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

                                   Form 10-QSB

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


                 For the quarterly period ended September 30, 2002


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


                For the transition period from _________to _________

                         Commission file number 0-10260


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



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

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

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



                         PART I - FINANCIAL INFORMATION



ITEM 1.     FINANCIAL STATEMENTS




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

                               September 30, 2002

<TABLE>
<CAPTION>


Assets
<S>                                                                       <C>
   Cash and cash equivalents                                              $    447
   Receivables and deposits                                                    183
   Restricted escrows                                                          136
   Other assets                                                                444
   Investment properties:
      Land                                                 $   1,281
      Buildings and related personal property                 28,015
                                                              29,296
      Less accumulated depreciation                          (19,059)       10,237
                                                                          $ 11,447

Liabilities and Partners' Deficit
Liabilities
   Accounts payable                                                       $     77
   Tenant security deposit liabilities                                          94
   Accrued property taxes                                                      306
   Other liabilities                                                           564
   Mortgage notes payable                                                   14,701
Partners' Deficit
   General partners                                        $   (108)
   Limited partners (55,000 units issued and
      outstanding)                                           (4,187)        (4,295)
                                                                          $ 11,447



            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            Nine Months Ended
                                       September 30,                 September 30,
                                    2002           2001           2002           2001
Revenues:
<S>                                <C>           <C>            <C>             <C>
   Rental income                   $1,216        $1,288         $3,723          $3,945
   Other income                       153           107            394             321
       Total revenues               1,369         1,395          4,117           4,266

Expenses:
   Operating                          681           790          1,858           2,002
   General and administrative          66            81            218             248
   Depreciation                       271           264            830             812
   Interest                           276           287            835             858
   Property taxes                     100            98            293             309
       Total expenses               1,394         1,520          4,034           4,229

   Net (loss) income               $  (25)       $ (125)        $   83          $   37

Net (loss) income allocated
   to general partners (1%)        $   --        $   (1)        $    1          $   --
Net (loss) income allocated
   to limited partners (99%)          (25)         (124)            82              37
                                   $  (25)       $ (125)        $   83          $   37
Net (loss) income per
   limited partnership unit        $ (.46)       $(2.25)        $ 1.49          $  .67

Distributions per limited
   partnership unit                $ 4.00        $   --         $ 5.95          $26.05


            See Accompanying Notes to Consolidated Financial Statements
</TABLE>

<PAGE>




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


<TABLE>
<CAPTION>

                                     Limited
                                     Partnership     General      Limited
                                        Units        Partners    Partners     Total

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

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

Distributions to partners                  --             (3)        (327)      (330)

Net income for the nine months
   ended September 30, 2002                --              1           82         83

Partners' deficit at
   September 30, 2002                  55,000         $ (108)     $(4,187)   $(4,295)

            See Accompanying Notes to Consolidated Financial Statements
</TABLE>

<PAGE>




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

                                                                 Nine Months Ended
                                                                   September 30,
                                                                    2002       2001
Cash flows from operating activities:
<S>                                                             <C>          <C>
   Net income                                                   $    83      $    37
   Adjustments to reconcile net income to net
     cash provided by operating activities:
        Depreciation                                                830          812
        Amortization of discounts and loan costs                     22           21
        Change in accounts:
            Receivables and deposits                                 55          281
            Other assets                                            (26)         (50)
            Accounts payable                                         --           59
            Tenant security deposit liabilities                      (3)          (5)
            Accrued property taxes                                   21           35
            Other liabilities                                       160          164

               Net cash provided by operating activities          1,142        1,354

Cash flows from investing activities:
   Property improvements and replacements                          (347)        (648)
   Net withdrawals from restricted escrows                           --          599

               Net cash used in investing activities               (347)         (49)

Cash flows from financing activities:
   Payments on mortgage notes payable                              (255)        (231)
   Loan costs paid                                                   --          (32)
   Partners' distributions                                         (330)      (1,447)

               Net cash used in financing activities               (585)      (1,710)

