FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

              (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
                     OF THE SECURITIES EXCHANGE ACT of 1934

               For the quarterly period ended September 30, 2002
   --------------------------------------------------------------------------

                                       OR

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

For the transition period from _____________________ to _____________________


                             Commission file number
                                     0-16850
                     ---------------------------------------


                            CNL Income Fund III, Ltd.
-----------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


           Florida                                          59-2809460
----------------------------------              -----------------------------
(State or other jurisdiction of                           (I.R.S. Employer
incorporation or organization)                           Identification No.)


   450 South Orange Avenue
      Orlando, Florida                                      32801
----------------------------------              ------------------------------
(Address of principal executive offices)                  (Zip Code)


Registrant's telephone number
(including area code)                                  (407) 540-2000
                                                 -----------------------------


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by  Sections  13 or 15(d)  of the  Securities  Exchange  Act of 1934
during the preceding 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>


                                    CONTENTS




                                                                       Page
Part I.

     Item 1.   Financial Statements:

                   Condensed Balance Sheets                             1

                   Condensed Statements of Income                       2

                   Condensed Statements of Partners' Capital            3

                   Condensed Statements of Cash Flows                   4

                   Notes to Condensed Financial Statements              5-8

     Item 2.   Management's Discussion and Analysis of Financial
                   Condition and Results of Operations                  9-13

     Item 3.   Quantitative and Qualitative Disclosures About
                   Market Risk                                          13

     Item 4.   Controls and Procedures                                  13


Part II.

     Other Information                                                  14-15





<PAGE>

                            CNL INCOME FUND III, LTD.
                         (A Florida Limited Partnership)
                            CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>

                                                                            September 30,           December 31,
                                                                                 2002                   2001
                                                                          -------------------    -------------------

 <c>
                              ASSETS

  Land and buildings on operating leases, net                                  $   8,306,797          $   8,642,179
  Net investment in direct financing leases                                               --                279,721
  Real estate held for sale                                                               --              1,175,155
  Investment in joint ventures                                                     2,083,524              2,196,170
  Mortgage note receivable                                                           640,000                     --
  Cash and cash equivalents                                                        1,272,534              1,242,931
  Receivables, less allowance for doubtful accounts
      of $37,194 and $28,216, respectively                                            21,312                 27,528
  Due from related parties                                                                --                  9,754
  Accrued rental income                                                               90,233                 74,755
  Other assets                                                                        30,805                 31,923
                                                                          -------------------    -------------------

                                                                               $  12,445,205          $  13,680,116
                                                                          ===================    ===================

                 LIABILITIES AND PARTNERS' CAPITAL

  Accounts payable                                                               $     5,450           $     12,786
  Real estate taxes payable                                                           11,194                 12,050
  Distributions payable                                                              375,000                437,500
  Due to related parties                                                             196,091                128,985
  Rents paid in advance                                                               17,352                  3,943
                                                                          -------------------    -------------------
      Total liabilities                                                              605,087                595,264

  Minority interest                                                                  125,328                127,430

  Partners' capital                                                               11,714,790             12,957,422
                                                                          -------------------    -------------------

                                                                               $  12,445,205          $  13,680,116
                                                                          ===================    ===================
</TABLE>
           See accompanying notes to condensed financial statements.




<PAGE>


                            CNL INCOME FUND III, LTD.
                         (A Florida Limited Partnership)
                         CONDENSED STATEMENTS OF INCOME
<TABLE>
<CAPTION>

                                                                  Quarter Ended                   Nine Months Ended
                                                                  September 30,                     September 30,
                                                               2002            2001             2002             2001
                                                           -------------   -------------   ----------------  --------------

 <c>
Revenues:
    Rental income from operating leases                       $ 261,289       $ 339,876        $   814,299     $ 1,047,114
    Earned income from direct financing leases                    2,218           3,243             16,257          32,330
    Contingent rental income                                     20,834           1,134             53,340          89,031
    Lease termination income                                      7,980          80,000              7,980          80,000
    Interest and other income                                     4,841           4,742             18,078          20,861
                                                           -------------   -------------   ----------------  --------------
                                                                297,162         428,995            909,954       1,269,336
                                                           -------------   -------------   ----------------  --------------

Expenses:
    General operating and administrative                         46,143          25,326            157,351         164,655
    Property expenses                                            10,398           1,858             40,457           5,212
    State and other taxes                                           292             230             23,372          12,768
    Depreciation                                                 56,309          64,315            168,009         195,897
    Provision for write-down of assets                               --          38,721             46,355          38,721
                                                           -------------   -------------   ----------------  --------------
                                                                113,142         130,450            435,544         417,253
                                                           -------------   -------------   ----------------  --------------

Income Before Gain (Loss) on Sale of Assets, Minority
    Interest in Income of Consolidated Joint Venture
    and Equity in Earnings of Unconsolidated Joint
    Ventures                                                    184,020         298,545            474,410         852,083

Gain (Loss) on Sale of Assets                                        --         229,029             (9,945 )       229,029

Minority Interest in Income of Consolidated
    Joint Venture                                                (4,352 )        (4,277 )          (12,943 )       (12,926 )

Equity in Earnings of Unconsolidated Joint Ventures              52,707          37,865            155,266         107,098
                                                           -------------   -------------   ----------------  --------------

Income from Continuing Operations                               232,375         561,162            606,788       1,175,284
                                                           -------------   -------------   ----------------  --------------

Discontinued Operations (Note 7):
    Income from discontinued operations, net                      9,294          34,983             35,810         105,011
    Loss on disposal of discontinued operations, net            (80,580 )            --           (160,230 )            --
                                                           -------------   -------------   ----------------  --------------
                                                                (71,286 )        34,983           (124,420 )       105,011
                                                           -------------   -------------   ----------------  --------------

Net Income                                                    $ 161,089       $ 596,145        $   482,368     $ 1,280,295
                                                           =============   =============   ================  ==============

Income (Loss) Per Limited Partner Unit:
    Continuing Operations                                      $   4.65       $   11.22         $    12.14       $   23.51
    Discontinued Operations                                       (1.43 )          0.70              (2.49 )          2.10
                                                           -------------   -------------   ----------------  --------------

    Total                                                      $   3.22       $   11.92         $     9.65       $   25.61
                                                           =============   =============   ================  ==============

Weighted Average Number of Limited Partner
    Units Outstanding                                            50,000          50,000             50,000          50,000
                                                           =============   =============   ================  ==============
</TABLE>
           See accompanying notes to condensed financial statements.

