<PAGE>


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

                                   FORM 10-QSB
(Mark One)

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

                For the quarterly period ended September 30, 2003
                                               ------------------

                                       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 2-81033

           Winthrop Residential Associates III, A Limited Partnership
           ----------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)


                Maryland                                 04-2782016
-----------------------------------------  -------------------------------------
     (State or other jurisdiction of        (I.R.S. Employer Identification No.)
        incorporation or organization)

 7 Bulfinch Place, Suite 500, Boston, MA                 02114-9507
-----------------------------------------  -------------------------------------
 (Address of principal executive office)                 (Zip Code)

        Registrant's telephone number, including area code (617) 570-4600
                                                           ---------------

Indicate by check mark whether Registrant (1) has filed all reports required to
be filed by Section 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_____


                                     1 of 13

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           WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
           ----------------------------------------------------------
                         FORM 10-QSB SEPTEMBER 30, 2003
                         ------------------------------

                         PART I - FINANCIAL INFORMATION
                         ------------------------------


ITEM 1.  FINANCIAL STATEMENTS.

<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS                                         SEPTEMBER 30,
                                                                        2003         DECEMBER 31,
(In Thousands, Except Unit Data)                                     (UNAUDITED)         2002
                                                                 ----------------   --------------
Assets
------
<S>                                                                <C>               <C>
Cash and cash equivalents                                          $       2,895     $       3,038
Investments in Local Limited Partnerships                                    205               365
Other assets                                                                 236               133
Real estate (net of accumulated depreciation
      of $3,899 in 2003 and $3,749 in 2002)                                1,432             1,582
                                                                   --------------    --------------

      Total Assets                                                 $       4,768     $       5,118
                                                                   ==============    ==============

Liabilities and Partners' Capital
---------------------------------

Liabilities:

Accounts payable and accrued expenses                               $        156     $         147
Distributions payable                                                         81               108
Mortgage payable                                                           2,216             2,273
Accrued interest - subordinated loan payable                                 123               114
Subordinated loan payable                                                    133               133
                                                                   --------------    --------------

      Total Liabilities                                                    2,709             2,775
                                                                   --------------    --------------

Partners' Capital:

Limited Partners -
   Units of Limited Partnership Interest,
   $1,000 stated value per unit; 25,005 units authorized,
   issued and outstanding                                                  3,246             3,509
General Partners' deficit                                                 (1,187)           (1,166)
                                                                   --------------    --------------

         Total Partners' Capital                                           2,059             2,343
                                                                   --------------    --------------

         Total Liabilities and Partners' Capital                    $      4,768     $       5,118
                                                                   ==============    ==============

</TABLE>

                 See notes to consolidated financial statements.

                                     2 of 13

<PAGE>

           WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
           ----------------------------------------------------------
                         FORM 10-QSB SEPTEMBER 30, 2003
                         ------------------------------

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(IN THOUSANDS, EXCEPT UNIT DATA)

<TABLE>
<CAPTION>
                                                                   FOR THE THREE MONTHS ENDED            FOR THE NINE MONTHS ENDED
                                                                SEPTEMBER 30,      SEPTEMBER 30,      SEPTEMBER 30,    SEPTEMBER 30,
                                                                    2003                2002              2003             2002
                                                                --------------    --------------      --------------  --------------
<S>                                                             <C>               <C>                 <C>             <C>
Income:
    Rental income                                               $         303     $         310       $        899    $         890
    Income from Local Limited Partnership cash distributions                -                 -                  -              250
    Equity in losses of Local Limited Partnerships                        (71)              (37)              (103)             (56)
    Interest                                                                6                12                 23               38
    Other                                                                  21                10                 59               32
                                                                --------------    --------------      --------------  --------------
      Total income                                                        259               295                878            1,154
                                                                --------------    --------------      --------------  --------------
Expenses:

    Operating                                                             228               200                673              613
    Interest                                                               45                46                136              140
    Depreciation                                                           50                50                150              150
    General and administrative                                             68                26                122               77
                                                                --------------    --------------      --------------  --------------
      Total expenses                                                      391               322              1,081              980
                                                                --------------    --------------      --------------  --------------
Net (loss) income                                               $        (132)    $         (27)      $       (203)   $         174
                                                                ==============    ==============      ==============  ==============
Net (loss) income allocated to General Partners                 $         (10)    $          (2)      $        (15)   $          13
                                                                ==============    ==============      ==============  ==============
Net (loss) income allocated to Limited Partners                 $        (122)    $         (25)      $       (188)   $         161
                                                                ==============    ==============      ==============  ==============
Net (loss) income per Unit of Limited Partnership Interest      $       (4.88)    $       (1.00)      $      (7.52)   $        6.44
                                                                ==============    ==============      ==============  ==============
Distributions per Unit of Limited Partnership Interest          $        1.00     $        1.00       $       3.00    $        3.00
                                                                ==============    ==============      ==============  ==============
</TABLE>


                 See notes to consolidated financial statements.

                                     3 of 13

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          WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
          ----------------------------------------------------------
                         FORM 10-QSB SEPTEMBER 30, 2003
                         ------------------------------

CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL (UNAUDITED)

(IN THOUSANDS, EXCEPT UNIT DATA)

<TABLE>
<CAPTION>

                                                  UNITS OF
                                                  LIMITED           GENERAL              LIMITED             TOTAL
                                                PARTNERSHIP        PARTNERS'            PARTNERS'          PARTNERS'
                                                  INTEREST          DEFICIT              CAPITAL            CAPITAL
                                                -----------      -------------       -------------      --------------

<S>                                               <C>            <C>                 <C>                <C>
Balance - January 1, 2003                          25,005         $    (1,166)        $     3,509        $      2,343

    Net loss                                            -                 (15)              (188)                (203)
    Distributions                                       -                  (6)               (75)                 (81)
                                                -----------      -------------       -------------      --------------
Balance - September 30, 2003                       25,005         $    (1,187)        $     3,246        $      2,059
                                                ===========      =============       =============      ==============
</TABLE>



                 See notes to consolidated financial statements.

                                    4 of 13

<PAGE>

           WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
           ----------------------------------------------------------
                         FORM 10-QSB SEPTEMBER 30, 2003
                         ------------------------------

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                    FOR THE NINE MONTHS ENDED
                                                                             SEPTEMBER 30,            SEPTEMBER 30,
(In Thousands)                                                                    2003                     2002
                                                                            --------------           --------------
Cash Flows from Operating Activities:
<S>                                                                         <C>                      <C>
Net (loss) income                                                           $        (203)           $         174
Adjustments to reconcile net (loss) income to net cash used in
  operating activities:
      Depreciation                                                                    150                      150
      Income from Local Limited Partnership cash distributions                          -                     (250)
      Equity in losses of Local Limited Partnerships                                  103                       56
      Changes in assets and liabilities:
         Increase in other assets                                                    (103)                     (23)
         Increase (decrease) in accounts payable
            and accrued expenses                                                        9                     (248)
         Increase in accrued interest payable on subordinated loan                      9                       10
                                                                            --------------           --------------
      Net cash used in operating activities                                           (35)                    (131)
                                                                            --------------           --------------
Cash Flows From Investing Activities:

      Distributions received from Local Limited Partnerships                           57                      261
                                                                            --------------           --------------
      Cash provided by investing activities                                            57                      261
                                                                            --------------           --------------
Cash Flows From Financing Activities:

      Mortgage principal payments                                                     (57)                     (54)
      Distributions to partners                                                      (108)                    (108)
                                                                            --------------           --------------
      Cash used in financing activities                                              (165)                    (162)
                                                                            --------------           --------------
Net decrease in cash and cash equivalents                                            (143)                     (32)

Cash and cash equivalents, beginning of period                                      3,038                    2,902
                                                                            --------------           --------------
Cash and cash equivalents, end of period                                    $       2,895            $       2,870
                                                                            ==============           ==============
Supplemental Disclosure of Cash Flow Information

      Interest paid in cash                                                 $         127            $         130
                                                                            ==============           ==============
Supplemental Disclosure of Non-Cash
      Financing Activities

      Accrued distributions to partners                                     $          81            $          81
                                                                            ==============           ==============

</TABLE>

                 See notes to consolidated financial statements.

