FORM 10-QSB--QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                        QUARTERLY OR TRANSITIONAL REPORT



                    U.S. 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 September 30, 1998

                                       or

[ ]  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 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)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X .  No   .


                         PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

a)
                             SHELTER PROPERTIES III

                           CONSOLIDATED BALANCE SHEET
                        (in thousands, except unit data)
                                  (Unaudited)
                               September 30, 1998

Assets
  Cash and cash equivalents                                       $ 1,974
  Receivables and deposits                                            485
  Restricted escrows                                                  937
  Other assets                                                        201
  Investment properties:
     Land                                               $  1,281
     Buildings and related personal property              24,841
                                                          26,122
     Less accumulated depreciation                       (14,905)  11,217

                                                                  $14,814

Liabilities and Partners' Capital (Deficit)

Liabilities
  Accounts payable                                                $    70
  Tenant security deposit liabilities                                 114
  Accrued property taxes                                              271
  Distribution payable                                                500
  Other liabilities                                                   396
  Mortgage notes payable                                            8,142

Partners' Capital (Deficit)
  General partners                                      $    (79)
  Limited partners (55,000 units
     issued and outstanding)                               5,400    5,321

                                                                  $14,814

          See Accompanying Notes to Consolidated Financial Statements
b)
                             SHELTER PROPERTIES III

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                        (in thousands, except unit data)
                                  (Unaudited)



                               Three Months Ended Nine Months Ended
                                  September 30,     September 30,
                                1998      1997      1998      1997
Revenues:
  Rental income                $1,297    $1,267    $3,799    $3,782
  Other income                    106       111       305       332
     Total revenues             1,403     1,378     4,104     4,114

Expenses:
  Operating                       688       706     1,886     1,972
  General & administrative         43        49       152       151
  Depreciation                    228       240       676       700
  Interest                        186       188       561       572
  Property taxes                   92        84       271       263
     Total expenses             1,237     1,267     3,546     3,658

  Net income                   $  166    $  111    $  558    $  456

Net income allocated
  to general partners (1%)     $    2    $    1    $    6    $    4
Net income allocated
  to limited partners (99%)       164       110       552       452
                               $  166    $  111    $  558    $  456

Net income per limited
  partnership unit             $ 2.99    $ 2.00    $10.04    $ 8.22
Distributions per limited
  partnership unit             $ 9.00    $12.60    $18.00    $12.60

          See Accompanying Notes to Consolidated Financial Statements

c)
                             SHELTER PROPERTIES III

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


                                     Limited
                                   Partnership   General   Limited
                                      Units     Partners  Partners    Total

Original capital contributions      55,000      $     2    $27,500   $27,502

Partners' (deficit) capital
  at December 31, 1997              55,000      $   (75)   $ 5,838   $ 5,763

Distribution to partners                --          (10)      (990)   (1,000)

Net income for the nine months
  ended September 30, 1998              --            6        552       558

Partners' (deficit) capital
  at September 30, 1998             55,000      $   (79)   $ 5,400   $ 5,321

          See Accompanying Notes to Consolidated Financial Statements


d)
                             SHELTER PROPERTIES III

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                  (Unaudited)


                                                         Nine Months Ended
                                                           September 30,
                                                          1998      1997
Cash flows from operating activities:
  Net income                                            $   558   $  456
  Adjustments to reconcile net income to net cash
  provided by operating activities:
    Depreciation                                            676      700
    Amortization of discounts and loan costs                 73       72
    Change in accounts:
      Receivables and deposits                             (256)     (12)
      Other Assets                                           12      (47)
      Accounts payable                                      (47)     101
      Tenant security deposit liabilities                    (6)     (10)
      Accrued property taxes                                271        5
      Other liabilities                                      18      (13)

         Net cash provided by operating activities        1,299    1,252

Cash flows from investing activities:
  Property improvements and replacements                   (242)    (358)
  Deposits to restricted escrows                            (31)     (27)

         Net cash used in investing activities             (273)    (385)

Cash flows from financing activities:
  Payments on mortgage notes payable                       (176)    (164)
  Partners' distributions                                  (500)    (700)

         Net cash used in financing activities             (676)    (864)

Net increase in cash and cash equivalents                   350        3

Cash and cash equivalents at beginning of period          1,624    1,509
Cash and cash equivalents at end of period              $ 1,974   $1,512

