SECURITIES AND EXCHANGE COMMISSION

                        Washington, D.C.  20549



                              FORM 10Q/A

                            AMENDMENT NO. 1


           Filed pursuant to Section 12, 13, or 15(d) of the
                    Securities Exchange Act of 1934



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



                                            IRS Employer Identification    

Commission File No. 0-16253                         No. 36-3346551   




     The undersigned registrant hereby amends the following sections of its
Report for the quarter ended September 30, 1996 on Form 10-Q as set forth
in the pages attached hereto:


     Item 1.  Financial Statements. Pages 3 through 11

     Item 2.  Management's Discussion and Analysis of Financial Condition
              and Results of Operations.  Pages 12 and 13

     Item 6.  Exhibits and Reports on Form 8-K.  Pages 15 and 16
              (and exhibits thereto)


     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.


                        JMB MORTGAGE PARTNERS, LTD. - III

                        By:    JMB Realty Corporation
                               (Corporate General Partner)


                               By:  GAILEN J. HULL
                                    Gailen J. Hull, Senior Vice President
                                    and Principal Accounting Officer




Dated:  November 21, 1996





<TABLE>
PART I.  FINANCIAL INFORMATION
     ITEM 1.  FINANCIAL STATEMENTS

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

                                         CONSOLIDATED BALANCE SHEETS

                                  SEPTEMBER 30, 1996 AND DECEMBER 31, 1995

                                                 (UNAUDITED)

                                                   ASSETS
                                                   ------
<CAPTION>
                                                                           SEPTEMBER 30,    DECEMBER 31,
                                                                               1996            1995     
                                                                           -------------    ----------- 
<S>                                                                       <C>              <C>          
Current assets:
  Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . .     $  8,359,856      7,538,476 
  Interest and other receivables. . . . . . . . . . . . . . . . . . . .          176,566        340,674 
  Due from affiliates . . . . . . . . . . . . . . . . . . . . . . . . .          312,944        251,872 
  Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . .           16,290         28,769 
                                                                            ------------   ------------ 
     Total current assets . . . . . . . . . . . . . . . . . . . . . . .        8,865,656      8,159,791 

Investment property:
  Land. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        3,588,126      9,561,468 
  Building and improvements . . . . . . . . . . . . . . . . . . . . . .        6,823,323     13,743,821 
                                                                            ------------   ------------ 
                                                                              10,411,449     23,305,289 

  Less accumulated depreciation . . . . . . . . . . . . . . . . . . . .         (983,909)    (2,321,280)
                                                                            ------------   ------------ 
     Total investment property, net of depreciation . . . . . . . . . .        9,427,540     20,984,009 

Mortgage notes receivable (net of allowance for loan
 loss of $111,000 in 1996 and $175,165 in 1995) . . . . . . . . . . . .       29,110,861     29,221,861 
Deferred interest receivable (net of allowance for
 loan loss of $1,691,218 in 1996 and 1995). . . . . . . . . . . . . . .        1,170,603      1,096,251 
Investment in unconsolidated venture, at equity . . . . . . . . . . . .        3,038,046      3,159,812 
Deferred costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . .          159,832        185,368 
                                                                            ------------   ------------ 
                                                                            $ 51,772,538     62,807,092 
                                                                            ============   ============ 

                                                      3




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

                                   CONSOLIDATED BALANCE SHEETS - CONTINUED

                            LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
                            -----------------------------------------------------

                                                                           SEPTEMBER 30,    DECEMBER 31,
                                                                               1996            1995     
                                                                           -------------    ----------- 
Current liabilities:
  Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . .     $    119,346         88,880 
  Accrued real estate taxes . . . . . . . . . . . . . . . . . . . . . .          111,104        148,139 
  Other current liabilities . . . . . . . . . . . . . . . . . . . . . .          150,438        205,309 
                                                                            ------------   ------------ 
     Total current liabilities. . . . . . . . . . . . . . . . . . . . .          380,888        442,328 
                                                                            ------------   ------------ 
  Tenant security deposits. . . . . . . . . . . . . . . . . . . . . . .           14,000         34,073 
                                                                            ------------   ------------ 
  Commitments and contingencies 

     Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . .          394,888        476,401 
                                                                            ------------   ------------ 

