<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549
                                 ------------
                                   FORM 10-Q

                  QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                    OF THE SECURITIES EXCHANGE ACT OF 1934

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

For Quarter Ended March 31, 2000            Commission File Number 0-14052


                   NEW ENGLAND LIFE PENSION PROPERTIES III;
                       A REAL ESTATE LIMITED PARTNERSHIP
            (Exact name of registrant as specified in its charter)



     Massachusetts                                      04-2847256
(State or other jurisdiction of           (I.R.S. Employer Identification No.)
incorporation or organization)

   225 Franklin Street, 25th Fl.
      Boston, Massachusetts                                02110
(Address of principal executive offices)                 (Zip Code)


              Registrant's telephone number, including area code:
                                (617) 261-9000



----------------------------------------------------------------------------
Former name, former address and former fiscal year if changed since last report

     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 twelve (12) months (or for such shorter period that
the Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.

                                    Yes  X       No
<PAGE>

                   NEW ENGLAND LIFE PENSION PROPERTIES III;
                       A REAL ESTATE LIMITED PARTNERSHIP

                                   FORM 10-Q

                       FOR QUARTER ENDED MARCH 31, 2000

                                    PART I

                             FINANCIAL INFORMATION
                             ---------------------

                                       2
<PAGE>

NEW ENGLAND LIFE PENSION PROPERTIES III;
A REAL ESTATE LIMITED PARTNERSHIP

BALANCE SHEETS

<TABLE>
<CAPTION>
                                        March 31, 2000      December 31, 1999
                                          (Unaudited)          (Audited)
                                        ---------------     -----------------
<S>                                     <C>                 <C>
ASSETS

Real estate investment:
   Property, net                           $5,832,327        $5,918,532
                                           ----------        ----------
                                            5,832,327         5,918,532


Cash and cash equivalents                     308,426           324,989
                                           ----------        ----------
                                           $6,140,753        $6,243,521
                                           ==========        ==========



LIABILITIES AND PARTNERS' CAPITAL

Accounts payable                           $   85,628        $   81,339
Accrued management fee                         13,327            13,532
                                           ----------        ----------
Total liabilities                              98,955            94,871
                                           ----------        ----------

Partners' capital:
     Limited partners ($183.60 per
     unit; 75,000 units
     authorized, 68,414 units issued
     and outstanding)                       6,040,335         6,146,119
   General partners                             1,463             2,531
                                           ----------        ----------
Total partners' capital                     6,041,798         6,148,650
                                           ----------        ----------

                                           $6,140,753        $6,243,521
                                           ==========        ==========
</TABLE>


          (See accompanying notes to unaudited financial statements)

                                       3
<PAGE>

NEW ENGLAND LIFE PENSION PROPERTIES III;
A REAL ESTATE LIMITED PARTNERSHIP

STATEMENTS OF OPERATIONS
(Unaudited)

<TABLE>
<CAPTION>
                                           Three Months Ended March 31,
                                               2000           1999
                                           ------------  --------------
<S>                                        <C>           <C>
INVESTMENT ACTIVITY

Property rentals                           $    232,845    $  316,867
Property operating expenses                     (77,014)     (102,695)
Depreciation and amortization                   (56,037)      (67,652)
                                           ------------    ----------
 Total real estate operations                    99,794       146,520

Gain on sale of property                              -     1,509,931
                                           ------------    ----------
   Total real estate activity                    99,794     1,656,451


Interest on cash equivalents                      4,306        22,255
                                           ------------    ----------
        Total investment activity               104,100     1,678,706
                                           ------------    ----------

PORTFOLIO EXPENSES

General and administrative                       60,797        84,981
Management fee                                   13,327        56,248
                                           ------------    ----------
                                                 74,124       141,229
                                           ------------    ----------


Net Income                                 $     29,976    $1,537,477
                                           ============    ==========

Net income per limited partnership
  unit                                     $       0.43    $    22.25
                                           ============    ==========

Cash distributions per
  limited partnership unit                 $       1.98    $     3.21
                                           ============    ==========

Number of limited partnership
  units outstanding during the period            68,414        68,414
                                           ============    ==========
</TABLE>


          (See accompanying notes to unaudited financial statements)

                                       4
<PAGE>

NEW ENGLAND LIFE PENSION PROPERTIES III;
A REAL ESTATE LIMITED PARTNERSHIP

STATEMENTS OF PARTNERS' CAPITAL
(Unaudited)

<TABLE>
<CAPTION>
                            Three Months Ended March 31,
                              2000                1999
                      -------------------   -----------------

                      General     Limited     General    Limited
                      Partner    Partners     Partner   Partners
                      -------    --------     -------   --------
<S>                 <C>         <C>          <C>       <C>
Balance at
beginning of
period              $  2,531    $6,146,119   $   209   $ 9,196,048

Cash
distributions         (1,368)     (135,460)   (2,218)     (219,609)


Net income               300        29,676    15,375     1,522,102
                    --------    ----------   -------   -----------

Balance at
end of period       $  1,463    $6,040,335   $13,366   $10,498,541
                    ========    ==========   =======   ===========
</TABLE>

          (See accompanying notes to unaudited financial statements)

                                       5
<PAGE>

NEW ENGLAND LIFE PENSION PROPERTIES III;
A REAL ESTATE LIMITED PARTNERSHIP


SUMMARIZED STATEMENTS OF CASH FLOWS
(Unaudited)

<TABLE>
<CAPTION>
                                                 Three Months Ended March 31,
                                                 ---------------------------
                                                   2000             1999
                                                  ------          -------
<S>                                              <C>             <C>
Net cash provided by operating activities        $ 120,265       $  179,438
                                                 ---------       ----------

Cash flows from investing activities:
    Net proceeds from sale of property                   -        2,639,445
                                                 ---------       ----------
          Net cash provided by
          investing activities                           -        2,639,445
                                                 ---------       ----------

Cash flows from financing activity:
    Distributions to partners                     (136,828)        (221,827)
                                                 ---------       ----------

          Net increase (decrease) in
          cash and cash equivalents                (16,563)       2,597,056

Cash and cash equivalents:
    Beginning of period                            324,989        1,952,504
                                                 ---------       ----------

    End of period                                $ 308,426       $4,549,560
                                                 =========       ==========
</TABLE>


          (See accompanying notes to unaudited financial statements)

                                       6
<PAGE>

NEW ENGLAND LIFE PENSION PROPERTIES III;
A REAL ESTATE LIMITED PARTNERSHIP

NOTES TO FINANCIAL STATEMENTS (Unaudited)

     In the opinion of management, the accompanying unaudited financial
statements contain all adjustments necessary to present fairly the Partnership's
financial position as of March 31, 2000 and December 31, 1999 and the results of
its operations, its cash flows and partners' capital for the three months ended
March 31, 2000 and 1999. These adjustments are of a normal recurring nature.

     See notes to financial statements included in the Partnership's 1999 Annual
Report on Form 10-K for additional information relating to the Partnership's
financial statements.

NOTE 1 - ORGANIZATION AND BUSINESS
-----------------------------------

     New England Life Pension Properties III; A Real Estate Limited Partnership
(the "Partnership") is a Massachusetts limited partnership organized for the
purpose of investing primarily in newly constructed and existing income
producing real properties. The Partnership primarily serves as an investment for
qualified pension and profit sharing plans and other entities intended to be
exempt from federal income tax. The Partnership commenced operations in July
1985 and acquired the remaining investment it currently owns prior to the end of
1988. The Partnership intended to dispose of its investments within twelve years
of their acquisition, and then liquidate; however, the Managing General Partner
extended the holding period, having determined it to be in the best interest of
the limited partners. The Partnership has engaged AEW Real Estate Advisors, Inc.
(the "Advisor") to provide asset management advisory services.

NOTE 2 - PROPERTY
-----------------

     Effective January 1, 1998, the management and control of the business and
affairs of the 270 Technology Park joint venture, including the sale of the
property, is vested solely in the Partnership through its 98% general partner
interest in the joint venture. Accordingly, as of January 1, 1998, the
investment has been accounted for as a wholly-owned property. The remaining 2%
general partner interest is owned by NELLP III/MORF III Associates Limited
Partnership, an entity in which the Partnership owns a 50% interest. The
carrying value of the joint venture investment at conversion ($6,162,959) was
allocated to land, building and improvements, and other net operating assets.

     The building is being depreciated over 30 years, beginning January 1, 1998.

     North Cabot Industrial Park (formerly Marathon/Hayward)
     -------------------------------------------------------

     In September 1985, the Partnership acquired land in Hayward, California,
for $786,130 and leased it back to the seller. The Partnership also made a
nonrecourse permanent mortgage loan of $2,663,870 to the ground lessee to
finance two research and development buildings located on the land.

                                       7
<PAGE>

NEW ENGLAND LIFE PENSION PROPERTIES III;
A REAL ESTATE LIMITED PARTNERSHIP

     On November 15, 1994, the Partnership restructured this ground
lease/mortgage loan investment into a wholly-owned property, due to the
inability of the ground lessee/mortgagor to meet its financial obligations. The
Partnership received $85,000 in settlement of the guaranty provided by
principals of the ground lessee.

     The Partnership obtained title to the improvements on the land and to
certain other operating assets in full satisfaction of the related mortgage loan
and obligations under the ground lease, and in consideration of the assumption
by the Partnership of certain operating liabilities. The carrying value of the
ground lease/mortgage loan investment as of the date of restructuring was
allocated to land, buildings and net operating assets.

     The buildings and improvements (two industrial buildings in Hayward,
California) were being depreciated over 25 years beginning November 15, 1994.

     Prior to 1994, the Managing General Partner determined that the carrying
value of this investment should be reduced to its estimated fair market value.
Accordingly, the carrying value was reduced by $2,500,000.

     On March 18, 1999, the North Cabot Industrial Park investment was sold to
an unaffiliated third party for gross proceeds of $2,800,000.  The Partnership
received net proceeds of $2,639,445 and recognized a gain of  $1,509,931 ($21.85
per limited partnership unit).  On April 29, 1999, the Partnership made a
capital distribution of $2,539,528 ($37.12 per limited partnership unit) from
the proceeds of the sale.

     The following is a summary of the Partnership's investment in property.


                                   March 31, 2000   December 31, 1999
                                   ---------------  ------------------

  Land                               $  215,404         $  215,404
  Buildings and improvements          5,667,126          5,667,126
  Accumulated depreciation
     and amortization                  (390,323)          (343,490)
  Net operating assets                  340,120            379,492
  Property held for disposition               -                  -
                                     ----------         ----------
                                     $5,832,327         $5,918,532
                                     ==========         ==========


NOTE 3 - SUBSEQUENT EVENT
-------------------------

     Distributions of cash from operations relating to the quarter ended March
31, 2000 were made on April 27, 2000 in the aggregate amount of $134,755 ($1.95
per limited partnership unit).

                                       8
<PAGE>

NEW ENGLAND LIFE PENSION PROPERTIES III;
A REAL ESTATE LIMITED PARTNERSHIP


Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operations
---------------------

Liquidity and Capital Resources
-------------------------------

     The Partnership completed its offering of units of limited partnership
interest in December 1985 and a total of 68,414 units were sold. The Partnership
received proceeds of $61,950,285, net of selling commissions and other offering
costs, which were invested in real estate, used to pay related acquisition
costs, or retained as working capital reserves. The Partnership made nine real
estate investments, six of which were sold prior to 1994, and one of which was
sold in each of 1998 and 1999. As a result of the sales and similar
transactions, capital of $55,853,190 ($816.40 per Limited Partnership Unit) has
been returned to the limited partners through March 31, 2000.

     At March 31, 2000, the Partnership had $308,426 in cash and cash
equivalents, of which $134,755 was used for cash distributions to partners on
April 27, 2000; the remainder is being retained as working capital reserves. The
source of future liquidity and cash distributions to partners will primarily be
cash generated by the Partnership's remaining real estate investment and
invested cash and cash equivalents. Distributions of cash from operations
related to the first quarter of 2000 were made at the annualized rate of 4.25%
on the adjusted capital contribution of $183.60 per limited partnership unit.
Distributions of cash from operations related to the first quarter of 1999 were
made at the annualized rate of 4.25% on the adjusted capital contribution of
$231.54 per limited partnership unit. At the time of the 1999 first quarter
distribution, the Partnership also made a special distribution of operating cash
previously held in reserves in the amount of $5.77 per limited partnership unit.

     The carrying value of real estate investments in the financial statements
at March 31, 2000 is at depreciated cost, or if the investment's carrying value
is determined not to be recoverable through expected undiscounted future cash
flows, the carrying value is reduced to estimated fair market value. The fair
market value of such investments is further reduced by the estimated cost of
sale for properties held for sale. Carrying value may be greater or less than
current appraised value. At March 31, 2000, the appraised value of the remaining
real estate investment exceeded its related carrying value by approximately
$750,000. The current appraised value of real estate investments has been
determined by the Managing General Partner and is generally based on a
combination of traditional appraisal approaches performed by the Advisor and
independent appraisers. Because of the subjectivity inherent in the valuation
process, the current appraised value may differ significantly from that which
could be realized if the real estate were actually offered for sale in the
marketplace.

                                       9
<PAGE>

NEW ENGLAND LIFE PENSION PROPERTIES III;
A REAL ESTATE LIMITED PARTNERSHIP


Results of Operations
---------------------

     Form of Real Estate Investments

     The North Cabot Industrial Park investment was a wholly-owned property,
which was sold in March 1999. Effective January 1, 1998, 270 Technology Park was
converted to a wholly-owned property; it was previously structured as a joint
venture with a real estate management/development firm.

     Operating Factors

     The North Cabot Industrial Park was sold on March 18, 1999, and the
Partnership recognized a gain of $1,509,931. Occupancy at North Cabot Industrial
Park was 92% at the time of the sale.

     Occupancy at 270 Technology Park was 66% at March 31, 2000 down from 96% at
March 31, 1999 due to Betchel Power Corporation vacating a portion of their
space. This space is being marketed for lease at this time.

     Investment Results

     Interest on cash equivalents decreased by approximately $18,000 between the
first three months of 1999 and 2000. The decrease is primarily due to lower
average invested balances as a result of the sale of North Cabot Industrial Park
on March 18, 1999.

     Real estate operating results were $99,794 for the first three months of
2000, and $146,520 for the comparable period of 1999. The decrease of $46,726 is
primarily due to a decrease in operating performance at 270 Technology Park due
to a decline in occupancy and an increase in bad debt expense offset by a
decrease in operating expenses as a result of lower legal fees.

     Cash flow from operations decreased by approximately $59,000 between the
two three-month periods. The decrease is primarily due to the decrease in
operating results discussed above.

     Portfolio Expenses

     General and administrative expenses primarily consist of state taxes, real
estate appraisal, legal, accounting, printing and servicing agent fees. These
expenses decreased by approximately $24,000, or 28% between the first three
months of 1999 and 2000 primarily due to a decrease in state taxes.

     The Partnership management fee is 9% of distributable cash flow from
operations after any increase or decrease in working capital reserves as
determined by the managing general partner.

                                       10
<PAGE>

NEW ENGLAND LIFE PENSION PROPERTIES III;
A REAL ESTATE LIMITED PARTNERSHIP


     The management fee decreased by approximately $43,000 between the
comparative three month periods of 1999 and 2000. The 1999 management fee was
higher due to a special distribution of operating reserves.

                                       11
<PAGE>

                   NEW ENGLAND LIFE PENSION PROPERTIES III;
                       A REAL ESTATE LIMITED PARTNERSHIP

                                   FORM 10-Q

                       FOR QUARTER ENDED MARCH 31, 2000

                                    PART II

                               OTHER INFORMATION
                              -------------------


     Items 1-5  Not Applicable

     Item 6.    Exhibits and Reports on Form 8-K

                  a.    Exhibits:  (27) Financial Data Schedule

                  b.    Reports on Form 8-K:  No reports on Form 8-K were filed
                        during the quarter ended March 31, 2000.

                                       12
<PAGE>

                                  SIGNATURES
                                  ----------


     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                              NEW ENGLAND LIFE PENSION PROPERTIES III;
                              A REAL ESTATE LIMITED PARTNERSHIP
                              (Registrant)


May 9, 2000
                              /s/ Alison Husid Cutler
                              -------------------------------------
                                Alison Husid Cutler
                                President, Chief Executive Officer and
                                Director of Managing General Partner,
                                Copley Properties Company III, Inc.


May 9, 2000
                              /s/ Karin J. Lagerlund
                              -------------------------------------
                                Karin J. Lagerlund
                                Principal Financial and Accounting Officer of
                                Managing General Partner, Copley Properties
                                Company III, Inc.

                                       13