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

                                   Form 10-QSB

(Mark One)
[X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934


               For the quarterly period ended March 31, 2004


[ ]   TRANSITION REPORT PURSUANT TO 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 registrant 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)

<PAGE>

                         PART I - FINANCIAL INFORMATION



ITEM 1.     FINANCIAL STATEMENTS




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

                                 March 31, 2004

<TABLE>
<CAPTION>

Assets
<S>                                                                           <C>
   Cash and cash equivalents                                                  $ 75
   Receivables and deposits                                                      135
   Restricted escrows                                                             84
   Other assets                                                                  665
   Investment properties:
      Land                                                     $ 945
      Buildings and related personal property                   22,863
                                                                23,808
      Less accumulated depreciation                            (16,069)        7,739
                                                                            $ 8,698

Liabilities and Partners' Deficit
Liabilities
   Accounts payable                                                           $ 68
   Tenant security deposit liabilities                                            73
   Accrued property taxes                                                         94
   Other liabilities                                                             295
   Due to affilate (Note C)                                                      374
   Mortgage notes payable                                                     12,588

Partners' Deficit
   General partners                                             $ (71)
   Limited partners (55,000 units issued and
      outstanding)                                              (4,723)       (4,794)
                                                                            $ 8,698


        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
                                                                       March 31,
                                                               2004             2003
Revenues:
<S>                                                            <C>              <C>
   Rental income                                               $ 998            $ 919
   Other income                                                    84               69
   Casualty gain (Note D)                                          47               --
      Total revenues                                            1,129              988

Expenses:
   Operating                                                      454              551
   General and administrative                                      72              101
   Depreciation                                                   226              219
   Interest                                                       234              232
   Property taxes                                                  95               85
      Total expenses                                            1,081            1,188

Net income (loss)                                              $ 48            $ (200)

Net income (loss) allocated to general partners (1%)           $ --             $ (2)
Net income (loss) allocated to limited partners (99%)              48             (198)

                                                               $ 48            $ (200)

Net income (loss) per limited partnership unit                $ 0.87           $ (3.60)


        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, 2003                   55,000         $ (71)      $(4,771)   $(4,842)

Net income for the three months
   ended March 31, 2004                    --             --           48         48

Partners' deficit at
   March 31, 2004                      55,000         $ (71)      $(4,723)   $(4,794)


        See Accompanying Notes to Consolidated Financial Statements

</TABLE>

<PAGE>

                             SHELTER PROPERTIES III
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                 (in thousands)
<TABLE>
<CAPTION>

                                                                   Three Months Ended
                                                                        March 31,
                                                                    2004         2003
Cash flows from operating activities:
<S>                                                                 <C>         <C>
  Net income (loss)                                                 $ 48        $ (200)
  Adjustments to reconcile net income (loss) to net cash
   used in operating activities:
     Depreciation                                                      226          219
     Amortization of loan costs                                          5            5
     Casualty gain                                                     (47)          --
     Change in accounts:
      Receivables and deposits                                           8           25
      Other assets                                                    (120)        (182)
      Accounts payable                                                  23          (56)
      Tenant security deposit liabilities                               (2)           2
      Accrued property taxes                                          (234)         (50)
      Due to affiliate                                                  55           --
      Other liabilities                                                 26           57
         Net cash used in operating activities                         (12)        (180)

Cash flows from investing activities:
  Property improvements and replacements                              (218)        (130)
  Net withdrawals from restricted escrows                               95           --
  Insurance proceeds received                                           47           --
         Net cash used in investing activities                         (76)        (130)

Cash flows from financing activities:
  Payments on mortgage notes payable                                   (95)         (89)
  Advances from affiliate                                              135           --
  Repayment of advances from affiliate                                 (69)          --
         Net cash used in financing activities                         (29)         (89)

Net decrease in cash and cash equivalents                             (117)        (399)
Cash and cash equivalents at beginning of period                       192          666

Cash and cash equivalents at end of period                          $ 75         $ 267

Supplemental disclosure of cash flow information:
  Cash paid for interest                                            $ 192        $ 235

        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 month  period ended March 31,  2004,  are not  necessarily
indicative  of the  results  that may be  expected  for the fiscal  year  ending
December 31, 2004. 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 fiscal year ended December 31, 2003.

