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

                                    FORM 10-Q

                           

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

                  For the quarterly period ended June 30, 1998

                                       OR

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

                  For the transition period from         to


                         Commission file number 0-14466

          CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
             (Exact name of registrant as specified in its charter)

              Connecticut                            06-1115374
         (State of Organization)       (I.R.S. Employer Identification No.)


                     900 Cottage Grove Road, South Building
                          Bloomfield, Connecticut 06002
                    (Address of principal executive offices)


                        Telephone Number: (860) 726-6000



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


                                       1

<PAGE>



Part I - Financial Information

<TABLE>
          CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
                       (a Connecticut limited partnership)

                                 Balance Sheets
<CAPTION>
                                                                                         June 30,                  December 31,
                                                                                           1998                        1997
                                                               Assets                   (Unaudited)                  (Audited)

<S>                                                                                  <C>                          <C>           
Property and improvements, at cost:
     Land and land improvements                                                      $    3,003,903               $    2,964,303
     Buildings                                                                           16,630,778                   16,618,817
     Furniture and fixtures                                                               1,410,217                    1,390,985
                                                                                     --------------               --------------
                                                                                         21,044,898                   20,974,105
     Less accumulated depreciation                                                        8,423,479                    8,112,558
                                                                                     --------------               --------------
              Net property and improvements                                              12,621,419                   12,861,547

Cash and cash equivalents                                                                   666,275                      682,614
Accounts receivable (net of allowance of $9,464
   in 1998 and $12,907 in 1997)                                                               5,255                        9,819
Escrow deposits                                                                              78,333                      144,407
Prepaid insurance                                                                             8,552                           --
Other asset                                                                                   1,000                        1,000
Deferred charges, net                                                                       845,042                      926,086
Escrowed debt service funds                                                                 506,660                      506,660
                                                                                     --------------               --------------
              Total                                                                  $   14,732,536               $   15,132,133
                                                                                     ==============               ==============

                        Liabilities and Partners' Deficit

Liabilities:
     Notes and mortgages payable                                                     $   15,346,129               $   15,452,462
     Accounts payable and accrued expenses (including $35,615
       in 1998 and $20,550 in 1997 due to affiliates)                                       158,787                      235,092
     Tenant security deposits                                                                72,312                       61,350
     Unearned income                                                                         10,651                       13,011
                                                                                     --------------               --------------
              Total liabilities                                                          15,587,879                   15,761,915
                                                                                     --------------               --------------

Partners' deficit:
     General Partner:
         Capital contributions                                                                1,000                        1,000
         Cumulative net income                                                               26,296                       25,802
         Cumulative cash distributions                                                      (31,243)                     (28,494)
                                                                                     --------------               --------------
                                                                                             (3,947)                      (1,692)
                                                                                     --------------               --------------
     Limited partners (24,856 Units)
         Capital contributions, net of offering costs                                    22,408,052                   22,408,052
         Cumulative net loss                                                            (15,071,262)                 (15,120,129)
         Cumulative cash distributions                                                   (8,188,186)                  (7,916,013)
                                                                                     --------------               --------------
                                                                                           (851,396)                    (628,090)
                                                                                     --------------               --------------
              Total partners' deficit                                                      (855,343)                    (629,782)
                                                                                     --------------               --------------
              Total                                                                  $   14,732,536               $   15,132,133
                                                                                     ==============               ==============



   The Notes to Financial Statements are an integral part of these statements.

</TABLE>

                                        2

<PAGE>


<TABLE>

          CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
                       (a Connecticut limited partnership)

                            Statements of Operations
                                   (Unaudited)
<CAPTION>

                                                                           Three Months Ended                 Six Months Ended
                                                                                June 30,                          June 30,
                                                                                --------                          --------
                                                                        1998               1997            1998             1997
                                                                        ----               ----            ----             ----

<S>                                                               <C>               <C>              <C>              <C>          
Income:
     Rental income                                                $      818,434    $   1,180,544    $    1,594,208   $   2,351,123
     Other income                                                         17,153           26,676            30,407          53,928
     Interest income                                                      19,474           18,475            35,736          34,331
                                                                  --------------    -------------    --------------   -------------
                                                                         855,061        1,225,695         1,660,351       2,439,382
                                                                  --------------    -------------    --------------   -------------

