United States
                       Securities And Exchange Commission
                             Washington, D.C. 20549

                                   Form 10-QSB

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

               For the quarterly period ended March 31, 2004


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


            For the transition period from _________to _________

                         Commission file number 0-15676


                 DAVIDSON DIVERSIFIED REAL ESTATE III, L.P.
           (Exact name of registrant as specified in its charter)



           Delaware                                              62-1242599
(State or other jurisdiction of                               (I.R.S. Employer
 incorporation or organization)                              Identification No.)

                         55 Beattie Place, P.O. Box 1089
                        Greenville, South Carolina 29602
                    (Address of principal executive offices)

                                 (864) 239-1000
                           (Issuer's telephone number)


                         PART I - FINANCIAL INFORMATION


ITEM 1.     FINANCIAL STATEMENTS



                 DAVIDSON DIVERSIFIED REAL ESTATE III, L.P.

                           CONSOLIDATED BALANCE SHEET
                                   (Unaudited)
                        (in thousands, except unit data)


                                 March 31, 2004

<TABLE>
<CAPTION>

Assets
<S>                                                                          <C>
   Cash and cash equivalents                                                 $ 358
   Receivables and deposits                                                      506
   Other assets                                                                  393
   Investment properties:
      Land                                                    $ 2,821
      Buildings and related personal property                   40,472
                                                               43,293
      Less accumulated depreciation                            (24,607)       18,686
                                                                            $ 19,943

Liabilities and Partners' Deficit
Liabilities
   Accounts payable                                                          $ 193
   Tenant security deposit liabilities                                           144
   Accrued property taxes                                                        389
   Other liabilities                                                             259
   Due to affiliate (Note B)                                                  10,476
   Mortgage notes payable                                                     20,493

Partners' Deficit
   General partners                                            $ (240)
   Limited partners (1,011.5 units issued and
      outstanding)                                             (11,771)      (12,011)
                                                                            $ 19,943


        See Accompanying Notes to Consolidated Financial Statements
</TABLE>


<PAGE>



                 DAVIDSON DIVERSIFIED REAL ESTATE III, L.P.

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)
                      (in thousands, except per unit data)

<TABLE>
<CAPTION>


                                                               Three Months Ended
                                                                   March 31,
                                                               2004          2003
Revenues:
<S>                                                          <C>             <C>
   Rental income                                             $ 1,166         $ 950
   Other income                                                   173           134
   Casualty gain                                                   --            62
      Total revenues                                            1,339         1,146

Expenses:
   Operating                                                      661           571
   General and administrative                                      42            58
   Depreciation                                                   488           417
   Interest                                                       510           439
   Property taxes                                                 102           117
      Total expenses                                            1,803         1,602

Net loss                                                      $ (464)       $ (456)

Net loss allocated to general partners (2%)                    $ (9)         $ (9)
Net loss allocated to limited partners (98%)                     (455)         (447)

                                                              $ (464)       $ (456)

Net loss per limited partnership unit                        $(449.83)     $(441.92)


        See Accompanying Notes to Consolidated Financial Statements
</TABLE>


<PAGE>




                 DAVIDSON DIVERSIFIED REAL ESTATE III, L.P.

           CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT
                                   (Unaudited)
                        (in thousands, except unit data)


<TABLE>
<CAPTION>

                                       Limited
                                     Partnership     General      Limited
                                        Units        Partners    Partners      Total

<S>                                    <C>             <C>       <C>          <C>
Original capital contributions         1,013.0         $ 1       $ 20,240     $ 20,241

Partners' deficit at
   December 31, 2003                   1,011.5        $ (231)    $(11,316)    $(11,547)

Net loss for the three months
   ended March 31, 2004                     --            (9)        (455)        (464)

Partners' deficit at
   March 31, 2004                      1,011.5        $ (240)    $(11,771)    $(12,011)


        See Accompanying Notes to Consolidated Financial Statements
</TABLE>


<PAGE>


                 DAVIDSON DIVERSIFIED REAL ESTATE III, L.P.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                 (in thousands)
<TABLE>
<CAPTION>

                                                                    Three Months Ended
                                                                         March 31,
                                                                     2004         2003

Cash flows from operating activities:
<S>                                                                 <C>          <C>
  Net loss                                                          $ (464)      $ (456)
  Adjustments to reconcile net loss to net cash provided by
   operating activities:
     Depreciation                                                       488          417
     Amortization of mortgage discounts and loan costs                    8           17
     Casualty gain                                                       --          (62)
     Change in accounts:
      Receivables and deposits                                         (244)         (36)
      Other assets                                                     (141)          20
      Accounts payable                                                   82           --
      Tenant security deposit liabilities                                 1           21
      Accrued property taxes                                            103          137
      Other liabilities                                                  33           35
      Due to affiliate                                                  143           77
         Net cash provided by operating activities                        9          170

Cash flows from investing activities:
  Property improvements and replacements                               (298)        (548)
  Net deposits to restricted escrows                                     --          (78)
  Insurance proceeds received                                            --           62
         Net cash used in investing activities                         (298)        (564)

Cash flows from financing activities:
  Payments on mortgage notes payable                                    (32)         (43)
  Advances from affiliate                                               263          545
         Net cash provided by financing activities                      231          502

Net (decrease) increase in cash and cash equivalents                    (58)         108
Cash and cash equivalents at beginning of period                        416          311

Cash and cash equivalents at end of period                           $ 358        $ 419

Supplemental disclosure of cash flow information:
  Cash paid for interest                                             $ 382        $ 513

Supplemental disclosure of non-cash information:
  Property improvements and replacements included in
   accounts payable                                                  $ --         $ 57

At December 31, 2003 and 2002, approximately $235,000 and $12,000, respectively,
of property  improvements and replacements were included in accounts payable and
which are included in property  improvements and  replacements  during the three
months ended March 31, 2004 and 2003, respectively.

        See Accompanying Notes to Consolidated Financial Statements
</TABLE>


<PAGE>



                 DAVIDSON DIVERSIFIED REAL ESTATE III, L.P.