<PAGE>


                            CNL INCOME FUND III, LTD.
                         (A Florida Limited Partnership)
                    CONDENSED STATEMENTS OF PARTNERS' CAPITAL

<TABLE>
<CAPTION>

                                                          Nine Months Ended           Year Ended
                                                            September 30,            December 31,
                                                                 2002                    2001
                                                         ---------------------    -------------------

 <c>
General partners:
    Beginning balance                                          $      371,371           $    371,371
    Net income                                                             --                     --
                                                         ---------------------    -------------------
                                                                      371,371                371,371
                                                         ---------------------    -------------------

Limited partners:
    Beginning balance                                              12,586,051             14,068,004
    Net income                                                        482,368                918,047
    Distributions ($34.50 and $48.00 per
       limited partner unit, respectively)                         (1,725,000 )           (2,400,000 )
                                                         ---------------------    -------------------
                                                                   11,343,419             12,586,051
                                                         ---------------------    -------------------

Total partners' capital                                       $    11,714,790         $   12,957,422
                                                         =====================    ===================
</TABLE>
           See accompanying notes to condensed financial statements.



<PAGE>


                            CNL INCOME FUND III, LTD.
                         (A Florida Limited Partnership)
                       CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>


                                                                                  Nine Months Ended
                                                                                    September 30,
                                                                               2002                2001
                                                                         -----------------    ---------------

 <c>
Increase (Decrease) in Cash and Cash Equivalents

    Net Cash Provided by Operating Activities                                 $   938,433        $ 1,295,190
                                                                         -----------------    ---------------

    Cash Flows from Investing Activities:
       Additions to land and buildings on operating leases                        (25,200 )               --
       Collections on mortgage note receivable                                    320,000                 --
       Proceeds from sale of assets                                               492,394            750,550
       Liquidating distribution from joint venture                                106,521                 --
                                                                         -----------------    ---------------
              Net cash provided by investing activities                           893,715            750,550
                                                                         -----------------    ---------------

    Cash Flows from Financing Activities:
       Distributions to limited partners                                       (1,787,500 )       (1,312,500 )
       Distributions to holders of minority interest                              (15,045 )          (15,021 )
                                                                         -----------------    ---------------
              Net cash used in financing activities                            (1,802,545 )       (1,327,521 )
                                                                         -----------------    ---------------

Net Increase in Cash and Cash Equivalents                                          29,603            718,219

Cash and Cash Equivalents at Beginning of Period                                1,242,931            578,746
                                                                         -----------------    ---------------

Cash and Cash Equivalents at End of Period                                   $  1,272,534        $ 1,296,965
                                                                         =================    ===============

Supplemental Schedule of Non-Cash Investing and Financing
    Activities:

       Deferred real estate disposition fee incurred and unpaid at
          end of period                                                       $    45,300         $   23,250
                                                                         =================    ===============

       Mortgage note accepted in exchange for sale of asset                   $   960,000            $    --
                                                                         =================    ===============

       Distributions declared and unpaid at end of
          period                                                              $   375,000        $ 1,087,500
                                                                         =================    ===============
</TABLE>
           See accompanying notes to condensed financial statements.

<PAGE>

                            CNL INCOME FUND III, LTD.
                         (A Florida Limited Partnership)
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
           Quarters and Nine Months Ended September 30, 2002 and 2001


   1.    Basis of Presentation:
         ---------------------

         The accompanying  unaudited  condensed  financial  statements have been
         prepared in accordance  with the  instructions  to Form 10-Q and do not
         include  all  of the  information  and  note  disclosures  required  by
         generally  accepted  accounting  principles.  The financial  statements
         reflect all adjustments,  consisting of normal  recurring  adjustments,
         which are, in the opinion of management,  necessary to a fair statement
         of the results for the interim periods presented. Operating results for
         the  quarter  and  nine  months  ended  September  30,  2002 may not be
         indicative  of the  results  that may be  expected  for the year ending
         December  31, 2002.  Amounts as of December  31, 2001,  included in the
         financial   statements   have  been  derived  from  audited   financial
         statements as of that date.

         These unaudited financial statements should be read in conjunction with
         the financial statements and notes thereto included in Form 10-K of CNL
         Income Fund III, Ltd. (the  "Partnership")  for the year ended December
         31, 2001.

         The Partnership  accounts for its 69.07%  interest in Tuscawilla  Joint
         Venture using the consolidation  method.  Minority interests represents
         the minority joint venture partners'  proportionate share of the equity
         in  the  Partnership's  consolidated  joint  venture.  All  significant
         intercompany accounts and transactions have been eliminated.

         Effective  January  1,  2002,  the  Partnership  adopted  Statement  of
         Financial  Accounting  Standards No. 144 "Accounting for the Impairment
         or Disposal of  Long-Lived  Assets."  This  statement  requires  that a
         long-lived  asset be  tested  for  recoverability  whenever  events  or
         changes in  circumstances  indicate that its carrying amount may not be
         recoverable.   The  carrying  amount  of  a  long-lived  asset  is  not
         recoverable  if it  exceeds  the  sum of the  undiscounted  cash  flows
         expected to result from the use and eventual  disposition of the asset.
         The assessment is based on the carrying amount of the asset at the date
         it is tested for recoverability.  An impairment loss is recognized when
         the carrying amount of a long-lived asset exceeds its fair value. If an
         impairment is recognized,  the adjusted carrying amount of a long-lived
         asset is its new cost  basis.  The  statement  also  requires  that the
         results of  operations of a component of an entity that either has been
         disposed  of or is  classified  as  held  for  sale  be  reported  as a
         discontinued   operation  if  the  disposal   activity  was   initiated
         subsequent to the adoption of the Standard.

2.       Reclassification:
         ----------------

         Certain  items in the  prior  year's  financial  statements  have  been
         reclassified to conform to 2002 presentation.  These  reclassifications
         had no effect on total partners' capital or net income.

3.       Land and Buildings on Operating Leases:
         --------------------------------------

         During the nine  months  ended  September  30,  2002,  the  Partnership
         established a provision for write-down of assets of $46,355 relating to
         its property in Fayetteville, North Carolina. In January, the tenant of
         this property,  Houlihan's, Inc., filed for bankruptcy and rejected the
         one lease it had with the  Partnership.  The provision  represented the
         difference  between the  carrying  value of the  property  and its fair
         value.


