<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, 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 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 MARCH 31, 2002
                           --------------------------
                         PART I - FINANCIAL INFORMATION
                         ------------------------------


ITEM 1.  FINANCIAL STATEMENTS.

<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
                                                                                    MARCH 31, 2002              DECEMBER 31,
(IN THOUSANDS, EXCEPT UNIT DATA)                                                     (UNAUDITED)                    2001
                                                                               -------------------------    ----------------------
Assets
<S>                                                                            <C>                          <C>
Cash and cash equivalents                                                      $                  2,806     $               2,902
Investments in Local Limited Partnerships                                                           490                       497
Other assets                                                                                        111                       108
Real estate (net of accumulated depreciation
      of $3,574 in 2002 and $3,524 in 2001)                                                       1,725                     1,775
                                                                               -------------------------    ----------------------

      Total Assets                                                             $                  5,132     $               5,282
                                                                               =========================    ======================

Liabilities and Partners' Capital

Liabilities:

Accounts payable and accrued expenses                                            $                   85     $                 339
Distributions payable                                                                               135                       108
Mortgage payable                                                                                  2,328                     2,346
Accrued interest - subordinated loan payable                                                        103                       100
Subordinated loan payable                                                                           133                       133
                                                                               -------------------------    ----------------------

      Total Liabilities                                                                           2,784                     3,026
                                                                               -------------------------    ----------------------

Partners' Capital:

Limited Partners -
   Units of Limited Partnership Interest,
   $1,000 stated value per unit; 25,005 units authorized,
   issued and outstanding                                                                         3,514                     3,429
General Partners' deficit                                                                        (1,166)                   (1,173)
                                                                               -------------------------    ----------------------

         Total Partners' Capital                                                                  2,348                     2,256
                                                                               -------------------------    ----------------------

         Total Liabilities and Partners' Capital                                 $                5,132     $               5,282
                                                                               =========================    ======================
</TABLE>


                 See notes to consolidated financial statements.



                                     2 of 13
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           WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
           ----------------------------------------------------------
                           FORM 10-QSB MARCH 31, 2002
                           --------------------------



CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(IN THOUSANDS, EXCEPT UNIT DATA)
<TABLE>
<CAPTION>
                                                                                               FOR THE THREE MONTHS ENDED
                                                                                              MARCH 31,            MARCH 31,
                                                                                               2002                  2001
                                                                                        --------------------  --------------------
<S>                                                                                      <C>                   <C>
Income:

    Rental income                                                                        $              273    $              303
    Income from Local Limited Partnership cash distributions                                            125                     -
    Equity in income of Local Limited Partnerships                                                        5                     -
    Interest                                                                                             13                    32
    Other                                                                                                 9                    11
                                                                                        --------------------  --------------------

      Total income                                                                                      425                   346
                                                                                        --------------------  --------------------

Expenses:

    Operating                                                                                           185                   180
    Interest                                                                                             47                    48
    Depreciation                                                                                         50                    50
    General and administrative                                                                           24                    18
                                                                                        --------------------  --------------------

      Total expenses                                                                                    306                   296
                                                                                        --------------------  --------------------

Net income                                                                               $              119    $               50
                                                                                        ====================  ====================

Net income allocated to General Partners                                                 $                9    $                4
                                                                                        ====================  ====================

Net income allocated to Limited Partners                                                 $              110    $               46
                                                                                        ====================  ====================

Net income per Unit of Limited Partnership Interest                                      $             4.40    $             1.84
                                                                                        ====================  ====================

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



                 See notes to consolidated financial statements.



                                     3 of 13





<PAGE>

           WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
           ----------------------------------------------------------
                           FORM 10-QSB MARCH 31, 2002
                           --------------------------


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, 2002                                25,005  $           (1,173)  $            3,429   $             2,256

    Net income                                                -                   9                  110                   119
    Distributions                                             -                  (2)                 (25)                  (27)
                                              ------------------ -------------------  -------------------  --------------------

Balance - March 31, 2002                                 25,005  $           (1,166)  $            3,514   $             2,348
                                              ================== ===================  ===================  ====================
</TABLE>





                 See notes to consolidated financial statements.