Note B - Reconciliation of Cash Flows

As required by the Partnership  Agreement,  the following is a reconciliation of
"Net  cash  used  in  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 Three Months Ended
                                                                  March 31,
                                                              2004            2003
                                                               (in thousands)
<S>                                                          <C>            <C>
Net cash used in operating activities                        $ (12)         $ (180)
  Payments on mortgage notes payable                           (95)            (89)
  Property improvements and replacements                      (218)           (130)
  Change in restricted excrows                                   95              --
  Changes in reserves for net operating assets                 244             204
  Additional reserves                                          (14)             --
     Net cash from operations                                $ --           $ (195)
</TABLE>

For the three  months  ended  March 31,  2004,  the  Corporate  General  Partner
reserved  approximately  $14,000 to fund capital improvements and repairs at the
Partnership's properties.

Distributions made from reserves no longer considered necessary by the Corporate
General  Partner are  considered to be additional  net cash from  operations for
allocation purposes.

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 three  months  ended  March 31,  2004 and  2003,  affiliates  of the
Corporate General Partner were entitled to receive 5% of gross receipts from all
of the Partnership's  properties for providing property management services. The
Partnership  paid to such affiliates  approximately  $53,000 and $47,000 for the
three months ended March 31, 2004 and 2003,  respectively,  which is included in
operating expenses.

An  affiliate  of  the  Corporate  General  Partner  received  reimbursement  of
accountable  administrative  expenses  amounting  to  approximately  $98,000 and
$47,000 for the three months ended March 31, 2004 and 2003, respectively,  which
is included in general and  administrative  expenses and investment  properties.
Included in these amounts are fees related to construction  management  services
provided by an  affiliate  of the  Corporate  General  Partner of  approximately
$43,000  and  $3,000  for the  three  months  ended  March  31,  2004 and  2003,
respectively. The construction management service fees are calculated based on a
percentage of additions to the  investment  properties.  At March 31, 2004,  the
Partnership owed approximately $55,000 for accountable  administrative  expenses
which is included in due to affiliate on the accompanying  consolidated  balance
sheet.

During 1986, a liability of  approximately  $185,000 was incurred to the general
partners for sales  commissions  earned.  In  connection  with the sale of North
River  Village  Apartments  in 2002,  the  Corporate  General  Partner  earned a
commission  of  $68,000  for  its  assistance  in  the  sale.  Payment  of  such
commissions  is subordinate  to the limited  partners  receiving a cumulative 7%
return on their  investment.  As of March 31,  2004,  the level of return to the
limited partners has not been met and the balance of  approximately  $253,000 is
included in due to affiliate on the accompanying consolidated balance sheet.

Pursuant to the  Partnership  Agreement,  an affiliate of the Corporate  General
Partner advanced the Partnership  approximately $135,000 during the three months
ended March 31, 2004 to assist with the payment of property  taxes at Essex Park
Apartments. During the three months ended March 31, 2004, the Partnership made a
payment on this  advance of  approximately  $69,000.  Interest  on  advances  is
charged  at the  prime  rate  plus  2%.  Interest  expense  for  this  loan  was
approximately  $1,000 for the three months  ended March 31,  2004.  At March 31,
2004,  the  Partnership  owed an  affiliate  of the  Corporate  General  Partner
approximately  $66,000 in advances  and accrued  interest.  No such  advances or
payments were made during the three months ended March 31, 2003.

The  Partnership  insures 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 2004, the Partnership anticipates its cost for
insurance  coverage  and  fees  associated  with  policy  claims  administration
provided  by  AIMCO  and its  affiliates  will  be  approximately  $38,000.  The
Partnership was charged approximately $59,000 for 2003.

Note D - Casualty

In May  2003,  one of the  Partnership's  investment  properties,  Colony  House
Apartments,  incurred damages as a result of a hail storm. During the year ended
December 31,  2003,  approximately  $151,000 of fixed  assets and  approximately
$86,000 of  accumulated  depreciation  were written off resulting in a net write
off of approximately  $65,000.  During 2003, the property received approximately
$244,000  in  proceeds  from the  insurance  company  to repair  the  damage and
recognized  a  casualty  gain  of  approximately  $179,000  as a  result  of the
difference between the proceeds received and the net book value of the buildings
which  were  damaged.  During  the  three  months  ended  March  31,  2004,  the
Partnership  received  additional  proceeds of approximately  $47,000 which were
recognized as a casualty  gain.  Subsequent to March 31, 2004,  the  Partnership
received additional proceeds of approximately $44,000.

Note E - Contingencies

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
purported  to  assert  claims  on  behalf  of a class of  limited  partners  and
derivatively  on behalf  of a number  of  limited  partnerships  (including  the
Partnership)  that 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 that 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  sought  monetary
damages and equitable relief, including judicial dissolution of the Partnership.
In addition, 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 Heller action was brought as a
purported derivative action, and asserted claims for, among other things, breach
of fiduciary  duty,  unfair  competition,  conversion,  unjust  enrichment,  and
judicial dissolution.

