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 June 30, 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 (i) 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 ___





<PAGE>






                         PART I - FINANCIAL INFORMATION



ITEM 1.     FINANCIAL STATEMENTS




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

                                  June 30, 2005

<TABLE>
<CAPTION>


<S>                                                            <C>            <C>
Assets
   Cash and cash equivalents                                                 $ 184
   Receivables and deposits                                                    118
   Restricted escrows                                                           85
   Other assets                                                                478
   Investment properties:
      Land                                                     $   762
      Buildings and related personal property                   16,347
                                                                17,109
      Less accumulated depreciation                            (12,176)       4,933
                                                                            $ 5,798

Liabilities and Partners' Deficit
Liabilities
   Accounts payable                                                           $ 85
   Tenant security deposit liabilities                                          69
   Accrued property taxes                                                      124
   Other liabilities                                                           262
   Due to affilate (Note C)                                                    514
   Mortgage notes payable                                                    8,957

Partners' Deficit
   General partners                                             $ (77)
   Limited partners (55,000 units issued and
      outstanding)                                              (4,136)     (4,213)
                                                                           $ 5,798
</TABLE>



            See Accompanying Notes to Consolidated Financial Statements



<PAGE>



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

<TABLE>
<CAPTION>

                                        Three Months Ended            Six Months Ended
                                             June 30,                     June 30,
                                       2005           2004           2005           2004
                                                   (Restated)                    (Restated)
<S>                                     <C>           <C>            <C>           <C>
Revenues:
  Rental income                        $ 660         $ 650         $ 1,305        $ 1,311
  Other income                             69            86            138            151
       Total revenues                     729           736          1,443          1,462

Expenses:
  Operating                               480           447            907            765
  General and administrative               42            61             82            133
  Depreciation                            145           156            289            310
  Interest                                170           171            341            345
  Property taxes                           54            65            124            129
       Total expenses                     891           900          1,743          1,682

Loss from continuing operations          (162)         (164)          (300)          (220)
Gain on sale of discontinued
 operations (Note A)                       --            --            124             --
Income from discontinued
 Operations (Note A)                       --            71             --            175
Net loss                              $ (162)        $ (93)         $ (176)        $ (45)

Net loss allocated to
 general partner (1%)                  $ (2)          $ (1)          $ (2)          $ --
Net loss allocated to
 limited partners (99%)                  (160)          (92)          (174)           (45)
                                      $ (162)        $ (93)         $ (176)        $ (45)
Per limited partnership unit:
Loss from continuing operations       $ (2.91)      $ (2.95)       $ (5.41)       $ (3.96)
Gain on sale of discontinued
 operations                                --            --           2.25             --
Income from discontinued
 operations                                --          1.28             --           3.14
Net loss per limited
 partnership unit                     $ (2.91)      $ (1.67)       $ (3.16)       $ (0.82)
</TABLE>

            See Accompanying Notes to Consolidated Financial Statements




<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 six months
   ended June 30, 2005                     --             (2)        (174)      (176)

Partners' deficit at
   June 30, 2005                       55,000         $ (77)      $(4,136)   $(4,213)
</TABLE>

            See Accompanying Notes to Consolidated Financial Statements




<PAGE>


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

                                                                    Six Months Ended
                                                                        June 30,
<S>                                                                  <C>         <C>
                                                                     2005        2004
Cash flows from operating activities:
  Net loss                                                         $ (176)      $ (45)
  Adjustments to reconcile net loss to net cash (used in)
   provided by operating activities:
     Depreciation                                                     289          459
     Amortization of loan costs                                         6            9
     Gain on sale of discontinued operations                         (124)          --
     Casualty gain                                                     --          (86)
     Change in accounts:
      Receivables and deposits                                         23          (10)
      Other assets                                                    (23)         (81)
      Accounts payable                                                (23)          82
      Tenant security deposit liabilities                              14            3
      Accrued property taxes                                          (69)        (161)
      Other liabilities                                               (55)          51
      Due to affiliate                                                (83)          19
         Net cash (used in) provided by operating activities         (221)         240

Cash flows from investing activities:
  Property improvements and replacements                             (109)        (360)
  Net insurance proceeds received                                      --           91
  Net (deposits to) withdrawals from restricted escrows                (1)          95
         Net cash used in investing activities                       (110)        (174)

Cash flows from financing activities:
   Payments on mortgage notes payable                                (153)        (192)
   Advances received from affiliate                                   193          135
   Repayment of advances from affiliate                                --          (69)
         Net cash provided by (used in) financing activities           40         (126)

Net decrease in cash and cash equivalents                            (291)         (60)

Cash and cash equivalents at beginning of period                      475          192

Cash and cash equivalents at end of period                         $ 184        $ 132

Supplemental disclosure of cash flow information:
 Cash paid for interest                                            $ 327        $ 419
Supplemental disclosure of non-cash flow information:
   Property improvements and replacements in accounts
    payable                                                         $ 38        $ --
</TABLE>

            See Accompanying Notes to Consolidated Financial Statements


<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 six month  period  ended  June 30,  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  statements of  operations  for the three and six months ended June 30, 2004
have 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 and six months ended June 30,
2004 is approximately $290,000 and $693,000,  respectively, of revenue generated
by the property.  The additional gain on sale  recognized  during the six months
ended June 30, 2005 is due to the reversal of contingency  and tax reserves that
were no longer needed.