                                     4 of 13
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           WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
           ----------------------------------------------------------
                           FORM 10-QSB MARCH 31, 2002
                           --------------------------


CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                           FOR THE THREE MONTHS ENDED
                                                                                      MARCH 31,                   MARCH 31,
(IN THOUSANDS)                                                                           2002                       2001
                                                                               -------------------------    ----------------------
<S>                                                                            <C>                          <C>
Cash Flows from Operating Activities:

Net income                                                                     $                    119     $                  50
Adjustments to reconcile net income to net cash (used in)
  provided by operating activities:
      Depreciation                                                                                   50                        50
      Income from Local Limited Partnership cash distributions                                     (125)                        -
      Equity in income of Local Limited Partnerships                                                 (5)                        -
      Changes in assets and liabilities:
         Increase in other assets                                                                    (3)                       (2)
         Decrease in accounts payable and accrued expenses                                         (254)                      (18)
         Increase in accrued interest payable on subordinated loan                                    3                         3
                                                                               -------------------------    ----------------------

      Net cash (used in) provided by operating activities                                          (215)                       83
                                                                               -------------------------    ----------------------

Cash Flows From Investing Activities:

Distributions received from Local Limited Partnerships                                              137                         -
                                                                               -------------------------    ----------------------

      Cash provided by investing activities                                                         137                         -
                                                                               -------------------------    ----------------------

Cash Flows From Financing Activities:

      Mortgage principal payments                                                                   (18)                      (17)
                                                                               -------------------------    ----------------------

      Cash used in financing activities                                                             (18)                      (17)
                                                                               -------------------------    ----------------------

Net (decrease) increase in cash and cash equivalents                                                (96)                       66

Cash and cash equivalents, beginning of period                                                    2,902                     3,052
                                                                               -------------------------    ----------------------

Cash and cash equivalents, end of period                                       $                  2,806     $               3,118
                                                                               =========================    ======================

Supplemental Disclosure of Cash Flow Information

      Interest paid in cash                                                    $                     44     $                  45
                                                                               =========================    ======================

Supplemental Disclosure of Non-Cash
      Investing Activities

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

                 See notes to consolidated financial statements.


                                     5 of 13
<PAGE>







           WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
           ----------------------------------------------------------
                           FORM 10-QSB MARCH 31, 2002
                           --------------------------

                   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, 2001.

             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, 2001 was derived from audited financial statements at
             such date.

             The results of operations for the three months ended March 31, 2002
             and 2001 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.





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           WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
           ----------------------------------------------------------
                           FORM 10-QSB MARCH 31, 2002
                           --------------------------


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, 2002, 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.

           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, 2002,
           the Partnership had cash and cash equivalents of $2,806,000, as
           compared to $2,902,000 at December 31, 2001. 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
           three months ended March 31, 2002.

           The level of liquidity based on cash and cash equivalents experienced
           a $96,000 decrease at March 31, 2002 as compared to December 31,
           2001. The Partnership's $215,000 of net cash used in operating
           activities and $18,000 of mortgage principal payments (financing
           activities) was partially offset by $137,000 of distributions
           received from Local Limited Partnerships (investing activities). For
           the three months ended March 31, 2002, the Partnership accrued
           distributions aggregating $25,000 ($1.00 per unit) to its limited
           partners and $2,000 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.



                                     7 of 13
<PAGE>



           WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
           ----------------------------------------------------------
                           FORM 10-QSB MARCH 31, 2002
                           --------------------------

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

           Liquidity and Capital Resources (Continued)

            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 increased by $69,000 for the three months ended March 31,
           2002, as compared to the three months ended March 31, 2001. The
           increase is due to an increase in income of $79,000 which was
           partially offset by an increase in expenses of $10,000. The increase
           in income is primarily due to an increase in income from Local
           Limited Partnership cash distributions of $125,000, which was
           partially offset by decreases in rental income of $30,000 and
           interest income of $19,000. The decrease in rental income is due to a
           decline in occupancy at Clear Creek. The increase in expenses is
           primarily due to an increase in operating expenses of $5,000 and
           general and administrative expenses of $6,000. All other items of
           income and expense remained relatively constant.