Expenses:
     Property operating expenses                                         237,110          339,650           455,391         648,387
     General and administrative                                          133,888          187,196           242,520         351,646
     Fees and reimbursements to affiliates                                29,385           41,589            55,514          81,016
     Interest expense                                                    232,451          367,096           465,600         734,087
     Depreciation and amortization                                       196,344          281,810           391,965         562,501
                                                                  --------------    -------------    --------------   -------------
                                                                         829,178        1,217,341         1,610,990       2,377,637
                                                                  --------------    -------------    --------------   -------------

         Net income                                               $       25,883    $       8,354    $       49,361   $      61,745
                                                                  ==============    =============    ==============   =============

Net income:
     General Partner                                              $          259    $          83    $          494   $         617
     Limited partners                                                     25,624            8,271            48,867          61,128
                                                                  --------------    -------------    --------------   -------------
                                                                  $       25,883    $       8,354    $       49,361   $      61,745
                                                                  ==============    =============    ==============   =============

Net income per Unit                                               $         1.03    $        0.33    $         1.97   $        2.46
                                                                  ==============    =============    ==============   =============

Cash distribution per Unit                                        $         5.25    $        6.45    $        10.95   $        6.45
                                                                  ==============    =============    ==============   =============


















   The Notes to Financial Statements are an integral part of these statements.

</TABLE>

                                        3

<PAGE>


<TABLE>

          CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
                       (a Connecticut limited partnership)

                            Statements of Cash Flows

                 For the Six Months Ended June 30, 1998 and 1997
                                   (Unaudited)
<CAPTION>

                                                                                         1998                      1997
                                                                                         ----                      ----


<S>                                                                               <C>                       <C>            
Cash flows from operating activities:
     Net income                                                                   $        49,361           $        61,745
     Adjustment to reconcile net income to net cash
       provided by operating activities:
         Depreciation and amortization                                                    391,965                   562,501
         Accounts receivable                                                                4,564                     6,791
         Accounts payable and accrued expenses                                            (76,305)                   37,649
         Escrow deposits                                                                   66,074                    15,150
         Other, net                                                                            50                   (30,696)
                                                                                  ---------------           ---------------
              Net cash provided by operating activities                                   435,709                   653,140
                                                                                  ---------------           ---------------

Cash flows from investing activities:
     Purchase of property and improvements                                                (70,793)                 (183,996)
                                                                                  ---------------           ---------------

Cash flows from financing activities:
     Distribution to limited partners                                                    (272,173)                 (160,321)
     Distribution to General Partner                                                       (2,749)                   (1,618)
     Repayment of notes and mortgage loans                                               (106,333)                 (153,927)
                                                                                  ---------------           ---------------
              Net cash used in financing activities                                      (381,255)                 (315,866)
                                                                                  ---------------           ---------------

Net increase (decrease) in cash and cash equivalents                                      (16,339)                  153,278
Cash and cash equivalents, beginning of year                                              682,614                   638,965
                                                                                  ---------------           ---------------
Cash and cash equivalents, end of period                                          $       666,275           $       792,243
                                                                                  ===============           ===============

Supplemental disclosure of cash information:
     Interest paid during period                                                  $       465,600           $       734,087
                                                                                  ===============           ===============















   The Notes to Financial Statements are an integral part of these statements.

</TABLE>

                                        4

<PAGE>



          CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
                       (a Connecticut limited partnership)

                          Notes to Financial Statements
                                   (Unaudited)


     Readers of this quarterly report should refer to CONNECTICUT GENERAL REALTY
INVESTORS  III  LIMITED  PARTNERSHIP'S  (the  "Partnership")  audited  financial
statements  for the year  ended  December  31,  1997 which are  included  in the
Partnership's  1997 Annual Report,  as certain footnote  disclosures which would
substantially  duplicate  those contained in such audited  financial  statements
have been omitted from this report.