Net increase (decrease) in cash and cash equivalents                210         (405)

Cash and cash equivalents at beginning of period                    237          665

Cash and cash equivalents at end of period                      $   447      $   260

Supplemental disclosure of cash flow information:
   Cash paid for interest                                       $   753      $   749

            See Accompanying Notes to Consolidated Financial Statements
</TABLE>

<PAGE>







                             SHELTER PROPERTIES III
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


Note A - Basis of Presentation

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

Note B - Reconciliation of Cash Flows

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

<TABLE>
<CAPTION>

                                                        For the Nine Months Ended
                                                              September 30,
                                                           2002             2001
                                                              (in thousands)
<S>                                                     <C>                <C>
Net cash provided by operating activities               $ 1,142            $ 1,354
   Payments on mortgage notes payable                      (255)              (231)
   Property improvements and replacements                  (347)              (648)
   Change in restricted escrows, net                         --                599
   Changes in reserves for net operating
      assets                                               (207)              (417)
   Additional reserves                                     (333)              (657)

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

The Corporate  General Partner reserved  approximately  $333,000 and $657,000 at
September  30, 2002 and 2001,  respectively,  to fund capital  improvements  and
repairs at the Partnership's four investment properties.

<PAGE>

Note C - Transactions with Affiliated Parties

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

During the nine months  ended  September  30, 2002 and 2001,  affiliates  of the
Corporate General Partner were entitled to receive 5% of gross receipts from all
of the Registrant's  properties for providing property management services.  The
Partnership paid to such affiliates  approximately $210,000 and $220,000 for the
nine months ended September 30, 2002 and 2001,  respectively,  which is included
in operating expenses.

An  affiliate  of  the  Corporate  General  Partner  received  reimbursement  of
accountable  administrative  expenses  amounting to  approximately  $150,000 and
$385,000 for the nine months ended  September  30, 2002 and 2001,  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  $1,000 and $249,000 for the nine months ended  September 30, 2002
and 2001, respectively.  The construction management service fees are calculated
based on a percentage of current additions to the investment properties.

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

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

Note D - Legal Proceedings

In March 1998, several putative unit holders of limited partnership units of the
Partnership  commenced an action  entitled  Rosalie  Nuanes,  et al. v. Insignia
Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the
State of  California  for the  County  of San  Mateo.  The  plaintiffs  named as
defendants,  among others,  the Partnership,  its Corporate  General Partner and
several of their  affiliated  partnerships  and corporate  entities.  The action
purports  to  assert  claims  on  behalf  of a class  of  limited  partners  and
derivatively  on behalf  of a number  of  limited  partnerships  (including  the
Partnership)  which are named as nominal  defendants,  challenging,  among other
things,  the  acquisition  of interests  in certain  Corporate  General  Partner
entities by Insignia Financial Group, Inc. ("Insignia") and entities which were,
at one  time,  affiliates  of  Insignia;  past  tender  offers  by the  Insignia
affiliates to acquire limited partnership units;  management of the partnerships
by the  Insignia  affiliates;  and the series of  transactions  which  closed on
October 1, 1998 and February 26, 1999 whereby  Insignia and Insignia  Properties
Trust,  respectively,  were merged  into AIMCO.  The  plaintiffs  seek  monetary
damages and equitable relief, including judicial dissolution of the Partnership.
On June 25, 1998, the Corporate General Partner filed a motion seeking dismissal
of the action.  In lieu of responding  to the motion,  the  plaintiffs  filed an
amended complaint.  The Corporate General Partner filed demurrers to the amended
complaint which were heard February 1999.