<PAGE>


                            CNL INCOME FUND III, LTD.
                         (A Florida Limited Partnership)
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
           Quarters and Nine Months Ended September 30, 2002 and 2001


3.       Land and Buildings on Operating Leases - Continued:
         --------------------------------------------------

         In May 2002, the Partnership sold the property in Montgomery,  Alabama,
         the building portion of which is classified as a direct financing lease
         (see Note 4), to an unrelated third party for $400,000. The Partnership
         received net sales proceeds of  approximately  $398,300  (consisting of
         approximately  $66,300 in cash and $320,000 in the form of a promissory
         note,  see Note 5) resulting in a loss of $9,945 during the nine months
         ended  September 30, 2002. In connection with the sale, the Partnership
         incurred a  deferred,  subordinated,  real  estate  disposition  fee of
         $12,000  (see Note 8).  This  property  was  identified  for sale as of
         December 31, 2001.

4.       Net Investment in Direct Financing Leases:
         -----------------------------------------

         In May 2002, the Partnership  sold the property in Montgomery,  Alabama
         to an unrelated  third party (see Note 3). In connection with the sale,
         the  gross  investment  (minimum  lease  payments  receivable  and  the
         estimated  residual value) and unearned income relating to the building
         were  removed  from  the  accounts  and the  loss  from the sale of the
         property was reflected in income.

5.       Mortgage Notes Receivable:
         -------------------------

         In connection with the sale of its property in Montgomery, Alabama, the
         Partnership  accepted  a  promissory  note  in  the  principal  sum  of
         $320,000,  collateralized  by a mortgage on the property  (see Note 3).
         The  promissory  note bore interest at a rate of ten percent per annum.
         In August  2002,  the  Partnership  received  a balloon  payment  which
         included the outstanding principal balance and accrued interest.

         In  connection  with  the  sale of its  property  in  Canton  Township,
         Michigan,  the Partnership  accepted a promissory note in the principal
         sum of $640,000, collateralized by a mortgage on the property (see Note
         7). The  promissory  note bears  interest at a rate of 10.5% per annum.
         The balance of the note, plus any accrued interest,  is due in December
         2002.

6.       Investment in Joint Ventures:
         ----------------------------

         In January 2002,  Titusville  Joint Venture,  in which the  Partnership
         owned a 73.4% interest, sold its property,  which had been vacant since
         1997,  to an unrelated  third party for $180,000 and received net sales
         proceeds   of   approximately   $165,600,   resulting   in  a  gain  of
         approximately  $4,900 to the joint  venture.  The  Partnership  and the
         joint venture  partner  dissolved the joint venture and the Partnership
         received  approximately $106,500 representing its pro rata share of the
         joint venture's liquidating distribution.  No gain or loss was recorded
         relating to the dissolution of the joint venture.


<PAGE>


                            CNL INCOME FUND III, LTD.
                         (A Florida Limited Partnership)
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
           Quarters and Nine Months Ended September 30, 2002 and 2001


7.       Discontinued Operations:
         -----------------------

         In  July  2002,  the  Partnership  entered  into an  agreement  with an
         unrelated  third  party to sell the Golden  Corral  property  in Altus,
         Oklahoma. In connection with the anticipated sale of the property,  the
         Partnership  recorded a loss on disposal of discontinued  operations of
         approximately  $79,600 during the quarter and six months ended June 30,
         2002.  In  September  2002,  the  Partnership  sold this  property  for
         $310,000 and received net sales proceeds of approximately  $298,500. In
         connection  with  the  sale,  the  Partnership   incurred  a  deferred,
         subordinated, real estate disposition fee of $9,300 (see Note 8).

         In  September  2002,  the  Partnership  sold  its Red  Oaks  Steakhouse
         property in Canton Township,  Michigan, to an unrelated third party for
         $800,000.  The Partnership received net sales proceeds of approximately
         $722,300  (consisting of approximately  $82,300 in cash and $640,000 in
         the  form of a  promissory  note,  see Note 5)  resulting  in a loss on
         disposal of discontinued operations of approximately $80,600 during the
         quarter and nine months ended  September 30, 2002.  In connection  with
         the sale,  the  Partnership  incurred a  deferred,  subordinated,  real
         estate  disposition fee of $24,000 (see Note 8). The financial  results
         for these two  properties are reflected as  Discontinued  Operations in
         the accompanying financial statements.

         The  operating  results of the  discontinued  operations  for the above
         properties are as follows:
<TABLE>
<CAPTION>

                                               Quarter Ended September 30,       Nine Months Ended September 30,
                                                  2002             2001              2002                2001
                                             ---------------   --------------  ------------------   ---------------

 <C>
         Rental revenues                         $   15,342       $   38,727         $    61,491        $  116,473
         Expenses                                    (6,048 )         (3,744 )           (25,681 )         (11,462 )
         Gain (Loss) on disposal of assets          (80,580 )             --            (160,230 )              --
                                             ---------------   --------------  ------------------   ---------------
         Income (loss) from discontinued
               operations                        $  (71,286 )     $   34,983        $   (124,420 )        $105,011
                                             ===============   ==============  ==================   ===============
</TABLE>

8.       Related Party Transaction:
         -------------------------

         An  affiliate  of the  Partnership  is  entitled to receive a deferred,
         subordinated real estate  disposition fee, payable upon the sale of one
         or more  properties,  based on the lesser of one-half of a  competitive
         real  estate  commission  or three  percent  of the sales  price if the
         Advisor  provides a substantial  amount of services in connection  with
         the sales.  However,  if the net sales  proceeds  are  reinvested  in a
         replacement  property,  no such real  estate  disposition  fees will be
         incurred  until  such  replacement  property  is sold and the net sales
         proceeds are  distributed.  The payment of the real estate  disposition
         fee is  subordinated  to the receipt by the  limited  partners of their
         aggregate, cumulative 10% Preferred Return, plus their adjusted capital
         contributions.  During the nine months ended  September  30, 2002,  the
         Partnership  incurred  deferred,  subordinated real estate  disposition
         fees of $45,300 as a result of the Partnership's sale of the properties
         in Montgomery, Alabama, Altus, Oklahoma and Canton Township, Michigan.