                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


Note A - Basis of Presentation

The  accompanying   unaudited  consolidated  financial  statements  of  Davidson
Diversified Real Estate III, L.P. (the  "Partnership" or "Registrant") have been
prepared in accordance with generally accepted accounting principles for interim
financial  information and with the  instructions to Form 10-QSB and Item 310(b)
of Regulation S-B.  Accordingly,  they do not include all of the information and
footnotes  required by generally  accepted  accounting  principles  for complete
financial statements.  In the opinion of Davidson Diversified  Properties,  Inc.
(the  "Managing  General  Partner"),   all  adjustments  (consisting  of  normal
recurring  accruals)  considered  necessary  for a fair  presentation  have been
included.  Operating results for the three month period ended March 31, 2004 are
not  necessarily  indicative  of the results  that may be expected  for the year
ending  December 31, 2004. For further  information,  refer to the  consolidated
financial  statements and footnotes thereto included in the Partnership's Annual
Report on Form 10-KSB for the year ended December 31, 2003. The Managing General
Partner is a wholly owned  subsidiary  of Apartment  Investment  and  Management
Company ("AIMCO"), a publicly traded real estate investment trust.

Note B - Transactions with Affiliated Parties

The  Partnership  has no employees  and is  dependent  on the  Managing  General
Partner  and  its  affiliates  for  the  management  and  administration  of all
Partnership  activities.  The  Partnership  Agreement  provides  for (i) certain
payments to affiliates for services and (ii)  reimbursement  of certain expenses
incurred by affiliates on behalf of the Partnership. The following payments were
paid or accrued to the Managing General Partner and affiliates  during the three
months ended March 31, 2004 and 2003.

Affiliates of the Managing  General  Partner are entitled to receive 5% of gross
receipts  from both of the  Partnership's  investment  properties  for providing
property   management   services.   The  Partnership  paid  to  such  affiliates
approximately  $65,000 and $54,000 for the three months ended March 31, 2004 and
2003, respectively, which is included in operating expenses.

Affiliates   of  the   Managing   General   Partner   charged  the   Partnership
reimbursements of accountable administrative expenses amounting to approximately
$43,000  and  $82,000  for the  three  months  ended  March  31,  2004 and 2003,
respectively.  Included  in these  amounts  are  fees  related  to  construction
management  services provided by an affiliate of the Managing General Partner of
approximately  $12,000 and $38,000 for the three months ended March 31, 2004 and
2003,  respectively.  Such  costs are  included  in general  and  administrative
expense, interest expense and investment properties. The construction management
service fees are  calculated  based on a percentage of current year additions to
investment   properties.   At  March  31,   2004,   approximately   $542,000  of
reimbursements  for services were accrued by the Partnership and are included in
due to affiliate on the accompanying consolidated balance sheet.

During the three  months  ended March 31, 2004,  the  Managing  General  Partner
advanced the  Partnership  approximately  $263,000 for  redevelopment  costs and
operational  expenses at  Plainview  Apartments.  During the three  months ended
March  31,  2003,  the  Managing   General  Partner   advanced  the  Partnership
approximately  $545,000  for  redevelopment  costs and  operational  expenses at
Plainview Apartments and the Partnership. These advances were made in accordance
with the terms of the Partnership  Agreement.  At March 31, 2004, the balance of
the advances,  including accrued interest, was approximately  $9,934,000 and are
included in due to affiliate on the  accompanying  consolidated  balance  sheet.
Interest  is  charged  at  the  prime  rate  plus  2%.   Interest   expense  was
approximately $121,000 and $27,000 for the three months ended March 31, 2004 and
2003,  respectively.  Subsequent to March 31, 2004, the Managing General Partner
advanced the  Partnership  an additional  $140,000 for  operational  expenses at
Plainview Apartments.

The Partnership  insures Salem  Courthouse up to certain limits through coverage
provided by AIMCO which is  generally  self-insured  for a portion of losses and
liabilities  related to workers  compensation,  property  casualty  and  vehicle
liability.  The  Partnership  insures  Salem  Courthouse  above the AIMCO limits
through insurance policies obtained by AIMCO from insurers unaffiliated with the
Managing  General Partner.  The Managing General Partner has obtained  insurance
coverage for  Plainview  Apartments  for 2004 from both AIMCO and a third party.
For 2003, the Managing General Partner obtained insurance coverage for Plainview
Apartments from a third party. During 2004, the Partnership anticipates its cost
for insurance  coverage and fees  associated  with policy claims  administration
provided  by  AIMCO  and its  affiliates  will  be  approximately  $35,000.  The
Partnership was charged approximately $36,000 for 2003.

Note C - Plainview Apartments Redevelopment

During 2002 the Managing General Partner began a major redevelopment  project at
Plainview  Apartments.  The property  discovered  mold growth  relating to water
leaks in two buildings in October 2001 and  experienced  fires in December 2001,
January 2002 and August 2002. The property also needed to be updated due to many
new  properties  being built which  significantly  increased the  competition in
Plainview's  market  area and the  older  property  has had  difficulty  staying
competitive.   Therefore,   in  an  effort  to  increase  occupancy  and  become
competitive  in  the  local  market  a  significant  redevelopment  project  was
undertaken  at the  property  and  was  complete  as of  December  31,  2003.  A
significant  number of units were  unrentable  during the ongoing  redevelopment
project.  As of December  31,  2003,  all units had been  restored to a leasable
state.

During the construction period certain expenses were capitalized and depreciated
over the remaining life of the property. During the three months ended March 31,
2003,  approximately $129,000 of interest,  approximately $21,000 of real estate
taxes and  approximately  $65,000 of operating costs were  capitalized.  No such
costs were capitalized during the three months ended March 31, 2004.

Note D - Casualty Gain

During  the year  ended  December  31,  2002 a  casualty  gain of  approximately
$211,000 was recorded at Plainview Apartments related to a fire that occurred in
August 2002 which caused  damage to ten units of the  complex.  The gain was the
result of the receipt in 2002 of insurance  proceeds of  approximately  $316,000
offset by the write off of  approximately  $105,000  of  undepreciated  property
improvements and replacements. During the three months ended March 31, 2003, the
Partnership recognized an additional casualty gain of approximately $62,000. The
gain was the result of the receipt of  additional  proceeds  from the  insurance
carrier.