Pending the ruling on such  demurrers,  settlement  negotiations  commenced.  On
November 2, 1999,  the parties  executed and filed a Stipulation  of Settlement,
settling claims, subject to court approval, on behalf of the Partnership and all
limited partners who owned units as of November 3, 1999. Preliminary approval of
the  settlement  was obtained on November 3, 1999 from the Court,  at which time
the Court set a final  approval  hearing for  December  10,  1999.  Prior to the
December  10,  1999  hearing,  the  Court  received  various  objections  to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement.  On
December 14, 1999, the Corporate  General Partner and its affiliates  terminated
the  proposed  settlement.  In  February  2000,  counsel  for some of the  named
plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who
negotiated  the  settlement.  On June  27,  2000,  the  Court  entered  an order
disqualifying  them  from the case and an  appeal  was  taken  from the order on
October 5, 2000. On December 4, 2000, the Court  appointed the law firm of Lieff
Cabraser  Heimann & Bernstein  LLP as new lead  counsel for  plaintiffs  and the
putative class.  Plaintiffs filed a third amended complaint on January 19, 2001.
On March 2, 2001,  the  Corporate  General  Partner and its  affiliates  filed a
demurrer to the third amended  complaint.  On May 14, 2001,  the Court heard the
demurrer to the third amended  complaint.  On July 10, 2001, the Court issued an
order  sustaining  defendants'  demurrer on certain  grounds.  On July 20, 2001,
Plaintiffs filed a motion for reconsideration of the Court's July 10, 2001 order
granting in part and denying in part defendants' demurrer. On September 7, 2001,
Plaintiffs  filed a fourth amended class and  derivative  action  complaint.  On
September 12, 2001, the Court denied Plaintiffs' motion for reconsideration.  On
October 5, 2001, the Corporate General Partner and affiliated defendants filed a
demurrer to the fourth amended complaint,  which was heard on December 11, 2001.
On February 2, 2002,  the Court served its order  granting in part the demurrer.
The  Court has  dismissed  without  leave to amend  certain  of the  plaintiffs'
claims.  On February 11, 2002,  plaintiffs  filed a motion  seeking to certify a
putative  class  comprised of all  non-affiliated  persons who own or have owned
units  in  the  partnerships.  The  Corporate  General  Partner  and  affiliated
defendants  oppose the motion.  On April 29,  2002,  the Court held a hearing on
plaintiffs' motion for class  certification and took the matter under submission
after further briefing,  as order by the court, was submitted by the parties. On
July 10, 2002,  the Court  entered an order  vacating the current  trial date of
January 13, 2003 (as well as the  pre-trial  and  discovery  cut-off  dates) and
stayed the case in its entirety through November 7, 2002 so that the parties can
have an  opportunity  to discuss  settlement.  On October  30,  2002,  the court
entered an order extending the stay in effect through January 10, 2003.

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

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

The  Partnership is unaware of any other pending or outstanding  litigation that
is not of a routine nature arising in the ordinary course of business.

<PAGE>

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

The Private  Securities  Litigation  Reform Act of 1995 provides a "safe harbor"
for forward-looking  statements in certain circumstances.  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. The discussions of the Registrant's business and results
of operations,  including forward-looking statements pertaining to such matters,
do not take into account the effects of any changes to the Registrant's business
and  results of  operations.  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; 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 four apartment complexes. The
following  table sets forth the average  occupancy of the properties for each of
the nine months ended September 30, 2002 and 2001:

                                                            Average
                                                           Occupancy
       Property                                        2002          2001

       Essex Park Apartments
          Columbia, South Carolina                     83%            92%

       Colony House Apartments
          Mufreesboro, Tennessee                       93%            85%

       North River Village Apartments
          Atlanta, Georgia                             87%            94%

       Willowick Apartments
          Greenville, South Carolina                   92%            94%

The Corporate  General  Partner  attributes  the increase in occupancy at Colony
House  Apartments  to an increase in the student  population  during the current
year. The decrease in occupancy at North River Village Apartments and Essex Park
Apartments is due to an increase in the number of tenants  purchasing  homes due
to lower interest rates and the competitive  market of the apartment industry in
the Atlanta and Columbia areas.