<PAGE>


                            CNL INCOME FUND III, LTD.
                         (A Florida Limited Partnership)
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
           Quarters and Nine Months Ended September 30, 2002 and 2001


9.       Concentration of Credit Risk:
         ----------------------------

         The following  schedule  presents total rental revenues from individual
         lessees,  each representing  more than 10% of the  Partnership's  total
         rental revenues  (including the Partnership's  share of rental revenues
         from joint ventures and the properties held as  tenants-in-common  with
         affiliates  of the  general  partners)  for each of the  periods  ended
         September 30:

                                            2002                2001
                                       ---------------     ---------------

              IHOP Properties, Inc.      $    209,980      $  210,092
              Golden Corral Corp.             117,230         224,840

         In addition, the following schedule presents total rental revenues from
         individual  restaurant  chains,  each representing more than 10% of the
         Partnership's  total rental revenues (including the Partnership's share
         of rental  revenues  from joint  ventures  and the  properties  held as
         tenants-in-common  with affiliates of the general partners) for each of
         the periods ended June 30:

                                               2002               2001
                                             ------------     -------------

                  KFC                          $ 215,013         $ 188,839
                  IHOP                           209,980           210,092
                  Golden Corral Family
                      Steakhouse Restaurants     199,714           375,920
                  Taco Bell                      129,501               N/A
                  Pizza Hut                      115,930               N/A

         The  information   denoted  by  N/A  indicates  that  for  each  period
         presented,   the  chains  did  not  represent  more  than  10%  of  the
         Partnership's total rental and earned income.

         Although  the  Partnership's   properties  are  geographically  diverse
         throughout the United States and the  Partnership's  lessees  operate a
         variety of restaurant concepts,  default by any one of these lessees or
         restaurant chains will  significantly  impact the results of operations
         of the  Partnership  if the  Partnership  is not able to  re-lease  the
         properties in a timely manner.




<PAGE>



ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

         CNL Income Fund III,  Ltd.  (the  "Partnership")  is a Florida  limited
partnership  that was  organized  on June 1, 1987 to  acquire  for cash,  either
directly or through  joint  venture  arrangements,  both newly  constructed  and
existing restaurant  properties,  as well as land upon which restaurants were to
be constructed  (the  "Properties"),  which are leased primarily to operators of
selected national and regional fast-food restaurant chains. The leases generally
are  triple-net  leases,  with  the  lessees  responsible  for all  repairs  and
maintenance,  property taxes, insurance and utilities. As of September 30, 2001,
the Partnership  owned 18 Properties  directly and seven  Properties  indirectly
through  joint  venture or tenancy in common  arrangements.  As of September 30,
2002, the Partnership owned 15 Properties directly and six Properties indirectly
through joint venture or tenancy in common arrangements.

Capital Resources

         Cash from  operating  activities  (which  includes  cash  received from
tenants,  distributions  from joint  ventures,  and  interest  and other  income
received,  less cash paid for expenses) was $938,433 and $1,295,190 for the nine
months ended  September  30, 2002 and 2001,  respectively.  The decrease in cash
from  operating  activities  for the nine months ended  September  30, 2002,  as
compared  to the same  period of 2001 was  primarily  a result of changes in the
Partnership's   income  and  expenses,   as  described   below  in  "Results  of
Operations."

         Other  sources and uses of capital  included the  following  during the
nine months ended September 30, 2002.

         In January 2002,  Titusville  Joint Venture,  in which the  Partnership
owned a 73.40% interest, sold its Property, which had been vacant since 1997, to
an  unrelated  third  party for  $180,000  and  received  net sales  proceeds of
approximately  $165,600 resulting in a gain of approximately $4,900 to the joint
venture.  The  Partnership  and the joint  venture  partner  dissolved the joint
venture in  accordance  with the joint  venture  agreement  and the  Partnership
received  approximately  $106,500  representing  its pro rata share of the joint
venture's liquidating distribution. No gain or loss was recorded relating to the
dissolution of the joint venture.  The  Partnership  distributed the liquidation
proceeds as a special distribution to the limited partners, as described below.

         In May 2002, the Partnership  sold its Property in Montgomery,  Alabama
to an unrelated  third party for  $400,000  and  received net sales  proceeds of
approximately $398,300 (consisting of approximately $66,300 in cash and $320,000
in the form of a promissory  note) resulting in a loss of $9,945 during the nine
months ended  September 30, 2002. The promissory note bore interest at a rate of
ten  percent  per annum.  In August  2002,  the  Partnership  received a balloon
payment which included the outstanding  principal  balance and accrued interest.
This Property was identified  for sale as of December 31, 2001. The  Partnership
used these sales proceeds to pay liabilities of the Partnership.

         In  July  2002,  the  Partnership  entered  into an  agreement  with an
unrelated third party to sell the Golden Corral Property in Altus,  Oklahoma. In
connection with the anticipated sale of the Property, the Partnership recorded a
loss on disposal of discontinued  operations of approximately $76,600 during the
quarter and six months ended June 30, 2002. In September  2002, the  Partnership
sold this property for $310,000 and received net sales proceeds of approximately
$298,500. The Partnership intends to use these sales proceeds to pay liabilities
of the Partnership.

         In  September  2002,  the  Partnership  sold  its Red  Oaks  Steakhouse
Property in Canton Township, Michigan, to an unrelated third party for $800,000.
The  Partnership   received  net  sales  proceeds  of   approximately   $722,300
(consisting  of  approximately  $82,300  in cash and  $640,000  in the form of a
promissory  note) resulting in a loss on disposal of discontinued  operations of
approximately  $80,600  during the quarter and nine months ended  September  30,
2002. The Partnership  intends to use these sales proceeds to pay liabilities of
the Partnership.

         In connection with the sales of the Properties in Montgomery,  Alabama;
Altus,  Oklahoma  and  Canton  Township,   Michigan,  the  Partnership  incurred
deferred,  subordinated, real estate disposition fees of $45,300. Payment of the
real  estate  disposition  fees is  subordinated  to the  receipt by the limited
partners  of their  aggregate,  cumulative  10%  Preferred  Return,  plus  their
adjusted capital contributions.

         Currently,  rental income from the Partnership's Properties and any net
sales  proceeds  from the  sales of  Properties  are  invested  in money  market
accounts or other short-term,  highly liquid  investments such as demand deposit
accounts at commercial banks,  money market accounts and certificates of deposit
with less than a 90-day  maturity date,  pending the  Partnership's  use of such
funds to pay Partnership  expenses or to make distributions to the partners.  At
September 30, 2002, the Partnership  had $1,272,534  invested in such short-term
investments, as compared to $1,242,931 at December 31, 2001. The funds remaining
at September 30, 2002, after payment  distributions and other liabilities,  will
be used to meet the Partnership's working capital needs.

