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 March 31, 2005


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


             For the transition period from _________to _________

                         Commission file number 0-10260


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



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

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

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

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

                         PART I - FINANCIAL INFORMATION


ITEM 1.     FINANCIAL STATEMENTS


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

                                 March 31, 2005

<TABLE>
<CAPTION>


Assets
<S>                                                                          <C>
   Cash and cash equivalents                                                 $ 198
   Receivables and deposits                                                      102
   Restricted escrows                                                             84
   Other assets                                                                  485
   Investment properties:
      Land                                                     $ 762
      Buildings and related personal property                   16,250
                                                                17,012
      Less accumulated depreciation                            (12,031)        4,981
                                                                            $ 5,850

Liabilities and Partners' Deficit
Liabilities
   Accounts payable                                                           $ 5
   Tenant security deposit liabilities                                            60
   Accrued property taxes                                                         71
   Other liabilities                                                             220
   Due to affiliate (Note C)                                                     511
   Mortgage notes payable                                                      9,034

Partners' Deficit
   General partners                                             $ (76)
   Limited partners (55,000 units issued and
      outstanding)                                              (3,975)       (4,051)
                                                                            $ 5,850


         See Accompanying Notes to Consolidated Financial Statements

</TABLE>


<PAGE>





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

<TABLE>
<CAPTION>


                                                                Three Months Ended
                                                                      March 31,
                                                               2005             2004
Revenues:                                                                    (Restated)
<S>                                                            <C>              <C>
   Rental income                                               $ 645            $ 661
   Other income                                                    69               65
      Total revenues                                              714              726

Expenses:
   Operating                                                      427              318
   General and administrative                                      40               72
   Depreciation                                                   144              154
   Interest                                                       171              174
   Property taxes                                                  70               64
      Total expenses                                              852              782

Loss from continuing operations                                  (138)             (56)
Gain on sale of discontinued operations (Note A)                  124               --
Income from discontinued operations                                --              104

Net (loss) income                                              $ (14)           $ 48

Net loss allocated to general partner                          $ (1)            $ --
Net (loss) income allocated to limited partners                   (13)              48

                                                               $ (14)           $ 48
Per limited partnership unit:
  Loss from continuing operations                             $ (2.49)        $ (1.00)
   Gain on sale of discontinued operations                       2.25               --
  Income from discontinued operations                              --             1.87

Net (loss) income per limited partnership unit                $ (0.24)         $ 0.87

         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, 2004                   55,000         $ (75)      $(3,962)   $(4,037)

Net loss for the three months
   ended March 31, 2005                    --             (1)         (13)       (14)

Partners' deficit at
   March 31, 2005                      55,000         $ (76)      $(3,975)   $(4,051)

         See Accompanying Notes to Consolidated Financial Statements
</TABLE>




<PAGE>


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

                                                                   Three Months Ended
                                                                        March 31,
                                                                    2005         2004
Cash flows from operating activities:
<S>                                                                <C>           <C>
  Net (loss) income                                                $ (14)        $ 48
  Adjustments to reconcile net (loss) income to net cash
   used in operating activities:
     Depreciation                                                      144          226
     Amortization of loan costs                                          3            5
     Gain on sale of discontinued operations                          (124)          --
     Casualty gain                                                      --          (47)
     Bad debt expense                                                   17           20
     Change in accounts:
      Receivables and deposits                                          22          (12)
      Other assets                                                     (27)        (120)
      Accounts payable                                                 (65)          23
      Tenant security deposit liabilities                                5           (2)
      Accrued property taxes                                          (122)        (234)
      Due to affiliate                                                 (86)          55
      Other liabilities                                                (97)          26
         Net cash used in operating activities                        (344)         (12)

Cash flows from investing activities:
  Property improvements and replacements                              (50)         (218)
  Net withdrawals from restricted escrows                               --           95
  Insurance proceeds received                                           --           47
         Net cash used in investing activities                         (50)         (76)

Cash flows from financing activities:
  Payments on mortgage notes payable                                   (76)         (95)
  Advances from an affiliate                                           193          135
  Repayment of advances from affiliate                                  --          (69)
         Net cash provided by (used in) financing activities           117          (29)

Net decrease in cash and cash equivalents                             (277)        (117)
Cash and cash equivalents at beginning of period                       475          192

Cash and cash equivalents at end of period                          $ 198        $ 75

Supplemental disclosure of cash flow information:
  Cash paid for interest                                            $ 164        $ 192