Venture partner's equity in ventures. . . . . . . . . . . . . . . . . .        3,727,338      8,199,483 
Partners' capital accounts:
  General partners:
     Capital contributions. . . . . . . . . . . . . . . . . . . . . . .            1,000          1,000 
     Cumulative net earnings (losses) . . . . . . . . . . . . . . . . .        3,180,968      2,948,423 
     Cumulative cash distributions. . . . . . . . . . . . . . . . . . .       (3,288,906)    (3,071,447)
                                                                            ------------   ------------ 
                                                                                (106,938)      (122,024)
                                                                            ------------   ------------ 

Limited partners (65,237.69 interests):
     Capital contributions, net of offering costs . . . . . . . . . . .       57,758,561     57,758,561 
     Cumulative net earnings. . . . . . . . . . . . . . . . . . . . . .       36,023,869     32,031,226 
     Cumulative cash distributions. . . . . . . . . . . . . . . . . . .      (46,025,180)   (35,536,555)
                                                                            ------------   ------------ 
                                                                              47,757,250     54,253,232 
                                                                            ------------   ------------ 
        Total partners' capital accounts (deficits) . . . . . . . . . .       47,650,312     54,131,208 
                                                                            ------------   ------------ 
                                                                            $ 51,772,538     62,807,092 
                                                                            ============   ============ 
<FN>
                        See accompanying notes to consolidated financial statements.
</TABLE>
                                                      4




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

                                    CONSOLIDATED STATEMENTS OF OPERATIONS

                           THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995

                                                 (UNAUDITED)
<CAPTION>
                                                      THREE MONTHS ENDED           NINE MONTHS ENDED     
                                                          SEPTEMBER 30                SEPTEMBER 30       
                                                  --------------------------  -------------------------- 
                                                       1996          1995          1996          1995    
                                                   -----------    ----------   -----------    ---------- 
<S>                                               <C>            <C>          <C>            <C>         
Income:
  Interest income . . . . . . . . . . . . . . . .  $   706,968       834,164     2,501,426     2,534,363 
  Rental income . . . . . . . . . . . . . . . . .      412,546       924,587     2,202,259     2,740,974 
                                                   -----------    ----------   -----------    ---------- 
                                                     1,119,514     1,758,751     4,703,685     5,275,337 
                                                   -----------    ----------   -----------    ---------- 
Expenses:
  Depreciation. . . . . . . . . . . . . . . . . .       58,714       161,172       175,180       483,518 
  Property operating expenses . . . . . . . . . .      168,443       391,889       798,425     1,062,075 
  Mortgage investment servicing fees. . . . . . .       18,525        18,524        55,170        57,652 
  Professional services . . . . . . . . . . . . .       29,752         7,259        73,373        63,588 
  Amortization of deferred expenses . . . . . . .        8,512         7,961        25,536        34,720 
  General and administrative. . . . . . . . . . .       69,925       113,718       270,564       223,676 
  Provision for value impairment. . . . . . . . .        --        2,300,000         --        2,300,000 
  Provision for loan loss . . . . . . . . . . . .      111,000         --          111,000         --    
                                                   -----------    ----------   -----------    ---------- 
                                                       464,871     3,000,523     1,509,248     4,225,229 
                                                   -----------    ----------   -----------    ---------- 

          Operating earnings (loss) . . . . . . .      654,643    (1,241,772)    3,194,437     1,050,108 

      Partnership's share of 
        operations of uncon-
        solidated venture . . . . . . . . . . . .     (195,414)       64,858      (121,766)      176,716 

      Venture partner's share 
         of ventures' operations. . . . . . . . .      (71,768)      632,427      (467,105)      303,254 
                                                   -----------    ----------   -----------    ---------- 

          Net operating earnings (loss) . . . . .      387,461      (544,487)    2,605,566     1,530,078 

                                                      5




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

                              CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED



                                                      THREE MONTHS ENDED           NINE MONTHS ENDED     
                                                         SEPTEMBER 30                 SEPTEMBER 30       
                                                  --------------------------  -------------------------- 
                                                       1996          1995          1996          1995    
                                                   -----------    ----------   -----------    ---------- 
Gain on sale of investment properties,
  net of venture partner's share of
  gain of $982,802. . . . . . . . . . . . . . . .        --            --        1,619,622         --    
                                                   -----------    ----------   -----------    ---------- 

