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

                                   Form 10-QSB

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


                 For the quarterly period ended September 30, 2003


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


                For the transition period from _________to _________

                         Commission file number 0-10260


                             SHELTER PROPERTIES III
             (Exact Name of Registrant as Specified in Its Charter)



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

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

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


<PAGE>

                         PART I - FINANCIAL INFORMATION



ITEM 1.     FINANCIAL STATEMENTS




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

                               September 30, 2003

<TABLE>
<CAPTION>

Assets
<S>                                                                          <C>
   Cash and cash equivalents                                                 $   164
   Receivables and deposits                                                      145
   Restricted escrow                                                              83
   Other assets                                                                  583
   Investment properties:
      Land                                                     $ 945
      Buildings and related personal property                   22,495
                                                                23,440
      Less accumulated depreciation                            (15,706)        7,734
                                                                            $ 8,709

Liabilities and Partners' Deficit
Liabilities
   Accounts payable                                                           $ 19
   Tenant security deposit liabilities                                            75
   Accrued property taxes                                                        258
   Other liabilities                                                             293
   Due to general partner                                                        253
   Mortgage notes payable                                                     12,776

Partners' Deficit
   General partners                                             $ (73)
   Limited partners (55,000 units issued and
      outstanding)                                              (4,892)       (4,965)
                                                                            $ 8,709

            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,
                                       2003           2002           2003           2002
                                                   (Restated)                    (Restated)
Revenues:
<S>                                    <C>           <C>           <C>            <C>
  Rental income                        $ 999         $ 967         $ 2,857        $ 2,962
  Other income                             88           105            239            296
       Total revenues                   1,087         1,072          3,096          3,258

Expenses:
  Operating                               558           527          1,522          1,427
  General and administrative               50            66            212            218
  Depreciation                            214           209            657            643
  Interest                                236           242            705            732
  Property taxes                           87            80            259            246
       Total expenses                   1,145         1,124          3,355          3,266

Loss from continuing operations           (58)          (52)          (259)            (8)
Income from discontinued
  operations                               --            27             --             91

Net (loss) income                      $ (58)        $ (25)         $ (259)         $ 83

Net (loss) income allocated
  to general partners (1%)             $ (1)          $ --           $ (3)          $ 1
Net (loss) income allocated
  to limited partners (99%)               (57)          (25)          (256)            82

                                       $ (58)        $ (25)         $ (259)         $ 83
Per limited partnership unit:
  Loss from continuing
    operations                        $ (1.03)      $ (0.95)       $ (4.65)       $ (0.15)
  Income from discontinued
    operations                             --          0.49             --           1.64

Net (loss) income                     $ (1.03)      $ (0.46)       $ (4.65)        $ 1.49

Distribution per limited
  partnership unit                     $ --          $ 4.00          $ --          $ 5.95

            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, 2002                   55,000         $ (70)      $(4,636)   $(4,706)

Net loss for the nine months
   ended September 30, 2003                --             (3)        (256)      (259)

Partners' deficit at
   September 30, 2003                  55,000         $ (73)      $(4,892)   $(4,965)

            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,
                                                                     2003       2002
Cash flows from operating activities:
<S>                                                                <C>          <C>
  Net (loss) income                                                $ (259)      $ 83
  Adjustments to reconcile net (loss) income to net cash
   provided by operating activities:
     Depreciation                                                     657          830
     Amortization of discounts and loan costs                          14           22
     Change in accounts:
      Receivables and deposits                                         37           55
      Other assets                                                   (224)         (26)
      Accounts payable                                               (165)          --
      Tenant security deposit liabilities                               9           (3)
      Accrued property taxes                                          122           21
      Other liabilities                                               (18)         160
         Net cash provided by operating activities                    173        1,142

Cash flows used in investing activities:
  Property improvements and replacements                             (404)        (347)

Cash flows from financing activities:
   Payments on mortgage notes payable                                (271)        (255)
   Distributions to partners                                           --         (330)
         Net cash used in financing activities                       (271)        (585)

Net (decrease) increase in cash and cash equivalents                 (502)         210

Cash and cash equivalents at beginning of period                      666          237

Cash and cash equivalents at end of period                         $ 164        $ 447

Supplemental disclosure of cash flow information:
 Cash paid for interest                                            $ 737        $ 753

            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. The non-corporate general partner,
AIMCO  Properties,  L.P.,  is also an affiliate of AIMCO.  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, 2003
are not  necessarily  indicative  of the results  that may be  expected  for the
fiscal year ending  December 31,  2003.  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, 2002.

