1994, the Lenders received a partial return in the amount of
$322,907 of the original principal funding (of which the Partnership's
share was $108,933).  These funds relate to an "earn down" provision in the
original purchase agreement between the borrower and the seller.  Due to a
major tenant not generating a certain level of sales in 1993, the seller
was required to return a portion of the sale price it had received in 1991
at closing.  The borrower subsequently remitted the proceeds back to the
Lenders as required by the terms of the loan agreement.  The Lenders will
retain these proceeds due to  the possibility of the borrower requesting
future additional fundings per the original loan agreement as discussed
above.

     In late 1993, the Lenders were informed by the borrower that an
underground gasoline tank experienced a gasoline leak at the property.  The
tenant, which has a ground lease with the borrower, informed the borrower
and the appropriate state agencies that gasoline was discharged into the
ground.  The tenant, which operates a gasoline station at the site, is
cooperating fully with all government agencies in order to rectify this
problem in a expeditious manner.  In addition, the Lenders were informed
that no nearby underground water supplies were affected nor does it appear
likely that any will be affected in the future.  The tenant (an affiliate
of a national gasoline marketer) appears to have the financial resources to
fully pay for the clean up at the property.  At this time, it is
undeterminable what the cost of the clean up will be.  In addition, at this
time, the Lenders believe the value of the borrower's property has not been
materially affected.  Therefore, no provision for loan loss has been
established at this time.  However, there can be no assurances that the
gasoline leak, as reported, will not have a material impact on the value of
the Lender's security in the future.  As of the date of the report, no
amounts currently due from the borrower of this loan are in arrears.


(6)  LEASES

     As Property Lessor

     At December 31, 1995, the Partnership and its consolidated ventures'
principal leased assets are the Calibre Pointe Apartments (see Note 2(a))
and North Rivers Market Shopping Center (see notes 2(b) and 5(c)).  The
Partnership has determined that all leases relating to these properties are
properly classified as operating leases; therefore, rental income is
reported when earned and the cost of each of the properties, excluding the
cost of the land, is depreciated over the estimated useful lives.  Leases
with tenants in effect at December 31, 1995 at the Calibre Pointe
Apartments are generally for a term of one year or less and provide for
annual rents of approximately $2,236,000.  Leases with tenants in effect at

December 31, 1995 at North Rivers Market Shopping Center range in term from
one to ten years and provide for fixed minimum rent and partial
reimbursement of operating costs.  In addition, leases generally provide
for additional rent based upon percentage of tenant's sale volumes.  A
substantial portion of the ability of retail tenants to honor their leases
is dependent upon the retail economic sector.

     Cost and accumulated depreciation of the leased assets are summarized
as follows at December 31, 1995:

          Shopping Center:
            Cost . . . . . . . . . . . . $10,212,057 
            Accumulated depreciation . .    (808,729)
                                         ----------- 
                                           9,403,328 
                                         ----------- 
          Apartment Complex:
            Cost . . . . . . . . . . . .  13,093,232 
            Accumulated depreciation . .  (1,512,551)
                                         ----------- 
                                          11,580,681 
                                         ----------- 
               Total . . . . . . . . . . $20,984,009 
                                         =========== 

     Minimum lease payments, including amounts representing executory costs
(e.g. taxes, maintenance, insurance) and any related profit, to be received
in the future under the operating leases at the North Rivers Market
Shopping Center are as follows: 

          1996 . . . . . . . . . . . . .   $1,298,375
          1997 . . . . . . . . . . . . .    1,177,755
          1998 . . . . . . . . . . . . .      503,040
          1999 . . . . . . . . . . . . .      338,771
          2000 . . . . . . . . . . . . .      136,360
          Thereafter . . . . . . . . . .       24,309
                                           ----------
               Total . . . . . . . . . .   $3,478,610
                                           ==========


(7)  TRANSACTIONS WITH AFFILIATES

     The Partnership, pursuant to the Partnership Agreement, is permitted
to engage in various transactions involving the Corporate General Partner
and its affiliates including the reimbursement for salaries and salary-
related expenses of its employees, certain of its officers, and other
direct expenses relating to the administration of the Partnership and the
operation of the Partnership's investments.  Fees, commissions and other
expenses required to be paid by the Partnership to the General Partners and
their affiliates as of December 31, 1995, 1994 and 1993 are as follows:



<TABLE>

<CAPTION>
                                                                                                UNPAID AT  
                                                                                               DECEMBER 31,
                                                  1995            1994            1993            1995     
                                                --------        --------        --------     --------------
<S>                                            <C>             <C>             <C>          <C>            
Property management and 
  leasing fees (note 2). . . . . . . . .        $ 98,452         243,518         146,159              --   
Reimbursement (at cost) for
  accounting services. . . . . . . . . .          46,750          50,781          45,495              --   
Reimbursement (at cost) for
  portfolio management
  services . . . . . . . . . . . . . . .          22,879          22,828            --                --   
Reimbursement (at cost) for
  legal services . . . . . . . . . . . .           1,157           3,904           1,999              --   
Reimbursement (at cost) for
  administrative charges and
  other out-of-pocket expenses . . . . .         121,073           3,494           9,277           41,577  
                                                --------        --------        --------           ------  

                                                $290,311         324,525         202,930           41,577  
                                                ========        ========        ========           ======  
<FN>

     The above table reflects that during 1995, the Partnership recognized and paid certain 1994 administrative
charges of approximately $77,597 that had not previously been reimbursed.

</TABLE>


     The Corporate General Partner is entitled to receive mortgage
investment servicing fees from the Partnership at an annual rate of 1/4 of
1% of the maximum amount advanced by the Partnership and outstanding from
time to time with respect to mortgage investments.  The cumulative amount
of such fees at December 31, 1995 aggregated $791,296, all of which were
paid at December 31, 1995.

     Effective October 1, 1995, the Corporate General Partner of the
Partnership engaged independent third parties to perform certain
administrative services for the Partnership which were previously performed
by, and partially reimbursed to, affiliates of the General Partners.  Use
of such third parties is not expected to have a material effect on the
operations of the Partnership.

     JMB is entitled to receive application and commitment fees in
connection with the receipt of loan applications and issuance of
commitments to make mortgage loans and to enter into land purchase
leasebacks.  Such application and commitment fees shall not exceed 3% of
the gross proceeds of the offering.  To the extent they are paid by actual
or prospective borrowers or sellers of land, the fees otherwise payable by
the Partnership will be reduced.  In January 1992, the Partnership paid
$130,164 which represented the remaining application fees due to JMB as a
result of the funding of  the Franklin Farm mortgage loan (note 5(e)).

     The General Partners have deferred payment of certain of their
distributions of net cash flow from the Partnership.  During February 1993,
the Partnership paid previously deferred distributions of approximately
$317,000 to the General Partners.  The remaining cumulative amount of such
deferred distributions aggregated $679,727 at December 31, 1995, all of
which is being deferred in accordance with the subordination requirements
of the Partnership Agreement.  The aggregate amount deferred, including the
above-noted subordinated distributions, is approximately $10 per Interest. 
All amounts deferred or currently payable do not bear interest.


(8)  SELECTED FINANCIAL INFORMATION (UNAUDITED)

     Pursuant to the requirements of the Securities and Exchange
Commission, the following is a summary of historical financial information
for certain of the properties securing the participating first mortgage
loans:  Shoppes at Rivergate (note 5(b)) as of and for the twelve months
ended November 30, 1995 and 1994; Riverpoint Center (note 5(d)) and
Franklin Farm Village Center (note 5(e)) as of and for the years ended
December 31, 1995 and 1994.  Such information is not related to current
market values.

                                            1995               1994    
                                        ------------       ----------- 

Current assets . . . . . . . . . . .    $  3,186,062         1,429,847 
Current liabilities. . . . . . . . .      (7,828,466)       (7,124,798)
                                        ------------       ----------- 
Working capital. . . . . . . . . . .      (4,642,404)       (5,694,951)
                                        ------------       ----------- 
Investment property, 
  net of depreciation. . . . . . . .      42,505,233        43,273,055 
Other assets . . . . . . . . . . . .       3,182,954         1,753,227 
Long-term debt . . . . . . . . . . .     (55,584,404)      (54,845,014)
                                        ------------       ----------- 
Owners' equity . . . . . . . . . . .    $(14,538,621)      (15,513,683)
                                        ============       =========== 
Represented by:
  Partners' capital. . . . . . . . .    $(14,324,052)      (15,569,370)
  Current year loss income (loss)
   (including depreciation). . . . .        (214,569)           55,687 
                                        ------------       ----------- 
                                        $(14,538,621)      (15,513,683)
                                        ============       =========== 
Total income . . . . . . . . . . . .    $  8,289,849        7,986,976  
                                        ============       =========== 
Expenses related to 
  operating income . . . . . . . . .    $  8,504,418        7,931,289  
                                        ============       =========== 
Net loss . . . . . . . . . . . . . .    $   (214,569)           55,687 
                                        ============       =========== 

     Total income, expenses related to operating income and net loss of the
Shoppes at Rivergate as of and for the twelve months ended November 30,
1993, Riverpoint Center and Franklin Farm Village Center as of and for the
year ended December 31, 1993 were $7,419,746, $9,410,214 and $(1,990,468),
respectively.