         See Accompanying Notes to Consolidated Financial Statements
</TABLE>


<PAGE>


                             SHELTER PROPERTIES III
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


Note A - Basis of Presentation

The  accompanying   unaudited   consolidated  financial  statements  of  Shelter
Properties  III (the  "Partnership"  or  "Registrant")  have  been  prepared  in
accordance with generally accepted  accounting  principles for interim financial
information  and  with  the  instructions  to Form  10-QSB  and  Item 310 (b) of
Regulation  S-B.  Accordingly,  they do not include all of the  information  and
footnotes  required by generally  accepted  accounting  principles  for complete
financial  statements.  The general  partner  responsible  for management of the
Partnership's  business  is Shelter  Realty III  Corporation,  a South  Carolina
corporation (the "Corporate General Partner").  The Corporate General Partner is
a  subsidiary  of Apartment  Investment  and  Management  Company  ("AIMCO"),  a
publicly  traded real estate  investment  trust. In the opinion of the Corporate
General  Partner,  all  adjustments  (consisting of normal  recurring  accruals)
considered  necessary  for a fair  presentation  have been  included.  Operating
results for the three month  period ended March 31,  2005,  are not  necessarily
indicative  of the  results  that may be  expected  for the fiscal  year  ending
December 31, 2005. 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, 2004.

In accordance with Statement of Financial Accounting Standards ("SFAS") No. 144,
the statement of  operations  for the three months ended March 31, 2004 has been
restated to reflect the  operations  of Colony House  Apartments  as income from
discontinued operations due to its sale in October 2004. Included in income from
discontinued   operations   for  the  three  months  ended  March  31,  2004  is
approximately $403,000 of revenue generated by the property. The additional gain
on sale  recognized  during the three  months ended March 31, 2005 is due to the
reversal of contingency and tax reserves that were no longer needed.

Certain  2004  balances  have  been   reclassified  to  conform  with  the  2005
presentation.

Note B - Reconciliation of Cash Flows

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

                                                         For the Three Months Ended
                                                                 March 31,
                                                             2005        2004
                                                               (in thousands)
Net cash used in operating activities                      $ (344)         $  (12)
<S>                                                           <C>             <C>
  Payments on mortgage notes payable                          (76)            (95)
  Property improvements and replacements                      (50)           (218)
  Change in restricted escrows                                 --              95
  Changes in reserves for net operating assets                370             264
  Additional reserves                                          --             (34)
     Net cash from operations                              $ (100)         $   --
</TABLE>

For the three  months  ended  March 31,  2004,  the  Corporate  General  Partner
reserved  approximately  $34,000 to fund capital improvements and repairs at the
Partnership's properties.

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

Note C - Transactions with Affiliated Parties

The  Partnership  has no employees and depends on the Corporate  General Partner
and its  affiliates for the management  and  administration  of all  Partnership
activities.  The  Partnership  Agreement  provides  for (i) certain  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  receive 5% of gross receipts from
the Partnership's  properties as compensation for providing property  management
services.  The  Partnership  paid to such affiliates  approximately  $35,000 and
$53,000  during the three  months  ended March 31, 2005 and 2004,  respectively,
which is 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  $26,000 and
$98,000 for the three months ended March 31, 2005 and 2004, respectively,  which
is included in general and  administrative  expenses and investment  properties.
The portion of these  reimbursements  included in investment  properties for the
three  months  ended  March 31, 2005 and 2004 are fees  related to  construction
management services provided by an affiliate of the Corporate General Partner of
approximately  $1,000 and $43,000,  respectively.  The  construction  management
service fees are calculated based on a percentage of additions to the investment
properties.

During 1986, a liability of  approximately  $185,000 was incurred to the general
partners for sales  commissions  earned.  In  connection  with the sale of North
River  Village  Apartments  in 2002,  the  Corporate  General  Partner  earned a
commission  of  approximately  $68,000  for  its  assistance  in  the  sale.  In
connection  with the sale of Colony  House  Apartments  in 2004,  the  Corporate
General Partner earned a commission of  approximately  $61,000.  Payment of such
commissions  is subordinate  to the limited  partners  receiving a cumulative 7%
return on their investment.  This return has not yet been met and the balance of
approximately  $314,000  is included in due to  affiliates  in the  accompanying
consolidated balance sheet at March 31, 2005.