           Recently Issued Accounting Standards

           In July 2001, the Financial Accounting Standards Board ("FASB")
           issued Statement of Financial Accounting Standards ("SFAS") No. 142
           "Goodwill and Other Intangible Assets". SFAS No. 142 addresses
           accounting and reporting for intangible assets acquired, except for
           those acquired in a business combination. SFAS No. 142 presumes that
           goodwill and certain intangible assets have indefinite useful lives.
           Accordingly, goodwill and certain intangibles will not be amortized
           but rather will be tested at least annually for impairment. SFAS No.
           142 also addresses accounting and reporting for goodwill and other
           intangible assets subsequent to their acquisition. SFAS No. 142 is
           effective for fiscal years beginning after December 15, 2001. This
           statement had no effect on the Partnership's financial statements.

           In August 2001, the FASB issued SFAS No. 144, "Accounting for the
           Impairment or Disposal of Long-Lived Assets," which addresses
           financial accounting and reporting for the impairment or disposal of
           long-lived assets. This statement supersedes SFAS No. 121,
           "Accounting for the Impairment of Long-Lived Assets and for
           Long-Lived Assets to be Disposed Of" and the accounting and reporting
           provisions of APB Opinion No. 30, "Reporting the Results of
           Operations -Reporting the Effects of a Disposal of a Business and
           Extraordinary, Unusual and Infrequently Occurring Events and
           Transactions," for the disposal of a segment of a business. This
           statement also amends ARB No. 51, "Consolidated Financial
           Statements," to eliminate the exception to consolidation for a
           subsidiary for which control is likely to be temporary. SFAS No. 144
           is effective for fiscal years beginning after December 15, 2001, and
           interim periods within those fiscal years. The provisions of this
           statement generally are to be applied prospectively. This statement
           had no effect on the Partnership's financial statements.



                                     8 of 13
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           WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
           ----------------------------------------------------------
                           FORM 10-QSB MARCH 31, 2002
                           --------------------------

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

           Recently Issued Accounting Standards (Continued)

           In April 2002, the FASB issued 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, an
           amendment of Accounting Principals Board Opinion ("APB") No. 30
           "Reporting the Results of Operations - Reporting the Effects of a
           Disposal of a Business and Extraordinary, Unusual and Infrequently
           Occurring Events and Transactions," for the disposal of a segment of
           a business. As a result, the criteria in APB 30 will be used to
           classify those gains and losses. FASB No. 64, "Extinguishments of
           Debts Made to Satisfy Sinking-Fund Requirements (an amendment of FASB
           No. 4)"is no longer necessary because FASB No. 4 has been rescinded.
           FASB No. 44, "Accounting for Intangible Assets of Motor Carriers" is
           no longer necessary since the transition to the Motor Carrier Act of
           1980 has been completed. FASB No. 145 amends FASB No. 13, "Accounting
           for Leases" to require that certain lease modifications that have
           economic effects similar to sale-leaseback transactions be accounted
           for in the same manner as sale-leaseback transactions. FASB No. 145
           also makes technical corrections to existing pronouncements. While
           these corrections are not substantive in nature, in some instances,
           they may change accounting practice. FASB No. 145 will be 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 APB 30. The Partnership
           does not expect that this statement will have a material effect 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, 2002 is at a fixed rate of
           interest.



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           WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
           ----------------------------------------------------------
                           FORM 10-QSB MARCH 31, 2002
                           --------------------------


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, 2002.



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           WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
           ----------------------------------------------------------
                           FORM 10-QSB MARCH 31, 2002
                           --------------------------


                                   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, 2002



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           WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
           ----------------------------------------------------------
                           FORM 10-QSB MARCH 31, 2002
                           --------------------------


Exhibit Index


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

99.      Supplementary  Information  Required Pursuant
         to Section 9.4 of the Partnership Agreement.                   13







                                    12 of 13
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                                                                      EXHIBIT 99
                                                                      ----------

           WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
           ----------------------------------------------------------
                           FORM 10-QSB MARCH 31, 2002
                           --------------------------


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, 2002:

<TABLE>
<CAPTION>
<S>                                                                                             <C>
             Net income                                                                         $     119,000
             Add:     Depreciation                                                                     50,000
                      Distributions received from Local Limited Partnerships, net                      12,000
             Less:    Equity in income of Local Limited Partnerships                                   (5,000)
                      Cash to reserves                                                               (149,000)
                                                                                                 ------------
             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, 2002:

<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>





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