UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   Form 10-QSB

(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, 2002


[] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
   1934


                For the transition period from _________to _________

                         Commission file number 0-10260


                             SHELTER PROPERTIES III
         (Exact name of small business issuer as specified in its charter)



         South Carolina                                         57-0718508
(State or other jurisdiction of                              (I.R.S. Employer
 incorporation or organization)                             Identification No.)

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

                                 (864) 239-1000
                           (Issuer's telephone number)


                         PART I - FINANCIAL INFORMATION



ITEM 1.     FINANCIAL STATEMENTS




                             SHELTER PROPERTIES III
                           CONSOLIDATED BALANCE SHEET
                                   (Unaudited)
                          (in thousands, except unit data)

                                  June 30, 2002


<TABLE>
<CAPTION>

Assets
<S>                                                                       <C>
   Cash and cash equivalents                                              $    344
   Receivables and deposits                                                    239
   Restricted escrows                                                          136
   Other assets                                                                479
   Investment properties:
      Land                                                 $   1,281
      Buildings and related personal property                 27,877
                                                              29,158
      Less accumulated depreciation                          (18,788)       10,370
                                                                          $ 11,568

Liabilities and Partners' Deficit
Liabilities
   Accounts payable                                                       $     18
   Tenant security deposit liabilities                                          97
   Accrued property taxes                                                      207
   Other liabilities                                                           500
   Mortgage notes payable                                                   14,794

Partners' Deficit
   General partners                                        $   (106)
   Limited partners (55,000 units issued and
      outstanding)                                           (3,942)        (4,048)
                                                                          $ 11,568


            See Accompanying Notes to Consolidated Financial Statements
</TABLE>

<PAGE>






                             SHELTER PROPERTIES III
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)
                        (in thousands, except per unit data)


<TABLE>
<CAPTION>

                                     Three Months Ended            Six Months Ended
                                          June 30,                     June 30,
                                    2002           2001           2002           2001
Revenues:
<S>                                <C>           <C>            <C>             <C>
   Rental income                   $1,211        $1,343         $2,507          $2,657
   Other income                       103            85            241             214
       Total revenues               1,314         1,428          2,748           2,871

Expenses:
   Operating                          588           643          1,177           1,212
   General and administrative          65            91            152             167
   Depreciation                       283           276            559             548
   Interest                           279           285            559             571
   Property taxes                      82           103            193             211
       Total expenses               1,297         1,398          2,640           2,709

   Net income                      $   17        $   30         $  108          $  162

Net income allocated
   to general partners (1%)        $   --        $   --         $    1          $    2
Net income allocated
   to limited partners (99%)           17            30            107             160
                                   $   17        $   30         $  108          $  162
Net income per limited
   partnership unit                $  .31        $  .55         $ 1.95          $ 2.91

Distributions per limited
   partnership unit                $ 1.95        $ 8.77         $ 1.95          $26.05

            See Accompanying Notes to Consolidated Financial Statements
</TABLE>

<PAGE>




                               SHELTER PROPERTIES III
               CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT
                                   (Unaudited)
                          (in thousands, except unit data)


<TABLE>
<CAPTION>

                                      Limited
                                     Partnership     General      Limited
                                        Units        Partners    Partners     Total

<S>                                    <C>             <C>        <C>        <C>
Original capital contributions         55,000          $ 2        $27,500    $27,502

Partners' deficit at
   December 31, 2001                   55,000         $ (106)     $(3,942)   $(4,048)

Distributions to partners                  --             (1)        (107)      (108)

Net income for the six months
   ended June 30, 2002                     --              1          107        108

Partners' deficit at
   June 30, 2002                       55,000         $ (106)     $(3,942)   $(4,048)

            See Accompanying Notes to Consolidated Financial Statements
</TABLE>

<PAGE>




                             SHELTER PROPERTIES III
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                   (in thousands)

<TABLE>
<CAPTION>

                                                                  Six Months Ended
                                                                        June 30,
                                                                  2002        2001
Cash flows from operating activities:
<S>                                                             <C>          <C>
   Net income                                                   $   108      $   162
   Adjustments to reconcile net income to net
     cash provided by operating activities:
        Depreciation                                                559          548
        Amortization of discounts and loan costs                     15           14
        Change in accounts:
            Receivables and deposits                                 (1)         279
            Other assets                                            (54)         (60)
            Accounts payable                                        (59)         (28)
            Tenant security deposit liabilities                      --           (1)
            Accrued property taxes                                  (78)         (63)
            Other liabilities                                        96          130