Pursuant to the  Partnership  Agreement,  an affiliate of the Corporate  General
Partner advanced the Partnership  approximately $193,000 and $135,000 during the
three months ended March 31, 2005 and 2004, respectively,  to aid in the payment
of property taxes at Essex Park Apartments.  During the three months ended March
31,  2004,  the  Partnership  made a payment on this  advance  of  approximately
$69,000.  Interest  on advances is charged at the prime rate plus 2% or 7.75% at
March 31, 2005.  Interest  expense was  approximately  $3,000 and $1,000 for the
three months ended March 31, 2005 and 2004, respectively. At March 31, 2005, the
Partnership  owed an affiliate of the Corporate  General  Partner  approximately
$197,000 in advances and accrued interest which is included in due to affiliate.

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 three months ended March 31, 2005,  the
Partnership  was charged by AIMCO and its affiliates  approximately  $27,000 for
hazard insurance coverage and fees associated with policy claims administration.
Additional  charges  will be  incurred by the  Partnership  during 2005 as other
insurance policies renew later in the year. The Partnership was charged by AIMCO
and its  affiliates  approximately  $65,000  for  insurance  coverage  and  fees
associated with policy claims  administration during the year ended December 31,
2004.

Note D - Casualty Gain

In May  2003,  one of the  Partnership's  investment  properties,  Colony  House
Apartments,  incurred  damages  as a result of a hail  storm.  During  the three
months ended March 31, 2004,  the  Partnership  received  insurance  proceeds of
approximately  $47,000,  which were  recognized  as a casualty  gain because the
damaged  fixed  assets had been written off during  2003.  The casualty  gain is
included in income from discontinued  operations due to the sale of the property
in October 2004.

Note E - Contingencies

In March 1998, several putative unit holders of limited partnership units of the
Partnership  commenced an action  entitled  Rosalie  Nuanes,  et al. v. Insignia
Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the
State of  California  for the  County  of San  Mateo.  The  plaintiffs  named as
defendants,  among others,  the Partnership,  its Corporate  General Partner and
several of their  affiliated  partnerships  and corporate  entities.  The action
purported  to  assert  claims  on  behalf  of a class of  limited  partners  and
derivatively  on behalf  of a number  of  limited  partnerships  (including  the
Partnership)  that are named as nominal  defendants,  challenging,  among  other
things,  the  acquisition  of interests  in certain  Corporate  General  Partner
entities by Insignia Financial Group, Inc.  ("Insignia") and entities that were,
at one  time,  affiliates  of  Insignia;  past  tender  offers  by the  Insignia
affiliates to acquire limited partnership units;  management of the partnerships
by the  Insignia  affiliates;  and the series of  transactions  which  closed on
October 1, 1998 and February 26, 1999 whereby  Insignia and Insignia  Properties
Trust,  respectively,  were merged into AIMCO.  The plaintiffs  sought  monetary
damages and equitable relief, including judicial dissolution of the Partnership.
In addition,  during the third quarter of 2001, a complaint  captioned Heller v.
Insignia  Financial  Group (the  "Heller  action")  was filed  against  the same
defendants  that are named in the  Nuanes  action.  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 28, 2002, the trial court granted  defendants
motion to strike the complaint.

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

On June 13, 2003, the court granted final approval of the settlement and entered
judgment in both the Nuanes and Heller actions.  On August 12, 2003, an objector
("Objector") filed an appeal (the "Appeal") seeking to vacate and/or reverse the
order approving the settlement and entering judgment thereto. On May 4, 2004 the
Objector filed a second appeal  challenging the court's use of a referee and its
order requiring Objector to pay those fees.

On March 21, 2005, the Court of Appeals issued opinions in both pending appeals.
With regard to the settlement and judgment entered thereto, the Court of Appeals
vacated  the trial  court's  order and  remanded  to the trial court for further
findings  on the basis that the "state of the record is  insufficient  to permit
meaningful  appellate  review".  With regard to the second appeal,  the Court of
Appeals  reversed the order requiring the Objector to pay referee fees. On April
26, 2005,  the Court of Appeals  lifted the stay of a pending  appeal related to
the Heller action and the trial court's order striking the  complaint.  On April
28, 2005, the Objector  filed a Petition for Review with the California  Supreme
Court in connection with the opinion vacating the order approving settlement and
remanding for further findings. The Corporate General Partner and its affiliates
are  currently  scheduled  to file an answer to  Objector's  petition on May 18,
2005.

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.