          Net earnings (loss) . . . . . . . . . .  $   387,461      (544,487)    4,225,188     1,530,078 
                                                   ===========    ==========   ===========    ========== 

          Net earnings (loss) per 
           limited partnership 
           interest:
            Net operating loss. . . . . . . . . .  $      5.96        (10.02)        36.63         18.45 
            Net gain on sale of
              investment property . . . . . . . .        --            --            24.58         --    
                                                   -----------    ----------   -----------    ---------- 

                                                   $      5.96        (10.02)        61.21         18.45 
                                                   ===========    ==========   ===========    ========== 

          Cash distributions per 
            limited partnership 
            interest. . . . . . . . . . . . . . .  $    130.00         15.00        160.78         45.00 
                                                   ===========    ==========   ===========    ========== 











<FN>
                        See accompanying notes to consolidated financial statements.
</TABLE>
                                                      6




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

                                    CONSOLIDATED STATEMENTS OF CASH FLOWS

                                NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
                                                 (UNAUDITED)
<CAPTION>
                                                                                 1996             1995    
                                                                             ------------     ----------- 
<S>                                                                         <C>              <C>          
Cash flows from operating activities:
  Net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . .  $  4,225,188       1,530,078 
  Items not requiring cash or cash equivalents:
    Total gain on sale of investment property . . . . . . . . . . . . . . .    (2,601,265)          --    
    Depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       175,180         483,518 
    Amortization of deferred expenses . . . . . . . . . . . . . . . . . . .        25,536          34,720 
    Provision for value impairment. . . . . . . . . . . . . . . . . . . . .         --          2,300,000 
    Provision for loan loss . . . . . . . . . . . . . . . . . . . . . . . .       111,000           --    
    Partnership's share of operations of unconsolidated venture, 
      net of distributions. . . . . . . . . . . . . . . . . . . . . . . . .       121,766         (46,516)
    Venture partners' share of ventures' operations and
      gain on sale of investment property . . . . . . . . . . . . . . . . .     1,449,907        (303,254)
  Changes in:
    Interest and other receivables. . . . . . . . . . . . . . . . . . . . .       164,108         152,450 
    Due from affiliates . . . . . . . . . . . . . . . . . . . . . . . . . .       (61,072)       (151,607)
    Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . .         --            (13,020)
    Deferred interest receivable. . . . . . . . . . . . . . . . . . . . . .       (74,352)       (125,757)
    Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . .        54,803          22,575 
    Due to affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . .         --           (366,280)
    Accrued real estate taxes . . . . . . . . . . . . . . . . . . . . . . .       (37,035)         26,541 
    Other current liabilities . . . . . . . . . . . . . . . . . . . . . . .       (54,871)         (2,661)
    Tenant security deposits. . . . . . . . . . . . . . . . . . . . . . . .       (20,662)        (14,281)
                                                                             ------------    ------------ 
          Net cash provided by (used in) operating activities . . . . . . .     3,478,231       3,526,506 
                                                                             ------------    ------------ 
Cash flows from investing activities:
  Partnership's distributions to venture partners . . . . . . . . . . . . .         --         (2,093,561)
  Net sales and maturities (purchases) of short-term investments. . . . . .         --            253,597 
  Cash proceeds from sale of investment property, net of 
    selling expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . .    14,176,011           --    
  Additions to investment properties. . . . . . . . . . . . . . . . . . . .      (204,727)       (151,614)
  Partnership's contribution to unconsolidated venture. . . . . . . . . . .         --             (3,607)
  Refund of deferred costs. . . . . . . . . . . . . . . . . . . . . . . . .         --              2,436 
                                                                             ------------    ------------ 
          Net cash provided in (used in) investing activities . . . . . . .    13,971,284      (1,992,749)
                                                                             ------------    ------------ 

                                                      7




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

                              CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED


                                                                                 1996             1995    
                                                                             ------------     ----------- 
Cash flows from financing activities:
  Distributions to venture partners . . . . . . . . . . . . . . . . . . . .    (5,922,051)          --    
  Distributions to limited partners . . . . . . . . . . . . . . . . . . . .   (10,488,625)     (2,935,698)
  Distributions to general partners . . . . . . . . . . . . . . . . . . . .      (217,459)       (326,188)
                                                                             ------------    ------------ 
     Net cash used in financing activities. . . . . . . . . . . . . . . . .   (16,628,135)     (3,261,886)
                                                                             ------------    ------------ 
     Net increase (decrease) in cash and cash equivalents . . . . . . . . .       821,380      (1,728,129)