                                     5 of 13

<PAGE>


          WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
           ----------------------------------------------------------
                         FORM 10-QSB SEPTEMBER 30, 2003
                         ------------------------------

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------


1.      GENERAL

        The accompanying consolidated financial statements, footnotes and
        discussions should be read in conjunction with the consolidated
        financial statements, related footnotes and discussions contained in the
        Partnership's Annual Report on Form 10-KSB for the year ended December
        31, 2002.

        The financial information contained herein is unaudited. In the opinion
        of management, all adjustments necessary for a fair presentation of such
        financial information have been included. All adjustments are of a
        normal recurring nature. The balance sheet at December 31, 2002 was
        derived from audited financial statements at such date.

        The results of operations for the nine months ended September 30, 2003
        and 2002 are not necessarily indicative of the results to be expected
        for the full year.

2.      CONSOLIDATION

        The accompanying financial statements have been prepared on a
        consolidated basis, including the accounts of Clear Creek Ltd. All
        significant intercompany transactions and balances have been eliminated.

3.      PARTNERSHIP MATTERS

        On June 19, 2003, the Partnership solicited the consent of its limited
        partners to extend the term of the Partnership from December 31, 2003 to
        December 31, 2034. The requisite consent of limited partners was not
        obtained on July 31, 2003, the final date on which votes were accepted.
        Accordingly, the Partnership will be dissolved in accordance with the
        terms of its Partnership Agreement on December 31, 2003. The General
        Partner is marketing the Partnership's assets for sale. It is not
        expected that the Partnership's assets will be sold prior to December
        31, 2003. Accordingly, the General Partner will, pursuant to the terms
        of the Partnership's partnership agreement liquidate in an orderly
        fashion the assets of the Partnership. As indicated in the Consent
        Solicitation Statement pursuant to which the vote of limited partners
        was sought to extend the term, the nature of the Partnership's assets
        are limited partnership interests in the Local Limited Partnerships.
        Accordingly, any potential purchaser of the Partnership's assets will
        not be acquiring the underlying real property but a limited partnership
        interest in the property owner. Further, because the Partnership does
        not have the ability to force a sale of the underlying properties, it is
        expected that any potential purchaser of the Partnership's interest will
        request a significant non-control discount. In the event the Partnership
        is unable to liquidate its assets, it may seek the consent of the
        general partners of the Local Limited Partnerships to enable the
        Partnership to make a distribution in kind which will transfer to the
        Partnership's limited partners their pro rata interest in the Local
        Limited Partnerships, thereby making the Partnership's limited partners
        direct limited partners in each Local Limited Partnership. There can be
        no assurance that the Partnership will be successful in selling its
        assets or at what the price such assets can be sold.

                                     6 of 13

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           WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
           ----------------------------------------------------------
                         FORM 10-QSB SEPTEMBER 30, 2003
                         ------------------------------



ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
        ---------------------------------------------------------

        The matters discussed in this Form 10-QSB contain certain
        forward-looking statements and involve risks and uncertainties
        (including changing market conditions, competitive and regulatory
        matters, etc.) detailed in the disclosure contained in this Form 10-QSB
        and the other filings with the Securities and Exchange Commission made
        by the Partnership from time to time. The discussion of the
        Partnership's liquidity, capital resources and results of operations,
        including forward-looking statements pertaining to such matters, does
        not take into account the effects of any changes to the Partnership's
        operations. Accordingly, actual results could differ materially from
        those projected in the forward-looking statements as a result of a
        number of factors, including those identified herein.

        This Item should be read in conjunction with the consolidated financial
        statements and other items contained elsewhere in the report.

        Liquidity and Capital Resources
        -------------------------------

        As of September 30, 2003, the Partnership retained an equity interest in
        five Local Limited Partnerships, each of which owns a single apartment
        complex. The Partnership also owns an 88.5% interest in Clear Creek Ltd.
        ("Clear Creek"), a partnership in which an affiliate of the
        Partnership's general partner is the managing general partner. The
        Partnership's primary sources of income are distributions from the Local
        Limited Partnerships and rental income from Clear Creek Apartments. The
        Partnership requires cash to pay the operating expenses and mortgage
        note of Clear Creek, for general and administrative expenses and to make
        capital contributions and/or loans to any of the Local Limited
        Partnerships which the managing general partner deems to be in the
        Partnership's best interest.