AIMCO  Properties  L.P.  and NHP  Management  Company,  both  affiliates  of the
Corporate  General  Partner,  are  defendants  in a lawsuit  alleging  that they
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  attempts to bring 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.  and  NHP
Management Company failed to compensate  maintenance  workers for time that they
were  required  to be  "on-call."  Additionally,  the  complaint  alleges  AIMCO
Properties  L.P. and NHP  Management  Company  failed to comply with the FLSA in
compensating  maintenance  workers for time that they worked in  responding to a
call  while  "on-call."  The  defendants  have  filed an answer  to the  amended
complaint  denying the substantive  allegations.  Oral argument  relating to the
certification  of the  collective  action  took  place  on May 12,  2005 and the
parties await a ruling from the Court. Although the outcome of any litigation is
uncertain,  AIMCO  Properties,  L.P. does not believe that the ultimate  outcome
will have a material  adverse  effect on its  financial  condition or results of
operations.  Similarly,  the Corporate General Partner does not believe that the
ultimate  outcome  will have a  material  adverse  effect  on the  Partnership's
consolidated financial condition or results of operations.

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.

Environmental

Various  Federal,  state and local laws subject  property owners or operators to
liability for management,  and the costs of removal or  remediation,  of certain
hazardous  substances  present on a property.  Such laws often impose  liability
without regard to whether the owner or operator knew of, or was responsible for,
the release or presence of the  hazardous  substances.  The  presence of, or the
failure to manage or remedy properly,  hazardous substances may adversely affect
occupancy at affected  apartment  communities and the ability to sell or finance
affected properties.  In addition to the costs associated with investigation and
remediation  actions brought by government  agencies,  the presence of hazardous
substances  on a  property  could  result in claims by  private  plaintiffs  for
personal injury,  disease,  disability or other  infirmities.  Various laws also
impose  liability for the cost of removal,  remediation or disposal of hazardous
substances  through a  licensed  disposal  or  treatment  facility.  Anyone  who
arranges for the disposal or treatment of hazardous  substances  is  potentially
liable  under such laws.  These laws often impose  liability  whether or not the
person arranging for the disposal ever owned or operated the disposal  facility.
In  connection  with  the  ownership  and  operation  of  its  properties,   the
Partnership could  potentially be liable for environmental  liabilities or costs
associated with its properties.

Mold

The Partnership is aware of lawsuits  against owners and managers of multifamily
properties asserting claims of personal injury and property damage caused by the
presence of mold, some of which have resulted in substantial  monetary judgments
or settlements. The Partnership has only limited insurance coverage for property
damage loss claims  arising from the  presence of mold and for  personal  injury
claims related to mold  exposure.  Affiliates of the Corporate  General  Partner
have  implemented a national  policy and procedures to prevent or eliminate mold
from its  properties  and the  Corporate  General  Partner  believes  that these
measures will eliminate,  or at least minimize, the effects that mold could have
on residents.  To date, the  Partnership  has not incurred any material costs or
liabilities  relating to claims of mold  exposure  or to abate mold  conditions.
Because the law regarding  mold is unsettled and subject to change the Corporate
General  Partner  can make no  assurance  that  liabilities  resulting  from the
presence of or exposure to mold will not have a material  adverse  effect on the
Partnership's consolidated financial condition or results of operations.

SEC Investigation

The  Central  Regional  Office of the  United  States  Securities  and  Exchange
Commission (the "SEC") is conducting a formal investigation  relating to certain
matters.  Although  the staff of the SEC is not limited in the areas that it may
investigate,   AIMCO  believes  the  areas  of  investigation   include  AIMCO's
miscalculated   monthly  net  rental  income  figures  in  third  quarter  2003,
forecasted  guidance,  accounts  payable,  rent  concessions,   vendor  rebates,
capitalization of payroll and certain other costs, and tax credit  transactions.
At the end of the first quarter of 2005, the SEC added certain tender offers for
limited partnership interests as an area of investigation.  AIMCO is cooperating
fully.  AIMCO is not able to predict  when the  investigation  will be resolved.
AIMCO does not believe  that the ultimate  outcome will have a material  adverse
effect  on its  consolidated  financial  condition  or  results  of  operations.
Similarly,  the  Corporate  General  Partner  does not believe that the ultimate
outcome will have a material  adverse effect on the  Partnership's  consolidated
financial condition or results of operations.


<PAGE>

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 two apartment complexes. The
following  table sets forth the average  occupancy of the properties for each of
the three months ended March 31, 2005 and 2004:

                                                            Average
                                                           Occupancy
       Property                                        2005          2004

       Essex Park Apartments
          Columbia, South Carolina                     86%            88%

       Willowick Apartments
          Greenville, South Carolina (1)               85%            91%

(1)   The  Corporate  General  Partner  attributes  the decrease in occupancy at
      Willowick   Apartments  to  increased  credit  standards  for  prospective
      tenants.