Supplemental disclosure of cash flow information:
  Cash paid for interest                                $   488   $  501
Supplemental disclosure of non-cash information
  Distribution payable                                  $   500   $   --

          See Accompanying Notes to Consolidated Financial Statements

e)
                             SHELTER PROPERTIES III

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)


NOTE A - BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements of Shelter
Properties III Limited Partnership (the "Partnership") have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB and Article 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.  In the opinion of Shelter Realty III Corporation (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 nine month periods ended September 30, 1998,
are not necessarily indicative of the results that may be expected for the
fiscal year ending December 31, 1998.  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, 1997.

Certain reclassifications have been made to the 1997 information to conform to
the 1998 presentation.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements of the Partnership include its one 99.99%
owned partnership.  The Partnership may remove the General Partner of the
consolidated partnership; therefore, the consolidated partnership is controlled
and consolidated by the Partnership.  All significant interpartnership balances
have been eliminated.

NOTE B - RECONCILIATION OF CASH FLOWS

The following is a reconciliation of the subtotal on the accompanying statements
of cash flows captioned "net cash provided by operating activities" to "net cash
used in operations," as defined in the Partnership Agreement.  However, "net
cash used in 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.


                                                 Nine Months Ended
                                                    September 30,
                                                 1998          1997
                                               (amounts in thousands)

Net cash provided by operating activities     $1,299        $1,252
  Payments on mortgage notes payable            (176)         (164)
  Property improvements and replacements        (242)         (358)
  Change in restricted escrows, net              (31)          (27)
  Changes in reserves for net operating
   liabilities                                     8           (24)
  Additional reserves                           (858)         (679)

      Net cash used in operations             $   --        $   --

In 1998 and 1997, the Corporate General Partner believed it to be in the best
interest of the Partnership to reserve an additional $858,000 and $679,000,
respectively, to fund continuing capital improvements and maintenance items at
the four properties.

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. Affiliates of the Corporate General Partner provide
property management and asset management services to the Partnership. The
Partnership Agreement provides for payments to affiliates for services and as
reimbursement of certain expenses incurred by affiliates on behalf of the
Partnership. The following amounts were paid or accrued to the Corporate General
Partner and affiliates in 1998 and 1997:

                                                           Nine Months Ended
                                                             September 30,
                                                            1998      1997
                                                            (in thousands)

Property management fees (included in operating expenses)  $208      $204
Reimbursement for services of affiliates (included in
 operating, general and administrative expenses and
 investment properties) (1)                                  92       102
Due to general partner                                      185       185
Due from general partner                                     11        11

(1)  Included in "reimbursements for services of affiliates" for the nine months
     ended September 30, 1998 and 1997, is approximately $6,000 and $11,000,
     respectively, in reimbursements for construction oversight costs.

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 can not be paid until certain levels of returns are received by
the limited partners. As of September 30, 1998, the level of return to the
limited partners has not been met.

For the period of January 1, 1997 to August 31, 1997, the Partnership insured
its properties under a master policy through an agency affiliated with the
Corporate General Partner with an insurer unaffiliated with the Corporate
General Partner.  An affiliate of the Corporate General Partner acquired, in the
acquisition of a business, certain financial obligations from an insurance
agency which was later acquired by the agent who placed the master policy.  The
agent assumed the financial obligations to the affiliate of the Corporate
General Partner, which receives payment on these obligations from the agent.
The amount of the Partnership's insurance premiums accruing to the benefit of
the affiliate of the Corporate General Partner by virtue of the agent's
obligations is not significant.

On September 26, 1997, an affiliate of the General Partner purchased Lehman
Brothers Class "D" subordinated bonds of SASCO, 1992-M1.  These bonds are
secured by 55 multi-family apartment mortgage loan pairs held in Trust,
including Essex Park Apartments, Colony House Apartments, and Willowick
Apartments owned by the Partnership.