Results of Operations

The  Registrant's  net income for the nine months ended  September  30, 2002 was
approximately  $83,000 as compared to approximately  $37,000 for the nine months
ended September 30, 2001. The  Registrant's  net loss for the three months ended
September  30,  2002 was  approximately  $25,000 as  compared  to  approximately
$125,000  for the three  months ended  September  30, 2001.  The increase in net
income for the nine  months  ended  September  30,  2002 is due to a decrease in
total expenses partially offset by a decrease in total revenues. The decrease in
net loss for the three months ended  September  30, 2002 is due to a decrease in
total expenses partially offset by a decrease in total revenues. The decrease in
total revenues for the three and nine months ended  September 30, 2002 is due to
a decrease in rental  income  partially  offset by an increase in other  income.
Rental income decreased due to an increase in bad debt expense and a decrease in
occupancy at Essex Park Apartments and North River Village Apartments  partially
offset by a decrease in  concessions  and special  promotions and an increase in
occupancy at Colony House Apartments.  Other income increased due to an increase
in utility  reimbursements at Essex Park Apartments and Colony House Apartments,
late charges at Essex Park  Apartments  and North River Village  Apartments  and
lease  cancellation  fees at Colony  House  Apartments  and North River  Village
Apartments  partially  offset by a decrease  in  interest  income as a result of
lower cash balances  maintained in interest  bearing accounts at the Partnership
and its investment properties.

The decrease in total expenses for the three and nine months ended September 30,
2002 was primarily due to a decrease in operating and general and administrative
expenses  partially  offset by an increase in  depreciation  expense.  Operating
expenses decreased due to a decrease in property expense,  insurance expense and
maintenance  expense.  Property expense  decreased due to a decrease in employee
salaries  and  utility   expenses  at  Colony  House  Apartments  and  Willowick
Apartments  partially offset by an increase in corporate unit housing expense at
Essex Park  Apartments and utility  expenses at North River Village  Apartments.
Insurance  expense  decreased due to a decrease in hazard insurance  premiums at
Essex Park Apartments and Willowick  Apartments.  Maintenance  expense decreased
due to a decrease in  contract  work at Colony  House  Apartments  and  contract
painting and interior building  improvements at Willowick  Apartments  partially
offset by an  increase  in  contract  work at North  River  Village  Apartments.
General and  administrative  expense decreased due to a decrease in professional
fees and state operating  taxes  partially  offset by an increase in the cost of
services  included in the  management  reimbursements  to the Corporate  General
Partner  allowed under the Partnership  Agreement.  Also included in the general
and  administrative  expenses for the three and nine months ended  September 30,
2002 and 2001 are costs associated with the quarterly and annual  communications
with  investors  and  regulatory  agencies and the annual audit  required by the
Partnership   Agreement.   Depreciation   expense   increased  due  to  property
improvements and replacements  placed into service during the last twelve months
at North River Village Apartments.

As part of the ongoing  business plan of the Registrant,  the Corporate  General
Partner monitors the rental market environments of its investment  properties to
assess the feasibility of increasing rents,  maintaining or increasing occupancy
levels and protecting  the  Partnership  from increases in expenses.  As part of
this plan, the Corporate  General  Partner  attempts to protect the  Partnership
from the burden of  inflation-related  increases in expenses by increasing rents
and maintaining a high overall occupancy level.  However, due to changing market
conditions  which  can  result  in the  use of  rental  concessions  and  rental
reductions to offset softening market conditions, there is no guarantee that the
Corporate General Partner will be able to sustain such a plan.

Liquidity and Capital Resources

At  September  30,  2002,  the  Registrant  had  cash and  cash  equivalents  of
approximately  $447,000 as compared to  approximately  $260,000 at September 30,
2001. Cash and cash equivalents  increased  approximately  $210,000 for the nine
months ended September 30, 2002 from the Registrant's year end, primarily due to
approximately  $1,142,000  of cash  provided by operating  activities  which was
partially offset by approximately  $347,000 of cash used in investing activities
and approximately  $585,000 of cash used in financing  activities.  Cash used in
investing activities consisted of property  improvements and replacements.  Cash
used in financing  activities  consisted  of payments of  principal  made on the
mortgages encumbering the Registrant's properties and distributions to partners.
The  Registrant  invests  its  working  capital  reserves  in  interest  bearing
accounts.