1.   Summary of Significant Accounting Policies

a)   Basis of  Presentation:  The  financial  statements  have been  prepared in
     conformity  with  generally  accepted  accounting  principles,  and reflect
     management's estimates and assumptions that affect the reported amounts. It
     is the  opinion  of  management  that the  financial  statements  presented
     reflect  all  the  adjustments  necessary  for a fair  presentation  of the
     financial condition and results of operations.  All such adjustments are of
     a normal recurring nature.

b)   Cash and Cash Equivalents:  Short term investments with a maturity of three
     months or less at the time of purchase are reported as cash equivalents.

2.   Deferred Charges

     Deferred charges consist of the following:
<TABLE>
<CAPTION>

                                                                                       June 30,                December 31,
                                                                                         1998                      1997

<S>                                                                               <C>                       <C>            
     Surety fee - Waterford Apartments mortgage note                              $       963,910           $       963,910
     Costs of obtaining financing                                                         660,522                   660,522
                                                                                  ---------------           ---------------
                                                                                        1,624,432                 1,624,432
     Accumulated amortization                                                            (779,390)                 (698,346)
                                                                                  ---------------           ---------------
                                                                                  $       845,042           $       926,086
                                                                                  ===============           ===============
</TABLE>

3.   Transactions with Affiliates

     Fees and expenses  related to the General  Partner or its affiliates are as
follows:
<TABLE>
<CAPTION>

                                                   Three Months Ended             Six Months Ended              Unpaid at
                                                        June 30,                      June 30,                   June 30,
                                                        --------                      --------                   --------
                                                 1998              1997         1998             1997              1998
                                                 ----              ----         ----             ----              ----

<S>                                        <C>              <C>              <C>            <C>              <C>     
     Property management fees (a)          $      5,172     $       9,098    $    10,029    $     18,041     $      3,428
     Partnership management fees                 12,515            16,761         25,551          32,761           12,515
     Reimbursement (at cost) for
      out-of-pocket expenses                     11,698            15,730         19,934          30,214           19,672
                                           ------------     -------------    -----------     -----------      -----------
                                           $     29,385     $      41,589    $    55,514     $    81,016      $    35,615
                                           ============     =============    ===========     ===========      ===========

</TABLE>

                                        5

<PAGE>



          CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
                       (a Connecticut limited partnership)

                    Notes to Financial Statements (Continued)
                                   (Unaudited)



(a)  Does not include  on-site  property  management  fees earned by independent
     property  management  companies of $36,334 and $51,050 for the three months
     ended June 30, 1998 and 1997,  respectively,  and $70,703 and  $101,544 for
     the six months ended June 30, 1998 and 1997, respectively. On-site property
     management  services  have been  contracted  by an affiliate of the General
     Partner  on  behalf  of  the  Partnership  and  are  paid  directly  by the
     Partnership to the third party companies.

4.   Subsequent Event

     On August 15, 1998, the Partnership  paid a distribution of $125,274 to the
limited partners and $1,265 to the General Partner.


































                                        6

<PAGE>



          CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
                       (a Connecticut limited partnership)

                Management's Discussion and Analysis of Financial
                       Condition and Results of Operations

     Except for historical information provided in this Management's  Discussion
and Analysis,  statements made in this document are  forward-looking and contain
information about financial  results,  economic  conditions,  trends,  and known
uncertainties.  The  Partnership  cautions the reader that actual  results could
differ materially from those expected by the Partnership.