Effective  January 1, 2002,  the  Partnership  adopted  Statement  of  Financial
Accounting  Standards  No. 144,  "Accounting  for the  Impairment or Disposal of
Long-Lived Assets", which established standards for the way that public business
enterprises  report  information  about long-lived  assets that are either being
held for sale or have  already  been  disposed  of by sale or other  means.  The
standard  requires  that results of  operations  for a long-lived  asset that is
being held for sale or has already been disposed of be reported as  discontinued
operations  on the  statement  of  operations.  As a  result,  the  accompanying
consolidated  statements of operations  have been restated as of January 1, 2002
to reflect the  operations  of North  River  Village  Apartments  as income from
discontinued operations due to its sale in December 2002.

Note B - Reconciliation of Cash Flows

As required by the Partnership  Agreement,  the following is a reconciliation of
"Net cash  (used in)  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.

                                                       For the Nine Months Ended
                                                             September 30,
                                                             2003         2002
                                                               (in thousands)
Net cash provided by operating activities                    $ 173       $1,142
  Payments on mortgage notes payable                          (271)        (255)
  Property improvements and replacements                      (404)        (347)
  Changes in reserves for net operating assets                 239         (207)
  Additional reserves                                           --         (333)
     Net cash used in operations                            $ (263)        $ --

For the nine months ended  September  30, 2003,  the Corporate  General  Partner
believed  it to be in the best  interest  of the  Partnership  to use cash  from
operations of approximately $263,000 to fund continuing capital improvements and
repairs in order for the properties to remain  competitive.  For the nine months
ended September 30, 2002, the Corporate  General Partner reserved  approximately
$333,000 to fund capital  improvements  and repairs at the  Partnership's  three
investment 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.  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.

Affiliates of the Corporate  General Partner are entitled to receive 5% of gross
receipts from all of the Partnership's  properties as compensation for providing
property   management   services.   The  Partnership  paid  to  such  affiliates
approximately $149,000 and $210,000 for the nine months ended September 30, 2003
and 2002, respectively, which are included in operating expenses and income from
discontinued operations.

An  affiliate  of  the  Corporate  General  Partner  received  reimbursement  of
accountable  administrative  expenses  amounting to  approximately  $119,000 and
$150,000 for the nine months ended  September  30, 2003 and 2002,  respectively,
which are  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  $3,000 for the nine months ended September 30, 2003. Fees for the
same period in 2002 were less than $1,000.  The construction  management service
fees are  calculated  based on a  percentage  of current  year  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,  2003,  the level of return to the
limited  partners has not been met and the balance is included in due to general
partner in the accompanying consolidated balance sheet.

Pursuant to the  Partnership  Agreement and in connection with the sale of North
River Village Apartments in 2002, the Corporate General Partner is entitled to a
commission  of up to 1%  for  its  assistance  in  the  sale.  Payment  of  such
commission  is  subordinate  to the limited  partners  receiving a cumulative 7%
return on their  investment.  This return has not yet been met, and accordingly,
$68,000  was  accrued  and  is  included  in  due  to  general  partner  in  the
accompanying consolidated balance sheet at September 30, 2003.

The  Partnership  insures its properties up to certain  limits through  coverage
provided by AIMCO which is  generally  self-insured  for a portion of losses and
liabilities  related to workers  compensation,  property  casualty  and  vehicle
liability. The Partnership insures its properties above the AIMCO limits through
insurance  policies  obtained  by  AIMCO  from  insurers  unaffiliated  with the
Corporate  General Partner.  During the nine months ended September 30, 2003 and
2002,  the  Partnership  was charged by AIMCO and its  affiliates  approximately
$59,000 and $92,000,  respectively,  for insurance  coverage and fees associated
with policy claims administration.