The sufficiency of existing  liquid assets to meet future  liquidity and capital
expenditure   requirements   is  directly   related  to  the  level  of  capital
expenditures  required at the investment  properties to adequately  maintain the
physical  assets and other  operating needs of the Registrant and to comply with
Federal,  state  and local  legal and  regulatory  requirements.  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  completed  at each of the  Registrant's  properties  are  detailed
below.

Essex Park Apartments

During the nine months ended  September  30,  2002,  the  Partnership  completed
approximately   $168,000  of  capital  improvements  at  Essex  Park  Apartments
consisting  primarily  of  structural   enhancements,   perimeter  fencing,  air
conditioning  upgrades,  plumbing  improvements,  appliance  and floor  covering
replacements  and  cabinet  replacements.  These  improvements  were funded from
operating  cash flows.  The  Partnership  has  budgeted,  but is not limited to,
approximately  $197,000  for  capital  improvements  during  2002 at Essex  Park
Apartments  consisting  primarily of air conditioning  upgrades,  floor covering
replacements,  structural  enhancements and appliance  replacements.  Additional
improvements may be considered and will depend on the physical  condition of the
property as well as anticipated cash flow generated by the property.

Colony House Apartments

During the nine months ended  September  30,  2002,  the  Partnership  completed
approximately  $61,000  of  capital  improvements  at  Colony  House  Apartments
consisting primarily of plumbing improvements, office computers, wall coverings,
air conditioning upgrades and appliance and floor covering  replacements.  These
improvements  were  funded  from  operating  cash  flows.  The  Partnership  has
budgeted,  but is not limited to, approximately $69,000 for capital improvements
during 2002 at Colony House  Apartments  consisting  primarily of floor covering
replacements,   door  replacements,   and  appliance  replacements.   Additional
improvements may be considered and will depend on the physical  condition of the
property as well as anticipated cash flow generated by the property.

North River Village Apartments

During the nine months ended  September  30,  2002,  the  Partnership  completed
approximately  $58,000 of capital improvements at North River Village Apartments
consisting  primarily of floor covering  replacements,  wall covering and office
computers.  These  improvements  were funded  from  operating  cash  flows.  The
Partnership  has  budgeted,  but is not  limited to,  approximately  $58,000 for
capital  improvements  during 2002 at North River Village Apartments  consisting
primarily  of  floor  covering  replacements.  Additional  improvements  may  be
considered and will depend on the physical  condition of the property as well as
anticipated cash flow generated by the property and replacement reserves.

<PAGE>

Willowick Apartments

During the nine months ended  September  30,  2002,  the  Partnership  completed
approximately $60,000 of capital improvements at Willowick Apartments consisting
primarily of floor covering  replacements,  air  conditioning  upgrades,  office
computers, appliance replacements and major landscaping. These improvements were
funded from operating cash flows.  The Partnership  has budgeted,  but it is not
limited  to,  approximately  $78,000  for  capital  improvements  during 2002 at
Willowick  Apartments  consisting  primarily  of  floor  covering  replacements,
structural upgrades, air conditioning unit upgrades and appliance  replacements.
Additional  improvements  may be  considered  and will  depend  on the  physical
condition  of the  property as well as  anticipated  cash flow  generated by the
property.

Additional capital  expenditures will be incurred only if cash is available from
operations and Partnership  reserves.  To the extent that such budgeted  capital
improvements are completed,  the Registrant's  distributable  cash flow, if any,
may be adversely affected at least in the short term.

The  Registrant's  current assets are thought to be sufficient for any near term
needs  (exclusive  of capital  improvements)  of the  Registrant.  The  mortgage
indebtedness of approximately  $14,701,000,  net of discount,  is amortized over
varying periods. A balloon payment of $1,543,000 is due in October 2003 at North
River Village.  All remaining debt is scheduled to be fully amortized in January
2021. The Corporate  General Partner will attempt to refinance such indebtedness
and/or sell the  properties  prior to such  maturity  dates.  If the  properties
cannot be refinanced or sold for a sufficient  amount,  the Registrant will risk
losing such properties through foreclosure.