Short Term Liquidity

         The Partnership's  investment strategy of acquiring Properties for cash
and  leasing  them under  triple-net  leases to  operators  who  generally  meet
specified financial  standards  minimizes the Partnership's  operating expenses.
The general  partners  believe  that the leases will  generate  net cash flow in
excess of operating expenses.

         The Partnership's  short-term liquidity  requirements consist primarily
of the operating expenses of the Partnership.

         The general  partners have the right,  but not the obligation,  to make
additional capital  contributions if they deem it appropriate in connection with
the operations of the Partnership.

         Total liabilities of the Partnership,  including distributions payable,
were  $605,087 at September  30,  2002,  as compared to $595,264 at December 31,
2001.  The net change in  liabilities  was due to an  increase in amounts due to
related  parties at  September  30,  2002,  as compared to  December  31,  2001,
partially offset by a decrease in distributions payable to the limited partners.
The general partners believe that the Partnership has sufficient cash on hand to
meet its current working capital needs.

         The Partnership  generally  distributes cash from operations  remaining
after the payment of operating  expenses of the Partnership,  to the extent that
the general partners  determine that such funds are available for  distribution.
Based on current cash from  operations,  and for the nine months ended September
30,  2002,  the net  sales  proceeds  from  the  2001  sale of the  Property  in
Washington,  Illinois and the liquidating  distribution received from Titusville
Joint Venture,  and for the nine months ended  September 30, 2001, the net sales
proceeds  from the 2001  sale of the  Property  in  Schererville,  Indiana,  the
Partnership  declared  distributions  to  limited  partners  of  $1,725,000  and
$1,962,500 for the nine months ended September 30, 2002 and 2001,  respectively,
($375,000 and  $1,087,500  for the quarters  ended  September 30, 2002 and 2001,
respectively).  This represents  distributions of $34.50 and $39.25 per unit for
the nine months  ended  September  30, 2002 and 2001,  respectively,  ($7.50 and
$21.75 per unit for each applicable quarter).  Distributions for the nine months
ended September 30, 2002 included a special distribution of $600,000 as a result
of the distribution of the net sales proceeds from the 2001 sale of the Property
in  Washington,   Illinois  and  the  liquidating   distribution  received  from
Titusville Joint Venture.  Distributions for the nine months ended September 30,
2001 included a special distribution of $650,000 as a result of the distribution
of the net sales  proceeds  from the 2001 sale of the Property in  Schererville,
Indiana.  These amounts were applied to the limited  partner's unpaid cumulative
10% Preferred Return. As a result of the sale of several  Properties in 2002 and
2001,  the  Partnership's  total  revenue  was reduced and is expected to remain
reduced in subsequent periods, while the majority of the Partnership's operating
expenses remained and are expected to remain fixed. Therefore,  distributions of
net cash flow were adjusted  commencing during the quarter ended March 31, 2002.
No  distributions  were made to the general  partners  for the quarters and nine
months ended September 30, 2002 and 2001. No amounts  distributed to the limited
partners for the nine months ended  September  30, 2002 and 2001 are required to
be or have been treated by the  Partnership  as a return of capital for purposes
of  calculating  the  limited   partners'   return  on  their  adjusted  capital
contributions. The Partnership intends to continue to make distributions of cash
available for distribution to the limited partners on a quarterly basis.

Long-Term Liquidity

         The  Partnership  has no long-term  debt or other  long-term  liquidity
requirements.


<PAGE>


Results of Operations

         Total rental revenues were $830,556 for the nine months ended September
30, 2002,  as compared to  $1,079,444  for the nine months ended  September  30,
2001,  of which  $263,507 and $343,119  were earned  during the third quarter of
2002 and 2001,  respectively.  Rental revenues  decreased during the quarter and
nine months ended  September  30, 2002, as compared to the same periods of 2001,
partially as a result of the sales of several  Properties  during 2001 and 2002.
Rental  revenues are expected to remain at reduced  amounts due to the fact that
the Partnership used the majority of these net sales proceeds to pay liabilities
of the Partnership and to make distributions to the limited partners.

         The  decrease  in rental  revenues  during the  quarter and nine months
ended  September  30, 2002,  as compared to the same  periods of 2001,  was also
partially  due to the  fact  that in  2002,  one of the  Partnership's  tenants,
Houlihan's,  Inc. filed for bankruptcy,  ceased rental payments and rejected the
one lease it had with the  Partnership.  As a result of the rejected lease,  the
Partnership  stopped  recording  rental revenue  relating to this Property.  The
Partnership  will not  recognize any rental  revenues from this vacant  Property
until the Property is re-leased or sold,  and the proceeds are  reinvested in an
additional  Property.  The lost revenues  resulting from the rejected lease will
have an adverse  effect on the results of operations of the  Partnership  if the
Partnership is unable to re-lease the Property in a timely  manner.  The general
partners are currently seeking a replacement tenant for the vacant Property.

         During  the  nine  months  ended  September  30,  2002  and  2001,  the
Partnership also earned $53,340 and $89,031,  respectively, in contingent rental
income,  of which  $20,834  and $1,134  were earned  during the  quarters  ended
September 30, 2002 and 2001,  respectively.  The decrease in  contingent  rental
income  during the nine months ended  September  30,  2002,  and the increase in
contingent  rental  income  during the quarter  ended  September  30, 2002,  was
primarily due to the fact that in accordance with Staff Accounting  Bulletin No.
101, the Partnership  recognized  certain  percentage rental income amounts when
certain defined thresholds were met.

         In August 2002, the lease for the Property in Witchita,  Kansas,  which
was scheduled to expire in November 2002, was terminated by the  Partnership and
the tenant.  The Partnership  re-leased this Property to a new tenant with terms
substantially  the same as the  Partnership's  other leases.  In June 2001,  the
lease for the Property in Washington, Illinois, which was scheduled to expire in
November 2002, was terminated by the Partnership and the tenant. The Partnership
re-leased this Property to a new tenant with terms substantially the same as the
Partnership's other leases. In addition, in September 2001, the Partnership sold
its  Property in  Schererville,  Indiana and  released  the tenant from  further
obligation  under its lease. In connection with these  transactions,  during the
nine  months  ended  September  30,  2002 and  2001,  the  Partnership  received
approximately $8,000 and $80,000,  respectively,  in lease termination income in
consideration  for the Partnership  releasing the tenants from their obligations
under each lease.