        On June 19, 2003, the Partnership solicited the consent of its limited
        partners to extend the term of the Partnership from December 31, 2003 to
        December 31, 2034. The requisite consent of limited partners was not
        obtained on July 31, 2003, the final date on which votes were accepted.
        Accordingly, the Partnership will be dissolved in accordance with the
        terms of its Partnership Agreement on December 31, 2003. The General
        Partner is marketing the Partnership's assets for sale. It is not
        expected that the Partnership's assets will be sold prior to December
        31, 2003. Accordingly, the General Partner will, pursuant to the terms
        of the Partnership's partnership agreement liquidate in an orderly
        fashion the assets of the Partnership. As indicated in the Consent
        Solicitation Statement pursuant to which the vote of limited partners
        was sought to extend the term, the nature of the Partnership's assets
        are limited partnership interests in the Local Limited Partnerships.
        Accordingly, any potential purchaser of the Partnership's assets will
        not be acquiring the underlying real property but a limited partnership
        interest in the property owner. Further, because the Partnership does
        not have the ability to force a sale of the underlying properties, it is
        expected that any potential purchaser of the Partnership's interest will
        request a significant non-control discount. In the event the Partnership
        is unable to liquidate its assets, it may seek the consent of the
        general partners of the Local Limited Partnerships to enable the
        Partnership to make a distribution in kind which will transfer to the
        Partnership's limited partners their pro rata interest in the Local
        Limited Partnerships, thereby making the Partnership's limited partners
        direct limited partners in each Local Limited Partnership. There can be
        no assurance that the Partnership will be successful in selling its
        assets or at what the price such assets can be sold.

                                     7 of 13

<PAGE>

           WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
           ----------------------------------------------------------
                         FORM 10-QSB SEPTEMBER 30, 2003
                         ------------------------------

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (CONTINUED)
        ---------------------------------------------------------------------

        Liquidity and Capital Resources (Continued)
        -------------------------------------------

        To date, all cash requirements have been satisfied by interest income
        earned on short-term investments, rental income from Clear Creek and
        cash distributed to the Partnership by the Local Limited Partnerships.
        If the Partnership funds any operating deficits, it will use monies from
        its operating reserves. As of September 30, 2003, the Partnership had
        cash and cash equivalents of $2,895,000 as compared to $3,038,000 at
        December 31, 2002. The managing general partner's current policy is to
        maintain a reserve balance sufficient to provide the Partnership the
        flexibility to preserve its economic interest in the Local Limited
        Partnerships. Therefore, a lack of cash distributed by the Local Limited
        Partnerships to the Partnership in the future should not deplete the
        reserves, though it may restrict the Partnership from making
        distributions. The Partnership did not fund any operating deficits to
        Local Limited Partnerships during the nine months ended September 30,
        2003.

        The level of liquidity based on cash and cash equivalents experienced a
        $143,000 decrease at September 30, 2003 as compared to December 31,
        2002. The Partnership's $35,000 of net cash used in operating activities
        and $165,000 of cash used in financing activities was partially offset
        by $57,000 of cash provided by investing activities. Cash used in
        financing activities consisted of $57,000 of mortgage principal payments
        and $108,000 of distributions to partners. Cash provided by investing
        activities consisted of $57,000 of distributions received from Local
        Limited Partnerships. For the nine months ended September 30, 2003, the
        Partnership accrued distributions aggregating $75,000 ($3.00 per unit)
        to its limited partners and $6,000 to the general partners. The
        Partnership's present policy is to accrue distributions on a quarterly
        basis and to pay them on an annual basis.

        The Partnership is not obligated to provide any additional funds to the
        Local Limited Partnerships to fund operating deficits. The Partnership
        determines on a case by case basis whether to fund any operating
        deficits. If a Local Limited Partnership sustains continuing operating
        deficits and has no other sources of funding, it is likely that it will
        eventually default on its mortgage obligations and risk a foreclosure on
        its property by the lender. If a foreclosure were to occur, the Local
        Limited Partnership would lose its investment in the property and would
        incur a tax liability due to the recapture of tax benefits taken in
        prior years. The Partnership, as an owner of the Local Limited
        Partnership, would share these consequences in proportion to its
        ownership interest in the Local Limited Partnership.