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

<TABLE>
<CAPTION>

                     Nine Months          Per          Nine Months          Per
                        Ended           Limited           Ended           Limited
                    September 30,     Partnership     September 30,     Partnership
                         2002             Unit             2001             Unit

<S>                    <C>              <C>              <C>               <C>
Operations             $  330           $ 5.95           $1,447            $26.05
</TABLE>

Future cash  distributions  will depend on the levels of net cash generated from
operations,   the  availability  of  cash  reserves,  and  the  timing  of  debt
maturities,   refinancings,   and/or  property  sales.  The  Partnership's  cash
available  for  distribution  is  reviewed on a monthly  basis.  There can be no
assurance,  however,  that the Partnership  will generate  sufficient funds from
operations,  after  planned  capital  improvement  expenditures,  to permit  any
additional  distributions  to its  partners  during  the  remainder  of  2002 or
subsequent periods.  In addition,  the Partnership may be restricted from making
distributions  if the amount in the  reserve  account  for North  River  Village
Apartments  maintained  by the mortgage  lender is less than $200 per  apartment
unit.  As of  September  30,  2002 the  reserve  account  was fully  funded with
approximately $53,000 on deposit with the mortgage lender.

Other

In addition to its indirect  ownership of the combined general partner interests
in the Partnership,  AIMCO and its affiliates  owned 35,653 limited  partnership
units  in the  Partnership  representing  64.82%  of the  outstanding  units  at
September  30,  2002. A number of these units were  acquired  pursuant to tender
offers  made by  AIMCO  or its  affiliates.  It is  possible  that  AIMCO or its
affiliates will acquire additional units of limited partnership  interest in the
Partnership  in  exchange  for cash or a  combination  of cash and  units in the
operating  partnership  of AIMCO  either  through  private  purchases  or tender
offers. Under the Partnership  Agreement,  unitholders holding a majority of the
Units are  entitled to take action with  respect to a variety of matters,  which
would  include  voting on certain  amendments to the  Partnership  Agreement and
voting to remove the Corporate General Partner.  As a result of its ownership of
64.82% of the  outstanding  units,  AIMCO is in a position  to control  all such
voting decisions with respect to the Registrant.  Although the Corporate General
Partner owes fiduciary duties to the limited  partners of the  Partnership,  the
Corporate  General  Partner  also  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  changes  in the
national,  regional and local economic  climate;  local  conditions,  such as an
oversupply  of  multifamily   properties;   competition   from  other  available
multifamily  property  owners and changes in market  rental  rates.  Any adverse
changes in these factors could cause an impairment in the Partnership's assets.

Revenue Recognition

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


<PAGE>



ITEM 3.     CONTROLS AND PROCEDURES

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, within 90 days of
the filing date of this  quarterly report, evaluated  the  effectiveness  of the
Partnership's  disclosure  controls and  procedures  (as defined in Exchange Act
Rules  (13a-14(c)  and  (15d-14(c))  and have  determined  that such  disclosure
controls and procedures are adequate.  There have been no significant changes in
the Partnership's internal controls or in other factors that could significantly
affect the  Partnership's  internal  controls since the date of evaluation.  The
Partnership does not believe any significant deficiencies or material weaknesses
exist in the Partnership's internal controls. Accordingly, no corrective actions
have been taken.


