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, 2004


[ ]   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, 2004
<TABLE>
<CAPTION>

Assets
<S>                                                                          <C>
   Cash and cash equivalents                                                 $ 132
   Receivables and deposits                                                      153
   Restricted escrows                                                             84
   Other assets                                                                  622
   Investment properties:
      Land                                                     $ 945
      Buildings and related personal property                   22,983
                                                                23,928
      Less accumulated depreciation                            (16,285)        7,643
                                                                            $ 8,634

Liabilities and Partners' Deficit
Liabilities
   Accounts payable                                                          $ 127
   Tenant security deposit liabilities                                            78
   Accrued property taxes                                                        167
   Other liabilities                                                             320
   Due to affilate (Note C)                                                      338
   Mortgage notes payable                                                     12,491

Partners' Deficit
   General partners                                             $ (71)
   Limited partners (55,000 units issued and
      outstanding)                                              (4,816)       (4,887)
                                                                            $ 8,634


        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            Six Months Ended
                                             June 30,                     June 30,
                                       2004           2003           2004           2003
Revenues:
<S>                                    <C>           <C>           <C>            <C>
  Rental income                        $ 967         $ 939         $ 1,965        $ 1,858
  Other income                            106            82            190            151
  Casualty gain (Note D)                   39            --             86             --
       Total revenues                   1,112         1,021          2,241          2,009

Expenses:
  Operating                               607           413          1,061            964
  General and administrative               61            61            133            162
  Depreciation                            233           224            459            443
  Interest                                231           237            465            469
  Property taxes                           73            87            168            172
       Total expenses                   1,205         1,022          2,286          2,210

Net loss                               $ (93)         $ (1)         $ (45)         $ (201)

Net loss allocated to general
  partners (1%)                        $ (1)          $ --           $ --           $ (2)
Net loss allocated to limited
  partners (99%)                          (92)           (1)           (45)          (199)

                                       $ (93)         $ (1)         $ (45)         $ (201)

Net loss per limited
  partnership unit                    $ (1.67)      $ (0.02)       $ (0.82)       $ (3.62)


        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, 2003                   55,000         $ (71)      $(4,771)   $(4,842)

Net loss for the six months
   ended June 30, 2004                     --             --          (45)       (45)

Partners' deficit at
   June 30, 2004                       55,000         $ (71)      $(4,816)   $(4,887)


        See Accompanying Notes to Consolidated Financial Statements

</TABLE>

<PAGE>

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

                                                                    Six Months Ended
                                                                        June 30,
                                                                     2004         2003
Cash flows from operating activities:
<S>                                                                <C>         <C>
  Net loss                                                         $ (45)      $ (201)
  Adjustments to reconcile net loss to net cash provided
   by (used in) operating activities:
     Depreciation                                                     459          443
     Amortization of loan costs                                         9            9
     Casualty gain                                                    (86)          --
     Change in accounts:
      Receivables and deposits                                        (10)          42
      Other assets                                                    (81)        (264)
      Accounts payable                                                 82         (164)
      Tenant security deposit liabilities                               3            9
      Accrued property taxes                                         (161)          36
      Other liabilities                                                51           66
      Due to affiliate                                                 19           --
         Net cash provided by (used in) operating activities          240          (24)

Cash flows from investing activities:
  Property improvements and replacements                             (360)        (216)
  Net insurance proceeds received                                      91           --
  Net withdrawals from restricted escrows                              95           --
         Net cash used in investing activities                       (174)        (216)

Cash flows from financing activities:
   Payments on mortgage notes payable                                (192)        (179)
   Advances received from affiliate                                   135           --
   Repayment of advances from affiliate                               (69)          --
         Net cash used in financing activities                       (126)        (179)

Net decrease in cash and cash equivalents                             (60)        (419)

Cash and cash equivalents at beginning of period                      192          666

Cash and cash equivalents at end of period                         $ 132        $ 247

Supplemental disclosure of cash flow information:
 Cash paid for interest                                            $ 419        $ 468