Liquidity and Capital Resources

     At June 30, 1998, the Partnership had $666,275 in cash and cash equivalents
which was available for working capital  requirements,  cash distributions,  and
the  Partnership's  cash  reserves.  For the three and six months ended June 30,
1998, the Partnership generated $127,000 and $260,000, respectively, of adjusted
cash from operations after debt service,  capital improvements,  and adjustments
to the Partnership's cash reserves. Property net operating income was consistent
with the first quarter results.  The Partnership expects capital expenditures to
be 9% below  those  planned at the start of the year.  The  Partnership's  first
quarter  1998  distribution  of  $130,494  or $5.25 per Unit was paid on May 15,
1998. The  Partnership's  second quarter 1998 cash  distribution  of $125,274 or
$5.04 per Unit is payable on August 15, 1998.  The  distributions  represent the
respective  quarter's  adjusted cash from operations.  The Partnership  plans to
distribute cash quarterly to the extent cash is available from operations  after
debt service,  capital, and changes to cash reserves for liabilities and capital
expenditures,  until the sale of the Partnership's remaining two properties. The
Partnership's  current  plans  assume  the sale of the two  remaining  apartment
projects  in early 1999.  Once the  Partnership  completes  the sales of the two
remaining properties,  the Partnership will distribute the net sales proceeds to
the  limited  partners  as  part  of  a  complete  liquidation  and  Partnership
termination.

Results of Operations

     Generally, decreases reflected in the statement of operations for the three
and six months ended June 30, 1998,  as compared  with the same periods in 1997,
are the result of the sale of  Stonebridge  Manor  Apartments  in October  1997.
Besides the sale, the Partnership's results reflect the following changes at the
two remaining properties.  Rental income at Waterford increased 8% for the three
months and 6% for the six months ended June 30, 1998,  as compared with the same
periods in 1997,  due to an increase in rates.  At  Versailles  Village,  strong
occupancy  and an increase in rates led to higher  rental  revenue for the three
and six months ended June 30, 1998. Partially offsetting the increase in revenue
was higher property  operating expense at Versailles  Village due to an increase
in carpet, paint and cleaning expense. In addition, payroll costs were higher at
Versailles Village due to a staffing vacancy in the second quarter of 1997 which
led to an increase in general and administrative expense.

     Fees and  reimbursements  to affiliates  decreased because of a drop in the
property management fees (resulting from the sale of Stonebridge  Manor),  lower
partnership  management fees as a result of less cash available for distribution
(resulting  from  the  sale of  Stonebridge  Manor),  and a  savings  in 1998 on
printing costs.











                                        7

<PAGE>


          CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
                       (a Connecticut limited partnership)

                Management's Discussion and Analysis of Financial
                 Condition and Results of Operations (Continued)



                                    Occupancy

     The  following is a listing of  approximate  physical  occupancy  levels by
quarter for the Partnership's investment properties:
<TABLE>
<CAPTION>

                                                                1997                                               1998
                                          -------------------------------------------------          -------------------------------

                                            At 3/31      At 6/30      At 9/30     At 12/31               At 3/31             At 6/30
                                            -------      -------      -------     --------               -------             -------


<S>                                           <C>          <C>          <C>          <C>                   <C>                <C> 
1.   Versailles Village Apartments
     Forest Park, Ohio                        94%          96%          98%          94%                   97%                100%

2.   Waterford Apartments
     Tulsa, Oklahoma                          94%          95%          96%          92%                   94%                 97%

3.   Stonebridge Manor Apartments
     New Orleans, Louisiana (a)               97%          97%          96%          N/A                   N/A                 N/A

</TABLE>

An N/A indicates  that the property was not owned by the  partnership at the end
of the quarter.

     (a) Stonebridge Manor Apartments was sold October 23, 1997.

Part II- Other Information

     Item 6.  Exhibits and Reports on Form 8-K

     (a) Exhibits:

         27 Financial Data Schedules.

     (b) No Form 8-Ks were filed during the three months ended June 30, 1998.


                                        8

<PAGE>



                                   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.



                             CONNECTICUT GENERAL REALTY INVESTORS III
                             LIMITED PARTNERSHIP


                                 By:    CIGNA Realty Resources, Inc. - Fifth,
                                        General Partner




Date: August 14, 1998            By:      /s/ John D. Carey
      ----------------                    -----------------
                                          John D. Carey, President
                                          (Principal Executive Officer)



Date: August 14, 1998            By:      /s/ Josephine C. Donofrio
      ---------------                     -------------------------
                                          Josephine C. Donofrio, Controller
                                          (Principal Accounting Officer)


                                                                 9

<PAGE>