NOTE D - TRANSFER OF CONTROL; SUBSEQUENT EVENT

On October 1, 1998, Insignia Financial Group, Inc. completed its merger with and
into Apartment Investment and Management Company  ("AIMCO"), a publicly traded
real estate investment trust, with AIMCO being the surviving corporation (the
"Insignia Merger"). As a result of the Insignia Merger, AIMCO acquired control
of the Corporate General Partner.   In addition, AIMCO also acquired
approximately 51% of the outstanding common shares of beneficial interest of
Insignia Properties Trust ("IPT"), the sole shareholder of the Corporate General
Partner.  Also, effective October 1, 1998 IPT and AIMCO entered into an
Agreement and plan of Merger pursuant to which IPT is to be merged with and into
AIMCO or a subsidiary of AIMCO (the "IPT Merger").  The IPT Merger requires the
approval of the holders of a majority of the outstanding IPT Shares.  
AIMCO has agreed to vote all of the IPT Shares owned by it in favor of the IPT
Merger and has granted an irrevocable limited proxy to unaffiliated
representatives of IPT to vote the IPT Shares acquired by AIMCO and its
subsidiaries in favor of the IPT Merger.  As a result of AIMCO's ownership and
its agreement, the vote of no other holder of IPT is required to approve the
merger. The Corporate General Partner does not believe that this transaction 
will have a material effect on the affairs and operations of the Partnership.


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Results of Operations

The Partnership's investment properties consist of four apartment complexes.
The following table sets forth the average occupancy of the properties for the
nine months ended September 30, 1998 and 1997:


                                          Average Occupancy
Property                                   1998       1997

Essex Park Apartments
   Columbia, South Carolina                 94%        95%

Colony House Apartments
   Murfreesboro, Tennessee                  91%        89%

North River Village Apartments
   Atlanta, Georgia                         93%        91%

Willowick Apartments
   Greenville, South Carolina               93%        92%


The Partnership's net income for the three and nine month periods ended
September 30, 1998, was approximately $166,000 and $558,000, respectively,
compared to net income of approximately $111,000 and $456,000, respectively, for
the three and nine month periods ended September 30, 1997.  The increase in net
income is attributable to a decrease in operating expenses.  Operating expenses
decreased primarily due to a decrease in advertising, property and maintenance
expenses.  Advertising expense decreased due to an increase in occupancy at all
properties except Essex Park Apartments.  Property expense decreased due to a
decrease in employee related expenses at all properties. Maintenance expense
decreased due to expenses incurred in 1997 for interior building improvements at
Colony House and Essex Park Apartments and major landscaping and roof
replacements at North River Village.

Included in operating expenses for the nine months ended September 30, 1998 is
approximately $54,000 of major repairs and maintenance comprised of parking lot
repairs, exterior painting and construction services.  Included in operating
expenses for the nine months ended September 30, 1997 is approximately $71,000
of major repairs and maintenance comprised of major landscaping, construction
services and tennis court repairs.

As part of the ongoing business plan of the Partnership, the Corporate General
Partner monitors the rental market environment of its investment properties to
assess the feasibility of increasing rents, maintaining or increasing occupancy
levels and protecting the Partnership from increases in expense.  As part of
this plan, the 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 September 30, 1998 the Partnership had cash and cash equivalents of
approximately $1,974,000 compared to approximately $1,512,000 at September 30,
1997.  The net increase in cash and cash equivalents for the nine months ended
September 30, 1998 was $350,000.  The net increase in cash and cash equivalents
for the nine months ended September 30, 1997 was $3,000.  Net cash provided by
operating activities increased due to the increase in net income as discussed
above and an increase in accrued property taxes.  Partially offsetting the
increase in net cash provided by operating activities was an increase in
receivables and deposits and a decrease in accounts payable due to the timing of
payments to vendors.  Net cash used in investing activities decreased due to a
decrease in property improvements in 1998. Net cash used in financing activities
decreased due to the timing of distributions paid to partners.

