March  28, 2000



United States

Securities and Exchange Commission
Washington, D.C.  20549


RE:   Angeles Income Properties, Ltd. III
      Form 10-KSB
      File No. 0-13191


To Whom it May Concern:

The  accompanying  Form 10-KSB for the year ended  December 31, 1999 describes a
change in the method of  accounting to  capitalize  exterior  painting and major
landscaping,   which  would  have  been  expensed  under  the  old  policy.  The
Partnership believes that this accounting principle change is preferable because
it  provides a better  matching  of  expenses  with the  related  benefit of the
expenditures and it is consistent with industry practice and the policies of the
Managing General Partner.

Please do not hesitate to contact the undersigned with any questions or comments
that you might have.

Very truly yours,



Stephen Waters
Real Estate Controller


<PAGE>


                  FORM 10-KSB--ANNUAL OR TRANSITIONAL REPORT UNDER

                               SECTION 13 OR 15(d)

                                   Form 10-KSB

(Mark One)
[X]   ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934 [No Fee Required]

                    For the fiscal year ended December 31, 1999

[ ]   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934 [No Fee Required]

                For the transition period from _________to _________

                         Commission file number 0-13192

                        ANGELES INCOME PROPERTIES, LTD. III
                   (Name of small business issuer in its charter)

         California                                            95-3903984
(State or other jurisdiction of                            (I.R.S. Employer
 incorporation or organization)                           Identification No.)

                          55 Beattie Place, PO Box 1089
                        Greenville, South Carolina 29602
                      (Address of principal executive offices)

                    Issuer's telephone number (864) 239-1000

           Securities registered under Section 12(b) of the Exchange Act:

                                      None

           Securities registered under Section 12(g) of the Exchange Act:

                            Limited Partnership Units

                                (Title of class)

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 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___

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure  will be contained,  to
the best of the  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. [ ]

State issuer's revenues for its most recent fiscal year.  $860,000

State the aggregate  market value of the voting  partnership  interests  held by
non-affiliates  computed  by  reference  to the price at which  the  partnership
interests  were sold,  or the average bid and asked  prices of such  partnership
interests as of December 31, 1999. No market exists for the limited  partnership
interests of the Registrant,  and,  therefore,  no aggregate market value can be
determined.

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None


                                     PART I

Item 1.  Description of Business

Angeles Income  Properties,  Ltd. III (the  "Partnership"  or "Registrant") is a
publicly held limited partnership organized under the California Uniform Limited
Partnership  Act on May 26, 1983,  as amended  (hereinafter  referred to as "the
Agreement").  The  Partnership's  managing  general  partner is  Angeles  Realty
Corporation  II, ("ARC II" or the "Managing  General  Partner",  an affiliate of
Apartment   Investment  and  Management   Company  ("AIMCO")  and  previously  a
wholly-owned subsidiary of MAE GP Corporation ("MAE GP"). Effective February 25,
1998, MAE GP was merged into Insignia  Properties  Trust  ("IPT"),  which was an
affiliate of Insignia Financial Group, Inc. ("Insignia"). Effective February 26,
1999,  IPT was merged into AIMCO.  Thus, the Managing  General  Partner is now a
wholly-owned  subsidiary  of  AIMCO.  The  Elliott  Accommodation  Trust and the
Elliott Family  Partnership,  Ltd.,  California limited  partnerships,  were the
Non-Managing  General Partners.  Effective  December 31, 1997 the Elliott Family
Partnership,  Ltd.  acquired the Elliott  Accommodation  Trust's general partner
interest in the Registrant.  The Managing  General Partner and the  Non-Managing
General Partner are herein  collectively  referred to as the "General Partners".
The  Partnership  Agreement  provides  that the  Partnership  is to terminate on
December 31, 2038 unless terminated prior to such date.

The  Registrant  is engaged in the business of operating and holding real estate
properties for investment.  In 1984 and 1985, during its acquisition  phase, the
Registrant  acquired  one  existing  apartment  complex,  a mobile home park,  a
shopping center and invested in three joint ventures  which, in turn,  owned two
shopping  centers  and  one  industrial/distribution   complex.  The  Registrant
continues to own and operate the apartment  complex (see "Item 2, Description of
Property").

Commencing  March 7, 1984,  the Registrant  offered,  pursuant to a Registration
Statement filed with the Securities and Exchange Commission, up to 160,000 units
of Limited Partnership  Interest (the "Units"),  at a purchase price of $500 per
Unit with a minimum  purchase of 10 Units  ($5,000),  or 4 Units ($2,000) for an
Individual Retirement Account.

The offering  terminated  March 6, 1985. Upon  termination of the offering,  the
Registrant  sold 86,920  units  aggregating  $43,460,000.  The General  Partners
contributed  capital  in  the  amount  of  $1,000  for  a  1%  interest  in  the
Partnership.  Since its initial offering,  the Registrant has not received,  nor
are limited partners required to make, additional capital contributions.

The  Partnership  has  no  employees.  Property  management  and  administrative
services are provided by the Managing  General Partner and by agents retained by
the Managing General Partner.  Property management services are performed at the
Partnership's  residential  property by an  affiliate  of the  Managing  General
Partner.  However,  since October 1, 1998, such property  management services at
the  Registrant's  commercial  property were provided by an unrelated party (see
"Transfer of Control"  below).  This  commercial  property was sold December 30,
1999 to an unaffiliated third party.

The  real  estate  business  in which  the  Partnership  is  engaged  is  highly
competitive.  There are other  residential  properties within the market area of
the Partnership's  property.  The number and quality of competitive  properties,
including  those which may be managed by an affiliate  of the  Managing  General
Partner,  in such market area could have a material  effect on the rental market
for apartments  owned by the  Partnership  and the rents that may be charged for
such  apartments.  While the Managing  General  Partner and its  affiliates  own
and/or  control a significant  number of apartment  units in the United  States,
such units represent an insignificant percentage of total apartment units in the
United States and competition for the apartments is local.

Both the income and expenses of operating the property owned by the  Partnership
are subject to factors outside of the Partnership's  control, such as changes in
the supply and demand for  similar  properties  resulting  from  various  market
conditions, increases/decreases in unemployment or population shifts, changes in
the  availability of permanent  mortgage  financing,  changes in zoning laws, or
changes in patterns or needs of users. In addition,  there are risks inherent in
owning  and  operating  residential   properties  because  such  properties  are
susceptible  to the  impact of  economic  and other  conditions  outside  of the
control of the Partnership.

There have been, and it is possible there may be other, Federal, state and local
legislation  and  regulations   enacted   relating  to  the  protection  of  the
environment.  The Partnership is unable to predict the extent,  if any, to which
such new  legislation  or  regulations  might occur and the degree to which such
existing or new legislation or regulations might adversely affect the properties
owned by the Partnership.

The  Partnership  monitors its property for evidence of  pollutants,  toxins and
other dangerous substances, including the presence of asbestos. In certain cases
environmental testing has been performed.  which resulted in no material adverse
conditions or liabilities.  In no cash has the Partnership  received notice that
it is a potentially  responsible party with respect to an environmental clean up
site.

A further description of the Partnership's  business is included in Management's
Discussion  and  Analysis or Plan of  Operations"  included in "Item 6." of this
Form 10-KSB.

Transfer of Control

Pursuant  to a series  of  transactions  which  closed  on  October  1, 1998 and
February 26, 1999,  Insignia and IPT merged into AIMCO,  a publicly  traded real
estate  investment  trust,  with  AIMCO  being the  surviving  corporation  (the
"Insignia Merger").  As a result,  AIMCO acquired 100% ownership interest in the
Managing  General  Partner.  The Managing  General Partner does not believe that
this  transaction  has had or will have a  material  effect on the  affairs  and
operations of the Partnership.

Item 2.  Description of Property:

The following table sets forth the Partnership's investment in its property:

                           Date of
Property                   Purchase       Type of Ownership         Use

Lake Forest Apartments      06/27/84       Fee ownership      Residential Rental
  Brandon, Mississippi                                            136 units


<PAGE>



Schedule of Property:

Set forth  below for the  Registrant's  property  is the gross  carrying  value,
accumulated  depreciation,  depreciable life, method of depreciation and Federal
tax basis.


<TABLE>
<CAPTION>
                       Gross
                     Carrying   Accumulated                              Federal
Property               Value    Depreciation     Rate       Method      Tax Basis
                          (in thousands)                             (in thousands)
<S>                  <C>           <C>         <C>          <C>        <C>

Lake Forest
   Apartments         $ 4,920     $ 3,122      5-40 yrs      S/L        $1,800
</TABLE>


See  "Note A" of the  consolidated  financial  statements  included  in "Item 7.
Financial Statements" for a description of the Partnership's depreciation policy
and "Note K - Change in Accounting Principle".