<TABLE>
                                                                                     SCHEDULE  III
                                           JMB MORTGAGE PARTNERS, LTD. III
                                               (A LIMITED PARTNERSHIP)
                                              AND CONSOLIDATED VENTURES

                                CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION

                                                  DECEMBER 31, 1995

<CAPTION>

                                                                           INITIAL           
                                                                    COST TO PARTNERSHIP (A)  
                                                                       --------------------------------  COSTS     
                                                               LAND AND                               CAPITALIZED  
                                                               LEASEHOLD        BUILDINGS AND        SUBSEQUENT TO 
                                      ENCUMBRANCES             INTEREST         IMPROVEMENTS        ACQUISITION (B)
                                      ------------            ----------       --------------       ---------------
<S>                                   <C>                     <C>              <C>                   <C>           
APARTMENT COMPLEX:
  Atlanta, Georgia . . . . . . .         $   --                6,016,626            6,616,984              459,622 

SHOPPING CENTER:
  North Charleston,
   South Carolina. . . . . . . .             --                4,461,069            7,838,931           (2,087,943)
                                         ---------            ----------           ----------           ---------- 

    Total. . . . . . . . . . . .         $   --               10,477,695           14,455,915           (1,628,321)
                                         =========            ==========           ==========           ========== 






</TABLE>


<TABLE>
                                                                                       SCHEDULE  III
                                           JMB MORTGAGE PARTNERS, LTD. III
                                               (A LIMITED PARTNERSHIP)
                                              AND CONSOLIDATED VENTURES

                          CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED


<CAPTION>
                                                               GROSS AMOUNT OF WHICH CARRIED      
                                                                    AT CLOSE OF PERIOD (C)        
                                                          ----------------------------------------
                                                           BUILDINGS AND                                ACCUMULATED 
                                    LAND                   IMPROVEMENTS                   TOTAL         DEPRECIATION
                                -----------               --------------              ------------      ------------
<S>                            <C>                       <C>                         <C>               <C>          
APARTMENT COMPLEX:
  Atlanta, Georgia . . . .        5,973,342                    7,119,890                13,093,232         1,512,551

SHOPPING CENTER:
  North Charleston,
   South Carolina. . . . .        3,588,126                    6,623,931                10,212,057           808,729
                                 ----------                   ----------              ------------         ---------
                                  9,561,468                   13,743,821                23,305,289         2,321,280
                                 ==========                   ==========              ============         =========





</TABLE>


<TABLE>
                                                                                      SCHEDULE  III
                                           JMB MORTGAGE PARTNERS, LTD. III
                                               (A LIMITED PARTNERSHIP)
                                              AND CONSOLIDATED VENTURES

                          CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED



<CAPTION>
                                                                                   LIFE ON WHICH
                                       DATE OF                                     DEPRECIATION        REAL ESTATE 
                                    CONSTRUCTION            DATE ACQUIRED           IS COMPUTED           TAXES    
                                    ------------           --------------         --------------     --------------
<S>                                <C>                    <C>                    <C>                <C>            
APARTMENT COMPLEX:
  Atlanta, Georgia . . . . . .          1987                    12/91               5-30 years            227,081  

SHOPPING CENTER:
  North Charleston,
   South Carolina. . . . . . .          1987                    9/92                5-30 years            148,139  
                                                                                                          -------  
                                                                                                          375,220  
                                                                                                          =======  

<FN>
------------

Notes:

   (A)   The initial cost to the Partnership represents the Partnership's net carrying value in the property.  See
Note 2 of Notes to Consolidated Financial Statements.

   (B)   Amount includes value impairment of $2,300,000 recorded in 1995.

   (C)   The aggregate cost of real estate owned at December 31, 1995 for Federal income tax purposes was
$25,657,295.