The  Partnership's  financial  results depend upon a number of factors including
the  ability to attract  and  maintain  tenants  at the  investment  properties,
interest  rates on mortgage  loans,  costs  incurred  to operate the  investment
properties,  general  economic  conditions  and weather.  As part of the ongoing
business plan of the  Partnership,  the Corporate  General Partner  monitors the
rental  market   environments  of  its  investment   properties  to  assess  the
feasibility of increasing rents,  maintaining or increasing occupancy levels and
protecting the Partnership from increases in expenses. As part of this plan, the
Corporate General Partner attempts to protect the Partnership from the burden of
inflation-related  increases in expenses by increasing  rents and  maintaining a
high overall  occupancy level.  However,  the Corporate  General Partner may use
rental  concessions  and  rental  rate  reductions  to offset  softening  market
conditions,  accordingly,  there  is no  guarantee  that the  Corporate  General
Partner will be able to sustain such a plan.  Further,  a number of factors that
are outside the control of the  Partnership  such as the local economic  climate
and weather can  adversely  or  positively  affect the  Partnership's  financial
results.

<PAGE>

Results of Operations

The  Partnership  had net  loss of  approximately  $14,000  and  net  income  of
approximately  $48,000  for the three  months  ended  March  31,  2005 and 2004,
respectively.  The  decrease in net income for the three  months ended March 31,
2005 is due to a  decrease  in income  from  discontinued  operations  partially
offset by gain on sale of discontinued operations recognized during 2005.

In accordance with Statement of Financial Accounting Standards ("SFAS") No. 144,
the statement of  operations  for the three months ended March 31, 2004 has been
restated to reflect the  operations  of Colony House  Apartments  as income from
discontinued operations due to its sale in October 2004. Included in income from
discontinued   operations   for  the  three  months  ended  March  31,  2004  is
approximately $403,000 of revenue generated by the property. The additional gain
on sale  recognized  during the three  months ended March 31, 2005 is due to the
reversal of contingency and tax reserves that were no longer needed.

Excluding  the  income  from  discontinued   operations  and  gain  on  sale  of
discontinued operations,  the Partnership had loss from continuing operations of
approximately $138,000 and $56,000 for the three months ended March 31, 2005 and
2004,  respectively.  The increase in loss from  continuing  operations  for the
three months ended March 31, 2005 is due to a decrease in total  revenues and an
increase in total expenses.

Total  revenues  decreased  due to a decrease in rental  income.  Rental  income
decreased due to decreases in occupancy at both investment  properties partially
offset by an increase in the average rental rates at Essex Park Apartments.

Total  expenses  increased  for the three  months ended March 31, 2005 due to an
increase in  operating  expenses  partially  offset by a decrease in general and
administrative expenses.  Operating expenses increased due to increased property
expenses.  Property expenses increased due to an increase in payroll and related
costs at both of the Partnership's investment properties.

General  and  administrative  expenses  decreased  due  to  a  decrease  in  the
management reimbursements paid to the Corporate General Partner as allowed under
the Partnership Agreement.  Also included in general and administrative expenses
are costs associated with the quarterly and annual communications with investors
and  regulatory  agencies  and the  annual  audit  required  by the  Partnership
Agreement.

Liquidity and Capital Resources

At  March  31,  2005,  the  Partnership   had  cash  and  cash   equivalents  of
approximately  $198,000 compared to approximately $75,000 at March 31, 2004. The
decrease in cash and cash  equivalents of  approximately  $277,000 from December
31, 2004 is due to approximately  $344,000 of cash used in operating  activities
and approximately  $50,000 of cash used in investing activities partially offset
by approximately $117,000 of cash provided by financing activities. Cash used in
investing activities consisted of property  improvements and replacements.  Cash
provided  by  financing  activities  consisted  of  advances  received  from  an
affiliate  of the  Corporate  General  Partner  partially  offset  by  principal
payments  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.  For example,  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.  Capital  improvements  planned for
the Partnership's properties are detailed below.

Essex Park Apartments

During  the  three  months  ended  March 31,  2005,  the  Partnership  completed
approximately   $33,000  of  capital  improvements  at  Essex  Park  Apartments,
consisting primarily of structural upgrades,  maintenance  equipment,  and floor
covering replacements.  These improvements were funded from operating cash flow.
The  Partnership  regularly  evaluates  the  capital  improvement  needs  of the
property.  While  the  Partnership  has no  material  commitments  for  property
improvements  and  replacements,   certain  routine  capital   expenditures  are
anticipated  during 2005. Such capital  expenditures will depend on the physical
condition of the property as well as the anticipated  cash flow generated by the
property.