Schedule of Rental Rate and Occupancy:

Average annual rental rate and occupancy for 1999 and 1998 for the property:

                                  Average Annual                Average Annual
                                    Rental Rate                   Occupancy
                                     (per unit)
 Property                       1999            1998          1999         1998

 Lake Forest Apartments       $6,783           $6,642         92%           94%

As noted under "Item 1.  Description of Business",  the real estate  industry is
highly  competitive.  The Partnership's  property is subject to competition from
other residential  apartment complexes in the area. The Managing General Partner
believes that the property is adequately  insured.  The apartment complex leases
its units for lease terms of one year or less. No residential  tenant leases 10%
or more  of the  available  rental  space.  The  property  is in  good  physical
condition,  subject to normal  depreciation and  deterioration as is typical for
assets of this type and age.

Schedule of Real Estate Tax and Rate:

Real estate taxes and rate in 1999 for the property were:

                                    1999             1999
                                  Billing            Rate
                              (in thousands)

Lake Forest Apartments              $38             10.85%

Capital Improvements:

Lake Forest  Apartments:  The Partnership  completed  approximately  $124,000 in
capital  expenditures  at  Lake  Forest  Apartments  as of  December  31,  1999,
consisting primarily of sewer upgrades,  appliances, floor covering replacement,
pool upgrades and recreation  facility  improvements.  These  improvements  were
funded  primarily from operations.  The Partnership is currently  evaluating the
capital  improvement  needs of the property for the upcoming  year.  The minimum
amount to be budgeted  is  expected  to be $300 per unit or $40,800.  Additional
improvements may be considered and will depend on the physical  condition of the
property as well as replacement  reserves and anticipated cash flow generated by
the property.

Item 3.  Legal Proceedings

In March 1998, several putative unit holders of limited partnership units of the
Partnership  commenced an action  entitled  Rosalie  Nuanes,  et al. v. Insignia
Financial  Group,  Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs  named as defendants,  among others,
the  Partnership,  the Managing  General Partner and several of their affiliated
partnerships  and corporate  entities.  The action  purports to assert claims on
behalf of a class of limited  partners and derivatively on behalf of a number of
limited  partnerships  (including  the  Partnership)  which are named as nominal
defendants,  challenging  the  acquisition  by Insignia  Financial  Group,  Inc.
("Insignia")  and  entities  which  were,  at one time,  affiliates  of Insignia
("Insignia  Affiliates") of interests in certain general partner entities,  past
tender offers by Insignia  Affiliates to acquire limited  partnership units, the
management of partnerships  by Insignia  Affiliates and the Insignia Merger (see
"Item 7. Financial  Statements,  Note B - Transfer of Control").  The plaintiffs
seek monetary damages and equitable relief,  including  judicial  dissolution of
the  Partnership.  On June 25, 1998, the Managing General Partner filed a motion
seeking  dismissal  of the action.  In lieu of  responding  to the  motion,  the
plaintiffs have filed an amended  complaint.  The Managing General Partner filed
demurrers to the amended  complaint which were heard February 1999.  Pending the
ruling on such  demurrers,  settlement  negotiations  commenced.  On November 2,
1999,  the parties  executed and filed a  Stipulation  of  Settlement,  settling
claims,  subject to final court  approval,  on behalf of the Partnership and all
limited partners who own units as of November 3, 1999.  Preliminary  approval of
the  settlement  was obtained on November 3, 1999 from the Superior Court of the
State of  California,  County of San Mateo,  at which time the Court set a final
approval  hearing for December 10, 1999.  Prior to the December 10, 1999 hearing
the Court received various  objections to the settlement,  including a challenge
to the Court's preliminary  approval based upon the alleged lack of authority of
class  plaintiffs'  counsel to enter the  settlement.  On December 14, 1999, the
Managing General Partner and its affiliates  terminated the proposed settlement.
Certain  plaintiffs  have filed a motion to disqualify  some of the  plaintiffs'
counsel in the action.  The Managing  General  Partner does not anticipate  that
costs  associated with this case will be material to the  Partnership's  overall
operations.

The  Partnership is unaware of any other pending or outstanding  litigation that
is not of a routine nature arising in the ordinary course of business.

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

During the quarter ended December 31, 1999, no matter was submitted to a vote of
security  holders  of the  Registrant  through  the  solicitation  of proxies or
otherwise.

                                     PART II

Item 5.  Market for the Partnership's Common Equity and Related Security Holder
         Matters

The Partnership,  a publicly-held  limited partnership,  offered and sold 86,920
Limited  Partnership Units during its offering period through March 7, 1984, and
currently has 86,738 Limited  Partnership  Units  outstanding  and 2,190 Limited
Partners of record.  Affiliates  of the Managing  General  Partner  owned 33,554
units or 38.684% of the outstanding  partnership  units at December 31, 1999. No
public  trading  market has developed for the Units,  and it is not  anticipated
that such a market  will  develop  in the  future.  During  1998,  the number of
Limited  Partnership  Units  decreased  by 40  units  due  to  limited  partners
abandoning  their units. In abandoning his or her Limited  Partnership  Units, a
limited partner relinquishes all right, title and interest in the Partnership as
of the date of abandonment.

The following table sets forth the distributions made by the Partnership for the
years ended  December 31, 1998 and 1999,  as well as for the  subsequent  period
from January 1, 2000 to March 1, 2000. (See "Item 7. Financial Statements,  Note
I - Distributions" for more details).

                                                Distribution

                                                          Per Limited
                                      Aggregate       Partnership Unit (4)

      1/01/98 - 12/31/98            $  247,000 (1)          $  .02

      1/01/99 - 12/31/99             1,000,000 (2)           11.41

      1/01/00 -  3/01/00             1,275,000 (3)           14.55

(1)   Distribution  was made from  operations  and included  payment of $245,000
      which had been declared at December 31, 1997.

(2)   Distribution was made from cash from operations.

(3)   Consists of $70,000 of cash from operations and $1,205,000 from sale
      proceeds.

(4)   All  distributions  are distributed 99% to limited  partners and 1% to
     general partners.

Future cash  distributions  will depend on the levels of net cash generated from
operations,   the  availability  of  cash  reserves,  and  the  timing  of  debt
maturities,  refinancings and/or property sales. The Partnership's  distribution
policy is reviewed on a semi-annual basis.  There can be no assurance,  however,
that the  Partnership  will generate  sufficient  funds from  operations,  after
required  capital  expenditures,  to permit any additional  distributions to its
partners in the year 2000 or subsequent  periods.  See "Item 2.  Description  of
Property - Capital Improvements" for information relating to anticipated capital
expenditures at the Partnership's property.

Several tender offers were made by various parties,  including affiliates of the
Managing General Partner,  during the years ended December 31, 1999 and 1998. As
a result of these tender offers,  AIMCO and its affiliates  currently own 33,554
limited partnership units in the Partnership representing  approximately 38.684%
of the outstanding  units. It is possible that AIMCO or its affiliates will make
one  or  more  additional  offers  to  acquire  additional  limited  partnership
interests in the  Partnership for cash or in exchange for units in the operating
partnership of AIMCO.  Under the Partnership  Agreement,  unitholders  holding a
majority of the Units are  entitled to take action with  respect to a variety of
matters. When voting on matters, AIMCO would in all likelihood vote the Units it
acquired in a manner  favorable to the interest of the Managing  General Partner
because of their affiliation with the Managing General Partner.

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 Registrant from time to time. The discussions of
the Registrant's business and results of operations,  including  forward-looking
statements pertaining to such matters, does not take into account the effects of
any changes to the Registrant's business and results of 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  consolidated  financial
statements and other items contained elsewhere in this report.

Results of Operations

The   Registrant's  net  income  for  the  year  ended  December  31,  1999  was
approximately  $2,076,000 as compared to a net loss of approximately $16,000 for
the year ended  December  31, 1998 (See "Note C" of the  consolidated  financial
statements for a  reconciliation  of these amounts to the  Registrant's  federal
taxable  income).  The increase in net income is primarily  attributable  to the
gain on sale of discontinued operations of approximately  $2,276,000 realized on
the sale of Poplar Square Shopping Center as discussed below.

The Registrant had a net loss before  discontinued  operations and extraordinary
loss on early  extinguishment of debt of approximately $4,000 for the year ended
December  31, 1999 as compared to income of  approximately  $41,000 for the year
ended  December 31, 1998.  The increase in loss is the result of both a decrease
in total revenue and an increase in total expenses. Total revenues decreased due
to a decrease in rental  income and a decrease in other  income.  Rental  income
decreased due to a decrease in occupancy and increased  concession costs at Lake
Forest  Apartments.  These decreases were partially offset by an increase in the
average annual rental rate at the property. Other income decreased primarily due
to a decrease in interest income due to lower cash balances invested in interest
bearing accounts as a result of the distribution made during 1999.