   (D)   Reconciliation of real estate owned:

</TABLE>


<TABLE>
                                                                                       SCHEDULE  III
                                           JMB MORTGAGE PARTNERS, LTD. III
                                               (A LIMITED PARTNERSHIP)
                                              AND CONSOLIDATED VENTURES

                          CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION - CONCLUDED


<CAPTION>
                                                                                  DECEMBER 31                      
                                                            ------------------------------------------------------ 
                                                                1995                 1994                  1993    
                                                            -----------           ----------           ----------- 
<S>                                                        <C>                   <C>                  <C>          
    Balance at beginning of period . . . . . . . .          $25,367,490           25,166,982            24,870,726 
    Additions during period. . . . . . . . . . . .           (2,062,201)             200,508               296,256 
                                                            -----------           ----------            ---------- 

    Balance at end of period . . . . . . . . . . .          $23,305,289           25,367,490            25,166,982 
                                                            ===========           ==========            ========== 

(D)  Reconciliation of accumulated depreciation:

    Balance at beginning of period . . . . . . . .          $ 1,683,840            1,045,761               417,282 
    Depreciation expense . . . . . . . . . . . . .              637,440              638,079               628,479 
                                                            -----------           ----------            ---------- 
    Balance at end of period . . . . . . . . . . .          $ 2,321,280            1,683,840             1,045,761 
                                                            ===========           ==========            ========== 


</TABLE>


ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
         ACCOUNTING AND FINANCIAL DISCLOSURE

     There were no changes in or disagreements with accountants during
fiscal years 1995 and 1994.

                                 PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP

     The Corporate General Partner of the Partnership is JMB Realty
Corporation, a Delaware corporation, substantially all of the outstanding
stock of which is owned directly or indirectly, by certain of its officers
and directors and members of their families.  JMB has responsibility for
all aspects of the Partnership's operations, subject to the requirement
that sales of real property must be approved by the Associate General
Partner of the Partnership, AGPP Associates, L.P.  Effective December 31,
1995, AGPP Associates, L.P. acquired all of the partnership interest in
Mortgage Associates-III, L.P. the Associates General Partner which then
dissolved.  AGPP Associates, L.P. elected to continue the business of
Mortgage Associates-III, L.P.  AGPP Associates, L.P., an Illinois limited
partnership, with JMB as its sole general partner, continues as the
Associate General Partner. The Associate General Partner shall be directed
by a majority in interest of its limited partners (who are generally
officers, directors and affiliates of JMB or its affiliates) as to whether
to provide its approval of any sale of real property (or any interest
therein) of the Partnership.

    The Partnership is subject to certain conflicts of interest arising out
of its relationships with the General Partners and their affiliates as well
as the fact that the General Partners and their affiliates are engaged in a
range of real estate activities.  Certain services have been and may in the
future be provided to the Partnership or its investment properties by
affiliates of the General Partners, including property management services
and insurance brokerage services.  In general, such services are to be
provided on terms no less favorable to the Partnership than could be
obtained from independent third parties and are otherwise subject to
conditions and restrictions contained in the Partnership Agreement.  The
Partnership Agreement permits the General Partners and their affiliates to
provide services to, and otherwise deal and do business with, persons who
may be engaged in transactions with the Partnership, and permits the
Partnership to borrow from, purchase goods and services from, and otherwise
to do business with, persons doing business with the General Partners or
their affiliates.  The General Partners and their affiliates may be in
competition with the Partnership under certain circumstances, including, in
certain geographical markets, for tenants for properties and/or for the
sale of properties.  Because the timing and amount of cash distributions
and profits and losses of the Partnership may be affected by various
determinations by the General Partners under the Partnership Agreement,
including whether and when to sell or refinance a property, the
establishment and maintenance of reasonable reserves, the timing of
expenditures and the allocation of certain tax items under the Partnership
Agreement, the General Partners may have a conflict of interest with
respect to such determinations.

     The names, positions held and length of service therein of each
director, and the executive and certain other officers of the Corporate
General Partner are as follows:

                                                              SERVED IN  
NAME                       OFFICE                            OFFICE SINCE
----                       ------                            ------------

Judd D. Malkin             Chairman                            5/03/71
                           Director                            5/03/71
                           Chief Financial Officer             2/23/96
Neil G. Bluhm              President                           5/03/71
                           Director                            5/03/71
Burton E. Glazov           Director                            7/01/71
Stuart C. Nathan           Executive Vice President            5/08/79
                           Director                            3/14/73
A. Lee Sacks               Director                            5/09/88
John G. Schreiber          Director                            3/14/73
H. Rigel Barber            Executive Vice President            1/02/87
                           Chief Executive Officer             8/01/93
Glenn E. Emig              Executive Vice President            1/01/93
                           Chief Operating Officer             1/01/95
Gary Nickele               Executive Vice President and        1/01/92
                           General Counsel                     2/17/84
Gailen J. Hull             Senior Vice President               6/01/88
Howard Kogen               Senior Vice President               1/02/86
                           Treasurer                           1/01/91

