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

                                    FORM 10-Q

[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities  Exchange
Act of 1934

For the period ended March 31, 1999
                     --------------

                                       or

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 [No Fee Required]

For the transition period from                to 
                              ----------------  ----------------  

Commission File Number 0-13479
                       -------

                              PS PARTNERS III, LTD.
            ---------------------------------------------------------
             (Exact name of registrant as specified in its charter)

               California                                       95-3920904
----------------------------------------------            ----------------------
     (State or other jurisdiction of                         (I.R.S. Employer
     incorporation or organization)                       Identification Number)

           701 Western Avenue
          Glendale, California                                  91201-2394
----------------------------------------------            ----------------------
(Address of principal executive offices)                        (Zip Code)


Registrant's telephone number, including area code:  (818) 244-8080
                                                     --------------

Indicate by check mark whether the 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
                                       ---  ---

<PAGE>

                                      INDEX


PART I.   FINANCIAL INFORMATION

         Condensed balance sheets at March 31, 1999
              and December 31, 1998                                         2

         Condensed statements of income for the three
              months ended March 31, 1999 and 1998                          3

         Condensed statements of cash flows for the three
              months ended March 31, 1999 and 1998                          4

         Notes to condensed financial statements                            5-6

         Management's discussion and analysis of financial condition
              and results of operations                                     7-9

PART II.  OTHER INFORMATION

         (Items 1 through 5 are not applicable)

         Item 6 - Exhibits and Reports on Form 8-K                          10

<PAGE>

                              PS PARTNERS III, LTD.
                            CONDENSED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                           March 31,       December 31,
                                                                             1999             1998
                                                                      ----------------- -----------------
                                                                        (Unaudited)
                                     ASSETS
                                     ------

<S>                                                                       <C>               <C>       
Cash and cash equivalents                                                 $1,005,000        $3,122,000

Rent and other receivables                                                    13,000            16,000

Real estate facilities, at cost:
     Land                                                                  3,558,000         3,558,000
     Buildings and equipment                                              13,096,000        13,062,000
                                                                      ----------------- -----------------
                                                                          16,654,000        16,620,000

     Less accumulated depreciation                                        (7,519,000)       (7,339,000)
                                                                      ----------------- -----------------
                                                                           9,135,000         9,281,000

Investment in real estate entities                                        13,640,000        13,897,000

Other assets                                                                  59,000            21,000
                                                                      ----------------- -----------------

                                                                         $23,852,000       $26,337,000
                                                                      ================= =================


                        LIABILITIES AND PARTNERS' EQUITY
                        --------------------------------

Accounts payable                                                            $348,000          $228,000

Advance payments from renters                                                101,000            82,000

Partners' equity:
     Limited partners' equity, $500 per unit, 128,000
       units authorized, issued and outstanding                           23,085,000        25,683,000
     General partner's equity                                                318,000           344,000
                                                                      ----------------- -----------------

Total partners' equity                                                    23,403,000        26,027,000
                                                                      ----------------- -----------------

                                                                         $23,852,000       $26,337,000
                                                                      ================= =================
</TABLE>
                            See accompanying notes.
                                       2

<PAGE>

                              PS PARTNERS III, LTD.
                         CONDENSED STATEMENTS OF INCOME
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                             Three Months Ended
                                                                                 March 31,
                                                                     -----------------------------------
                                                                           1999              1998
                                                                     ----------------- -----------------

REVENUE:

<S>                                                                        <C>               <C>     
Rental income                                                              $685,000          $682,000
Equity in earnings of real estate entities                                1,350,000           669,000
Interest income                                                              40,000            20,000
                                                                     ----------------- -----------------
                                                                          2,075,000         1,371,000
                                                                     ----------------- -----------------

COSTS AND EXPENSES:

Cost of operations                                                          252,000           231,000
Management fees                                                              41,000            41,000
Depreciation and amortization                                               180,000           165,000
Administrative                                                               26,000            22,000
                                                                     ----------------- -----------------
                                                                            499,000           459,000
                                                                     ----------------- -----------------

NET INCOME                                                               $1,576,000          $912,000
                                                                     ================= =================

Limited partners' share of net income
     ($8.95 per unit in 1999 and
     $6.28 per unit in 1998)                                             $1,145,000          $804,000
General partner's share of net income                                       431,000           108,000
                                                                     ----------------- -----------------
                                                                         $1,576,000          $912,000
                                                                     ================= =================
</TABLE>
                            See accompanying notes.
                                       3