Note D - Disposition of Investment Property

On December 13, 2002, the Partnership sold North River Village  Apartments to an
unrelated  third party for a gross sale price of  $6,800,000.  The net  proceeds
realized by the  Partnership  were  approximately  $6,613,000  after  payment of
closing costs of  approximately  $187,000.  The Partnership  used  approximately
$1,568,000 of the net proceeds to repay the mortgages  encumbering the property.
The Partnership  realized a gain of approximately  $4,348,000 for the year ended
December 31, 2002, as a result of this sale. The property's  operations,  income
of approximately $27,000 and $91,000 and revenues of approximately  $297,000 and
$859,000 for the three and nine months ended  September 30, 2002,  respectively,
are included in income from discontinued operations.

Note E - Legal Proceedings

In March 1998, several putative unit holders of limited partnership units of the
Partnership  commenced an action  entitled  Rosalie  Nuanes,  et al. v. Insignia
Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the
State of  California  for the  County  of San  Mateo.  The  plaintiffs  named as
defendants,  among others,  the Partnership,  its Corporate  General Partner and
several of their  affiliated  partnerships  and corporate  entities.  The action
purported  to  assert  claims  on  behalf  of a class of  limited  partners  and
derivatively  on behalf  of a number  of  limited  partnerships  (including  the
Partnership)  that are named as nominal  defendants,  challenging,  among  other
things,  the  acquisition  of interests  in certain  Corporate  General  Partner
entities by Insignia Financial Group, Inc.  ("Insignia") and entities that were,
at one  time,  affiliates  of  Insignia;  past  tender  offers  by the  Insignia
affiliates to acquire limited partnership units;  management of the partnerships
by the  Insignia  affiliates;  and the series of  transactions  which  closed on
October 1, 1998 and February 26, 1999 whereby  Insignia and Insignia  Properties
Trust,  respectively,  were merged into AIMCO.  The plaintiffs  sought  monetary
damages and equitable relief, including judicial dissolution of the Partnership.
In addition, during the third quarter of 2001, a complaint (the "Heller action")
was filed  against  the same  defendants  that are named in the  Nuanes  action,
captioned  Heller v.  Insignia  Financial  Group.  On or about  August 6,  2001,
plaintiffs filed a first amended  complaint.  The Heller action was brought as a
purported derivative action, and asserted claims for, among other things, breach
of fiduciary  duty,  unfair  competition,  conversion,  unjust  enrichment,  and
judicial dissolution.

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

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

On June 13, 2003, the Court granted final approval of the settlement and entered
judgment in both the Nuanes and Heller actions.  On August 12, 2003, an objector
filed an appeal  seeking  to vacate  and/or  reverse  the  order  approving  the
settlement and entering judgment thereto.  The Corporate General Partner intends
to file a respondent's  brief in support of the order  approving  settlement and
entering judgment thereto.

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

On August 8, 2003 AIMCO Properties  L.P., an affiliate of the Corporate  General
Partner,  was served  with a  Complaint  in the United  States  District  Court,
District of Columbia alleging that AIMCO Properties L.P.  willfully violated the
Fair Labor Standards Act (FLSA) by failing to pay maintenance  workers  overtime
for all hours worked in excess of forty per week.  The  Complaint is styled as a
Collective  Action  under  the FLSA and seeks to  certify  state  subclasses  in
California, Maryland, and the District of Columbia. Specifically, the plaintiffs
contend that AIMCO Properties L.P. failed to compensate  maintenance workers for
time  that they were  required  to be  "on-call".  Additionally,  the  Complaint
alleges AIMCO  Properties  L.P.  failed to comply with the FLSA in  compensating
maintenance  workers  for time that they  worked in  responding  to a call while
"on-call".  The  Complaint  also  attempts  to certify a subclass  for  salaried
service  directors who are challenging  their  classification as exempt from the
overtime  provisions of the FLSA.  AIMCO  Properties L.P. has filed an answer to
the Complaint denying the substantive  allegations.  Although the outcome of any
litigation is uncertain,  in the opinion of the  Corporate  General  Partner the
claims will not result in any material liability to the Partnership.