               Net cash provided by operating activities            586          981

Cash flows from investing activities:
   Property improvements and replacements                          (209)        (252)
   Net withdrawals from restricted escrows                           --          598

               Net cash (used in) provided by investing
                    activities                                     (209)         346

Cash flows from financing activities:
   Payments on mortgage notes payable                              (162)        (143)
   Loan costs paid                                                   --          (32)
   Partners' distributions                                         (108)      (1,447)

               Net cash used in financing activities               (270)      (1,622)

Net increase (decrease) in cash and cash equivalents                107         (295)

Cash and cash equivalents at beginning of period                    237          665

Cash and cash equivalents at end of period                      $   344      $   370

Supplemental disclosure of cash flow information:
   Cash paid for interest                                       $   483      $   474

            See Accompanying Notes to Consolidated Financial Statements
</TABLE>

<PAGE>




                             SHELTER PROPERTIES III
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


Note A - Basis of Presentation

The  accompanying   unaudited   consolidated  financial  statements  of  Shelter
Properties  III (the  "Partnership"  or  "Registrant")  have  been  prepared  in
accordance with generally accepted  accounting  principles for interim financial
information  and  with  the  instructions  to Form  10-QSB  and  Item 310 (b) of
Regulation  S-B.  Accordingly,  they do not include all of the  information  and
footnotes  required by generally  accepted  accounting  principles  for complete
financial  statements.  The general  partner  responsible  for management of the
Partnership's  business  is Shelter  Realty III  Corporation,  a South  Carolina
corporation (the "Corporate General Partner").  The Corporate General Partner is
a  subsidiary  of Apartment  Investment  and  Management  Company  ("AIMCO"),  a
publicly  traded real estate  investment  trust. In the opinion of the Corporate
General  Partner,  all  adjustments  (consisting of normal  recurring  accruals)
considered  necessary  for a fair  presentation  have been  included.  Operating
results  for the  three and six  month  periods  ended  June 30,  2002,  are not
necessarily  indicative  of the results that may be expected for the fiscal year
ending  December 31, 2002. For further  information,  refer to the  consolidated
financial  statements and footnotes thereto included in the Partnership's Annual
Report on Form 10-KSB for the year ended December 31, 2001.

Note B - Reconciliation of Cash Flows

As required by the Partnership  Agreement,  the following is a reconciliation of
"Net cash provided by operating  activities"  in the  accompanying  consolidated
statements  of cash  flows to "Net  cash from  operations",  as  defined  in the
Partnership  Agreement.  However,  "Net  cash  from  operations"  should  not be
considered  an  alternative  to net income as an indicator of the  Partnership's
operating performance or to cash flows as a measure of liquidity.

<TABLE>
<CAPTION>

                                                         For the Six Months Ended
                                                                 June 30,
                                                           2002             2001
                                                              (in thousands)
<S>                                                     <C>                <C>
Net cash provided by operating activities               $   586            $   981
   Payments on mortgage notes payable                      (162)              (143)
   Property improvements and replacements                  (209)              (252)
   Change in restricted escrows, net                         --                598
   Changes in reserves for net operating
      assets                                                 96               (257)
   Additional reserves                                     (311)              (927)

      Net cash from operations                          $    --            $    --
</TABLE>

The Corporate  General Partner reserved  approximately  $311,000 and $927,000 at
June 30, 2002 and 2001,  respectively,  to fund capital improvements and repairs
at the Partnership's four investment properties.



<PAGE>




Note C - Transactions with Affiliated Parties

The  Partnership  has no employees  and is dependent  on the  Corporate  General
Partner  and  its  affiliates  for  the  management  and  administration  of all
partnership  activities.  The Partnership Agreement provides for (i) payments to
affiliates for services and (ii)  reimbursement of certain expenses  incurred by
affiliates on behalf of the Partnership.

During the six months ended June 30, 2002 and 2001,  affiliates of the Corporate
General  Partner were  entitled to receive 5% of gross  receipts from all of the
Registrant's   properties  for  providing  property  management  services.   The
Partnership paid to such affiliates  approximately $142,000 and $147,000 for the
six months  ended June 30,  2002 and 2001,  respectively,  which is  included in
operating expenses.

