<PAGE>


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

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

For the year ended December 31, 1999              Commission File Number 2-81033
                   -----------------                                     -------


           WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
           ----------------------------------------------------------
       (Exact name of small business issuer as specified in its charter)

       Maryland                                                       04-2782016
-----------------------                                     --------------------
(State of Organization)                               (I.R.S. Employer I.D. No.)

5 Cambridge Center, 9th Floor, Cambridge, Massachusetts                    02142
-------------------------------------------------------                  -------
      (Address of principal executive offices)                       (Zip  Code)

Registrant's telephone number including area code:                (617) 234-3000
                                                                  --------------

        Securities registered pursuant to Section 12(b) of the Act: None
                                                                    ----

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

                      Units of Limited Partnership Interest
                      -------------------------------------
                                (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-B 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-KSB or any amendment to
this Form 10-KSB. [   ]

Registrant's revenues for its most recent fiscal year were $2,529,000.

No market exists for the limited partnership interests of the Registrant, and
therefore, no aggregate market value can be computed.

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None


<PAGE>


                                     PART I

Item 1.     Description of Business.

Development

         Winthrop Residential Associates III ("WRA III"), a limited partnership,
was originally organized under the Uniform Limited Partnership Act of the State
of Maryland on June 28, 1982, for the purpose of investing, as a limited
partner, in other limited partnerships which would develop, manage, own, operate
and otherwise deal with apartment complexes which would be assisted by federal,
state and local government agencies ("Local Limited Partnerships") pursuant to
programs which would not significantly restrict distributions to owners or the
rates of return on investments in such complexes. On December 15, 1982, WRA III
elected to comply with and be governed by the Maryland Revised Uniform Limited
Partnership Act (the "Act") and filed its Agreement and Certificate of Limited
Partnership (the "Partnership Agreement") with the Maryland State Department of
Assessments and Taxation. In accordance with, and upon filing its certificate of
Limited Partnership pursuant to, the Act, WRA III changed its name to Winthrop
Residential Associates III, A Limited Partnership (the "Partnership").

         The General Partners of the Partnership are Two Winthrop Properties,
Inc. ("Two Winthrop") and Linnaeus-Oxford Associates Limited Partnership
("Linnaeus-Oxford"). The Initial Limited Partner is WFC Realty Co., Inc.
("WFC"). Two Winthrop and WFC are Massachusetts corporations which are wholly
owned subsidiaries of First Winthrop Corporation ("First Winthrop"), a Delaware
corporation, which in turn is wholly-owned by Winthrop Financial Associates, A
Limited Partnership ("WFA"), a Maryland limited partnership. Linnaeus-Oxford is
a Massachusetts limited partnership. Two Winthrop is the Partnership's Managing
General Partner. See "Employees" below.

         In 1983, the Partnership sold, pursuant to a Registration Statement
filed with the Securities and Exchange Commission, 25,000 Units of limited
partnership interest ("Units") at a purchase price of $1,000 per Unit (an
aggregate of $25,000,000). Capital contributions net of selling commissions,
sales and registration costs, were utilized to purchase investments in Local
Limited Partnerships and temporary short-term investments.

         The Partnership invests as a limited partner in other limited
partnerships that own, operate and otherwise deal with apartment properties with
original financing insured by the U.S. Department of Housing and Urban
Development ("HUD").


                                       2

<PAGE>


Local Limited Partnerships

         The Partnership initially acquired equity interests in the form of
limited partnership interests in 12 Local Limited Partnerships owning and
operating apartment properties. The Partnership continues to hold an interest in
6 Local Limited Partnerships. In addition, the Partnership reduced its residual
interest in two Local Limited Partnerships, those owning Maple Manor and The
Groves, during 1988 to 50%. See Item 2, "Description of Properties" for
information relating to the Local Limited Partnerships' properties.

Defaults

         The Partnership holds limited partnership interests in Local Limited
Partnerships which own apartment properties, all of which were originally
financed with HUD-insured first mortgages. If a Local Limited Partnership
defaults on a HUD-insured mortgage, the mortgagee can assign the defaulted
mortgage to HUD and recover the principal owed on its first mortgage from HUD.
HUD, in its discretion, may then either (i) negotiate a workout agreement with
the Local Limited Partnership, (ii) sell the mortgage to another lender, or
(iii) pursue its right to transfer the ownership of the property from the Local
Limited Partnership to HUD or a new lender if HUD sells its mortgage
(collectively, the "Lender") through a foreclosure action. The objective of a
workout agreement between an owner and the Lender is to secure the Lender`s
sanction of a plan which, over time, will cure any mortgage delinquencies. While
a workout agreement is effective and its terms are being met, the Lender agrees
not to pursue any remedies available to it as a result of the default. If the
owner does default under the terms of the workout agreement or if the Lender
concludes that a property in default lacks the ability to generate sufficient
revenue to cure its default, it may pursue its right to assume ownership of the
property through foreclosure.

         Dunhaven Apartments, Section 2 Phase 2 - The loan encumbering Dunhaven
Apartments Phase II, ("Dunhaven") was in default and held by the U.S. Department
of Housing and Urban Development. The Partnership was unable to reach an
agreement with the general partner of the Local Limited Partnership which holds
title to Dunhaven pursuant to which the Partnership, or an affiliate of the
Partnership, would have been appointed as general partner of the Dunhaven Local
Limited Partnership and the Partnership, or its affiliate, would satisfy the
default on the loan. In June 1999, the Department of Housing and Urban
Development foreclosed on the mortgage for Dunhaven. For financial reporting
purposes, the Partnership's investment in this Local Limited Partnership had
previously been written down


                                       3

<PAGE>


to zero. For tax reporting purposes, the Partnership will incur a tax liability
due to the recapture of tax benefits taken in prior years in proportion to its
ownership interest in the Local Limited Partnership.

         Clear Creek - The loan encumbering Clear Creek was in default and was
operating under a Provisional Workout Agreement with HUD. HUD sold the mortgage
and under the terms of the Agreement, the new lender had the option to terminate
such agreement on November 1, 1996. In order to reinstate the loan to current
status and to protect the Partnership's interest in the property, in October
1996 the Partnership loaned approximately $412,000 to the Local Limited
Partnership which owns Clear Creek. In connection with this loan, the interests
of the general partners in the Local Limited Partnership owning Clear Creek were
converted into Class B Limited Partner interests and an affiliate of the
Partnership was appointed as the general partner of Clear Creek, Ltd.

         Clear Creek has two housing assistance contracts with the Department of
Housing and Urban Development, which account for approximately 20% of the units
in the apartment complex. One contract expired in July 1999 and was not renewed.
The other contract expired in September 1999 but was extended through December
1999. Based upon current market conditions of apartment rentals, the non-renewal
of these contracts is not expected to have a significant impact on rental
operations.

Employees

         The Partnership does not have any employees. Services are performed for
the Partnership by the Managing General Partner, and agents retained by it.