The increase in total expenses is primarily the result of an increase in general
and administrative  expenses and was partially offset by a decrease in operating
expenses.  General and  administrative  expenses  increased  due primarily to an
increase in legal expense,  increased Partnership  management fees allowed to be
paid  to  the  Managing  General  Partner  based  on  "net  cash  available  for
distributions"   as  defined  in  the   Partnership   Agreement   and  increased
professional   fees.   These   increases  were   partially   offset  by  reduced
reimbursements  to the Managing General Partner.  Legal expense increased due to
the settlement of a lawsuit as discussed in the  Partnership's  Annual Report on
Form 10-KSB at December 31, 1998. Included in general and administrative expense
for the  years  ended  December  31,  1999 and 1998  are  reimbursements  to the
Managing General Partner allowed under the Partnership  Agreement.  In addition,
costs associated with the quarterly and annual communications with investors and
regulatory  agencies  and the  annual  audits  and  appraisals  required  by the
Partnership  Agreement are also included.  Operating  expenses  decreased due to
reduced  maintenance  expenses and  advertising  expenses  which were  partially
offset by an increase in payroll expenses.

On December 30, 1999, Poplar Square Shopping Center located in Medford,  Oregon,
was sold to an unaffiliated  third party for $5,215,000.  After closing expenses
and other  expenses  (net) of  approximately  $93,000 and the  assumption by the
purchaser of the property's  mortgage of $3,660,000 the net proceeds received by
the Partnership were approximately  $1,462,000.  Subsequent to December 31, 1999
approximately  $1,205,000 of the remaining net sale proceeds were distributed to
the  Partners.   The  Partnership   recorded  an  extraordinary  loss  on  early
extinguishment  of debt of  approximately  $92,000  due to the  payment  of loan
assumption  fees and the write off of the remaining  unamortized  loan costs. In
addition  a  gain  on the  sale  of  discontinued  operations  of  approximately
$2,276,000  was  recorded  as a result  of  writing  off the net  assets  of the
property against the net proceeds received from the sale.

Poplar Square was the only  commercial  property  owned by the  Partnership  and
represented one segment of the Partnership's operations. Due to the sale of this
property,  the results of the commercial  segment have been shown as income from
discontinued operations and gain on sale of discontinued operations for 1999 and
1998 and,  accordingly,  the  statements  of  operations  have been  restated to
reflect this presentation. Revenues of this property were approximately $976,000
and  $1,020,000  for 1999 and  1998,  respectively.  Loss from  operations  were
approximately $104,000 and $57,000 for 1999 and 1998, respectively. The increase
in loss from discontinued operations was due to an increase in bad debt expense,
and reduced  occupancy which were partially  offset by increased  average rental
rates and tenant charges.

Effective  January 1, 1999, the Partnership  changed its method of accounting to
capitalize the cost of exterior  painting and major landscaping on a prospective
basis.  The  Partnership  believes  that  this  accounting  principle  change is
preferable  because it provides a better  matching of expenses  with the related
benefit of the expenditures and it is consistent with industry  practice and the
policies of the Managing General  Partner.  The effect of the change in 1999 was
not  material.  The  cumulative  effect,  had the change  been  applied to prior
periods,  is not  material.  The  accounting  principle  change will not have an
effect on cash flow,  funds  available for  distribution  or fees payable to the
Managing General Partner and affiliates.

As part of the ongoing  business plan of the  Partnership,  the Managing General
Partner  monitors the rental market  environment of its  investment  property to
assess the feasibility of increasing rents,  maintaining or increasing occupancy
levels and protecting the Partnership from increases in expense. As part of this
plan, the Managing  General Partner attempts to protect the Partnership from the
burden of  inflation-related  increases  in  expenses  by  increasing  rents and
maintaining a high overall  occupancy  level.  However,  due to changing  market
conditions,  which  can  result  in the use of  rental  concessions  and  rental
reductions needed to offset softening market  conditions,  there is no guarantee
that the Managing General Partner will be able to sustain such a plan.

Capital Resources and Liquidity

At  December  31,  1999,  the  Registrant  held  cash  and cash  equivalents  of
approximately  $2,253,000,  compared to approximately $1,347,000 at December 31,
1998.  The increase in cash and cash  equivalents of  approximately  $906,000 is
primarily  due  to  approximately  $1,308,000  of  cash  provided  by  investing
activities and to a lessor extent to approximately  $648,000 of cash provided by
operating activities  partially offset by approximately  $1,050,000 of cash used
in  financing  activities.  Cash  provided  by  investing  activities  consisted
primarily  of net  proceeds  received  as a result of the sale of Poplar  Square
Shopping  Center  and  was  partially   offset  by  property   improvements  and
replacements. Cash used in financing activities consisted of scheduled principal
payments and the payoff of the mortgage at Poplar  Square and  distributions  to
partners.  The Registrant  invests its working capital  reserves in money market
accounts.

The sufficiency of existing  liquid assets to meet future  liquidity and capital
expenditure   requirements   is  directly   related  to  the  level  of  capital
expenditures  required at the Partnership's  property to adequately maintain the
physical  assets and other operating needs of the Partnership and to comply with
Federal, state, and local legal and regulatory requirements.  The Partnership is
currently  evaluating  the capital  improvement  needs of the  property  for the
upcoming year. The minimum amount to be budgeted is expected to be $300 per unit
or $40,800.  Additional  improvements  may be considered  and will depend on the
physical condition of the property as well as anticipated cash flow generated by
the property.  The additional capital expenditures will be incurred only if cash
is available from operations and Partnership  reserves.  To the extent that such
budgeted capital improvements are completed the Registrant's  distributable cash
flow, if any, may be adversely affected at least in the short term.

The  Registrant's  current assets are thought to be sufficient for any near-term
needs (exclusive of capital improvements) of the Registrant.

The  Partnership  made a cash  distribution  from  operations  of  approximately
$1,000,000  (approximately  $990,000  to the  limited  partners,  or $11.41  per
limited  partnership  unit),  during  the year ended  December  31,  1999.  Cash
distributions of approximately $247,000 were paid during the year ended December
31,  1998,  of which $2,000  ($.02 per limited  partnership  unit) was paid from
operations  for the  year  ended  December  31,  1998 and  $245,000  was paid in
relation to a  distribution  declared as of December  31,  1997.  Subsequent  to
December 31, 1999 a cash distribution of approximately $1,275,000 (approximately
$1,262,000 to the limited partners or $14.55 per limited  partnership  unit) was
approved and paid.  Approximately $70,000  (approximately $69,000 to the limited
partners or $0.80 per limited  partnership unit) of this was from operations and
approximately  $1,205,000  (approximately  $1,193,000 to the limited partners or
$13.75  per  limited  partnership  unit) was from  sale  proceeds.  Future  cash
distributions  will depend on the levels of net cash generated from  operations,
the  availability  of  cash  reserves,   and  the  timing  of  debt  maturities,
refinancings  and/or property sales. The  Partnership's  distribution  policy is
reviewed on a semi-annual  basis. There can be no assurance,  however,  that the
Partnership  will generate  sufficient  funds from  operations,  after  required
capital expenditures,  to permit additional distributions to its partners in the
year 2000 or subsequent periods.

Several tender offers were made by various parties,  including affiliates of the
Managing General Partner,  during the years ended December 31, 1999 and 1998. As
a result of the tender  offers,  AIMCO and its  affiliates  currently own 33,554
limited partnership units in the Partnership representing  approximately 38.684%
of the outstanding  units. It is possible that AIMCO or its affiliates will make
one  or  more  additional  offers  to  acquire  additional  limited  partnership
interests in the  Partnership for cash or in exchange for units in the operating
partnership of AIMCO.  Under the Partnership  Agreement,  unitholders  holding a
majority of the Units are  entitled to take action with  respect to a variety of
matters. When voting on matters, AIMCO would in all likelihood vote the Units it
acquired in a manner  favorable to the interest of the Managing  General Partner
because of their affiliation with the Managing General Partner.

Year 2000 Compliance

General Description

The Year 2000 issue is the result of computer  programs  being written using two
digits rather than four digits to define the applicable year. The Partnership is
dependent  upon the Managing  General  Partner and its affiliates for management
and  administrative  services  ("Managing  Agent").  Any of the Managing Agent's
computer programs or hardware that had date-sensitive software or embedded chips
might have  recognized  a date using "00" as the year 1900  rather than the year
2000.  This could have resulted in a system failure or  miscalculations  causing
disruptions of operations,  including, among other things, a temporary inability
to process  transactions,  send invoices,  or engage in similar normal  business
activities.