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.

<TABLE>
<CAPTION>
                                                          For the Six Months Ended
                                                                  June 30,
<S>                                                           <C>              <C>
                                                              2005             2004
                                                                 (in thousands)
Net cash (used in) provided by operating activities         $ (221)          $ 240
  Payments on mortgage notes payable                          (153)           (192)
  Property improvements and replacements                      (109)           (360)
  Change in restricted escrow                                   (1)             95
  Changes in reserves for net operating assets                 216              97
     Net cash used in operations                            $ (268)         $ (120)
</TABLE>


<PAGE>




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  $71,000 and
$106,000 during the six months ended June 30, 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  $51,000 and
$137,000 for the six months ended June 30, 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 six
months ended June 30, 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 June 30, 2005.

Pursuant to the  Partnership  Agreement,  an affiliate of the Corporate  General
Partner advanced the Partnership  approximately $193,000 and $135,000 during the
six months ended June 30, 2005 and 2004, respectively,  to aid in the payment of
property  taxes at Essex Park  Apartments.  During the six months ended June 30,
2004, the Partnership  repaid  advances of  approximately  $69,000.  Interest on
advances  is  charged  at the  prime  rate  plus 2% or 8.25%  at June 30,  2005.
Interest  expense was  approximately  $7,000 and $2,000 for the six months ended
June 30, 2005 and 2004, respectively.  At June 30, 2005, the Partnership owed an
affiliate of the Corporate  General Partner  approximately  $200,000 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,  general
liability 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 six months ended
June 30, 2005 and 2004, the  Partnership was charged by AIMCO and its affiliates
approximately $46,000 and $65,000, respectively, for insurance coverage and fees
associated with policy claims administration.


<PAGE>


Note D - Casualty

In May  2003,  one of the  Partnership's  investment  properties,  Colony  House
Apartments,  incurred damages as a result of a hail storm. During the six months
ended  June  30,  2004,  the   Partnership   received   insurance   proceeds  of
approximately  $91,000 and wrote off  approximately  $5,000 of additional assets
which resulted in a casualty gain of approximately $86,000. 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. Plaintiffs took an appeal from this order.

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.  On June 10, 2005, the California  Supreme Court
denied  Objector's  Petition for Review and the Court of Appeals sent the matter
back to the trial court on June 21,  2005.  The parties  intend to ask the trial
court to make further findings in connection with settlement consistent with the
Court of Appeal's  remand order.  With respect to the related Heller appeal,  on
July 28, 2005, the Court of Appeal reversed the trial court's order striking the
first amended complaint.

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.

As previously disclosed,  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 excess
of 40 hours in a week.  On June 23, 2005 the Court  conditionally  certified the
collective  action on both the on-call and  overtime  issues.  The Court  ruling
allows  plaintiffs to provide notice of the collective  action to all non-exempt
maintenance  workers from August 7, 2000 through the  present.  Those  employees
will have the  opportunity to opt-in to the collective  action.  Defendants have
asked the Court to  reconsider  its  ruling or in the  alternative  certify  the
ruling for appeal on that issue. After the notice goes out, defendants will have
the  opportunity to move to decertify the collective  action.  The Court further
denied plaintiffs' Motion for Certification of the state subclass.  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
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.

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,  and  potential  fines or
penalties  imposed by such  agencies in  connection  therewith,  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,  operation and management 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  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")  continues its 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  have included  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, tax credit transactions,  and
tender offers for limited  partnership  interests.  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 six months ended June 30, 2005 and 2004:
<TABLE>
<CAPTION>

                                                            Average
                                                           Occupancy
<S>                                                    <C>           <C>
       Property                                        2005          2004

       Essex Park Apartments
          Columbia, South Carolina                     86%            87%

       Willowick Apartments (1)
          Greenville, South Carolina                   85%            92%
</TABLE>

(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 which
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's net loss for the three and six months ended June 30, 2005 was
approximately  $162,000  and  $176,000,  respectively,  compared  to net loss of
approximately  $93,000 and $45,000 for the  corresponding  periods in 2004.  The
increase in net loss for the three  month  period is due to a decrease in income
from discontinued  operations and a decrease in total revenues  partially offset
by a decrease  in total  expenses.  The  increase  in net loss for the six month
period is due to a decrease in income from discontinued  operations,  a decrease
in total revenues and an increase in total expenses  partially  offset by a gain
on sale of discontinued operations recognized in 2005.