     Cash and cash equivalents, beginning of year . . . . . . . . . . . . .     7,538,476      10,278,236 
                                                                             ------------    ------------ 
     Cash and cash equivalents, end of period . . . . . . . . . . . . . . .  $  8,359,856       8,550,107 
                                                                             ============    ============ 
Supplemental disclosure for cash flow information:
  Cash paid for mortgage and other interest . . . . . . . . . . . . . . . .  $      --              --    
                                                                             ============    ============ 
  Non-cash investing and financing activities:
     Balance due on mortgage note receivable (net of
      allowance for loan loss of $99,000) . . . . . . . . . . . . . . . . .  $      --          3,121,072 
     Partnership contribution to unconsolidated venture . . . . . . . . . .         --              3,607 
                                                                             ------------    ------------ 
       Net carrying value of investment property (reflected 
         as investment in unconsolidated venture) . . . . . . . . . . . . .  $      --          3,124,679 
                                                                             ============    ============ 














<FN>
                        See accompanying notes to consolidated financial statements.
</TABLE>
                                                      8




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

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                      SEPTEMBER 30, 1996 AND 1995

                              (UNAUDITED)

GENERAL

     Readers of this quarterly report should refer to the Partnership's
audited financial statements for the fiscal year ended December 31, 1995,
which are included in the Partnership's 1995 Annual Report, as certain
footnote disclosures which would substantially duplicate those contained in
such audited financial statements have been omitted from this report.

     The preparation of financial statements in accordance with GAAP
requires the Partnership to make estimates and assumptions that affect the
reported or disclosed amount of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period.  Actual results could differ from those
estimates.

     Statement of Financial Accounting Standards No. 121 was adopted by the
Partnership on January 1, 1996.


TRANSACTIONS WITH AFFILIATES

     The Partnership, pursuant to the Partnership Agreement, is permitted
to engage in various transactions involving the Corporate General Partner
and its affiliates including the reimbursement for salaries and salary-
related expenses of its employees, certain of its officers, and other
direct expenses relating to the administration of the Partnership and the
operation of the Partnership's investments.  Fees, commissions and other
expenses required to be paid by the Partnership to the General Partners and
their affiliates as of September 30, 1996 and for the nine months ended
September 30, 1996 and 1995 were as follows:

                                                           Unpaid at  
                                                         September 30,
                                   1996         1995         1996     
                                 --------      ------    -------------
Mortgage investment 
  servicing fees. . . . . . .    $ 55,170      57,652        36,797   
Property management
 fees . . . . . . . . . . . .      73,544      73,678         --      
Reimbursement (at cost)
 for out-of-pocket
 expenses and salaries
 and salary-related 
 expenses . . . . . . . . . .      66,553     133,605        57,906   
                                 --------     -------        ------   
                                 $195,267     264,935        94,703   
                                 ========     =======        ======   

     The General Partners have deferred payment of $679,727 (approximately
$10 per Interest) of their distributions of prior net cash flow from the
Partnership at September 30, 1996, in accordance with the subordination
requirements of the Partnership Agreement.  All amounts deferred or
currently payable do not bear interest.

                                   9




SPRING HILL FASHION CENTER

     A major tenant, which occupied approximately 24% of the leasable space
at the property and was operating under Chapter 11 bankruptcy protection,
did not exercise its renewal option when its lease expired in October 1995
and vacated its space.  The Spring Hill joint venture (the "venture"),
however, executed a ten-year lease (in February 1996) with a replacement
tenant for this space at rental rates lower than those of the former
tenant.  The replacement tenant's occupancy in late June 1996 has resulted
in the property being 95% leased and occupied at September 30, 1996, up
from 75% at December 31, 1995.  The venture is conserving its working
capital in order to fund certain costs associated with the replacement
tenant's move-in.  

     The property was classified as held for sale as of July 1, 1996 and
therefore has not been subject to continued depreciation as of that date. 
The accompanying financial statements include ($121,766) and $176,716 of
operations of unconsolidated venture for the nine months ended September
30, 1996 and 1995, respectively.  Such asset had a net carrying value of
$3,038,046 and $3,159,812 at September 30, 1996 and December 31, 1995,
respectively.