        The mortgage note payable encumbering Clear Creek in the amount of
        $2,216,000 is self amortizing and is payable in monthly installments of
        approximately $20,000, including interest at 7.5% per annum, through
        October 2018, the date of maturity. The mortgage is collateralized by
        the rental property.

        The subordinated loan, in the amount of $133,000, is due to the former
        general partner of Clear Creek who also manages the property. The
        subordinated loan accrues interest at 10% and is due upon sale of the
        property.

                                     8 of 13

<PAGE>

           WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
           ----------------------------------------------------------
                         FORM 10-QSB SEPTEMBER 30, 2003
                         ------------------------------

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (CONTINUED)
        ---------------------------------------------------------------------

        Liquidity and Capital Resources (Continued)

        The Partnership's only significant critical accounting policy relates to
        the evaluation of the fair value of real estate and its investments in
        Local Limited Partnerships. The Partnership evaluates the need for an
        impairment loss on its real estate assets and investments when
        indicators of impairment are present and the undiscounted cash flows are
        not sufficient to recover the asset's carrying amount. The impairment
        loss is measured by comparing the fair value of the asset to its
        carrying amount. The evaluation of the fair value of real estate and its
        investments is an estimate that is susceptible to change and actual
        results could differ from those estimates.

        Results of Operations
        ---------------------

        The Partnership's net loss for the nine months ended September 30, 2003
        was $203,000, as compared to net income of $174,000 for the nine months
        ended September 30, 2002. The decrease is due to a decrease in income of
        $276,000 and an increase in expenses of $101,000. The decrease in income
        is due to decreases in income from Local Limited Partnership of
        $250,000, interest income of $15,000 and $103,000 of equity in losses of
        Local Limited Partnerships for the nine months ended September 30, 2003
        as compared to $56,000 of equity in losses of Local Limited Partnerships
        for the nine months ended September 30, 2002, which were partially
        offset by increases in rental income of $9,000 and other income of
        $27,000. The increase in expenses is due to an increase in various
        operating expenses of $60,000 and an increase in general and
        administrative expenses of $45,000, which were partially offset by a
        decrease in interest expense of $4,000. The increase in general and
        administrative expenses primarily relates to expenses incurred in
        connection with the Partnership's attempt to solicit the consent of its
        limited partners to extend the term of the Partnership.

        Recently Issued Accounting Standards
        ------------------------------------

        In April 2002, the Financial Accounting Standards Board ("FASB") issued
        Statement of Financial Accounting Standard ("SFAS") No. 145, "Rescission
        of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13
        and Technical Corrections," which updates, clarifies and simplifies
        existing accounting pronouncements. This statement rescinds SFAS No. 4,
        "Reporting Gains and Losses from Extinguishment of Debt." FASB No. 145
        is effective for fiscal years beginning after May 15, 2002. Upon
        adoption, enterprises must reclassify prior period items that do not
        meet the extraordinary item classification criteria in Accounting
        Principles Board Opinion No. 30. This statement had no effect on the
        Partnership's consolidated financial statements.

        In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs
        Associated with Exit or Disposal Activities." SFAS No. 146 requires
        companies to recognize costs associated with exit or disposal activities
        when they are incurred rather than at the date of a commitment to an
        exit or disposal plan. Examples of costs covered by the standard include
        lease termination costs and certain employee severance costs that are
        associated with a restructuring, discontinued operation, plant closing
        or other exit or disposal activity. SFAS No. 146 is effective
        prospectively for exit and disposal activities after December 31, 2002.
        This statement had no effect on the Partnership's consolidated financial
        statement.

