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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 March 31, 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>
                                                                                         March 31,                 December 31,
                                                                                          1998                        1997
                                                               Assets                   (Unaudited)                  (Audited)

<S>                                                                                  <C>                          <C>           
 Property and improvements, at cost:
     Land and land improvements                                                      $    2,964,303               $    2,964,303
     Buildings                                                                           16,624,871                   16,618,817
     Furniture and fixtures                                                               1,398,478                    1,390,985
                                                                                     --------------               --------------
                                                                                         20,987,652                   20,974,105
     Less accumulated depreciation                                                        8,267,657                    8,112,558
                                                                                     --------------               --------------
              Net property and improvements                                              12,719,995                   12,861,547

Cash and cash equivalents                                                                   700,109                      682,614
Accounts receivable (net of allowance of $14,970
   in 1998 and $12,907 in 1997)                                                               6,480                        9,819
Escrow deposits                                                                              82,095                      144,407
Prepaid insurance                                                                             6,686                           --
Other asset                                                                                   1,000                        1,000
Deferred charges, net                                                                       885,564                      926,086
Escrowed debt service funds                                                                 506,660                      506,660
                                                                                     --------------               --------------
              Total                                                                  $   14,908,589               $   15,132,133
                                                                                     ==============               ==============

                   Liabilities and Partners' Capital (Deficit)

Liabilities:
     Notes and mortgages payable                                                     $   15,399,476               $   15,452,462
     Accounts payable and accrued expenses (including $24,438
       in 1998 and $31,485 in 1997 due to affiliates)                                       183,797                      235,092
     Tenant security deposits                                                                63,859                       61,350
     Unearned income                                                                         10,871                       13,011
                                                                                     --------------               --------------
              Total liabilities                                                          15,658,003                   15,761,915
                                                                                     --------------               --------------

Partners' capital (deficit):
     General Partner:
         Capital contributions                                                                1,000                        1,000
         Cumulative net income                                                               26,037                       25,802
         Cumulative cash distributions                                                      (29,925)                     (28,494)
                                                                                     --------------               --------------
                                                                                             (2,888)                      (1,692)
                                                                                     --------------               --------------
     Limited partners (24,856 Units)
         Capital contributions, net of offering costs                                    22,408,052                   22,408,052
         Cumulative net loss                                                            (15,096,886)                 (15,120,129)
         Cumulative cash distributions                                                   (8,057,692)                  (7,916,013)
                                                                                     --------------               --------------
                                                                                           (746,526)                    (628,090)
                                                                                     --------------               --------------
              Total partners' deficit                                                      (749,414)                    (629,782)
                                                                                     --------------               --------------
              Total                                                                  $   14,908,589               $   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

               For the Three Months Ended March 31, 1998 and 1997
                                   (Unaudited)
<CAPTION>


                                                                                               1998                    1997
                                                                                               ----                    ----


<S>                                                                                       <C>                      <C>          
Income: 
     Rental income                                                                        $      775,774           $   1,170,579
     Other income                                                                                 13,254                  27,252
     Interest income                                                                              16,262                  15,856
                                                                                          --------------           -------------
                                                                                                 805,290               1,213,687
                                                                                          --------------           -------------

Expenses:
     Property operating expenses                                                                 218,281                 308,737
     General and administrative                                                                  108,632                 164,450
     Fees and reimbursements to affiliates                                                        26,129                  39,427
     Interest expense                                                                            233,149                 366,991
     Depreciation and amortization                                                               195,621                 280,691
                                                                                          --------------           -------------
                                                                                                 781,812               1,160,296
                                                                                          --------------           -------------

              Net income                                                                  $       23,478           $      53,391
                                                                                          ==============           =============

Net income:
     General Partner                                                                      $          235           $         534
     Limited partners                                                                             23,243                  52,857
                                                                                          --------------           -------------
                                                                                          $       23,478           $      53,391
                                                                                          ==============           =============

Net income per Unit                                                                       $         0.94           $        2.13
                                                                                          ==============           =============

Cash distribution per Unit                                                                $         5.70           $          --
                                                                                          ==============           =============
















                             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 Three Months Ended March 31, 1998 and 1997
                                   (Unaudited)
<CAPTION>