The  Partnership  is unaware  of any other  pending  or  outstanding  litigation
matters  involving  it or its  investment  properties  that are not of a routine
nature arising in the ordinary course of business.

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

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

The Partnership's  investment  properties consist of three apartment  complexes.
The following table sets forth the average  occupancy of the properties for each
of the nine months ended September 30, 2003 and 2002:

                                                            Average
                                                           Occupancy
       Property                                        2003          2002

       Essex Park Apartments
          Columbia, South Carolina                     85%            83%

       Colony House Apartments
          Murfeesboro, Tennessee                       95%            93%

       Willowick Apartments
          Greenville, South Carolina                   90%            92%

Results of Operations

The Partnership's net loss was approximately  $58,000 and $259,000 for the three
and nine months ended September 30, 2003,  respectively,  compared to a net loss
of  approximately  $25,000 for the three months ended September 30, 2002 and net
income of  approximately  $83,000 for the nine months ended  September 30, 2002.
The increase in net loss for the three months ended September 30, 2003 is due to
a decrease  in income  from  discontinued  operations  and an  increase in total
expenses, partially offset by an increase in total revenues. The decrease in net
income for the nine  months  ended  September  30,  2003 is due to a decrease in
income  from  discontinued  operations,  a decrease  in total  revenues,  and an
increase in total expenses.

Effective  January 1, 2002,  the  Partnership  adopted  Statement  of  Financial
Accounting  Standards  No. 144,  "Accounting  for the  Impairment or Disposal of
Long-Lived Assets", which established standards for the way that public business
enterprises  report  information  about long-lived  assets that are either being
held for sale or have  already  been  disposed  of by sale or other  means.  The
standard  requires  that results of  operations  for a long-lived  asset that is
being held for sale or has already been disposed of be reported as  discontinued
operations  on the  statement  of  operations.  As a  result,  the  accompanying
consolidated  statements of operations  have been restated as of January 1, 2002
to reflect the  operations  of North  River  Village  Apartments  as income from
discontinued operations due to its sale in December 2002.

On December 13, 2002, the Partnership sold North River Village  Apartments to an
unrelated  third party for a gross sale price of  $6,800,000.  The net  proceeds
realized by the  Partnership  were  approximately  $6,613,000  after  payment of
closing costs of  approximately  $187,000.  The Partnership  used  approximately
$1,568,000 of the net proceeds to repay the mortgages  encumbering the property.
The Partnership  realized a gain of approximately  $4,348,000 for the year ended
December 31, 2002, as a result of this sale. The property's  operations,  income
of  approximately  $27,000  and  $91,000  for the  three and nine  months  ended
September 30, 2002,  respectively,  and revenues of  approximately  $297,000 and
$859,000, respectively, are included in income from discontinued operations.

Excluding the  discontinued  operations,  the  Partnership  realized a loss from
continuing  operations of approximately $58,000 and $52,000,  respectively,  for
the three months ended  September 30, 2003 and 2002, and a loss from  continuing
operations  of  approximately  $259,000  and  $8,000 for the nine  months  ended
September 30, 2003 and 2002, respectively.  The increase in loss from continuing
operations  for the three months ended  September 30, 2003 is due to an increase
in total  expenses,  partially  offset by an  increase  in total  revenues.  The
increase in loss from continuing  operations for the nine months ended September
30,  2003 is due to a  decrease  in  total  revenues  and an  increase  in total
expenses.  The increase in total  revenues for the three months ended  September
30,  2003 is due to an  increase  in  rental  income  caused by an  increase  in
occupancy at all three investment  properties  partially offset by a decrease in
other income. The decrease in total revenues for the nine months ended September
30, 2003 is due to  decreases  in both rental and other  income.  Rental  income
decreased  due to a  decrease  in  average  rental  rates  at all  three  of the
Partnership's  investment  properties  and a decrease in  occupancy at Willowick
Apartments, partially offset by increases in occupancy at Colony House and Essex
Park Apartments.  Other income decreased for the nine months ended September 30,
2003, primarily due to decreases in utility reimbursements and corporate housing
revenue at Essex Park  Apartments.  Other income  decreased for the three months
ended September 30, 2003 primarily due to decreases in utility reimbursements.

