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UNITED
    STATES
 SECURITIES
    AND EXCHANGE COMMISSION
 Washington, D.C.
    20549
 FORM
    10-Q
  (Mark
    one)
 x
    QUARTERLY
    REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934  For the quarterly
    period ended June 30, 2008.
  OR
  o
    TRANSITION
    REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934   For the
    transition period from
    
    to
     .
   Commission file
    no. 0-16851
  DEL
    TACO RESTAURANT PROPERTIES III
 a California
    limited partnership
 (Exact
    name of registrant as specified in its charter)
  California(State or other jurisdiction of
    incorporation or organization)

33-0139247(I.R.S. Employer
    Identification Number)25521 Commercentre Drive, Lake Forest, California(Address of principal executive
    offices)

92630(Zip Code)   (949) 462-9300
 (Registrants
    telephone number, including area code)
  Indicate by check
    mark whether the registrant (1) has filed all reports
    required to be filed by Section 13 or 15(d) of the
    Securities Exchange Act of 1934 during the preceding
    12 months (or for such shorter period that the registrant
    was required to file such reports), and (2) has been
    subject to such filing requirements for the past
    90 days.  Yes þ  No o
  Indicate by check
    mark whether the registrant is a large accelerated filer, an
    accelerated filer, a non-accelerated filer, or a smaller
    reporting company. See the definitions of large
    accelerated filer, accelerated filer and
    smaller reporting company in
    Rule 12b-2
    of the Exchange Act. (Check one):
  Large
    accelerated
    filer o
    Accelerated
    filer o
    Non-accelerated
    filer þ
    Smaller reporting
    company o (Do
    not check if a smaller reporting company)
  Indicate by check
    mark whether the registrant is a shell company (as defined in
    Rule 12b-2
    of the Exchange
    Act).  Yes o  No þ




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##### 



DEL TACO RESTAURANT PROPERTIES III
 PAGE NUMBERPART I. FINANCIAL INFORMATIONItem 1. Financial StatementsCondensed Balance Sheets at June 30, 2008 (Unaudited) and
December 31, 2007
    
    
    3Condensed Statements of Income for the three and six months ended
June 30, 2008 and 2007 (Unaudited)
    
    
    4Condensed Statements of Cash Flows for the six months ended
June 30, 2008 and 2007 (Unaudited)
    
    
    5Notes to Condensed Financial Statements (Unaudited)
    
    
    6Item 2. Managements Discussion and Analysis of
Financial Condition and Results of Operations
    
    
    9Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    11Item 4T. Controls and Procedures
    
    
    12PART II. OTHER INFORMATIONItem 6. Exhibits
    
    
    13SIGNATURE
    
    
    14EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1
  -2-




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PART I. FINANCIAL INFORMATION
 
 ITEM I. FINANCIAL STATEMENTS
 DEL TACO RESTAURANT PROPERTIES III
 
 CONDENSED BALANCE SHEETS
 June 30,
    
    
    December 31,2008
    
    
    2007(Unaudited)ASSETSCURRENT ASSETS:Cash
    
    $
    319,571
    
    
    $
    321,231Receivable from Del Taco LLC
    
    
    89,181
    
    
    
    85,642Deposits
    
    
    2,121
    
    
    
    1,654Total current assets
    
    
    410,873
    
    
    
    408,527RESTRICTED CASH
    
    
    86,017
    
    
    
    86,017PROPERTY AND EQUIPMENT:Land and improvements
    
    
    4,405,966
    
    
    
    4,405,966Buildings and improvements
    
    
    2,954,959
    
    
    
    2,954,959Machinery and equipment
    
    
    1,522,922
    
    
    
    1,522,9228,883,847
    
    
    
    8,883,847Lessaccumulated depreciation
    
    
    3,755,036
    
    
    
    3,698,4165,128,811
    
    
    
    5,185,431$
    5,625,701
    
    
    $
    5,679,975LIABILITIES AND PARTNERS EQUITYCURRENT LIABILITIES:Payable to limited partners
    