An  affiliate  of  the  Corporate  General  Partner  received  reimbursement  of
accountable  administrative  expenses  amounting to  approximately  $105,000 and
$91,000 for the six months ended June 30, 2002 and 2001, respectively,  which is
included in general and administrative expenses and investment properties.

During 1986, a liability of  approximately  $185,000 was incurred to the general
partners for sales commissions  earned.  Pursuant to the Partnership  Agreement,
this  liability  cannot be paid until certain  levels of returns are received by
the limited  partners.  As of June 30, 2002,  the level of return to the limited
partners  has not been met and the balance is included in other  liabilities  in
the accompanying consolidated balance sheet.

Beginning in 2001, the  Partnership  began insuring its properties up to certain
limits through coverage provided by AIMCO which is generally  self-insured for a
portion of losses and  liabilities  related  to workers  compensation,  property
casualty and vehicle liability. The Partnership insures its properties above the
AIMCO  limits  through  insurance  policies  obtained  by  AIMCO  from  insurers
unaffiliated  with the Corporate  General  Partner.  During the six months ended
June 30, 2002 and 2001, the  Partnership was charged by AIMCO and its affiliates
approximately $62,000 and $82,000, respectively, for insurance coverage and fees
associated with policy claims administration.

Note D - 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. (the "Nuanes action") in the Superior Court of the
State of  California  for the  County  of San  Mateo.  The  plaintiffs  named as
defendants,  among others,  the Partnership,  its Corporate  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,  among other
things,  the  acquisition  of interests  in certain  Corporate  General  Partner
entities by Insignia Financial Group, Inc. ("Insignia") and entities which were,
at one  time,  affiliates  of  Insignia;  past  tender  offers  by the  Insignia
affiliates to acquire limited partnership units;  management of the partnerships
by the  Insignia  affiliates;  and the series of  transactions  which  closed on
October 1, 1998 and February 26, 1999 whereby  Insignia and Insignia  Properties
Trust,  respectively,  were merged  into AIMCO.  The  plaintiffs  seek  monetary
damages and equitable relief, including judicial dissolution of the Partnership.
On June 25, 1998, the Corporate General Partner filed a motion seeking dismissal
of the action.  In lieu of responding  to the motion,  the  plaintiffs  filed an
amended complaint.  The Corporate 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 court approval, on behalf of the Partnership and all
limited partners who owned units as of November 3, 1999. Preliminary approval of
the  settlement  was obtained on November 3, 1999 from the Court,  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 prior lead counsel to enter the settlement.  On
December 14, 1999, the Corporate  General Partner and its affiliates  terminated
the  proposed  settlement.  In  February  2000,  counsel  for some of the  named
plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who
negotiated  the  settlement.  On June  27,  2000,  the  Court  entered  an order
disqualifying  them  from the case and an  appeal  was  taken  from the order on
October 5, 2000. On December 4, 2000, the Court  appointed the law firm of Lieff
Cabraser  Heimann & Bernstein  LLP as new lead  counsel for  plaintiffs  and the
putative class.  Plaintiffs filed a third amended complaint on January 19, 2001.
On March 2, 2001,  the  Corporate  General  Partner and its  affiliates  filed a
demurrer to the third amended  complaint.  On May 14, 2001,  the Court heard the
demurrer to the third amended  complaint.  On July 10, 2001, the Court issued an
order  sustaining  defendants'  demurrer on certain  grounds.  On July 20, 2001,
Plaintiffs filed a motion for reconsideration of the Court's July 10, 2001 order
granting in part and denying in part defendants' demurrer. On September 7, 2001,
Plaintiffs  filed a fourth amended class and  derivative  action  complaint.  On
September 12, 2001, the Court denied Plaintiffs' motion for reconsideration.  On
October 5, 2001, the Corporate General Partner and affiliated defendants filed a
demurrer to the fourth amended complaint,  which was heard on December 11, 2001.
On February 2, 2002,  the Court served its order  granting in part the demurrer.
The  Court has  dismissed  without  leave to amend  certain  of the  plaintiffs'
claims.  On February 11, 2002,  plaintiffs  filed a motion  seeking to certify a
putative  class  comprised of all  non-affiliated  persons who own or have owned
units  in  the  partnerships.  The  Corporate  General  Partner  and  affiliated
defendants  oppose the motion.  On April 29,  2002,  the Court held a hearing on
plaintiffs' motion for class  certification and took the matter under submission
after further briefing,  as order by the court, was submitted by the parties. On
July 10, 2002,  the Court  entered an order  vacating the current  trial date of
January 13, 2003 (as well as the  pre-trial  and  discovery  cut-off  dates) and
stayed the case in its entirety through November 7, 2002 so that the parties can
have an opportunity to discuss settlement.