The increase in total expenses for the three months ended  September 30, 2003 is
due to an increase in operating expense.  The increase in total expenses for the
nine months ended September 30, 2003 is due to an increase in operating expense,
partially  offset by a decrease in interest  expense.  The increase in operating
expense for the three and nine months ended  September 30, 2003 is primarily due
to an  increase  in  contract  maintenance  expense  at all  of the  properties,
partially  offset by a decrease in property  management  fees as a result of the
decrease in rental  income.  Interest  expense  decreased  due to the  scheduled
payments on the mortgages encumbering the investment properties.

Included  in general  and  administrative  expense for the three and nine months
ended September 30, 2003 and 2002 are management reimbursements to the Corporate
General Partner as allowed under the Partnership Agreement.  In addition,  costs
associated  with the  quarterly  and annual  communications  with  investors and
regulatory  agencies and the annual audit required by the Partnership  Agreement
are also included in general and administrative expenses.

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

Liquidity and Capital Resources

At  September  30,  2003,  the  Partnership  had cash and  cash  equivalents  of
approximately $164,000 compared to approximately $447,000 at September 30, 2002.
Cash and cash  equivalents  decreased  approximately  $502,000 from December 31,
2002 due to  approximately  $404,000 of cash used in  investing  activities  and
approximately $271,000 of cash used in financing activities, partially offset by
approximately  $173,000 of cash provided by operating  activities.  Cash used in
investing activities consisted of property  improvements and replacements.  Cash
used in financing activities consisted of payments of principal on the mortgages
encumbering the Partnership's  properties.  The Partnership  invests its working
capital reserves in interest bearing accounts.

The sufficiency of existing  liquid assets to meet future  liquidity and capital
expenditure   requirements   is  directly   related  to  the  level  of  capital
expenditures  required at the investment  properties to adequately  maintain the
physical  assets and other operating needs of the Partnership and to comply with
Federal,  state  and local  legal and  regulatory  requirements.  The  Corporate
General  Partner  monitors  developments  in the  area of legal  and  regulatory
compliance and is studying new federal laws, including the Sarbanes-Oxley Act of
2002. The Sarbanes-Oxley Act of 2002 mandates or suggests additional  compliance
measures with regard to governance,  disclosure, audit and other areas. In light
of these changes,  the  Partnership  expects that it will incur higher  expenses
related  to  compliance,  including  increased  legal  and audit  fees.  Capital
improvements planned at each of the Partnership's properties are detailed below.

Essex Park Apartments

During the nine months ended  September  30,  2003,  the  Partnership  completed
approximately  $257,000  of  capital  improvements  at  Essex  Park  Apartments,
consisting primarily of interior  decoration,  building and structural upgrades,
parking area and swimming pool upgrades and floor covering, appliance, and water
heater  replacements.  These  improvements were funded from operating cash flow.
The Partnership  evaluates the capital  improvement needs of the property during
the year and  currently  expects to  complete an  additional  $21,000 in capital
improvements  during the remainder of 2003. The additional capital  improvements
will consist  primarily of pool  improvements  and appliance and floor  covering
replacements.  Additional capital improvements may be considered and will depend
on the physical  condition of the property as well as the anticipated  cash flow
generated by the property.

Colony House Apartments

During the nine months ended  September  30,  2003,  the  Partnership  completed
approximately  $64,000  of  capital  improvements  at Colony  House  Apartments,
consisting primarily of water heater installations, plumbing upgrades, and floor
covering replacements.  These improvements were funded from operating cash flow.
The Partnership  evaluates the capital  improvement needs of the property during
the year and  currently  expects to  complete an  additional  $14,000 in capital
improvements  during the remainder of 2003. The additional capital  improvements
will consist primarily of floor covering,  appliance,  cabinet, fencing, and air
conditioning  unit  replacements.   Additional   capital   improvements  may  be
considered and will depend on the physical  condition of the property as well as
the anticipated cash flow generated by the property.