On January 8, 2003,  the parties filed a  Stipulation  of Settlement in proposed
settlement of the Nuanes action and the Heller action.

In general  terms,  the  proposed  settlement  provides  for  certification  for
settlement  purposes of a settlement class consisting of all limited partners in
this  Partnership and others (the  "Partnerships")  as of December 20, 2002, the
dismissal  with  prejudice  and  release  of claims  in the  Nuanes  and  Heller
litigation,  payment by AIMCO of $9.9  million  (which shall be  distributed  to
settlement  class  members  after  deduction of attorney fees and costs of class
counsel and certain costs of settlement) and up to $1 million toward the cost of
independent  appraisals of the  Partnerships'  properties  by a Court  appointed
appraiser. An affiliate of the Corporate General Partner has also agreed to make
at least one round of tender offers to purchase all of the partnership interests
in the Partnerships within one year of final approval,  if it is granted, and to
provide  partners with the independent  appraisals at the time of these tenders.
The proposed  settlement also provided for the limitation of the allowable costs
which  the  Corporate   General  Partner  or  its  affiliates  will  charge  the
Partnerships  in connection with this litigation and imposes limits on the class
counsel  fees and  costs in this  litigation.  On April  11,  2003,  notice  was
distributed  to  limited   partners   providing  the  details  of  the  proposed
settlement.

On June 13, 2003, the Court granted final approval of the settlement and entered
judgment in both the Nuanes and Heller actions.  On August 12, 2003, an objector
("Objector")  filed an  appeal  seeking  to  vacate  and/or  reverse  the  order
approving the settlement and entering  judgment  thereto.  On November 24, 2003,
the Objector filed an  application  requesting the Court order AIMCO to withdraw
settlement  tender offers it had  commenced,  refrain from making further offers
pending the appeal and auction any units tendered to third  parties,  contending
that the offers did not conform  with the terms of the  Settlement.  Counsel for
the Objector (on behalf of another  investor)  had  alternatively  requested the
Court take certain  action  purportedly  to enforce the terms of the  settlement
agreement.  On December 18, 2003,  the Court heard oral  argument on the motions
and denied them both in their entirety.  On January 28, 2004, Objector filed his
opening brief in his pending  appeal.  On April 23, 2004, the Corporate  General
Partner and its  affiliates  filed a response brief in support of the settlement
and the judgment  thereto.  Plaintiffs have also filed a brief in support of the
settlement.  Objector is  scheduled  to file a reply brief no later than May 13,
2004.

On August 8, 2003 AIMCO Properties  L.P., an affiliate of the Corporate  General
Partner,  was served  with a  Complaint  in the United  States  District  Court,
District of Columbia alleging that AIMCO Properties L.P.  willfully violated the
Fair Labor Standards Act (FLSA) by failing to pay maintenance  workers  overtime
for all hours  worked in excess of forty per week.  On March 5, 2004  Plaintiffs
filed an amended complaint also naming NHP Management Company,  which is also an
affiliate  of the  Corporate  General  Partner.  The  Complaint  is  styled as a
Collective  Action  under  the FLSA and seeks to  certify  state  subclasses  in
California, Maryland, and the District of Columbia. Specifically, the plaintiffs
contend that AIMCO Properties L.P. failed to compensate  maintenance workers for
time  that they were  required  to be  "on-call".  Additionally,  the  Complaint
alleges AIMCO  Properties  L.P.  failed to comply with the FLSA in  compensating
maintenance  workers  for time that they  worked in  responding  to a call while
"on-call".  The Defendants have filed an answer to the Amended Complaint denying
the substantive allegations. Discovery is currently underway.

The  Corporate  General  Partner  does  not  anticipate  that  any  costs to the
Partnership, 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
matters  involving  it or its  investment  properties  that are not of a routine
nature arising in the ordinary course of business.

Pursuant to a formal order of investigation received by AIMCO on March 29, 2004,
the  Central  Regional  Office of the  United  States  Securities  and  Exchange
Commission is conducting an  investigation  relating to certain  matters.  AIMCO
believes the areas of investigation  include AIMCO's  miscalculated  monthly net
rental  income  figures in third  quarter 2003,  forecasted  guidance,  accounts
payable,  rent concessions,  vendor rebates,  and capitalization of expenses and
payroll.  AIMCO is cooperating  fully.  AIMCO does not believe that the ultimate
outcome  will  have a  material  adverse  effect on its  consolidated  financial
condition or results of operations  taken as a whole.  Similarly,  the Corporate
General Partner does not believe that the ultimate  outcome will have a material
adverse effect on the Partnership's  consolidated financial condition or results
of operations taken as a whole.

