<PAGE>
 
                                                            Total # of Pages: 47

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

                                   FORM 10-K
                                        
(Mark One)
[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

     For the fiscal year ended    September 30, 1997
                                ----------------------

                                      OR
 
[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934
 
     For the transition period from       None       to        None
                                   -----------------     ------------------
     Commission file number           0-11502
                           ------------------------------


                     BOETTCHER WESTERN PROPERTIES III LTD.
--------------------------------------------------------------------------------
            (Exact name of registrant as specified in its charter)
 
               COLORADO                                 84-0911344
---------------------------------------   --------------------------------------
    (State or other jurisdiction of                  (I.R.S. Employer
    incorporation or organization)                 Identification No.)

77 West Wacker Drive, Chicago, Illinois                   60601
---------------------------------------   --------------------------------------
(Address of principal executive offices)                (Zip Code)
 
Registrant's telephone number, including area code     (312) 574-6000
                                                  ------------------------------

Securities registered pursuant to Section 12(b) of the Act:

                                                 Name of each exchange on
          Title of each class                        which registered
          -------------------                        ----------------


                  None                                     None
---------------------------------------   --------------------------------------

Securities registered pursuant to Section 12(g) of the Act:

                     Units of Limited Partnership Interest
--------------------------------------------------------------------------------
                               (Title of Class)

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.
                                                               [X] Yes   [ ]  No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates of the registrant. The aggregate market value shall be
computed by reference to the price at which the common equity was sold, or the
average bid and ask prices of such common equity, as of a specified date within
60 days prior to the date of filing. (See definition of Affiliate in Rule 405,
17 C.F.R. 230.405.)
<PAGE>
 
                                     INDEX
<TABLE>
<CAPTION>

                                       PART I                                 Page
                                       ------
<S>        <C>                                                                <C>

  Item 1.  Business                                                            3
  Item 2.  Properties                                                          7
  Item 3.  Legal Proceedings                                                   8
  Item 4.  Submission of Matters to a Vote of Holders
           of Limited Partnership Interests                                    8

                                       PART II
                                       -------

  Item 5.  Market of the Registrant's Limited Partnership Interests and
           Related Limited Partner Matters                                     8
  Item 6.  Selected Financial Data                                            10
  Item 7.  Management's Discussion and Analysis of Financial Condition
           and Results of Operations                                          11
  Item 8.  Financial Statements and Supplementary Data                        18
  Item 9.  Changes in and Disagreements with Accountants on Accounting
           and Financial Disclosure                                           34

                                       PART III
                                       --------

  Item 10. Directors and Executive Officers of the Registrant                 34
  Item 11. Executive Compensation                                             36
  Item 12. Security Ownership of Certain Beneficial Owners and Management     36
  Item 13. Certain Relationship and Related Transactions                      37

                                       PART IV
                                       -------

  Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K    38

  SIGNATURES                                                                  43
 </TABLE>

                                       2
<PAGE>
 
Forward Looking Statements
--------------------------

The following discussion should be read in conjunction with the Partnership's
financial statements and notes thereto contained in Item 8 of this report. In
addition to historical information, the following "Management's Discussion and
Analysis of Financial Condition and Results of Operations", and discussion on
"Business" contain forward-looking statements. Such forward looking statements
are within the meaning of that term in Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Such statements may include, but are not limited to, projections of
revenues, income or loss, capital expenditures, plans for future operations,
financing needs or plans, and plans relating to the sale of assets of the
Partnership, as well as assumptions relating to the foregoing.

Forward looking statements are inherently subject to risks and uncertainties,
some of which cannot be predicted or quantified.  Future events and actual
results could differ materially from those set forth in, contemplated by, or
underlying the forward looking statements.  Statements in this annual report,
including the notes to the consolidated financial statements, "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Business", describe factors, among others, that could contribute to or cause
such differences.  Additional factors that could cause actual results to differ
materially from those expressed in such forward looking statements include those
discussed below.
                                     PART I
                                     ------

Item 1.  BUSINESS
         --------

General
-------

Boettcher Western Properties III Ltd. (the "Partnership") was organized in March
1983 as a Colorado limited partnership.  The Partnership's primary business is
to own and operate income-producing properties.  At September 30, 1997, the
Partnership owned and operated one shopping center located in Stockton,
California known as Venetian Square Shopping Center, which is being held for
sale (the "Remaining Property" or "Venetian").  The Remaining Property is more
fully described in Item 2 of this report.

The Partnership, as of September 30, 1997, did not directly employ any persons;
it is however, a party to a Management Agreement with Boettcher Properties, Ltd.
Under the terms of the Management Agreement, Boettcher Properties, Ltd. is
responsible for the day-to-day operations of the Partnership, and operating and
managing its investments.  All regular employees rendering service on behalf of
the Partnership are employees of Boettcher Properties, Ltd. or its affiliates.
The Remaining Property is owned directly by the Partnership and is managed by an
independent, third-party property manager who performs daily property management
services.

The General Partners of the Partnership are Boettcher Properties, Ltd. and
Boettcher 1983 Associates, Ltd. (the "General Partners"), both Colorado limited
partnerships.  The Managing General Partner of the Partnership is Boettcher
Properties, Ltd. (the "Managing General Partner") and the Associate General
Partner is Boettcher 1983 Associates, Ltd. (the "Associate General Partner").
With limited exceptions, the General Partners of the Partnership have exclusive
control over the business of the Partnership, which control is exercised only by
the Managing General Partner.

                                       3
<PAGE>
 
For the fiscal year ended September 30, 1997, gross rents and tenant
reimbursements generated by the Partnership's income-producing properties
represented 95% of total Partnership revenue.  Monthly rental income is derived
from tenant leases at Venetian.  Commercial leases at Venetian contain lease
terms which vary from one year up to five years for most tenants, and up to
twenty-five years for major anchor tenants.  These leases permit the pass
through by the Partnership of taxes, insurance and common area operating costs
to the tenants. See "Statements of Operations" contained in Item 8 of this
report for a summary of the Partnership's revenue components for the last three
fiscal years.

Competition
-----------

The Partnership faces active competition in all aspects of its business.  The
Partnership competes with entities which own properties similar in type to the
one owned by the Partnership.  The ability of the Partnership to compete with
these entities depends on many factors, including the location, size, condition
of its facilities and the availability of similar facilities.  When comparable
space is available in a general location, the Partnership competes through
rental rates and lease terms, among other variables.  In selling the Remaining
Property, the Partnership competes with sellers of other income-producing
properties for prospective purchasers.  While no statistical information is
currently available to delineate the Partnership's competitive position, many of
its competitors are believed to have assets and revenues greater than those of
the Partnership.

Cash Reserves and Debt Maturities
---------------------------------

The Partnership is required under its Partnership Agreement to maintain cash
reserves of not less than 3% of aggregate capital contributions for normal
repairs, replacements, working capital and other contingencies.  As of September
30, 1997, the Partnership had cash reserves of $855,739, while the required
minimum amount was $660,000.  The Partnership intends to apply cash flow
generated from Partnership operations in fiscal 1998, if any, to maintain
minimum required cash reserves, including any additional reserves deemed
necessary by the Managing General Partner to cover any contingent liabilities.
Thereafter, the Partnership intends to pay the Managing General Partner all
unpaid cash advances made to the Partnership, all unpaid administrative
reimbursements, all unpaid property management fees and all deferred fees earned
by the Managing General Partner, which total $53,078, $8,640, $1,964 and
$131,321, respectively, as of September 30, 1997.

At the end of September 1997, the Partnership entered into an agreement with
Great West Life Assurance Company ("Great West") to extend the maturity date of
the first mortgage payable secured by the Remaining Property to December 31,
1997.  Under the extension agreement the Partnership paid an extension fee of
$2,500.  As of December 31, 1997, the Partnership's first mortgage secured by
the Remaining Property, amounted to approximately $3,125,850.  This mortgage
matured on December 31, 1997, and on January 9, 1998, the Managing General
Partner obtained a verbal extension of the mortgage financing through January
15, 1998, which the Managing General Partner believes, should be sufficient to
permit the Partnership to sell the Remaining Property.  In the event the
mortgage financing cannot be extended after January 15, 1998, the Managing
General Partner believes it could refinance the first mortgage payable at terms
favorable to the Partnership due to current market conditions.

                                       4
<PAGE>
 
Sale of Venetian Square Shopping Center
---------------------------------------

The Partnership attempted to sell the Remaining Property in the fiscal year
ended September 30, 1997.  The existence of petroleum contamination has limited
the potential buyers of the Remaining Property.  Specifically, it has prevented
marketing to many institutional buyers and public real estate investment trusts.
The Partnership had to focus its marketing efforts on entrepreneurial investors
who are not subject to financing or other constraints due to the environmental
remediation issues.

Despite the difficulty in marketing the Remaining Property, the Partnership
entered into a purchase and sale agreement, which became effective on July 17,
1997, as amended or supplemented from time to time (the "Purchase and Sale
Agreement"), for the sale of the Remaining Property for a sale price of
$7,275,000.  Certain contingencies delayed the expected sale closing date into
the early part of 1998.  The purchaser's obligation to complete the sale remains
subject to customary closing conditions, and there can be no assurances that the
Partnership will sell the Remaining Property in 1998.  Upon closing of the sale
of the Remaining Property, the sale proceeds will be used to repay the mortgages
secured by the Remaining Property and expenses of sale (including, without
limitation, the cost of purchasing insurance covering unknown environmental
contamination).  Thereafter, the Managing General Partner will proceed to
liquidate and dissolve the Partnership, applying the remaining net proceeds from
the sale of the Remaining Property and any other funds of the Partnership in the
following manner:

(a)  to the payment of remaining debts and liabilities of the Partnership and
     expenses of liquidation;

(b)  to setting up cash reserves, if necessary, to cover any contingent
     liabilities identified by the Managing General Partner arising out of or in
     connection with the operations of the Partnership; and

(c)  to distributions to the limited partners.

Once this liquidation has been completed, the operations of the Partnership will
cease and the Partnership will be dissolved.

The Managing General Partner believes that the sale will provide net proceeds to
the Partnership after the payment of sales costs, closing costs, and mortgages
payable.  The Partnership continues to classify the Remaining Property as real
estate held for sale at September 30, 1997.


Other Factors
-------------

Seasonal weather conditions do not have a material impact on the operations of
Venetian, although the usage of water, gas, electricity and the attendant
expense, to the extent not paid by the tenants, may vary according to the
particular season.

With the exception of the environmental assessment undertaken at Venetian,
federal, state and local laws and regulations, which have been enacted or
adopted regulating the discharge of materials into the environment or otherwise
relating to the protection of the environment do not presently have a material
effect on the operations of the Remaining Property nor on the capital
expenditures, earnings or competitive position of the Partnership and no
material effect is anticipated in the future.

                                       5
<PAGE>
 
Environmental site assessments have been performed on a parcel of land adjacent
to and part of Venetian.  This parcel of land had previously been operated as a
card-lock fuel station containing underground fuel storage tanks.  In fiscal
1992, these underground fuel storage tanks were excavated.  Soil and groundwater
assessments revealed petroleum contaminates, resulting in the Partnership's
participation in an environmental remediation effort.  On December 31, 1997, the
San Joaquin County Environmental Health Division issued a "no further action
required" letter (the "Closure Letter"), confirming completion of the
remediation effort with regard to the contaminates released from the underground
storage tanks.  For additional discussion on how this matter affected the
financial operating results of the Partnership and history of the environmental
contamination and the Partnership's remediation efforts, refer to Note 7 to the
Financial Statements contained in Item 8 of this report.

From time to time the Partnership has analyzed potential sources of
reimbursement for environmental remediation expenses.  As a result, the
Partnership made an inquiry to the California State Water Resources Control
Board as to a potential reimbursement claim. On January 6, 1998, the Partnership
received correspondence from the California State Water Resources Control Board
indicating that the Partnership's claim for reimbursement filed under the
Underground Storage Tank Cleanup Fund Program has been accepted for review.  The
Partnership is currently working on submitting all of the required information
within the prescribed preliminary filing guidelines.  The Managing General
Partner is unable at this time to determine the amount of reimbursement, if any,
that the Partnership may receive as a result of this filing.  Accordingly, no
adjustments have been made to the financial statements contained in Item 8 of
this report.