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 various 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.  Such assets are
currently thought to be sufficient for any near-term needs of the Partnership.
The Corporate General Partner is currently assessing the need for capital
improvements at each of the Partnership's properties.  To the extent that
additional capital improvements are required, the Partnership's distributable
cash flow, if any, may be adversely effected at least in the short term.  The
mortgage indebtedness of approximately $8,142,000, net of discount, is amortized
over varying periods.  In addition, the mortgage notes require balloon payments
ranging from November 15, 2002, to October 15, 2003. The General Partner will
attempt to refinance such indebtedness or sell the properties prior to such
maturity date.  If the properties cannot be refinanced or sold for a sufficient
amount, the Partnership will risk losing such properties through foreclosure.
During the nine months ended September 30, 1998, the Partnership made a
distribution of approximately $495,000 to the limited partners and $5,000 to the
general partners. Included in these amounts is approximately $14,000 of
withholding taxes paid on behalf of the nonresident partners to the state of
South Carolina related to the taxable income generated from Essex Park and
Willowick Apartments in 1997. The Partnership made a cash distribution from
operations during October 1998 of approximately $495,000 to the limited partners
and $5,000 to the general partners, which was accrued for in third quarter of
1998. Future cash distributions will depend on the levels of net cash generated
from operations, refinancings, property sales and the availability of cash
reserves.  The Partnership's distribution policy will be reviewed on a quarterly
basis.  There can be no assurance, however, that the Partnership will generate
sufficient funds from operations to permit distributions to its partners in 1998
or subsequent periods.

Transfer of Control; Subsequent Event

On October 1, 1998, Insignia Financial Group, Inc. completed its merger with and
into Apartment Investment and Management Company  ("AIMCO"), a publicly traded
real estate investment trust, with AIMCO being the surviving corporation (the
"Insignia Merger"). As a result of the Insignia Merger, AIMCO acquired control
of the Corporate General Partner.   In addition, AIMCO also acquired
approximately 51% of the outstanding common shares of beneficial interest of
Insignia Properties Trust ("IPT"), the sole shareholder of the Corporate General
Partner.  Also, effective October 1, 1998 IPT and AIMCO entered into an
Agreement and plan of Merger pursuant to which IPT is to be merged with and into
AIMCO or a subsidiary of AIMCO (the "IPT Merger").  The IPT Merger requires the
approval of the holders of a majority of the outstanding IPT Shares.  
AIMCO has agreed to vote all of the IPT Shares owned by it in favor of the IPT
Merger and has granted an irrevocable limited proxy to unaffiliated
representatives of IPT to vote the IPT Shares acquired by AIMCO and its
subsidiaries in favor of the IPT Merger.  As a result of AIMCO's ownership and
its agreement, the vote of no other holder of IPT is required to approve the
merger.  The Corporate General Partner does not believe that this transaction 
will have a material effect on the affairs and operations of the Partnership.

Year 2000

GENERAL DESCRIPTION OF THE YEAR 2000 ISSUE AND THE NATURE AND EFFECTS OF THE
YEAR 2000 ON INFORMATION TECHNOLOGY (IT) AND NON-IT SYSTEMS

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

The Managing Agent has determined that it will be required to modify or replace
significant portions of its software and certain hardware so that those systems
will properly utilize dates beyond December 31, 1999. The Managing Agent
presently believes that with modifications or replacements of existing software
and certain hardware, the Year 2000 Issue can be mitigated.  However, if such
modifications and replacements are not made, or are not completed timely, the
Year 2000 Issue could have a material impact on the operations of the Managing
Agent and the Partnership.

STATUS OF PROGRESS IN BECOMING YEAR 2000 COMPLIANT

The Managing Agent's plan to resolve the Year 2000 Issue involves the following
four phases: assessment, remediation, testing and implementation.  To date, the
Managing Agent has fully completed its assessment of all information systems
that could be significantly affected by the Year 2000, and has begun the
remediation, testing and implementation phase on both hardware and software
systems.  Assessments are continuing in regards to embedded systems in operating
equipment.  The Managing Agent anticipates having all phases complete by June 1,
1999.

In addition to the areas the Partnership is relying on the Managing Agent to
verify compliance with,  the Partnership has certain operating equipment,
primarily at the property sites,  which needed to be evaluated for Year 2000
compliance.  The focus of the Corporate General Partner was to the security
systems, elevators, heating-ventilation-air-conditioning systems, telephone
systems and switches, and sprinkler systems. The Corporate General Partner is
currently engaged in the identification of all non-compliant operational
systems, and is in the process of estimating the costs associated with any
potential modifications or replacements needed to such systems in order for them
to be Year 2000 compliant.  It is not expected that such costs would have a
material adverse affect upon  the operations of the Partnership.