     There is no family relationship among the foregoing directors or
officers.  The foregoing directors have been elected to serve a one-year
term until the annual meeting of the Corporate General Partner to be held
on June 5, 1996.  All of the foregoing officers have been elected to serve
one-year terms until the first meeting of the Board of Directors held after
the annual meeting of the Corporate General Partner to be held on June 5,
1996.  There are no arrangements or understandings between or among any of
said directors or officers and any other person pursuant to which any
director or officer was elected as such.

     JMB is the corporate general partner of Carlyle Real Estate Limited
Partnership-VII ("Carlyle-VII"), Carlyle Real Estate Limited Partnership-IX
("Carlyle-IX"), Carlyle Real Estate Limited Partnership-X ("Carlyle-X"),
Carlyle Real Estate Limited Partnership-XI ("Carlyle-XI"), Carlyle Real
Estate Limited Partnership-XII ("Carlyle-XII"), Carlyle Real Estate Limited
Partnership-XIII ("Carlyle-XIII"), Carlyle Real Estate Limited Partnership-
XIV ("Carlyle-XIV"), Carlyle Real Estate limited Partnership-XV ("Carlyle-
XV"), Carlyle Real Estate Limited Partnership-XVI ("Carlyle-XVI"), Carlyle
Real Estate Limited Partnership-XVII ("Carlyle-XVII"), JMB Mortgage
Partners, Ltd. ("Mortgage Partners"), JMB Mortgage Partners, Ltd.-II
("Mortgage Partners-II"), JMB Mortgage Partners, Ltd.-IV ("Mortgage
Partners-IV"), Carlyle Income Plus, Ltd. ("Carlyle Income Plus"), and
Carlyle Income Plus, Ltd.-II ("Carlyle Income Plus-II") and the managing
general partner of JMB Income Properties, Ltd.-IV ("JMB Income-IV"), JMB
Income Properties, Ltd.-V ("JMB Income-V"), JMB Income Properties, Ltd.-VI
("JMB Income-VI"), JMB Income Properties, Ltd.-IX ("JMB Income-IX"), JMB
Income Properties, Ltd.-X, ("JMB Income-X"), JMB Income Properties, Ltd.-XI
("JMB Income-XI"), JMB Income Properties, Ltd.-XII ("JMB Income -XII"), JMB
Income Properties, Ltd.-XIII, ("JMB Income-XIII").  JMB is also the sole
general partner of the associate general partner of most of the foregoing
partnerships.  Most of the foregoing directors and officers are also
officer and/or directors of various affiliated companies of JMB including
Arvida/JMB Managers, Inc. (the general partner of Arvida/JMB Partners, L.P.
("Arvida")), Arvida/JMB Managers-II, Inc. (the general partner of
Arvida/JMB Partners, L.P.-II ("Arvida-II") and Income Growth Managers, Inc.
(the general partner of IDS/JMB Balance Income Growth, Ltd. ("IDS/BIG")). 
Most of such directors and officers are also partners of certain
partnerships which are associate general partners in the following real
estate limited partnerships:  Carlyle-VII, Carlyle-IX, Carlyle-X, Carlyle-
XI, Carlyle-XII, Carlyle-XIII, Carlyle-XIV, Carlyle-XV, Carlyle-XVI,
Carlyle-XVII, JMB Income-IV, JMB Income-V, JMB Income-VI, JMB Income-IX,
JMB Income-X, JMB Income-XI, JMB Income-XII, JMB Income-XIII, Mortgage
Partners, Mortgage Partners-II, Mortgage Partners-IV, Carlyle Income Plus,
Carlyle Income Plus-II and IDS/BIG.

     The business experience during the past five years of each such
director and officer of the Corporate General Partner of the Partnership in
addition to that described above is as follows:

     Judd D. Malkin (age 58) is an individual general partner of JMB
Income-IV and JMB Income-V.  Mr. Malkin has been associated with JMB since
October, 1969.  Mr. Malkin is a director of Urban Shopping Centers, Inc.,
an affiliate of JMB that is a real estate investment trust in the business
of owning, managing and developing shopping centers.  He is a Certified
Public Accountant.