Note E - Accrued Property Taxes

During 2003,  the state of Indiana  implemented a  reassessment  of property tax
values. The Partnership is currently appealing the reassessed property tax value
of Salem Courthouse  Apartments.  In the state of Indiana property tax bills are
paid one year in arrears.  Thus,  the 2003  property  tax bills are received and
paid in 2004. Due to the Partnership's  appeal of the reassessed property value,
the  property  tax accrual for 2004 and, in certain  situations,  the  remaining
liability  for the 2003 and 2002 property tax bills is based on the property tax
value as estimated by a third party property tax specialist.  If the Partnership
is  unsuccessful  in its  appeal,  it  could  potentially  be  liable  for up to
approximately $75,000 of additional property taxes related to 2002, 2003 and the
first quarter of 2004. The Partnership  believes that the recorded  liability is
the best  estimate of the  amounts  ultimately  to be paid for Indiana  property
taxes.

Note F - Contingencies

In March 1998, several putative unit holders of limited partnership units of the
Partnership  commenced an action  entitled  Rosalie  Nuanes,  et al. v. Insignia
Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the
State of  California  for the  County  of San  Mateo.  The  plaintiffs  named as
defendants,  among others,  the  Partnership,  its Managing  General Partner and
several of their  affiliated  partnerships  and corporate  entities.  The action
purported  to  assert  claims  on  behalf  of a class of  limited  partners  and
derivatively  on behalf  of a number  of  limited  partnerships  (including  the
Partnership)  that are named as nominal  defendants,  challenging,  among  other
things,  the  acquisition  of  interests  in certain  Managing  General  Partner
entities by Insignia Financial Group, Inc.  ("Insignia") and entities that were,
at one  time,  affiliates  of  Insignia;  past  tender  offers  by the  Insignia
affiliates to acquire limited partnership units;  management of the partnerships
by the  Insignia  affiliates;  and the series of  transactions  which  closed on
October 1, 1998 and February 26, 1999 whereby  Insignia and Insignia  Properties
Trust,  respectively,  were merged into AIMCO.  The plaintiffs  sought  monetary
damages and equitable relief, including judicial dissolution of the Partnership.
In addition, during the third quarter of 2001, a complaint (the "Heller action")
was filed  against  the same  defendants  that are named in the  Nuanes  action,
captioned  Heller v.  Insignia  Financial  Group.  On or about  August 6,  2001,
plaintiffs filed a first amended  complaint.  The Heller action was brought as a
purported derivative action, and asserted claims for, among other things, breach
of fiduciary  duty,  unfair  competition,  conversion,  unjust  enrichment,  and
judicial dissolution.

On January 8, 2003,  the parties filed a  Stipulation  of Settlement in proposed
settlement of the Nuanes action and the Heller action.

In general  terms,  the  proposed  settlement  provides  for  certification  for
settlement  purposes of a settlement class consisting of all limited partners in
this  Partnership and others (the  "Partnerships")  as of December 20, 2002, the
dismissal  with  prejudice  and  release  of claims  in the  Nuanes  and  Heller
litigation,  payment by AIMCO of $9.9  million  (which shall be  distributed  to
settlement  class  members  after  deduction of attorney fees and costs of class
counsel and certain costs of settlement) and up to $1 million toward the cost of
independent  appraisals of the  Partnerships'  properties  by a Court  appointed
appraiser.  An affiliate of the Managing General Partner has also agreed to make
at least one round of tender offers to purchase all of the partnership interests
in the Partnerships within one year of final approval,  if it is granted, and to
provide  partners with the independent  appraisals at the time of these tenders.
The proposed  settlement also provided for the limitation of the allowable costs
which  the  Managing   General   Partner  or  its  affiliates  will  charge  the
Partnerships  in connection with this litigation and imposes limits on the class
counsel  fees and  costs in this  litigation.  On April  11,  2003,  notice  was
distributed  to  limited   partners   providing  the  details  of  the  proposed
settlement.

On June 13, 2003, the Court granted final approval of the settlement and entered
judgment in both the Nuanes and Heller actions.  On August 12, 2003, an objector
("Objector")  filed an  appeal  seeking  to  vacate  and/or  reverse  the  order
approving the settlement and entering  judgment  thereto.  On November 24, 2003,
the Objector filed an  application  requesting the Court order AIMCO to withdraw
settlement  tender offers it had  commenced,  refrain from making further offers
pending the appeal and auction any units tendered to third  parties,  contending
that the offers did not conform  with the terms of the  Settlement.  Counsel for
the Objector (on behalf of another  investor)  had  alternatively  requested the
Court take certain  action  purportedly  to enforce the terms of the  settlement
agreement.  On December 18, 2003,  the Court heard oral  argument on the motions
and denied them both in their entirety.  On January 28, 2004, Objector filed his
opening brief in his pending  appeal.  On April 23, 2004,  the Managing  General
Partner and its  affiliates  filed a response brief in support of the settlement
and the judgment  thereto.  Plaintiffs have also filed a brief in support of the
settlement.  Objector is  scheduled  to file a reply brief no later than May 13,
2004.

On August 8, 2003 AIMCO  Properties  L.P., an affiliate of the Managing  General
Partner,  was served  with a  Complaint  in the United  States  District  Court,
District of Columbia alleging that AIMCO Properties L.P.  willfully violated the
Fair Labor Standards Act (FLSA) by failing to pay maintenance  workers  overtime
for all hours  worked in excess of forty per week.  On March 5, 2004  Plaintiffs
filed an amended complaint also naming NHP Management Company,  which is also an
affiliate  of the  Managing  General  Partner.  The  Complaint  is  styled  as a
Collective  Action  under  the FLSA and seeks to  certify  state  subclasses  in
California, Maryland, and the District of Columbia. Specifically, the plaintiffs
contend that AIMCO Properties L.P. failed to compensate  maintenance workers for
time  that they were  required  to be  "on-call".  Additionally,  the  Complaint
alleges AIMCO  Properties  L.P.  failed to comply with the FLSA in  compensating
maintenance  workers  for time that they  worked in  responding  to a call while
"on-call".  The Defendants have filed an answer to the Amended Complaint denying
the substantive allegations. Discovery is currently underway.

The  Managing  General  Partner  does  not  anticipate  that  any  costs  to the
Partnership, whether legal or settlement costs, associated with these cases will
be material to the Partnership's overall operations.

The  Partnership  is unaware  of any other  pending  or  outstanding  litigation
matters  involving  it or its  investment  properties  that are not of a routine
nature arising in the ordinary course of business.