Computer Hardware, Software and Operating Equipment

In 1999,  the Managing  Agent  completed  all phases of its Year 2000 program by
completing  the  replacement  and repair of any  hardware or software  system or
operating  equipment that was not yet Year 2000 compliant.  The Managing Agent's
hardware  and software  systems and its  operating  equipment  are now Year 2000
compliant.  No  material  failure or  erroneous  results  have  occurred  in the
Managing Agent's computer  applications  related to the failure to reference the
Year 2000 to date.

Third Parties

To  date,  the  Managing  Agent  is not  aware of any  significant  supplier  or
subcontractor  (external agent) or financial institution of the Partnership that
has a Year 2000 issue that  would  have a material  impact on the  Partnership's
results of operations,  liquidity or capital  resources.  However,  the Managing
Agent  has no means of  ensuring  or  determining  the Year 2000  compliance  of
external  agents.  At this time, the Managing Agent does not believe that a Year
2000 issue of any  non-compliant  external agent will have a material  impact on
the Partnership's financial position or results of operations.

Costs

The total cost of the Managing Agent's Year 2000 project was approximately  $3.2
million and was funded from operating cash flows.

Risks Associated with the Year 2000

The Managing  Agent  completed all necessary  phases of its Year 2000 program in
1999,  and did not  experience  system or  equipment  malfunctions  related to a
failure to reference the Year 2000. The Managing  Agent or Partnership  have not
been  materially  adversely  effected by  disruptions  in the economy  generally
resulting from the Year 2000 issue.

At this  time,  the  Managing  Agent  does not  believe  that the  Partnership's
businesses,  results of  operations  or financial  condition  will be materially
adversely effected by the Year 2000 issue.

Contingency Plans Associated with the Year 2000

The  Managing  Agent has not had to implement  contingency  plans such as manual
workarounds or selecting new relationships for its banking or elevator operation
activities in order to avoid the Year 2000 issue.

Item 7.  Financial Statements

ANGELES INCOME PROPERTIES, LTD. III

LIST OF FINANCIAL STATEMENTS

      Report of Ernst & Young LLP, Independent Auditors

      Consolidated Balance Sheet - December 31, 1999

      Consolidated Statements of Operations - Years ended December 31, 1999 and
      1998

      Consolidated  Statements of Changes in Partners' (Deficit) Capital - Years
      ended December 31, 1999 and 1998

      Consolidated Statements of Cash Flows - Years ended December 31, 1999 and
      1998

      Notes to Consolidated Financial Statements


<PAGE>


                 Report of Ernst & Young LLP, Independent Auditors

The Partners

Angeles Income Properties, Ltd. III


We have audited the  accompanying  consolidated  balance sheet of Angeles Income
Properties,  Ltd.  III as of December  31,  1999,  and the related  consolidated
statements of operations,  changes in partners' (deficit) capital and cash flows
for each of the two years in the period ended December 31, 1999. These financial
statements  are  the  responsibility  of  the  Partnership's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made  by the  Partnership's  management,  as  well  as  evaluating  the  overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the consolidated  financial  position of Angeles Income
Properties,  Ltd. III at December 31, 1999, and the consolidated  results of its
operations  and its cash  flows  for each of the two years in the  period  ended
December 31, 1999, in conformity with accounting  principles  generally accepted
in the United States.

                                                            /s/ERNST & YOUNG LLP

Greenville, South Carolina
February 25, 2000

                        ANGELES INCOME PROPERTIES, LTD. III
                           CONSOLIDATED BALANCE SHEET
                          (in thousands, except unit data)

                                December 31, 1999

<TABLE>
<CAPTION>

Assets
<S>                                                           <C>          <C>

   Cash and cash equivalents                                               $ 2,253
   Receivables and deposits, net of allowance for
    doubtful accounts of $126                                                  160
   Other assets                                                                  7
   Investment properties (Note E):
      Land                                                   $    657
      Buildings and related personal property                   4,263
                                                                4,920

      Less accumulated depreciation                            (3,122)       1,798
                                                                           $ 4,218

Liabilities and Partners' Capital
Liabilities

   Accounts payable                                                        $    33
   Tenant security deposit liabilities                                          20
   Accrued property taxes                                                       39
   Other liabilities                                                           180

Partners' Capital

   General partners                                           $     7
   Limited partners (86,738 units issued and
      outstanding)                                              3,939        3,946
                                                                           $ 4,218

            See Accompanying Notes to Consolidated Financial Statements

</TABLE>



                        ANGELES INCOME PROPERTIES, LTD. III

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                          (in thousands, except unit data)

<TABLE>
<CAPTION>

                                                           Years Ended December 31,
                                                              1999         1998

Revenues:                                                               (restated)
<S>                                                          <C>         <C>

   Rental income                                             $  803       $  812
   Other income                                                  57           67
      Total revenues                                            860          879

Expenses:
   Operating                                                    329          342
   General and administrative                                   232          198
   Depreciation                                                 264          261
   Property taxes                                                39           37

      Total expenses                                            864          838

(Loss) income before discontinued operations and
   extraordinary loss on early extinguishment of debt            (4)          41

Loss from discontinued operations (Note F)                     (104)         (57)
Gain on sale of discontinued operations (Note F)              2,276           --

Income (loss) before extraordinary loss on early
  extinguishment of debt                                      2,168          (16)
Loss on early extinguishment of debt (Note F)                   (92)          --


Net income (loss) (Note C)                                    2,076          (16)


Net income (loss) allocated to general partners              $  364       $   --

Net income (loss) allocated to limited partners               1,712          (16)


                                                             $2,076       $  (16)

Net (loss) income per limited partnership unit:
(Loss) income before discontinued operations and
   extraordinary loss on early extinguishment of debt        $ (.05)      $  .47

Loss from discontinued operations                             (1.18)        (.65)
Gain on sale of discontinued operations                       22.02           --

Income (loss) before extraordinary loss on early
  extinguishment of debt                                      20.79         (.18)
Loss on early extinguishment of debt                          (1.05)          --


Net income (loss) per limited partnership unit               $19.74       $ (.18)

Distributions per limited partnership unit                   $11.41       $  .02


            See Accompanying Notes to Consolidated Financial Statements

</TABLE>



                        ANGELES INCOME PROPERTIES, LTD. III

          CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL
                          (in thousands, except unit data)

<TABLE>
<CAPTION>


                                        Limited
                                       Partnership    General     Limited
                                          Units       Partners    Partners     Total

<S>                                      <C>          <C>        <C>         <C>

Original capital contributions           86,920      $     1     $43,460    $43,461


Partners' (deficit) capital

   at December 31, 1997                  86,778      $  (347)    $ 3,235    $ 2,888

Net loss for the year ended
   December 31, 1998                         --           --         (16)       (16)

Distributions to partners                    --           --          (2)        (2)

Abandonment of partnership units
  (Note G)                                  (40)          --          --         --


Partners' (deficit) capital at
   December 31, 1998                     86,738         (347)      3,217      2,870

Net income for the year ended
   December 31, 1999                         --          364       1,712      2,076
Distributions to partners                    --          (10)       (990)    (1,000)

Partners' capital at

   December 31, 1999                     86,738      $     7     $ 3,939    $ 3,946


            See Accompanying Notes to Consolidated Financial Statements
</TABLE>


<PAGE>


                        ANGELES INCOME PROPERTIES, LTD. III

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                   (in thousands)

<TABLE>
<CAPTION>
                                                              Year Ended December 31,
                                                                  1999        1998

Cash flows from operating activities:
<S>                                                               <C>          <C>
  Net income (loss)                                              $ 2,076     $   (16)
  Adjustments to reconcile net income (loss) to net
   cash provided by operating activities:
   Gain on sale of discontinued operations                        (2,276)         --
   Extraordinary loss on early extinguishment of debt                 92          --
   Depreciation                                                      687         685
   Amortization of loan costs and leasing commissions                 40          37
   Change in accounts:
      Receivables and deposits                                        (5)        (51)
      Other assets                                                    11          --
      Accounts payable                                                12          (2)
      Tenant security deposit liabilities                             (1)         --
      Accrued property taxes                                         (16)        (38)
      Other liabilities                                               28          45

          Net cash provided by operating activities                  648         660

Cash flows from investing activities:

  Property improvements and replacements                            (124)        (76)
  Net proceeds from sale of discontinued operations                1,462          --
  Net deposits to restricted escrows                                 (30)        (26)

          Net cash provided by (used in) investing
             activities                                            1,308        (102)

Cash flows from financing activities:

  Payments on mortgage note payable                                  (50)        (45)
  Distributions to partners                                       (1,000)       (247)


          Net cash used in financing activities                   (1,050)       (292)


Net increase in cash and cash equivalents                            906         266

Cash and cash equivalents at beginning of the year                 1,347       1,081