     Neil G. Bluhm (age 58) is an individual general partner of JMB
Income-IV and JMB Income-V.  Mr. Bluhm has been associated with JMB since
August, 1970.  Mr. Bluhm is a director of Urban Shopping Centers, Inc., an
affiliate of JMB that is a real estate investment trust in the business of
owning, managing and developing shopping centers.  He is a member of the
Bar of the State of Illinois and a Certified Public Accountant.

     Burton E. Glazov (age 57) has been associated with JMB since June,
1971 and served as an Executive Vice President of JMB until December 1990. 
He is a member of the Bar of the State of Illinois and a Certified Public
Accountant.

     Stuart C. Nathan (age 54) has been associated with JMB since July,
1972.  Mr. Nathan is also a director of Sportmart, Inc., a retailer of
sporting goods.  He is a member of the Bar of the State of Illinois. 

     A. Lee Sacks (age 62) (President and Director of JMB Insurance Agency,
Inc.) has been associated with JMB since December, 1972.

     John G. Schreiber (age 49) has been associated with JMB since
December, 1970 and served as an Executive Vice President of JMB until
December 1990.  Mr. Schreiber is President of Schreiber Investments, Inc.,
a company which is engaged in the real estate investing business.  He is
also a senior advisor and partner of Blackstone Real Estate Partners, an
affiliate of the Blackstone Group, L.P.  He is now also a director of Urban
Shopping Centers, Inc., an affiliate of JMB that is a real estate
investment trust in the business of owning, managing and developing
shopping centers, and a director of a number of investment companies
advised or managed by T. Rowe Price Associates and its affiliates.  Since
1994, Mr. Schreiber has also served as a Trustee of Amli Residential
Property Trust, a publicly - traded real estate investment trust that
invests in multi-family properties.  He holds a Masters degree in Business
Administration from Harvard University Graduate School of Business.

     H. Rigel Barber (age 46) has been associated with JMB since March,
1982.  He holds a J.D. degree from the Northwestern Law School and is a
member of the Bar of the State of Illinois.

     Glenn E. Emig (age 48) has been associated with JMB since December,
1979.  Prior to becoming Executive Vice President of JMB in 1993, Mr. Emig
was Executive Vice President and Treasurer of JMB Institutional Realty
Corporation.  He holds a Masters Degree in Business Administration from the
Harvard University Graduate School of Business and is a Certified Public
Accountant. 

     Gary Nickele (age 43) has been associated with JMB since February,
1984.  He holds a J.D. degree from the University of Michigan Law School
and is a member of the Bar of the State of Illinois.

     Gailen J. Hull (age 47) has been associated with JMB since March,
1982.  He holds a Masters degree in Business Administration from Northern
Illinois University and is a Certified Public Accountant.

     Howard Kogen (age 60) has been associated with JMB since March, 1973. 
He is a Certified Public Accountant.





ITEM 11. EXECUTIVE COMPENSATION

     The General Partners of the Partnership are entitled to receive a
share of cash distributions, when and as cash distributions are made to the
Limited Partners, and a share of profits or losses.  Reference is also made
to Notes 3 and 7 for a description of such transactions, distributions and
allocations.

     The General Partners have deferred payment of certain of their
distributions of net cash flow from the Partnership.  During February 1993,
the Partnership paid previously deferred distributions of approximately
$317,000 to the General Partners.  The remaining cumulative amount of such
deferred distributions aggregated $679,727 at December 31, 1995, all of
which is being deferred in accordance with the subordination requirements
of the Partnership Agreement.  The aggregate amount deferred, including the
above-noted subordinated distributions, is approximately $10 per Interest. 
All amounts deferred or currently payable do not bear interest.

     The Corporate General Partner is entitled to receive mortgage
investment servicing fees from the Partnership at an annual rate of 1/4 of
1% of the maximum amount advanced by the Partnership and outstanding from
time to time with respect to mortgage investments. The servicing fee is
payable from the date the Partnership first advances funds with respect to
a mortgage investment.  The cumulative amount of such fees aggregated
$785,906, all of which is paid at December 31, 1995.

     JMB Realty Corporation or its affiliates are entitled to receive
application and commitment fees in connection with the receipt of loan
applications and the issuance of commitments to make mortgage loans or to
enter into land purchase-leasebacks.  Such application and commitment fees
shall not exceed 3% of the gross proceeds of the offering.  To the extent
they are paid by actual or prospective borrowers or sellers of land, the
fees otherwise payable by the Partnership will be reduced.  As of December
31, 1995, JMB has received approximately $1,367,152 of such fees from the
borrowers and the Partnership has paid $589,828 of such fees to the
Corporate General Partner.