<PAGE>



                           PART II - OTHER INFORMATION


ITEM 1.     LEGAL PROCEEDINGS

In March 1998, several putative unit holders of limited partnership units of the
Partnership  commenced an action  entitled  Rosalie  Nuanes,  et al. v. Insignia
Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the
State of  California  for the  County  of San  Mateo.  The  plaintiffs  named as
defendants,  among others,  the Partnership,  its Corporate  General Partner and
several of their  affiliated  partnerships  and corporate  entities.  The action
purports  to  assert  claims  on  behalf  of a class  of  limited  partners  and
derivatively  on behalf  of a number  of  limited  partnerships  (including  the
Partnership)  which are named as nominal  defendants,  challenging,  among other
things,  the  acquisition  of interests  in certain  Corporate  General  Partner
entities by Insignia Financial Group, Inc. ("Insignia") and entities which were,
at one  time,  affiliates  of  Insignia;  past  tender  offers  by the  Insignia
affiliates to acquire limited partnership units;  management of the partnerships
by the  Insignia  affiliates;  and the series of  transactions  which  closed on
October 1, 1998 and February 26, 1999 whereby  Insignia and Insignia  Properties
Trust,  respectively,  were merged  into AIMCO.  The  plaintiffs  seek  monetary
damages and equitable relief, including judicial dissolution of the Partnership.
On June 25, 1998, the Corporate General Partner filed a motion seeking dismissal
of the action.  In lieu of responding  to the motion,  the  plaintiffs  filed an
amended complaint.  The Corporate General Partner filed demurrers to the amended
complaint which were heard February 1999.

Pending the ruling on such  demurrers,  settlement  negotiations  commenced.  On
November 2, 1999,  the parties  executed and filed a Stipulation  of Settlement,
settling claims, subject to court approval, on behalf of the Partnership and all
limited partners who owned units as of November 3, 1999. Preliminary approval of
the  settlement  was obtained on November 3, 1999 from the Court,  at which time
the Court set a final  approval  hearing for  December  10,  1999.  Prior to the
December  10,  1999  hearing,  the  Court  received  various  objections  to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement.  On
December 14, 1999, the Corporate  General Partner and its affiliates  terminated
the  proposed  settlement.  In  February  2000,  counsel  for some of the  named
plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who
negotiated  the  settlement.  On June  27,  2000,  the  Court  entered  an order
disqualifying  them  from the case and an  appeal  was  taken  from the order on
October 5, 2000. On December 4, 2000, the Court  appointed the law firm of Lieff
Cabraser  Heimann & Bernstein  LLP as new lead  counsel for  plaintiffs  and the
putative class.  Plaintiffs filed a third amended complaint on January 19, 2001.
On March 2, 2001,  the  Corporate  General  Partner and its  affiliates  filed a
demurrer to the third amended  complaint.  On May 14, 2001,  the Court heard the
demurrer to the third amended  complaint.  On July 10, 2001, the Court issued an
order  sustaining  defendants'  demurrer on certain  grounds.  On July 20, 2001,
Plaintiffs filed a motion for reconsideration of the Court's July 10, 2001 order
granting in part and denying in part defendants' demurrer. On September 7, 2001,
Plaintiffs  filed a fourth amended class and  derivative  action  complaint.  On
September 12, 2001, the Court denied Plaintiffs' motion for reconsideration.  On
October 5, 2001, the Corporate General Partner and affiliated defendants filed a
demurrer to the fourth amended complaint,  which was heard on December 11, 2001.
On February 2, 2002,  the Court served its order  granting in part the demurrer.
The  Court has  dismissed  without  leave to amend  certain  of the  plaintiffs'
claims.  On February 11, 2002,  plaintiffs  filed a motion  seeking to certify a
putative  class  comprised of all  non-affiliated  persons who own or have owned
units  in  the  partnerships.  The  Corporate  General  Partner  and  affiliated
defendants  oppose the motion.  On April 29,  2002,  the Court held a hearing on
plaintiffs' motion for class  certification and took the matter under submission
after further briefing,  as order by the court, was submitted by the parties. On
July 10, 2002,  the Court  entered an order  vacating the current  trial date of
January 13, 2003 (as well as the  pre-trial  and  discovery  cut-off  dates) and
stayed the case in its entirety through November 7, 2002 so that the parties can
have an  opportunity  to discuss  settlement.  On October  30,  2002,  the court
entered an order extending the stay in effect through January 10, 2003.