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

The matters discussed in this report contain certain forward-looking statements,
including, without limitation, statements regarding future financial performance
and the effect of government  regulations.  Actual results may differ materially
from those described in the forward-looking statements and will be affected by a
variety of risks and factors including,  without limitation:  national and local
economic  conditions;  the terms of  governmental  regulations  that  affect the
Registrant and interpretations of those regulations; the competitive environment
in which the Registrant operates;  financing risks, including the risk that cash
flows from operations may be insufficient to meet required payments of principal
and interest;  real estate risks, including variations of real estate values and
the general  economic  climate in local markets and  competition  for tenants in
such markets;  litigation,  including  costs  associated  with  prosecuting  and
defending  claims  and  any  adverse   outcomes,   and  possible   environmental
liabilities.   Readers  should  carefully  review  the  Registrant's   financial
statements and the notes thereto,  as well as the risk factors  described in the
documents  the  Registrant  files  from  time to time  with the  Securities  and
Exchange Commission.

The Partnership's  investment  properties consist of three apartment  complexes.
The following table sets forth the average  occupancy of the properties for each
of the three months ended March 31, 2004 and 2003:

                                                             Average
                                                            Occupancy
       Property                                        2004          2003

       Essex Park Apartments
          Columbia, South Carolina (1)                 88%            81%

       Colony House Apartments
          Murfeesboro, Tennessee                       95%            93%

       Willowick Apartments
          Greenville, South Carolina                   91%            89%

(1)   The  Corporate  General  Partner  attributes  the increase in occupancy at
      Essex  Park  Apartments  to  increased  retention  efforts  from  property
      management and a more stable customer base.

The  Partnership's  financial  results  are  dependent  upon a number of factors
including  the  ability  to  attract  and  maintain  tenants  at the  investment
properties,  interest  rates on mortgage  loans,  costs  incurred to operate the
investment  properties,  general economic conditions and weather. As part of the
ongoing business plan of the Partnership, 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,  the Corporate  General Partner may use
rental  concessions  and  rental  rate  reductions  to offset  softening  market
conditions,  accordingly,  there  is no  guarantee  that the  Corporate  General
Partner will be able to sustain such a plan.  Further, a number of factors which
are outside the control of the  Partnership  such as the local economic  climate
and weather can  adversely  or  positively  impact the  Partnership's  financial
results.

Results of Operations

The  Partnership's  net income was  approximately  $48,000 for the three  months
ended March 31, 2004  compared to a net loss of  approximately  $200,000 for the
corresponding  period in 2003. The decrease in net loss is due to an increase in
total revenues and a decrease in total expenses. Total revenues increased due to
increased rental and other income and due to a casualty gain recognized in 2004.
Rental income  increased due to increased  average  rental rates at Colony House
and Essex Park  Apartments and increased  occupancy at all of the  Partnership's
properties.  Other income  increased due to increased late charges at Essex Park
Apartments and increased  lease  cancellation  fees at all of the  Partnership's
properties.

In May  2003,  one of the  Partnership's  investment  properties,  Colony  House
Apartments,  incurred damages as a result of a hail storm. During the year ended
December 31,  2003,  approximately  $151,000 of fixed  assets and  approximately
$86,000 of  accumulated  depreciation  were written off resulting in a net write
off of approximately  $65,000.  During 2003, the property received approximately
$244,000  in  proceeds  from the  insurance  company  to repair  the  damage and
recognized  a  casualty  gain  of  approximately  $179,000  as a  result  of the
difference between the proceeds received and the net book value of the buildings
which  were  damaged.  During  the  three  months  ended  March  31,  2004,  the
Partnership  received  additional  proceeds of approximately  $47,000 which were
recognized as a casualty  gain.  Subsequent to March 31, 2004,  the  Partnership
received additional proceeds of approximately $44,000.

Total  expenses  decreased  due  to  decreases  in  operating  and  general  and
administrative  expenses.  Operating  expenses  decreased  due to a decrease  in
maintenance expense.  Maintenance expense decreased due to decreases in contract
labor at Essex Park and Colony House Apartments and painting  supplies at Colony
House Apartments.