        See Accompanying Notes to Consolidated Financial Statements

</TABLE>

<PAGE>

                           SHELTER PROPERTIES III
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


Note A - Basis of Presentation

The  accompanying   unaudited   consolidated  financial  statements  of  Shelter
Properties  III (the  "Partnership"  or  "Registrant")  have  been  prepared  in
accordance with generally accepted  accounting  principles for interim financial
information  and  with  the  instructions  to Form  10-QSB  and  Item 310 (b) of
Regulation  S-B.  Accordingly,  they do not include all of the  information  and
footnotes  required by generally  accepted  accounting  principles  for complete
financial  statements.  The general  partner  responsible  for management of the
Partnership's  business  is Shelter  Realty III  Corporation,  a South  Carolina
corporation (the "Corporate General Partner").  The Corporate General Partner is
a  subsidiary  of Apartment  Investment  and  Management  Company  ("AIMCO"),  a
publicly  traded real estate  investment  trust. In the opinion of the Corporate
General  Partner,  all  adjustments  (consisting of normal  recurring  accruals)
considered  necessary  for a fair  presentation  have been  included.  Operating
results  for the  three and six  month  periods  ended  June 30,  2004,  are not
necessarily  indicative  of the results that may be expected for the fiscal year
ending  December 31, 2004. 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, 2003.

Note B - Reconciliation of Cash Flows

As required by the Partnership  Agreement,  the following is a reconciliation of
"Net  cash  provided  by (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 Six Months Ended
                                                                   June 30,
                                                             2004            2003
                                                               (in thousands)
Net cash provided by (used in) operating activities          $ 240           $ (24)
<S>                                                           <C>             <C>
  Payments on mortgage notes payable                          (192)           (179)
  Property improvements and replacements                      (360)           (216)
  Change in restricted escrow                                   95              --
  Changes in reserves for net operating assets                  97             275
     Net cash used in operations                            $ (120)         $ (144)
</TABLE>

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 is dependent  on the  Corporate  General
Partner  and  its  affiliates  for  the  management  and  administration  of all
Partnership  activities.  The Partnership Agreement provides for (i) payments to
affiliates for services and (ii)  reimbursement of certain expenses  incurred by
affiliates on behalf of the Partnership.

During the six months ended June 30, 2004 and 2003,  affiliates of the Corporate
General  Partner were  entitled to receive 5% of gross  receipts from all of the
Partnership's   properties  for  providing  property  management  services.  The
Partnership paid to such affiliates  approximately  $106,000 and $96,000 for the
six months  ended June 30,  2004 and 2003,  respectively,  which is  included in
operating expenses.

An  affiliate  of  the  Corporate  General  Partner  received  reimbursement  of
accountable  administrative  expenses  amounting to  approximately  $137,000 and
$80,000 for the six months ended June 30, 2004 and 2003, respectively,  which is
included in general  and  administrative  expenses  and  investment  properties.
Included in these amounts are fees related to construction  management  services
provided by an  affiliate  of the  Corporate  General  Partner of  approximately
$43,000  and  $3,000  for  the  six  months   ended  June  30,  2004  and  2003,
respectively. The construction management service fees are calculated based on a
percentage  of additions to the  investment  properties.  At June 30, 2004,  the
Partnership owed approximately $18,000 for accountable  administrative  expenses
which is included in due to affiliate.

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  $68,000  for  its  assistance  in  the  sale.  Payment  of  such
commissions  is subordinate  to the limited  partners  receiving a cumulative 7%
return  on their  investment.  As of June 30,  2004,  the level of return to the
limited partners has not been met and the balance of  approximately  $253,000 is
included in due to affiliate.

Pursuant to the  Partnership  Agreement,  an affiliate of the Corporate  General
Partner  advanced the Partnership  approximately  $135,000 during the six months
ended June 30, 2004 to assist  with the payment of property  taxes at Essex Park
Apartments.  During the six months ended June 30, 2004, the  Partnership  made a
payment on this  advance of  approximately  $69,000.  Interest  on  advances  is
charged  at the  prime  rate  plus  2%.  Interest  expense  for  this  loan  was
approximately  $2,000 for the six months ended June 30, 2004.  At June 30, 2004,
the Partnership owed an affiliate of the Corporate General Partner approximately
$67,000 in advances and accrued interest, which is included in due to affiliate.
No such  advances  or payments  were made  during the six months  ended June 30,
2003.