<PAGE>

                              PS PARTNERS III, LTD.
                       CONDENSED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                                   Three Months Ended
                                                                                        March 31,
                                                                           ------------------------------------
                                                                                 1999                1998
                                                                           ------------------ -----------------
                                                                                              
CASH FLOWS FROM OPERATING ACTIVITIES:                                                         
                                                                                              
     <S>                                                                      <C>                    <C>     
     Net income                                                               $1,576,000             $912,000
                                                                                              
     Adjustments to reconcile net income to net cash                                          
         provided by operating activities                                                     
                                                                                              
         Depreciation and amortization                                           180,000              165,000
         Decrease in rent and other receivables                                    3,000               48,000
         Increase in other assets                                                (38,000)              (5,000)
         Increase (decrease) in accounts payable                                 120,000              (81,000)
         Increase in advance payments from renters                                19,000                5,000
         Equity in earnings of real estate entities                           (1,350,000)            (669,000)
                                                                           ------------------ -----------------
                                                                                              
             Total adjustments                                                (1,066,000)            (537,000)
                                                                           ------------------ -----------------
                                                                                              
             Net cash provided by operating activities                           510,000              375,000
                                                                           ------------------ -----------------
                                                                                              
CASH FLOWS PROVIDED BY INVESTING ACTIVITIES:                                                  
                                                                                              
         Distributions from real estate entities                               1,607,000            1,026,000
         Additions to real estate facilities                                     (34,000)             (71,000)
                                                                           ------------------ -----------------
                                                                                              
             Net cash provided by investing activities                         1,573,000              955,000
                                                                           ------------------ -----------------
                                                                                              
CASH FLOWS USED IN FINANCING ACTIVITIES:                                                      
                                                                                              
         Distributions to partners                                            (4,200,000)          (1,000,000)
                                                                           ------------------ -----------------
                                                                                              
             Net cash used in financing activities                            (4,200,000)          (1,000,000)
                                                                           ------------------ -----------------
                                                                                              
Net (decrease) increase in cash and cash equivalents                          (2,117,000)             330,000
                                                                                              
Cash and cash equivalents at the beginning of the period                       3,122,000            1,222,000
                                                                           ------------------ -----------------
                                                                                              
Cash and cash equivalents at the end of the period                            $1,005,000           $1,552,000
                                                                           ================== =================
</TABLE>
                            See accompanying notes.
                                       4
                                                                               
<PAGE>

                              PS PARTNERS III, LTD.
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                 MARCH 31, 1999
                                   (UNAUDITED)


1.       The accompanying  unaudited  condensed  financial  statements have been
         prepared  pursuant to the rules and  regulations  of the Securities and
         Exchange  Commission.  Certain  information  and  footnote  disclosures
         normally included in financial  statements  prepared in accordance with
         generally accepted accounting principles have been condensed or omitted
         pursuant to such rules and regulations,  although  management  believes
         that  the  disclosures  contained  herein  are  adequate  to  make  the
         information   presented  not  misleading.   These  unaudited  condensed
         financial  statements  should be read in conjunction with the financial
         statements and related notes appearing in the  Partnership's  Form 10-K
         for the year ended December 31, 1998.

2.       In the opinion of  management,  the  accompanying  unaudited  condensed
         financial statements reflect all adjustments, consisting of only normal
         accruals,  necessary  to  present  fairly the  Partnership's  financial
         position at March 31,  1999,  the results of  operations  for the three
         months  ended  March  31,  1999 and 1998 and cash  flows  for the three
         months then ended.

3.       The results of operations for the three months ended March 31, 1999 are
         not  necessarily  indicative of the results to be expected for the full
         year.

4.       In January 1997, the Joint Venture, PSI, and other related partnerships
         transferred  a total of 35  business  parks to PS  Business  Parks,  LP
         ("PSBPLP"), an operating partnership formed to own and operate business
         parks in which  PSI has a  significant  interest.  Included  among  the
         properties  transferred  was  the  Joint  Venture's  business  park  in
         exchange for a partnership  interest in PSBPLP.  The general partner of
         PSBPLP is PS Business Parks, Inc.