Other federal, state and local laws and regulations regarding the operation of
commercial rental property, including requirements of the Americans with
Disabilities Act, may require that the Partnership incur capital expenditures to
ensure compliance.  At this time, it is not anticipated that these capital
expenditures will materially affect the Partnership's cash flows.

The Tax Reform Act of 1986 resulted in reduced tax benefits for purchasers of
real estate.  To offset the loss of such benefits, purchasers may negotiate
lower prices when acquiring properties to achieve yields comparable to those
that resulted from the combination of cash flow and tax benefits available prior
to the Tax Reform Act of 1986.  In addition, the value of tax losses allocated
to individual limited partners has been significantly reduced due to passive
loss limitations and reduced tax rates.

The business of the Partnership to date has involved only one industry segment;
accordingly, all information required by Item 101(b) of Regulation S-K is
included in the Financial Statements contained in Item 8 of this report.  The
Partnership has no foreign operations.

                                       6
<PAGE>
 
Item 2.  PROPERTIES
         ----------

At September 30, 1997, the Partnership owned and operated one shopping center,
which is subject to the Purchase and Sale Agreement, as more fully described
below:

Name and Location                    General Character of Property
-----------------                    -----------------------------

Venetian Square Shopping Center      3-building shopping center containing
4555 North Pershing Avenue           approximately 117,107 square feet of net 
Stockton, California                 rentable area on approximately 9.2 acres of
                                     land.

As of September 30, 1997, the Partnership continues to classify the Remaining
Property as real estate held for sale.

For information regarding the indebtedness to which the Remaining Property is
subject, see Notes 3, 6 and 8 to the Financial Statements as contained in Item 8
of this report.

The Remaining Property is subject to the Purchase and Sale Agreement.  The sale
price under the Purchase and Sale Agreement is $7,275,000.  The buyer has
deposited a total of $60,000 earnest money with respect to the Purchase and Sale
Agreement.  See Management's Discussion and Analysis of Financial Condition and
Results of Operations in Item 7 of this report for a more detailed discussion of
the proposed sale.

     Average weighted average occupancies and weighted average effective rental
rates generated by the Remaining Property in the five fiscal years ended
September 30, were as follows:

<TABLE>
<CAPTION>
                                  1st     2nd     3rd     4th
                                  Qtr     Qtr     Qtr     Qtr    Fiscal   Fiscal   Fiscal   Fiscal   Fiscal
                                  1997    1997    1997    1997    1997     1996     1995     1994     1993
                                 -----   -----   -----   -----   ------   ------   ------   ------   ------ 
<S>                              <C>     <C>     <C>     <C>     <C>      <C>      <C>      <C>      <C>
Commercial
----------
Venetian Square
  Shopping Center
Weighted average occupancy         84%     80%     79%     77%      80%      88%      91%      95%      93%
Average effective rental rate
  per square foot(1)             $8.40   $8.15   $8.48   $7.93    $8.24    $7.99    $8.54    $8.57    $8.59

</TABLE>

 (1) These rates are "triple net."  In addition to this base rent, tenants pay
     their pro rata share of taxes, insurance and common area maintenance
     expenses at the property.

The Remaining Property has one tenant occupying 10% or more of the total
rentable square footage.  Save Mart Supermarkets is a party to a 25 year lease
expiring September 10, 2004 at Venetian and is a provider of full service
grocery products.  The rent per annum is approximately $204,000.  Save Mart
Supermarkets has the option of renewing the lease for three consecutive 5-year
lease terms.


The following table sets forth a schedule of lease expirations for the next ten
years, including: (a) the number of tenants whose leases will expire, (b) the
total area in square feet covered by such leases, (c) the annual rental
represented by such leases, and (d) the percentage of gross annual rental
represented by such leases.

                                       7
<PAGE>
 
As of September 30, 1997:
Venetian Square Shopping Center
-------------------------------
<TABLE>
<CAPTION>
 
                              1998      1999       2000      2001      2002      2003       2004   2005      2006   2007
                          --------   -------   --------   -------   -------   -------   --------   ----  --------   ----
<S>                       <C>        <C>       <C>        <C>       <C>       <C>       <C>        <C>   <C>        <C>
No. of tenants                   4         3          3         1         1         2          2      -         1      -
Total square footage        11,534     5,487      6,922     1,400     4,815     3,682     46,580      -     9,276      -
Annual rent               $165,618   $93,171   $114,367   $19,308   $68,967   $60,304   $239,238      -  $120,533      -
% of gross annual rent          19%       11%        13%        2%        8%        7%        27%     -        13%     -
</TABLE>

Item 3.   LEGAL PROCEEDINGS

          The Partnership is not a party to, nor is  the Remaining Property the
          subject of, any material pending legal proceedings.

Item 4.   SUBMISSION OF MATTERS TO A VOTE OF HOLDERS OF LIMITED
          PARTNERSHIP INTERESTS

          There have been no matters submitted to a vote of holders of Limited
          Partnership Interests (the "Units") during the fiscal year which is
          covered by this report.

                                    PART II
                                    -------

Item 5.  MARKET FOR THE REGISTRANT'S LIMITED PARTNERSHIP INTERESTS AND RELATED
         LIMITED PARTNER MATTERS

         At September 30, 1997, 22,000 Units were outstanding and held by
approximately 1,830 limited partners.  Based on a review of the Partnership's
records, Summit Venture L.P. owned 1,110 Units, representing 5.05% of the
outstanding units.  The Partnership's records did not reveal any other person or
group of persons who were on record as owning more than 5% of the outstanding
Units.

     The Units have limited transferability.  There is no public market for the
Units and it is not expected that any will develop.  There are significant
restrictions relating to the transferability of Units, including the requirement
that the Managing General Partner consent to any transfer and to any transferee
becoming a substituted limited partner, which consent may be granted or withheld
at the sole discretion of the Managing General Partner.  In addition,
restrictions on transfers may be imposed by federal and state securities laws.

     Historically, the Partnership has not made regular distributions, rather,
the Partnership has made distributions when it has deemed its cash reserves to
be in excess of amounts required.  On March 21, 1996, as a result of the sale of
LaRisa Apartments, a distribution of $999,900 ($45.45/Unit) was made to limited
partners.  The following table sets forth a summary of distributions made to
limited partners for the three years ended September 30, 1997 on an aggregate
and per unit basis:

<TABLE>
<CAPTION>
                         1997           1996           1995
                         ----           ----           ----
                            Per              Per           Per
Distributions        Total  Unit   Total     Unit   Total  Unit
                     -----  ----  --------  ------  -----  ----
<S>                  <C>    <C>   <C>       <C>     <C>    <C>
From operations      $   -     -  $      -  $       $   -     -
Return of capital        -     -   999,900   45.45      -     -
                     -----  ----  --------  ------  -----  ----
      Total          $   -     -  $999,900  $45.45  $   -     -
                     =====  ====  ========  ======  =====  ====
</TABLE>

                                       8
<PAGE>
 
     The Managing General Partner intends to apply cash flow generated from
Partnership operations in fiscal 1998, if any, to maintain the Partnership's
minimum required cash reserves, as necessary, including any reserves deemed
necessary by the Managing General Partner to cover contingent liabilities.
Thereafter, the Partnership intends to pay amounts owed to the Managing General
Partner and, upon sale of the Remaining Property, make final distributions to
the limited partners.

     The Partnership attempted to sell the Remaining Property in the fiscal year
ended September 30, 1997 and in the process, entered into the Purchase and Sale
Agreement as described previously.  The Managing General Partner expects a sale
of the Remaining Property to occur in the early part of 1998; however, there can
be no assurance that such sale will occur. Upon closing of the sale of the
Remaining Property, the sale proceeds will be used to repay the mortgages
secured by the Remaining Property and expenses of sale (including, without
limitation, the cost of purchasing insurance covering unknown environmental
contamination).  Thereafter, the Managing General Partner will proceed to
liquidate and dissolve the Partnership, applying the remaining net proceeds from
the sale of the Remaining Property and any other funds of the Partnership in the
following manner:

(a)  to the payment of remaining debts and liabilities of the Partnership and
     expenses of liquidation;

(b)  to setting up cash reserves, if necessary, to cover any contingent
     liabilities identified by the Managing General Partner arising out of or in
     connection with the operations of the Partnership; and

(c)  to distributions to the limited partners.

     Once this liquidation has been completed, the operations of the Partnership
will cease and the Partnership will be dissolved.

     The Managing General Partner believes that the sale will provide net
proceeds to the Partnership after the payment of sales costs, closing costs, and
mortgages payable.  The Partnership continues to classify the Remaining Property
as real estate held for sale at September 30, 1997.

     The Remaining Property is subject to the Purchase and Sale Agreement.  The
sale price under the Purchase and Sale Agreement is $7,275,000.  The buyer has
deposited a total of $60,000 earnest money with respect to the Purchase and Sale
Agreement.  See Management's Discussion and Analysis of Financial Condition and
Results of Operations in Item 7 of this report for a more detailed discussion of
the proposed sale.

                                       9
<PAGE>
 
Item 6.  SELECTED FINANCIAL DATA
         -----------------------

                     BOETTCHER WESTERN PROPERTIES III LTD.
                           SELECTED FINANCIAL DATA/(a)/

<TABLE>
<CAPTION>
                            As of or for the year ended September 30,
                                1997        1996          1995          1994          1993
                             ----------  -----------  ------------  ------------  ------------
<S>                          <C>         <C>          <C>           <C>           <C>

Total revenue                $1,071,468  $1,631,685   $ 2,508,536   $ 4,521,349   $ 5,191,770

Operating income (loss)         449,323     (85,603)     (146,895)     (492,317)   (1,391,737)

Gain (loss) on sale
  or disposition of
  real estate investments             -   1,329,705             -     1,441,887      (154,921)
                             ----------  ----------   -----------   -----------   -----------

Net earnings (loss)          $  449,323  $1,244,102   $  (146,895)  $   949,570   $(1,546,658)
                             ==========  ==========   ===========   ===========   ===========

Per Unit:/(b)/
  Net earnings (loss)            $20.42  $    55.98        $(6.61)  $     42.73       $(69.60)
  Cash distribution                   -       45.45             -        125.00             -

Total assets                 $6,800,824  $6,910,619   $11,665,669   $11,895,397   $25,694,558

Mortgages payable            $3,169,358  $3,303,685   $ 7,153,781   $ 7,339,842   $18,075,625

</TABLE>

(a)  The above selected financial data should be read in conjunction with the
     Financial Statements and related Notes contained in Item 8 of this report.
(b)  Per Unit data is based upon the 22,000 weighted average Units outstanding
     during each fiscal year.

                                       10
<PAGE>
 
Item 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         ---------------------------------------------------------------
         RESULTS OF OPERATIONS
         ---------------------

Results of Operations
---------------------

1997 as compared to 1996:

September 30, 1997 marked the close of the Partnership's fourteenth year of
operations.  The Partnership currently owns and operates one shopping center
located in Stockton, California known as Venetian Square Shopping Center, (the
"Remaining Property" or "Venetian") which is being held for sale.

For the fiscal year ended September 30, 1997, the Partnership generated total
revenue of $1,071,468, and incurred total expenses of $622,145, resulting in
operating income of $449,323.  The Partnership's fiscal 1997 operating income
increased $534,926 when compared with fiscal 1996.  The increase in income from
operations is due primarily to  the adoption of Statement of Financial
Accounting Standards No. 121.  ("SFAS 121") in fiscal 1997.  SFAS 121 addresses
the accounting for long-lived assets that are expected to be disposed of, and
has accordingly eliminated depreciation and amortization related to the
Partnership's long-lived assets held for sale.  For the year ended September 30,
1997 no depreciation or amortization related to the Partnership's real estate
held for sale was recorded.  In fiscal 1996, the depreciation and amortization
related to this asset amounted to approximately $271,000.  In addition, in
fiscal 1997 the Partnership reduced its accrual for environmental remediation by
$225,000 based on favorable information received from state regulatory agencies.
This resulted in a credit of $216,177 in environmental expenses for the year
ended September 30, 1997.  Total revenue, primarily rental and other income,
decreased, and total expenses decreased in all categories for the year ended
September 30, 1997 due in part from  the sale of LaRisa Apartments ("LaRisa") in
the second quarter of 1996.  A summary of the Partnership's operations and
period-to-period comparisons is presented below.