The  Partnership  insures its properties up to certain  limits through  coverage
provided by AIMCO which is  generally  self-insured  for a portion of losses and
liabilities  related to workers  compensation,  property  casualty  and  vehicle
liability. The Partnership insures its properties above the AIMCO limits through
insurance  policies  obtained  by  AIMCO  from  insurers  unaffiliated  with the
Corporate  General Partner.  During the six months ended June 30, 2004 and 2003,
the Partnership paid AIMCO and its affiliates approximately $38,000 and $59,000,
respectively,  for  insurance  coverage and fees  associated  with policy claims
administration.

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 year ended
December 31,  2003,  approximately  $151,000 of fixed  assets and  approximately
$86,000 of  accumulated  depreciation  were written off resulting in a net write
off of approximately  $65,000.  During 2003, the property received approximately
$244,000  in  proceeds  from the  insurance  company  to repair  the  damage and
recognized  a  casualty  gain  of  approximately  $179,000  as a  result  of the
difference between the proceeds received and the net book value of the buildings
which were damaged.  During the six months ended June 30, 2004, the  Partnership
received   additional   proceeds   of   approximately   $91,000  and  wrote  off
approximately  $5,000 of additional  net assets which  resulted in an additional
gain of approximately $86,000.

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 (the "Heller action")
was filed  against  the same  defendants  that are named in the  Nuanes  action,
captioned  Heller v.  Insignia  Financial  Group.  On or about  August 6,  2001,
plaintiffs filed a first amended  complaint.  The Heller action was brought as a
purported derivative action, and asserted claims for, among other things, breach
of fiduciary  duty,  unfair  competition,  conversion,  unjust  enrichment,  and
judicial dissolution.

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

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

On June 13, 2003, the Court granted final approval of the settlement and entered
judgment in both the Nuanes and Heller actions.  On August 12, 2003, an objector
("Objector")  filed an  appeal  seeking  to  vacate  and/or  reverse  the  order
approving the settlement and entering  judgment  thereto.  On November 24, 2003,
the Objector filed an  application  requesting the Court order AIMCO to withdraw
settlement  tender offers it had  commenced,  refrain from making further offers
pending the appeal and auction any units tendered to third  parties,  contending
that the offers did not conform  with the terms of the  Settlement.  Counsel for
the Objector (on behalf of another  investor)  had  alternatively  requested the
Court take certain  action  purportedly  to enforce the terms of the  settlement
agreement.  On December 18, 2003,  the Court heard oral  argument on the motions
and denied them both in their entirety.

On January 28, 2004,  Objector filed his opening brief in his pending appeal. On
April 23,  2004,  the  Corporate  General  Partner  and its  affiliates  filed a
response brief in support of the settlement and the judgment thereto. Plaintiffs
have also filed a brief in support of the settlement.  On June 4, 2004, Objector
filed a reply to the briefs  submitted  by the  Corporate  General  Partner  and
Plaintiffs. No hearing has been scheduled in the matter.

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

On August 8, 2003 AIMCO Properties  L.P., an affiliate of the Corporate  General
Partner,  was served  with a  complaint  in the United  States  District  Court,
District of Columbia alleging that AIMCO Properties L.P.  willfully violated the
Fair Labor Standards Act ("FLSA") by failing to pay maintenance workers overtime
for all hours  worked in excess of forty per week.  On March 5, 2004  Plaintiffs
filed an amended complaint also naming NHP Management Company,  which is also an
affiliate  of the  Corporate  General  Partner.  The  complaint  is  styled as a
Collective  Action  under  the FLSA and seeks to  certify  state  subclasses  in
California, Maryland, and the District of Columbia. Specifically, the plaintiffs
contend that AIMCO Properties L.P. failed to compensate  maintenance workers for
time  that they were  required  to be  "on-call".  Additionally,  the  complaint
alleges AIMCO  Properties  L.P.  failed to comply with the FLSA in  compensating
maintenance  workers  for time that they  worked in  responding  to a call while
"on-call".  The defendants have filed an answer to the amended complaint denying
the  substantive  allegations.  Some  discovery  has taken place and  settlement
negotiations  continue.  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
taken as a whole. Similarly, the Corporate General Partner does not believe that
the ultimate  outcome will have a material  adverse effect on the  Partnership's
financial condition or results of operations taken as a whole.