         During the nine months ended  September  30,  2002,  two lessees of the
Partnership,   IHOP  Properties,  Inc.,  and  Golden  Corral  Corporation,  each
contributed more than 10% of the Partnership's  total rental revenues (including
rental  revenues  from the  Partnership's  consolidated  joint  venture  and the
Partnership's  share of rental revenues from Properties owned by  unconsolidated
joint ventures and Properties  owned with affiliates of the general  partners as
tenants-in-common). It is anticipated that, based on the minimum rental payments
required by the leases,  IHOP Properties,  Inc. will continue to contribute more
than  10%  of  the  Partnership's  total  rental  revenues.  In  addition,  five
restaurant chains,  IHOP, Golden Corral Family Steakhouse  Restaurants  ("Golden
Corral"), KFC, Taco Bell, and Pizza Hut, each accounted for more than 10% of the
Partnership's  total  rental  revenues,  (including  rental  revenues  from  the
Partnership's  consolidated  joint  venture and the  Partnership's  share of the
rental  revenues from  Properties  owned by  unconsolidated  joint  ventures and
Properties owned with affiliates of the general partners as  tenants-in-common).
It is  anticipated  that these five  restaurant  chains,  each will  continue to
account for more than 10% of total rental  revenues to which the  Partnership is
entitled  under the terms of the leases.  Any failure of these lessees or any of
these restaurant chains could materially affect the Partnership's income, if the
Partnership is not able to re-lease these Properties in a timely manner.


<PAGE>


         During  the  nine  months  ended  September  30,  2002  and  2001,  the
Partnership  earned  $155,266 and $107,098,  respectively,  attributable  to net
income earned by unconsolidated joint ventures, $52,707 and $37,865 of which was
earned during the quarters ended  September 30, 2002 and 2001. Net income earned
by  unconsolidated  joint  ventures was lower during the quarter and nine months
ended  September 30, 2001, as compared to the same periods of 2002 primarily due
to the fact that during the nine months ended  September  30,  2001,  Titusville
Joint  Venture  (in which the  Partnership  owned a 73.4%  interest)  recorded a
provision for write-down of assets of approximately  $38,300. The Property owned
by the joint venture  became vacant  during 1997.  Titusville  Joint Venture had
previously  recorded a  provision  for  write-down  of assets  relating  to this
Property.  The increase in the provision  during 2001 represented the difference
between  the  Property's  carrying  value and its fair value.  In January  2002,
Titusville  Joint  Venture sold its  Property,  to an unrelated  third party for
$180,000 and received net sales proceeds of approximately  $165,600 resulting in
a gain of  approximately  $4,900 to the joint venture.  The  Partnership and the
joint venture  partner  dissolved the joint venture in accordance with the joint
venture   agreement  and  the  Partnership   received   approximately   $106,500
representing its pro rata share of the joint venture's liquidating distribution.
No gain or loss was recorded  relating to the  dissolution of the joint venture.
The  Partnership  used these proceeds to pay  liabilities of the Partnership and
make distributions, as described above in "Capital Resources."

         Operating expenses,  including  depreciation  expense and provision for
write-down  of assets,  were  $435,544  and  $417,253  for the nine months ended
September 30, 2002 and 2001,  respectively,  of which $113,142 and $130,450 were
incurred  during the quarters ended September 30, 2002 and 2001. The increase in
operating  expenses during the nine months ended September 30, 2002, as compared
to the same period of 2001,  was  partially due to the fact that during the nine
months  ended  September  30, 2002,  the  Partnership  recorded a provision  for
write-down of assets of $46,355 relating to the Property in Fayetteville,  North
Carolina. The provision represented the difference between the carrying value of
the  Property  and its fair  value.  In  January,  the tenant of this  property,
Houlihan's,  Inc.,  filed for  bankruptcy and rejected the one lease it had with
the Partnership,  as described  above.  During the quarter and nine months ended
September  30, 2001,  the  Partnership  recorded a provision  for  write-down of
assets of $38,721 relating to the Property in Montgomery,  Alabama. During 2001,
the tenant of this Property experienced financial difficulties and ceased making
rental payments.  The provision  represented the difference between the carrying
value of the Property and its fair value. In May 2002, the Partnership sold this
Property, as described above in "Capital Resources."

         The increase in operating  expenses was also  partially due to the fact
that the Partnership incurred Property expenses, such as legal fees, real estate
taxes,  insurance,  and  maintenance  relating to the  Properties in Montgomery,
Alabama and Fayetteville,  North Carolina. In May 2002, the Partnership sold the
Property in Montgomery,  Alabama, as described above in "Capital Resources." The
general  partners  anticipate that the Partnership  will continue to incur these
expenses  related to the vacant Property in  Fayetteville,  North Carolina until
such time as the Partnership  executes a new lease for the Property or until the
Partnership sells the Property. The general partners are currently seeking a new
tenant for this Property. In addition, the increase in operating expenses during
the nine months ended  September  30, 2002,  was partially due to an increase in
the  amount  of state  tax  expense  relating  to  certain  states  in which the
Partnership  conducts  business.  The increase in operating  expenses during the
nine months ended  September  30, 2002,  as compared to the same period of 2001,
was partially  offset by a decrease in  depreciation  expense during the quarter
and nine months ended September 30, 2002, as a result of the sales of Properties
during 2001 and 2002.

         Effective  January  1,  2002,  the  Partnership  adopted  Statement  of
Financial  Accounting  Standards  No.  144  "Accounting  for the  Impairment  or
Disposal of Long-Lived  Assets." This statement requires that a long-lived asset
be tested  for  recoverability  whenever  events  or  changes  in  circumstances
indicate that its carrying amount may not be recoverable. The carrying amount of
a long-lived  asset is not recoverable if it exceeds the sum of the undiscounted
cash flows  expected  to result  from the use and  eventual  disposition  of the
asset.  The assessment is based on the carrying  amount of the asset at the date
it is tested for  recoverability.  An  impairment  loss is  recognized  when the
carrying  amount of a long-lived  asset exceeds its fair value. If an impairment
is recognized,  the adjusted  carrying  amount of a long-lived  asset is its new
cost basis.  The  statement  also  requires  that the results of operations of a
component of an entity that either has been disposed of or is classified as held
for sale be reported as a  discontinued  operation if the disposal  activity was
initiated subsequent to the adoption of the Standard.