5.       Summarized  combined  financial  data with  respect to the Real  Estate
         Entities is as follows:

                                              Three Months Ended March 31,
                                           -------------------------------------
                                                1999                   1998
                                           -----------------  ------------------
Total revenues.........................    $32,566,000              $18,056,000
Minority interest in income............     $2,966,000               $2,814,000
Net income.............................    $10,809,000               $4,999,000


6.       During the first  quarter of 1999,  the Joint  Venture and the State of
         Texas ("Texas") reached agreement on the terms of a conveyance, in lieu
         of an exercise of the State's right of eminent  domain,  of a parcel of
         land with  improvements at the Joint Venture's East Ben White,  Austin,
         Texas  property.  Texas  intends  to use the  parcel  of land  for road
         expansion. As a result of the agreement, the Joint Venture received net

                                       5

<PAGE>

         settlement  proceeds  of  approximately  $771,000.  The  Joint  Venture
         recognized  a gain  on the  partial  disposition  of  the  property  of
         approximately   $533,000,   the  Partnership's  portion  of  which  was
         approximately $438,000.

         In March 1999,  the Joint Venture and the City of  Manchester,  Airport
         Authority  ("Airport  Authority")  reached agreement on the terms of an
         acquisition by termination,  in lieu of an exercise of the City's right
         of eminent  domain,  of the Joint Venture's  Manchester,  New Hampshire
         property.  The  Airport  Authority  intends  to use  the  land  for the
         construction  of an extension of its runways and for the  relocation of
         an  adjoining  road.  According  to  the  terms  of  the  agreement  of
         acquisition,  the Airport  Authority  will  acquire the property at the
         purchase price $2,250,000. The Joint Venture expects the receipt of net
         proceeds and the close of transaction to be completed during the second
         quarter of 1999. 

                                       6

<PAGE>

                              PS PARTNERS III, LTD.
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


FORWARD LOOKING STATEMENTS
--------------------------

         Management's Discussion and Analysis of Financial Condition and Results
of  Operations  contains  "forward  looking"  statements  that involve risks and
uncertainties  and are based upon a number of  assumptions.  Actual  results and
trends may differ  materially  depending  upon a number of factors.  Information
regarding these factors is contained in the Partnership's  Annual Report on Form
10-K for the fiscal year ended December 31, 1998.

RESULTS OF OPERATIONS
---------------------

THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THREE MONTHS ENDED MARCH 31, 1998:

         The  Partnership's net income for the three months ended March 31, 1999
was  $1,576,000  compared to $912,000 for the three months ended March 31, 1998,
representing an increase of $664,000,  or 73%. The increase was primarily due to
the Partnership's share of the gain on the disposition of a portion of the Joint
Venture's  East Ben White  property  of  $438,000,  combined  with a decrease in
depreciation  allocated to the  Partnership  with respect to the Joint  Venture,
partially offset by a decrease in the Partnership's share of property operations
at the  real  estate  facilities  in  which  the  Partnership  has an  interest.
Excluding  the  effect  of  the  partial   disposition  of  the  property,   the
Partnership's  net  income  for the  three  months  ended  March  31,  1999  was
$1,138,000  compared  to $912,000  for the three  months  ended March 31,  1998,
representing an increase of $226,000, or 25%.

         Rental  income  for  the  Partnership's   wholly-owned   mini-warehouse
properties  was  $685,000  compared to $682,000 for the three months ended March
31, 1999 and 1998,  respectively,  representing  an increase of $3,000.  Cost of
operations  (including  management fees) increased  $21,000,  or 8%, to $293,000
from $272,000 for the three months ended March 31, 1999 and 1998,  respectively.
Accordingly,  for  the  Partnership's  wholly-owned  mini-warehouse  properties,
property net  operating  income  decreased by $18,000,  or 5%, from  $410,000 to
$392,000 for the three months ended March 31, 1998 and 1999, respectively.

Equity in Earnings of Real Estate Entities
------------------------------------------

         Equity in earnings of real estate  entities was $1,350,000 in the three
months  ended March 31, 1999 as  compared  to $669,000  during the three  months
ended  March 31,  1998,  representing  an increase of  $681,000,  or 102%.  This
increase  was  due  primarily  to the  Partnership's  share  of the  gain on the
disposition  of a portion  of the Joint  Venture's  East Ben White  property  of
$438,000,  combined with a decrease in depreciation allocated to the Partnership
with  respect  to the  Joint  Venture,  partially  offset by a  decrease  in the
Partnership's  share of operating results at the Joint Venture's  mini-warehouse
properties. Excluding the effect of the partial disposition of the property,

                                       7

<PAGE>

equity in earnings of real estate entities was $912,000 compared to $669,000 for
the three months ended March 31, 1999 and 1998,  respectively,  representing  an
increase of $243,000, or 36%.