During the third  quarter of 2001, a complaint  (the "Heller  action") was filed
against  the same  defendants  that are named in the  Nuanes  action,  captioned
Heller v. Insignia Financial Group. On or about August 6, 2001, plaintiffs filed
a first amended  complaint.  The first amended complaint in the Heller action is
brought as a purported  derivative  action,  and asserts  claims for among other
things  breach  of  fiduciary  duty;  unfair  competition;   conversion,  unjust
enrichment;  and judicial  dissolution.  Plaintiffs in the Nuanes action filed a
motion to  consolidate  the Heller action with the Nuanes action and stated that
the Heller action was filed in order to preserve the derivative claims that were
dismissed  without  leave to amend in the Nuanes action by the Court order dated
July 10, 2001. On October 5, 2001, the Corporate  General Partner and affiliated
defendants  moved to strike the first  amended  complaint  in its  entirety  for
violating  the Court's July 10, 2001 order  granting in part and denying in part
defendants'  demurrer in the Nuanes action, or alternatively,  to strike certain
portions of the complaint based on the statute of limitations.  Other defendants
in the action  demurred to the fourth  amended  complaint,  and,  alternatively,
moved to strike the complaint. On December 11, 2001, the court heard argument on
the motions  and took the matters  under  submission.  On February 4, 2002,  the
Court  served  notice of its order  granting  defendants'  motion to strike  the
Heller complaint as a violation of its July 10, 2001 order in the Nuanes action.
On March 27, 2002,  the plaintiffs  filed a notice  appealing the order striking
the complaint. The parties are currently in the midst of briefing that appeal.

The Corporate General Partner does not anticipate that any costs,  whether legal
or  settlement  costs,  associated  with  these  cases 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.


<PAGE>




Item 2.     Management's Discussion and Analysis or Plan of Operation

The  matters  discussed  in this Form  10-QSB  contain  certain  forward-looking
statements  and  involve  risks and  uncertainties  (including  changing  market
conditions,   competitive  and  regulatory   matters,   etc.)  detailed  in  the
disclosures  contained  in this  Form  10-QSB  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.

The Partnership's investment properties consist of four apartment complexes. The
following  table sets forth the average  occupancy of the properties for each of
the six months ended June 30, 2002 and 2001:

                                                            Average
                                                           Occupancy
       Property                                        2002          2001

       Essex Park Apartments
          Columbia, South Carolina                     82%            91%

       Colony House Apartments
          Mufreesboro, Tennessee                       94%            88%

       North River Village Apartments
          Atlanta, Georgia                             86%            93%

       Willowick Apartments
          Greenville, South Carolina                   91%            94%

The Corporate  General  Partner  attributes  the increase in occupancy at Colony
House  Apartments  to an increase in the student  population  during the current
year.  The decrease in occupancy at North River Village  Apartments,  Essex Park
Apartments  and  Willowick  Apartments is due to the  competitive  market of the
apartment industry in the Atlanta, Columbia and Greenville areas.

Results of Operations

The Registrant's net income for the three and six months ended June 30, 2002 was
approximately  $17,000 and  $108,000 as  compared to  approximately  $30,000 and
$162,000 for the three and six months  ended June 30, 2001.  The decrease in net
income for the three and six months  ended June 30, 2002 is due to a decrease in
total revenues partially offset by a decrease in total expenses. The decrease in
total  revenues is due to a decrease  in rental  income  partially  offset by an
increase in other income. Rental income decreased due to a decrease in occupancy
at  Essex  Park  Apartments,   North  River  Village  Apartments  and  Willowick
Apartments  partially  offset  by an  increase  in  occupancy  at  Colony  House
Apartments.  Other income increased due to an increase in utility reimbursements
at Essex Park  Apartments  and North  River  Village  Apartments  and  corporate
housing  revenue  at Essex Park  Apartments  partially  offset by a decrease  in
interest  income as a result  of lower  cash  balances  maintained  in  interest
bearing accounts.