Willowick Apartments

During  the  three  months  ended  March 31,  2005,  the  Partnership  completed
approximately $17,000 of capital improvements at Willowick Apartments consisting
primarily of floor covering  replacements.  These  improvements were funded from
operating cash flow. The Partnership regularly evaluates the capital improvement
needs of the property.  While the  Partnership  has no material  commitments for
property improvements and replacements, certain routine capital expenditures are
anticipated  during 2005. Such capital  expenditures will depend on the physical
condition of the property as well as the anticipated  cash flow generated by the
property.

Capital  expenditures will be incurred only if cash is available from operations
or from  Partnership  reserves.  To the extent  that  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  both of the  investment  properties of  approximately
$9,034,000 is amortized  over 240 months and is scheduled to be fully  amortized
in January 2021.

No  distributions  were made  during the three  months  ended March 31, 2005 and
2004.

Future  cash  distributions  will  depend on the levels of cash  generated  from
operations  and the  timing  of the  debt  maturities,  property  sales,  and/or
refinancings. The Partnership's cash available for distribution is reviewed on a
monthly  basis.  There can be no assurance  that the  Partnership  will generate
sufficient funds from operations, after required capital expenditures, to permit
any distributions to its partners in the year 2005 or subsequent periods.

Other

In addition to its  indirect  ownership of the general  partner  interest in the
Partnership,  AIMCO and its affiliates  owned 36,382 limited  partnership  units
(the "Units") in the Partnership representing 66.15% of the outstanding Units at
March 31, 2005. A number of these Units were acquired  pursuant to tender offers
made by AIMCO or its  affiliates.  It is possible  that AIMCO or its  affiliates
will acquire  additional Units in exchange for cash or a combination of cash and
units in AIMCO  Properties,  L.P., the operating  partnership  of AIMCO,  either
through  private  purchases  or  tender  offers.  Pursuant  to  the  Partnership
Agreement,  unitholders  holding a majority  of the Units are  entitled  to take
action with  respect to a variety of matters that  include,  but are not limited
to,  voting on certain  amendments  to the  Partnership  Agreement and voting to
remove the Corporate General Partner.  As a result of its ownership of 66.15% of
the outstanding Units, AIMCO and its affiliates are in a position to control all
such voting  decisions with respect to the  Partnership.  Although the Corporate
General  Partner  owes  fiduciary   duties  to  the  limited   partners  of  the
Partnership,  the Corporate  General Partner also owes fiduciary duties to AIMCO
as its sole  stockholder.  As a  result,  the  duties of the  Corporate  General
Partner,  as  corporate  general  partner,  to the  Partnership  and its limited
partners may come into conflict with the duties of the Corporate General Partner
to AIMCO as its sole stockholder.

Critical Accounting Policies and Estimates

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

Impairment of Long-Lived Assets

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

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

Revenue Recognition

The Partnership generally leases apartment units for twelve-month terms or less.
The Partnership will offer rental concessions during particularly slow months or
in response  to heavy  competition  from other  similar  complexes  in the area.
Rental income attributable to leases, net of any concessions, is recognized on a
straight-line  basis over the term of the lease.  The Partnership  evaluates all
accounts  receivable  from  residents and  establishes  an allowance,  after the
application of security deposits,  for accounts greater than 30 days past due on
current tenants and all receivables due from former tenants.

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.

<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
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  captioned Heller v.
Insignia  Financial  Group (the  "Heller  action")  was filed  against  the same
defendants  that are named in the  Nuanes  action.  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 28, 2002, the trial court granted  defendants
motion to strike the complaint.

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

On June 13, 2003, the court granted final approval of the settlement and entered
judgment in both the Nuanes and Heller actions.  On August 12, 2003, an objector
("Objector") filed an appeal (the "Appeal") seeking to vacate and/or reverse the
order approving the settlement and entering judgment thereto. On May 4, 2004 the
Objector filed a second appeal  challenging the court's use of a referee and its
order requiring Objector to pay those fees.

On March 21, 2005, the Court of Appeals issued opinions in both pending appeals.
With regard to the settlement and judgment entered thereto, the Court of Appeals
vacated  the trial  court's  order and  remanded  to the trial court for further
findings  on the basis that the "state of the record is  insufficient  to permit
meaningful  appellate  review".  With regard to the second appeal,  the Court of
Appeals  reversed the order requiring the Objector to pay referee fees. On April
26, 2005,  the Court of Appeals  lifted the stay of a pending  appeal related to
the Heller action and the trial court's order striking the  complaint.  On April
28, 2005, the Objector  filed a Petition for Review with the California  Supreme
Court in connection with the opinion vacating the order approving settlement and
remanding for further findings. The Corporate General Partner and its affiliates
are  currently  scheduled  to file an answer to  Objector's  petition on May 18,
2005.