General and administrative  expenses decreased due to a decrease in taxes, fees,
and  licenses,  which were paid in 2003 and  related to the sale of North  River
Village in 2002. Included in general and administrative expense during the three
months  ended  March  31,  2004 and 2003 are  management  reimbursements  to the
Corporate  General  Partner  as  allowed  under the  Partnership  Agreement.  In
addition,  costs  associated with the quarterly and annual  communications  with
investors  and  regulatory  agencies  and  the  annual  audit  required  by  the
Partnership Agreement are also included in general and administrative expenses.

Liquidity and Capital Resources

At  March  31,  2004,  the  Partnership   had  cash  and  cash   equivalents  of
approximately $75,000 compared to approximately $267,000 at March 31, 2003. Cash
and cash equivalents decreased approximately $117,000 from December 31, 2003 due
to  approximately  $12,000,  $76,000  and  $29,000  of cash  used in  operating,
investing  and  financing  activities,  respectively.  Cash  used  in  investing
activities consisted of property improvements and replacements  partially offset
by net withdrawals from restricted escrows and insurance proceeds received. Cash
used in financing activities consisted of payments of principal on the mortgages
encumbering  the  Partnership's  properties  and  repayment  of  advances  to an
affiliate  partially  offset  by  advances  received  from  an  affiliate.   The
Partnership 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 Partnership and to comply with
Federal,  state  and local  legal and  regulatory  requirements.  The  Corporate
General  Partner  monitors  developments  in the  area of legal  and  regulatory
compliance and is studying new federal laws, including the Sarbanes-Oxley Act of
2002. The Sarbanes-Oxley Act of 2002 mandates or suggests additional  compliance
measures with regard to governance,  disclosure, audit and other areas. In light
of these changes,  the  Partnership  expects that it will incur higher  expenses
related  to  compliance,  including  increased  legal  and audit  fees.  Capital
improvements planned at each of the Partnership's properties are detailed below.

Essex Park Apartments

During  the  three  months  ended  March 31,  2004,  the  Partnership  completed
approximately   $11,000  of  capital  improvements  at  Essex  Park  Apartments,
consisting  primarily of  structural  upgrades and floor  covering and appliance
replacements.  These  improvements  were funded from  operating  cash flow.  The
Partnership  evaluates the capital  improvement needs of the property during the
year and  currently  expects  to  complete  an  additional  $169,000  in capital
improvements during the remainder of 2004.  Additional capital  improvements may
be considered and will depend on the physical  condition of the property as well
as the anticipated cash flow generated by the property.

Colony House Apartments

During  the  three  months  ended  March 31,  2004,  the  Partnership  completed
approximately  $201,000  of  capital  improvements  at Colony  House  Apartments
consisting  primarily of floor covering and appliance  replacements and building
repairs related to damage from a hail storm. These improvements were funded from
operating  cash  flow,   replacement   reserves  and  insurance  proceeds.   The
Partnership  evaluates the capital  improvement needs of the property during the
year and  currently  expects  to  complete  an  additional  $72,000  in  capital
improvements during the remainder of 2004.  Additional capital  improvements may
be considered and will depend on the physical  condition of the property as well
as replacement reserves and the anticipated cash flow generated by the property.

Willowick Apartments

During  the  three  months  ended  March 31,  2004,  the  Partnership  completed
approximately $6,000 of capital improvements at Willowick Apartments, consisting
primarily of floor covering  replacements.  These  improvements were funded from
operating cash flow. The Partnership  evaluates the capital improvement needs of
the property  during the year and  currently  expects to complete an  additional
$93,000 in capital improvements during the remainder of 2004. Additional capital
improvements may be considered and will depend on the physical  condition of the
property as well as the 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 Partnership's  distributable cash flow, if any,
may be adversely affected at least in the short term.

The  Partnership's  assets are thought to be sufficient  for any near term needs
(exclusive  of  capital   improvements)   of  the   Partnership.   The  mortgage
indebtedness   encumbering  the   Partnership's   properties  of   approximately
$12,588,000 is amortized over 240 months and is scheduled to be fully  amortized
in January 2021.

No  distributions  were made  during the three  months  ended March 31, 2004 and
2003.

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
distributions  to its  partners  during  the  remainder  of 2004  or  subsequent
periods.