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.
Note E - Contingencies (continued)

As  previously  disclosed,  the  Central  Regional  Office of the United  States
Securities and Exchange  Commission is conducting an  investigation  relating to
certain  matters.  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, and
capitalization of expenses and payroll.  AIMCO is cooperating  fully. AIMCO does
not believe that the ultimate outcome will have a material adverse effect on its
consolidated  financial  condition  or results of  operations  taken as a whole.
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 taken as a whole.

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

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

The Partnership's  investment  properties consist of three apartment  complexes.
The following table sets forth the average  occupancy of the properties for each
of the six months ended June 30, 2004 and 2003:

                                                             Average
                                                            Occupancy
       Property                                        2004          2003

       Essex Park Apartments
          Columbia, South Carolina (1)                 87%            84%

       Colony House Apartments
          Murfeesboro, Tennessee                       92%            94%

       Willowick Apartments (1)
          Greenville, South Carolina                   92%            89%

(1)   The  Corporate  General  Partner  attributes  the increase in occupancy at
      Essex Park and Willowick  Apartments to increased  retention  efforts from
      property management and a more stable customer base.

The  Partnership's  financial  results  are  dependent  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  impact the  Partnership's  financial
results.

Results of Operations

The  Partnership's net loss for the three and six months ended June 30, 2004 was
approximately  $93,000  and  $45,000,  respectively,  compared  to net  loss  of
approximately  $1,000 and $201,000 for the  corresponding  periods in 2003.  The
increase in net loss for the three  month  period is due to an increase in total
expenses partially offset by an increase in total revenues.  The decrease in net
loss for the six month period is due to an increase in total revenues  partially
offset by an increase in total  expenses.  Total  revenues for the three and six
months ended June 30, 2004 increased due to increases in rental and other income
and due to a casualty gain  recognized in 2004.  Rental income  increased due to
increases in average rental rates at Colony House and Essex Park  Apartments and
occupancy at Essex Park and Willowick Apartments.  Other income increased due to
increases in late charges at Essex Park Apartments and lease  cancellation  fees
at all of the Partnership's investment properties.

In May  2003,  one of the  Partnership's  investment  properties,  Colony  House
Apartments,  incurred damages as a result of a hail storm. During the year ended
December 31,  2003,  approximately  $151,000 of fixed  assets and  approximately
$86,000 of  accumulated  depreciation  were written off resulting in a net write
off of approximately  $65,000.  During 2003, the property received approximately
$244,000  in  proceeds  from the  insurance  company  to repair  the  damage and
recognized  a  casualty  gain  of  approximately  $179,000  as a  result  of the
difference between the proceeds received and the net book value of the buildings
which were damaged.  During the six months ended June 30, 2004, the  Partnership
received   additional   proceeds   of   approximately   $91,000  and  wrote  off
approximately  $5,000 of additional  net assets which  resulted in an additional
gain of approximately $86,000.

Total  expenses  increased  for the  three  months  ended  June 30,  2004 due to
increases in operating and depreciation  expenses partially offset by a decrease
in property tax expense.  Total expenses increased for the six months ended June
30, 2004 due to increases  in  operating  and  depreciation  expenses  partially
offset by a decrease in general and administrative  expense.  Operating expenses
for both periods  increased due to increases in property expenses and management
fees.  Property  expenses  increased  due to an  increase in payroll and related
benefits  at  all  of  Partnership's  investment  properties.   Management  fees
increased  due to an increase  in rental  income at the  investment  properties.
Depreciation  expense for both periods increased due to capital improvements and
replacements  placed into  service  during the past twelve  months at all of the
Partnership's  investment  properties.  Property tax expense  decreased  for the
three  months  ended June 30,  2004 due to an  adjustment  to the  property  tax
accrual at Colony House Apartments.

General and  administrative  expense decreased for the six months ended June 30,
2004  due  to a  decrease  in  taxes  and  licenses.  Included  in  general  and
administrative  expense  during the six months  ended June 30, 2004 and 2003 are
management  reimbursements to the Corporate General Partner as allowed under the
Partnership  Agreement.  In addition,  costs  associated  with the quarterly and
annual  communications  with  investors and  regulatory  agencies and the annual
audit  required by the  Partnership  Agreement  are also included in general and
administrative expenses.