<TABLE>
<CAPTION>
                              For the year ended September 30,
                                        In thousands
                                        ------------

                                               Amount of      %
                            1997      1996      Change      Change
                           ------     -----    ---------    ------

<S>                        <C>        <C>      <C>          <C>
Total revenue              $1,071     1,632         (561)   (34%)
Total expenses                622     1,717       (1,095)   (64%)
                           ------     -----       ------

Operating income (loss)    $  449       (85)         534
                           ======     =====       ======
</TABLE>

When making period-to-period comparisons, the exclusion of LaRisa's operations
from the prior fiscal year's results allows for a more meaningful analysis of
the operations of the Partnership's remaining investment.  For comparison
purposes only, LaRisa's results of operations have been excluded in the fiscal
1996 amounts in the table below.

<TABLE>
<CAPTION>

                              For the years ended September 30
                                       (In thousands)
                                       --------------
                                       Pro    Amount
                                      Forma     of        %
                              1997    1996    Change    Change
                             ------  -------  -------  --------
<S>                          <C>     <C>      <C>      <C>
Total revenue                $1,071   1,111      (40)      (4%)
Total expenses                  622   1,179     (557)     (47%)
                             ------   -----     ----

Operating income (loss)      $  449     (68)     517
                             ======   =====     ====
</TABLE>

                                       11
<PAGE>
 
Based upon the proforma amounts presented above, total revenue generated by the
Partnership for the year ended September 30, 1997, amounted to $1,071,468,
representing a decrease of $38,628 (4%) compared with the proforma revenues of
fiscal 1996.  The Remaining Property  generated rental income of $773,819 in
fiscal 1997, which represents a decrease of $49,971 (6%) when compared with
fiscal 1996.  Venetian achieved an average occupancy of 80% and an average
effective rental rate per square foot of $8.24, representing a decrease of 8%
and an increase of $.25, respectively, when compared with fiscal 1996.  The
decrease in rental income at Venetian is directly related to the increased
vacancies at the shopping center in the current fiscal year.  The Managing
General Partner believes the decrease in average occupancies at Venetian is due
to a certain extent to the bankruptcy of a junior anchor tenant and the
subsequent effect that bankruptcy had on other tenants at the property.  For
additional information on the historical average occupancies and average
effective rental rates for the Partnership's Remaining Property, refer to the
table provided in Item 2 of this report.  Tenant reimbursement income generated
by the Remaining Property increased $11,268 (5%) in fiscal 1997 when compared
with fiscal 1996, as a result of increased tenant assessments for common area
maintenance based upon costs of operations.  Other income remained relatively
stable in fiscal 1997 when compared with fiscal 1996.

Based upon the proforma table provided above, total expenses incurred by the
Partnership amounted to $622,145 in fiscal 1997, a decrease of  $557,044 (47%)
when compared with the proforma amounts of fiscal 1996.  As indicated earlier,
the largest components of this decrease are the adoption of SFAS 121 in fiscal
1997 and the reduction of the Partnership's accrual for environmental
remediation.  Fees and reimbursements to the Managing General Partner decreased
$31,917 (24%) in fiscal 1997 when compared with fiscal 1996. This decrease is
the result of the elimination of the accrual of deferred acquisition fees
related to LaRisa beginning in the second quarter of 1996.  Repairs and
maintenance increased $4,986 (4%) in fiscal 1997.  This increase is primarily
the result of ongoing roof repairs and plumbing work at Venetian.  Other
administrative expense decreased $17,682 (23%) in fiscal 1997 when compared to
fiscal 1996, primarily the result of the write off of approximately $20,000 of
past due rents deemed uncollectible in fiscal 1996, as well as the elimination
of amortization of deferred leasing costs in the current year, also a result of
the adoption of SFAS 121.

1996 as compared to 1995:

For the fiscal year ended September 30, 1996, the Partnership generated total
revenue of $1,631,685, and incurred total expenses of $1,717,288, resulting in
an operating loss of $85,603.  The Partnership's fiscal 1996 operating loss
decreased $61,292 (42%) when compared with fiscal 1995.  A gain on the sale of
real estate investments, LaRisa, in the amount $1,329,705, was recorded in the
second quarter of fiscal 1996 as more fully discussed in Note 2 to the Financial
Statements contained in Item 8 of this report.  Due to the gain on sale of real
estate investments, the Partnership generated net earnings of $1,244,102.  Total
revenue decreased, primarily rental and other income, and total expenses
decreased in all categories, primarily due to the sale of LaRisa.

When making period-to-period comparisons, the exclusion of LaRisa's operations
from the current and prior fiscal year's results allows for a more meaningful
analysis of the operations of the Partnership's Remaining Property.  For
comparison purposes only,

                                       12
<PAGE>
 
LaRisa's results of operations have been excluded in both fiscal 1996 and 1995
in the table below.
<TABLE>
<CAPTION>
                                September 30
                               (In Thousands)
                               --------------
                    Pro     Pro    Amount
                   Forma   Forma     of        %
                   1996    1995    Change    Change
                  -------  -----   -------   ------
<S>               <C>      <C>     <C>       <C>
Total revenue     $1,111   1,218     (107)    (9%)
Total expenses     1,179   1,324     (145)   (11%)
                  ------   -----     ----

Operating loss    $  (68)   (106)      38
                  ======   =====     ====
</TABLE>

Based upon the pro forma amounts presented above, total revenue generated by the
Partnership, excluding LaRisa, amounted to $1,110,096, representing a decrease
of $107,929 (9%) compared with fiscal 1995.  The Partnership's Remaining
Property generated rental income of $823,790 in fiscal 1996, which represents a
decrease of $86,809 (10%) when compared with fiscal 1995.  Venetian achieved an
average occupancy of 88% and an average effective rental rate per square foot of
$7.99, representing decreases of 3% and $.55, respectively, when compared with
fiscal 1995.  For additional information on the historical average occupancies
and average effective rental rates for the Partnership's real estate
investments, refer to the table provided in Item 2 of this report.  Tenant
reimbursement income generated by Venetian decreased $41,459 (15%) in fiscal
1996 when compared with fiscal 1995 due to increased vacancies in the current
fiscal year.  Other income increased $20,339 (56%) in fiscal 1996 when compared
with fiscal 1995 primarily as a result of increased interest earned by the
Partnership due to the maintenance of larger cash reserve balances.

Based upon the pro forma amounts provided above, total expenses, excluding
LaRisa, incurred by the Partnership amounted to $1,179,189 in fiscal 1996, a
decrease of  $144,983 (11%) when compared with fiscal 1995.  The largest
component of this decrease is the $55,540 decrease in environmental expense
associated with the remediation of petroleum contamination at Venetian as more
fully discussed below and in Note 7 to the Financial Statements contained in
Item 8 of this report.  Property tax expense decreased $22,211 (22%) in fiscal
1996 primarily the result of a successful appeal related to the property's
assessed value and subsequent reduction in property tax assessments at Venetian.
Fees and reimbursements to the Managing General Partner decreased $53,363 (29%)
in fiscal 1996 when compared with fiscal 1995.  This decrease is the result of
the elimination of the accrual of deferred acquisition fees related to LaRisa
beginning in the second quarter of 1996.  Repairs and maintenance decreased
$11,644 (9%) in fiscal 1996.  This decrease is primarily the result of
underground water leak repairs and parking lot repairs done in fiscal 1995 at
Venetian.  Other administrative expense increased $15,862 (10%) in fiscal 1996
when compared to fiscal 1995, primarily the result of the write off of
approximately $20,000 of past due rents deemed uncollectible.

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

Combined cash and cash equivalent balances, which represent Partnership
reserves, were $855,739 at September 30, 1997, representing a decrease of
$384,338 when compared with fiscal 1996 year-end balances.  Net cash used by
operating activities in fiscal 1997 amounted to $41,657.  The most significant
change in assets and liabilities in fiscal 1997

                                       13
<PAGE>
 
relates to an decrease in payable to Managing General Partner relating to
operations of $407,320.  This decrease represents current year net payments made
to the Managing General Partner to fund the Partnership's ongoing operations.
At September 30, 1997 the payable to Managing General Partner totaled $195,003.
Accounts receivable and other assets increased $82,678 over the prior fiscal
year due to the purchase of environmental liability insurance that was accrued
at September 30, 1997.

Net cash used by investing activities in fiscal 1997 amounted to $203,002 and is
comprised solely of expenditures made for additions to real estate held for
sale.  These costs include costs related to tenant finish and lease commissions
associated with new tenants and the renewal of existing tenants at Venetian.
The majority of these costs relate specifically to the acquisition of a new
junior anchor tenant at the center in fiscal 1997.

Net cash used by financing activities amounted to $139,679 in fiscal 1997,
primarily comprised of reductions in mortgage principal of $137,179.

The Partnership is required under its Partnership Agreement to maintain cash
reserves of not less than 3% of aggregate capital contributions for normal
repairs, replacements, working capital and other contingencies.  As of September
30, 1997, the Partnership had $855,739 in cash reserves.  The Partnership
intends to apply cash flow generated from Partnership operations in fiscal 1998,
if any, to maintain minimum required cash reserves, including any additional
reserves deemed necessary by the Managing General Partner to cover any
contingent liabilities.  Thereafter, the Partnership intends to pay the Managing
General Partner all unpaid cash advances made to the Partnership, all unpaid
administrative reimbursements, all unpaid property management fees and all
deferred fees earned by the Managing General Partner, which total $53,078,
$8,640, $1,964 and $131,321 respectively, as of September 30, 1997.

To the knowledge of the Managing General Partner, the Remaining Property is in
good physical condition.  During fiscal 1997, no major capital expenditures were
made at the Remaining Property, other than tenant finish costs associated with
ongoing leasing efforts.  However, the Remaining Property is in excess of 18
years of age and the Managing General Partner believes that it will require,
over the next one to two-year period, from $200,000 to $250,000 of maintenance
and capital improvements for roof and facade repairs to maintain its competitive
position.

The Partnership attempted to sell the Remaining Property in the fiscal year
ended September 30, 1997.  The existence of petroleum contamination has limited
the potential buyers of the Remaining Property.  Specifically, it has prevented
marketing to many institutional buyers and public real estate investment trusts.
The Partnership had to focus its marketing efforts on entrepreneurial investors
who are not subject to financing or other constraints due to the environmental
remediation issues.

Despite the difficulty in marketing the Remaining Property, the Partnership
entered into a purchase and sale agreement, which became effective on July 17,
1997, as amended or supplemented from time to time (the "Purchase and Sale
Agreement"), for the sale of the Remaining Property for a sales price of
$7,275,000.  Certain contingencies delayed the expected sale closing date into
the early part of 1998.  The purchaser's obligation to complete the sale remains
subject to customary closing conditions, and, there can be no assurances that
the Partnership will sell the Remaining Property in 1998.  Upon closing of the
sale of the Remaining Property, the sale proceeds will be used to repay the
mortgages

                                       14
<PAGE>
 
secured by the Remaining Property and expenses of sale (including, without
limitation, the cost of purchasing insurance covering unknown environmental
contamination).  Thereafter, the Managing General Partner will proceed to
liquidate and dissolve the Partnership, applying the remaining net proceeds from
the sale of the Remaining Property and any other funds of the Partnership in the
following manner:

(a)  To the payment of remaining debts and liabilities of the Partnership and
     expenses of liquidation;

(b)  to setting up cash reserves, if necessary, to cover any contingent
     liabilities identified by the Managing General Partner arising out of or in
     connection with the operations of the Partnership; and

(c)  to distributions to the limited partners.

Once this liquidation has been completed, the operations of the Partnership will
cease and the Partnership will be dissolved.  See Exhibit 11 for an analysis of
the effect of the sale and subsequent liquidation on the Partnership's Balance
Sheet and Statement of Operations as of September 30, 1997.

The Managing General Partner believes that the sale will provide net proceeds to
the Partnership after the payment of sales costs, closing costs, and mortgages
payable.  The Partnership continues to classify the Remaining Property as real
estate held for sale at September 30, 1997.