Depreciation and Amortization
-----------------------------

         Depreciation and amortization  increased $15,000,  or 9%, from $165,000
to $180,000 for the three  months  ended March 31, 1998 and 1999,  respectively.
This  increase  was  primarily  attributable  to  the  depreciation  of  capital
expenditures made during 1998 and 1999.

SUPPLEMENTAL PROPERTY DATA
--------------------------

         Most of the Partnership's net income is from the Partnership's share of
the operating results of the Mini-Warehouse  Properties.  Therefore, in order to
evaluate the Partnership's  operating results,  the General Partners analyze the
operating performance of the Mini-Warehouse  Properties.  Because of the partial
condemnation  of the Joint  Venture's  East Ben White  facility,  the  operating
results  of the East Ben White  property  are not  comparable  on a 1999 to 1998
basis.  Consequently,  the amounts described below exclude the operations of the
East Ben White property.

THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THREE MONTHS ENDED MARCH 31, 1998:

         Rental income for the Mini-Warehouse Properties was $3,864,000 compared
to $3,801,000 for the three months ended March 31, 1999 and 1998,  respectively,
representing  an increase of $63,000,  or 2%. The increase in rental  income was
primarily attributable to increased rental rates, partially offset by a decrease
in average  occupancy  rates.  The monthly average realized rent per square foot
for the Mini-Warehouse Properties was $.62 compared to $.59 for the three months
ended March 31, 1999 and 1998,  respectively.  The  weighted  average  occupancy
levels at the Mini-Warehouse  Properties decreased from 89% to 87% for the three
months  ended  March  31,  1998  and  1999,  respectively.  Cost  of  operations
(including  management  fees)  increased  $161,000,  or 11%, to $1,642,000  from
$1,481,000  for the three  months  ended March 31, 1999 and 1998,  respectively.
This increase was primarily  attributable to increases in advertising,  payroll,
repairs  and  maintenance,  and  property  tax  expenses.  Accordingly,  for the
Mini-Warehouse  Properties,  property net operating income decreased by $98,000,
or 4%, from  $2,320,000 to $2,222,000  for the three months ended March 31, 1998
and 1999, respectively.

                                       8

<PAGE>

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

         The Partnership has adequate sources of cash to finance its operations,
both on a short-term and long-term  basis,  primarily from internally  generated
cash from property operations and cash reserves.  Cash generated from operations
and  distributions  from real estate  entities  ($2,117,000 for the three months
ended March 31, 1999) has been sufficient to meet all current obligations of the
Partnership.

         During 1999,  the  Partnership  anticipates  approximately  $194,000 of
capital improvements with respect to the Partnership's  wholly-owned facilities.
Total  capital  improvements  were  $34,000 for the three months ended March 31,
1999 with respect to these properties.

         The Partnership paid  distributions to the limited and general partners
totaling  $3,742,000  ($29.23 per unit) and $458,000,  respectively,  during the
first  three  months  of 1999.  Included  in these  distributions  were  special
distributions of a portion of the Partnership's operating reserve to the limited
and general partners  totaling  approximately  $2,851,000  ($22.27 per unit) and
$349,000,  respectively.  Future  distribution  rates may be  adjusted to levels
which are supported by operating  cash flow after capital  improvements  and any
other necessary obligations.

                                       9

<PAGE>

                           PART II. OTHER INFORMATION

ITEMS 1 through 5 are not applicable.

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

         (a)      The following Exhibits are included herein:

                  (27)     Financial Data Schedule

         (b)      Reports on Form 8-K

                  None.

                                   SIGNATURES

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


                           DATED:  May 14, 1999



                                   PS PARTNERS III, LTD.

                           BY:     Public Storage, Inc.
                                   General Partner



                           BY:     /s/ John Reyes
                                   ---------------------------------------------
                                   John Reyes
                                   Senior Vice President and Chief Financial
                                   Officer of Public Storage, Inc.
                                   (principal financial and accounting officer)

                                       10