Willowick Apartments

During the nine months ended  September  30,  2003,  the  Partnership  completed
approximately   $83,000  of  capital   improvements  at  Willowick   Apartments,
consisting  primarily  of  electrical  upgrades,  major  landscaping,  and floor
covering  and  appliance  replacements.  These  improvements  were  funded  from
operating cash flow. The Partnership  evaluates the capital improvement needs of
the property  during the year and  currently  expects to complete an  additional
$14,000 in capital  improvements  during the remainder of 2003.  The  additional
capital improvements will consist primarily of parking lot upgrades,  structural
enhancements,   building   improvements,   and  floor   covering  and  appliance
replacements.  Additional capital improvements may be considered and will depend
on the physical  condition of the property as well as the anticipated  cash flow
generated by the property.

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

The  Partnership's  assets are thought to be sufficient  for any near term needs
(exclusive  of  capital   improvements)   of  the   Partnership.   The  mortgage
indebtedness  encumbering all of the properties of approximately  $12,776,000 is
amortized  over 240 months and is  scheduled  to be fully  amortized  in January
2021.

The Partnership  distributed the following  amounts during the nine months ended
September 30, 2003 and 2002 (in thousands, except per unit data):
<TABLE>
<CAPTION>

                                       Per Limited                        Per Limited
                  Nine Months Ended    Partnership    Nine Months Ended   Partnership
                  September 30, 2003       Unit       September 30, 2002      Unit

<S>                      <C>               <C>              <C>              <C>
Operations               $ --              $ --             $ 330            $ 5.95
</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
distributions  to its  partners  during  the  remainder  of 2003  or  subsequent
periods.

Other

In addition to its indirect  ownership of the combined general partner interests
in the Partnership,  AIMCO and its affiliates  owned 35,663 limited  partnership
units (the "Units") in the  Partnership  representing  64.84% of the outstanding
Units at September 30, 2003. A number of these Units were  acquired  pursuant to
tender offers made by AIMCO or its affiliates.  It is possible that AIMCO or its
affiliates will acquire  additional  Units in exchange for cash or a combination
of cash and Units in AIMCO Properties, L.P., the operating partnership of AIMCO,
either through private  purchases or tender offers.  Pursuant to the Partnership
Agreement,  unitholders  holding a majority  of the Units are  entitled  to take
action with  respect to a variety of matters that  include,  but are not limited
to,  voting on certain  amendments  to the  Partnership  Agreement and voting to
remove the Corporate General Partner.  As a result of its ownership of 64.84% of
the outstanding  Units,  AIMCO and its affiliates are in a position to influence
all  such  voting  decisions  with  respect  to the  Partnership.  Although  the
Corporate  General Partner owes fiduciary  duties to the limited partners of the
Partnership,  the Corporate  General Partner also owes fiduciary duties to AIMCO
as its sole  stockholder.  As a  result,  the  duties of the  Corporate  General
Partner,  as  corporate  general  partner,  to the  Partnership  and its limited
partners may come into conflict with the duties of the Corporate General Partner
to AIMCO, as its sole stockholder.

Critical Accounting Policies and Estimates

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

Impairment of Long-Lived Assets

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

Real  property  investments  are  subject  to varying  degrees of risk.  Several
factors  may  adversely  affect  the  economic  performance  and  value  of  the
Partnership's investment properties.  These factors include, but are not limited
to,  changes  in the  national,  regional  and  local  economic  climate;  local
conditions,  such as an oversupply of multifamily  properties;  competition from
other available  multifamily property owners and changes in market rental rates.
Any adverse changes in these factors could cause impairment of the Partnership's
assets.

Revenue Recognition

The Partnership generally leases apartment units for twelve-month terms or less.
Rental income  attributable to leases is recognized  monthly as it is earned and
the Partnership  fully reserves all balances  outstanding  over thirty days. The
Partnership will offer rental concessions during  particularly slow months or in
response to heavy  competition  from other  similar  complexes in the area.  Any
concessions  given at the inception of the lease are amortized  over the life of
the lease.

ITEM 3.     CONTROLS AND PROCEDURES

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

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

                           PART II - OTHER INFORMATION


ITEM 1.     LEGAL PROCEEDINGS

In March 1998, several putative unit holders of limited partnership units of the
Partnership  commenced an action  entitled  Rosalie  Nuanes,  et al. v. Insignia
Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the
State of  California  for the  County  of San  Mateo.  The  plaintiffs  named as
defendants,  among others,  the Partnership,  its Corporate  General Partner and
several of their  affiliated  partnerships  and corporate  entities.  The action
purported  to  assert  claims  on  behalf  of a class of  limited  partners  and
derivatively  on behalf  of a number  of  limited  partnerships  (including  the
Partnership)  that are named as nominal  defendants,  challenging,  among  other
things,  the  acquisition  of interests  in certain  Corporate  General  Partner
entities by Insignia Financial Group, Inc.  ("Insignia") and entities that were,
at one  time,  affiliates  of  Insignia;  past  tender  offers  by the  Insignia
affiliates to acquire limited partnership units;  management of the partnerships
by the  Insignia  affiliates;  and the series of  transactions  which  closed on
October 1, 1998 and February 26, 1999 whereby  Insignia and Insignia  Properties
Trust,  respectively,  were merged into AIMCO.  The plaintiffs  sought  monetary
damages and equitable relief, including judicial dissolution of the Partnership.
In addition, during the third quarter of 2001, a complaint (the "Heller action")
was filed  against  the same  defendants  that are named in the  Nuanes  action,
captioned  Heller v.  Insignia  Financial  Group.  On or about  August 6,  2001,
plaintiffs filed a first amended  complaint.  The Heller action was brought as a
purported derivative action, and asserted claims for, among other things, breach
of fiduciary  duty,  unfair  competition,  conversion,  unjust  enrichment,  and
judicial dissolution.

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

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

On June 13, 2003, the Court granted final approval of the settlement and entered
judgment in both the Nuanes and Heller actions.  On August 12, 2003, an objector
filed an appeal  seeking  to vacate  and/or  reverse  the  order  approving  the
settlement and entering judgment thereto.  The Corporate General Partner intends
to file a respondent's  brief in support of the order  approving  settlement and
entering judgment thereto.

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

On August 8, 2003 AIMCO Properties  L.P., an affiliate of the Corporate  General
Partner,  was served  with a  Complaint  in the United  States  District  Court,
District of Columbia alleging that AIMCO Properties L.P.  willfully violated the
Fair Labor Standards Act (FLSA) by failing to pay maintenance  workers  overtime
for all hours worked in excess of forty per week.  The  Complaint is styled as a
Collective  Action  under  the FLSA and seeks to  certify  state  subclasses  in
California, Maryland, and the District of Columbia. Specifically, the plaintiffs
contend that AIMCO Properties L.P. failed to compensate  maintenance workers for
time  that they were  required  to be  "on-call".  Additionally,  the  Complaint
alleges AIMCO  Properties  L.P.  failed to comply with the FLSA in  compensating
maintenance  workers  for time that they  worked in  responding  to a call while
"on-call".  The  Complaint  also  attempts  to certify a subclass  for  salaried
service  directors who are challenging  their  classification as exempt from the
overtime  provisions of the FLSA.  AIMCO  Properties L.P. has filed an answer to
the Complaint denying the substantive  allegations.  Although the outcome of any
litigation is uncertain,  in the opinion of the  Corporate  General  Partner the
claims will not result in any material liability to the Partnership.

ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K

            a) Exhibits:

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

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

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

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

            b) Reports on Form 8-K:

                  None filed during the quarter ended September 30, 2003.


<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/Paul J. McAuliffe
                                          Paul J. McAuliffe
                                          Executive Vice President
                                          and Chief Financial Officer


                                    Date: November 12, 2003


<PAGE>




Exhibit 31.1


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

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

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

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

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

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

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

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

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

Date:  November 12, 2003

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


<PAGE>



Exhibit 31.2


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

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

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

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

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

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

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

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

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

Date:  November 12, 2003

                                    /s/Paul J. McAuliffe
                                    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 32.1


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



In connection with the Quarterly Report on Form 10-QSB of Shelter Properties III
(the "Partnership"),  for the quarterly period ended September 30, 2003 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 12, 2003

                                           /s/Paul J. McAuliffe
                                    Name:  Paul J. McAuliffe
                                    Date:  November 12, 2003

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