         During the nine  months  ended  September  30,  2002,  the  Partnership
identified  and sold two  Properties  that met the criteria of this standard and
were  classified  as  Discontinued  Operations  in  the  accompanying  financial
statements.  The  Partnership  intends  to  use  these  sales  proceeds  to  pay
liabilities of the Partnership.

         As a result of the sale of the  Property in  Montgomery,  Alabama,  the
Partnership recognized a loss on sale of assets of $9,945 during the nine months
ended  September  30, 2002,  as  described  above in "Capital  Resources."  This
Property had been  identified  for sale as of December 31, 2001.  As a result of
the  2001  sale  of the  Property  in  Schererville,  Indiana,  the  Partnership
recognized  a gain of  $229,029,  during  the  quarter  and  nine  months  ended
September 30, 2001.


Item 3.  Quantitative and Qualitative Disclosures About Market Risk

         During the nine  months  ended  September  30,  2002,  the  Partnership
accepted a promissory note in connection with the sale of its Property in Canton
Township,  Michigan.  The general partners believe that the estimated fair value
of the  mortgage  note  at  September  30,  2002  approximated  the  outstanding
principal  amounts.  The  Partnership  is exposed to equity loss in the event of
changes in interest rates.  The following table presents the expected cash flows
of principal that are sensitive to these changes.

                                                   Mortgage Note
                                                     Fixed Rate
                                                 -------------------

                        2002                           $    640,000
                        2003                                     --
                        2004                                     --
                        2005                                     --
                        2006                                     --
                        Thereafter                               --
                                                 -------------------

                                                       $    640,000
                                                 ===================


ITEM 4.  CONTROLS AND PROCEDURES

         The  general  partners  maintain  a  set  of  disclosure  controls  and
procedures  designed to ensure that information  required to be disclosed in the
Partnership's  filings  under the  Securities  Exchange Act of 1934 is recorded,
processed,  summarized  and reported  within the time  periods  specified in the
Securities and Exchange  Commission's  rules and forms. The principal  executive
and  financial  officers of the  corporate  general  partner have  evaluated the
Partnership's  disclosure  controls and  procedures  within 90 days prior to the
filing  of this  Quarterly  Report on Form  10-Q and have  determined  that such
disclosure controls and procedures are effective.

         Subsequent to the above evaluation,  there were no significant  changes
in internal  controls or other  factors  that could  significantly  affect these
controls,   including  any   corrective   actions  with  regard  to  significant
deficiencies and material weaknesses.



<PAGE>


                           PART II. OTHER INFORMATION


Item 1.       Legal Proceedings.   Inapplicable.
              -----------------

Item 2.       Changes in Securities.  Inapplicable.
              ---------------------

Item 3.       Defaults upon Senior Securities.  Inapplicable.
              -------------------------------

Item 4.       Submission of Matters to a Vote of Security Holders. Inapplicable.
              ---------------------------------------------------

Item 5.       Other Information.  Inapplicable.
              -----------------

Item 6.       Exhibits and Reports on Form 8-K.
              --------------------------------

              (a)  Exhibits

                    3.1      Certificate  of Limited  Partnership  of CNL Income
                             Fund  III,   Ltd.   (Included  as  Exhibit  3.1  to
                             Amendment No. 1 to the  Registration  Statement No.
                             33-15374  on Form S-11 and  incorporated  herein by
                             reference.)

                    3.2      Amended and Restated  Agreement and  Certificate of
                             Limited  Partnership  of CNL Income Fund III,  Ltd.
                             (Included  as  Exhibit  3.2 to Form 10-K filed with
                             the Securities and Exchange  Commission on April 5,
                             1993, and incorporated herein by reference.)

                    4.1      Certificate  of Limited  Partnership  of CNL Income
                             Fund  III,   Ltd.   (Included  as  Exhibit  4.1  to
                             Amendment  No.  1  to  Registration  Statement  No.
                             33-15374  on Form S-11 and  incorporated  herein by
                             reference.)

                    4.2      Amended and Restated  Agreement and  Certificate of
                             Limited  Partnership  of CNL Income Fund III,  Ltd.
                             (Included  as  Exhibit  3.2 to Form 10-K filed with
                             the Securities and Exchange  Commission on April 5,
                             1993, and incorporated herein by reference.)

                    10.1     Property Management  Agreement (Included as Exhibit
                             10.1 to Form 10-K  filed  with the  Securities  and
                             Exchange   Commission   on  April  5,   1993,   and
                             incorporated herein by reference.)

                    10.2     Assignment of Property  Management  Agreement  from
                             CNL Investment Company to CNL Income Fund Advisors,
                             Inc.  (Included  as Exhibit 10.2 to Form 10-K filed
                             with the  Securities  and  Exchange  Commission  on
                             March  30,  1995,   and   incorporated   herein  by
                             reference.)

                    10.3     Assignment of Property  Management  Agreement  from
                             CNL  Income  Fund   Advisors,   Inc.  to  CNL  Fund
                             Advisors,  Inc.  (Included  as Exhibit 10.3 to Form
                             10-K  filed  with  the   Securities   and  Exchange
                             Commission  on  April  1,  1996,  and  incorporated
                             herein by reference.)

                    10.4     Assignment  of Management  Agreement  from CNL Fund
                             Advisors,  Inc. to CNL APF Partners,  LP. (Included
                             as  Exhibit  10.4  to  Form  10-Q  filed  with  the
                             Securities  and Exchange  Commission  on August 10,
                             2001, and incorporated herein by reference.)

                    10.5     Assignment  of  Management  Agreement  from CNL APF
                             Partners,   LP  to  CNL  Restaurants   XVIII,  Inc.
                             (Included  as Exhibit  10.5 to Form 10-Q filed with
                             the  Securities  and Exchange  Commission on August
                             14, 2002, and incorporated herein by reference.)


<PAGE>



                    99.1     Certification   of  Chief   Executive   Officer  of
                             Corporate  General  Partner  Pursuant  to 18 U.S.C.
                             Section 1350 as Adopted  Pursuant to Section 906 of
                             the Sarbanes-Oxley Act of 2002. (Filed herewith.)