                                                                                         1998                      1997
                                                                                         ----                      ----


<S>                                                                               <C>                       <C>            
Cash flows from operating activities: 
     Net income                                                                   $        23,478           $        53,391
     Adjustment to reconcile net income to net cash
       provided by operating activities:
         Depreciation and amortization                                                    195,621                   280,691
         Accounts receivable                                                                3,339                     7,370
         Accounts payable and accrued expenses                                            (51,295)                   17,530
         Accrued interest payable                                                              --                    44,877
         Escrow deposits                                                                   62,312                    28,930
         Other, net                                                                        (6,317)                  (57,296)
                                                                                  ---------------           ---------------
              Net cash provided by operating activities                                   227,138                   375,493
                                                                                  ---------------           ---------------

Cash flows from investing activities:
     Purchase of property and improvements                                                (13,547)                 (139,709)
                                                                                  ---------------           ---------------

Cash flows from financing activities:
     Distribution to limited partners                                                    (141,679)                       --
     Distribution to General Partner                                                       (1,431)                       --
     Repayment of notes and mortgage loans                                                (52,986)                  (70,305)
                                                                                  ---------------           ---------------
              Net cash used in financing activities                                      (196,096)                  (70,305)
                                                                                  ---------------           ---------------

Net increase in cash and cash equivalents                                                  17,495                   165,479
Cash and cash equivalents, beginning of year                                              682,614                   638,965
                                                                                  ---------------           ---------------
Cash and cash equivalents, end of period                                          $       700,109           $       804,444
                                                                                  ===============           ===============

Supplemental disclosure of cash information:
     Interest paid during period                                                  $       233,149           $       322,114
                                                                                  ===============           ===============

Supplemental disclosure of non-cash information:
     Accrued purchases of property and improvements                               $            --           $         4,432
                                                                                  ===============           ===============











                             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>

                                                                                       March 31,               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                                                            (738,868)                 (698,346)
                                                                                  ---------------           ----------------
                                                                                  $       885,564           $       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             Unpaid at
                                                                                      March 31,                  March 31,
                                                                                1998             1997              1998
                                                                                ----             ----              ----

<S>                                                                          <C>             <C>              <C>        
     Property management fees (a)                                            $     4,857     $     8,943      $     3,242
     Partnership management fees                                                  13,036          16,000           13,036
     Reimbursement (at cost) for
      out-of-pocket expenses                                                       8,236          14,484            8,160
                                                                             -----------     -----------      -----------
                                                                             $    26,129     $    39,427      $    24,438
                                                                             ===========     ===========      ===========

</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 $34,369 and $50,494 for the three months
     ended March 31, 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 May 15, 1998, the  Partnership  paid a  distribution  of $130,494 to the
limited partners and $1,318 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  March  31,  1998,  the  Partnership  had  $700,109  in  cash  and  cash
equivalents  which  was  available  for  working  capital   requirements,   cash
distributions,  and the Partnership's cash reserves. For the quarter ended March
31, 1998, the  Partnership  generated  $133,000 of adjusted cash from operations
after debt service,  capital improvements,  and adjustments to the Partnership's
cash  reserves.  The  Partnership's  first  quarter  1998 cash  distribution  of
$130,494 or $5.25 per Unit is payable on May 15, 1998,  and represents the first
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
months ended March 31, 1998, as compared  with the same period 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 5% due to an increase
in rates throughout 1997. Waterford plans to increase rates at a similar pace in
1998. Versailles Village reported a 12% increase in property operating expenses,
which  generally  was the  result  of the  timing  of  repairs  and  maintenance
expenses.  As 1998 progresses,  the change in repairs and maintenance  expenses,
when compared with the same period of the prior year, is expected to diminish at
Versailles Village.

     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


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

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

3.   Stonebridge Manor Apartments
     New Orleans, Louisiana (a)               97%          97%          96%          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 March 31, 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: May 13, 1998                   By:      /s/ John D. Carey
      -------------                           -----------------
                                              John D. Carey, President
                                              (Principal Executive Officer)



Date: May 13, 1998                   By:      /s/ Josephine C. Donofrio
      ------------                            -------------------------
                                              Josephine C. Donofrio, Controller
                                              (Principal Accounting Officer)


                                                                 9

<PAGE>