Cash and cash equivalents at end of year                        $  2,253    $  1,347

Supplemental disclosure of cash flow information:

  Cash paid for interest                                        $    339    $    344

Supplemental disclosure of non-cash activity
  Extinguishment of debt in connection with the sale of
   discontinued operations                                      $  3,660    $     --

            See Accompanying Notes to Consolidated Financial Statements
</TABLE>


<PAGE>



                        ANGELES INCOME PROPERTIES, LTD. III

                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                December 31, 1999

Note A - Organization and Significant Accounting Policies

Organization:   Angeles  Income  Properties,  Ltd.  III  (the  "Partnership"  or
"Registrant")  is a  California  limited  partnership  organized  in May 1983 to
acquire and operate  residential  and  commercial  real estate  properties.  The
Partnership's  managing  general partner is Angeles Realty  Corporation II ("ARC
II" or the "Managing General Partner"), an affiliate of Apartment Investment and
Management Company ("AIMCO") and previously a wholly-owned  subsidiary of MAE GP
Corporation  ("MAE GP").  Effective  February 25,  1998,  MAE GP was merged into
Insignia Properties Trust ("IPT"),  which was an affiliate of Insignia Financial
Group, Inc ("Insignia"). Effective February 26, 1999, IPT was merged into AIMCO.
See "Note B - Transfer of Control".  Thus the Managing  General Partner is now a
wholly-owned  subsidiary  of  AIMCO.  The  Elliott  Accommodation  Trust and the
Elliott Family  Partnership,  Ltd.,  California limited  partnerships,  were the
Non-Managing  General Partners.  Effective  December 31, 1997 the Elliott Family
Partnership,  Ltd., acquired the Elliott  Accommodation  Trust's general partner
interest in the Registrant.  The Managing  General Partner and the  Non-Managing
General Partner are herein  collectively  referred to as the "General Partners".
The  Partnership  Agreement  provides  that the  Partnership  is to terminate on
December  31, 2038,  unless  terminated  prior to such date.  As of December 31,
1999, the Partnership operates one residential property in Mississippi.

Principles  of  Consolidation:  The  consolidated  financial  statements  of the
Partnership include its 99% limited  partnership  interests in Poplar Square AIP
III, L.P. and Poplar Square GP LP. Poplar Square GP LP is the general partner of
Poplar Square AIP III and ARC II is the general  partner of Poplar Square GP LP.
Both general  partners of the  consolidated  partnerships  may be removed by the
Registrant;  therefore,  the partnerships are controlled and consolidated by the
Partnership. All significant interpartnership balances have been eliminated.

Use 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 reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

Allocations and  Distributions  to Partners:  In accordance with the Partnership
Agreement,  any gain from the sale or other  disposition of  Partnership  assets
will be  allocated  first to the Managing  General  Partner to the extent of the
amount of any  Incentive  Interest  (as  defined  below)  to which the  Managing
General  Partner is entitled.  Any gain remaining  after said allocation will be
allocated to the general  partners and limited  partners in  proportion to their
interests in the Partnership; provided that the gain shall first be allocated to
Partners with negative account balances,  in proportion to such balances,  in an
amount  equal  to  the  sum of  such  negative  capital  account  balances.  The
Partnership  will allocate other profits and losses 0.5% to the Managing General
Partner,  0.5% to the  Non-Managing  General  Partners,  and 99% to the  Limited
Partners.

Except as discussed below, the Partnership will allocate distributions 1% to the
general partners and 99% to the limited partners.

Upon  the  sale  or  other  disposition,  or  refinancing  of any  asset  of the
Partnership, the Distributable Net Proceeds shall be distributed as follows: (i)
First,  to the  Partners  in  proportion  to their  interest  until the  Limited
Partners have  received  proceeds  equal to their  Original  Capital  Investment
applicable  to the  property;  and (ii) Second,  to the Partners  until  Limited
Partners  have  received  distributions  from  all  sources  equal  to  their 6%
Cumulative  Distribution,  (iii) Third, to the Managing General Partner until it
has  received  its  Brokerage  Compensation;  (iv)  Fourth,  to the  Partners in
proportion  to  their  interests  until  the  Limited   Partners  have  received
distributions   from  all  sources  equal  to  their  additional  2%  Cumulative
Distribution;  and (v)  Thereafter,  85% to the Partners in  proportion to their
interests and 15% ("Incentive Interest") to the Managing General Partner.

Depreciation:  Depreciation  is  provided by the  straight-line  method over the
estimated lives of the apartment  property and related  personal  property.  For
Federal income tax purposes,  the  accelerated  cost recovery method is used (1)
for real property  over 15 years for additions  prior to March 16, 1984, 18 year
for  additions  after  March 15,  1984 and before May 9, 1985,  and 19 years for
additions  after May 8, 1985,  and before  January 1, 1987, and (2) for personal
property over 5 years for additions prior to January 1, 1987. As a result of the
Tax Reform Act of 1986,  for  additions  after  December 31, 1986,  the modified
accelerated  cost recovery method is used for  depreciation of (1) real property
over 27 1/2 years and (2) personal property additions over 5 years.

Effective  January 1, 1999 the  Partnership  changed its method of accounting to
capitalize the costs of exterior painting and major landscaping (see Note K).

Cash and Cash Equivalents: Cash and cash equivalents include cash on hand and in
banks and money market accounts.  At certain times, the amount of cash deposited
at a bank may exceed the limit on insured deposits.

Investment  Property:  Investment property consists of one apartment complex and
is stated at cost. Acquisition fees are capitalized as a cost of real estate. In
accordance with Statement of Financial  Accounting  Standards  ("SFAS") No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of," 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.  No adjustments  for
impairment  of value were  necessary  for the years ended  December  31, 1999 or
1998.

Tenant Security  Deposits:  The Partnership  requires security deposits from all
apartment  lessees for the duration of the lease and such  deposits are included
in receivables and deposits.  The security deposits are refunded when the tenant
vacates  the  apartment  provided  the tenant has not  damaged  the space and is
current on rental payments.

Leases: The Partnership  generally leases apartment units for twelve month terms
or less. The Partnership recognizes income as earned on its leases. In addition,
the Managing  General  Partner's  policy is to offer rental  concessions  during
particularly  slow  months or in  response  to heavy  competition  from  similar
complexes  in the  area.  Concessions  are  charged  against  rental  income  as
incurred.

Fair  Value:  SFAS  No.  107,   "Disclosures   about  Fair  Value  of  Financial
Instruments",  as  amended  by  SFAS  No.  119,  "Disclosures  about  Derivative
Financial  Instruments  and  Fair  Value  of  Financial  Instruments",  requires
disclosure of fair value information about financial instruments, whether or not
recognized in the balance  sheet,  for which it is  practicable to estimate fair
value.  Fair value is defined in the SFAS as the amount at which the instruments
could be exchanged in a current transaction between willing parties,  other than
in a forced or  liquidation  sale.  The  Partnership  believes that the carrying
amount of its  financial  instruments  approximates  their fair value due to the
short term maturity of these instruments.

Segment Reporting: SFAS No. 131, "Disclosure about Segments of an Enterprise and
Related  Information"  established  standards  for the way that public  business
enterprises  report  information  about operating  segments in annual  financial
statements and requires that those enterprises report selected information about
operating segments in interim financial reports.  It also establishes  standards
for related disclosures about products and services, geographic areas, and major
customers. (See "Note H" for required disclosure).

Advertising:  The  Partnership  expenses  the cost of  advertising  as incurred.
Advertising  costs of  approximately  $18,000  and  $28,000  for the years ended
December 31, 1999 and 1998,  respectively,  were charged to operating expense as
incurred.

Reclassifications: Certain reclassifications have been made to the 1998 balances
to conform to the 1999 presentation:

Note B - Transfer of Control

Pursuant  to a series  of  transactions  which  closed  on  October  1, 1998 and
February 26, 1999,  Insignia and IPT merged into AIMCO,  a publicly  traded real
estate  investment  trust,  with  AIMCO  being the  surviving  corporation  (the
"Insignia Merger").  As a result,  AIMCO acquired 100% ownership interest in the
Managing  General  Partner.  The Managing  General Partner does not believe that
this  transaction  has had or will have a  material  effect on the  affairs  and
operations of the Partnership.

Note C - Income Taxes

The Partnership has received a ruling from the Internal  Revenue Service that it
will  be  classified  as  a  partnership   for  Federal   income  tax  purposes.
Accordingly, 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 consolidated financial statements of the Partnership.

The  following is a  reconciliation  of reported  net income  (loss) and Federal
taxable income (in thousands, except per unit data):

                                          1999          1998

Net income (loss) as reported            $2,076        $  (16)
Add (deduct):
     Depreciation differences               104            46
     Gain on sale of Poplar Square       (1,697)           --
     Other                                  135            36

Federal taxable income                   $  618        $   66

Federal taxable income per limited
     partnership unit                    $ 7.05        $  .75

The following is a reconciliation between the Partnership's reported amounts and
Federal tax basis of net assets and liabilities (in thousands):

Net assets as reported                $ 3,946
Land and buildings                        (61)
Accumulated depreciation                   63
Syndication and distribution costs      5,807
Other                                     737

Net assets - Federal tax basis        $10,492

Note D - Transactions with Affiliated Parties

The  Partnership  has no employees  and is  dependent  on the  Managing  General
Partner  and  its  affiliates  for  the  management  and  administration  of all
Partnership activities.  The Partnership Agreement provides (i) certain payments
to affiliates for services and (ii)  reimbursement of certain expenses  incurred
by affiliates on behalf of the Partnership.  The following payments were paid or
accrued to the Managing General Partner and affiliates in 1999 and in 1998:

                                                              1999       1998
                                                              (in thousands)

   Property management fees (included in
     operating expense)                                       $ 43       $ 65

   Partnership management fees (included in other
    liabilities, general and administrative expense) (1)        47         27

   Reimbursement for services of affiliates (included in
     investment properties, operating expense and
     general and administrative expense)                        55         92

(1)   The  Partnership  Agreement  provides  for a fee equal to 10% of "net cash
      flow from operations",  as defined in the Partnership Agreement to be paid
      to  the  Managing   General  Partner  for  executive  and   administrative
      management services.

During the years ended  December 31, 1999 and 1998,  affiliates  of the Managing
General  Partner  were  entitled  to  receive  5% of  gross  receipts  from  the
Registrant's   residential  property  as  compensation  for  providing  property
management  services.  The  Registrant  paid  to such  affiliates  approximately
$43,000 for both the years ended December 31, 1999 and 1998.

For the nine months ended September 30, 1998 affiliates of the Managing  General
Partner were entitled to receive varying  percentages of gross receipts from the
Registrant's commercial property for providing property management services. The
Registrant  paid to  such  affiliates  $22,000  during  the  nine  months  ended
September  30,  1998.  Effective  October  1,  1998 (the  effective  date of the
Insignia Merger),  these services for the commercial  property were performed by
an unrelated party.

An  affiliate  of  the  Managing  General  Partner  received   reimbursement  of
accountable  administrative  expenses  amounting  to  approximately  $55,000 and
$92,000 for the years ended December 31, 1999 and 1998,  respectively.  Included
in  "Reimbursement  for Services of Affiliates"  for the year ended December 31,
1998, is approximately $4,000 in leasing commissions paid to an affiliate of the
Managing General Partner. No such fees were paid during 1999.

Several tender offers were made by various parties,  including affiliates of the
Managing General Partner,  during the years ended December 31, 1999 and 1998. As
a result of tender offer, AIMCO and its affiliates  currently own 33,554 limited
partnership units in the Partnership  representing  approximately 38.684% of the
outstanding  units. It is possible that AIMCO or its affiliates will make one or
more additional offers to acquire  additional limited  partnership  interests in
the Partnership  for cash or in exchange for units in the operating  partnership
of AIMCO. Under the Partnership Agreement, unitholders holding a majority of the
Units are  entitled to take action  with  respect to a variety of matters.  When
voting on matters, AIMCO would in all likelihood vote the Units it acquired in a
manner  favorable  to the interest of the Managing  General  Partner  because of
their affiliation with the Managing General Partner.

Note E - Real Estate and Accumulated Depreciation

                                               Initial Cost
                                              To Partnership
                                              (in thousands)
                                                                      Cost
                                                      Buildings    Capitalized
                                                     and Related    (Removed)
                                                      Personal    Subsequent to
     Description         Encumbrances       Land      Property     Acquisition
                        (in thousands)                            (in thousands)

Lake Forest Apts.         $    --         $  657       $ 3,160       $ 1,103


                      Gross Amount At Which Carried
                          At December 31, 1999
                             (in thousands)

<TABLE>
<CAPTION>

                               Buildings
                              And Related

                               Personal                Accumulated      Date    Depreciable
    Description       Land     Property      Total     Depreciation   Acquired   Life-Years
<S>                  <C>          <C>         <C>         <C>         <C>           <C>

Lake Forest Apts.   $  657     $ 4,263      $ 4,920     $ 3,122       6/27/84        40
</TABLE>


The depreciable  lives included above are for the buildings and components.  The
depreciable lives for related personal property are for 3 to 10 years.

Reconciliation of "Investment Properties and Accumulated Depreciation":

                                                 Years Ended December 31,
                                                   1999           1998
                                                      (in thousands)
Investment Properties

Balance at beginning of year                      $14,566       $14,490
    Property improvements and replacements            124            76
    Sale of discontinued operations                (9,770)           --
Balance at end of year                            $ 4,920       $14,566

Accumulated Depreciation

Balance at beginning of year                      $ 9,940       $ 9,255
    Additions charged to expense                      687           685
    Sale of discontinued operations                (7,505)           --

Balance at end of year                            $ 3,122       $ 9,940

The  aggregate  cost of the real  estate  for  Federal  income tax  purposes  at
December  31,  1999 and  1998,  is  approximately  $4,859,000  and  $16,478,000,
respectively. The accumulated depreciation taken for Federal income tax purposes
at December 31, 1999 and 1998, is approximately $3,059,000 and $10,256,000.

Note F - Sale of Discontinued Operations

On December 30, 1999, Poplar Square Shopping Center located in Medford,  Oregon,
was sold to an unaffiliated  third party for $5,215,000.  After closing expenses
and other  payments  (net) of  approximately  $93,000 and the  assumption by the
purchaser of the property's  mortgage of $3,660,000 the net proceeds received by
the Partnership were approximately  $1,462,000.  Subsequent to December 31, 1999
approximately  $1,205,000 of the remaining net sale proceeds were distributed to
the  partners.   The  Partnership   recorded  an  extraordinary  loss  on  early
extinguishment  of debt of  approximately  $92,000  due to the  payment  of loan
assumption fees and the write off of the remaining unamortized loan costs.

The Poplar  Square  Shopping  Center sale  transaction  is summarized as follows
(amounts in thousands):

Net sales price, net of selling costs           $ 5,034,000
Net real estate (1)                              (2,265,000)
Other assets                                       (493,000)
     Gain on sale of real estate                 $ 2,276,000

(1)   Net of accumulated depreciation of approximately $7,505,000.

Poplar Square was the only  commercial  property  owned by the  Partnership  and
represented one segment of the Partnership's operations. Due to the sale of this
property,  the results of the commercial  segment have been shown as income from
discontinued operations and gain on sale of discontinued operations for 1999 and
1998 and,  accordingly,  the  statements  of  operations  have been  restated to
reflect this presentation. Revenues of this property were approximately $976,000
and  $1,020,000  for 1999 and  1998,  respectively.  Loss from  operations  were
approximately $104,000 and $57,000 for 1999 and 1998, respectively.

Note G - Abandonment of Limited Partnership Units

In 1998, the number of Limited  Partnership  Units  decreased by 40 units due to
limited  partners  abandoning  their  units.  In  abandoning  his or her Limited
Partnership Units, a limited partner relinquishes all right, title, and interest
in the  Partnership as of the date of abandonment.  However,  during the year of
abandonment,  the  limited  partner is still  allocated  his or her share of net
income or loss for that year. The income or loss per Limited Partnership Unit in
the  accompanying  Statements of Operations is calculated based on the number of
units outstanding at the beginning of the year.

Note H - Segment Reporting

Description of the types of products and services from which reportable  segment
derives its revenues:

The  Partnership  had  two  reportable  segments:   residential  properties  and
commercial properties.  The Partnership's  residential property segment consists
of one apartment complex located in Mississippi. The Partnership rents apartment
units to  tenants  for terms  that are  typically  twelve  months  or less.  The
commercial  property  segment  consisted of a shopping center located in Oregon,
which was sold on December 30, 1999.  As a result of the sale of the  commercial
property during 1999 the commercial segment is shown as discontinued operations.
(See "Note F - Sale of Discontinued Operations" for further discussion regarding
the commercial property sale).

Measurement of segment profit or loss:

The  Partnership  evaluates  performance  based on segment  profit (loss) before
depreciation.  The accounting policies of the reportable segment are the same as
those of the  Partnership as described in the summary of significant  accounting
policies.

Factors management used to identify the enterprise's reportable segment:

The  Partnership's  reportable  segments are  investment  properties  that offer
different  products  and  services.  The  reportable  segments  are each managed
separately  because they  provide  distinct  services  with  different  types of
products and customers.