                                    9 of 13

<PAGE>

           WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
           ----------------------------------------------------------
                         FORM 10-QSB SEPTEMBER 30, 2003
                         ------------------------------

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (CONTINUED)
        ---------------------------------------------------------------------

        Recently Issued Accounting Standards (Continued)
        ------------------------------------------------

        In November 2002, the FASB issued Interpretation No. 45, "Guarantors'
        Accounting and Disclosure Requirements for Guarantees, Including
        Indirect Guarantees of Indebtedness of Others." The interpretation
        elaborates on the disclosures to be made by a guarantor in its financial
        statements about its obligations under certain guarantees that it has
        issued. It also clarifies that a guarantor is required to recognize, at
        the inception of a guarantee, a liability for the fair value of the
        obligation undertaken in issuing the guarantee. This interpretation does
        not prescribe a specific approach for subsequently measuring the
        guarantor's recognized liability over the term of the related guarantee.
        The disclosure provisions of this interpretation were effective for the
        Partnership's December 31, 2002 consolidated financial statements. The
        initial recognition and initial measurement provisions of this
        interpretation are applicable on a prospective basis to guarantees
        issued or modified after December 31, 2002. This interpretation had no
        effect on the Partnership's consolidated financial statements.

        In January 2003, the FASB issued Interpretation No. 46, "Consolidation
        of Variable Interest Entities." This interpretation clarifies the
        application of existing accounting pronouncements to certain entities in
        which equity investors do not have the characteristics of a controlling
        financial interest or do not have sufficient equity at risk for the
        entity to finance its activities without additional subordinated
        financial support from other parties. The provisions of the
        interpretation are effective for all variable interests in variable
        interest entities created after January 31, 2003, and the Partnership
        will need to apply its provisions to any existing variable interests in
        variable interest entities no later than December 31, 2004. The
        Partnership does not expect that this interpretation will have an impact
        on the Partnership's consolidated financial statements.

        In April 2003, the FASB issued SFAS No. 149, "Amendment of SFAS No. 133
        on Derivative Instruments and Hedging Activities." This statement amends
        and clarifies financial accounting and reporting for derivative
        instruments, including certain derivative instruments embedded in other
        contracts (collectively referred to as derivatives) and for hedging
        activities under SFAS No. 133, "Accounting for Derivative Instruments
        and Hedging Activities." The changes in this statement improve financial
        reporting by requiring that contracts with comparable characteristics be
        accounted for similarly. In particular, this statement (1) clarifies
        under what circumstances a contract with an initial net investment meets
        the characteristic of a derivative discussed in SFAS No. 133, (2)
        clarifies when a derivative contains a financing component, (3) amends
        the definition of an underlying that is related to an asset, liability
        or equity security to conform it to language used in FASB Interpretation
        No. 45, and (4) amends certain other existing pronouncements. Those
        changes will result in more consistent reporting of contracts as either
        derivatives or hybrid instruments. This statement is effective for
        contracts entered into or modified after June 30, 2003, and for hedging
        relationships designated after June 30, 2003. The guidance should be
        applied prospectively. The provisions of this statement that relate to
        SFAS No. 133 implementation issues that have been effective for fiscal
        quarters that began prior to June 15, 2003, should continue to be
        applied in accordance with their respective effective dates. In
        addition, certain provisions relating to forward purchases or sales of
        when-issued securities or other securities that do not yet exist, should
        be applied to existing contracts as well as new contracts entered into
        after June 30, 2003. This statement had no effect on the Partnership's
        consolidated financial statements.

                                    10 of 13
<PAGE>

           WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
           ----------------------------------------------------------
                         FORM 10-QSB SEPTEMBER 30, 2003
                         ------------------------------

ITEM 2. MANAGEMENT'S DISCUSSION AND
        ANALYSIS OR PLAN OF OPERATION (CONTINUED)

        Recently Issued Accounting Standards (Continued)
        ------------------------------------------------

        In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
        Financial Instruments with Characteristics of both Liabilities and
        Equity." The statement improves the accounting for certain financial
        instruments that under previous guidance, issuers could account for as
        equity. The new statement requires that those instruments be classified
        as liabilities in statements of financial position. SFAS No. 150 affects
        the issuer's accounting for three types of freestanding financial
        instruments. One type is mandatorily redeemable shares, which the
        issuing company is obligated to buy back in exchange for cash or other
        assets. A second type, which includes put options and forward purchase
        contracts, involves instruments that do or may require the issuer to buy
        back some of its shares in exchange for cash or other assets. The third
        type of instruments that are liabilities under this statement is
        obligations that can be settled with shares, the monetary value of which
        is fixed, tied solely or predominantly to a variable such as
        a market index, or varies inversely with the value of the issuers'
        shares. SFAS No. 150 does not apply to features embedded in a financial
        instrument that is not a derivative in its entirety. In addition to its
        requirements for the classification and measurement of financial
        instruments in its scope, SFAS No. 150 also requires disclosures about
        alternative ways of settling the instruments and the capital structure
        of entities, all of whose shares are mandatorily redeemable. Most of the
        guidance in SFAS No. 150 is effective for all financial instruments
        entered into or modified after May 31, 2003, and otherwise is effective
        at the beginning of the first interim period beginning after June 15,
        2003. This statement had no effect on the Partnership's consolidated
        financial statements.

        Quantitative and Qualitative Disclosures of Market Risk
        -------------------------------------------------------

        The Partnership does not have any financial instruments that would
        expose it to market risk associated with the risk of loss arising from
        adverse changes in market rates and prices. The Partnership's mortgage
        note payable at September 30, 2003 is at a fixed rate of interest.

ITEM 3. CONTROLS AND PROCEDURES
        -----------------------

        The Partnership's management, with the participation of the
        Partnership's Chief Executive Officer and Chief Financial Officer, 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) as of the end of
        the period covered by this report. Based on such evaluation, the
        Partnership's Chief Executive Officer and Chief Financial Officer have
        concluded that, as of the end of such period, the Partnership's
        disclosure controls and procedures are effective.

        There have not been any changes in the Partnership's internal control
        over financial reporting 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.

                                    11 of 13

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           WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
           ----------------------------------------------------------
                         FORM 10-QSB SEPTEMBER 30, 2003
                         ------------------------------

PART II - OTHER INFORMATION
---------------------------

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
        ----------------------------------------------------

        On June 19, 2003, the Partnership solicited the consent of its limited
        partners to extend the term of the Partnership from December 31, 2003 to
        December 31, 2034. Limited partners were required to return their
        ballots by no later than July 31, 2003. At July 31, 2003, the
        Partnership had received 9,583 votes "for," 4,816 votes "against" and
        396 "abstentions" on this matter. As a result of the failure of majority
        in interest of the limited partners to vote "for" the proposal, the
        proposal was not approved.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
        ---------------------------------

        (a)    Exhibits:

               Exhibits required by Item 601 of Regulation S-B are filed
               herewith and are listed in the attached Exhibit Index

        (b)    Reports on Form 8-K:

               No reports on Form 8-K were filed during the period ended
               September 30, 2003.







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           WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
           ----------------------------------------------------------
                         FORM 10-QSB SEPTEMBER 30, 2003
                         ------------------------------


                                   SIGNATURES
                                   ----------

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


                                      WINTHROP RESIDENTIAL ASSOCIATES III,
                                      A LIMITED PARTNERSHIP


                                      BY: TWO WINTHROP PROPERTIES, INC.
                                          Managing General Partner



                                      BY: /s/ Michael L. Ashner
                                          --------------------------------------
                                          Michael L. Ashner
                                          Chief Executive Officer



                                      BY: /s/ Thomas C. Staples
                                          --------------------------------------
                                          Thomas C. Staples
                                          Chief Financial Officer

                                          Dated:     November 13, 2003



                                    13 of 13

<PAGE>

           WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
           ----------------------------------------------------------
                         FORM 10-QSB SEPTEMBER 30, 2003
                         ------------------------------


Exhibit Index


  Exhibits
  --------


  31.1  Chief Executive Officer's Certification, pursuant to Section
        302 of the Sarbanes-Oxley Act of 1302.

  31.2  Chief Financial Officer's Certification, pursuant to Section
        302 of the Sarbanes-Oxley Act of 1302.


  32    Certification of Chief Executive Officer and Chief Financial
        Officer, pursuant to 18 U.S.C. Section 1350, as adopted
        pursuant to Section 906 of the Sarbanes-Oxley Act of 1302.

  99.1  Supplementary Information Required Pursuant to Section 9.4 of
        the Partnership Agreement.