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.

AIMCO  Properties  L.P.  and NHP  Management  Company,  both  affiliates  of the
Corporate  General  Partner,  are  defendants  in a lawsuit  alleging  that they
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  attempts to bring 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.  and  NHP
Management Company failed to compensate  maintenance  workers for time that they
were  required  to be  "on-call."  Additionally,  the  complaint  alleges  AIMCO
Properties  L.P. and NHP  Management  Company  failed to comply with the FLSA in
compensating  maintenance  workers for time that they worked in  responding to a
call  while  "on-call."  The  defendants  have  filed an answer  to the  amended
complaint  denying the substantive  allegations.  Oral argument  relating to the
certification  of the  collective  action  took  place  on May 12,  2005 and the
parties await a ruling from the Court. Although the outcome of any litigation is
uncertain,  AIMCO  Properties,  L.P. does not believe that the ultimate  outcome
will have a material  adverse  effect on its  financial  condition or results of
operations.  Similarly,  the Corporate General Partner does not believe that the
ultimate  outcome  will have a  material  adverse  effect  on the  Partnership's
consolidated financial condition or results of operations.

ITEM 5.     OTHER INFORMATION

            None.

ITEM 6.     EXHIBITS

            See Exhibit Index.


<PAGE>


                                   SIGNATURES



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



                                    SHELTER PROPERTIES III


                                    By:   Shelter Realty III Corporation
                                          Corporate General Partner


                                    By:   /s/Martha L. Long
                                          Martha L. Long
                                          Senior Vice President


                                    By:   /s/Stephen B. Waters
                                          Stephen B. Waters
                                          Vice President


                                    Date: May 13, 2005


<PAGE>


                             SHELTER PROPERTIES III

                                  EXHIBIT INDEX

Exhibit

3                 See Exhibit 4(a)

4      (a)        Amended and Restated  Certificate  and  Agreement of Limited
                  Partnership,  [included  as Exhibit A to the  Prospectus  of
                  Registrant  dated  September 2, 1981  contained in Amendment
                  No. 1 to  Registration  Statement No.  2-72567 of Registrant
                  filed September 2, 1981 (the  "Prospectus") and incorporated
                  herein by reference].

       (b)        Subscription   Agreements  and  Signature  Pages  [Filed  with
                  Amendment  No. 1 of  Registration  Statement  No.  2-72567  of
                  Registrant and incorporated herein by reference].

       (d)        Modification  Agreement  between  Citibank,  N.A. and Southern
                  Associates  Limited  Partnership  and a Title  to Real  Estate
                  between Southern  Associates  Limited  Partnership and Shelter
                  Properties III to acquire Essex Park Apartments.*

                  *Filed  as  Exhibit  4(d),  respectively,   to  Form  10-K  of
                  Registrant for year ended  December 31, 1987 and  incorporated
                  herein by reference.

10(i)             Contract related to acquisition of properties.

       (b)        Purchase  Agreement  dated  July 31,  1981,  between  Southern
                  Associated Limited Partnership and U.S. Shelter Corporation
                  to purchase Essex Park Apartments.**

                  **Filed as Exhibit 12(b) to Amendment No. 1 of  Registration
                  Statement No. 2-72567 of Registrant  filed September 2, 1981
                  and incorporated herein by reference.

       (e)        Purchase   Agreement   dated  May  14,  1982  between  Lincoln
                  Willowick  Greenville  Associates and U.S. Shelter Corporation
                  to  purchase  Willowick  Apartments.  [Filed  with Form 8-K of
                  Registrant  dated  May 14,  1982 and  incorporated  herein  by
                  reference.]

10(ii)            Form of Management  Agreement  with U.S.  Shelter  Corporation
                  subsequently  assigned to Shelter  Management Group, L.P. (now
                  known as Insignia Management,  L.P.) [Filed with Amendment No.
                  1 to  Registration  Statement,  No.  2-72567 of Registrant and
                  incorporated herein by reference.]