RISK ASSOCIATED WITH THE YEAR 2000

The Corporate General Partner believes that the Managing Agent has an effective
program in place to resolve the Year 2000 issue in a timely manner and has
appropriate contingency plans in place for critical applications that could
affect the Partnership's operations.   To date, the Corporate General Partner
is not aware of any external agent with a Year 2000 issue that would materially
impact the Partnership's results of operations, liquidity or capital resources.
However, the Corporate General Partner has no means of ensuring that external
agents will be Year 2000 compliant.  The Corporate General Partner does not
believe that the inability of external agents to complete their Year 2000
resolution process in a timely manner will have a material impact on the
financial position or results of operations of the Partnership.  However, the
effect of non-compliance by external agents is not readily determinable.

Other

Certain items discussed in this quarterly report may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995 (the "Reform Act") and as such may involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of the Partnership to be materially different from any future
results, performance, or achievements expressed or implied by such forward-
looking statements.  Such forward-looking statements speak only as of the date
of this quarterly report.  The Partnership expressly disclaims any obligation or
undertaking to release publicly any updates of revisions to any forward-looking
statements contained herein to reflect any change in the Partnership's
expectations with regard thereto or any change in events, conditions or
circumstances on which any such statement is based.


                          PART II - OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDING

In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled ROSALIE NUANES, ET AL. V. INSIGNIA
FINANCIAL GROUP, INC., ET AL. in the Superior Court of the State of California
for the County of San Mateo.  The plaintiffs named as defendants, among others,
the Partnership, the Corporate General Partner and several of their affiliated
partnerships and corporate entities.  The complaint purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition by Insignia Financial Group, Inc.
("Insignia") and entities which were, at the time, affiliates of Insignia
("Insignia Affiliates") of interests in certain general partner entities, past
tender offers by Insignia Affiliates to acquire limited partnership units, the
management of partnerships by Insignia Affiliates as well as a recently
announced agreement between Insignia and Apartment Investment and Management
Company. The complaint seeks 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, plaintiffs have recently filed an amended complaint.
The Corporate General Partner has filed demurrers to the amended complaint which
are scheduled to be heard on January 8, 1999.  The Corporate General Partner
believes the action to be without merit, and intends to vigorously defend it.

On July 30, 1998, certain entities claiming to own limited partnership interests
in certain limited partnerships whose general partners were, at the time,
affiliates of Insignia filed a complaint entitled EVEREST PROPERTIES LLC. V.
INSIGNIA FINANCIAL GROUP, INC. in the Superior Court of the State of California,
County of Los Angeles. The action involves 44 real estate limited partnerships
(including the Partnership) in which the plaintiffs allegedly own interests and
which Insignia Affiliates allegedly manage or control (the "Subject
Partnerships"). The complaint names as defendants Insignia, several Insignia
Affiliates alleged to be managing partners of the Subject Partnerships, the
Partnership and the Corporate General Partner. Plaintiffs allege that they have
requested from, but have been denied by each of the Subject Partnerships, lists
of their respective limited partners for the purpose of making tender offers to
purchase up to 4.9% of the limited partner units of each of the Subject
Partnerships.  The complaint also alleges that certain of the defendants made
tender offers to purchase limited partner units in many of the Subject
Partnerships, with the alleged result that plaintiffs have been deprived of the
benefits they would have realized from ownership of the additional units. The
plaintiffs assert eleven causes of action, including breach of contract, unfair
business practices, and violations of the partnership statutes of the states in
which the Subject Partnerships are organized.  Plaintiffs seek compensatory,
punitive and treble damages.  The Corporate General Partner filed an answer to
the complaint on September 15, 1998. The Corporate General Partner believes the
claims to be without merit and intends to defend the action vigorously.

The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature.  The Corporate General Partner of the Partnership
believes that all such pending or outstanding litigation will be resolved
without a material adverse effect upon the business, financial condition, or
operations of the Partnership.


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

        a)    Exhibits:

              Exhibit 27, Financial Data Schedule, is filed as part of this
              report.

        b)    Reports on Form 8-K:

              None filed during the quarter ended September 30, 1998.



                                   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 LIMITED PARTNERSHIP

                               By:        Shelter Realty III Corporation
                                          Corporate General Partner



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


                               By:        /s/ Timothy R. Garrick
                                          Timothy R. Garrick
                                          Vice President - Accounting 
                                          (Duly Authorized Officer)


                               Date:      November 12, 1998