<PAGE>


The decrease in total  expenses for the three and six months ended June 30, 2002
was  primarily  due to a decrease  in  operating,  property  tax and general and
administrative  expenses.  Operating  expenses  decreased  due to a decrease  in
property  expense.  Property  expense  decreased  due to a decrease  in employee
salaries at Colony House Apartments and Willowick Apartments partially offset by
an increase in corporate unit housing expense at Essex Park Apartments. Property
tax expense decreased due to the receipt of a refund during 2002 for overpayment
of prior year  property  taxes at North River  Village  Apartments.  General and
administrative  expense  decreased  due to a decrease in  professional  fees and
state operating  taxes  partially  offset by an increase in the cost of services
included in the  management  reimbursements  to the  Corporate  General  Partner
allowed  under the  Partnership  Agreement.  Also  included  in the  general and
administrative  expenses  for the three and six months  ended June 30,  2002 and
2001 are costs  associated  with the  quarterly and annual  communications  with
investors  and  regulatory  agencies  and  the  annual  audit  required  by  the
Partnership Agreement.

As part of the ongoing  business plan of the Registrant,  the Corporate  General
Partner monitors the rental market environments of its investment  properties to
assess the feasibility of increasing rents,  maintaining or increasing occupancy
levels and protecting  the  Partnership  from increases in expenses.  As part of
this plan, the Corporate  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 to offset softening market conditions, there is no guarantee that the
Corporate General Partner will be able to sustain such a plan.

Liquidity and Capital Resources

At June 30, 2002, the Registrant had cash and cash  equivalents of approximately
$344,000 as compared to  approximately  $370,000 at June 30, 2001. Cash and cash
equivalents increased  approximately  $107,000 for the six months ended June 30,
2002 from the Registrant's year end, primarily due to approximately  $586,000 of
cash  provided  by  operating   activities   which  was   partially   offset  by
approximately  $209,000 of cash used in investing  activities and  approximately
$270,000 of cash used in financing activities. Cash used in investing activities
consisted  of property  improvements  and  replacements.  Cash used in financing
activities consisted of payments of principal made on the mortgages  encumbering
the  Registrant's  properties  and  distributions  to partners.  The  Registrant
invests its working capital reserves in interest bearing 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 investment  properties to adequately  maintain the
physical  assets and other  operating needs of the Registrant and to comply with
Federal, state and local legal and regulatory requirements. Capital improvements
completed at each of the Registrant's properties are detailed below.

Essex Park Apartments

During  the  six  months  ended  June  30,  2002,  the   Partnership   completed
approximately   $88,000  of  capital   improvements  at  Essex  Park  Apartments
consisting  primarily  of  structural   improvements,   plumbing   improvements,
appliance  and floor  covering  replacements  and  cabinet  replacements.  These
improvements  were  funded  from  operating  cash  flows.  The  Partnership  has
budgeted, but is not limited to,

<PAGE>


approximately  $174,000  for  capital  improvements  during  2002 at Essex  Park
Apartments  consisting  primarily  of floor  covering  replacements,  structural
enhancements  and  appliance   replacements.   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.

Colony House Apartments

During  the  six  months  ended  June  30,  2002,  the   Partnership   completed
approximately  $35,000  of  capital  improvements  at  Colony  House  Apartments
consisting   primarily  of  floor  covering,   air  conditioning  and  appliance
replacements.  These  improvements  were funded from operating  cash flows.  The
Partnership  has  budgeted,  but is not  limited to,  approximately  $67,000 for
capital improvements during 2002 at Colony House Apartments consisting primarily
of floor covering replacements,  door replacements,  and appliance replacements.
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.

North River Village Apartments

During  the  six  months  ended  June  30,  2002,  the   Partnership   completed
approximately  $55,000 of capital improvements at North River Village Apartments
consisting  primarily of floor covering  replacements,  wall covering and office
computers.  These  improvements  were funded  from  operating  cash  flows.  The
Partnership  has  budgeted,  but is not  limited to,  approximately  $55,000 for
capital  improvements  during 2002 at North River Village Apartments  consisting
primarily  of  floor  covering  replacements.  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 and replacement reserves.

Willowick Apartments

During  the  six  months  ended  June  30,  2002,  the   Partnership   completed
approximately $31,000 of capital improvements at Willowick Apartments consisting
primarily  of floor  covering  replacements,  appliance  replacements  and major
landscaping.  These  improvements  were funded from  operating  cash flows.  The
Partnership has budgeted,  but it is not limited to,  approximately  $69,000 for
capital improvements during 2002 at Willowick Apartments consisting primarily of
floor  covering   replacements,   structural  upgrades,  air  conditioning  unit
replacements  and  appliance   replacements.   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.

