Cushman & Wakefield, Inc.                                              CUSHMAN &
51 West 52nd Street                                                WAKEFIELD(R).
New York, NY 10019-6178                                     Improving your place
(212) 841-7500                                                 In the world.

                                          February 6, 1997

Participating Income Properties III, Limited Partnership
FFCA Participating Management Company, LP.
17207 North Perimeter Drive
Scottsdale, Arizona 85255

Attn:    Morton H. Fleischer
         General Partner

                                   Re:      Annual Portfolio Valuation
                                            Participating Income Properties III,
                                            Limited Partnership

Gentleman:

         Pursuant to your request,  we have completed our analysis of properties
contained in  Participating  Income  Properties III,  Limited  Partnership.  The
purpose of our analysis is twofold:  to report on the physical  condition of the
premises  and  determine  the  lessee's  compliance  with  the  terms of the net
leases/mortgage agreement; and to estimate the market value of the properties on
a going concern basis subject to existing  leases/mortgage  encumbrances for the
purpose of determining  the value of the leased fee and  mortgagee's  interests.
The valuation  includes  equipment lease income for most of the properties.  Our
opinion of value for the real properties will then be adjusted for cash on hand,
net receivables,  distributions payable and other liabilities, which information
is  provided  by the  General  Partner.  It  should  be  noted  that  Cushman  &
Wakefield's  opinion  is  restricted  to the market  value of the  Partnership's
interest in the real properties; we are not opining as to the value of the other
assets or liabilities of the Partnership. Furthermore, our opinion is subject to
the attached  Certification  and Assumptions and Limiting  Conditions which have
been retained in our files. The date of value was December 31, 1996.

         According to the  Dictionary of Real Estate  Appraisal,  Third Edition,
published by the Appraisal Institute, market value may be defined as:

         "The most probable  price, as of a specified date, in cash, or in terms
equivalent to cash, or in other precisely revealed terms for which the specified
property rights should sell after  reasonable  exposure in a competitive  market
under all  conditions  requisite to a fair sale,  with the buyer and seller each
acting  prudently,  knowledgeably,  and for  self-interest,  and  assuming  that
neither is under undue duress."

         The real  properties  that are the subject of this  valuation have been
inspected by members of Cushman & Wakefield's  Valuation Advisory Services Group
operating under the supervision of the undersigned. Overall, the properties were
viewed to be in good physical condition and generally in compliance with the net
lease requirements. Individual property data relating to our re-inspections will
be delivered to you under separate cover and is part of our valuation.

         Our valuation addresses the market value of the leased  fee/mortgagee's
interest in these  properties  as a going  concern and considers the various net
leases/mortgage  in effect. The vast majority of the data used for this analysis
has been supplied to us by FFCA Participating  Management  Company,  LP., and we
have  relied  upon  their  database  input  ,  various   reports  and  financial
statements.  We have visited their offices in  Scottsdale,  Arizona and have had
complete and unrestricted access to all pertinent information,  and have assumed
all such information to be accurate and complete.  We have verified certain data
and resolved any discrepancies by reconciling to Cushman & Wakefield's database.
The individual property-by-property database and cash flow projections have been
delivered under separate cover and are a part of our valuation.

         For the purposes of our valuation,  we have determined that the highest
and best use of the real properties is their continued use as travel plazas. The
Income Approach to the value is relied upon as the primary  appraisal  technique
based upon the properties'  capabilities to generate net income and to be bought
and sold in the investment marketplace.  Neither the Cost Approach nor the Sales
Comparison Approach were considered directly
<PAGE>
Cushman & Wakefield, Inc.

Mr. Morton H. Fleischer
General Partner                        -2-                      February 6, 1997

relevant  in the  analysis  of a travel  plaza  under long term  lease/mortgage.
Within  the Income  Approach,  the  discounted  cash flow  method was  employed,
whereby  anticipated  future income  streams over a 10 year holding period and a
reversionary  value  (sale at the end of the tenth  year) are  discounted  via a
market derived rate to a net present value estimate utilizing a proprietary cash
flow model.  Anticipated rental income as well as deductions for management fees
and administrative expenses are analyzed over the holding period.  Consideration
has also been given to direct capitalization of estimated 1997 net income.

         Participating Income Properties III, Limited Partnership contains three
travel  plaza  properties  that are net  leased to CFJ  Properties  and TFJ that
operate  Flying  J Travel  Plazas.  Gross  proceeds  originally  raised  by this
Partnership  amounted to  $26,709,000  (26.709  units @ $1,000 per unit).  As of
December 31, 1996, $957,269 of capital was returned to the partners,  making the
adjusted gross proceeds raised  $25,751,731 or $964.16 per unit. Of this amount,
adjusted net proceeds  invested in the properties  contained in this Partnership
amounted  to  $22,392,838   after  adjusting  for  organization   costs,   sales
commissions and capital returned.  The Partnership was fully invested as of June
1993.

         Considering all of the above factors, it is our opinion that the market
value of the leased fee and mortgagee's  interests in the three  properties an a
going  concern  basis  subject to existing  lease/mortgage  encumbrances,  as of
December 31, 1996 was:

            TWENTY SEVEN MILLION TWO HUNDRED TWENTY THOUSAND DOLLARS
                                   $27,220,000

         The aggregate market value of the leased fee and mortgagee's  interests
in the three  properties  is  $27,220,000  as  adjusted  by cash on hand and net
receivables of $734,469,  less  distributions  payable and other  liabilities of
$842,674 as provided by the General Partner resulting in a total of $27,111,795.
This total as of December 31, 1996  represents an 21.07 percent  increase  above
the adjusted net  proceeds.  Dividing the total value by the 26,709  outstanding
units  results in an indicated  value per unit  investment  of  $1,015.08  which
represents  an increase of 5.28  percent from the adjusted  unit  investment  of
$964.16.

         The continued favorable performance of the Partnership, in our opinion,
is  directly  attributable  to  the  quality  of  management  and  the  numerous
safeguards built into the acquisition and management program.  Our due diligence
has  revealed  that when  problems  arise,  management  has acted  prudently  in
avoiding  defaults  and  delinquent  rent  payments,  working  effectively  with
franchisees and franchisors.

         We certify that neither  Cushman & Wakefield,  Inc. nor the undersigned
have any present or prospective interest in the Partnership's properties, and we
have no personal interest or bias with respect to the parties  involved.  To the
best of our  knowledge  and  belief,  the  facts  upon  which the  analysis  and
conclusions  were based are materially  true and correct.  No one other than the
undersigned  assisted by members of our staff who performed  inspections  of the
properties,  performed the analyses and reached the conclusions resulting in the
opinion expressed in this letter. Our fee for this assignment was not contingent
on any action or event resulting from the analysis,  opinions or conclusions in,
or the use of, this  analysis.  Our  analysis has been  prepared  subject to the
Departure  Provision of the Uniform  Standards of  Professional  Practice of the
Appraisal  Foundation and the Code of  Professional  Ethics and the Standards of
Professional  Appraisal  Practice of the  Appraisal  Institute.  The use of this
report is subject to the  requirements  of the Appraisal  Institute  relating to
review by its duly  authorized  representatives.  As of the date of this report,
the  undersigned  have completed the  requirements  of the continuing  education
program of the Appraisal Institute.

Respectfully submitted;

CUSHMAN & WAKEFIELD, INC.

<TABLE>
<S>                                     <C>                                    <C>    
/s/ Matthew C. Mondanile                 /s/ Brian R. Corcoran                  /s/ Frank P. Liantonio
Matthew C. Mondanile, MAI                Brian R. Corcoran, MAI, CRE            Frank P. Liantonio, MAI, CRE
Senior Director                          Executive Managing Director            Executive Managing Director
Valuation Advisory Services              Valuation Advisory Services            Valuation Advisory Services
</TABLE>