         On December 16, 1997, the Managing General Partner and certain of its
affiliates entered into a Services Agreement with Coordinated Services of
Valdosta, LLC ("Coordinated Services"), an affiliate of the general partner of
the Local Limited Partnerships which own The Groves and Maple Manor Apartments,
pursuant to which Coordinated Services was retained to provide asset management
and investor services to the Partnership and certain affiliated partnerships. As
a result of this agreement, Coordinated Services has the right to direct the day
to day affairs of the Partnership, including, without limitation, reviewing and
analyzing potential sale, refinancing or restructuring proposals by Local
Limited Partnerships, preparation of all Partnership reports, maintaining
Partnership records and maintaining bank accounts of the Partnership.
Coordinated Services is not permitted, however, without the


                                       4

<PAGE>


consent of the Managing General Partner, or as otherwise required under the
terms of the Partnership's Agreement of Limited Partnership (the "Partnership
Agreement") to, among other things, cause the Partnership to consent to a sale
of an asset or cause the Partnership to file for bankruptcy. As compensation for
providing these services, the Managing General Partner and its affiliates
assigned to Coordinated Services all of their right to receive fees from the
Partnership as provided in the Partnership Agreement. See "Item 12., Certain
Relationships and Related Transactions."

Item 2.  Description of Properties.

         The following table sets forth certain information regarding the
properties owned by the seven Local Limited Partnerships in which the
Partnership has retained an interest and which continue to own apartment
properties as of March 15, 2000:


<TABLE>
<CAPTION>
Property Name                    Location                        Date of Acquisition(1)          Number of Units
-------------                    --------                        ----------------------          ---------------

<S>                              <C>                             <C>                             <C>
Clear Creek Landing Apartments   Houston, TX                             4-28-83                       200

Village Square Apartments        Manassas, VA                            4-28-83                       285

Dunhaven Apartments,             Baltimore, MD                           6-24-83                        72
Section 2, Phase 1

The Groves Apartments            North Augusta, SC                       7-29-83                       132

Autumn Chase Apartments          Mobile, AL                              9-19-83                       120

Maple Manor Apartments           Fayetteville, AR                       10-30-83                       128
</TABLE>

--------------------
(1)  Represents the date on which the Partnership made its initial investment in
the Local Limited Partnership


                                       5

<PAGE>


         The following table sets forth information relating to the first
mortgage encumbering each of the Local Limited Partnership's properties:

<TABLE>
<CAPTION>
                                                                                                                      Principal
                           Principal Balance at                                                                     Balance Due at
    Property                 December 31, 1999       Interest Rate      Period Amortized         Maturity Date         Maturity
    --------                 -----------------       -------------      ----------------         -------------         --------

<S>                          <C>                     <C>                <C>                      <C>                   <C>
Clear Creek                    $2,474,853                7.5%                36 years              10/1/2018                  (1)
Village Square                $10,560,224                7.64%               13 years               6/1/2011                  (1)
Dunhaven
 Apartments,
 Section 2,
 Phase 1                       $2,516,765                7.5%                36 years               2/1/2022                  (1)
The Groves Apartments          $1,865,364                7.5%                36 years               2/1/2019                  (1)
Autumn Chase                   $3,032,378                7.5%                40 years              11/1/2024                  (1)
Maple Manor                    $1,826,438                7.08%               10 years               7/1/2008           $1,630,000
</TABLE>

(1)  Loan is a self-amortizing loan.

      On June 16, 1998, Fayetteville Apartments Limited Partnership, one of the
Local Limited Partnerships in which the Partnership has an equity interest,
refinanced its mortgage. The new mortgage in the amount of $1,850,000 replaced
indebtedness of approximately $1,217,000. The mortgage bears interest at 7.08%,
requires monthly payments of approximately $12,000 and matures on July 1, 2008,
with a balloon payment of approximately $1,630,000. During September 1998, the
Local Limited Partnership distributed $250,000 of refinancing proceeds to the
Partnership. The Partnership distributed the proceeds during the first quarter
of 1999.

         On May 27, 1999, Village Square Associates Limited Partnership
("Village Square") refinanced its mortgage. During September 1999, Village
Square distributed $942,000 of the proceeds to the Partnership. At December 31,
1999, the Partnership recorded an accrued distribution of $475,000 related to
these refinancing proceeds which was distributed during the first quarter of
2000.

      The following table sets forth the Partnership's ownership interest in
each of the Local Limited Partnerships:

    Local Limited Partnership                 Ownership Interest
    -------------------------                 ------------------

Clear Creek Landing Apartments                       88.5%
Village Square Apartments                            50%
Dunhaven Apartments,
 Section 2, Phase 1                                  95%
The Groves Apartments                                50%
Autumn Chase Apartments                              99%
Maple Manor Apartments                               50%


                                       6

<PAGE>


      The following chart provides comparative data for each property owned by
the Local Limited Partnerships regarding occupancy rates and average market
rental rates per apartment unit, for the last two years, where that data is
available to the Partnership:

<TABLE>
<CAPTION>

                                       Average Monthly        Average Monthly Rental
                                       Occupancy Rate             Rate per Unit
                                       --------------             -------------

            Property                  1999         1998         1999         1998
            --------                  ----         ----         ----         ----

<S>                                   <C>           <C>         <C>          <C>
Clear Creek Landing                   91%           92%         $518         $518
Village Square                        93%           94%         $725         $679
Dunhaven Apartments,  Section 2,      73%           96%         $592         $577
Phase 1
The Groves                            91%           88%         $414         $433
Autumn Chase                          (1)           95%          (1)         $454
Maple Manor                           88%           92%         $372         $679
</TABLE>

(1)      Information has not been provided by the Local Limited Partnership.

         Set forth below is a table showing the gross carrying value and
accumulated depreciation and federal tax basis of each of the Partnership's
properties as of December 31, 1999 (in thousands):

<TABLE>
<CAPTION>
            Property                    Gross                                                                   Federal
                                       Carrying       Accumulated                                                  Tax
                                        Value         Depreciation           Rate                Method           Basis
                                        -----         ------------           ----                ------           -----
<S>                                    <C>              <C>              <C>                  <C>            <C>
Clear Creek Landing                     $5,128            $3,073           3-25 yrs.               S/L              $144
Village Square                          $9,592            $6,704           10-25 yrs.              S/L            $1,954
Dunhaven  Apartments,  Section  2,      $2,244            $1,601           5-33.3 yrs.           S/L,DD             $146
Phase 1
The Groves                              $3,361            $2,159           10-25 yrs.              S/L              $167
Autumn Chase                            $3,460            $2,088           7-30 yrs.               S/L              $262
Maple Manor                             $2,810            $1,763           10-25 yrs.              S/L              $161
</TABLE>

Item 3.     Legal Proceedings.

         The Partnership is not a party, nor to the Partnership's knowledge are
any of the Local Limited Partnerships, subject to any material pending legal
proceedings.

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

         No matter was submitted to a vote of security holders during the period
covered by this report.


                                       7

<PAGE>


                                     PART II

Item 5.     Market for the Registrant's Common Stock and Related
            Stockholders Matters.

         The Partnership is a partnership and thus has no common stock. There is
no active market for the Units. Trading in the Units is sporadic and occurs
solely through private transactions.

         As of March 15, 2000, there were 2,089 holders of the 25,000 Units.