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  mortgage
indebtedness of approximately  $14,794,000,  net of discount,  is amortized over
varying periods. A balloon payment of $1,543,000 is due in October 2003 at North
River Village.  All remaining debt is scheduled to be fully amortized in January
2021. The Corporate  General Partner will attempt to refinance such indebtedness
and/or sell the  properties  prior to such  maturity  dates.  If the  properties
cannot be refinanced or sold for a sufficient  amount,  the Registrant will risk
losing such properties through foreclosure.


<PAGE>



The Partnership  distributed  the following  amounts during the six months ended
June 30, 2002 and 2001 (in thousands, except per unit data):

<TABLE>
<CAPTION>

                      Six Months      Per Limited       Six Months      Per Limited
                        Ended         Partnership         Ended         Partnership
                    June 30, 2002         Unit        June 30, 2001         Unit

<S>                    <C>              <C>              <C>               <C>
Operations             $  108           $ 1.95           $1,447            $26.05
</TABLE>

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  cash
available  for  distribution  is  reviewed on a monthly  basis.  There can be no
assurance,  however,  that the Partnership  will generate  sufficient funds from
operations,  after  planned  capital  improvement  expenditures,  to permit  any
additional  distributions  to its  partners  during  the  remainder  of  2002 or
subsequent periods.  In addition,  the Partnership may be restricted from making
distributions  if the amount in the  reserve  account  for North  River  Village
Apartments  maintained  by the mortgage  lender is less than $200 per  apartment
unit.  As  of  June  30,  2002  the  reserve   account  was  fully  funded  with
approximately $54,000 on deposit with the mortgage lender.

Other

In addition to its indirect  ownership of the combined general partner interests
in the Partnership,  AIMCO and its affiliates  owned 35,639 limited  partnership
units in the Partnership  representing  64.80% of the outstanding  units at June
30, 2002. A number of these units were  acquired  pursuant to tender offers made
by AIMCO or its  affiliates.  It is possible that AIMCO or its  affiliates  will
acquire additional units of limited  partnership  interest in the Partnership in
exchange  for  cash  or a  combination  of  cash  and  units  in  the  operating
partnership of AIMCO either through private  purchases or tender offers. In this
regard, on June 25, 2002, a tender offer by AIMCO  Properties,  L.P., to acquire
any and all of the Units not owned by affiliates  of AIMCO for a purchase  price
of $79.00 per Unit  expired.  Pursuant to this offer,  AIMCO  acquired 939 Units
during  the  quarter  ended  June 30,  2002.  Under the  Partnership  Agreement,
unitholders  holding a majority  of the Units are  entitled  to take action with
respect  to a  variety  of  matters,  which  would  include  voting  on  certain
amendments  to the  Partnership  Agreement  and  voting  to remove  the  general
partners. As a result of its ownership of 64.80% of the outstanding units, AIMCO
is in a position  to  control  all such  voting  decisions  with  respect to the
Registrant.  Although the Corporate General Partner owes fiduciary duties to the
limited  partners of the  Partnership,  the Corporate  General Partner also owed
fiduciary duties to AIMCO as its sole  stockholder.  As a result,  the duties of
the Corporate General Partner, as corporate general partner, to the Partnerships
and its limited partners may come into conflict with the duties of the Corporate
General Partner to AIMCO, as its sole stockholder.

Critical Accounting Policies and Estimates

The consolidated financial statements are prepared in accordance with accounting
principles generally accepted in the United States which require the Partnership
to  make  estimates  and  assumptions.  The  Partnership  believes  that  of its
significant  accounting  policies,  the following may involve a higher degree of
judgment and complexity.



<PAGE>


Impairment of Long-Lived Assets

Investment  properties  are  recorded at cost,  less  accumulated  depreciation,
unless  considered  impaired.  If  events  or  circumstances  indicate  that the
carrying  amount of a property may be  impaired,  the  Partnership  will make an
assessment of its  recoverability  by estimating  the  undiscounted  future cash
flows,  excluding  interest  charges,  of the property.  If the carrying  amount
exceeds the aggregate  future cash flows,  the  Partnership  would  recognize an
impairment  loss to the extent the carrying amount exceeds the fair value of the
property.