     The Corporate General Partner and its affiliates may be reimbursed for
their direct expenses or out-of-pocket expenses relating to the offering,
the administration of the Partnership, and the funding of the Partnership's
mortgage investments.  In 1995, such reimbursable costs were, $1,902, of
which $3 was unpaid at December 31, 1995.

     The Corporate General Partner and its affiliates are entitled to
reimbursement for salaries, salary-related and direct expenses of certain
of their officers and employees while directly engaged in the
administration of the Partnership and the operation of the Partnership's
real property investments.  In 1995, such reimbursable costs aggregated
$189,957, of which $41,574 were unpaid at December 31, 1995.

     The Partnership is permitted to engage in various transactions
involving affiliates of the Corporate General Partner.  The relationship of
the Corporate General Partner (and its directors and officers) to its
affiliates is set forth above in Item 10 above.


ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     (a)  No person or group is known by the Partnership to own
beneficially more than 5% of the outstanding Interests of the Partnership.




<TABLE>
<CAPTION>

     (a)  No person or group is known by the Partnership to own beneficially more than 5% of the outstanding
Interests of the Partnership.

     (b)   The Corporate General Partner, its officers and directors and the Associate General Partner of the
Partnership own as a group the following Interests of the Partnership:

                               NAME OF                         AMOUNT AND NATURE
                               BENEFICIAL                      OF BENEFICIAL               PERCENT
TITLE OF CLASS                 OWNER                           OWNERSHIP                   OF CLASS 
--------------                 ----------                      -----------------           --------
<S>                            <C>                             <C>                         <C>
Limited Partnership            JMB Realty Corporation          5 Interests                 Less than 1%
Interests                                                      directly

Limited Partnership            Neil G. Bluhm                   5 Interests                 Less than 1%
Interests                      and Judd D. Malkin              indirectly (1)              

Limited Partnership            Corporate General               14.34189 Interests          Less than 1%
Interests                      Partner, (its                   indirectly (1)(2)           
                               officers and 
                               directors) and the
                               Associate General
                               Partner

<FN>

     (1)   Includes 5 Interests owned by an investment partnership, of which Messrs. Bluhm and Malkin are the
managing general partners thereof and have shared investment and voting power with respect to the Interests so
owned.

     (2)   Includes 4.34189 Interests owned by officers or their respective relatives for which the relevant
officer has investment and voting power.

     No officer or director of the Corporate General Partner of the Partnership possesses a right to acquire
beneficial ownership of Interests of the Partnership.

     (c)   There exists no arrangement, known to the Partnership, the operation of which may at a subsequent date
result in a change in control of the Partnership.


</TABLE>


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     There were no significant transactions or business relationships with
the Corporate General Partner, affiliates or their management other than
those described in Items 10 and 11 above.



                                  PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

     (a)  The following documents are filed as part of this report:

      (1)  Financial Statements (See Index to Financial Statements filed
with this report.)

      (2)  Exhibits

           3-A.   The Prospectus of the Partnership dated July 24, 1985,
as supplemented January 27, 1986, April 29, 1986, June 11, 1986, August 14,
1986, September 27, 1986 as filed with the Commission pursuant to Rules
424(b) and 424(c), is hereby incorporated herein by reference.  Copies of
pages 8-16, 46-47 and A-7 to A-20 of the prospectus is hereby incorporated
herein by reference to Exhibit 3-A to the Partnership's Report for December
31, 1992 on Form 10-K (File No. 16253) dated March 19, 1993.

           3-B.   Amended and Restated Agreement of Limited Partnership
set forth as Exhibit A to the Prospectus, which is hereby incorporated
herein by reference to the Partnership's Registration Statement on Form S-
11 (File No. 2-95948) dated July 24, 1985. 

           10-A.  Loan documents related to the Partnership's
participation in the funding of a non-recourse first mortgage loan on
Calibre Pointe Apartments located in Atlanta, Georgia is hereby
incorporated herein by reference to the Partnership's Form 8-K (File No. 2-
95948) dated March, 25, 1987.

           10-B.  Loan documents related to the Partnership's
participation in the funding of a first mortgage loan secured by a first
mortgage loan on North Rivers Market Shopping Center located in North
Charleston, South Carolina, is hereby incorporated herein by reference to
the Partnership's Form 8-K (File No. 2-95948) dated September 15, 1987.