Pursuant to a formal order of investigation received by AIMCO on March 29, 2004,
the  Central  Regional  Office of the  United  States  Securities  and  Exchange
Commission is conducting an  investigation  relating to certain  matters.  AIMCO
believes the areas of investigation  include AIMCO's  miscalculated  monthly net
rental  income  figures in third  quarter 2003,  forecasted  guidance,  accounts
payable,  rent concessions,  vendor rebates,  and capitalization of expenses and
payroll.  AIMCO is cooperating  fully.  AIMCO does not believe that the ultimate
outcome  will  have a  material  adverse  effect on its  consolidated  financial
condition or results of  operations  taken as a whole.  Similarly,  the Managing
General Partner does not believe that the ultimate  outcome will have a material
adverse effect on the Partnership's  consolidated financial condition or results
of operations taken as a whole.



<PAGE>



ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION

The matters discussed in this report contain certain forward-looking statements,
including, without limitation, statements regarding future financial performance
and the effect of government  regulations.  Actual results may differ materially
from those described in the forward-looking statements and will be affected by a
variety of risks and factors including,  without limitation:  national and local
economic  conditions;  the terms of  governmental  regulations  that  affect the
Registrant and interpretations of those regulations; the competitive environment
in which the Registrant operates;  financing risks, including the risk that cash
flows from operations may be insufficient to meet required payments of principal
and interest;  real estate risks, including variations of real estate values and
the general  economic  climate in local markets and  competition  for tenants in
such markets;  litigation,  including  costs  associated  with  prosecuting  and
defending  claims  and  any  adverse   outcomes,   and  possible   environmental
liabilities.   Readers  should  carefully  review  the  Registrant's   financial
statements and the notes thereto,  as well as the risk factors  described in the
documents  the  Registrant  files  from  time to time  with the  Securities  and
Exchange Commission.

The Partnership's  investment properties consist of two apartment complexes. The
following  table sets forth the average  occupancy of these  properties  for the
three months ended March 31, 2004 and 2003:

                                                 Average Occupancy
                                                 2004        2003
         Salem Courthouse
            Indianapolis, Indiana                 91%         92%

         Plainview Apartments
            Louisville, Kentucky                  81%         53%

Plainview  Apartments is located in a local market where the apartment  industry
has  been  soft  recently.  In  addition,  two of  the  buildings  at  Plainview
Apartments had roof leaks which has led to some mold growth,  several  buildings
have had units down as a result of fires and the  property  needed to be updated
in order to become competitive in the local market. These factors contributed to
approximately  32% of the  property's  total  available  units at March 31, 2003
being  vacated in order to  expedite  reconstruction.  The  Partnership  engaged
architectural and environmental engineering experts to perform corrective action
on the affected buildings.  As of December 31, 2003, all units had been restored
to a leasable state.

The  Partnership's  financial  results  are  dependent  upon a number of factors
including  the  ability  to  attract  and  maintain  tenants  at the  investment
properties,  interest  rates on mortgage  loans,  costs  incurred to operate the
investment  properties,  general economic conditions and weather. As part of the
ongoing business plan of the Partnership,  the Managing General Partner monitors
the  rental  market  environment  of its  investment  properties  to assess  the
feasibility of increasing rents,  maintaining or increasing occupancy levels and
protecting the Partnership from increases in expenses. As part of this plan, the
Managing  General Partner attempts to protect the Partnership from the burden of
inflation-related  increases in expenses by increasing  rents and  maintaining a
high overall  occupancy  level.  However,  the Managing  General Partner may use
rental  concessions  and  rental  rate  reductions  to offset  softening  market
conditions, accordingly, there is no guarantee that the Managing General Partner
will be able to sustain  such a plan.  Further,  a number of  factors  which are
outside the control of the  Partnership  such as the local economic  climate and
weather can adversely or positively impact the Partnership's financial results.

Results of Operations

The Partnership  recognized a net loss of  approximately  $464,000 for the three
months ended March 31, 2004 compared to a net loss of approximately $456,000 for
the three  months  ended March 31,  2003.  The increase in net loss is due to an
increase in total expenses partially offset by an increase in total revenues.

Total  expenses  increased  due to  increases  in  operating,  depreciation  and
interest expense,  partially offset by decreases in property tax and general and
administrative  expenses.  Operating  expense  increased  due  to  increases  in
advertising   and  utility   expenses  at  Plainview   Apartments  and  contract
maintenance  expenses  at  both  of  the  Partnership's  investment  properties.
Depreciation  expense  increased due to property  improvements  and replacements
placed  into  service  during  the  past  twelve  months  which  are  now  being
depreciated.  Interest expense increased due to a decrease in the capitalization
of  construction  period  interest  associated  with Plainview  Apartment and an
increase  in interest  expense  related to advances  from the  Managing  General
Partner.  Partially offsetting the increase in interest expense is a decrease in
interest expense related to the mortgage on Salem Courthouse  Apartments,  which
was refinanced in October 2003 at a lower  interest  rate.  Property tax expense
decreased  due to the  Partnership's  appeal  of the  reassessed  value of Salem
Courthouse  by the  taxing  authorities.  During  2003,  the  state  of  Indiana
implemented a reassessment of property tax values.  The Partnership is currently
appealing the reassessed property tax value of Salem Courthouse. In the state of
Indiana property tax bills are paid one year in arrears. Thus, the 2003 property
tax bills are received and paid in 2004. Due to the Partnership's  appeal of the
reassessed  property  value,  the  property tax accrual for 2004 and, in certain
situations,  the remaining liability for the 2003 and 2002 property tax bills is
based on the  property  tax value as  estimated  by a third party  property  tax
specialist.  If  the  Partnership  is  unsuccessful  in  its  appeal,  it  could
potentially  be liable for up to  approximately  $75,000 of additional  property
taxes  related  to 2002,  2003 and the first  quarter of 2004.  The  Partnership
believes  that the  recorded  liability  is the  best  estimate  of the  amounts
ultimately to be paid for Indiana property taxes.

General and  administrative  expenses  decreased  due to decreases in management
reimbursements  to  affiliates  as  allowed  under  the  Partnership  Agreement.
Included in general and administrative expenses for the three months ended March
31,  2004 and 2003 are the  annual  partnership  and  investor  service  fees as
allowed under the Partnership Agreement. In addition,  costs associated with the
quarterly and annual  communications  with investors and regulatory agencies and
the annual audit required by the Partnership are also included.

