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,
1997

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



PART I                                                    PAGE NO.


     FINANCIAL INFORMATION

     Balance Sheets at September 30, 1997
     and December 31, 1996 . . . . . . . . . . . . . . . . . . . 3


     Statements of Income for the Three and Nine
     Months Ended September 30, 1997 and 1996. . . . . . . . . . 4


     Statements of Cash Flows for the Nine
     Months Ended September 30, 1997 and 1996. . . . . . . . . . 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>
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<TABLE>
<CAPTION>
                  PART I - FINANCIAL INFORMATION
           FLORIDA INCOME FUND III, LIMITED PARTNERSHIP
                    BALANCE SHEETS (Unaudited)

                                           Sept 30     Dec. 31
                                           1997        1996
                                           -------     -------
<S>                                        <C>         <C>
ASSETS

CURRENT ASSETS
Cash                                          358,772     101,108 
Accts Recvable Trade, Net of Allowance
  for Doubtful Accts of $22,219 for
  9/30/97 and $19,457 for 12/31/96            285,684     346,767 
Notes Receivable                                    0           0 
Inventory                                      65,180      68,422 
Prepaid Expenses and Other                     48,925     201,608 
                                           __________   _________
     Total Current Assets                     758,561     717,905 

Rental Properties
  Abandonment                               3,082,157   3,082,157 
Rental Properties, (Net of accumulated
  depreciation of $4,399,967 at
  9/30/97 $4,562,574 at 12/31/96           14,609,743  15,073,430 
Intangible Assets
  Deferred Loan and
  Organizational Costs Net                     35,479      46,326 
                                           __________  __________
     Total Assets                          18,485,940  18,919,818 

LIABILITIES & PARTNERS' CAPITAL

CURRENT LIABILITIES
Current Maturities of Notes Mtgs Payable      543,573     383,573 
Accounts Payable, Trade                       318,089     619,317 
Accrued Expenses                              449,153     702,971 
Customer and Security Deposits                485,394     453,988 
                                           __________  __________
     Total Current Liabilities              1,796,209   2,159,849 

Mtgs Payable related to Rental Prpty Mgmt   3,200,000   3,200,000 
Mtgs Payable, Less Current Maturities       4,931,335   5,380,758 

PARTNERS' CAPITAL
General Partners Capital                      (38,189)    (38,189)
Limited Partners Capital                    7,739,285   8,217,400 
Net Income                                    857,300           0 
                                           __________  __________
  Total Partners' Equity                    8,558,396   8,179,211 

  Total Liabilities & Partners' Capitl     18,485,940  18,919,818 

</TABLE>
See Accompanying Notes to the Financial Statements

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


                      For Three Months Ended   For Nine Months Ended
                      09/30/97     09/30/96    09/30/97  09/30/96
                      ______________________   ____________________
<S>                   <C>          <C>         <C>       <C>
REVENUES:

Rental Income         2,000,000    1,831,316   8,170,907 7,972,328

Interest Income           4,986        6,224      12,731    16,577
                      _________    _________   _________ _________
    Total Revenues    2,004,986    1,837,540   8,183,638 7,988,905


COSTS AND EXPENSES:

Property Operating
    Expenses          1,901,722    1,857,818   6,123,398 5,950,249

Real Estate Taxes        48,525       70,012     145,575   209,338

Interest Expense        146,501      232,745     444,662   706,259

Depreciation            200,619      215,796     601,857   634,263

Amortization              3,615        4,179      10,846    12,536
                      _________    _________   _________ _________

Total Expenses        2,300,982    2,380,550   7,326,338 7,512,645

    Net Income (Loss)  (295,996)    (543,010)    857,300   476,260
                                

</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
                                           9/30/97     9/30/96   
                                           _________   __________
<S>                                        <C>         <C>       
Cash flows from operating activities:

Net Income                                   857,300     476,260 
Adjustments to reconcile net income to
  net cash provided by operations:
     Depreciation & Amortization             612,703     646,799 
     (Increase) decrease in Accts recvble     61,084     167,696 
     Prepaid expenses and other              152,683     (26,484)
  Inventory                                    3,242      (4,421)
  Increase (decrease) in:
     Accounts payable and Accrued expense   (555,046)    (28,359)
     Customer & security deposits             31,406    (170,292)
                                           __________  __________
Net Cash flows provided by operating 
activities                                 1,163,372   1,061,199 

Cash flows from investing activities:
  Acquisition of and improvements to 
   rental properties                        (138,170)   (286,303)
                                           __________  __________
Net cash used in investing activities       (138,170)   (286,303)

Cash flows from financing activities:
  Partner distributions paid                (478,115)   (608,277)
  Repayment of long term borrowing          (289,423)   (262,367)
                                           __________  __________
  Net cash flows used by financing 
   activities                               (767,538)   (870,644)

  Net increase (decrease) in cash            257,664     (95,748)

  Cash December 31                           101,108     164,966 

  Cash September 30                          358,772      69,218 

</TABLE>

See Accompanying Notes to the Financial Statements

PAGE 5<PAGE>
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              FLORIDA INCOME FUND III, LIMITED PARTNERSHIP
                      NOTES TO FINANCIAL STATEMENTS
                           SEPTEMBER 30, 1997
                               (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, 1996. 
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 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 $664,829 were incurred during the third quarter of 1997.  This
compares to $783,090 of costs that were incurred during the third
quarter of 1996.  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 $120,015 in management fees in accordance with the
Partnership agreement.  This compares to $102,336 in management fees
which were incurred during the third quarter of 1996.


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, 1997, was $358,772.  This compares to its cash position of
$101,108 at December 31, 1996.  The Partnership's cash position at
September 30, 1996, was $69,218.





PAGE 6<PAGE>
<PAGE>

Liquidity - Continued

For the nine months ended September 30, 1997, the Partnership's cash
increased $257,664.  The increase in cash was due to cash flow from
operations of $1,163,372; cash outlays for capital improvements of
$138,170; cash outlays for partner distributions of $478,115; and net
repayment of long term debt of $289,423.

The Partnership's total investment in properties for its portfolio at
September 30, 1997, was $22,856,331.  This compares to its total
property investment of $22,718,161 at December 31, 1996.  

On November 27, 1996, the Partnership defaulted under the terms of a
$3,200,000 mortgage loan on the Walsingham Commons Shopping Center.  The
Partnership agreed to the appointment of a receiver on the Walsingham
Commons on February 3, 1997.  All rights, powers, interests and
obligations in Walsingham Commons have been transferred to the receiver
as of November 27, 1996. The outstanding mortgage balance $3,200,000 is
nonrecourse and will be satisfied upon the final judgment of
foreclosure.  Details of this transaction were provided in an 8-K filed
on April 15, 1997.

This action was taken in response to a declining rental market in the
area of Largo, FL where this property is located.  The subject
neighborhood has been declining and losing many of the long term tenants
to newer buildings located in more desirable areas of Pinellas County.
This has resulted in a high supply of vacant space versus very low
demand which has in turn led to reduced rental rates.  The General
Partner was of the opinion that the problem is long term and felt it was
economically prudent to default on the mortgage loan to eliminate the
negative cash flow being generated by the property.  

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.



PAGE 7

<PAGE>

Capital Resources - Continued

The Partnership paid down $289,423 of principal on long term borrowings
during the nine month period.  Partnership debt as of September 30,
1997, was $8,674,908 as compared to $8,964,331 as of December 31, 1996.

Also during the nine months, the Partnership paid $138,170 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 $857,300 for the nine months ended
September 30, 1997.  This compares with net income of $476,260 for the
nine month period ended September 30, 1996.  The increase in net income
is due to revenues increasing by $194,733, property operating expenses
increasing by $173,149, real estate taxes decreasing by $63,763,
interest expense decreasing by $261,597 and depreciation and
amortization decreasing by $34,096.

Pink Shell's revenues increased $579,912 due to increased room rates and
higher occupancy.  Room revenue increased $500,249, store revenue
increased $55,404, and other revenues increased $24,259.  Interest
income decreased $3,846 due to a smaller amount of funds being invested
in short term Government Securities.  

Property operating expenses have increased for the nine months by
$173,149.  The Primary increases are in the operations of the Pink
Shell.  Guaranteed payments to owners have increased $37,758 compared to
the first nine months of 1996.  This is due to the lease back agreements
signed with the 42 unit condominium owners.  Marketing expenses have
increased $33,922 and insurance has decreased $116,394.  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 decreased $63,763 which reflects the abandonment
of Walsingham Commons.

Interest expense decreased by $261,597 due to the Partnership having a
lower amount of debt, and due to the abandonment of Walsingham Commons.

Depreciation and amortization have decreased $34,096.





PAGE 8<PAGE>
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                                 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)





          11/7/97         By: /s/ LAWRENCE A. RAIMONDI
                          --------------------------------
                          Lawrence A. Raimondi
                          President, Director and CEO
                          Mariner Capital Management, Inc.
                          (Principal Executive Officer)
                          





          11/7/97         By: /s/ JOE K. BLACKETER   
                          --------------------------------
                          Joe K. Blacketer
                          Secretary/Treasurer
                          Mariner Capital Management, Inc.
                          (Principal Financial and Accounting
                           Officer)
                          










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