                    99.2     Certification   of  Chief   Financial   Officer  of
                             Corporate  General  Partner  Pursuant  to 18 U.S.C.
                             Section 1350 as Adopted  Pursuant to Section 906 of
                             the Sarbanes-Oxley Act of 2002. (Filed herewith.)

                    (b)      Reports on Form 8-K

                             No  reports  of Form  8-K  were  filed  during  the
                             quarter ended September 30, 2002.




<PAGE>




                                   SIGNATURES



         Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended,  the  registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

         DATED this 6th day of November, 2002.


                                      CNL INCOME FUND III, LTD.

                                      By:  CNL REALTY CORPORATION
                                           General Partner


                                           By:/s/ James M. Seneff, Jr.
                                              ------------------------------
                                              JAMES M. SENEFF, JR.
                                              Chief Executive Officer
                                              (Principal Executive Officer)


                                           By:/s/ Robert A. Bourne
                                              ------------------------------
                                              ROBERT A. BOURNE
                                              President and Treasurer
                                              (Principal Financial and
                                              Accounting Officer)




<PAGE>


                    CERTIFICATION OF CHIEF EXECUTIVE OFFICER
                          OF CORPORATE GENERAL PARTNER

                 PURSUANT TO RULE 13a-14 AS ADOPTED PURSUANT TO
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


        I,  James M.  Seneff,  Jr.,  the Chief  Executive  Officer of CNL Realty
Corporation,  the  corporate  general  partner of CNL Income Fund III, Ltd. (the
"registrant"), certify that:

        1.   I  have  reviewed  this  quarterly  report  on  Form  10-Q  of  the
             registrant;

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

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

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

                a. designed such  disclosure  controls and  procedures to ensure
                   that  material   information   relating  to  the  registrant,
                   including its consolidated subsidiaries,  is made known to us
                   by others  within  those  entities,  particularly  during the
                   period in which this quarterly report is being prepared;

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

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

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

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

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

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

Date:  November 6, 2002


/s/ James M. Seneff, Jr.
---------------------------
James M. Seneff, Jr.
Chief Executive Officer


<PAGE>


                    CERTIFICATION OF CHIEF FINANCIAL OFFICER
                          OF CORPORATE GENERAL PARTNER

                 PURSUANT TO RULE 13a-14 AS ADOPTED PURSUANT TO
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

        I, Robert A. Bourne,  President and Treasurer of CNL Realty Corporation,
the corporate  general  partner of CNL Income Fund III, Ltd. (the  "registrant")
certify that:

        1.   I  have  reviewed  this  quarterly  report  on  Form  10-Q  of  the
             registrant;

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

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

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

                a. designed such  disclosure  controls and  procedures to ensure
                   that  material   information   relating  to  the  registrant,
                   including its consolidated subsidiaries,  is made known to us
                   by others  within  those  entities,  particularly  during the
                   period in which this quarterly report is being prepared;

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

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

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

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

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

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


Date:  November 6, 2002


/s/ Robert A. Bourne
-----------------------
Robert A. Bourne
President and Treasurer


<PAGE>


                                  EXHIBIT INDEX


     Exhibit Number

        (c)  Exhibits

               3.1      Certificate  of Limited  Partnership  of CNL Income Fund
                        III, Ltd. (Included as Exhibit 3.1 to Amendment No. 1 to
                        the Registration Statement No. 33-15374 on Form S-11 and
                        incorporated herein by reference.)

               3.2      Amended  and  Restated   Agreement  and  Certificate  of
                        Limited   Partnership  of  CNL  Income  Fund  III,  Ltd.
                        (Included  as  Exhibit  3.2 to Form 10-K  filed with the
                        Securities and Exchange Commission on April 5, 1993, and
                        incorporated herein by reference.)

               4.1      Certificate  of Limited  Partnership  of CNL Income Fund
                        III, Ltd. (Included as Exhibit 4.1 to Amendment No. 1 to
                        Registration  Statement  No.  33-15374  on Form S-11 and
                        incorporated herein by reference.)

               4.2      Amended  and  Restated   Agreement  and  Certificate  of
                        Limited   Partnership  of  CNL  Income  Fund  III,  Ltd.
                        (Included  as  Exhibit  3.2 to Form 10-K  filed with the
                        Securities and Exchange Commission on April 5, 1993, and
                        incorporated herein by reference.)

               10.1     Property Management  Agreement (Included as Exhibit 10.1
                        to Form 10-K  filed  with the  Securities  and  Exchange
                        Commission on April 5, 1993, and incorporated  herein by
                        reference.)

               10.2     Assignment  of Property  Management  Agreement  from CNL
                        Investment  Company to CNL Income  Fund  Advisors,  Inc.
                        (Included  as  Exhibit  10.2 to Form 10-K filed with the
                        Securities  and Exchange  Commission  on March 30, 1995,
                        and incorporated herein by reference.)

               10.3     Assignment  of Property  Management  Agreement  from CNL
                        Income Fund Advisors,  Inc. to CNL Fund  Advisors,  Inc.
                        (Included  as  Exhibit  10.3 to Form 10-K filed with the
                        Securities and Exchange Commission on April 1, 1996, and
                        incorporated herein by reference.)

               10.4     Assignment  of  Management   Agreement   from  CNL  Fund
                        Advisors,  Inc. to CNL APF  Partners,  LP.  (Included as
                        Exhibit 10.4 to Form 10-Q filed with the  Securities and
                        Exchange Commission on August 10, 2001, and incorporated
                        herein by reference.)

               10.5     Assignment   of  Management   Agreement   from  CNL  APF
                        Partners, LP to CNL Restaurants XVIII, Inc. (Included as
                        Exhibit 10.5 to Form 10-Q filed with the  Securities and
                        Exchange Commission on August 14, 2002, and incorporated
                        herein by reference.)

               99.1     Certification  of Chief  Executive  Officer of Corporate
                        General  Partner  Pursuant to 18 U.S.C.  Section 1350 as
                        Adopted  Pursuant to Section  906 of the  Sarbanes-Oxley
                        Act of 2002. (Filed herewith.)

               99.2     Certification  of Chief  Financial  Officer of Corporate
                        General  Partner  Pursuant to 18 U.S.C.  Section 1350 as
                        Adopted  Pursuant to Section  906 of the  Sarbanes-Oxley
                        Act of 2002. (Filed herewith.)


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                                  EXHIBIT 99.1

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                                  EXHIBIT 99.2