Segment  information  for the years ended December 31, 1999 and 1998 is shown in
the tables below. The "Other" column includes Partnership administration related
items and income and  expense  not  allocated  to the  reportable  segments  (in
thousands).

<TABLE>
<CAPTION>

                 1999                    Residential   Commercial     Other      Totals
                                                     (discontinued)
<S>                                           <C>         <C>          <C>        <C>

Rental income                                $ 803       $   --       $   --      $ 803
Other income                                    25           --           32         57
Depreciation                                   264           --           --        264
General and administrative expense              --           --          232        232
Loss from discontinued operations               --         (104)          --       (104)
Gain on sale of discontinued
  operations                                    --        2,276           --      2,276
Loss on early extinguishment of debt            --          (92)          --        (92)
Segment profit (loss)                          196        2,080         (200)     2,076
Total assets                                 2,322           --        1,896      4,218
Capital expenditures for investment
  property                                     124           --           --        124

                 1998                   Residential    Commercial     Other      Totals
                                                      (discontinued)
Rental income                               $ 812         $ --         $ --       $ 812
Other income                                   27            --           40         67
Depreciation                                  261            --           --        261
General and administrative expense             --            --          198        198
Loss from discontinued operations              --           (57)          --        (57)
Segment profit (loss)                         199           (57)        (158)       (16)
Total assets                                2,057         3,582        1,116      6,755
Capital expenditures for investment
  properties                                   55            21           --         76

</TABLE>

Note I - Distributions

The  Partnership  made a cash  distribution  from  operations  of  approximately
$1,000,000  (approximately  $990,000 was paid to limited partners, or $11.41 per
limited  partnership  unit),  during  the year ended  December  31,  1999.  Cash
distributions of approximately $247,000 were paid during the year ended December
31,  1998,  of which $2,000  ($.02 per limited  partnership  unit) was paid from
operations  for the  year  ended  December  31,  1998 and  $245,000  was paid in
relation  to a  distribution  payable as of December  31,  1997.  Subsequent  to
December 31, 1999 a cash distribution of approximately $1,275,000 ($1,262,000 to
the limited  partners or $14.55 per limited  partnership  unit) was approved and
paid.  Approximately  $70,000  of this was  from  operations  and  approximately
$1,205,000 was from sale proceeds.

Note J - Legal Proceedings

In March 1998, several putative unit holders of limited partnership units of the
Partnership  commenced an action  entitled  Rosalie  Nuanes,  et al. v. Insignia
Financial  Group,  Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs  named as defendants,  among others,
the  Partnership,  the Managing  General Partner and several of their affiliated
partnerships  and corporate  entities.  The action  purports to assert claims on
behalf of a class of limited  partners and derivatively on behalf of a number of
limited  partnerships  (including  the  Partnership)  which are named as nominal
defendants,  challenging  the  acquisition  by Insignia  Financial  Group,  Inc.
("Insignia")  and  entities  which  were,  at one time,  affiliates  of Insignia
("Insignia  Affiliates") of interests in certain general partner entities,  past
tender offers by Insignia  Affiliates to acquire limited  partnership units, the
management of partnerships  by Insignia  Affiliates and the Insignia Merger (see
"Note B - Transfer  of  Control").  The  plaintiffs  seek  monetary  damages and
equitable relief, including judicial dissolution of the Partnership. On June 25,
1998,  the Managing  General  Partner  filed a motion  seeking  dismissal of the
action.  In lieu of  responding  to the  motion,  the  plaintiffs  have filed an
amended  complaint.  The Managing General Partner filed demurrers to the amended
complaint which were heard February 1999.  Pending the ruling on such demurrers,
settlement negotiations commenced. On November 2, 1999, the parties executed and
filed a  Stipulation  of  Settlement,  settling  claims,  subject to final court
approval, on behalf of the Partnership and all limited partners who own units as
of November 3, 1999.  Preliminary  approval of the  settlement  was  obtained on
November 3, 1999 from the Superior Court of the State of  California,  County of
San Mateo, at which time the Court set a final approval hearing for December 10,
1999.  Prior to the  December  10,  1999  hearing  the  Court  received  various
objections to the settlement,  including a challenge to the Court's  preliminary
approval based upon the alleged lack of authority of class  plaintiffs'  counsel
to enter the settlement.  On December 14, 1999, the Managing General Partner and
its affiliates terminated the proposed settlement. Certain plaintiffs have filed
a motion to  disqualify  some of the  plaintiffs'  counsel  in the  action.  The
Managing  General  Partner does not anticipate  that costs  associated with this
case will be material to the Partnership's overall operations.

The  Partnership is unaware of any other pending or outstanding  litigation that
is not of a routine nature arising in the ordinary course of business.

Note K - Change in Accounting Principle

Effective  January 1, 1999, the Partnership  changed its method of accounting to
capitalize the cost of exterior  painting and major landscaping on a prospective
basis.  The  Partnership  believes  that  this  accounting  principle  change is
preferable  because it provides a better  matching of expenses  with the related
benefit of the expenditures and it is consistent with industry  practice and the
policies of the Managing General  Partner.  The effect of the change in 1999 was
not  material.  The  cumulative  effect,  had this change been  applied to prior
periods,  is not  material.  The  accounting  principle  change will not have an
effect on cash flow,  funds  available for  distribution  or fees payable to the
Managing General Partner and affiliates.


<PAGE>



Item 8. Changes in and Disagreements with Accountant on Accounting and Financial
        Disclosures

         None.

                                    PART III

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

Angeles Income  Properties,  Ltd. III (the "Partnership" or "Registrant") has no
officers  or  directors.   The  Managing   General  Partner  is  Angeles  Realty
Corporation  II  ("ARC  II"  or  "Managing  General   Partner"),   which  was  a
wholly-owned subsidiary of MAE GP Corporation ("MAE GP"). Effective February 25,
1998,  MAE GP was merged  into  Insignia  Properties  Trust  ("IPT").  Effective
February 26,  1999,  IPT was merged into  Apartment  Investment  and  Management
Company  ("AIMCO").  Thus,  the Managing  General  Partner is now a wholly-owned
subsidiary of AIMCO.

The names of the director and  executive  officers of ARC II, their ages and the
nature of all positions with ARC II presently held are as follows:

Name                        Age    Position

Patrick J. Foye              42    Executive Vice President and Director
Martha L. Long               40    Senior Vice President and Controller

Patrick J. Foye has been  Executive  Vice President and Director of the Managing
General  Partner  since October 1, 1998.  Mr. Foye has served as Executive  Vice
President  of 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.

Martha L. Long has been Senior Vice  President  and  Controller  of the Managing
General  Partner and AIMCO since October 1998, as a result of the acquisition of
Insignia  Financial  Group,  Inc. From June 1994 until January 1997, she was the
Controller for Insignia, and was promoted to Senior Vice President - Finance and
Controller in January 1997,  retaining that title until October 1998.  From 1988
to June 1994,  Ms. Long was Senior Vice  President and  Controller for The First
Savings Bank, FSB in Greenville, South Carolina.

Based solely upon a review of Forms 3 and 4 and amendments  thereto furnished to
the Registrant  under Rule 16a-3(e) during the  Registrant's  most recent fiscal
year and Forms 5 and amendments thereto furnished to the Registrant with respect
to its most recent  fiscal year,  the  Registrant  is not aware of any director,
officer,  beneficial  owner of more than ten  percent  of the  units of  limited
partnership interest in the Registrant 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 except as follows:
AIMCO Properties,  L.P. and its joint filers failed to timely file a Form 3 with
respect to its  acquisition  of Units and AIMCO and its joint  filers  failed to
timely file a Form 4 with respect to its acquisition of Units.

Item 10. Executive Compensation

No direct form of compensation  or  remuneration  was paid by the Partnership to
any officer or director of the Managing General Partner.


<PAGE>



Item 11. Security Ownership of Certain Beneficial Owners and Management

Except as noted below, no person or entity was known by the Registrant to be the
beneficial  owner  of  more  than 5% of the  Limited  Partnership  Units  of the
Registrant as of December 31, 1999.

Entity                                  Number of Units      Percentage

AIMCO Properties LLP
 (an affiliate of AIMCO)                     22,079            25.455%

Cooper River Properties, LLC
 (an affiliate of AIMCO)                     11,470            13.224%

Insignia Properties LP
 (an affiliate of AIMCO)                          5              .005%

Cooper River Properties LLC and Insignia Properties LP are indirectly ultimately
owned by AIMCO.  Their business address is 55 Beattie Place,  Greenville,  South
Carolina  29602.  AIMCO  Properties  LP is indirectly  ultimately  controlled by
AIMCO. Its business address is 2000 South Colorado Boulevard,  Denver,  Colorado
80222.