At the end of September 1997, the Partnership entered into an agreement with
Great West Life Assurance Company ("Great West") to extend the maturity date of
the first mortgage payable secured by the Remaining Property to December 31,
1997.  Under the extension agreement the Partnership paid an extension fee of
$2,500.  As of December 31, 1997, the Partnership's first mortgage secured by
the Remaining Property, amounted to approximately $3,125,850.  This mortgage
matured on December 31, 1997, and on January 9, 1998, the Managing General
Partner obtained a verbal extension of the mortgage financing through January
15, 1998, which the Managing General Partner believes, should be sufficient to
permit the Partnership to sell the Remaining Property.  In the event the
mortgage financing cannot be extended after January 15, 1998, the Managing
General Partner believes it could refinance the first mortgage payable at terms
favorable to the Partnership due to current market conditions.

On December 30, 1997, in connection with a recent proxy solicitation of the
limited partners of the Partnership, a special meeting of the limited partners
of the Partnership was held for the purpose of obtaining limited partner
approval of the proposed sale of the Remaining Property and the subsequent
liquidation and dissolution of the Partnership.

The above referenced proposal was approved at the meeting by the following vote:

                             Limited Partner Units
                       ---------------------------------
                         For       Against      Abstain
                         ---       -------      -------

                       12,248         71           88

The Partnership Agreement requires a simple majority of the 22,000 limited
partner units outstanding (11,220 units) for approval of the proposal.  The
purchaser has until January 17, 1998 to consummate the purchase of the Remaining
Property.  Provided the closing occurs, an

                                       15
<PAGE>
 
initial distribution of approximately $150 per $1,000 unit will be made to
limited partners from the sale proceeds.

During fiscal 1997, the Partnership continued the remediation of petroleum
contaminated soil and groundwater on a parcel of land adjacent to and part of
Venetian.  The Partnership has spent approximately $310,000 through September
30, 1997 in connection with the remediation program and has maintained an
accrual of approximately $250,000 as a provision for possible additional
remediation expenses.  Amounts expended to date have been for the evaluation,
monitoring, and remediation of the petroleum contamination.  As of September 30,
1997, management determined, based on current information that the amount of
additional remediation expense that may be incurred in completion of the
remediation effort would amount to significantly less than its prior estimate,
and as such decreased its accrual to $25,000 at September 30, 1997.
Accordingly, the Financial Statements contained in Item 8 of this report include
adjustments reflecting the completion of substantially all of the required
remediation at Venetian.  On December 31, 1997, the San Joaquin County
Environmental Health Division issued a "no further action required" letter (the
"Closure Letter"), confirming completion of the remediation effort with regard
to the contaminates released from the underground storage tanks.  For additional
discussion on how this matter affected the financial operating results of the
Partnership and history of the environmental contamination and the Partnership's
remediation efforts, refer to Note 7 to the Financial Statements contained in
Item 8 of this report.

From time to time the Partnership has analyzed potential sources of
reimbursement for environmental remediation expenses.  As a result, the
Partnership made an inquiry to the California State Water Resources Control
Board as to a potential reimbursement claim.  On January 6, 1998, the
Partnership received correspondence from the California State Water Resources
Control Board indicating that the Partnership's claim for reimbursement filed
under the Underground Storage Tank Cleanup Fund Program has been accepted for
review.  The Partnership is currently working on submitting all of the required
information within the prescribed preliminary filing guidelines.  The Managing
General Partner is unable at this time to determine the amount of reimbursement,
if any, that the Partnership may receive as a result of this filing, and is
unable to determine the timing of the reimbursement, if any.  Accordingly, no
adjustments have been made to the financial statements contained in Item 8 of
this report.

On February 29, 1996 the Partnership sold the land, related improvements and
personal property of LaRisa Apartments ("LaRisa").  The purchaser, ALT
Affordable Housing Service, Inc. is not affiliated with the Partnership, its
Managing General Partner or any affiliate, director, officer or associate of the
foregoing, and the sales price was determined by arm's length negotiations.

                                       16
<PAGE>
 
The net proceeds to the Partnership, before proration of operating income and
expenses related to the property, were as follows:

<TABLE>
<CAPTION>
 
<S>                                                      <C>          <C>
Sales Price                                                           $ 6,440,000
  Less:
     Costs of sale:
        Sales commissions                                  (223,453)
        Closing costs (title fees, legal and other)         (74,400)
     Tenant security deposit liability                      (33,040)
     Mortgage payoff                                     (3,692,414)   (4,023,307)
                                                                      -----------
 
Net Proceeds                                                          $ 2,416,693
                                                                      ===========
 
The net proceeds were utilized as follows:
Distribution to limited partners ($45.45/unit)                        $   999,900
Partial repayment of cash advances, reimbursement and
  deferred fees to the Managing General Partner                         1,000,000
Addition to Partnership cash reserves                                     416,793
                                                                      -----------
                                                                      $ 2,416,693
                                                                      ===========
</TABLE>

The Partnership recorded a net gain on sale of real estate investment of
$1,329,705 related to this transaction, resulting from the excess of the net
sales proceeds over the Partnership's net carrying value of La Risa.

                                       17
<PAGE>
 
Item 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
          -------------------------------------------


     The following Financial Statements of the Partnership are included herein:

     Independent Auditors' Report                                      19

     Balance Sheets - September 30, 1997 and 1996                      20

     Statements of Operations -
     Years ended September 30, 1997, 1996 and 1995                     21

     Statements of Partners' Capital (Deficit)
     Years ended September 30, 1997, 1996 and 1995                     22

     Statements of Cash Flows -
     Years ended September 30, 1997, 1996 and 1995                     23

     Notes to Financial Statements                                     24

                                       18
<PAGE>
 
                         Independent Auditors' Report
                         ----------------------------
                                        
The Partners
Boettcher Western Properties III Ltd.:

We have audited the accompanying balance sheets of Boettcher Western Properties
III Ltd. (a limited partnership) as of September 30, 1997 and 1996, and the
related statements of operations, partners' capital (deficit), and cash flows
for each of the years in the three-year period ended September 30, 1997. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 8 to the financial statements, Boettcher Western Properties
III Ltd. is in the process of winding up, liquidating its assets and dissolving,
as provided in the Partnership Agreement. The Partnership's management's plans
in regard to this matter are also discussed in Note 8.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Boettcher Western Properties
III Ltd. as of September 30, 1997 and 1996, and the results of its operations
and its cash flows for each of the years in the three-year period ended
September 30, 1997, in conformity with generally accepted accounting principles.

                                        KPMG Peat Marwick LLP


Denver, Colorado
December 15, 1997, except as to paragraphs four and five of Note 7
which are as of January 6, 1998, and paragraphs two through seven of
Note 8 which are as of January 9, 1998

                                       19
<PAGE>
 
                     BOETTCHER WESTERN PROPERTIES III LTD.
                            (A Limited Partnership)

                                 Balance Sheets
                          September 30, 1997 and 1996
<TABLE>
<CAPTION>
 
   Assets                                                   1997          1996
   ------                                              ------------  ------------
<S>                                                     <C>           <C>
Real estate held for sale, at cost                       $5,769,761    $5,566,759
Cash and cash equivalents at cost,
   which approximates market value                          855,739     1,240,077
Accounts receivable and other assets                        172,824        90,146
Debt issuance costs, net of accumulated
   amortization of $47,083 and $33,446, respectively          2,500        13,637
                                                         ----------    ----------
                                                         $6,800,824    $6,910,619
                                                         ==========    ==========
 
   Liabilities and Partners' Capital
   ---------------------------------
Mortgages payable, net of unamortized debt
   discount of $1,673 and $4,525, respectively           $3,169,358    $3,303,685
Payable to managing general partner                         195,003       602,323
Accounts payable and accrued expenses                       282,163       296,557
Property taxes payable                                       21,238        21,238
Tenants' deposits                                            36,638        39,339
Unearned rental income                                        5,670         5,556
Accrued interest payable                                          -           490
                                                         ----------    ----------
   Total liabilities                                      3,710,070     4,269,188
 
Partners' capital:
   General partners                                        (109,376)     (113,869)
   Limited partners                                       3,200,130     2,755,300
                                                         ----------    ----------
   Total partners' capital                                3,090,754     2,641,431
                                                         ----------    ----------
                                                         $6,800,824    $6,910,619
                                                         ==========    ==========
</TABLE>

See accompanying notes to financial statements.

                                      20
<PAGE>
 
                     BOETTCHER WESTERN PROPERTIES III LTD.
                            (A Limited Partnership)
                           Statements of Operations
                 Years ended September 30, 1997, 1996 and 1995
<TABLE>
<CAPTION>
 
                                              1997         1996         1995
                                           -----------  -----------  -----------
<S>                                        <C>          <C>          <C>
Revenue:
--------
Rental income                              $  773,819   $1,323,274   $2,145,948
Tenant reimbursements for
   common area charges,
   insurance and taxes                        240,896      229,628      271,087
Other income                                   56,753       78,783       91,501
                                           ----------   ----------   ----------
                                            1,071,468    1,631,685    2,508,536
                                           ----------   ----------   ----------
Expenses:
---------
Interest, including amortization
   of debt discount and debt
   issuance costs                             360,774      526,180      807,298
Depreciation                                        -      317,221      451,174
Property taxes                                 86,165      143,570      255,633
Fees and reimbursements to
   managing general partner                   101,613      133,530      186,893
Other management fees                          45,147       72,928      108,667
Salaries of on-site property
   managers                                         -       62,888      156,975
Repairs and maintenance                       127,779      170,148      260,913
Utilities                                      37,679       71,245      121,150
Other administrative                           79,165      202,982      234,592
Environmental costs                          (216,177)      16,596       72,136
                                           ----------   ----------   ----------
 
                                              622,145    1,717,288    2,655,431
                                           ----------   ----------   ----------
 
    Operating income (loss)                   449,323      (85,603)    (146,895)
 
Gain on sale of real estate investments             -    1,329,705            -
                                           ----------   ----------   ----------
 
    Net earnings (loss)                    $  449,323   $1,244,102   $ (146,895)
                                           ==========   ==========   ==========
 
Net earnings (loss)
   per limited partnership unit            $    20.42   $    55.98   $    (6.61)
                                           ==========   ==========   ==========
 
Weighted average number of limited
   partnership units outstanding               22,000       22,000       22,000
                                           ==========   ==========   ==========
</TABLE>

See accompanying notes to financial statements.

                                      21
<PAGE>
 
                     BOETTCHER WESTERN PROPERTIES III LTD.
                            (A Limited Partnership)

                   Statements of Partners' Capital (Deficit)
                 Years ended September 30, 1997, 1996 and 1995
<TABLE>
<CAPTION>
 
                                                                         Total
                                             General      Limited      Partners'
                                            partners      partners      capital
                                           -----------  ------------  ------------
<S>                                        <C>          <C>           <C>
Capital (deficit) at October 1, 1994        $(124,841)   $2,668,965    $2,544,124
 
Net loss                                       (1,469)     (145,426)     (146,895)
                                            ---------    ----------    ----------
 
Capital (deficit) at September 30, 1995      (126,310)    2,523,539     2,397,229
 
Distribution to limited partners                    -      (999,900)     (999,900)
 
Net earnings                                   12,441     1,231,661     1,244,102
                                            ---------    ----------    ----------
 
Capital (deficit) at September 30, 1996      (113,869)    2,755,300     2,641,431
 
Net earnings                                    4,493       444,830       449,323
                                            ---------    ----------    ----------
 
Capital (deficit) at September 30, 1997     $(109,376)   $3,200,130    $3,090,754
                                            =========    ==========    ==========
</TABLE>

See accompanying notes to financial statements.

                                      22
<PAGE>
 
                     BOETTCHER WESTERN PROPERTIES III LTD.
                            (A Limited Partnership)

                           Statements of Cash Flows
                 Years ended September 30, 1997, 1996 and 1995
<TABLE>
<CAPTION>
 
                                                                     1997          1996         1995
                                                                  -----------  ------------  -----------
<S>                                                               <C>          <C>           <C>
Cash flows from operating activities:
 Net earnings (loss)                                              $  449,323   $ 1,244,102    $(146,895)
  Adjustments to reconcile net earnings (loss)
  to net cash provided (used) by operating activities:
   Depreciation and amortization                                      16,489       398,755      566,109
      Gain on sale of real estate investments                              -    (1,329,705)           -
  Change in operating assets and liabilities:
   (Increase) decrease in accounts receivable and other assets       (82,678)       97,399       42,186
   (Increase) decrease in property tax and
    other escrow deposits                                                  -       111,511      (23,193)
   Increase (decrease) in payable to
    Managing General Partner relating to operations                 (407,320)     (925,068)     126,622
   Decrease in accounts payable and accrued expenses                 (14,394)      (25,863)     (13,307)
   Decrease in property taxes payable                                      -      (119,664)        (344)
   Decrease in tenants' deposits                                      (2,701)      (31,194)      (7,177)
   Decrease in unearned rental income                                    114       (14,172)      (2,949)
   Decrease in accrued interest payable                                 (490)      (33,195)        (157)
                                                                  ----------   -----------    ---------
Net cash provided (used) by operating activities                     (41,657)     (627,094)     540,895
                                                                  ----------   -----------    ---------
 
Cash flows from investing activities:
   Additions to real estate held for sale                           (203,002)     (113,257)    (113,549)
   Deferred leasing costs                                                  -       (59,273)     (12,724)
   Net proceeds from sale of real estate investments                       -     6,053,468            -
                                                                  ----------   -----------    ---------
Net cash provided (used) by investing activities                    (203,002)    5,880,938     (126,273)
                                                                  ----------   -----------    ---------
 
Cash flows from financing activities:
   Payments of mortgage principal                                   (137,179)   (3,852,733)    (194,912)
   (Increase) decrease in debt issuance costs                         (2,500)        2,726      (78,398)
   Distributions to limited partners                                       -      (999,900)           -
                                                                  ----------   -----------    ---------
Net cash used by financing activities                               (139,679)   (4,849,907)    (273,310)
                                                                  ----------   -----------    ---------
 
Net increase (decrease) in cash and equivalents                     (384,338)      403,937      141,312
 
Cash and cash equivalents at beginning of year                     1,240,077       836,140      694,828
                                                                  ----------   -----------    ---------
Cash and cash equivalents at end of year                          $  855,739   $ 1,240,077    $ 836,140
                                                                  ==========   ===========    =========
 
Supplemental disclosure of cash flow information:
  Interest paid in cash during the year                           $  364,992   $   537,454    $ 736,630
                                                                  ==========   ===========    =========
</TABLE>

See accompanying notes to financial statements.

                                      23
<PAGE>
 
                     BOETTCHER WESTERN PROPERTIES III LTD.
                            (A Limited Partnership)

                         Notes to Financial Statements
                       September 30, 1997, 1996 and 1995

--------------------------------------------------------------------------------

(1)  Significant Accounting Principles
     ---------------------------------

     Organization and Allocation of Income and Losses
     ------------------------------------------------
     Boettcher Western Properties III Ltd. (the "Partnership") is a limited
     partnership formed on March 18, 1983 for the purpose of investing in
     improved and unimproved real property. Limited Partnership Interests (the
     "Units") were sold through a public offering and currently 22,000 Units at
     $1,000 per Unit are outstanding.

     The managing general partner of the Partnership is Boettcher Properties,
     Ltd. ("BPL"), and the associate general partner is Boettcher 1983
     Associates, Ltd.

     The Partnership Agreement provides for the net operating income of the
     Partnership to be allocated as follows: (i) to the limited partners to the
     extent necessary to satisfy the 8% Current Distribution Preference, as
     defined (an amount equal to 8% of the daily average aggregate adjusted
     capital contributions of the limited partners) and (ii) 1% of the remainder
     to the General Partners and 99% to the limited partners. Net operating
     losses are allocated 1% to the General Partners and 99% to the limited
     partners.

     The Partnership Agreement provides for net capital income from the sale or
     other disposition of Partnership properties to be allocated on a cumulative
     basis as follows: (i) 1% to the General Partner and 99% to the limited
     partners to the extent of depreciation deductions taken from the inception
     of the Partnership, (ii) to the limited partners to the extent necessary to
     satisfy the Net Proceeds Distribution Preference, as defined (an amount
     equal to the sum of limited partner capital contributions not yet returned
     and any unsatisfied 8% current Distribution Preference from prior periods)
     and (iii) 25% of the remainder to the General Partners and 75% to the
     limited partners. Net capital loss is allocated 1% to the General Partners
     and 99% to the limited partners.

     Basis of Accounting
     -------------------     
     The Partnership uses the accrual method of accounting. As discussed in Note
     8, the Partnership has begun the process of winding up its activities,
     liquidating its assets, and dissolving, as provided for in the Partnership
     Agreement. The accompanying financial statements have been prepared in
     accordance with generally accepted accounting principles on a basis
     consistent with prior years and do not reflect liquidation accounting.

     Environmental Remediation Liabilities
     -------------------------------------
     Liabilities for loss contingencies, including environmental remediation
     costs, arising from claims, assessments, litigation, fines and penalties,
     and other sources are recorded when it is probable that a liability has
     been incurred and the amount of the assessment and/or remediation can be
     reasonably estimated. The costs of site clean-up are recorded in the amount
     of the cash payments made or for future estimated costs for that site when
     fixed or reliably determinable based upon information derived from the
     remediation plan for that site. Recoveries from third parties which are
     probable of realization are separately recorded, and are not offset against
     the related environmental liability.

                                      24
<PAGE>
 
                     BOETTCHER WESTERN PROPERTIES III LTD.
                            (A Limited Partnership)

                         Notes to Financial Statements
                       September 30, 1997, 1996 and 1995

--------------------------------------------------------------------------------

     In October 1996, the American Institute of Certified Public Accountants
     issued Statement of Position ("SOP") 96-1, Environmental Remediation
     Liabilities. SOP 96-1 was adopted by the Partnership during fiscal 1996 and
     required, among other things, environmental remediation liabilities to be
     accrued when the criteria of SFAS No. 5, Accounting for Contingencies, have
     been met. The SOP also provides guidance with respect to the measurement of
     the remediation liabilities. Such accounting is consistent with the
     Partnership's current method of accounting for environmental remediation
     costs and therefore, adoption of this new Statement did not have a material
     impact on the Partnership's financial position, results of operations, or
     liquidity.

     Deferred Leasing Costs
     ----------------------
     Costs associated with the leasing of the Partnership's shopping center are
     deferred and amortized over the life of the related leases. These costs are
     comprised of lease commissions and construction costs related to the
     buildout of tenant space.

     Financial Instruments
     ---------------------
     The fair value of the Partnership's financial instruments approximate their
     carrying values due to the short maturities of those instruments or due to
     the interest rates of those instruments approximating interest rates for
     similar issues.

     Income Taxes
     ------------
     No provision has been made for federal income taxes, as the taxable income
     (loss) is reported by the partners rather than the Partnership. The
     Partnership reports certain transactions differently for tax and financial
     statement purposes, primarily depreciation and debt discount.

     A reconciliation of net earnings (loss) per the accompanying financial
     statements and Partnership's tax return is shown in the table below.
     Results of operations for the year ended September 30, 1997 as shown in the
     financial statements is actual. However, the Partnership's tax return for
     December 31, 1997 has not been prepared; therefore, the reconciling items
     for 1997 are estimates by management.

<TABLE>
<CAPTION>
                                                                 Unaudited
                                                      1997          1996         1995
                                                    ---------    ----------   ----------
<S>                                                <C>          <C>           <C>
Net earnings (loss) per financial statements        $ 449,323    $1,244,102   $ (146,895)
Fiscal to calendar year net difference                110,000       (15,690)       6,343
Tax depreciation in excess of depreciation
  for financial statement purposes                   (440,000)     (217,864)    (288,639)
Debt discount amortization not deducted for
  tax purposes                                          3,000         2,651        2,594
Rental revenue reported in different years
  for tax and financial statement purposes              2,500           253       14,573
Environmental costs deducted for tax purposes        (250,000)            -            -
Difference in net gain on sale of real estate
   investments for tax and financial statements             -     1,132,304    1,233,006
                                                    ---------    ----------   ----------
Net earnings (loss) for income tax purposes         $(125,177)   $2,145,756   $  820,982
                                                    =========    ==========   ==========
</TABLE>

                                       25
 
<PAGE>
 
                     BOETTCHER WESTERN PROPERTIES III LTD.
                            (A Limited Partnership)

                         Notes to Financial Statements
                       September 30, 1997, 1996 and 1995

--------------------------------------------------------------------------------

     Real Estate Held for Sale
     -------------------------
     Real estate held for sale is recorded at the lower of cost or fair value
     based upon independent appraised values less estimated selling costs.

     During 1996 and prior years, buildings and improvements were depreciated
     using the straight-line method over an estimated useful life of 30 years.
     Equipment and furnishings were depreciated using the straight-line method
     over an estimated useful life of 5 years. Renewals and betterment's are
     capitalized, and repairs and maintenance are charged to operations as
     incurred.

     Effective October 1, 1996, the Partnership adopted Statement of Financial
     Accounting Standards No. 121, "Accounting for the impairment of long-lived
     assets and for long-lived assets expected to be disposed of" ("SFAS 121").
     The adoption of SFAS 121 resulted in the Partnership no longer recording
     depreciation and amortization expense on its real estate held for sale.

     Cash and Cash Equivalents
     -------------------------
     For purposes of the Statement of Cash Flows, cash and cash equivalents
     include highly liquid debt instruments purchased with an original maturity
     of three months or less.  Cash and cash equivalents are comprised of the
     following as of September 30:

<TABLE>
<CAPTION>
                                       1997          1996
                                     --------     ----------
     <S>                             <C>          <C>
     Money market fund               $746,711     $1,120,644
     Operating cash                   109,028        119,433
                                     --------     ----------
     Cash and cash equivalents       $855,739     $1,240,077
                                     ========     ==========
</TABLE>

     Debt Issuance Costs and Debt Discount
     -------------------------------------
     Costs incurred in arranging financing, such as loan origination fees,
     commitment fees and extension fees, are deferred and amortized using the
     level-interest-yield method over the term of the related debt or the
     extension period.

     Debt discount is amortized to interest expense using the level-interest-
     yield method over the term of the related debt.

     Use of Estimates
     ----------------
     Management of the Partnership has made a number of estimates and
     assumptions relating to the reporting of assets and liabilities and the
     disclosure of contingent assets and liabilities to prepare these financial
     statements in conformity with generally accepted accounting principles.
     Actual results could differ significantly from those estimates.

     Reclassification
     ----------------
     Certain prior year amounts have been reclassified to conform with fiscal
     1997 financial statement presentation.

                                       26
<PAGE>
 
                     BOETTCHER WESTERN PROPERTIES III LTD.
                            (A Limited Partnership)

                         Notes to Financial Statements
                       September 30, 1997, 1996 and 1995

--------------------------------------------------------------------------------

(2)  Real Estate Held for Sale
     -------------------------
     Mortgages assumed in connection with the acquisition of the Partnership's
     properties were discounted using an equivalent market rate of interest as
     of the date of acquisition. For financial statement purposes, the resulting
     discount is deducted from the original cost basis of the related real
     estate investment property, thereby resulting in a reduction of
     depreciation expense over the life of the assets.

     As of September 30, 1997, the fair value of the Partnership's real estate
     held for sale exceeds cost, based upon independent appraised values or
     preliminary offers to purchase the property less estimated selling costs.

     Sale of Real Estate
     -------------------
     On February 29, 1996 the Partnership sold the land, related improvements
     and personal property of La Risa Apartments ("La Risa").  The purchaser,
     ALT Affordable Housing Service, Inc. is not affiliated with the
     Partnership, its Managing General Partner or any affiliate, director,
     officer or associate of the foregoing, and the sales price was determined
     by arm's length negotiations.

     The net proceeds to the Partnership, before proration of operating income
     and expenses related to the property, were as follows:

<TABLE>
     <S>                                              <C>           <C>
     Sales Price                                                    $ 6,440,000
         Less:
           Costs of sale:
              Sales commissions                         (223,453)
              Closing costs (title fees, legal 
                and other)                               (74,400)
           Tenant security deposit liability             (33,040)
           Mortgage payoff                            (3,692,414)    (4,023,307)
                                                                    -----------
 
     Net Proceeds                                                   $ 2,416,693
                                                                    ===========
 
     The net proceeds were utilized as follows:
 
     Distribution to limited partners ($45.45/unit)                 $   999,900
 
     Partial repayment of cash advances, reimbursement 
       and deferred fees to the Managing General 
       Partner                                                        1,000,000
 
     Addition to Partnership cash reserves                              416,793
                                                                    -----------
                                                                    $ 2,416,693
                                                                    ===========
</TABLE>

     The Partnership recorded a net gain on sale of real estate investment of
     $1,329,705 related to this transaction, resulting from the excess of the
     net sales proceeds over the Partnership's net carrying value of La Risa.