Total  revenues  increased  due to an increase in rental income and other income
partially  offset by a decrease in casualty gains. The increase in rental income
is due to an  increase  in  occupancy  at  Plainview  Apartments.  Other  income
increased due to an increase in utility reimbursements at Plainview Apartments.

During the year ended  December  31,  2002,  a  casualty  gain of  approximately
$211,000 was recorded at Plainview Apartments related to a fire that occurred in
August 2002 which caused  damage to ten units of the  complex.  The gain was the
result of the receipt in 2002 of insurance  proceeds of  approximately  $316,000
offset by the write off of  approximately  $105,000  of  undepreciated  property
improvements and replacements. During the three months ended March 31, 2003, the
Partnership recognized an additional casualty gain of approximately $62,000. The
gain was the result of the receipt of  additional  proceeds  from the  insurance
carrier.

Liquidity and Capital Resources

At  March  31,  2004,  the  Partnership   had  cash  and  cash   equivalents  of
approximately $358,000 compared to approximately $419,000 at March 31, 2003. The
decrease in cash and cash equivalents of approximately $58,000 from December 31,
2003 is due to  approximately  $298,000  of cash used in  investing  activities,
partially  offset  by  approximately  $231,000  of cash  provided  by  financing
activities and  approximately  $9,000 of cash provided by operating  activities.
Cash  used in  investing  activities  consisted  of  property  improvements  and
replacements. Cash provided by financing activities consisted of advances to the
Partnership made by the Managing General Partner,  partially offset by principal
payments  made on the mortgage  encumbering  Salem  Courthouse  Apartments.  The
Partnership invests its working capital in interest bearing accounts.

The sufficiency of existing  liquid assets to meet future  liquidity and capital
expenditure   requirements   is  directly   related  to  the  level  of  capital
expenditures  required at the  properties  to  adequately  maintain the physical
assets and other  operating needs of the Partnership and to comply with Federal,
state, and local legal and regulatory requirements. The Managing General Partner
monitors  developments  in the area of legal and  regulatory  compliance  and is
studying  new  federal  laws,  including  the  Sarbanes-Oxley  Act of 2002.  The
Sarbanes-Oxley Act of 2002 mandates or suggests  additional  compliance measures
with regard to governance,  disclosure, audit and other areas. In light of these
changes,  the Partnership  expects that it will incur higher expenses related to
compliance,  including  increased  legal and audit  fees.  Capital  improvements
planned for both of the Partnership's properties are detailed below.

Plainview  Apartments:  During  the  three  months  ended  March 31,  2004,  the
Partnership completed approximately $44,000 in capital expenditures at Plainview
Apartments consisting of floor covering replacements,  water heaters and parking
lot resurfacing.  These  expenditures  were funded primarily  through loans from
affiliates  of the Managing  General  Partner.  The  Partnership  evaluates  the
capital  improvement needs of the property during the year and currently expects
to complete an additional $220,000 in capital  improvements during the remainder
of 2004. The additional  capital  improvements  will consist  primarily of floor
covering  replacements,  swimming pool improvements,  lighting and furniture and
fixture upgrades. Additional improvements may be considered during 2004 and will
depend on the physical  condition of the  property as well as  anticipated  cash
flow generated by the property.

Salem Courthouse  Apartments:  During the three months ended March 31, 2004, the
Partnership  completed  approximately  $19,000 of capital  improvements at Salem
Courthouse  Apartments,  consisting  primarily of floor  covering and  appliance
replacements.  These  improvements  were funded from  operating  cash flow.  The
Partnership  evaluates the capital  improvement needs of the property during the
year and  currently  expects  to  complete  an  additional  $194,000  in capital
improvements  during the remainder of 2004. The additional capital  improvements
will consist primarily of floor covering and appliance replacements, parking lot
resurfacing and interior building improvements.  Additional  improvements may be
considered during 2004 and will depend on the physical condition of the property
as well as anticipated cash flow generated by the property.

The additional  capital  expenditures will be incurred only if cash is available
from operations or from Partnership  reserves.  To the extent that such budgeted
capital improvements are completed,  the Partnership's  distributable cash flow,
if any, may be adversely affected at least in the short term.


The  Partnership's  assets are thought to be sufficient for any near-term  needs
(exclusive of capital improvements) of the Partnership. The mortgage encumbering
Salem Courthouse  Apartments of approximately  $5,157,000 has a maturity date of
September  15,  2007 at which  time a  balloon  payment  totaling  approximately
$4,710,000 is due. At that time, the Managing  General Partner has the option to
extend  the  maturity  of  this  loan  for  another  five  years.  The  mortgage
indebtedness  encumbering  Plainview  Apartments  of  approximately  $15,336,000
requires a balloon payment of  approximately  $15,336,000 due November 15, 2010.
The Managing General Partner will attempt to refinance such indebtedness  and/or
sell the properties  prior to maturity.  If the property cannot be refinanced or
sold  for  a  sufficient  amount,  the  Partnership  will  risk  losing  through
foreclosure.

There were no  distributions to the partners during the three months ended March
31, 2004 and 2003.  Future cash  distributions  will depend on the levels of net
cash generated from operations, the availability of cash reserves and the timing
of debt maturities,  refinancings  and/or property sales. The Partnership's cash
available  for  distribution  is  reviewed on a monthly  basis.  In light of the
amounts  accrued and payable to the Managing  General Partner at March 31, 2004,
there can be no assurance that the Partnership  will generate  sufficient  funds
from   operations,   after  required   capital   expenditures,   to  permit  any
distributions to its partners during 2004 or subsequent periods.