In accordance with Statement of Financial Accounting Standards ("SFAS") No. 144,
the  statements of  operations  for the three and six months ended June 30, 2004
have 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 and six months ended June 30,
2004 is approximately $290,000 and $693,000,  respectively, of revenue generated
by the property.  The additional gain on sale  recognized  during the six months
ended June 30, 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  $162,000 and $300,000 for the three and six months ended June 30,
2005, respectively, compared to loss from continuing operations of approximately
$164,000 and $220,000 for the corresponding periods in 2004. The slight decrease
in loss  from  continuing  operations  for the  three  month  period is due to a
decrease in total expenses partially offset by a decrease in total revenues. The
increase in loss from  continuing  operations for the six month period is due to
an increase in total expenses and a decrease in total  revenues.  Total revenues
for the three and six months ended June 30, 2005  decreased due to a decrease in
other income.  Other income decreased due to decreases in late charges and lease
cancellation fees, primarily at Essex Park Apartments.

Total  expenses  decreased  for the  three  months  ended  June 30,  2005 due to
decreases in general and administrative,  depreciation and property tax expenses
partially offset by an increase in operating  expense.  Total expenses increased
for the six months ended June 30, 2005 due to an increase in  operating  expense
partially  offset by decreases in general and  administrative  and  depreciation
expenses.  Operating  expenses for both periods  increased due to an increase in
property  expenses.  Property expenses increased due to increases in payroll and
related  benefits  and in  utilities  at  both of the  Partnership's  investment
properties.  Depreciation  expense for both periods  decreased  due to assets at
Willowick  Apartments  becoming fully depreciated.  Property tax expense for the
three  month  period  decreased  due to a prior  year tax  refund  at one of the
Partnership's properties.

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

Liquidity and Capital Resources

At June 30, 2005, the Partnership had cash and cash equivalents of approximately
$184,000  compared to  approximately  $132,000 at June 30,  2004.  Cash and cash
equivalents  decreased  approximately  $291,000  from  December  31, 2004 due to
approximately  $221,000  and $110,000 of cash used in  operating  and  investing
activities,  respectively,  partially  offset by  approximately  $40,000 of cash
provided by financing activities. Cash used in investing activities consisted of
property  improvements and replacements and deposits to restricted escrows. Cash
provided by financing  activities consisted of advances from an affiliate of the
Corporate  General  Partner  partially  offset by 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  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 each of
the Partnership's properties are detailed below.

Essex Park Apartments

During  the  six  months  ended  June  30,  2005,  the   Partnership   completed
approximately   $96,000  of  capital  improvements  at  Essex  Park  Apartments,
consisting  primarily of structural  upgrades 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  six  months  ended  June  30,  2005,  the   Partnership   completed
approximately $51,000 of capital improvements at Willowick Apartments consisting
primarily of exterior  light  fixtures 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.

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
$8,957,000 is amortized  over 240 months and is scheduled to be fully  amortized
in January 2021.

No distributions were made during the six months ended June 30, 2005 and 2004.

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 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
June 30, 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. Plaintiffs took an appeal from this order.

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.  On June 10, 2005, the California  Supreme Court
denied  Objector's  Petition for Review and the Court of Appeals sent the matter
back to the trial court on June 21,  2005.  The parties  intend to ask the trial
court to make further findings in connection with settlement consistent with the
Court of Appeal's  remand order.  With respect to the related Heller appeal,  on
July 28, 2005, the Court of Appeal reversed the trial court's order striking the
first amended complaint.



<PAGE>


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.

As previously disclosed,  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 excess
of 40 hours in a week.  On June 23, 2005 the Court  conditionally  certified the
collective  action on both the on-call and  overtime  issues.  The Court  ruling
allows  plaintiffs to provide notice of the collective  action to all non-exempt
maintenance  workers from August 7, 2000 through the  present.  Those  employees
will have the  opportunity to opt-in to the collective  action.  Defendants have
asked the Court to  reconsider  its  ruling or in the  alternative  certify  the
ruling for appeal on that issue. After the notice goes out, defendants will have
the  opportunity to move to decertify the collective  action.  The Court further
denied plaintiffs' Motion for Certification of the state subclass.  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
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.

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: August 12, 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).



<PAGE>




        (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:  August 12, 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:  August 12, 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 June 30,
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 of 1934; and

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


                                           /s/Martha L. Long
                                    Name:  Martha L. Long
                                    Date:  August 12, 2005


                                           /s/Stephen B. Waters
                                    Name:  Stephen B. Waters
                                    Date:  August 12, 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 of 1934, as amended.