         The Partnership Agreement requires that if the Partnership has Cash
Available for Distribution it be distributed quarterly to the Partners in
specified proportions. The Partnership Agreement defines Cash Available for
Distribution as Cash Flow less cash designated by the Managing General Partner
to be held for restoration or creation of reserves. Cash Flow, in turn, is
defined as cash derived from the Local Limited Partnerships (but excluding sale
or refinancing proceeds) and all cash derived from Partnership operations, less
cash used to pay operating expenses of the Partnership. During the years ended
December 31, 1999 and 1998, the Partnership has made the following cash
distributions with respect to the Units to holders thereof as of the dates set
forth below in the amounts set forth opposite such dates:


                                               Amount of
                                              Distribution
                                                Per Unit
                                                --------
             Distribution with
                 Respect to
               Quarter Ended             1999              1998
               -------------             ----              ----

     March 31                            $ 1.00            $ 1.00
     June 30                             $ 1.00            $ 1.00
     September 30                        $ 1.00            $ 1.00
     December 31                         $20.00            $11.04

         Over the past few years many companies have begun making "mini-tenders"
(offers to purchase an aggregate of less than 5% of the total outstanding units)
for limited partnership interests in the Partnership. Pursuant to the rules of
the Securities and Exchange Commission, when a tender offer is commenced for
Units the Partnership is required to provide limited partners with a statement
setting forth whether it believes limited partners should tender or whether it
is remaining neutral with respect to the offer. Unfortunately, the rules of the
Securities and Exchange Commission do not require that the bidders in certain
tender offers provide the Partnership with a copy of their offer. As a result,
the Managing General Partner often does not become


                                       8

<PAGE>


aware of such offers until shortly before they are scheduled to expire or even
after they have expired. Accordingly, the Managing General Partner does not have
sufficient time to advise you of its position on the tender. In this regard,
please be advised that pursuant to the discretionary right granted to the
Managing General Partner of your partnership in the Partnership Agreement to
reject any transfers of units, the Managing General Partner will not permit the
transfer of any Unit in connection with a tender offer unless: (i) the
Partnership is provided with a copy of the bidder's offering materials,
including amendments thereto, simultaneously with their distribution to the
limited partners; (ii) the offer provides for withdrawal rights at any time
prior to the expiration date of the offer and, if payment is not made by the
bidder within 60 days of the date of the offer, after such 60 day period; and
(iii) the offer must be open for at least 20 business days and, if a material
change is made to the offer, for at least 10 business days following such
change.


                                       9

<PAGE>


Item 6.           Management's Discussion and Analysis or Plan of Operation

         The matters discussed in this Form 10-KSB contain certain
forward-looking statements and involve risks and uncertainties (including
changing market conditions, competitive and regulatory matters, etc.) detailed
in the disclosure contained in this Form 10-KSB and the other filings with the
Securities and Exchange Commission made by the Partnership from time to time.
The discussion of the Partnership's liquidity, capital resources and results of
operations, including forward-looking statements pertaining to such matters,
does not take into account the effects of any changes to the Partnership's
operations. Accordingly, actual results could differ materially from those
projected in the forward-looking statements as a result of a number of factors,
including those identified herein.

         This Item should be read in conjunction with the financial statements
and other items contained elsewhere in the report.

         Liquidity and Capital Resources

         As of December 31, 1999, the Partnership retained an equity interest in
five Local Limited Partnerships, each of which owns a single apartment complex.
The Partnership also owns an 88.5% interest in Clear Creek Ltd. ("Clear Creek"),
a partnership in which an affiliate of the Partnership's general partner is the
sole general partner. The Partnership's primary sources of income are
distributions from the Local Limited Partnerships and rental income from Clear
Creek Apartments. The Partnership requires cash to pay the operating expenses of
Clear Creek, for general and administrative expenses and to make capital
contributions and/or loans to any of the Local Limited Partnerships which the
Managing General Partner deems to be in the Partnership's best interest.

         To date, all cash requirements have been satisfied by interest income
earned on short-term investments, rental income from Clear Creek and cash
distributed to the Partnership by the Local Limited Partnerships. If the
Partnership funds any operating deficits, it will use monies from its operating
reserves. As of December 31, 1999, the Partnership had cash and cash equivalents
of $2,683,000 as compared to $1,723,000 at December 31, 1998. The Managing
General Partner's current policy is to maintain a reserve balance sufficient to
provide the Partnership the flexibility to preserve its economic interest in the
Local Limited Partnerships. Therefore, a lack of cash distributed by the Local
Limited Partnerships to the Partnership in the future should not deplete the
reserves, though it may


                                       10

<PAGE>


restrict the Partnership from making distributions. The Partnership did not fund
any operating deficits to Local Limited Partnerships in 1999 and 1998.

         The level of liquidity based on cash and cash equivalents experienced a
$960,000 increase at December 31, 1999, as compared to December 31, 1998. The
Partnership's $181,000 of net cash provided by operating activities and
$1,348,000 of distributions received from Local Limited Partnership (investing
activities) was partially offset by $358,000 of cash distributed to partners,
$58,000 of mortgage principal payments (financing activities), and $153,000 used
for additions to fixed assets (investing activities). As of December 31, 1999,
Partnership distributions (paid or accrued) aggregated $575,000 ($23.00 per
Unit) to its limited partners and $8,000 to the general partners. On May 27,
1999, Village Square Associates ("Village Square") refinanced its mortgage.
During September 1999, Village Square distributed $942,000 of refinancing
proceeds to the Partnership. At December 31, 1999, the Partnership recorded an
accrued distribution of $475,000 related to the refinancing proceeds which was
distributed during the first quarter of 2000.

         The Partnership is not obligated to provide any additional funds to the
Local Limited Partnerships to fund operating deficits. The Partnership
determines on a case by case basis whether to fund any operating deficits. If a
Local Limited Partnership sustains continuing operating deficits and has no
other sources of funding, it is likely that it will eventually default on its
mortgage obligations and risk a foreclosure on its property by the lender. If a
foreclosure were to occur, the Local Limited Partnership would lose its
investment in the property and would incur a tax liability due to the recapture
of tax benefits taken in prior years. The Partnership, as an owner of the Local
Limited Partnership, would share these consequences in proportion to its
ownership interest in the Local Limited Partnership.

         The Department of Housing and Urban Development foreclosed on the
mortgage for Dunhaven Apartments Phase II, ("Dunhaven"). For financial reporting
purposes, the Partnership's investment in this Local Limited Partnership had
previously been written down to zero. For tax reporting purposes, the
Partnership will incur a tax liability due to the recapture of tax benefits
taken in prior years in proportion to its ownership interest in the Local
Limited Partnership.

         Clear Creek had two housing assistance contracts with the Department of
Housing and Urban Development which accounted for approximately 20% of the units
in the apartment complex. These contracts expired in 1999 and were not renewed.
Management


                                       11

<PAGE>


intends to replace the housing assistance contracts with subsidized payments
from a local subsidy contract. Based upon current market conditions of apartment
rentals, if the Partnership is unable to obtain a replacement subsidy contract,
the Partnership does not expect that this will have a significant impact on
rental operations.

         Results of Operations

The Partnership's net income for the year ended December 31, 1999 was
$1,271,000, as compared to a net loss of $52,000 for the year ended December 31,
1998. The increase is due to an increase in income of $1,237,000 and a decrease
in expenses of $86,000. The increase in income is primarily due to an increase
of $1,219,000 of cash received from Local Limited Partnerships, an increase in
rental income of $21,000, and an increase in interest income of $18,000, which
was partially offset by an increase of $28,000 of equity in loss of Local
Limited Partnership. During the year ended December 31, 1999, the Local Limited
Partnerships owning Village Square Apartments, Maple Manor Apartments and the
Groves Apartments distributed $1,308,000, $27,000 and $13,000, respectively. The
distribution from Village Square includes $942,000 of refinancing proceeds.
During the year ended December 31, 1998, the Local Limited Partnerships owning
Village Square Apartments and Dunhaven Apartments, Section II - Phase I
distributed $115,000 and $14,000, respectively. The decrease in expenses is
primarily due to a decrease in operating expenses of $75,000 and a decrease in
general and administrative expenses of $17,000. All other items of income and
expense remained relatively constant.


                                       12

<PAGE>


Item 7.  Financial Statements

           WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP

                        CONSOLIDATED FINANCIAL STATEMENTS

                     YEARS ENDED DECEMBER 31, 1999 and 1998

                                      INDEX

                                                                      Page

Independent Auditors' Report..........................................F - 2

Financial Statements:

Consolidated Balance Sheets as of December 31, 1999 and 1998..........F - 3

Consolidated Statements of Income for the Years Ended
   December 31, 1999 and 1998.........................................F - 4

Consolidated Statements of Partners' Capital for the Years Ended
   December 31, 1999 and 1998.........................................F - 5

Consolidated Statements of Cash Flows for the Years Ended
   December 31, 1999 and 1998.........................................F - 6

Notes to Consolidated Financial Statements............................F - 7







                                      F - 1

<PAGE>


                          Independent Auditors' Report

To the Partners
Winthrop Residential Associates III, a Limited Partnership

We have audited the accompanying consolidated balance sheets of Winthrop
Residential Associates III, a Limited Partnership (a Maryland limited
partnership) and its subsidiary as of December 31, 1999 and 1998, and the
related consolidated statements of income, partners' capital and cash flows for
the years then ended. These consolidated financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits. We
did not audit the financial statements of certain Local Limited Partnerships,
the investments in which are reflected in the accompanying financial statements
using the equity method of accounting and were written down to zero (see Note
1). Those statements were audited by other auditors whose reports have been
furnished to us, and our opinion, insofar as it relates to the amounts included
for those Local Limited Partnerships, is based solely on the reports of other
auditors.

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 consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audits and
the reports of other auditors provide a reasonable basis for our opinion.

In our opinion, based on our audits and the reports of other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the consolidated financial position of Winthrop Residential
Associates III, a Limited Partnership, and its subsidiary as of December 31,
1999 and 1998, and the consolidated results of their operations and their cash
flows for the years then ended in conformity with generally accepted accounting
principles.



                                                 /s/ Imowitz Koenig & Co., LLP


New York, New York
March 20, 2000

                                      F - 2

<PAGE>
             WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP

                           CONSOLIDATED BALANCE SHEETS

                        (In Thousands, Except Unit Data)

<TABLE>
<CAPTION>
                                                               DECEMBER 31,
                                                      -------------------------------

                                                           1998             1999
                                                      --------------   --------------

<S>                                                   <C>              <C>
ASSETS

Cash and Cash Equivalents                             $       2,683    $       1,723
Investment in Local Limited Partnership                           -               76
Other Assets                                                     91               98
Real Estate, net                                              2,055            2,090
                                                      --------------   --------------

     Total Assets                                     $       4,829    $       3,987
                                                      ==============   ==============

LIABILITIES AND PARTNERS' CAPITAL

Liabilities:

Accounts Payable and Accrued Expenses                 $          82    $         108
Distributions Payable                                           502              277
Mortgage Payable                                              2,475            2,533
Accrued Interest - Subordinated Loan Payable                     73               60
Subordinated Loan Payable                                       133              133
                                                      --------------   --------------

     Total Liabilities                                        3,265            3,111
                                                      --------------   --------------

Partners' Capital:

Limited Partners -
     Units of Limited Partnership Interest,
     $1,000 stated value per unit; 25,005
     units authorized, issued and outstanding                 2,790            2,189
General Partners' deficit                                    (1,226)          (1,313)
                                                      --------------   --------------

     Total Partners' Capital                                  1,564              876
                                                      --------------   --------------

     Total Liabilities and Partners' Capital          $       4,829    $       3,987
                                                      ==============   ==============
</TABLE>



                See notes to consolidated financial statements.

                                      F-3

<PAGE>


           WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP

                        CONSOLIDATED STATEMENTS OF INCOME

                        (In Thousands, Except Unit Data)

<TABLE>
<CAPTION>
                                                                                        YEARS ENDED DECEMBER 31,
                                                                              ----------------------------------------------

                                                                                      1999                     1998
                                                                              ---------------------    ---------------------


<S>                                                                           <C>                      <C>
Income:

Rental Income                                                                 $              1,127     $              1,106
Income from Local Limited Partnerships'
  cash distributions                                                                         1,348                      129
Equity in loss of Local Limited Partnership                                                    (72)                     (44)
Interest                                                                                        83                       65
Other                                                                                           43                       36
                                                                              ---------------------    ---------------------

       Total Income                                                                          2,529                    1,292
                                                                              ---------------------    ---------------------

Expenses:

Operating                                                                                      784                      859
Interest                                                                                       201                      205
Depreciation and Amortization                                                                  192                      182
General and Administrative                                                                      81                       98
                                                                              ---------------------    ---------------------

       Total Expenses                                                                        1,258                    1,344
                                                                              ---------------------    ---------------------

Net Income (Loss)                                                             $              1,271     $                (52)
                                                                              =====================    =====================

Net  Income (Loss) Allocated to General Partners                              $                 95     $                 (4)
                                                                              =====================    =====================

Net Income (Loss) Allocated to Limited Partners                               $              1,176     $                (48)
                                                                              =====================    =====================

Net Income (Loss)  per Unit of Limited Partnership Interest                   $              47.03     $              (1.92)
                                                                              =====================    =====================

Distributions per Unit of Limited Partnership Interest                        $              23.00     $              14.04
                                                                              =====================    =====================
</TABLE>



                 See notes to consolidated financial statements.

                                      F - 4

<PAGE>

           WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP

                  CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
                     YEARS ENDED DECEMBER 31, 1999 AND 1998

                        (In Thousands, Except Unit Data)



<TABLE>
<CAPTION>
                                                        Units of
                                                         Limited           General          Limited
                                                       Partnership        Partners'         Partners'           Total
                                                         Interest          Deficit           Capital           Capital
                                                     ---------------   ---------------   ---------------  ----------------

<S>                                                  <C>               <C>               <C>              <C>
Balance - January 1, 1998                                    25,005    $       (1,301)   $        2,588   $         1,287

     Net Loss                                                                      (4)              (48)              (52)

     Distributions                                                                 (8)             (351)             (359)
                                                     ---------------   ---------------   ---------------  ----------------

Balance - December 31, 1998                                  25,005    $       (1,313)   $        2,189   $           876

     Net Income                                                                    95             1,176             1,271

     Distributions                                                                 (8)             (575)             (583)
                                                     ---------------   ---------------   ---------------  ----------------

Balance - December 31, 1999                                  25,005    $       (1,226)   $        2,790   $         1,564
                                                     ===============   ===============   ===============  ================
</TABLE>


                 See notes to consolidated financial statements.

                                      F - 5

<PAGE>

           WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                        (In Thousands, Except Unit Data)

<TABLE>
<CAPTION>
                                                                                        YEARS ENDED DECEMBER 31,
                                                                              ----------------------------------------------

                                                                                      1999                     1998
                                                                              ---------------------    ---------------------

<S>                                                                           <C>                      <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)                                                             $              1,271     $                (52)
Adjustments to reconcile net income (loss)  to net cash provided
  by operating activities:
       Depreciation                                                                            188                      178
       Amortization                                                                              4                        4
       Equity in loss of Local Limited Partnership                                              72                       44
       Income from Local Limited Partnerships' cash distributions                           (1,348)                    (129)
Changes in assets and liabilities:
       Decrease (Increase) in other assets                                                       7                      (38)
       (Decrease) Increase in accounts payable and
          accrued expenses                                                                     (26)                       1
       Increase in accrued interest payable on subordinated loan                                13                       14
                                                                              ---------------------    ---------------------

Net cash provided by operating activities                                                      181                       22
                                                                              ---------------------    ---------------------

CASH FLOWS FROM INVESTING ACTIVITIES:

       Distributions received from Local Limited Partnerships                                1,348                      379
       Additions to Fixed Assets                                                              (153)                       -
                                                                              ---------------------    ---------------------

       Net cash provided by investing activities                                             1,195                      379
                                                                              ---------------------    ---------------------

CASH FLOWS FROM FINANCING ACTIVITIES:

       Mortgage principal payments                                                             (58)                     (53)
       Distributions to partners                                                              (358)                    (109)
                                                                              ---------------------    ---------------------

Cash used in financing activities                                                             (416)                    (162)
                                                                              ---------------------    ---------------------

Net increase in Cash and Cash Equivalents                                                      960                      239

Cash and Cash Equivalents, Beginning of Year                                                 1,723                    1,484
                                                                              ---------------------    ---------------------

Cash and Cash Equivalents, End of Year                                        $              2,683     $              1,723
                                                                              =====================    =====================

Supplemental Disclosure of Cash Flow Information

       Cash paid for interest                                                 $                188     $                192
                                                                              =====================    =====================

Supplemental Disclosure of Non-Cash Financing Activities

       Accrued Distributions to Partners                                      $                502     $                277
                                                                              =====================    =====================
</TABLE>



                 See notes to consolidated financial statements.

                                      F - 6

<PAGE>


           WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 1999 AND 1998


1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

   Organization

   Winthrop Residential Associates III, A Limited Partnership (the
   "Partnership") was organized on June 28, 1982 under the Uniform Limited
   Partnership Act of the State of Maryland to invest in limited partnerships
   (the "Local Limited Partnerships") which develop, manage, operate and
   otherwise deal in government - assisted apartment complexes and which do not
   significantly restrict distributions to owners or the rate of return on
   investments in such properties. The Partnership has investments in five Local
   Limited Partnerships each owning an apartment complex. Additionally, the
   Partnership owns an 88.5% limited partnership interest in Clear Creek Ltd.
   ("Clear Creek"), a partnership in which an affiliate of the Partnership is
   the Managing General Partner.

   The Partnership was capitalized with $25,000,000 of contributions
   representing 25,000 investor limited partnership units. The offering closed
   in July, 1983. The general partners and the initial limited partner (5 units)
   contributed $8,000. At December 31, 1999 and 1998, there were 25,005 limited
   partnership units issued and outstanding.

   Consolidation

   The consolidated financial statements include all of the accounts of the
   Partnership and Clear Creek. All significant intercompany transactions and
   balances have been eliminated. Losses of Clear Creek have not been allocated
   to its minority interests since there is no obligation on the part of the
   minority partners to fund such losses.

   Real Estate

   Real estate is stated at cost, less accumulated depreciation. The Partnership
   records impairment losses on long-lived assets used in operations when events
   and circumstances indicate that the assets might be impaired and the
   undiscounted cash flows estimated to be generated by those assets are less
   than the carrying amounts of those assets.

   Cash and Cash Equivalents

   The Partnership considers all highly liquid investments with an original
   maturity of three months or less at the time of purchase to be cash
   equivalents. The carrying amount of cash and cash equivalents approximates
   its fair value due to its short term nature.


                                      F - 7

<PAGE>


           WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 1999 AND 1998
                                   (Continued)

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

   Uses of Estimates

   The preparation of financial statements in conformity with generally accepted
   accounting principles requires management to make estimates and assumptions
   that affect the amounts and disclosures in the financial statements and
   accompanying notes. Actual results could differ from those estimates.

   Investments in Local Limited Partnerships

   The Partnership accounts for its investment in each Local Limited Partnership
   using the equity method. Under the equity method of accounting, the
   investment cost is subsequently adjusted by the Partnership's share of the
   Local Limited Partnership's results of operations and by distributions
   received. Costs relating to the acquisition and selection of the investment
   in the Local Limited Partnerships are capitalized to the investment account
   and amortized over the life of the investment. Costs in excess of the
   Partnership's initial basis in the net assets of the Local Limited
   Partnership are amortized over the estimated useful lives of the underlying
   assets. Equity in loss of Local Limited Partnerships and amortization of
   investment costs and costs in excess of initial basis are not recognized to
   the extent that the investment balance would become negative since the
   Partnership is not obligated to advance funds to the Local Limited
   Partnerships.

   Depreciation

   Depreciation is computed by the straight-line method over an estimated useful
   life of 25 years for buildings and improvements and 3 to 5 years for
   furnishings.

   Net Income Per Limited Partnership Unit

   The net income per limited partnership unit is computed by dividing net
   income allocated to the limited partners by the 25,005 units outstanding.

   Income Taxes

   Taxable income or loss of the Partnership is reported in the income tax
   returns of its partners. Accordingly, no provision for income taxes is made
   in the financial statements of the Partnership.

   Concentration of Credit Risk

   Principally all of the Partnership's cash and cash equivalents consist of
   certificates of deposit and a money market account held by banks with
   original maturity dates of three months or less.


                                      F - 8

<PAGE>


           WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 1999 AND 1998
                                   (Continued)

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

   Segment Reporting

   The Partnership has one reportable segment, residential real estate. The
   Partnership evaluates performance based on net operating income, which is
   income before depreciation, amortization, interest and non-operating items.

   Reclassification

   Certain reclassifications have been made to the 1998 amounts to conform to
   the 1999 presentation.

2. ALLOCATION OF PROFITS, LOSSES AND DISTRIBUTIONS

   In accordance with the partnership agreement, profits and losses and cash
   available for distribution not arising from a sale or refinancing are
   allocated 7.5% to the general partners and 92.5% to the limited partners.
   Distributions of proceeds arising from a sale or refinancing are allocated
   first to the limited partners to the extent of their Adjusted Capital
   Contribution (as defined) and then in accordance with the partnership
   agreement.

3. TRANSACTIONS WITH RELATED PARTIES

   Two Winthrop Properties, Inc. ("Two Winthrop" or the "Managing General
   Partner") is a wholly owned subsidiary of First Winthrop Corporation ("First
   Winthrop"), which in turn is controlled by Winthrop Financial Associates, A
   Limited Partnership. A subsidiary of First Winthrop is one of the general
   partners in a Local Limited Partnership.

   The Managing General Partner and certain of its affiliates have a Services
   Agreement with Coordinated Services of Valdosta, LLC ("Coordinated Services")
   pursuant to which Coordinated Services provides asset management and investor
   services to the Partnership and certain affiliated partnerships. As a result
   of this agreement, Coordinated Services has the right to direct the day to
   day affairs of the Partnership. Coordinated Services is not permitted,
   however, without the consent of the Managing General Partner, or as otherwise
   required under the terms of the partnership's agreement to, among other
   things, cause the Partnership to consent to a sale of an asset or cause the
   Partnership to file for bankruptcy. As compensation for providing these
   services, the Managing General Partner and its affiliates assigned to
   Coordinated Services all of their rights to receive fees from the
   Partnership, as provided in the partnership agreement. Coordinated Services,
   which is a related party for financial reporting purposes only, is affiliated
   with the general partner and managing agent of certain Local Limited
   Partnerships, in which the Partnership has invested. For the years ended
   December 31, 1999 and 1998, respectively, affiliates of Coordinated Services
   received $358,000 and $243,000 in fees and expense reimbursements for
   managing these Local Limited Partnerships.

   An affiliate of the Managing General Partner received approximately $42,000
   in management fees from a Local Limited Partnership during 1998. Coordinated
   Services was entitled to receive 25% or approximately $15,000 and $13,000 for
   1999 and 1998, respectively, of the Clear Creek management fee for
   supervisory services.


                                      F - 9

<PAGE>


           WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 1999 AND 1998
                                   (Continued)

4. MORTGAGE PAYABLE

   The mortgage, which is secured by Clear Creek, bears interest at 7.5% per
   annum, requires monthly payments of approximately $20,000 and matures in
   October 2018.

   Principal payments on the mortgage note are due as follows:

                               2000              $    62,000
                               2001                   67,000
                               2002                   72,000
                               2003                   78,000
                               2004                   84,000
                               Thereafter          2,112,000
                                                 ------------
                                                 $ 2,475,000
                                                 ============

   The estimated fair value of the Partnership's debt approximates its carrying
   amount.

5. SUBORDINATED LOAN PAYABLE

   The subordinated loan, in the amount of $133,000, is due to the former
   general partner of Clear Creek who also manages the property. The
   subordinated loan accrues interest at 10% and is due upon sale of the
   property.

6. REAL ESTATE

   Real estate is comprised of the following:

                                                      December 31,
                                               ----------------------------
                                                   1999           1998
                                               -------------  -------------
          Land                                 $    500,000   $    500,000
          Buildings and Improvements              4,569,000      4,457,000
          Furnishings                                59,000         17,000
                                               -------------  -------------
                                                  5,128,000      4,974,000
          Accumulated Depreciation               (3,073,000)    (2,884,000)
                                               -------------  -------------

                                               $  2,055,000   $  2,090,000
                                               =============  =============

7. INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS

   As of December 31, 1999, the Partnership has Limited Partnership equity
   interests in five Local Limited Partnerships each owning one apartment
   complex. Such interests are summarized as follows:


                                     F - 10

<PAGE>


           WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 1999 AND 1998
                                   (Continued)

7. INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS (Continued)


<TABLE>
<CAPTION>
                     Local Limited Partnership                                       Percentage
                                                                                      Ownership
    ------------------------------------------------------------                 --------------------

<S>                                                                              <C>
    Village Square Associates Limited Partnership                                        50
    Walther Limited Partnership (Dunhaven Apartments Phase I)                            95
    Savannah River Associates Limited Partnership (The Grove Apartments)                 50
    Autumn Chase, Ltd.                                                                   99
    Fayetteville Apartments Limited Partnership (Maple Manor Apartments)                 50
</TABLE>

   In addition, the Partnership also holds an 88.5% limited partnership interest
   in Clear Creek, which was accounted for as a Local Limited Partnership prior
   to being consolidated. Clear Creek had two housing assistance contracts with
   the Department of Housing and Urban Development which accounted for
   approximately 20% of the units in the apartment complex. These contracts
   expired in 1999 and were not renewed. Management intends to replace the
   housing assistance contracts with a local subsidy contract.

   On June 16, 1998, Fayetteville Apartments Limited Partnership,
   ("Fayetteville") refinanced its mortgage. During September 1998, Fayetteville
   distributed $250,000 of refinancing proceeds to the Partnership. The
   Partnership distributed these proceeds during the first quarter of 1999.

   On May 27, 1999, Village Square Associates Limited Partnership ("Village
   Square") refinanced its mortgage. During September 1999, Village Square
   distributed $942,000 of the proceeds to the Partnership. At December 31,
   1999, the Partnership recorded an accrued distribution of $475,000 related to
   these refinancing proceeds which was distributed during the first quarter of
   2000.

   The above Local Limited Partnerships have outstanding mortgages, as of
   December 31, 1999, totaling $21,855,000 secured by the Local Limited
   Partnerships' real property, security interests, liens and endorsements
   common to first mortgage loans.

   During 1999 and 1998, the Partnership made no additional capital
   contributions in the Local Limited Partnerships.

   The Department of Housing and Urban Development foreclosed on the mortgage
   for Dunhaven Apartments Phase II. For financial reporting purposes, the
   Partnership's investment in this Local Limited Partnership had previously
   been written down to zero.

                                     F - 11

<PAGE>

           WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 1999 AND 1998
                                   (Continued)

7.   INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS (Continued)
     -----------------------------------------------------

     The combined balance sheets of the Local Limited Partnerships, are as
follows (in thousands):

<TABLE>
<CAPTION>
                                                                     DECEMBER 31,
                                                            -------------------------------

                                                                 1999             1998
                                                            --------------   --------------
<S>                                                         <C>              <C>
     ASSETS

     Real estate, at cost:
     Land                                                   $       1,365    $       1,365
     Buildings, net of accumulated depreciation
       of $15,827 and $15,088, in 1999
       and 1998, respectively                                       6,793            6,892
     Cash and cash equivalents                                      2,789            1,052
     Other assets, net of accumulated amortization
       of $160 and $375 in 1999 and
       1998, respectively                                           1,336            1,502
                                                            --------------   --------------

       Total Assets                                         $      12,283    $      10,811
                                                            ==============   ==============

     LIABILITIES AND PARTNERS' DEFICIT

     Liabilities:

       Notes payable                                        $         547    $         541
       Loans payable                                                   28               28
       Mortgage notes payable                                      21,855           18,184
       Accounts payable and accrued expenses                          901              572
                                                            --------------   --------------

       Total Liabilities                                           23,331           19,325
                                                            --------------   --------------

     Partners' Deficit:
       Winthrop Residential Associates III                         (6,079)          (4,338)
       Other partners                                              (4,969)          (4,176)
                                                            --------------   --------------

       Total Deficit                                              (11,048)          (8,514)
                                                            --------------   --------------

       Total Liabilities and Partners' Deficit              $      12,283    $      10,811
                                                            ==============   ==============
</TABLE>



                                     F - 12

<PAGE>

           WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 1999 AND 1998
                                   (Continued)

7.   INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS (Continued)

     The combined statements of operations of the Local Limited Partnerships,
are as follows (in thousands):

<TABLE>
<CAPTION>
                                                               YEARS ENDED DECEMBER 31,
                                                            -------------------------------

                                                                 1999              1998
                                                            --------------   --------------

<S>                                                         <C>              <C>
       Income:
        Rental income                                       $       4,861    $       4,681
        Other income                                                  268              167
                                                            --------------   --------------

        Total Income                                                5,129            4,848
                                                            --------------   --------------

       Expenses:
        Interest                                                    1,606            1,369
        Depreciation and amortization                               1,067              760
        Taxes and insurance                                           420              450
        Management and administration fees                            305              269
        Repairs, maintenance and utilities                          1,271            1,054
        General and administrative                                    765              672
                                                            --------------   --------------

        Total Expenses                                              5,434            4,574
                                                            --------------   --------------

       Net (Loss) Income                                    $        (305)   $         274
                                                            ==============   ==============

       Net (Loss) Income allocated to

       Winthrop Residential Associates III                  $        (393)   $           -
                                                            ==============   ==============

       Net income allocated to
       other partners                                       $          88    $         274
                                                            ==============   ==============
</TABLE>


                                      F-13

<PAGE>


           WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 1999 AND 1998
                                   (Continued)

8. TAXABLE INCOME

   The Partnership's taxable income differs from its net income (loss) for
   financial reporting purposes, as follows (in thousands):

<TABLE>
<CAPTION>
                                                            1999             1998
                                                       ---------------   --------------

<S>                                                    <C>               <C>
     Net income (loss) for financial                   $        1,271    $         (52)
     reporting purposes

       Amortization of capitalized costs and
       costs in excess of the Partnership's
       initial basis in the net assets of the
       Local Limited Partnerships                                   4                4

       Differences in equity in Local Limited
       Partnership's income/loss for
       financial reporting and tax reporting
       purposes                                                   387              353

       Income from Local Limited

       Partnerships' Cash Distributions                        (1,348)            (129)
                                                       ---------------   --------------

     Taxable income                                    $          314     $        176
                                                       ===============   ==============
</TABLE>


                                     F - 14

<PAGE>


Item 8.  Changes in and Disagreements on Accounting and
         Financial Disclosure.


         There were no disagreements with Imowitz Koenig & Co., LLP regarding
the 1999 or 1998 audits of the Partnership's financial statements.


                                       27

<PAGE>


                                    PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons;
         Compliance With Section 16(a) of the Exchange Act.

         The Partnership has no officers or directors. Two Winthrop Properties,
Inc., the managing partner of the Partnership (the "Managing General Partner"),
manages and controls substantially all of the Partnership's affairs and has
general responsibility and ultimate authority in all matters affecting its
business. As of March 1, 2000, the names of the directors and executive officers
of the Managing General Partner and the position held by each of them, are as
follows:

                                                           Has Served as
                           Position Held with the          a Director or
Name                       Managing General Partner        Officer Since
----                       ------------------------        -------------

Michael L. Ashner          Chief Executive Officer              1-96
                           and Director

Thomas C. Staples          Chief Financial Officer              1-99

Peter Braverman            Executive Vice President             1-96
                           and Director

Patrick J. Foye            Vice President - Residential         10-98
                           and Director

Carolyn Tiffany            Chief Operating Officer              10-95
                           and Clerk

         Michael L. Ashner, age 47, has been the Chief Executive Officer of
Winthrop Financial Associates, A Limited Partnership ("WFA") and the Managing
General Partner since January 15, 1996. From June 1994 until January 1996, Mr.
Ashner was a Director, President and Co-chairman of National Property Investors,
Inc., a real estate investment company ("NPI"). Mr. Ashner was also a Director
and executive officer of NPI Property Management Corporation ("NPI Management")
from April 1984 until January 1996. In addition, since 1981 Mr. Ashner has been
President of Exeter Capital Corporation, a firm which has organized and
administered real estate limited partnerships.

         Thomas C. Staples, age 44, has been the Chief Financial Officer of WFA
since January 1, 1999. From March 1996 through December 1998, Mr. Staples was
Vice President/Corporate Controller of WFA. From May 1994 through February 1996,
Mr.


                                       28

<PAGE>


Staples was the Controller of the Residential Division of Winthrop Management.

         Peter Braverman, age 48, has been a Vice President of WFA and the
Managing General Partner since January 1996. From June 1995 until January 1996,
Mr. Braverman was a Vice President of NPI and NPI Management. From June 1991
until March 1994, Mr. Braverman was President of the Braverman Group, a firm
specializing in management consulting for the real estate and construction
industries. From 1988 to 1991, Mr. Braverman was a Vice President and Assistant
Secretary of Fischbach Corporation, a publicly traded, international real estate
and construction firm.

         Patrick J. Foye, age 42, has been Vice President-Residential and
Director of the Managing General Partner since October 1, 1998. Mr. Foye has
served as Executive Vice President of Apartment Investment and Management
Company ("AIMCO") since May 1998. Prior to joining AIMCO, Mr. Foye was a partner
in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP from 1989 to 1998
and was Managing Partner of the firm's Brussels, Budapest and Moscow offices
from 1992 through 1994. Mr. Foye is also Deputy Chairman of the Long Island
Power Authority and serves as a member of the New York State Privatization
Council. He received a B.A. from Fordham College and a J.D. from Fordham
University Law School.

         Carolyn Tiffany, age 33, has been employed with WFA since January 1993.
From 1993 to September 1995, Ms. Tiffany was a Senior Analyst and Associate in
WFA's accounting and asset management departments. Ms. Tiffany was a Vice
President in the asset management and investor relations departments of WFA from
October 1995 to December 1997, at which time she became the Chief Operating
Officer of WFA.

         One or more of the above persons are also directors or officers of a
general partner (or general partner of a general partner) of the following
limited partnerships which either have a class of securities registered pursuant
to Section 12(g) of the Securities and Exchange Act of 1934, or are subject to
the reporting requirements of Section 15(d) of such Act: Winthrop Partners 79
Limited Partnership; Winthrop Partners 80 Limited Partnership; Winthrop
Residential Associates I, A Limited Partnership; Winthrop Residential Associates
II, A Limited Partnership; 1999 Broadway Associates Limited Partnership;
Nantucket Island Associates Limited Partnership; Presidential Associates I
Limited Partnership; Riverside Park Associates Limited Partnership; Springhill
Lake Investors Limited Partnership; Twelve AMH Associates Limited Partnership;
Winthrop


                                       29

<PAGE>


California Investors Limited Partnership; and Winthrop Growth Investors I
Limited Partnership.

         Except as indicated above, neither the Partnership nor the Managing
General Partner has any significant employees within the meaning of Item 401(b)
of Regulation S-B. There are no family relationships among the officers and
directors of the Managing General Partner.

         Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to the Partnership under Rule 16a-3(e) during the Partnership's most
recent fiscal year and Forms 5 and amendments thereto furnished to the
Partnership with respect to its most recent fiscal year, the Partnership is not
aware of any director, officer or beneficial owner of more than ten percent of
the units of limited partnership interest in the Partnership that failed to file
on a timely basis, as disclosed in the above Forms, reports required by section
16(a) of the Exchange Act during the most recent fiscal year or prior fiscal
years.

         Effective December 16, 1997, the Managing General Partner and certain
of its affiliates entered into an agreement with Coordinated Services of
Valdosta, LLC ("Coordinated Services") to provide for the daily asset and
property management services and investor services for the Partnership. See
"Item 11, Security Ownership of Certain Beneficial Owners and Management."
Coordinated Services of Valdosta LLC is a Georgia limited liability corporation
with headquarters in Valdosta, Georgia. Founded in 1997, its managing member is
Investor Service Group, Inc., a Georgia Corporation. The principals of Investor
Service Group are Mary T. Johnson and James L. Dewar, Jr.

         Mary T. Johnson is the Manager of Coordinated Services. Ms. Johnson is
also Executive Vice President of Dewar Realty, Inc. and Dewar Properties, Inc.
Ms. Johnson is a graduate of Valdosta State University and is a licensed Georgia
Real Estate Broker. Ms. Johnson has 21 years of experience in property
management, asset management, investor services, and development of apartment
and assisted living properties. Ms. Johnson is currently responsible for the
asset management of over 150 investor partnerships and property management of
over 50 apartment communities.

         James L. Dewar, Jr. is the founder of Dewar Realty, Inc. and Dewar
Properties, Inc. Mr. Dewar is a graduate of the University of Georgia and is a
licensed Georgia Real Estate Broker. Mr. Dewar has 32 years experience in real
estate construction, property management and development of apartment and
assisted living properties. Mr. Dewar has produced over $100 million in


                                       30

<PAGE>


conventional and government funded family and elderly apartment communities.

Item 10. Executive Compensation.

         The Partnership is not required to and did not pay any compensation to
the officers or directors of the Managing General Partner. The Managing General
Partner does not presently pay any compensation to any of its officers or
directors. (See Item 13, "Certain Relationships and Related Transactions.")

Item 11. Security Ownership of Certain Beneficial Owners and
         Management.

         (a)  Security ownership of certain beneficial owners.

         The General Partners own all the outstanding general partnership
interests. No person or group is known by the Partnership to be the beneficial
owner of more than 5% of the outstanding Units at March 15, 2000. Under the
Partnership Agreement, the voting rights of the Limited Partners are limited.

         Under the Partnership Agreement, the right to manage the business of
the Partnership is vested in the General Partners and is generally to be
exercised only by the Managing General Partners, although approval of
Linnaeus-Oxford is required as to all investments in Local Limited Partnerships
and in connection with any votes or consents arising out of the ownership of a
Local Limited Partnership interest.

         (b)  Security ownership of management.

         As of March 15, 2000, WFC Realty Co., Inc. owns 95 Units, which is less
than 1%. None of the officers, directors or the general partner of the General
Partners own any Units.

         (c)  Changes in control.

                  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. On December 16, 1997, the Managing General Partner and certain of
its affiliates entered into a Services Agreement with Coordinated Services of
Valdosta, LLC ("Coordinated Services") pursuant to which Coordinated Services
was retained to provide asset management and investor services to the
Partnership and certain affiliated partnerships. As a result of this agreement,
Coordinated Services has the right to direct the day to day affairs of the
Partnership, including, without limitation, reviewing and analyzing potential
sale,


                                       31

<PAGE>


refinancing or restructuring proposals by Local Limited Partnerships,
preparation of all Partnership reports, maintaining Partnership records and
maintaining bank accounts of the Partnership. Coordinated Services is not
permitted, however, without the consent of the Managing General Partner, or as
otherwise required under the terms of the Partnership's Agreement of Limited
Partnership (the "Partnership Agreement") to, among other things cause the
Partnership to consent to a sale of an asset or cause the Partnership to file
for bankruptcy. As compensation for providing these services, the Managing
General Partner and its affiliates assigned to Coordinated Services all of their
right to receive fees from the Partnership as provided in the Partnership
Agreement. An affiliate of Coordinated Services is the general partner of the
Local Limited Partnerships which own The Groves and Maple Manor Apartments.

Item 12. Certain Relationships and Related Transactions.

         For the years ended December 31, 1999 and 1998, the Partnership
allocated taxable income to the General Partners of $23,513_ and $13,215,
respectively. For each of the years ended December 31, 1999, and 1998, the
Partnership paid or accrued cash distributions to the General Partners of
$8,110. For the year ended December 31, 1998, Village Square paid $41,600, of
property management fees to an affiliate of the Managing General Partner. The
management at this property was transferred to an unaffiliated third party
during the second quarter of 1998. As a result, no property management fees were
paid to an affiliate of the Managing General Partner for the year ended December
31, 1999.

Item 13. Exhibits and Reports on Form 8-K.

(a)      Exhibits:

                  The Exhibits listed on the accompanying Index to Exhibits are
                  filed as part of this Annual Report and incorporated in this
                  Annual Report as set forth in said Index.

(b)      Reports on Form 8-K - None


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<PAGE>



                                   SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, there unto duly authorized as of this 13th day of
April, 2000.

                                            WINTHROP RESIDENTIAL ASSOCIATES III,
                                            A LIMITED PARTNERSHIP

                                            By:   TWO WINTHROP PROPERTIES, INC.

                                                  By: /s/ Michael L. Ashner
                                                     ----------------------
                                                        Michael L. Ashner
                                                        Chief Executive Officer

      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.

Signature/Name               Title                         Date
--------------               -----                         ----

/s/ Michael L. Ashner      Chief Executive             April 13, 2000
---------------------      Officer and Director
Michael L. Ashner

/s/ Thomas Staples         Chief Financial Officer     April 13, 2000
------------------
Thomas Staples

/s/ Peter Braverman        Executive Vice              April 13, 2000
-------------------        President and Director
Peter Braverman



                                       33

<PAGE>


                                INDEX TO EXHIBITS

Exhibit

Number                      Title of Document                            Page

3.A.     Agreement and Certificate of Limited
         Partnership of Winthrop    Residential
         Associates III, A Limited Partnership,
         dated as of June 28, 1982 (incorporated
         herein by reference to the Partnership's
         Registration Statement on Form S-11, File No. 2-81033).

3.B.     Twelfth Amendment dated as of January 24,
         1984 to the Agreement and Certificate of
         Limited Partnership (incorporated herein by
         reference to the Partnership's Annual Report on
         Form 10-K filed March 30, 1984, File No. 2-81033).

  4.     Agreement and Certificate of Limited
         Partnership of Winthrop Residential
         Associates III, A Limited Partnership, dated as of
         June 28, 1982 (incorporated herein by reference to
         the Partnership's Annual Report on Form 10-K for
         the year ended December 31, 1995)

10A.     Sales Agency Agreement between Winthrop Residential
         Associates III, A Limited Partnership and
         Winthrop Securities Co., Inc. (incorporated herein
         by reference to the Registrant's Registration
         Statement on Form S-11, File No. 2-81033).

10B.     Escrow Deposit Agreement among Winthrop
         Residential Associates III, A Limited
         Partnership, Winthrop Securities Co., Inc. and
         United States Trust Company (incorporated
         herein by reference to the Registrant's
         Registration Statement on Form S-11, File
         No. 2-81033).

10C.     Services Agreement, dated December 16, 1997, by and            37
         between First Winthrop Corporation, Winthrop
         Financial Co., Inc., WFC Realty Co., Inc., WFC
         Realty Saugus, Inc., Winthrop Properties, Inc.,
         Winthrop Metro Equities Corporation, Winthrop
         Lisbon Realty, Inc. and Northwood Realty Co., Inc.
         and Coordinated Services of Valdosta, LLC
         (incorporated by reference to the Registrant's
         Annual Report on Form 10KSB for the year ended
         December 31, 1998.


                                       34

<PAGE>


16.      Letter dated September 19, 1996 from Arthur
         Andersen LLP (incorporated by referenced to the
         Partnership's Current Report on Form 8-K dated
         September 19, 1996).

27.      Financial Data Schedule

99.      Supplementary Information required pursuant to
         Section 9.4 of the Partnership Agreement.


                             35