                                       27
<PAGE>
 
                     BOETTCHER WESTERN PROPERTIES III LTD.
                            (A Limited Partnership)

                         Notes to Financial Statements
                       September 30, 1997, 1996 and 1995

--------------------------------------------------------------------------------

(3)  Mortgages Payable
     -----------------
     Mortgages payable at September 30, 1997 and 1996 are secured solely by the
     Partnership's real estate held for sale and are nonrecourse to the
     Partnership.  At September 30, 1997 and 1996, mortgages payable are
     comprised of the following:

<TABLE>
<CAPTION>
1997:
-----
                                             Unamortized       Balance
                                                debt            net of      Interest            Monthly           Due
Property                   Principal          discount         discount       rate              payment           date
--------                   ---------         -----------       --------       ----              -------           ----
<S>                       <C>                <C>              <C>           <C>                 <C>             <C>
Venetian Square
     First                $3,158,998             -            3,158,998      10.50%             $39,098          12/97/(d)/
     Second                   12,033        (1,673)/(a)/         10,360       6.75%/(b)/        $ 1,062/(c)/      4/98
                          ----------        ------            ---------
                          $3,171,031        (1,673)           3,169,358
                          ==========        ======            =========

1996:
-----
                                             Unamortized       Balance
                                                debt           net of        Interest            Monthly          Due
Property                   Principal          discount         discount        rate              payment          date
--------                   ---------          --------        ----------       ----              -------          ----
Venetian Square                              <C>
     First                $3,285,221             -            3,285,221      10.50%              39,098          10/97
     Second                   22,989        (4,525)/(a)/         18,464       6.75%/(b)/          1,062/(c)/      4/98
                          ----------        ------            ---------
                          $3,308,210        (4,525)           3,303,685
                          ==========        ======            =========
</TABLE>

(a)  Discount was based on market interest rate at the time of purchase of
     12.5%.
(b)  Average rate of bond issue.
(c)  Paid semiannually in April and December.
(d)  The Partnership extended the mortgage payable to December 31, 1997.  See
     note 6 for additional information.

     The fair value of the mortgages attributable to the Partnership is
     estimated to be approximated by its carrying value.

     Aggregate maturities of principal payments for the five fiscal years ending
     September 30, 2002 and thereafter are as follows:

     <TABLE>
     <S>              <C>
     1998             $3,171,031
     1999                      -
     2000                      -
     2001                      -
     2002                      -
     Thereafter                -
                      ----------
                      $3,171,031
                      ==========
     </TABLE>
     For additional discussion of the Partnership's mortgages payable refer to
     note 8.

                                       28
<PAGE>
 
                     BOETTCHER WESTERN PROPERTIES III LTD.
                            (A Limited Partnership)

                         Notes to Financial Statements
                       September 30, 1997, 1996 and 1995

--------------------------------------------------------------------------------

(4)  Transactions with Related Parties
     ---------------------------------
     BPL is the Managing Agent of the Partnership and is paid an annual fee for
     its services. The annual fee is comprised of a property management fee and
     a deferred acquisition fee. The property management fee is equal to 5% of
     gross receipts from the Properties, less management fees paid to others.
     The property management fee earned by BPL amounted to $5,733, $6,255, and
     $15,734 for the years ended September 30, 1997, 1996, and 1995,
     respectively.  The deferred acquisition fee is an annual fee equal to the
     sum of 2% of average daily invested capital plus 1/2 of 1% of average daily
     liquid capital, as defined. The deferred acquisition fee is payable for a
     maximum of 15 years and is limited in the aggregate to payments having a
     discounted value equal to 14% of gross limited partner capital
     contributions.  Payments made over the 15-year period will be discounted at
     10% per year from the date of payment to May 2, 1983 in determining whether
     the limit has been reached. Payments are limited in the aggregate to
     $3,080,000.  Since inception, the total discounted deferred acquisition fee
     earned by the Managing General Partner is approximately $2,329,000.  The
     annual deferred acquisition fee earned by BPL amounted to $78,600,
     $104,335, and $140,364 for the years ended September 30, 1997, 1996, and
     1995, respectively.

     The Partnership also reimburses BPL for its allocable share of salaries of
     nonmanagement and nonsupervisory personnel providing accounting, investor
     reporting and communications, and legal services to the Partnership and
     allowable expenses related to the maintenance and repair of data processing
     equipment used for or by the Partnership. The amount due to BPL for such
     reimbursements for the years ended September 30, 1997, 1996, and 1995
     amounted to $17,280, $22,940, and $30,795, respectively.

(5)  Future Rental Income
     --------------------
     Aggregate base rental income relating to long-term noncancelable leases for
     the Venetian Square Shopping Center for the five fiscal years ending
     September 30, 2002 and thereafter is as follows:

     <TABLE> 
     <S>           <C>  
     1998          $  745,552
     1999             647,248
     2000             536,942
     2001             493,870
     2002             421,111
     Thereafter       658,649
                   ----------
                   $3,503,372
                   ==========
</TABLE> 

(6)  Liquidity and Debt Maturities
     -----------------------------
     The Partnership is required under its Partnership Agreement to maintain
     cash reserves of not less than 3% of aggregate capital contributions for
     normal repairs, replacements, working capital and other contingencies.  As
     of September 30, 1997, the Partnership had cash reserves of $855,739, while
     the required minimum amount was $660,000.  During

                                       29
<PAGE>
 
                     BOETTCHER WESTERN PROPERTIES III LTD.
                            (A Limited Partnership)

                         Notes to Financial Statements
                       September 30, 1997, 1996 and 1995

--------------------------------------------------------------------------------

     fiscal 1997, the payable to Managing General Partner decreased $407,320 to
     a total of $195,003 as of September 30, 1997.  This decrease is the net
     result of payments to the Managing General Partner and additional cash
     advances made to the Partnership plus the accrual of fees and
     reimbursements earned by the Managing General Partner in fiscal 1997.  The
     Managing General Partner intends to apply cash flow generated from
     Partnership operations in fiscal 1998, if any, to maintain the minimum
     required cash reserves, as necessary, including any additional reserves to
     cover any contingent liabilities.  Thereafter, the Partnership intends to
     pay the Managing General Partner all unpaid cash advances made to the
     Partnership, all unpaid administrative reimbursements and all deferred fees
     earned by the Managing General Partner.

     The Partnership attempted to sell the Remaining Property in the fiscal year
     ended September 30, 1997.  The existence of petroleum contamination has
     limited the potential buyers of the Remaining Property.  Specifically, it
     has prevented marketing to many institutional buyers and public real estate
     investment trusts.  The Partnership had to focus its marketing efforts on
     entrepreneurial investors who are not subject to financing or other
     constraints due to the environmental remediation issues.

     Despite the difficulty in marketing the Remaining Property, the Partnership
     entered into a purchase and sale agreement, which became effective on July
     17, 1997, as amended or supplemented from time to time (the "Purchase and
     Sale Agreement"), for the sale of the Remaining Property for a sale price
     of $7,275,000 (For additional discussion see Note 8).  Certain
     contingencies delayed the expected sale closing date into the early part of
     1998.  The purchaser's obligation to complete the sale remains subject to
     customary closing conditions, and there can be no assurances that the
     Partnership will sell the Remaining Property in 1998.

     The Managing General Partner believes that the sale will provide net
     proceeds to the Partnership after the payment of sales costs, closing
     costs, and mortgages payable.  The Partnership continues to classify the
     Remaining Property as real estate held for sale at September 30, 1997.

(7)  Environmental Remediation Costs
     -------------------------------
     From approximately 1979 through 1990 a card-lock fueling station had been
     operated on a parcel of land adjacent to and a part of the Remaining
     Property.  In 1990, operation of the fueling station ceased, and in fiscal
     1991 the Partnership determined that it would be permanently closed.  In
     compliance with the California and San Joaquin County environmental
     regulatory requirements, the Partnership contracted with an environmental
     engineering firm to perform Phase I and Phase II environmental site
     assessments on this specific parcel of land.  The results of those site
     assessments suggested the possibility that the site contained petroleum
     contaminants.

                                       30
<PAGE>
 
                     BOETTCHER WESTERN PROPERTIES III LTD.
                            (A Limited Partnership)

                         Notes to Financial Statements
                       September 30, 1997, 1996 and 1995

--------------------------------------------------------------------------------

     In fiscal 1992, the Partnership contracted for the excavation and removal
     of the three underground fuel storage tanks located on this parcel of land.
     Upon excavation and removal of those underground fuel storage tanks,
     leakage of petroleum contaminants was discovered through performance of
     soil and groundwater tests.  The Partnership retained California legal
     counsel and contracted with an environmental engineering firm (the
     "Engineering Firm") to perform further site analysis and to determine the
     proximate cause and extent of any contaminants.

     In the first quarter of fiscal 1993, the Partnership received the
     Preliminary Site Assessment report from the Engineering Firm detailing the
     results of its Phase II soil and groundwater sampling and analysis, as well
     as the Engineering Firm's recommendation for further action. In working
     with the San Joaquin County Public Health Services/Environmental Health
     Division (the "County Health Division"), the Partnership received approval
     to proceed with quarterly groundwater monitoring of the site for a term of
     one years which was completed as of December 31, 1993.  An Evaluation of
     Remedial Alternative For Petroleum Hydrocarbon Impacted Soil was submitted
     to the County Health Division for further review and comments.  The County
     Health Division notified the Partnership that the remedial alternative
     consisting primarily of soil vapor extraction complied with regulatory
     requirements and requested that the Partnership submit a work plan to the
     regulatory agency which included the proposed actions and proposed schedule
     for implementation and operation of the soil vapor extraction system.
     However, the Partnership became aware that groundwater contamination had
     also occurred and then began the process of determining the method, cost
     and timing of required soil and groundwater remediation measures.

     During fiscal 1997, the Partnership continued the remediation of petroleum
     contaminated soil and groundwater on a parcel of land adjacent to and part
     of Venetian.  The Partnership has spent approximately $310,000 through
     September 30, 1997 in connection with the remediation program and has
     maintained an accrual of approximately $250,000 as a provision for possible
     additional remediation expenses.  Amounts expended to date have been for
     the evaluation, monitoring, and remediation of the petroleum contamination.
     As of September 30, 1997, management determined, based on current
     information that the amount of additional remediation expense that may be
     incurred in completion of the remediation effort would amount to
     significantly less than its prior estimate, and as such decreased its
     accrual to $25,000 at September 30, 1997.  On December 31, 1997, the
     Partnership received from the County Health Division a "no further action
     required" letter, confirming completion of the remediation effort at
     Venetian.

     From time to time the Partnership has analyzed potential sources of
     reimbursement for environmental remediation expenses.  As a result, the
     Partnership made an inquiry to the California State Water Resources Control
     Board as to a potential reimbursement claim.  On January 6, 1998, the
     Partnership received correspondence from the California State

                                       31

<PAGE>
 
                     BOETTCHER WESTERN PROPERTIES III LTD.
                            (A Limited Partnership)

                         Notes to Financial Statements
                       September 30, 1997, 1996 and 1995

--------------------------------------------------------------------------------

     Water Resources Control Board indicating that the Partnership's claim for
     reimbursement filed under the Underground Storage Tank Cleanup Fund Program
     has been accepted for review.  The Partnership is currently working on
     submitting all of the required information within the prescribed
     preliminary filing guidelines.  The Managing General Partner is unable at
     this time to determine the amount of reimbursement, if any, that the
     Partnership may receive as a result of this filing, and is unable to
     determine the timing of the reimbursement, if any.  Accordingly, no
     adjustments have been made to the financial statements contained herein.

(8)  Pending Sale of Real Estate and Dissolution of the Partnership
     --------------------------------------------------------------
     On July 17, 1997, the Partnership entered into a contract to sell the land,
     related improvements and personal property of the retail center known as
     Venetian Square Shopping Center located in Stockton, California for a
     purchase price of $7,275,000.  An affiliate of the purchaser is currently
     employed by the Partnership as the property manager of Venetian.  Other
     than this business relationship, the purchaser is not affiliated in any way
     with the Partnership, the Managing General Partner or its affiliates.  The
     prospective purchaser's due diligence period expired on October 7, 1997.
     The sale of Venetian was primarily contingent upon the majority vote of the
     Partnership's limited partners to approve the sale as provided in the
     Partnership agreement. Closing is subject to customary conditions.  If the
     prospective purchaser does not close for reasons other than the fault of
     the Partnership, the Partnership will be entitled to keep an aggregate of
     $60,000 of earnest money.

     On December 30, 1997, in connection with a recent proxy solicitation of the
     limited partners of the Partnership, a special meeting of the limited
     partners of the Partnership was held for the purpose of obtaining limited
     partner approval of the proposed sale of Venetian and the subsequent
     liquidation and dissolution of the Partnership.

     The above referenced proposal was approved at the meeting by the following
     vote:

<TABLE> 
<CAPTION> 
                                   (Unaudited)
                              Limited Partner Units
                         ------------------------------- 
                         For       Against       Abstain
                         ---       -------       -------
                         <S>       <C>           <C> 
                        12,248       71            88
</TABLE> 

     The Partnership Agreement requires a simple majority of the 22,000 limited
     partner units outstanding (11,220 units) for approval of the proposal.  The
     purchaser has until January 17, 1998 to consummate the purchase of the
     Remaining Property.  Upon closing of the sale of the Remaining Property,
     the sale proceeds will be used to repay the mortgages secured by the
     Remaining Property and expenses of sale (including, without limitation, the
     cost of purchasing insurance covering unknown environmental contamination).
     Thereafter, the Managing General Partner will proceed to liquidate and
     dissolve the Partnership, applying

                                       32
<PAGE>
 
                     BOETTCHER WESTERN PROPERTIES III LTD.
                            (A Limited Partnership)

                         Notes to Financial Statements
                       September 30, 1997, 1996 and 1995

--------------------------------------------------------------------------------

     the remaining net proceeds from the sale of the Remaining Property and any
     other funds of the Partnership in the following manner:

(a)  To the payment of remaining debts and liabilities of the Partnership and
     expenses of liquidation;

(b)  to setting up cash reserves, if necessary, to cover any contingent
     liabilities identified by the Managing General Partner arising out of or in
     connection with the operations of the Partnership; and

(c)  to distributions to the limited partners.

     In order to permit the sale of the Remaining Property, at the end of
     September 1997, the Partnership entered into an agreement with Great West
     Life Assurance Company ("Great West") to extend the maturity date of the
     first mortgage payable secured by the Remaining Property to December 31,
     1997.  Under the extension agreement the Partnership paid an extension fee
     of $2,500.  As of December 31, 1997, the Partnership's first mortgage
     secured by the Remaining Property, amounted to approximately $3,125,850.
     This mortgage matured on December 31, 1997, and on January 9, 1998 the
     Managing General Partner obtained a verbal extension of the mortgage
     financing through January 15, 1998, which the Managing General Partner
     believes, should be sufficient to permit the Partnership to sell the
     Remaining Property.  In the event the mortgage financing cannot be extended
     after January 15, 1998, the Managing General Partner believes it could
     refinance the first mortgage payable at terms favorable to the Partnership
     due to current market conditions.

     Provided the closing occurs, an initial distribution of approximately $150
     per $1,000 unit will be made to limited partners from the sale proceeds.

     Once this liquidation has been completed, the operations of the Partnership
     will cease and the Partnership will be dissolved.

                                       33
<PAGE>
 
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        ---------------------------------------------------------------
        FINANCIAL DISCLOSURE
        --------------------

     There have been no changes in accountants or disagreements with accountants
on any matter of accounting principles or practices on financial statement
disclosure or auditing scope or procedure.

                                    PART III
                                    --------

Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
         --------------------------------------------------

          The Partnership does not have directors or executive officers.  The
general partner of the Partnership's Managing General Partner and Associate
General Partner is BPL Holdings, Inc. (BPL Holdings), a Delaware corporation.
During fiscal 1995, the ultimate parent company of BPL Holdings (Kemper
Securities Holdings, Inc.) experienced a change in ownership, whereby it became
a wholly-owned subsidiary of EVEREN Capital Corporation and changed its name to
EVEREN Securities Holdings, Inc. (ESHI).  EVEREN Securities, Inc. is a wholly-
owned subsidiary of ESHI.  These changes had no impact on the day-to-day
operations of BPL Holdings.   The following is a list of the directors and
officers of BPL Holdings.

<TABLE> 
<CAPTION> 
                    Present Position and Principal Occupation and Affiliation
                    ---------------------------------------------------------
Name and Age        During the Last 5 years or More
------------        -------------------------------
<S>                 <C>  
Janet L. Reali      President and Principal Executive Officer of BPL Holdings, Inc.
Age: 46             ---------------------------------------------------------------
                    Ms. Reali was elected Executive Vice President and Secretary of
                    EVEREN Capital Corporation in May 1995. Since December 1993 she
                    has been Executive Vice President, Corporate Counsel and
                    Corporate Secretary of EVEREN Securities, Inc. She became a
                    Director and the President of BPL Holdings, Inc. in May 1995.
                    She was Senior Vice President and Associate General Counsel of
                    EVEREN Securities, Inc. from July 1991 to December 1993. Before
                    joining EVEREN Securities, Inc. she was a partner in the
                    Chicago law firm of Keck, Mahin & Cate.

Stanley R. Fallis   Director of BPL Holdings, Inc.
Age: 56             ------------------------------
                    Mr. Fallis graduated from the University of Idaho with a BS
                    degree in accounting.  Mr. Fallis also obtained an MBA
                    degree from the University of Utah.  Mr. Fallis is a
                    Certified Public Accountant and practiced public accounting
                    for six years.  Mr. Fallis has been associated with
                    Boettcher & Co. for 18 years and is currently Senior
                    Executive Vice President and Chief Administrative Officer of
                    EVEREN Securities, Inc.
</TABLE> 

                                       34
<PAGE>

<TABLE> 
<S>                  <C>  
Daniel D. Williams   Director and Vice President of BPL Holdings, Inc.
Age: 46              -------------------------------------------------
                     Mr. Williams became a Director and Vice President of
                     BPL Holdings, Inc. in May 1995. Mr. Williams was elected
                     Senior Executive Vice President, Treasurer and Chief
                     Financial Officer of EVEREN Capital Corporation in May
                     1995.  Since April 1995 he has been Senior Executive Vice
                     President and Chief Financial Officer of EVEREN Securities,
                     Inc.  From January 1994 to April 1995, Mr. Williams was
                     Executive Vice President and Director of Finance and
                     Administration and from January 1991 to January 1994 he was
                     Senior Vice President and Director of Accounting of EVEREN
                     Securities, Inc.  Prior thereto, he was Executive Vice
                     President, Treasurer and Chief Financial Officer of
                     Boettcher & Co.

Kelly J. Stradinger  Vice President and Secretary of BPL Holdings, Inc.
Age: 38              --------------------------------------------------
                     Mr. Stradinger joined BPL in 1983 as Assistant
                     Controller for the syndicated public real estate
                     partnerships.  Mr. Stradinger is currently in charge of
                     asset management for all syndicated partnerships where BPL
                     or an affiliate is the general partner.  He is also a  Vice
                     President of EVEREN Securities, Inc. and Director of
                     Leasing for the facilities management department.  Mr.
                     Stradinger graduated from Western Michigan University with
                     a Bachelor of Business Administration in Accounting and
                     successfully completed the Certified Public Accountant
                     exam.

Thomas M. Mansheim   Director and Treasurer of BPL Holdings, Inc. (Principal
Age: 40              -------------------------------------------------------
                     Financial and Accounting Officer of the Partnership)
                     ----------------------------------------------------
                     Mr. Mansheim joined BPL in 1984 and is currently an
                     Executive Vice President with EVEREN Securities, Inc.  He
                     became a Director and the Treasurer of BPL Holdings, Inc.
                     Mr. Mansheim is a Certified Public Accountant and from 1980
                     to 1984 was employed with KPMG Peat Marwick.  Mr. Mansheim
                     graduated from the University of Colorado with a Bachelor
                     of Science degree in business administration.
</TABLE> 

There is no family relationship among the officers or directors of BPL Holdings
or any of its affiliates.

                                       35
<PAGE>
 
Item 11.  EXECUTIVE COMPENSATION
          ----------------------

     The Partnership, as an entity, does not have any directors or executive
officers.  The information required by Item 402 of Regulation S-K relating to
amounts owed by the Partnership to the Managing General Partner and its
affiliates for services rendered during the fiscal year ended September 30, 1997
is presented below.  Reference is also made to Note 4 to Financial Statements as
contained in Item 8 of this report for a description of related parties.

<TABLE>
<CAPTION>
                                                                            Total
                            Capacities in Which        Cash       Deferral   Fees
Name of Entity            Compensation was Earned      Paid/(a)/  of Fees   Earned
--------------            -----------------------      ----       --------  ------
<S>                   <C>                              <C>        <C>       <C>
Boettcher
  Properties, Ltd.    Deferred Acquisition Fee         $   -        78,600  78,600
 
Boettcher
  Properties, Ltd.    Property Management Fee          $   -         5,733   5,733
 
Boettcher             Reimbursement of direct general
  Properties, Ltd.      and administrative expenses    $   -        17,280  17,280
</TABLE>

(a)  During the fiscal year ended September 30, 1997, the Partnership made cash
     payments to the Managing General Partner totaling $600,000 which were
     applied as follows:

<TABLE>
<CAPTION>
                                   Current    Prior
                                    Year      Years      Total
                                   -------  ---------  ---------
<S>                                <C>      <C>        <C>
Deferred acquisition fee           $     -   $516,774   $516,774
Property management fee                  -      4,997      4,997
Reimbursement of direct general
   and administrative expenses           -     17,280     17,280
Repayment of cash advances               -     60,949     60,949
                                   -------   --------   --------
                                   $     -   $600,000   $600,000
                                   =======   ========   ========
</TABLE>

     No form of non-cash remuneration was paid by the Partnership.  See Item 13
below with respect to a description of certain transactions of the General
Partners and their affiliates with the Partnership.

Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
          --------------------------------------------------------------

     Based on a review of the Partnership's records, the following person or
group of persons were on record as owning more than 5% of the outstanding Units
as of November 18, 1997: Summit Venture L.P. owned 1,110 Units, representing
5.05% of the outstanding Units.

     The Partnership has no directors or executive officers. The Managing
General Partner owns 424 Units, to the knowledge of the Partnership, no
directors or officers of the Managing General Partner or its affiliates own any
Units. There exists no arrangement, known to the Partnership, the operation of
which may at a subsequent date result in a change in control of the Partnership.

                                       36
<PAGE>
 
Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
          ----------------------------------------------

     The Partnership has no directors or executive officers. The information
required by Item 404 of Regulation S-K is set forth in Item 11. Executive
Compensation as contained in this report.

     The Partnership has a Management Agreement with the Managing General
Partner pursuant to which the Managing General Partner is responsible for
performing the day-to-day investment and administrative operations of the
Partnership and supervising the management and operation of the Partnership's
properties. For such services and for services rendered in connection with the
acquisition of the Partnership's properties, the Managing General Partner is
entitled to receive annual fees comprised of a Deferred Acquisition Fee and a
Property Management Fee as more fully discussed in Note 4 to the Financial
Statements as contained in Item 8 of this report. The Managing General Partner
earns such fees for services provided to the Partnership pursuant to the
Management Agreement and not by reason of its Partnership interest. The Managing
General Partner earned a Deferred Acquisition Fee of $78,600 and a Property
Management Fee of $5,733 for the fiscal year ended September 30, 1997.

     Pursuant to the Partnership Agreement, the Managing General Partner may be
reimbursed by the Partnership for certain of its costs, including reimbursements
for its allocable share of salaries of nonmanagement and nonsupervisory
personnel providing accounting, investor reporting and communications and legal
services to the Partnership, and the maintenance and repair of data processing
equipment used for or by the Partnership. Pursuant to such provision, for
services provided during the fiscal year ended September 30, 1997, the Managing
General Partner is entitled to receive reimbursements aggregating $195,003.

     The Partnership Agreement provides for the net operating income or loss of
the Partnership to be allocated as follows: (i) to the limited partners to the
extent necessary to satisfy the 8% Current Distribution Preference, as defined
(an amount equal to 8% of the daily average aggregate adjusted capital
contributions of the limited partners) and (ii) 1% of the remainder to the
General Partners and 99% to the limited partners. Net operating losses are
allocated 1% to the General Partners and 99% to the limited partners.

     The Partnership Agreement provides for net capital income from the sale or
other disposition of Partnership properties to be allocated on a cumulative
basis as follows: (i) 1% to the General Partners and 99% to the limited partners
to the extent of depreciation deductions taken from the inception of the
partnership, (ii) to the limited partners to the extent necessary to satisfy the
Net Proceeds Distribution Preference, as defined (an amount equal to the sum of
limited partner capital contributions not yet returned and any unsatisfied 8%
current Distribution Preference from prior periods) and (iii) 25% of the
remainder to the General Partners and 75% to the limited partners. Net capital
loss is allocated 1% to the General Partners and 99% to the limited partners.

                                       37
<PAGE>

                                    PART IV
                                    ------- 

Item 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
          ---------------------------------------------------------------

          (a)  (1)  Financial Statements

                    The following Financial Statements of the Partnership are
                    included herein:

                    Independent Auditors' Report

                    Balance Sheets - September 30, 1997 and 1996

                    Statements of Operations
                    Years ended September 30, 1997, 1996 and 1995

                    Statements of Partners' Capital (Deficit)
                    Years ended September 30, 1997, 1996 and 1995

                    Statements of Cash Flows
                    Years ended September 30, 1997, 1996 and 1995

                    Notes to Financial Statements

               (2)  Financial Statement Schedule

                    Independent Auditor's Report

                    Schedule-III Real Estate and Accumulated Depreciation as of
                    September 30, 1997

                    Schedules, other than the one listed, are omitted for the
                    reason that they are inapplicable or equivalent information
                    has been included elsewhere herein.

          (b)  Reports on Form 8-K

               No reports on Form 8-K were filed by the Registrant during the
               last quarter of the fiscal year covered by this report.

                                       38
<PAGE>
 
     (c)  Exhibits

          Number    Exhibit
          ------    -------
          4         Limited Partnership Agreement of Registrant /(1)/

          10.1      Management Agreement /(1)/

          10.2      La Risa Apartments Purchase and Sale Agreement /(2)/

          10.3      Venetian Square Shopping Center Purchase and Sale Agreement
                    /(2)/

          10.4      Southcenter Office Building Purchase and Sale Agreement
                    /(2)/

          10.5      La Paz Apartments Purchase and Sale Agreement /(3)/

          10.6      Maryland Villa Apartments Purchase and Sale Agreement /(3)/

          10.7      Los Compadres Apartments Purchase and Sale Agreement /(3)/

          10.8      Loan Extension Agreement for Los Compadres Apartments dated
                    August 27, 1993 /(5)/

          10.9      Letter Agreement for Loan Extension for Los Compadres
                    Apartments dated as of December 17, 1993 /(5)/

          10.10     Loan Extension Agreement for La Paz Apartments dated August
                    27, 1993 /(5)/

          10.11     Letter Agreement for Loan Extension for La Paz Apartments
                    dated as of December 17, 1993 /(5)/

          10.12     Loan Extension Agreement for Maryland Villa Apartments dated
                    August 27, 1993 /(5)/

          10.13     Letter Agreement for Loan Extension for Maryland Villa
                    Apartments dated as of December 17, 1993 /(5)/

          10.14     Los Compadres Apartments Purchase and Sale Agreement dated
                    January 11, 1994 /(6)/

          10.15     La Paz Apartments Purchase and Sale Agreement dated January
                    11, 1994 /(6)/

          10.16     Maryland Villa Apartments Purchase and Sale Agreement dated
                    January 11, 1994 /(6)/

          10.17     First Amendment to Purchase and Sale Agreements for Los
                    Compadres, La Paz and Maryland Villa Apartments dated
                    February 18, 1994 /(6)/

                                       39
<PAGE>
 
     (c)  Exhibits (continued)

          Number    Exhibit
          ------    -------

          10.18     Loan extension agreement for Venetian Square Shopping Center
                    dated October 24, 1995 (8)
 
          11        Proforma Financial Statements

          27        Financial Data Schedule

          28.1      Complaint for Judicial Foreclosure of Mortgage Dated May 27,
                    1993 /(4)/

          28.2      Motion for Appointment of Receiver Dated May 27, 1993 /(4)/

          28.3      Objection to Order to Show Cause Dated June 3, 1993 /(4)/

          28.4      Order Appointing Receiver in Aid of Foreclosure Dated June
                    7, 1993 /(4)/

          28.5      Motion for Order of Default, Order of Summary Judgment, and
                    Entry of Judgment of Foreclosure of Mortgage Dated August
                    10, 1993 /(5)/

          28.6      Second Extension and Modification Agreement dated
                    December 28, 1994 /(7)/
 
          /(1)/     Incorporated by reference to Exhibit No. 3.1 and Exhibit 10
                    to Amendment No. 2 to Form S-11 Registration Statement filed
                    May 2, 1983 - File No. 2-82570.

          /(2)/     Incorporated by reference to Registrant's Reports on Form 
                    8-K dated October 18, 1983, December 9, 1983 and April 27,
                    1984, respectively.

          /(3)/     Incorporated by reference to Registrant's Report on Form 8-K
                    dated October 16, 1984.

          /(4)/     Incorporated by reference to Registrant's Report on Form 8-K
                    dated June 7, 1993.

          /(5)/     Incorporated by reference to Registrant's Report on Form 
                    10-K dated September 30, 1993.

          /(6)/     Incorporated by reference to Registrant's Report on Form 8-K
                    dated February 18, 1994.

          /(7)/     Incorporated by reference to Registrant's Report on Form
                    10-Q dated February 13, 1995.

          /(8)/     Incorporated by reference to Registrant's Report of Form
                    10-Q dated February 14, 1996.

                                       40
<PAGE>
 
                         Independent Auditors' Report
                         ----------------------------
                                        

The Partners
Boettcher Western Properties III Ltd.:

Under date of December 15, 1997, we reported on the balance sheets of Boettcher
Western Properties III Ltd. (a limited partnership) as of September 30, 1997 and
1996, and the related statements of operations, partners' capital (deficit), and
cash flows for each of the years in the three-year period ended September 30,
1997, as contained in the Partnership's annual report on Form 10-K for the year
1997. In connection with our audits of the aforementioned financial statements,
we also audited the related financial statement Schedule III - Real Estate and
Accumulated Depreciation. This financial statement schedule is the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on this financial statement schedule based on our audit.

As discussed in Note 8 to the financial statements, Boettcher Western Properties
III Ltd. is in the process of winding up, liquidating its assets and dissolving,
as provided in the Partnership Agreement. The Partnership's management's plans
in regard to this matter are also discussed in Note 8.

In our opinion, the related financial statement schedule, when considered in
relation to the basic financial statements taken as a whole, presents fairly, in
all material respects, the information set forth therein.

                                    KPMG Peat Marwick LLP

Denver, Colorado
December 15, 1997

                                       41
<PAGE>

                    BOETTCHER WESTERN PROPERTIES III, LTD.
                            (A Limited Partnership)
            SCHEDULE III - Real Estate and Accumulated Depreciation
                              September 30, 1997

<TABLE> 
<CAPTION> 

                            --------------------------------------------------------------------------------------------------------
                                                                              Costs capitalized            Gross amount at close    
PROPERTY                                  Initial cost (a) and (b)        Subsequent to acquisition        of period (a) and (b)    
                            --------------------------------------------------------------------------------------------------------
                                           Land and     Buildings         Land and     Buildings           Land and       Buildings 
                             Mortgage      improve-        and            improve-        and              improve-          and    
SHOPPING CENTER:            Payable (b)     ments      Improvements         ment      Improvements          ments       Improvements
                            --------------------------------------------------------------------------------------------------------
<S>                         <C>           <C>          <C>                <C>         <C>                 <C>           <C>         
 Venetian Square                                                                                                                    
  Stockton, California      $ 3,169,358   1,591,361       5,719,350         43,590       1,015,409        1,634,951       6,734,759 
                            -----------   ---------       ---------        -------       ---------        ---------       --------- 
                                                                                                                                    
Balances at                                                                                                                         
 September 30, 1997         $ 3,169,358   1,591,361       5,719,350         43,590       1,015,409        1,634,951       6,734,759 
                            -----------   ---------       ---------        -------       ---------        ---------       --------- 
                            --------------------------------------------------------------------------------------------------------
</TABLE> 

<TABLE> 
<CAPTION> 

                            --------------------------------------------------------------------------------------------------------
                                                                                                    Life on which
PROPERTY                                                                                          depr. is computed
                            --------------------------------------------------------------------------------------------------------
                                                            Date of         Date of         Buildings             Equipment  
                                           Accumulated     construc-       acquisi-           and                    and 
SHOPPING CENTER:             Total         depreciation      tion            tion         Improvements           Furnishings
                            --------------------------------------------------------------------------------------------------------
<S>                         <C>            <C>             <C>            <C>             <C>                    <C> 
 Venetian Square                                                                                                                  
  Stockton, California      $ 8,369,710     (2,599,949)      1979         09-Dec-83          30 years               5 years     
                            -----------     -----------                                                                         
Balances at                                                                                                    
 September 30, 1997         $ 8,369,710     (2,599,949)                                                 
                            -----------     -----------
                            --------------------------------------------------------------------------------------------------------
</TABLE> 

Notes:
(a)  La Risa and Venetian Square were purchased during the period ended 
     September 30, 1984.

(b)  Net of debt discount.

(c)  Reconciliation of the total amount at which real estate was carried:

<TABLE> 
<CAPTION> 

                                                               Balance at September 30,          
                                                               ------------------------          
                                                   1997                                    1996     
                                                   ----                                    ----     
<S>                                       <C>      <C>                         <C>        <C> 
     Balance at beginning of period                $5,566,759                             $10,177,265 
       Additions during period:
        Improvements, etc.                $203,002                             $113,257 
        Other (describe)                         0                                    0
                                          --------                             --------    
                                                      203,002                                 113,257
                                                   ----------                             -----------
                                                    5,769,761                              10,290,522

       Deductions during period:
        Cost of real estate sold                 0                            4,723,763 
        Other (describe)                         0                                    0
                                          --------                            ---------
                                                            0                               4,723,763 
                                                   ----------                             -----------
     Balance at close or period         $5,769,761                                         $5,566,759
                                        ----------                                         ----------
</TABLE> 

(d) No item of real estate investment has been written down or reserved against.

(e) The aggregate cost for Federal income tax purposes at September 30, 1997 is
    $9,214,700.


See accompanying independent auditor's report.
<PAGE>
 
                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) 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.

                         BOETTCHER WESTERN PROPERTIES III LTD.
                                    (Registrant)

                         By:  Boettcher Properties, Ltd.,
                                Managing General Partner

                              By:   BPL Holdings, Inc.,
                                     General Partner

                                    By:  /s/Thomas M. Mansheim
                                         ---------------------
                                         Treasurer; (Principal Financial
                                         and Accounting Officer of the 
                                         Partnership)

                                         Dated: January 13, 1998

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons (constituting a majority
of the Directors of the corporate general partner of the Registrant's Managing
General Partner) on January 13, 1998 in the capacities indicated below.

<TABLE> 
<CAPTION> 
Name                                     Capacities
----                                     ----------
<S>                                      <C> 
DANIEL D. WILLIAMS                       Director and Vice President of BPL
                                         Holdings, Inc.


By:  /s/Daniel D. Williams               Dated: January 13, 1998
     --------------------------                                   
     Daniel D. Williams


THOMAS M. MANSHEIM                       Director and Treasurer of BPL Holdings,
                                         Inc.; Principal Financial and
                                         Accounting Officer of the Partnership

By:  /s/Thomas M. Mansheim               Dated: January 13, 1998
     --------------------------                            
     Thomas M. Mansheim
</TABLE> 

                                       43
<PAGE>
 
     No annual report or proxy material has been sent to the limited partners of
the Partnership.  An annual report will be sent to the limited partners
subsequent to this filing and the Partnership will furnish copies of such report
to the Commission when it is sent to the limited partners.

                                       44