Other

In addition to its indirect  ownership of the managing  general partner interest
in the Partnership,  AIMCO and its affiliates  owned 439.50 limited  partnership
units (the "Units") in the  Partnership  representing  43.45% of the outstanding
Units at March 31, 2004. A number of these Units were  acquired  pursuant to the
tender offers made by AIMCO or its affiliates.  It is possible that AIMCO or its
affiliates will acquire  additional  Units in exchange for cash or a combination
of cash and units in AIMCO Properties, L.P., the operating partnership of AIMCO,
either through private  purchases or tender offers.  Pursuant to the Partnership
Agreement,  unitholders  holding a majority  of the Units are  entitled  to take
action with  respect to a variety of matters that  include,  but are not limited
to,  voting on certain  amendments  to the  Partnership  Agreement and voting to
remove the Managing General  Partner.  As a result of its ownership of 43.45% of
the outstanding  Units,  AIMCO and its affiliates are in a position to influence
all such voting decisions with respect to the Partnership. Although the Managing
General  Partner  owes  fiduciary   duties  to  the  limited   partners  of  the
Partnership, the Managing General Partner also owes fiduciary duties to AIMCO as
its sole stockholder.  As a result,  the duties of the Managing General Partner,
as managing  general  partner,  to the Partnership and its limited  partners may
come into conflict with the duties of the Managing  General Partner to AIMCO, as
its sole stockholder.

Critical Accounting Policies

The consolidated financial statements are prepared in accordance with accounting
principles generally accepted in the United States which require the Partnership
to  make  estimates  and  assumptions.  The  Partnership  believes  that  of its
significant  accounting  policies,  the following may involve a higher degree of
judgment and complexity.

Impairment of Long-Lived Assets

The Partnership's  investment  properties are recorded at cost, less accumulated
depreciation,  unless considered impaired.  If events or circumstances  indicate
that the carrying  amount of a property may be impaired,  the  Partnership  will
make an assessment of its  recoverability by estimating the undiscounted  future
cash flows,  excluding interest charges, of the property. If the carrying amount
exceeds the aggregate  future cash flows,  the  Partnership  would  recognize an
impairment  loss to the extent the carrying amount exceeds the fair value of the
property.

Real  property  investments  are  subject  to varying  degrees of risk.  Several
factors  may  adversely  affect  the  economic  performance  and  value  of  the
Partnership's investment properties.  These factors include, but are not limited
to,  changes  in the  national,  regional  and  local  economic  climate;  local
conditions,  such as an oversupply of multifamily  properties;  competition from
other available  multifamily property owners and changes in market rental rates.
Any adverse changes in these factors could cause impairment of the Partnership's
assets.

Revenue Recognition

The Partnership generally leases apartment units for twelve-month terms or less.
Rental income  attributable to leases is recognized monthly as it is earned. The
Partnership  evaluates all accounts receivable from residents and establishes an
allowance, after the application of security deposits, for accounts greater than
30 days past due on current tenants and all receivables due from former tenants.
The Partnership will offer rental concessions during particularly slow months or
in response to heavy  competition from other similar  complexes in the area. Any
concessions  given at the inception of the lease are amortized  over the life of
the lease.

ITEM 3.     CONTROLS AND PROCEDURES

(a) Disclosure Controls and Procedures.  The Partnership's management,  with the
participation of the principal executive officer and principal financial officer
of the Managing  General  Partner,  who are the equivalent of the  Partnership's
principal executive officer and principal financial officer,  respectively,  has
evaluated  the  effectiveness  of  the  Partnership's  disclosure  controls  and
procedures (as such term is defined in Rules  13a-15(e) and 15d-15(e)  under the
Securities  Exchange Act of 1934, as amended (the "Exchange Act")) as of the end
of the period covered by this report.  Based on such  evaluation,  the principal
executive  officer  and  principal  financial  officer of the  Managing  General
Partner, who are the equivalent of the Partnership's principal executive officer
and principal  financial officer,  respectively,  have concluded that, as of the
end of such period,  the  Partnership's  disclosure  controls and procedures are
effective.

(b) Internal Control Over Financial  Reporting.  There have not been any changes
in the Partnership's  internal control over financial reporting (as such term is
defined in Rules  13a-15(f)  and  15d-15(f)  under the Exchange  Act) during the
fiscal quarter to which this report relates that have  materially  affected,  or
are reasonably likely to materially affect,  the Partnership's  internal control
over financial reporting.



<PAGE>


                           PART II - OTHER INFORMATION

ITEM 1.     LEGAL PROCEEDINGS

In March 1998, several putative unit holders of limited partnership units of the
Partnership  commenced an action  entitled  Rosalie  Nuanes,  et al. v. Insignia
Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the
State of  California  for the  County  of San  Mateo.  The  plaintiffs  named as
defendants,  among others,  the  Partnership,  its Managing  General Partner and
several of their  affiliated  partnerships  and corporate  entities.  The action
purported  to  assert  claims  on  behalf  of a class of  limited  partners  and
derivatively  on behalf  of a number  of  limited  partnerships  (including  the
Partnership)  that are named as nominal  defendants,  challenging,  among  other
things,  the  acquisition  of  interests  in certain  Managing  General  Partner
entities by Insignia Financial Group, Inc.  ("Insignia") and entities that were,
at one  time,  affiliates  of  Insignia;  past  tender  offers  by the  Insignia
affiliates to acquire limited partnership units;  management of the partnerships
by the  Insignia  affiliates;  and the series of  transactions  which  closed on
October 1, 1998 and February 26, 1999 whereby  Insignia and Insignia  Properties
Trust,  respectively,  were merged into AIMCO.  The plaintiffs  sought  monetary
damages and equitable relief, including judicial dissolution of the Partnership.
In addition, during the third quarter of 2001, a complaint (the "Heller action")
was filed  against  the same  defendants  that are named in the  Nuanes  action,
captioned  Heller v.  Insignia  Financial  Group.  On or about  August 6,  2001,
plaintiffs filed a first amended  complaint.  The Heller action was brought as a
purported derivative action, and asserted claims for, among other things, breach
of fiduciary  duty,  unfair  competition,  conversion,  unjust  enrichment,  and
judicial dissolution.

On January 8, 2003,  the parties filed a  Stipulation  of Settlement in proposed
settlement of the Nuanes action and the Heller action.