Other

In addition to its  indirect  ownership of the general  partner  interest in the
Partnership,  AIMCO and its affiliates  owned 36,370 limited  partnership  units
(the "Units") in the Partnership representing 66.13% of the outstanding Units at
March 31, 2004. 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 in exchange for cash or a combination of cash and
units in AIMCO  Properties,  L.P., the operating  partnership  of AIMCO,  either
through  private  purchases  or  tender  offers.  Pursuant  to  the  Partnership
Agreement,  unitholders  holding a majority  of the Units are  entitled  to take
action with  respect to a variety of matters that  include,  but are not limited
to,  voting on certain  amendments  to the  Partnership  Agreement and voting to
remove the Corporate General Partner.  As a result of its ownership of 66.13% of
the outstanding Units, AIMCO and its affiliates are in a position to control all
such voting  decisions with respect to the  Partnership.  Although the Corporate
General  Partner  owes  fiduciary   duties  to  the  limited   partners  of  the
Partnership,  the Corporate  General Partner also owes fiduciary duties to AIMCO
as its sole  stockholder.  As a  result,  the  duties of the  Corporate  General
Partner,  as  corporate  general  partner,  to the  Partnership  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.

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, but are not limited
to,  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 impairment of 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  evaluates all accounts receivable from residents and establishes an
allowance, after the application of security deposits, for accounts greater than
30 days past due on current tenants and all receivables due from former tenants.
The Partnership will offer rental concessions during particularly slow months or
in response to heavy  competition from other similar  complexes in the area. Any
concessions  given at the inception of the lease are amortized  over the life of
the lease.

ITEM 3.     CONTROLS AND PROCEDURES

(a) Disclosure Controls and Procedures.  The Partnership's management,  with the
participation of the principal executive officer and principal financial officer
of the Corporate  General Partner,  who are the equivalent of the  Partnership's
principal executive officer and principal financial officer,  respectively,  has
evaluated  the  effectiveness  of  the  Partnership's  disclosure  controls  and
procedures (as such term is defined in Rules  13a-15(e) and 15d-15(e)  under the
Securities  Exchange Act of 1934, as amended (the "Exchange Act")) as of the end
of the period covered by this report.  Based on such  evaluation,  the principal
executive  officer and  principal  financial  officer of the  Corporate  General
Partner, who are the equivalent of the Partnership's principal executive officer
and principal  financial officer,  respectively,  have concluded that, as of the
end of such period,  the  Partnership's  disclosure  controls and procedures are
effective.

(b) Internal Control Over Financial  Reporting.  There have not been any changes
in the Partnership's  internal control over financial reporting (as such term is
defined in Rules  13a-15(f)  and  15d-15(f)  under the Exchange  Act) during the
fiscal quarter to which this report relates that have  materially  affected,  or
are reasonably likely to materially affect,  the Partnership's  internal control
over financial reporting.

                           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
purported  to  assert  claims  on  behalf  of a class of  limited  partners  and
derivatively  on behalf  of a number  of  limited  partnerships  (including  the
Partnership)  that 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 that 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  sought  monetary
damages and equitable relief, including judicial dissolution of the Partnership.
In addition, 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 Heller action was brought as a
purported derivative action, and asserted claims for, among other things, breach
of fiduciary  duty,  unfair  competition,  conversion,  unjust  enrichment,  and
judicial dissolution.

On January 8, 2003,  the parties filed a  Stipulation  of Settlement in proposed
settlement of the Nuanes action and the Heller action.

In general  terms,  the  proposed  settlement  provides  for  certification  for
settlement  purposes of a settlement class consisting of all limited partners in
this  Partnership and others (the  "Partnerships")  as of December 20, 2002, the
dismissal  with  prejudice  and  release  of claims  in the  Nuanes  and  Heller
litigation,  payment by AIMCO of $9.9  million  (which shall be  distributed  to
settlement  class  members  after  deduction of attorney fees and costs of class
counsel and certain costs of settlement) and up to $1 million toward the cost of
independent  appraisals of the  Partnerships'  properties  by a Court  appointed
appraiser. An affiliate of the Corporate General Partner has also agreed to make
at least one round of tender offers to purchase all of the partnership interests
in the Partnerships within one year of final approval,  if it is granted, and to
provide  partners with the independent  appraisals at the time of these tenders.
The proposed  settlement also provided for the limitation of the allowable costs
which  the  Corporate   General  Partner  or  its  affiliates  will  charge  the
Partnerships  in connection with this litigation and imposes limits on the class
counsel  fees and  costs in this  litigation.  On April  11,  2003,  notice  was
distributed  to  limited   partners   providing  the  details  of  the  proposed
settlement.

On June 13, 2003, the Court granted final approval of the settlement and entered
judgment in both the Nuanes and Heller actions.  On August 12, 2003, an objector
("Objector")  filed an  appeal  seeking  to  vacate  and/or  reverse  the  order
approving the settlement and entering  judgment  thereto.  On November 24, 2003,
the Objector filed an  application  requesting the Court order AIMCO to withdraw
settlement  tender offers it had  commenced,  refrain from making further offers
pending the appeal and auction any units tendered to third  parties,  contending
that the offers did not conform  with the terms of the  Settlement.  Counsel for
the Objector (on behalf of another  investor)  had  alternatively  requested the
Court take certain  action  purportedly  to enforce the terms of the  settlement
agreement.  On December 18, 2003,  the Court heard oral  argument on the motions
and denied them both in their entirety.  On January 28, 2004, Objector filed his
opening brief in his pending  appeal.  On April 23, 2004, the Corporate  General
Partner and its  affiliates  filed a response brief in support of the settlement
and the judgment  thereto.  Plaintiffs have also filed a brief in support of the
settlement.  Objector is  scheduled  to file a reply brief no later than May 13,
2004.

On August 8, 2003 AIMCO Properties  L.P., an affiliate of the Corporate  General
Partner,  was served  with a  Complaint  in the United  States  District  Court,
District of Columbia alleging that AIMCO Properties L.P.  willfully violated the
Fair Labor Standards Act (FLSA) by failing to pay maintenance  workers  overtime
for all hours  worked in excess of forty per week.  On March 5, 2004  Plaintiffs
filed an amended complaint also naming NHP Management Company,  which is also an
affiliate  of the  Corporate  General  Partner.  The  Complaint  is  styled as a
Collective  Action  under  the FLSA and seeks to  certify  state  subclasses  in
California, Maryland, and the District of Columbia. Specifically, the plaintiffs
contend that AIMCO Properties L.P. failed to compensate  maintenance workers for
time  that they were  required  to be  "on-call".  Additionally,  the  Complaint
alleges AIMCO  Properties  L.P.  failed to comply with the FLSA in  compensating
maintenance  workers  for time that they  worked in  responding  to a call while
"on-call".  The Defendants have filed an answer to the Amended Complaint denying
the substantive allegations. Discovery is currently underway.

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

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).

                  31.1  Certification  of equivalent of Chief Executive  Officer
                        pursuant    to    Securities    Exchange    Act    Rules
                        13a-14(a)/15d-14(a),  as Adopted Pursuant to Section 302
                        of the Sarbanes-Oxley Act of 2002.

                  31.2  Certification  of equivalent of Chief Financial  Officer
                        pursuant    to    Securities    Exchange    Act    Rules
                        13a-14(a)/15d-14(a),  as Adopted Pursuant to Section 302
                        of the Sarbanes-Oxley Act of 2002.

                  32.1  Certification  Pursuant to 18 U.S.C.  Section  1350,  as
                        Adopted  Pursuant to Section  906 of the  Sarbanes-Oxley
                        Act of 2002.

            b)    Reports on Form 8-K filed  during the quarter  ended March 31,
                  2004:

                  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/Martha L. Long
                                          Martha L. Long
                                          Senior Vice President


                                    By:   /s/Thomas M. Herzog
                                          Thomas M. Herzog
                                          Senior Vice President and
                                          Chief Accounting Officer


                                    Date: May 13, 2004


<PAGE>



Exhibit 31.1


                                  CERTIFICATION


I, Martha L. Long, certify that:


1.    I have reviewed this quarterly report on Form 10-QSB of Shelter Properties
      III;

2.    Based on my knowledge,  this report does not contain any untrue  statement
      of a material fact or omit to state a material fact  necessary to make the
      statements made, in light of the circumstances under which such statements
      were made,  not  misleading  with  respect  to the period  covered by this
      report;

3.    Based on my  knowledge,  the  financial  statements,  and other  financial
      information  included  in this  report,  fairly  present  in all  material
      respects the financial condition,  results of operations and cash flows of
      the registrant as of, and for, the periods presented in this report;

4.    The  registrant's  other  certifying  officer(s) and I are responsible for
      establishing  and  maintaining  disclosure  controls  and  procedures  (as
      defined in Exchange Act Rules  13a-15(e) and 15d-15(e)) for the registrant
      and have:

      (a)   Designed such  disclosure  controls and  procedures,  or caused such
            disclosure   controls  and  procedures  to  be  designed  under  our
            supervision,  to ensure that  material  information  relating to the
            registrant,  including its consolidated subsidiaries,  is made known
            to us by others  within  those  entities,  particularly  during  the
            period in which this report is being prepared;

      (b)   Evaluated the effectiveness of the registrant's  disclosure controls
            and  procedures and presented in this report our  conclusions  about
            the effectiveness of the disclosure  controls and procedures,  as of
            the  end  of the  period  covered  by  this  report  based  on  such
            evaluation; and

      (c)   Disclosed  in this  report any change in the  registrant's  internal
            control  over   financial   reporting   that  occurred   during  the
            registrant's  most recent fiscal  quarter (the  registrant's  fourth
            fiscal  quarter in the case of an annual report) that has materially
            affected,   or  is  reasonably  likely  to  materially  affect,  the
            registrant's internal control over financial reporting; and

5.    The registrant's other certifying  officer(s) and I have disclosed,  based
      on  our  most  recent   evaluation  of  internal  control  over  financial
      reporting,  to the  registrant's  auditors and the audit  committee of the
      registrant's  board of directors  (or persons  performing  the  equivalent
      functions):

      (a)   All significant  deficiencies and material  weaknesses in the design
            or operation of internal control over financial  reporting which are
            reasonably  likely to adversely affect the  registrant's  ability to
            record, process, summarize and report financial information; and

      (b)   Any fraud,  whether or not  material,  that  involves  management or
            other  employees  who have a  significant  role in the  registrant's
            internal control over financial reporting.


Date:  May 13, 2004

                                    /s/Martha L. Long
                                    Martha L. Long
                                    Senior Vice  President of Shelter Realty III
                                    Corporation,   equivalent   of   the   chief
                                    executive officer of the Partnership


<PAGE>



Exhibit 31.2


                                  CERTIFICATION


I, Thomas M. Herzog, certify that:


1.    I have reviewed this quarterly report on Form 10-QSB of Shelter Properties
      III;

2.    Based on my knowledge,  this report does not contain any untrue  statement
      of a material fact or omit to state a material fact  necessary to make the
      statements made, in light of the circumstances under which such statements
      were made,  not  misleading  with  respect  to the period  covered by this
      report;

3.    Based on my  knowledge,  the  financial  statements,  and other  financial
      information  included  in this  report,  fairly  present  in all  material
      respects the financial condition,  results of operations and cash flows of
      the registrant as of, and for, the periods presented in this report;

4.    The  registrant's  other  certifying  officer(s) and I are responsible for
      establishing  and  maintaining  disclosure  controls  and  procedures  (as
      defined in Exchange Act Rules  13a-15(e) and 15d-15(e)) for the registrant
      and have:

      (a)   Designed such  disclosure  controls and  procedures,  or caused such
            disclosure   controls  and  procedures  to  be  designed  under  our
            supervision,  to ensure that  material  information  relating to the
            registrant,  including its consolidated subsidiaries,  is made known
            to us by others  within  those  entities,  particularly  during  the
            period in which this report is being prepared;

      (b)   Evaluated the effectiveness of the registrant's  disclosure controls
            and  procedures and presented in this report our  conclusions  about
            the effectiveness of the disclosure  controls and procedures,  as of
            the  end  of the  period  covered  by  this  report  based  on  such
            evaluation; and

      (c)   Disclosed  in this  report any change in the  registrant's  internal
            control  over   financial   reporting   that  occurred   during  the
            registrant's  most recent fiscal  quarter (the  registrant's  fourth
            fiscal  quarter in the case of an annual report) that has materially
            affected,   or  is  reasonably  likely  to  materially  affect,  the
            registrant's internal control over financial reporting; and

5.    The registrant's other certifying  officer(s) and I have disclosed,  based
      on  our  most  recent   evaluation  of  internal  control  over  financial
      reporting,  to the  registrant's  auditors and the audit  committee of the
      registrant's  board of directors  (or persons  performing  the  equivalent
      functions):

      (a)   All significant  deficiencies and material  weaknesses in the design
            or operation of internal control over financial  reporting which are
            reasonably  likely to adversely affect the  registrant's  ability to
            record, process, summarize and report financial information; and

      (b)   Any fraud,  whether or not  material,  that  involves  management or
            other  employees  who have a  significant  role in the  registrant's
            internal control over financial reporting.


Date:  May 13, 2004

                                    /s/Thomas M. Herzog
                                    Thomas M. Herzog
                                    Senior Vice  President and Chief  Accounting
                                    Officer of Shelter  Realty III  Corporation,
                                    equivalent of the chief financial officer of
                                    the Partnership


<PAGE>


Exhibit 32.1


                          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 March
31, 2004 as filed with the Securities and Exchange Commission on the date hereof
(the "Report"), Martha L. Long, as the equivalent of the chief executive officer
of the  Partnership,  and  Thomas  M.  Herzog,  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/Martha L. Long
                                    Name:  Martha L. Long
                                    Date:  May 13, 2004


                                           /s/Thomas M. Herzog
                                    Name:  Thomas M. Herzog
                                    Date:  May 13, 2004


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