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

                                  FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996

Commission File Number:   33-19152 

Exact name of Registrant as specified in its charter:

    Florida Income Fund III, Limited Partnership

State or other Jurisdiction of incorporation or organization:

    Delaware

I.R.S. Employer Identification Number:   65-0016187

Address of Principal Executive Offices:

    12800 University Drive, Ste 675
    Fort Myers, FL 33907

Registrant's Telephone Number, including Area Code:

    (941) 481-2011

Securities registered pursuant to Section 12(b) of the Act:  None

Securities registered pursuant to Section 12(g) of the Act:  None

The registrant 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 has been subject to such filing requirements for the past 90 days.


PAGE 1
<PAGE>
<PAGE>
                        FLORIDA INCOME FUND III, L.P.
                                    INDEX



PART I                                                                PAGE NO.


    FINANCIAL INFORMATION

    Balance Sheets at September 30, 1996
    and December 31, 1995. . . . . . . . . . . . . . . . . . . . . . . . . 3


    Statements of Income for the Three and Nine
    Months Ended September 30, 1996 and 1995 . . . . . . . . . . . . . . . 4


    Statements of Cash Flows for the Nine
    Months Ended September 30, 1996 and 1995 . . . . . . . . . . . . . . . 5


    Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . . 6


    Management's Discussion and Analysis of
    Financial Condition and Results of Operations. . . . . . . . . . . . 6-8



PART II

    OTHER INFORMATION

    Items 1 through 6. . . . . . . . . . . . . . . . . . . . . . . . . . . 9



PART III

    Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10


COVER PAGE


EXHIBIT 27 - Financial Data Schedule



Page 2
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
                       PART I - FINANCIAL INFORMATION
                FLORIDA INCOME FUND III, LIMITED PARTNERSHIP
                         BALANCE SHEETS (Unaudited)

                                              Sept 30      Dec. 31
                                              1996         1995
<S>                                           <C>          <C>
ASSETS

CURRENT ASSETS
Cash                                              69,218      164,966 
Accts Receivable Trade, Net of Allowance
  for Doubtful Accounts of $24,443 for
  9/30/96 and $8,500 for 12/31/95                186,573      351,231 
Notes Receivable                                     -0-        3,038 
Inventory                                         62,732       58,311 
Prepaid Expenses and Other                       217,427      169,346 
                                              ___________  __________
     Total Current Assets                        535,950      746,892 

Rental Properties, (Net of
  accumulated depreciation of
  $4,273,543 at 9/30/96
  $3,658,502 at 12/31/95                      18,401,919   18,762,415 
Intangible Assets
  Deferred Loan and
  Organizational Costs Net                        59,691       81,288 
                                              __________   __________
     Total Assets                             18,997,560   19,590,595 

LIABILITIES & PARTNERS' CAPITAL

Current Liabilities
Current Maturities of Notes
  and Mortgages Payable                        3,548,276      348,033 
Accounts Payable, Trade                          226,177      401,490 
Accrued Expenses                                 562,776      415,822 
Customer and Security Deposits                   364,020      534,312 
                                              __________   __________
     Total Current Liabilities                 4,701,249    1,699,657 

Mortgages Payable Less Current Maturities      5,504,651    8,967,261

PARTNERS' CAPITAL
General Partners Capital                         (37,551)     (37,551)
Limited Partners Capital                       8,352,951    8,961,228 
Net Income                                       476,260            0 
                                              __________   ___________
  Total Partners' Equity                       8,791,660    8,923,677 

  Total Liabilities and Ptnrs' Capital        18,997,560   19,590,595 

</TABLE>

See Accompanying Notes to the Financial Statements

PAGE 3<PAGE>
<PAGE>
<TABLE>
<CAPTION>
                FLORIDA INCOME FUND III, LIMITED PARTNERSHIP
                            STATEMENTS OF INCOME
                                 (Unaudited)



                         For Three Months Ended    For Nine Months Ended
                         09/30/96    09/30/95      09/30/96    09/30/95
<S>                      <C>         <C>           <C>         <C>

REVENUES:

Rental Income            1,831,316   1,757,161     7,972,328   7,399,567

Gain from Condominium 
    Building                   -0-      58,626           -0-     136,796

Interest Income              6,224      14,678        16,577      46,189

    Total Revenues       1,837,540   1,830,465     7,988,905   7,582,552


COSTS AND EXPENSES:

Property Operating
    Expenses             1,857,818   1,696,851     5,950,249   5,450,521 

Real Estate Taxes           70,012      69,429       209,338     208,287 

Interest Expense           232,745     242,516       706,259     832,773 

Depreciation               215,796     172,800       634,263     518,400 

Amortization                 4,179       8,279        12,536      30,762 
    

Total Expenses           2,380,550   2,189,875     7,512,645   7,040,743 

    Net Income (Loss)     (543,010)   (359,410)      476,260     541,809 
                                                                

</TABLE>


See Accompanying Notes to the Financial Statements


PAGE 4<PAGE>
<PAGE>
<TABLE>
<CAPTION>
                FLORIDA INCOME FUND III, LIMITED PARTNERSHIP
                          STATEMENTS OF CASH FLOWS
                                 (Unaudited)

                                                  For The Nine Months Ended
                                                  9/30/96        9/30/95   
                                                  _________      __________
<S>                                               <C>            <C>       
Cash flows from operating activities:

Net Income                                          476,260         541,809 
Adjustments to reconcile net income to
  net cash provided by operations:
     Depreciation & Amortization                    646,799         549,162 
     (Increase) decrease in Accts recvble           167,696          13,672 
     Prepaid expenses and other                     (26,484)        (72,440)
  Inventory                                          (4,421)         12,817 
  Increase (decrease) in:
     Accounts payable and Accrued expense           (28,359)       (787,912)
     Customer & security deposits                  (170,292)         46,803 
     Deferred Income                                      0       2,232,170 
                                                  _________      __________
Net Cash flows provided by operating 
activities                                        1,061,199       2,536,081 

Cash flows from investing activities:
  Cost of condominiums sold                               0       7,260,526 
  Cost of condominium construction                        0      (2,697,513)
  Acquisition of and improvements to 
   rental properties                               (286,303)        (78,431)
                                                  __________     ___________
Net cash used in investing activities              (286,303)      4,484,582 

Cash flows from financing activities:
  Loan Origination Fee paid                               0          (8,013)
  Partner distributions paid                       (608,277)       (478,302)
  Repayment of long term borrowing                 (262,367)     (6,209,118)
                                                  __________     ___________
  Net cash flows used by financing 
   activities                                      (870,644)     (6,695,433)

  Net increase (decrease) in cash                   (95,748)        325,230 

  Cash December 31                                  164,966         414,944 
  Cash September 30                                  69,218         740,174 

</TABLE>

See Accompanying Notes to the Financial Statements

PAGE 5<PAGE>
<PAGE>
           FLORIDA INCOME FUND III, LIMITED PARTNERSHIP
                   NOTES TO FINANCIAL STATEMENTS
                        SEPTEMBER 30, 1996
                            (Unaudited)

NOTE 1 - BASIS OF PRESENTATION

The accompanying financial statements have been prepared in accordance
with the instructions to Form 10-Q and therefore, do not include all
disclosures necessary for a fair presentation of the Partnership's
financial position, results of operations and statements of cash flows
in conformity with generally accepted accounting principles as set
forth in the Partnership's form 10-K for the period ended December 31,
1995.  In management's opinion, all adjustments have been made to the
financial statements necessary for a fair presentation of interim
periods presented.


NOTE 2 - RELATED PARTY TRANSACTIONS

The General Partner and their affiliates are also entitled to
reimbursement of costs (including amounts of any salaries paid to
employees or its affiliates) directly attributable to the operation of
the Partnership that could have been provided by independent parties. 
Costs amounting to $1,039,546 were incurred during the third quarter
of 1996.  This compares to $783,090 of costs that were incurred during
the third quarter of 1995.  The increase in cost is primarily due to
increases in payroll costs, health insurance premiums and reservation
expense.  An affiliate company, South Seas Resorts Company, Inc., pays
the payroll and related benefits and charges them back to the Pink
Shell.  South Seas Resorts Company, Inc. also provides room
reservation services for the resort.  During the quarter, the
Partnership incurred $102,336 in management fees in accordance with
the Partnership agreement.  This compares to $109,678 in management
fees which were incurred during the third quarter of 1995.


NOTE 3 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Liquidity

The Partnership's cash position, including interest bearing deposits
at September 30, 1996, was $69,218.  This compares to its cash
position of $164,966 at December 31, 1995.  The Partnership's cash
position at September 30, 1995, was $740,174.





PAGE 6
<PAGE>
<PAGE>

Liquidity - Continued

For the nine months ended September 30, 1996, the Partnership's cash
decreased $95,748.  The decrease in cash was due to cash flow from
operations of $1,061,199; cash outlays for capital improvements of
$286,303; cash outlays for partner distributions of $608,277; and net
repayment of long term debt of $262,367.

The Partnership's total investment in properties for its portfolio at
September 30, 1996, was $22,675,462.  This compares to its total
property investment of $22,420,917 at December  31, 1995.  Other than
as discussed herein, there are no known trends, demands, commitments,
events or uncertainties, that in management's opinion, will result or
are reasonably likely to result in the registrant's liquidity
increasing or decreasing in any material way.

Capital Resources

The Partnership has entered into long term leases with 42 condominium
unit owners.  This enables the Partnership to include the 42 units in
its resort rental operation.  The Partnership pays a minimum annual
rental of $25,000 in 12 equal monthly installments to each unit owner
for a total minimum annual rental of $1,050,000.  In addition, the
Partnership pays the owner an amount by which 42.5% of the annual
gross rental income generated by the lessee from the unit exceeds the
amount of annual base rent paid.  These leases expire at various times
between December 31, 2000, and December 31, 2005.

The Partnership paid down $262,367 of principal on long term
borrowings during the nine month period.  Partnership debt as of
September 30, 1996, was $9,052,927 as compared to $9,315,294 as of
December 31, 1995.

Also during the nine months, the Partnership paid $286,303 for
improvements at the Pink Shell in order to refurbish the units and to
meet Best Western requirements.

Results of Operations

The Partnership had net income of $476,260 for the nine months ended
September 30, 1996.  This compares with net income of $541,809 for the
nine month period ended September 30, 1995.  The decrease in net
income is due to revenues increasing by $406,353; property operating
expenses increasing by $499,728, real estate taxes increasing by
$1,051, interest expense decreasing by $126,514 and depreciation and
amortization increasing by $97,637.





PAGE 7<PAGE>
<PAGE>

Results of Operations - Continued

Pink Shell's revenues increased $406,303 due to more units being
available to rent.  Room revenue increased $530,065, store revenue
decreased $17,528, and other revenues decreased $76,622.  Interest
income decreased $29,612 due to a smaller amount of funds being
invested in short term Government Securities.  

Property operating expenses have increased for the quarter by
$499,728.  The Primary increases are in the operations of the Pink
Shell.  Guaranteed payments to owners have increased $172,836 compared
to the first nine months of 1995.  This is due to the lease back
agreements signed with the 42 unit condominium owners.  Insurance has
increased $121,787.  Other operating expense increases are in relation
to the increased occupancy and room revenue.  The resort has moved to
daily housekeeping in order to meet guest expectations and Best
Western affiliation requirements.

Real Estate Taxes have increased $1,051 to reflect a higher assessment
at Walsingham Commons.

Interest expense decreased by $126,514 due to the Partnership having a
lower amount of debt.

Depreciation and amortization have increased $97,637 because of
certain new assets starting to be depreciated.

As of September 30, 1996, Walsingham Commons Shopping Center was 68%
occupied.




















PAGE 8<PAGE>
<PAGE>
                              PART II
                         OTHER INFORMATION
           FLORIDA INCOME FUND III, LIMITED PARTNERSHIP



ITEM 1.  LEGAL PROCEEDINGS  

         None


ITEM 2.  CHANGES IN SECURITIES

         None


ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         None


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         None


ITEM 5.  OTHER MATERIALLY IMPORTANT EVENTS

         None


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a)  EXHIBITS

              None

         (b)  REPORTS ON FORM 8-K

              None











PAGE 9<PAGE>
<PAGE>
                             PART III
                            SIGNATURES



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




                       FLORIDA INCOME FUND III, LIMITED PARTNERSHIP
                       MARINER CAPITAL MANAGEMENT, INC.
                       MANAGING GENERAL PARTNER
                       (Registrant)





         10/29/96      By: /s/ LAWRENCE A. RAIMONDI
                       --------------------------------
                       Lawrence A. Raimondi
                       President, Director and CEO
                       Mariner Capital Management, Inc.
                       (Principal Executive Officer)
                       





         10/29/96      By: /s/ JOE K. BLACKETER   
                       --------------------------------
                       Joe K. Blacketer
                       Secretary/Treasurer
                       Mariner Capital Management, Inc.
                       (Principal Financial and Accounting
                        Officer)
                       










PAGE 10