     In October 1996, the venture finalized a contract with a potential
purchaser for the sale of this property.  The sale of the property is
subject to the closing of the transaction including satisfaction of certain
closing conditions.  If the transaction is consummated under the current
proposed terms, the venture would recognize a loss for Federal income tax
reporting purposes and a loss of approximately $775,000 for financial
reporting purposes.  Accordingly, as a matter of prudent accounting
practice, the venture has recognized this amount as a $775,000 provision
for value impairment at September 30, 1996, of which $252,263 has been
allocated to the Partnership.  There can be no assurance, however, that the
final sale agreement will not differ materially from the present agreement,
or that the sale of the property will be consummated on any terms.


RIVERPOINT CENTER

     The Silo Electronic store (12,100 sq. ft.) vacated its space in the
third quarter 1995 and subsequently filed for bankruptcy.  The borrower is
pursuing its legal remedies regarding the remaining amounts due.  The
borrowers leased the space to the Old Navy Clothing Co., for five years and
rent commenced in July 1996.  The borrower had notified the Lenders that it
was experiencing financial difficulties and had approached the Lenders
regarding a loan modification.  During the third quarter of 1996, the
Lenders and borrowers finalized a loan modification whereby they reached an
agreement to defer payment of a portion of the scheduled debt service
payments from September 15, 1995 to July 15, 1996.  In conjunction with the
modification agreement, the scheduled maturity date of the loan has been
accelerated to December 31, 1997.  Finally, the Lenders have agreed to
accept at certain dates through June 30, 1997 repayment of the loan at
specified amounts.  Since 1992, the Partnership has been recognizing
interest income only as collected.  However, as repayment of the loan per
such agreement would yield the Lenders, when paid, an amount less than the
current carrying amount of the loan, the Partnership, as a matter of
prudent accounting practice, has recognized as of July 1, 1996 an
additional provision for loan loss of $111,000.  However, there can be no
assurance that the loan will be repaid prior to its revised maturity date
of December 1997 pursuant to such agreement.  

     During the third quarter, the borrower notified the Lenders that a
tenant which operates a dry cleaning plant at the site has leaked a
chemical associated with the dry cleaning process that can cause
environmental problems if not handled properly.  The Lenders have been
advised that the tenant and borrower are currently remediating the problem.

The Lenders do not currently expect that the value of the borrower's
property has been materially impaired.

                                  10




FRANKLIN FARM VILLAGE CENTER

     During July 1996, the Lenders executed an agreement with the borrower
regarding an early repayment of the mortgage loan.  Such agreement allowed
the borrower to repay the loan at a predetermined amount prior to November
8, 1996.  Pursuant to such agreement, the Lenders received $16,275,000 on
October 30, 1996 as payment in full of all principal and accrued interest
due on the original mortgage loan.  Accordingly, the Partnership has
recognized for the nine months ended September 30, 1996 basic and simple
accrued interest of approximately $383,000 based upon the amounts
subsequently received in satisfaction of the loan rather than what would
otherwise have been due under the original loan terms.  Although such
repayment is not expected to result in a gain or loss for financial
reporting purposes, the Partnership expects to report a loss on repayment
of approximately  $69,000 for Federal income tax reporting purposes in
1996.


CALIBRE POINT APARTMENTS

     Calibre Pointe Associates sold the property on May 30, 1996 for
$14,450,000, paid in cash at closing.  Calibre Pointe Associates has
recognized a gain of $2,601,265 for financial reporting purposes and
expects to recognize a gain of approximately $2,200,000 for Federal income
tax purposes in 1996.  The Partnership has recognized a gain of $1,619,622
for financial reporting purposes and expects to recognize a gain of
approximately $1,370,000 for Federal income tax purposes in 1996.

     The property was classified as held for sale or disposition as of
January 1, 1996 and therefore has not been subject to continued
depreciation.   The accompanying consolidated financial statements include
$998,678 and $1,632,214 of revenues and $384,478 and $621,202 of operating
expenses for the nine months ended September 30, 1996 and 1995,
respectively.  The property had a net carrying value of approximately
$11,580,000 at December 31, 1995.