No director  or officer of the  Managing  General  Partner  owns any Units.  The
Managing  General  Partner  owns  100  Units  as  required  by the  terms of the
Partnership Agreement governing the Partnership.

Item 12. Certain Relationships and Related Transactions

The  Partnership  has no employees  and is  dependent  on the  Managing  General
Partner  and  its  affiliates  for  the  management  and  administration  of all
Partnership activities.  The Partnership Agreement provides (i) certain payments
to affiliates for services and (ii)  reimbursement of certain expenses  incurred
by affiliates on behalf of the Partnership.  The following payments were paid or
accrued to the Managing General Partner and affiliates in 1999 and in 1998:

                                                              1999       1998
                                                              (in thousands)

   Property management fees                                   $ 43       $ 65

   Partnership management fees (1)                              47         27

   Reimbursement for services of affiliates                     55         92

(1)   The  Partnership  Agreement  provides  for a fee equal to 10% of "net cash
      flow from operations",  as defined in the Partnership Agreement to be paid
      to  the  Managing   General  Partner  for  executive  and   administrative
      management services.

During the years ended  December 31, 1999 and 1998,  affiliates  of the Managing
General   Partner  were  entitled  to  receive  5%  of  gross  receipts  of  the
Registrant's   residential  property  as  compensation  for  providing  property
management  services.  The  Registrant  paid  to such  affiliates  approximately
$43,000 for both the years ended December 31, 1999 and 1998.

For the nine months ended September 30, 1998 affiliates of the Managing  General
Partner were entitled to receive varying  percentages of gross receipts from the
Registrant's commercial property for providing property management services. The
Registrant paid to such  affiliates  $22,000 for the nine months ended September
30, 1998. Effective October 1, 1998 (the effective date of the Insignia Merger),
these  services for the  commercial  properties  were  performed by an unrelated
party.

An  affiliate  of  the  Managing  General  Partner  received   reimbursement  of
accountable  administrative  expenses  amounting  to  approximately  $55,000 and
$92,000 for the years ended December 31, 1999 and 1998,  respectively.  Included
in  "Reimbursement  for Services of Affiliates"  for the year ended December 31,
1998, is approximately $4,000 in leasing commissions paid to an affiliate of the
Managing General Partner. No such fees were paid during 1999.

Several tender offers were made by various parties,  including affiliates of the
Managing General Partner,  during the years ended December 31, 1999 and 1998. As
a result of these tender offers,  AIMCO and its affiliates  currently own 33,554
limited partnership units in the Partnership representing  approximately 38.684%
of the outstanding  units. It is possible that AIMCO or its affiliates will make
one  or  more  additional  offers  to  acquire  additional  limited  partnership
interests in the  Partnership for cash or in exchange for units in the operating
partnership of AIMCO.  Under the Partnership  Agreement,  unitholders  holding a
majority of the Units are  entitled to take action with  respect to a variety of
matters. When voting on matters, AIMCO would in all likelihood vote the Units it
acquired in a manner  favorable to the interest of the Managing  General Partner
because of their affiliation with the Managing General Partner.

                                     PART IV

Item 13. Exhibits and Reports on Form 8-K

(a)   Exhibits:

      18    Independent   Accountants'   Preferability   Letter  for  Change  in
            Accounting Principle, filed as an exhibit to this report.

      27    Financial Data Schedule, filed as an exhibit to this report.

(b)   Reports on Form 8-K filed in the fourth quarter of year 1999:

      Form 8-K dated December 30, 1999 disclosing sale of Poplar Square Shopping
      Center to SB Management Corporation.


<PAGE>


                                   SIGNATURES

In accordance  with Section 13 or 15(d) of the Exchange Act, the  Registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                 ANGELES INCOME PROPERTIES, LTD. III
                                 (A California Limited Partnership)
                                 (Registrant)


                                 By:     Angeles Realty Corporation II
                                         Managing General Partner

                                 By:     /s/Patrick J. Foye
                                         Patrick J. Foye
                                         Executive Vice President

                                 By:     /s/Martha L. Long
                                         Martha L. Long
                                         Senior Vice President and
                                         Controller

                                 Date:

In  accordance  with the Exchange  Act, this report has been signed below by the
following  persons on behalf of the Registrant and in the capacities on the date
indicated.

/s/Patrick J. Foye        Executive Vice President    Date:
Patrick J. Foye           and Director


/s/Martha L. Long         Senior Vice President       Date:
Martha L. Long            and Controller


<PAGE>


                       ANGELES INCOME PROPERTIES, LTD. III

                                  EXHIBIT INDEX

Exhibit Number    Description of Exhibit

      3.1         Amended  Certificate and Agreement of the Limited  Partnership
                  file in Form S-11 dated June 2,  1983,  which is  incorporated
                  herein by reference.

      10.1        Agreement of Purchase  and of Real  Property  with  Exhibits -
                  Lake Forest  Apartments  filed in Form 8K dated June 28, 1984,
                  which is incorporated herein by reference

      10.3        Agreement of Purchase and Sale of Real  Property with Exhibits
                  - Poplar Square Shopping Center filed in Form 8K dated May 15,
                  1985, incorporated herein by reference.

      10.4        Agreement of Purchase and Sale of Real  Property with Exhibits
                  - Northtown  Mall filed in Form 8K dated July 15, 1985,  which
                  is incorporated herein by reference

      10.5        General  Partnership  Agreement of Northtown Partners filed in
                  Form 10-K dated October 31, 1986, which is incorporated herein
                  by reference.

      10.11       Promissory  Note -  Northtown  Mall  filed in Form 10-K  dated
                  December 31, 1990, which is incorporated herein by reference.

      10.12       Stock Purchase  Agreement  dated November 24, 1992 showing the
                  purchase of 100% of the  outstanding  stock of Angeles  Realty
                  Corporation II, a subsidiary of MAE GP  Corporation,  filed in
                  Form 8-K dated December 31, 1993, which is incorporated herein
                  by reference.

      10.15       Promissory Note-dated October 31,  1996, between Poplar Square
                  AIP III. L.P., and Union Capital Investments, LLC.

      10.16       Purchase and Sale Contract between Poplar Square AIP III, L.P.
                  and SB Management  Corporation  dated August 12, 1999 filed in
                  Form 8-K dated December 30, 1999, which is incorporated herein
                  by reference.

      10.17       Amendment to Purchase and Sale Contract  between Poplar Square
                  AIP III, L.P. and SB Management  Corporation filed in Form 8-K
                  dated  December  30,  1999,  which is  incorporated  herein by
                  reference.

      10.18       Second  Amendment to Purchase and Sale Contract between Poplar
                  Square AIP III,  L.P. and SB Management  Corporation  filed in
                  Form 8-K dated December 30, 1999, which is incorporated herein
                  by reference.

      10.19       Third  Amendment to Purchase and Sale Contract  between Poplar
                  Square AIP III,  L.P. and SB Management  Corporation  filed in
                  Form 8-K dated December 30, 1999, which is incorporated herein
                  by reference.

      10.20       Fourth  Amendment to Purchase and Sale Contract between Poplar
                  Square AIP III,  L.P. and SB Management  Corporation  filed in
                  Form 8-K dated December 30, 1999, which is incorporated herein
                  by reference.

      16.1        Letter  from  Registrant's  former  accountant  regarding  its
                  concurrence  with the  statements  made by the  Registrant  is
                  incorporated  by reference to the Exhibit  filed with Form 8-K
                  dated September 1, 1993.

      18          Independent  Accountants' Preferability Letter for  Change  in
                  Accounting Principle.

      27          Financial Data Schedule.


<PAGE>


                                                                      Exhibit 18

February 7, 2000


Mr. Patrick J. Foye
Executive Vice President
Angeles Realty Corporation II

Managing General Partner of Angeles Income Properties, Ltd. III
55 Beattie Place
P.O. Box 1089
Greenville, South Carolina 29602

Dear Mr. Foye:

Note K of Notes to the  Consolidated  Financial  Statements  of  Angeles  Income
Properties, Ltd. III included in its Form 10-KSB for the year ended December 31,
1999  describes  a change in the method of  accounting  to  capitalize  exterior
painting and major  landscaping,  which would have been  expensed  under the old
policy.  You have advised us that you believe that the change is to a preferable
method in your  circumstances  because it provides a better matching of expenses
with the related  benefit of the  expenditures  and is consistent  with policies
currently  being used by your  industry  and  conforms  to the  policies  of the
Managing General Partner.

There are no authoritative criteria for determining a preferable method based on
the particular circumstances; however, we conclude that the change in the method
of accounting  for exterior  painting and major  landscaping is to an acceptable
alternative  method which,  based on your business  judgment to make this change
for the reasons cited above, is preferable in your circumstances.

                                                               Very truly yours,
                                                            /s/Ernst & Young LLP