10(iii)           Contracts related to refinancing the debt:

        (m)       Multifamily  Note dated  December  15,  2000  between  Shelter
                  Properties III and Reilly Mortgage Group,  Inc., a District of
                  Columbia corporation  securing Colony House Apartments,  Essex
                  Park Apartments,  and Willowick  Apartments  (filed as Exhibit
                  10(iii)(m)  on Form 8-K  February  1,  2001  and  incorporated
                  herein by reference).

        (n)       Multifamily  Deed of Trust,  Assignment of Rents, and Security
                  Agreement dated December 15, 2000 between  Shelter  Properties
                  III and Reilly  Mortgage  Group,  Inc., a District of Columbia
                  corporation,  securing  Colony  House  Apartments,  Essex Park
                  Apartments,   and  Willowick   Apartments  (filed  as  Exhibit
                  10(iii)(n) on Form 8-K February 1, 2001).

10(iv)            Contracts related to disposition of properties:

        (c)       Purchase and Sale  Contract  between  Registrant  and The Dama
                  Realty Investors, LLC, dated August 18, 2004 (filed as exhibit
                  10 (iv)(c) on Form 8-K dated November 3, 2004).

(d)               Assignment  and  Assumption  of  Real  Estate  Sale  Agreement
                  between  The  Dama  Realty  Investors,  LLC and  Colony  House
                  General  Partnership,  dated August 18, 2004 (filed as exhibit
                  10 (iv)(d) on Form 8-K dated November 3, 2004).

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  of  the  equivalent  of the  Chief  Executive
                  Officer and Chief  Financial  Officer  Pursuant to 18 U.S.C.
                  Section  1350,  as Adopted  Pursuant  to Section  906 of the
                  Sarbanes-Oxley Act of 2002.

99     (a)        Prospectus of Registrant  dated  September 2, 1981 [included
                  in Registration  Statement No.  2-72567,  of Registrant] and
                  incorporated herein by reference.



<PAGE>



Exhibit 31.1


                                  CERTIFICATION


I, Martha L. Long, certify that:


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

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

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

4.    The  small  business  issuer'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 small business issuer 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
            small business issuer, 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  small  business   issuer'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 small  business  issuer's
            internal  control over financial  reporting that occurred during the
            small  business  issuer's  most  recent  fiscal  quarter  (the small
            business  issuer's  fourth  fiscal  quarter in the case of an annual
            report) that has  materially  affected,  or is reasonably  likely to
            materially affect, the small business issuer's internal control over
            financial reporting; and

5.    The  small  business  issuer's  other  certifying  officer(s)  and I  have
      disclosed,  based on our most recent  evaluation of internal  control over
      financial reporting, to the small business issuer's auditors and the audit
      committee of the small  business  issuer'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 small business  issuer'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 small  business
            issuer's internal control over financial reporting.


Date:  May 13, 2005

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


<PAGE>



Exhibit 31.2


                                  CERTIFICATION


I, Stephen B. Waters, 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 small  business  issuer as of, and for, the periods  presented in this
      report;

4.    The  small  business  issuer'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 small business issuer 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
            small business issuer, 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  small  business   issuer'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 small  business  issuer's
            internal  control over financial  reporting that occurred during the
            small  business  issuer's  most  recent  fiscal  quarter  (the small
            business  issuer's  fourth  fiscal  quarter in the case of an annual
            report) that has  materially  affected,  or is reasonably  likely to
            materially affect, the small business issuer's internal control over
            financial reporting; and

5.    The  small  business  issuer's  other  certifying  officer(s)  and I  have
      disclosed,  based on our most recent  evaluation of internal  control over
      financial reporting, to the small business issuer's auditors and the audit
      committee of the small  business  issuer'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 small business  issuer'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 small  business
            issuer's internal control over financial reporting.


Date:  May 13, 2005

                                    /s/Stephen B. Waters
                                    Stephen B. Waters
                                    Vice   President  of  Shelter  Realty  III
                                    Corporation,   equivalent   of  the  chief
                                    financial officer of the Partnership


<PAGE>


Exhibit 32.1


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



In connection with the Quarterly Report on Form 10-QSB of Shelter Properties III
Limited  Partnership (the  "Partnership"),  for the quarterly period ended March
31, 2005 as filed with the Securities and Exchange Commission on the date hereof
(the "Report"), Martha L. Long, as the equivalent of the chief executive officer
of the  Partnership,  and  Stephen B.  Waters,  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; and

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


                                           /s/Martha L. Long
                                    Name:  Martha L. Long
                                    Date:  May 13, 2005


                                           /s/Stephen B. Waters
                                    Name:  Stephen B. Waters
                                    Date:  May 13, 2005


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, as amended.