           10-C.  Loan documents related to the Partnership's
participation in the funding of a first mortgage loan secured by a first
mortgage loan on Riverpoint Center Shopping Center located in Chicago,
Illinois, is hereby incorporated herein by reference to the Partnership's
Form 8-K (File No. 0-16253) dated September 5, 1989.

           10-D.  Loan document related to the Partnership's participation
in the funding of a first mortgage secured by a first mortgage on Shoppes
at Rivergate  Shopping Center located in Goodlettsville, Tennessee, dated
August 24, 1 987 is hereby incorporated herein by reference to Exhibit 10-D
of the Partnership's report for December 31, 1992 on Form 10-K (File No. 0-
16253) dated March 19, 1993.

           10-E.  Loan documents related to the Partnership's
participation in the funding of a participating first mortgage loan secured
by Franklin Farm Village Center located in Fairfax County, Virginia, is
hereby incorporated herein by reference to the Partnership's Report on Form
8-K (File No. 0-16253) dated November 25, 1991.

           10-F.  First and Second Amendments to the Loan Documents dated
September 28, 1993 and November 23, 1994, respectively, between
Rosenfeld/Franklin Farm Village Center L.P. and Mortgage Partners, Ltd.-IV,
relating to additional loan amounts, are incorporated herein by reference
to the Partnership's Report for December 31, 1994 on Form 10-K (File No. 0-
16253) dated March 27, 1995.

           21.    List of Subsidiaries

           24.    Powers of Attorney

           27.    Financial Data Schedule

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

      No annual report or proxy material for the fiscal year 1995 has been
sent to the Partners of the Partnership.  An annual report will be sent to
the Partners subsequent to this filing.





                                SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Act of 1934, the Partnership has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                 JMB MORTGAGE PARTNERS, LTD. - III

                 By:     JMB Realty Corporation
                         Corporate General Partner


                         GAILEN J. HULL
                 By:     Gailen J. Hull
                         Senior Vice President
                 Date:   March 25, 1996

     Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

                 By:     JMB Realty Corporation
                         Corporate General Partner


                         JUDD D. MALKIN*
                 By:     Judd D. Malkin, Chairman and 
                         Chief Financial Officer
                 Date:   March 25, 1996

                         NEIL G. BLUHM*
                 By:     Neil G. Bluhm, President and Director
                 Date:   March 25, 1996

                         H. RIGEL BARBER*
                 By:     H. Rigel Barber, Chief Executive Officer
                 Date:   March 25, 1996

                         GLENN E. EMIG*
                 By:     Glenn E. Emig, Chief Operating Officer
                 Date:   March 25, 1996


                         GAILEN J. HULL
                 By:     Gailen J. Hull, Senior Vice President
                         Principal Accounting Officer
                 Date:   March 25, 1996

                         A. LEE SACKS*
                 By:     A. Lee Sacks, Director
                 Date:   March 25, 1996

                         STUART C. NATHAN*
                 By:     Stuart C. Nathan, Executive Vice President
                          and Director
                 Date:   March 25, 1996

                 *By:    GAILEN J. HULL, Pursuant to a Power of Attorney


                         GAILEN J. HULL
                 By:     Gailen J. Hull, Attorney-in-Fact
                         Date:March 25, 1996



                     JMB MORTGAGE PARTNERS, LTD. - III

                               EXHIBIT INDEX



                                                    DOCUMENT  
                                                 INCORPORATED 
                                                 BY REFERENCE     PAGE
                                                 -------------    ----
3-A.       Copies of pages 8-16, 46-47 and                    
           A-7 to A-20 of the Prospectus of 
           the Partnership dated July 24, 
           1985, (as supplemented)                      Yes         --

3-B.       Amended and Restated Agreement of
           Limited Partnership                          Yes         --

10-A.      Calibre Pointe Apartments Loan 
           Documents                                    Yes         --

10-B.      North Rivers Market Shopping Center
           Loan Documents                               Yes         --

10-C.      Riverpoint Center Loan Documents             Yes         --

10-D.      Rivergate Shopping Center Loan
           Documents                                    Yes         --

10-E.      Franklin Farm Village Center Loan
           Documents                                    Yes         --

10-F.      First and Second Amendments to the
           Franklin Farm Village Center Loan
           Documents                                    Yes         --

21.        List of Subsidiaries                         No    

24.        Powers of Attorney                           No    

27.        Financial Data Schedule                      No