NORTH RIVERS MARKET SHOPPING CENTER

     Occupancy was 83% at September 30, 1996.  The manager is aggressively
attempting to lease the vacant space in the center.  However, the
competitiveness of the market given the Naval facility closings in the
nearby area is expected to make it difficult to lease space in the center,
thereby extending the period of time it will take to complete the lease-up
of the center and result in a decrease in cash flow from operations over
the near-term.


SHOPPES AT RIVERGATE

     In May 1995, a tornado touched down in Goodlettsville, Tennessee and
severely damaged a significant percentage (17% or 29,000 square feet) of
the Shoppes at Rivergate.  The portion of the shopping center undamaged by
the tornado continued to operate while the damaged portion was being
repaired.  Substantially all of the loss, including any loss caused by
business interruption, was covered by the borrower's insurance.  The
borrower has substantially rebuilt the damaged portions of the center with
funds provided by the insurance company and the property has been restored
to full operations.  Total costs to repair the center were approximately
$1,200,000, substantially all of which has been spent as of September 30,
1996.  As of the date of this report, the borrower is current with all
payments due to the Partnership.

                                  11




SELECTED FINANCIAL INFORMATION

     Pursuant to the requirements of the Securities and Exchange
Commission, the following is a summary of historical income statement
information for Shoppes at Rivergate, Riverpoint Center and Franklin Farm
Village Center shopping centers for the nine months ended September 30,
1996 and 1995.  Such properties secure the participating first mortgage
investments made by the Partnership.

                                              1996          1995   
                                           ----------    --------- 

     Total revenues . . . . . . . . . .    $6,071,581    5,711,066 
                                           ==========    ========= 
     Net income (loss). . . . . . . . .    $ (222,023)       1,099 
                                           ==========    ========= 


ADJUSTMENTS

     In the opinion of the Corporate General Partner, all adjustments
(consisting solely of normal recurring adjustments) necessary for a fair
presentation have been made to the accompanying figures as of September 30,
1996 and for the three and nine months ended September 30, 1996 and 1995.



PART I.FINANCIAL INFORMATION

Item 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
        CONDITION AND RESULTS OF OPERATIONS

     Reference is made to the notes to the accompanying financial
statements for additional information concerning the Partnership's
investments.

     During the second quarter some of the Limited Partners in the
Partnership received from an unaffiliated third party an unsolicited tender
offer to purchase up to 3,070 Interests in the Partnership at between $450
and $500 per Interest.  The Partnership recommended against acceptance of
this offer on the basis that, among other things, the offer price was
inadequate.  In June such offer expired with approximately 896 Interests
being purchased by such unaffiliated third party pursuant to such offer. 
In addition, the Partnership has, from time to time, received inquiries
from other third parties that may consider making offers for Interests,
including requests for the list of Limited Partners in the Partnership. 
These inquiries are generally preliminary in nature.  There is no assurance
that any other third party will commence an offer for Interests, the terms
of any such offer or whether any such offer, if made, will be consummated,
amended or withdrawn.  The board of directors of JMB Realty Corporation
("JMB") the corporate general partner of the Partnership, has established a
special committee (the "Special Committee") consisting of certain directors
of JMB to deal with all matters relating to tender offers for Interests in
the Partnership, including any and all responses to such tender offers. 
The Special Committee has retained independent counsel to advise it in
connection with any potential tender offers for Interests and has retained
Lehman Brothers Inc. as financial advisor to assist the Special Committee
in evaluating and responding to any additional potential tender offers for
Interests.

     After reviewing the properties and competitive market places in the
portfolio, the General Partners of the Partnership expect to be able to
liquidate the remaining assets as quickly as practicable.  Therefore, the
affairs of the Partnership are expected to be wound up no later than 1999,
barring unforeseen economic developments.

                                  12




RESULTS OF OPERATIONS

     The decreases in interest and other receivables, prepaid expenses,
land, building and improvements, accumulated depreciation, accrued real
estate taxes, other current liabilities, and tenant security deposits at
September 30, 1996 as compared to December 31, 1995 is primarily due to the
May 30, 1996 sale of Calibre Pointe Apartments.

     The increase in deferred interest receivable at September 30, 1996 as
compared to December 31, 1995 is due to the deferral in 1996 of certain
additional interest earned under the terms of the mortgage loan receivable
secured by the Franklin Farm Village Center.