In general  terms,  the  proposed  settlement  provides  for  certification  for
settlement  purposes of a settlement class consisting of all limited partners in
this  Partnership and others (the  "Partnerships")  as of December 20, 2002, the
dismissal  with  prejudice  and  release  of claims  in the  Nuanes  and  Heller
litigation,  payment by AIMCO of $9.9  million  (which shall be  distributed  to
settlement  class  members  after  deduction of attorney fees and costs of class
counsel and certain costs of settlement) and up to $1 million toward the cost of
independent  appraisals of the  Partnerships'  properties  by a Court  appointed
appraiser.  An affiliate of the Managing General Partner has also agreed to make
at least one round of tender offers to purchase all of the partnership interests
in the Partnerships within one year of final approval,  if it is granted, and to
provide  partners with the independent  appraisals at the time of these tenders.
The proposed  settlement also provided for the limitation of the allowable costs
which  the  Managing   General   Partner  or  its  affiliates  will  charge  the
Partnerships  in connection with this litigation and imposes limits on the class
counsel  fees and  costs in this  litigation.  On April  11,  2003,  notice  was
distributed  to  limited   partners   providing  the  details  of  the  proposed
settlement.

On June 13, 2003, the Court granted final approval of the settlement and entered
judgment in both the Nuanes and Heller actions.  On August 12, 2003, an objector
("Objector")  filed an  appeal  seeking  to  vacate  and/or  reverse  the  order
approving the settlement and entering  judgment  thereto.  On November 24, 2003,
the Objector filed an  application  requesting the Court order AIMCO to withdraw
settlement  tender offers it had  commenced,  refrain from making further offers
pending the appeal and auction any units tendered to third  parties,  contending
that the offers did not conform  with the terms of the  Settlement.  Counsel for
the Objector (on behalf of another  investor)  had  alternatively  requested the
Court take certain  action  purportedly  to enforce the terms of the  settlement
agreement.  On December 18, 2003,  the Court heard oral  argument on the motions
and denied them both in their entirety.  On January 28, 2004, Objector filed his
opening brief in his pending  appeal.  On April 23, 2004,  the Managing  General
Partner and its  affiliates  filed a response brief in support of the settlement
and the judgment  thereto.  Plaintiffs have also filed a brief in support of the
settlement.  Objector is  scheduled  to file a reply brief no later than May 13,
2004.

On August 8, 2003 AIMCO  Properties  L.P., an affiliate of the Managing  General
Partner,  was served  with a  Complaint  in the United  States  District  Court,
District of Columbia alleging that AIMCO Properties L.P.  willfully violated the
Fair Labor Standards Act (FLSA) by failing to pay maintenance  workers  overtime
for all hours  worked in excess of forty per week.  On March 5, 2004  Plaintiffs
filed an amended complaint also naming NHP Management Company,  which is also an
affiliate  of the  Managing  General  Partner.  The  Complaint  is  styled  as a
Collective  Action  under  the FLSA and seeks to  certify  state  subclasses  in
California, Maryland, and the District of Columbia. Specifically, the plaintiffs
contend that AIMCO Properties L.P. failed to compensate  maintenance workers for
time  that they were  required  to be  "on-call".  Additionally,  the  Complaint
alleges AIMCO  Properties  L.P.  failed to comply with the FLSA in  compensating
maintenance  workers  for time that they  worked in  responding  to a call while
"on-call".  The Defendants have filed an answer to the Amended Complaint denying
the substantive allegations. Discovery is currently underway.

The  Managing  General  Partner  does  not  anticipate  that  any  costs  to the
Partnership, whether legal or settlement costs, associated with these cases will
be material to the Partnership's overall operations.

ITEM 6      EXHIBITS AND REPORTS ON FORM 8-K

            a)    Exhibits

                  Exhibit  3,  Partnership  Agreement  dated  July 8,  1985  and
                  amended as of October 9, 1985 is  incorporated by reference to
                  Exhibit A to the  Prospectus of the  Registrant  dated October
                  28, 1985 as filed with the Commission  pursuant to Rule 424(b)
                  under the Act.

                  Exhibit  3A,  Second  Amendment  dated  April  1,  1986 to the
                  Partnership Agreement dated July 8, 1985 as amended October 9,
                  1985  is  incorporated  by  reference  to  Exhibit  3A to  the
                  Registrant's  Annual  Report on Form 10-K for the fiscal  year
                  ended December 31, 1986.

                  Exhibit 31.1,  Certification  of equivalent of Chief Executive
                  Officer   pursuant   to   Securities    Exchange   Act   Rules
                  13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the
                  Sarbanes-Oxley Act of 2002.

                  Exhibit 31.2,  Certification  of equivalent of Chief Financial
                  Officer   pursuant   to   Securities    Exchange   Act   Rules
                  13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the
                  Sarbanes-Oxley Act of 2002.

                  Exhibit  32.1,  Certification  Pursuant  to 18 U.S.C.  Section
                  1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley
                  Act of 2002.

            b) Reports on Form 8-K:

                  None filed during the quarter ended March 31, 2004.


<PAGE>


                                   SIGNATURES



In accordance with the  requirements of the Exchange Act, the registrant  caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.



                                    DAVIDSON  DIVERSIFIED  REAL  ESTATE III,
                                      L.P.


                                    By:   Davidson Diversified Properties, Inc.,
                                          Managing General Partner


                                    By:   /s/Martha L. Long
                                          Martha L. Long
                                          Senior Vice President


                                    By:   /s/Thomas M. Herzog
                                          Thomas M. Herzog
                                          Senior Vice President
                                          and Chief Accounting Officer


                                    Date: May 13, 2004



<PAGE>



Exhibit 31.1


                                  CERTIFICATION


I, Martha L. Long, certify that:


1.    I  have  reviewed  this  quarterly  report  on  Form  10-QSB  of  Davidson
      Diversified Real Estate III, L.P.;

2.    Based on my knowledge,  this report does not contain any untrue  statement
      of a material fact or omit to state a material fact  necessary to make the
      statements made, in light of the circumstances under which such statements
      were made,  not  misleading  with  respect  to the period  covered by this
      report;

3.    Based on my  knowledge,  the  financial  statements,  and other  financial
      information  included  in this  report,  fairly  present  in all  material
      respects the financial condition,  results of operations and cash flows of
      the registrant as of, and for, the periods presented in this report;

4.    The  registrant's  other  certifying  officer(s) and I are responsible for
      establishing  and  maintaining  disclosure  controls  and  procedures  (as
      defined in Exchange Act Rules  13a-15(e) and 15d-15(e)) for the registrant
      and have:

      (a)   Designed such  disclosure  controls and  procedures,  or caused such
            disclosure   controls  and  procedures  to  be  designed  under  our
            supervision,  to ensure that  material  information  relating to the
            registrant,  including its consolidated subsidiaries,  is made known
            to us by others  within  those  entities,  particularly  during  the
            period in which this report is being prepared;

      (b)   Evaluated the effectiveness of the registrant's  disclosure controls
            and  procedures and presented in this report our  conclusions  about
            the effectiveness of the disclosure  controls and procedures,  as of
            the  end  of the  period  covered  by  this  report  based  on  such
            evaluation; and

      (c)   Disclosed  in this  report any change in the  registrant's  internal
            control  over   financial   reporting   that  occurred   during  the
            registrant's  most recent fiscal  quarter (the  registrant's  fourth
            fiscal  quarter in the case of an annual report) that has materially
            affected,   or  is  reasonably  likely  to  materially  affect,  the
            registrant's internal control over financial reporting; and

5.    The registrant's other certifying  officer(s) and I have disclosed,  based
      on  our  most  recent   evaluation  of  internal  control  over  financial
      reporting,  to the  registrant's  auditors and the audit  committee of the
      registrant's  board of directors  (or persons  performing  the  equivalent
      functions):

      (a)   All significant  deficiencies and material  weaknesses in the design
            or operation of internal control over financial  reporting which are
            reasonably  likely to adversely affect the  registrant's  ability to
            record, process, summarize and report financial information; and

      (b)   Any fraud,  whether or not  material,  that  involves  management or
            other  employees  who have a  significant  role in the  registrant's
            internal control over financial reporting.

Date:  May 13, 2004

                                    /s/Martha L. Long
                                    Martha L. Long
                                    Senior   Vice   President   of  Davidson
                                    Diversified      Properties,       Inc.,
                                    equivalent   of  the   chief   executive
                                    officer of the Partnership


<PAGE>



Exhibit 31.2


                                  CERTIFICATION


I, Thomas M. Herzog, certify that:


1.    I  have  reviewed  this  quarterly  report  on  Form  10-QSB  of  Davidson
      Diversified Real Estate III, L.P.;

2.    Based on my knowledge,  this report does not contain any untrue  statement
      of a material fact or omit to state a material fact  necessary to make the
      statements made, in light of the circumstances under which such statements
      were made,  not  misleading  with  respect  to the period  covered by this
      report;

3.    Based on my  knowledge,  the  financial  statements,  and other  financial
      information  included  in this  report,  fairly  present  in all  material
      respects the financial condition,  results of operations and cash flows of
      the registrant as of, and for, the periods presented in this report;

4.    The  registrant's  other  certifying  officer(s) and I are responsible for
      establishing  and  maintaining  disclosure  controls  and  procedures  (as
      defined in Exchange Act Rules  13a-15(e) and 15d-15(e)) for the registrant
      and have:

      (a)   Designed such  disclosure  controls and  procedures,  or caused such
            disclosure   controls  and  procedures  to  be  designed  under  our
            supervision,  to ensure that  material  information  relating to the
            registrant,  including its consolidated subsidiaries,  is made known
            to us by others  within  those  entities,  particularly  during  the
            period in which this report is being prepared;

      (b)   Evaluated the effectiveness of the registrant's  disclosure controls
            and  procedures and presented in this report our  conclusions  about
            the effectiveness of the disclosure  controls and procedures,  as of
            the  end  of the  period  covered  by  this  report  based  on  such
            evaluation; and

      (c)   Disclosed  in this  report any change in the  registrant's  internal
            control  over   financial   reporting   that  occurred   during  the
            registrant's  most recent fiscal  quarter (the  registrant's  fourth
            fiscal  quarter in the case of an annual report) that has materially
            affected,   or  is  reasonably  likely  to  materially  affect,  the
            registrant's internal control over financial reporting; and

5.    The registrant's other certifying  officer(s) and I have disclosed,  based
      on  our  most  recent   evaluation  of  internal  control  over  financial
      reporting,  to the  registrant's  auditors and the audit  committee of the
      registrant's  board of directors  (or persons  performing  the  equivalent
      functions):

      (a)   All significant  deficiencies and material  weaknesses in the design
            or operation of internal control over financial  reporting which are
            reasonably  likely to adversely affect the  registrant's  ability to
            record, process, summarize and report financial information; and

      (b)   Any fraud,  whether or not  material,  that  involves  management or
            other  employees  who have a  significant  role in the  registrant's
            internal control over financial reporting.

Date:  May 13, 2004

                                    /s/Thomas M. Herzog
                                    Thomas M. Herzog
                                    Senior   Vice    President   and   Chief
                                    Accounting     Officer    of    Davidson
                                    Diversified      Properties,       Inc.,
                                    equivalent   of  the   chief   financial
                                    officer of the Partnership


<PAGE>

Exhibit 32.1


                          Certification of CEO and CFO
                       Pursuant to 18 U.S.C. Section 1350,
                           As Adopted Pursuant to
               Section 906 of the Sarbanes-Oxley Act of 2002



In connection with the Quarterly  Report on Form 10-QSB of Davidson  Diversified
Real Estate III, L.P. (the "Partnership"),  for the quarterly period ended March
31, 2004 as filed with the Securities and Exchange Commission on the date hereof
(the "Report"), Martha L. Long, as the equivalent of the Chief Executive Officer
of the  Partnership,  and  Thomas  M.  Herzog,  as the  equivalent  of the Chief
Financial  Officer of the  Partnership,  each hereby  certifies,  pursuant to 18
U.S.C.  Section 1350, as adopted  pursuant to Section 906 of the  Sarbanes-Oxley
Act of 2002, that, to the best of his knowledge:

      (1)   The Report fully complies with the  requirements of Section 13(a) or
            15(d) of the Securities Exchange Act of 1934; and

      (2)   The  information  contained in the Report  fairly  presents,  in all
            material respects, the financial condition and results of operations
            of the Partnership.


                                           /s/Martha L. Long
                                    Name:  Martha L. Long
                                    Date:  May 13, 2004


                                           /s/Thomas M. Herzog
                                    Name:  Thomas M. Herzog
                                    Date:  May 13, 2004


This  certification is furnished with this Report pursuant to Section 906 of the
Sarbanes-Oxley  Act of 2002 and shall not be deemed filed by the Partnership for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended.