<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 March 31, 2001

                                       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)

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

         Five Cambridge Center, Cambridge, MA                                   02142-1493
  ----------------------------------------------------         ---------------------------------------------
        (Address of principal executive office)                                 (Zip Code)
</TABLE>

         Registrant's telephone number, including area code     (617) 234-3000


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 12


<PAGE>
           WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
                           FORM 10-QSB MARCH 31, 2001

                         PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS.

CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                                    MARCH 31, 2001             DECEMBER 31,
(IN THOUSANDS, EXCEPT UNIT DATA)                                                     (UNAUDITED)                   2000
                                                                               -------------------------   ----------------------


Assets

<S>                                                                            <C>                         <C>
Cash and cash equivalents                                                      $                  3,118    $               3,052
Other assets                                                                                        100                       98
Real estate (net of accumulated depreciation
      of $3,343 in 2001 and $3,293 in 2000)                                                       1,927                    1,977
                                                                               -------------------------   ----------------------

      Total Assets                                                             $                  5,145    $               5,127
                                                                               =========================   ======================

Liabilities and Partners' Capital

Liabilities:

Accounts payable and accrued expenses                                           $                    92     $                110
Distributions payable                                                                               108                       81
Mortgage payable                                                                                  2,396                    2,413
Accrued interest - subordinated loan payable                                                         90                       87
Subordinated loan payable                                                                           133                      133
                                                                               -------------------------   ----------------------

      Total Liabilities                                                                           2,819                    2,824
                                                                               -------------------------   ----------------------

Partners' Capital:

Limited Partners -
   Units of Limited Partnership Interest,
   $1,000 stated value per unit; 25,005 units authorized,
   issued and outstanding                                                                         3,494                    3,473
General Partners' deficit                                                                        (1,168)                  (1,170)
                                                                               -------------------------   ----------------------

         Total Partners' Capital                                                                  2,326                    2,303
                                                                               -------------------------   ----------------------

         Total Liabilities and Partners' Capital                                $                 5,145     $              5,127
                                                                               =========================   ======================
</TABLE>










                 See notes to consolidated financial statements.



                                     2 of 12
<PAGE>

           WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
                           FORM 10-QSB MARCH 31, 2001



CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(IN THOUSANDS, EXCEPT UNIT DATA)
<TABLE>
<CAPTION>
                                                                                              FOR THE THREE MONTHS ENDED
                                                                                             MARCH 31,            MARCH 31,
                                                                                              2001                  2000
                                                                                       --------------------  --------------------

Income:

<S>                                                                                     <C>                   <C>
    Rental income                                                                       $              303    $              289
    Income from Local Limited Partnership cash distributions                                             -                    87
    Interest                                                                                            32                    28
    Other                                                                                               11                     9
                                                                                       --------------------  --------------------

      Total income                                                                                     346                   413
                                                                                       --------------------  --------------------

Expenses:

    Operating                                                                                          180                   164
    Interest                                                                                            48                    50
    Depreciation                                                                                        50                    47
    General and administrative                                                                          18                    20
                                                                                       --------------------  --------------------

      Total expenses                                                                                   296                   281
                                                                                       --------------------  --------------------

Net income                                                                              $               50    $              132
                                                                                       ====================  ====================

Net income allocated to General Partners                                                $                4    $               10
                                                                                       ====================  ====================

Net income allocated to Limited Partners                                                $               46    $              122
                                                                                       ====================  ====================

Net income per Unit of Limited Partnership Interest                                     $             1.84    $             4.88
                                                                                       ====================  ====================

Distributions per Unit of Limited Partnership Interest                                  $             1.00    $             1.00
                                                                                       ====================  ====================
</TABLE>







                 See notes to consolidated financial statements.

                                     3 of 12

<PAGE>

           WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
                           FORM 10-QSB MARCH 31, 2001



CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL (UNAUDITED)

<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT UNIT DATA)                    UNITS OF
                                                   LIMITED             GENERAL                LIMITED              TOTAL
                                                 PARTNERSHIP          PARTNERS'              PARTNERS'           PARTNERS'
                                                  INTEREST             DEFICIT                  CAPITAL           CAPITAL
                                              ------------------  -------------------  -------------------   -------------------


<S>                                                      <C>      <C>                  <C>                   <C>
Balance - January 1, 2001                                25,005   $           (1,170)  $            3,473    $            2,303

    Net income                                                                     4                   46                    50
    Distributions                                                                 (2)                 (25)                  (27)
                                              ------------------  -------------------  -------------------   -------------------

Balance - March 31, 2001                                 25,005   $           (1,168)  $            3,494    $            2,326
                                              ==================  ===================  ===================   ===================
</TABLE>



























                 See notes to consolidated financial statements.

                                     4 of 12

<PAGE>
           WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
                           FORM 10-QSB MARCH 31, 2001

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
                                                                                          FOR THE THREE MONTHS ENDED
                                                                                      MARCH 31,                  MARCH 31,
(In Thousands)                                                                           2001                      2000
                                                                               -------------------------   ----------------------

Cash Flows from Operating Activities:

<S>                                                                            <C>                         <C>
Net income                                                                     $                     50    $                 132
Adjustments to reconcile net income to net cash
  provided by operating activities:
      Depreciation                                                                                   50                       47
      Income from Local Limited Partnership cash distribution                                         -                      (87)

      Changes in assets and liabilities:
         Increase in other assets                                                                    (2)                     (16)
         (Decrease) increase in accounts payable
          and accrued expenses                                                                      (18)                       8
         Increase in accrued interest payable on subordinated loan                                    3                        4
                                                                               -------------------------   ----------------------

      Net cash provided by operating activities                                                      83                       88
                                                                               -------------------------   ----------------------

Cash Flows From Investing Activities:

Distributions received from Local Limited Partnerships                                                -                       87
                                                                               -------------------------      -------------------

      Cash provided by investing activities                                                           -                       87
                                                                               -------------------------      -------------------

Cash Flows From Financing Activities:

      Mortgage principal payments                                                                   (17)                     (15)
      Distributions to partners                                                                       -                     (502)
                                                                               -------------------------   ----------------------

      Net cash used in financing activities                                                         (17)                    (517)
                                                                               -------------------------   ----------------------

Net increase (decrease) in cash and cash equivalents                                                 66                     (342)

Cash and cash equivalents, beginning of period                                                    3,052                    2,683
                                                                               -------------------------   ----------------------

Cash and cash equivalents, end of period                                       $                  3,118    $               2,341
                                                                               =========================   ======================

Supplemental Disclosure of Cash Flow Information

      Interest paid in cash                                                    $                     45    $                  46
                                                                               =========================   ======================

Supplemental Disclosure of Non-Cash
      Investing Activities

      Accrued distributions to partners                                        $                     27    $                  27
                                                                               =========================   ======================
</TABLE>





                 See notes to consolidated financial statements.

                                     5 of 12


<PAGE>

           WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
                           FORM 10-QSB MARCH 31, 2001

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.           GENERAL

             The accompanying financial statements, footnotes and discussions
             should be read in conjunction with the financial statements,
             related footnotes and discussions contained in the Partnership's
             Annual Report on Form 10-KSB for the year ended December 31, 2000.

             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, 2000 was derived from audited financial statements at
             such date.

             The results of operations for the three months ended March 31, 2001
             and 2000 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.
             ("Clear Creek"). All significant intercompany transactions and
             balances have been eliminated.


























                                     6 of 12

<PAGE>



           WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
                           FORM 10-QSB MARCH 31, 2001


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 March 31, 2001, 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 sole 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 of Clear Creek, 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.

           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 March 31, 2001,
           the Partnership had cash and cash equivalents of $3,118,000, as
           compared to $3,052,000 at December 31, 2000. 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 in 2001 and
           2000.

           The level of liquidity based on cash and cash equivalents experienced
           a $66,000 increase at March 31, 2001 as compared to December 31,
           2000. The Partnership's $83,000 of net cash provided by operating
           activities was partially offset by $17,000 of mortgage principal
           payments (financing activities).









                                     7 of 12

<PAGE>

           WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
                           FORM 10-QSB MARCH 31, 2001

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

           Liquidity and Capital Resources (Continued)

           For the three months ended March 31, 2001, the Partnership accrued
           distributions aggregating $25,000 ($1.00 per Unit) to its limited
           partners and $2,000 to the general partners.

           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.

           Results of Operations

           Net income decreased by $82,000 for the three months ended March 31,
           2001, as compared to the three months ended March 31, 2000. The
           decrease is due to a decrease in income of $67,000 and an increase in
           expenses of $15,000. The decrease in income is due to a decrease in
           income from Local Limited Partnerships of $87,000, which was
           partially offset by an increase rental income of $14,000. The
           increase in expenses is primarily due to an increase in operating
           expenses of $16,000. All other items of income and expense remained
           relatively constant.

           Recently Issued Accounting Standards

           The Financial Accounting Standards Board issued SFAS No. 137,
           "Accounting for Derivative Instruments and Hedging Activities -
           Deferral of the Effective Date of SFAS No. 133." The Statement
           deferred for one year the effective date of SFAS No. 133, "Accounting
           for Derivative Instruments and Hedging Activities". The Statement
           requires companies to recognize all derivatives on the balance sheet
           as assets or liabilities, measured at fair value. Gains or losses
           resulting from changes in the values of those derivatives would be
           accounted for depending on the use of the derivative and whether they
           qualify for hedge accounting. This Statement was effective for fiscal
           years beginning after June 15, 2000. There was no effect from this
           Statement on the Partnership's 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 March 31, 2001 is at a fixed rate of
           interest.








                                     8 of 12


<PAGE>



           WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
                           FORM 10-QSB MARCH 31, 2001



PART II - OTHER INFORMATION


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

             (a)  Exhibits:

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

             (b)  Reports on Form 8-K:

                  No reports on Form 8-K were filed during the period ended
March 31, 2001.


































                                     9 of 12

<PAGE>



           WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
                           FORM 10-QSB MARCH 31, 2001


                                   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 Staples
                                     --------------------------------
                                     Thomas Staples
                                     Chief Financial Officer

                                     Dated:     May 14, 2001





















                                    10 of 12


<PAGE>



           WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
                           FORM 10-QSB MARCH 31, 2001



Exhibit Index


         Exhibit                                                   Page No.
         -------                                                   --------

99.      Supplementary  Information  Required  Pursuant  to           12
         Section 9.4 of the Partnership Agreement.








































                                    11 of 12


<PAGE>



                                                                      EXHIBIT 99

           WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
                           FORM 10-QSB MARCH 31, 2001



Supplementary information required pursuant to section 9.4 of the partnership
agreement:

1.    Statement of Cash Available for Distribution for the three months ended
      March 31, 2001:

<TABLE>
<CAPTION>
             <S>                                                                    <C>
             Net Income                                                             $      50,000
             Add:     Depreciation                                                         50,000
             Less:    Cash to reserves                                                    (73,000)
                                                                                    --------------
             Cash Available for Distribution                                        $      27,000
                                                                                    =============
             Distributions allocated to General Partners                            $       2,000
                                                                                    =============
             Distributions allocated to Limited Partners                            $      25,000
                                                                                    =============
</TABLE>


2.    Fees and other compensation paid or accrued by the Partnership to the
      General Partners, or their affiliates, during the three months ended March
      31, 2001:


<TABLE>
<CAPTION>
                Entity Receiving                                      Form of
                  Compensation                                     Compensation                              Amount
         <S>                                    <C>                                                      <C>
         General Partners                       Interest in Cash Available for Distribution              $       2,000

         WFC Realty Co., Inc.
         (Initial Limited Partner)              Interest in Cash Available for Distribution              $           5
</TABLE>





















                                    12 of 12