     The decreases in interest income for the three and nine months ended
September 30, 1996 as compared to the three and nine months ended September
30, 1995 are due to the Partnership recognizing interest income only as
collected on the River Point and Franklin Farm Village Center mortgage
loans.

     The decreases in rental income and property operating expenses for the
three and nine months ended September 30, 1996 as compared to the three and
nine months ended September 30, 1995 are primarily due to the May 30, 1996
sale of Calibre Pointe Apartments.

     The decreases in depreciation expense for the three and nine months
ended September 30, 1996 as compared to the same periods in 1995 are due to
the Calibre Pointe property being classified as held for sale or
disposition as of January 1, 1996 and its subsequent sale in May 1996.

     The increase in professional services for the three and nine months
ended September 30, 1996 as compared to the three and nine months ended
September 30, 1995 are primarily due to expenses incurred in connection
with tender offer matters discussed above.

     The increases in general and administrative expenses for the nine
months ended September 30, 1996 as compared to the nine months ended
September 30, 1995 are attributable primarily to the timing of the
recognition of costs for certain outsourcing services, the recognition of
certain prior year reimbursable costs to affiliates of the General Partners
and the timing of the recognition of certain printing costs in 1996.

     The provision for value impairment of $2,300,000 was due to such
provision being recorded at the North Rivers Market property at September
30, 1995.

     The decreases in Partnership's share of operations of unconsolidated
venture for the three and nine months ended September 30, 1996 as compared
to the three and nine months ended September 30, 1995 are attributable
primarily to a provision for value impairment recorded at Spring Hill at
September 30, 1996 in the amount of $775,000 of which the Partnership's
share is $252,263 and to the decrease in rental income at Spring Hill
Fashion Center due to a decrease in average occupancy arising from the
vacating of a major tenant during the fourth quarter of 1995.  The Spring
Hill joint venture executed a ten-year lease in February 1996 with a
replacement tenant for this space at rental rates lower than those of the
former tenant, with the replacement tenant taking occupancy in late June
1996.

     The increases in venture partner's share of ventures' operations for
the three and nine months ended September 30, 1996 as compared to the three
and nine months ended September 30, 1995 are primarily due to the $770,000
portion of the North Rivers Market value impairment allocated to the
venture partner at September 30, 1995.




                                  13




PART II.  OTHER INFORMATION
     ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

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

              3-A.   The Prospectus of the Partnership dated July 18,
1986, as supplemented January 27, 1986, April 29, 1986, June 11, 1986,
August 14, 1986, September 27, 1986 as filed with the Commission pursuant
to Rules 424(b) and 424(c), is hereby incorporated herein by reference to
Exhibit 3-A to the Partnership's Report for December 31, 1992 on Form 10-K
(File No. 0-16253) dated March 19, 1993.

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

              3-C.   Acknowledgement of rights and duties of the General
Partners of the Partnership between AGPP Associates, L.P. (a successor
Associated General Partner of the Partnership) and JMB Realty Corporation
as of December 31, 1995 is hereby incorporated herein by reference to the
Partnership's report for June 30, 1996 on Form 10-Q (File No. 0-16253)
dated August 9, 1996.

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

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

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

              10-D.  Loan document related to the Partnership's
participation in the funding of a first mortgage secured by a first
mortgage on Shops at Rivergate Shopping Center located in Goodlettsville,
Tennessee, dated August 24, 1987 is hereby incorporated herein by reference
to Exhibit 10-D of the Partnership's Report for December 31, 1992 on Form
10-K (File No. 0-16253) dated March 19, 1993.

              10-E.  Loan documents related to the Partnership's
participation in the funding of a participating first mortgage loan secured
by Franklin Farm Village Center located in Fairfax County, Virginia, are
hereby incorporated by reference to the Partnership's Report for December
31, 1994 on Form 10-K (File No. 0-16253) dated March 27, 1995.

                                  15




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

              10-G.  Real Property Purchase Agreement between Calibre
Pointe Associates and Security Capital Atlantic Incorporated, dated April
29, 1996 are hereby incorporated by reference to the Partnership's report
on Form 8-K (File No. 0-16253) dated May 30, 1996.

              27.    Financial Data Schedule


      (b)     No reports on Form 8-K have been filed during the last
quarter of the period covered by this report.

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