Liquidity and Capital Resources

At June 30, 2004, the Partnership had cash and cash equivalents of approximately
$132,000  compared to  approximately  $247,000 at June 30,  2003.  Cash and cash
equivalents  decreased  approximately  $60,000  from  December  31,  2003 due to
approximately  $174,000  and $126,000 of cash used in  investing  and  financing
activities,  respectively,  partially offset by  approximately  $240,000 of cash
provided by operating activities. Cash used in investing activities consisted of
property improvements and replacements  partially offset by net withdrawals from
restricted  escrows and  insurance  proceeds  received.  Cash used in  financing
activities  consisted of payments of principal on the mortgages  encumbering the
Partnership's  properties  and  repayment of advances to an affiliate  partially
offset by advances  received  from an  affiliate.  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, including increased legal and audit fees.
Capital  improvements  planned  for  each of the  Partnership's  properties  are
detailed below.

Essex Park Apartments

During  the  six  months  ended  June  30,  2004,  the   Partnership   completed
approximately   $70,000  of  capital  improvements  at  Essex  Park  Apartments,
consisting  primarily of  structural  upgrades and floor  covering and appliance
replacements.  These  improvements  were funded from  operating  cash flow.  The
Partnership  evaluates the capital  improvement needs of the property during the
year and  currently  expects  to  complete  an  additional  $106,000  in capital
improvements during the remainder of 2004.  Additional capital  improvements may
be considered and will depend on the physical  condition of the property as well
as the anticipated cash flow generated by the property.

Colony House Apartments

During  the  six  months  ended  June  30,  2004,  the   Partnership   completed
approximately  $246,000  of  capital  improvements  at Colony  House  Apartments
consisting  primarily of floor covering and appliance  replacements and building
repairs related to damage from a hail storm. These improvements were funded from
operating  cash  flow,   replacement   reserves  and  insurance  proceeds.   The
Partnership  evaluates the capital  improvement needs of the property during the
year and  currently  expects  to  complete  an  additional  $46,000  in  capital
improvements during the remainder of 2004.  Additional capital  improvements may
be considered and will depend on the physical  condition of the property as well
as replacement reserves and the anticipated cash flow generated by the property.

Willowick Apartments

During  the  six  months  ended  June  30,  2004,  the   Partnership   completed
approximately   $44,000  of  capital   improvements  at  Willowick   Apartments,
consisting primarily of floor covering and appliance  replacements and furniture
and fixtures.  These  improvements  were funded from  operating  cash flow.  The
Partnership  evaluates the capital  improvement needs of the property during the
year and  currently  expects  to  complete  an  additional  $55,000  in  capital
improvements during the remainder of 2004.  Additional capital  improvements may
be considered and will depend on the physical  condition of the property as well
as the anticipated cash flow generated by the property.

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

The  Partnership's  assets are thought to be sufficient  for any near term needs
(exclusive  of  capital   improvements)   of  the   Partnership.   The  mortgage
indebtedness   encumbering  the   Partnership's   properties  of   approximately
$12,491,000 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, 2004 and 2003.

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 2004  or  subsequent
periods.

Other

In addition to its  indirect  ownership of the general  partner  interest in the
Partnership,  AIMCO and its affiliates  owned 36,370 limited  partnership  units
(the "Units") in the Partnership representing 66.13% of the outstanding Units at
June 30, 2004. 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 66.13% 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.
Rental income  attributable to leases is recognized monthly as it is earned. 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.
The Partnership will offer rental concessions during particularly slow months or
in response to heavy  competition from other similar  complexes in the area. Any
concessions  given at the inception of the lease are amortized  over the life of
the lease.

ITEM 3.     CONTROLS AND PROCEDURES

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

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

                           PART II - OTHER INFORMATION


ITEM 1.     LEGAL PROCEEDINGS

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

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

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

On June 13, 2003, the Court granted final approval of the settlement and entered
judgment in both the Nuanes and Heller actions.  On August 12, 2003, an objector
("Objector")  filed an  appeal  seeking  to  vacate  and/or  reverse  the  order
approving the settlement and entering  judgment  thereto.  On November 24, 2003,
the Objector filed an  application  requesting the Court order AIMCO to withdraw
settlement  tender offers it had  commenced,  refrain from making further offers
pending the appeal and auction any units tendered to third  parties,  contending
that the offers did not conform  with the terms of the  Settlement.  Counsel for
the Objector (on behalf of another  investor)  had  alternatively  requested the
Court take certain  action  purportedly  to enforce the terms of the  settlement
agreement.  On December 18, 2003,  the Court heard oral  argument on the motions
and denied them both in their entirety.