Real  property  investments  are  subject  to varying  degrees of risk.  Several
factors  may  adversely  affect  the  economic  performance  and  value  of  the
Partnership's  investment  properties.  These  factors  include  changes  in the
national,  regional and local economic  climate;  local  conditions,  such as an
oversupply  of  multifamily   properties;   competition   from  other  available
multifamily  property  owners and changes in market  rental  rates.  Any adverse
changes in these factors could cause an impairment in the Partnership's assets.

Revenue Recognition

The Partnership generally leases apartment units for twelve-month terms or less.
Rental income  attributable to leases is recognized monthly as it is earned. The
Partnership will offer rental concessions during  particularly slow months or in
response  to  heavy  competition  from  other  similar  complexes  in the  area.
Concessions are charged to income as incurred.



<PAGE>



                           PART II - OTHER INFORMATION


ITEM 1.     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. (the "Nuanes action") in the Superior Court of the
State of  California  for the  County  of San  Mateo.  The  plaintiffs  named as
defendants,  among others,  the Partnership,  its Corporate  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,  among other
things,  the  acquisition  of interests  in certain  Corporate  General  Partner
entities by Insignia Financial Group, Inc. ("Insignia") and entities which were,
at one  time,  affiliates  of  Insignia;  past  tender  offers  by the  Insignia
affiliates to acquire limited partnership units;  management of the partnerships
by the  Insignia  affiliates;  and the series of  transactions  which  closed on
October 1, 1998 and February 26, 1999 whereby  Insignia and Insignia  Properties
Trust,  respectively,  were merged  into AIMCO.  The  plaintiffs  seek  monetary
damages and equitable relief, including judicial dissolution of the Partnership.
On June 25, 1998, the Corporate General Partner filed a motion seeking dismissal
of the action.  In lieu of responding  to the motion,  the  plaintiffs  filed an
amended complaint.  The Corporate 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 court approval, on behalf of the Partnership and all
limited partners who owned units as of November 3, 1999. Preliminary approval of
the  settlement  was obtained on November 3, 1999 from the Court,  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 prior lead counsel to enter the settlement.  On
December 14, 1999, the Corporate  General Partner and its affiliates  terminated
the  proposed  settlement.  In  February  2000,  counsel  for some of the  named
plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who
negotiated  the  settlement.  On June  27,  2000,  the  Court  entered  an order
disqualifying  them  from the case and an  appeal  was  taken  from the order on
October 5, 2000. On December 4, 2000, the Court  appointed the law firm of Lieff
Cabraser  Heimann & Bernstein  LLP as new lead  counsel for  plaintiffs  and the
putative class.  Plaintiffs filed a third amended complaint on January 19, 2001.
On March 2, 2001,  the  Corporate  General  Partner and its  affiliates  filed a
demurrer to the third amended  complaint.  On May 14, 2001,  the Court heard the
demurrer to the third amended  complaint.  On July 10, 2001, the Court issued an
order  sustaining  defendants'  demurrer on certain  grounds.  On July 20, 2001,
Plaintiffs filed a motion for reconsideration of the Court's July 10, 2001 order
granting in part and denying in part defendants' demurrer. On September 7, 2001,
Plaintiffs  filed a fourth amended class and  derivative  action  complaint.  On
September 12, 2001, the Court denied Plaintiffs' motion for reconsideration.  On
October 5, 2001, the Corporate General Partner and affiliated defendants filed a
demurrer to the fourth amended complaint,  which was heard on December 11, 2001.
On February 2, 2002,  the Court served its order  granting in part the demurrer.
The  Court has  dismissed  without  leave to amend  certain  of the  plaintiffs'
claims.  On February 11, 2002,  plaintiffs  filed a motion  seeking to certify a
putative  class  comprised of all  non-affiliated  persons who own or have owned
units  in  the  partnerships.  The  Corporate  General  Partner  and  affiliated
defendants  oppose the motion.  On April 29,  2002,  the Court held a hearing on
plaintiffs' motion for class  certification and took the matter under submission
after further briefing,  as order by the court, was submitted by the parties. On
July 10, 2002,  the Court  entered an order  vacating the current  trial date of
January 13, 2003 (as well as the  pre-trial  and  discovery  cut-off  dates) and
stayed the case in its entirety through November 7, 2002 so that the parties can
have an opportunity to discuss settlement.