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

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


<PAGE>





ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K

            a) Exhibits:

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

                  99    Certification of Chief  Executive   Officer   and  Chief
                        Financial Officer.

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

                  None.


<PAGE>


                                   SIGNATURES



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



                             SHELTER PROPERTIES III

                                 By:     Shelter Realty III Corporation
                                         Corporate General Partner

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

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


                                 Date:  November 13, 2002


<PAGE>



                                  CERTIFICATION


I, Patrick J. Foye, certify that:


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


2. Based on my  knowledge,  this  quarterly  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 quarterly
report;


3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included in this quarterly  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 quarterly report;


4.  The  registrant's  other  certifying  officers  and  I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:


      a)  Designed  such  disclosure  controls  and  procedures  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 quarterly report is
      being prepared;


      b) Evaluated the effectiveness of the registrant's disclosure controls and
      procedures  as of a date  within 90 days prior to the filing  date of this
      quarterly report (the "Evaluation Date"); and


      c)  Presented  in  this  quarterly   report  our  conclusions   about  the
      effectiveness  of the  disclosure  controls  and  procedures  based on our
      evaluation as of the Evaluation Date;


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


      a) All  significant  deficiencies  in the design or  operation of internal
      controls which could adversely affect the registrant's  ability to record,
      process,  summarize and report  financial data and have identified for the
      registrant's auditors any material weaknesses in internal controls; and


      b) Any fraud,  whether or not material,  that involves management or other
      employees  who  have  a  significant  role  in the  registrant's  internal
      controls; and


6. The  registrant's  other  certifying  officers  and I have  indicated in this
quarterly  report  whether or not there  were  significant  changes in  internal
controls or in other factors that could  significantly  affect internal controls
subsequent to the date of our most recent  evaluation,  including any corrective
actions with regard to significant deficiencies and material weaknesses.


Date:  November 13, 2002

                                    _______________________
                                    Patrick J. Foye
                                    Executive  Vice  President of Shelter Realty
                                    III  Corporation,  equivalent  of the  chief
                                    executive officer of the Partnership


<PAGE>



                                  CERTIFICATION


I, Paul J. McAuliffe, certify that:


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


2. Based on my  knowledge,  this  quarterly  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 quarterly
report;


3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included in this quarterly  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 quarterly report;


4.  The  registrant's  other  certifying  officers  and  I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:


      a)  Designed  such  disclosure  controls  and  procedures  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 quarterly report is
      being prepared;


      b) Evaluated the effectiveness of the registrant's disclosure controls and
      procedures  as of a date  within 90 days prior to the filing  date of this
      quarterly report (the "Evaluation Date"); and


      c)  Presented  in  this  quarterly   report  our  conclusions   about  the
      effectiveness  of the  disclosure  controls  and  procedures  based on our
      evaluation as of the Evaluation Date;


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


      a) All  significant  deficiencies  in the design or  operation of internal
      controls which could adversely affect the registrant's  ability to record,
      process,  summarize and report  financial data and have identified for the
      registrant's auditors any material weaknesses in internal controls; and


      b) Any fraud,  whether or not material,  that involves management or other
      employees  who  have  a  significant  role  in the  registrant's  internal
      controls; and


6. The  registrant's  other  certifying  officers  and I have  indicated in this
quarterly  report  whether or not there  were  significant  changes in  internal
controls or in other factors that could  significantly  affect internal controls
subsequent to the date of our most recent  evaluation,  including any corrective
actions with regard to significant deficiencies and material weaknesses.


Date:  November 13, 2002

                                    _______________________
                                    Paul J. McAuliffe
                                    Executive Vice President and Chief Financial
                                    Officer of Shelter  Realty III  Corporation,
                                    equivalent of the chief financial officer of
                                    the Partnership


<PAGE>


Exhibit 99


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



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

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

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


                                           /s/Patrick J. Foye
                                    Name:  Patrick J. Foye
                                    Date:  November 13, 2002


                                           /s/Paul J. McAuliffe
                                    Name:  Paul J. McAuliffe
                                    Date: November 13, 2002


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