    $
    63,159
    
    
    $
    64,734Accounts payable
    
    
    20,461
    
    
    
    13,357Total current liabilities
    
    
    83,620
    
    
    
    78,091OBLIGATION TO GENERAL PARTNER
    
    
    577,510
    
    
    
    577,510PARTNERS EQUITY:Limited partners; 47,261 units outstanding at June 30, 2008
and December 31, 2007
    
    
    5,010,338
    
    
    
    5,069,543General partner-Del Taco LLC
    
    
    (45,767
    )
    
    
    (45,169
    )4,964,571
    
    
    
    5,024,374$
    5,625,701
    
    
    $
    5,679,975
  -3-




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DEL TACO RESTAURANT PROPERTIES III
 
 CONDENSED STATEMENTS OF INCOME
 (Unaudited)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007RENTAL REVENUES
    
    $
    266,067
    
    
    $
    262,074
    
    
    $
    522,955
    
    
    $
    512,433EXPENSES:General and administrative
    
    
    13,153
    
    
    
    13,782
    
    
    
    55,907
    
    
    
    55,784Depreciation
    
    
    28,310
    
    
    
    28,310
    
    
    
    56,620
    
    
    
    56,62041,463
    
    
    
    42,092
    
    
    
    112,527
    
    
    
    112,404Operating income
    
    
    224,604
    
    
    
    219,982
    
    
    
    410,428
    
    
    
    400,029OTHER INCOME:Interest
    
    
    796
    
    
    
    2,126
    
    
    
    2,158
    
    
    
    4,190Other
    
    
    4,400
    
    
    
    650
    
    
    
    5,070
    
    
    
    1,200Net income
    
    $
    229,800
    
    
    $
    222,758
    
    
    $
    417,656
    
    
    $
    405,419Net income per limited
partnership unit (note 3)
    
    $
    4.81
    
    
    $
    4.67
    
    
    $
    8.75
    
    
    $
    8.49Number of units used in computing
per unit amounts
    
    
    47,261
    
    
    
    47,261
    
    
    
    47,261
    
    
    
    47,261
  -4-




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DEL TACO RESTAURANT PROPERTIES III
 
 CONDENSED STATEMENTS OF CASH FLOWS
 (Unaudited)
 Six Months EndedJune 30,2008
    
    
    2007CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    417,656
    
    
    $
    405,419Adjustments to reconcile net income to net
cash provided by operating activities:Depreciation
    
    
    56,620
    
    
    
    56,620Changes in operating assets and liabilities:Receivable from Del Taco LLC
    
    
    (3,539
    )
    
    
    (1,131
    )Deposits
    
    
    (467
    )
    
    
    217Payable to limited partners
    
    
    (1,575
    )
    
    
    (5,445
    )Accounts payable
    
    
    7,104
    
    
    
    (5,906
    )Net cash provided by operating activities
    
    
    475,799
    
    
    
    449,774CASH FLOWS FROM FINANCING ACTIVITIES:Cash distributions to partners
    
    
    (477,459
    )
    
    
    (488,519
    )Net decrease in cash
    
    
    (1,660
    )
    
    
    (38,745
    )Beginning cash balance
    
    
    321,231
    
    
    
    335,050Ending cash balance
    
    $
    319,571
    
    
    $
    296,305
  -5-




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DEL TACO RESTAURANT PROPERTIES III
 
 NOTES TO CONDENSED FINANCIAL STATEMENTS
 FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2008
 UNAUDITED
 NOTE 1  BASIS OF PRESENTATION
  NOTE 2  RESTRICTED CASH
  NOTE 3  NET INCOME PER LIMITED PARTNERSHIP UNIT
   -6-




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DEL TACO RESTAURANT PROPERTIES III
 NOTES TO CONDENSED FINANCIAL STATEMENTS  CONTINUED
 FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2008
 UNAUDITED
 NOTE 4  LEASING ACTIVITIES
    NOTE 5  TRANSACTIONS WITH DEL TACO
    NOTE 6  DISTRIBUTIONS
  -7-




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DEL TACO RESTAURANT PROPERTIES III
 NOTES TO CONDENSED FINANCIAL STATEMENTS  CONTINUED
 FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2008
 UNAUDITED
 NOTE 7  PAYABLE TO LIMITED PARTNERS
  NOTE 8  CONCENTRATION OF RISK
   -8-




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Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
 Liquidity and Capital Resources
    Results of Operations
   Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Rancho California Plaza, Rancho California, CA
    
    $
    42,835
    
    
    $
    40,893
    
    
    $
    83,417
    
    
    $
    79,790East Vista Way, Vista, CA
    
    
    23,431
    
    
    
    21,814
    
    
    
    46,321
    
    
    
    42,823Plaza at Puente Hills, Industry, CA
    
    
    20,486
    
    
    
    20,528
    
    
    
    39,804
    
    
    
    40,0614th Street, Perris, CA
    
    
    34,831
    
    
    
    36,674
    
    
    
    67,543
    
    
    
    70,813Foothill Blvd., Upland, CA
    
    
    33,163
    
    
    
    31,618
    
    
    
    65,704
    
    
    
    63,167East Valley Blvd., Walnut, CA
    
    
    18,887
    
    
    
    18,960
    
    
    
    37,404
    
    
    
    37,005Lassen Street, Chatsworth, CA
    
    
    37,559
    
    
    
    36,134
    
    
    
    73,272
    
    
    
    71,021Hesperia Road, Victorville, CA
    
    
    36,453
    
    
    
    35,929
    
    
    
    72,734
    
    
    
    69,584W. Sepulveda Blvd., Los Angeles, CA
    
    
    18,422
    
    
    
    19,524
    
    
    
    36,756
    
    
    
    38,169Total
    
    $
    266,067
    
    
    $
    262,074
    
    
    $
    522,955
    
    
    $
    512,433
 -9-




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Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations -
continued
   Percent of TotalGeneral & Administrative ExpenseThree Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Accounting fees
    
    
    48.07
    %
    
    
    46.38
    %
    
    
    77.00
    %
    
    
    74.19
    %Distribution of information
to limited partners
    
    
    51.93
    %
    
    
    53.62
    %
    
    
    23.00
    %
    
    
    25.81
    %100.00
    %
    
    
    100.00
    %
    
    
    100.00
    %
    
    
    100.00
    %
   Recent Accounting Pronouncements
  Off-Balance Sheet Arrangements
  -10-




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Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations -
continued
 Critical Accounting Policies and Estimates
  Revenue Recognition:
 Property and Equipment:
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk.
  -11-




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Item 4T. Controls and Procedures
 (a)
    
    Evaluation of disclosure controls and procedures:
  (b)
    
    Changes in internal controls:
  (c)
    
    Asset-backed issuers:
  -12-




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PART II. OTHER INFORMATION
 
   (a)
    
    Exhibits
 31.1
    
    Shirlene Lopezs Certification pursuant to Section 302 of the
Sarbanes-Oxley Act of 200231.2
    
    Steven L. Brakes Certification pursuant to Section 302 of the
Sarbanes-Oxley Act of 200232.1
    
    Certification pursuant to Subsections (a) and (b) of Section 1350,
Chapter 63 of Title 18, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
 -13-




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SIGNATURE
  DEL TACO RESTAURANT PROPERTIES III
(a California limited partnership)
Registrant

Del Taco LLC
General PartnerDate:  August 14, 2008
    /s/ Steven L. BrakeSteven L. BrakeTreasurer -14-




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Exhibits
    
    Description31.1
    
    Shirlene Lopezs Certification pursuant to Section 302 of the
Sarbanes-Oxley Act of 200231.2
    
    Steven L. Brakes Certification pursuant to Section 302 of the
Sarbanes-Oxley Act of 200232.1
    
    Certification pursuant to Subsections (a) and (b) of Section 1350,
Chapter 63 of Title 18, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
 -15-