During the third  quarter of 2001, a complaint  (the "Heller  action") was filed
against  the same  defendants  that are named in the  Nuanes  action,  captioned
Heller v. Insignia Financial Group. On or about August 6, 2001, plaintiffs filed
a first amended  complaint.  The first amended complaint in the Heller action is
brought as a purported  derivative  action,  and asserts  claims for among other
things  breach  of  fiduciary  duty;  unfair  competition;   conversion,  unjust
enrichment;  and judicial  dissolution.  Plaintiffs in the Nuanes action filed a
motion to  consolidate  the Heller action with the Nuanes action and stated that
the Heller action was filed in order to preserve the derivative claims that were
dismissed  without  leave to amend in the Nuanes action by the Court order dated
July 10, 2001. On October 5, 2001, the Corporate  General Partner and affiliated
defendants  moved to strike the first  amended  complaint  in its  entirety  for
violating  the Court's July 10, 2001 order  granting in part and denying in part
defendants'  demurrer in the Nuanes action, or alternatively,  to strike certain
portions of the complaint based on the statute of limitations.  Other defendants
in the action  demurred to the fourth  amended  complaint,  and,  alternatively,
moved to strike the complaint. On December 11, 2001, the court heard argument on
the motions  and took the matters  under  submission.  On February 4, 2002,  the
Court  served  notice of its order  granting  defendants'  motion to strike  the
Heller complaint as a violation of its July 10, 2001 order in the Nuanes action.
On March 27, 2002,  the plaintiffs  filed a notice  appealing the order striking
the complaint. The parties are currently in the midst of briefing that appeal.

The Corporate General Partner does not anticipate that any costs,  whether legal
or  settlement  costs,  associated  with  these  cases will be  material  to the
Partnership's overall operations.


<PAGE>





ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K

            a)    Exhibits:

               3    Amended and Restated  Certificate  and  Agreement of Limited
                    Partnership   (Exhibit  A  to  the  Prospectus  included  in
                    Registrant's  Amendment  No.  1 to  Registration  Statement,
                    filed September 2, 1981 (File No. 2-72567),  is incorporated
                    herein by reference).

               99   Certification of Chief Executive Officer and Chief Financial
                    Officer.

            b) Reports on Form 8-K filed during the quarter ended June 30, 2002:

                  None.


<PAGE>


                                   SIGNATURES



In accordance with the  requirements of the Exchange Act, the registrant  caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.



                             SHELTER PROPERTIES III

                                 By:     Shelter Realty III Corporation
                                         Corporate General Partner

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

                                 By:     /s/Thomas C. Novosel
                                         Thomas C. Novosel
                                         Senior Vice President
                                         and Chief Accounting Officer


                              Date: August 14, 2002


<PAGE>


Exhibit 99


                          Certification of CEO and CFO
                       Pursuant to 18 U.S.C. Section 1350,
                             As Adopted Pursuant to
                   Section 906 of the Sarbanes-Oxley Act of 2002



In connection with the Quarterly Report on Form 10-QSB of Shelter Properties III
Limited  Partnership (the  "Partnership"),  for the quarterly period ended June
30, 2002 as filed with the Securities and Exchange Commission on the date hereof
(the  "Report"),  Patrick  J. Foye,  as the  equivalent  of the Chief  Executive
Officer of the  Partnership,  and Paul J.  McAuliffe,  as the  equivalent of the
Chief Financial Officer of the Partnership,  each hereby certifies,  pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that, to the best of his knowledge:

      (1)   The Report fully complies with the  requirements of Section 13(a) or
            15(d) of the Securities Exchange Act of 1934; and

      (2)   The  information  contained in the Report  fairly  presents,  in all
            material respects, the financial condition and results of operations
            of the Partnership.


                                           /s/Patrick J. Foye
                                    Name:  Patrick J. Foye
                                    Date:  August 14, 2002


                                           /s/Paul J. McAuliffe
                                    Name:  Paul J. McAuliffe
                                    Date:  August 14, 2002


      This  certification  accompanies the Report pursuant to Section 906 of the
   Sarbanes-Oxley  Act of 2002 and shall not,  except to the extent  required by
   the  Sarbanes-Oxley  Act of 2002,  be  deemed  filed by the  Partnership  for
   purposes of
           Section 18 of the Securities Exchange Act of 1934, as amended.