On January 28, 2004,  Objector filed his opening brief in his pending appeal. On
April 23,  2004,  the  Corporate  General  Partner  and its  affiliates  filed a
response brief in support of the settlement and the judgment thereto. Plaintiffs
have also filed a brief in support of the settlement.  On June 4, 2004, Objector
filed a reply to the briefs  submitted  by the  Corporate  General  Partner  and
Plaintiffs. No hearing has been scheduled in the matter.

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

On August 8, 2003 AIMCO Properties  L.P., an affiliate of the Corporate  General
Partner,  was served  with a  complaint  in the United  States  District  Court,
District of Columbia alleging that AIMCO Properties L.P.  willfully violated the
Fair Labor Standards Act ("FLSA") by failing to pay maintenance workers overtime
for all hours  worked in excess of forty per week.  On March 5, 2004  Plaintiffs
filed an amended complaint also naming NHP Management Company,  which is also an
affiliate  of the  Corporate  General  Partner.  The  complaint  is  styled as a
Collective  Action  under  the FLSA and seeks to  certify  state  subclasses  in
California, Maryland, and the District of Columbia. Specifically, the plaintiffs
contend that AIMCO Properties L.P. failed to compensate  maintenance workers for
time  that they were  required  to be  "on-call".  Additionally,  the  complaint
alleges AIMCO  Properties  L.P.  failed to comply with the FLSA in  compensating
maintenance  workers  for time that they  worked in  responding  to a call while
"on-call".  The defendants have filed an answer to the amended complaint denying
the  substantive  allegations.  Some  discovery  has taken place and  settlement
negotiations  continue.  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
taken as a whole. Similarly, the Corporate General Partner does not believe that
the ultimate  outcome will have a material  adverse effect on the  Partnership's
financial condition or results of operations taken as a whole.

ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K

            a)    Exhibits:

                  See Exhibit Index attached.

            b)    Reports on Form 8-K filed  during the  quarter  ended June 30,
                  2004:

                  None.


<PAGE>


                                   SIGNATURES



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



                                    SHELTER PROPERTIES III


                                    By:   Shelter Realty III Corporation
                                          Corporate General Partner


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


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


                                    Date: August 13, 2004



<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].

       (c)        Real  Estate  Note  and  Deed  to  Secure  Debt  and  Security
                  Agreement  between  Pacific Mutual Life Insurance  Company and
                  Shelter   Properties   III  to  acquire  North  River  Village
                  Apartments.*

       (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(c) and 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.

       (a)        Purchase  Agreement  dated July 1, 1981 and First  Addendum to
                  Purchase  Agreement  dated August 4, 1981 between Colony House
                  of  Murfreesboro  and U.S.  Shelter  Corporation  to  purchase
                  Colony House Apartments.**

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

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

       (d)        Purchase  Agreement  dated April 15, 1982 between  North River
                  Village  Joint  Venture  (a  partnership)   and  U.S.  Shelter
                  Corporation to purchase North River Village Apartments. [Filed
                  with  Form  8-K  of  Registrant   dated  April  21,  1982  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:

        (a)       Purchase and Sale Contract  between  Registrant  and Investors
                  Realty  Group,  Inc.,  effective  December  13, 2002 (filed as
                  exhibit   10(iv)(a)  on  Form  8-K,   December  27,  2002  and
                  incorporated herein by reference).

        (b)       Assignment  of  Purchase  Agreement   effective  December  13,
                  2002(filed as exhibit 10(iv)(b) on Form 8-K, December 27, 2002
                  and incorporated herein by reference).

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

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

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

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

       (b)        Agreement of Limited  Partnership  for North River Village III
                  between  Shelter  III  GP  Limited   Partnership  and  Shelter
                  Properties III entered into April 30, 1992.  [Filed as Exhibit
                  28(b) to Form 10-KSB of Registrant for year ended December 31,
                  1992 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 13, 2004

                                    /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 13, 2004

                                    /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,
2004 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 13, 2004


                                           /s/Stephen B. Waters
                                    Name:  Stephen B. Waters
                                    Date:  August 13, 2004


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.