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,
1998

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 260
     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.
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                   FLORIDA INCOME FUND III, L.P.
                               INDEX



PART I                                                   PAGE NO.


     FINANCIAL INFORMATION

     Balance Sheets at September 30, 1998
     and December 31, 1997. . . . . . . . . . . . . . . . . . . 3


     Statements of Income for the Three and Nine
     Months Ended September 30, 1998 and 1997 . . . . . . . . . 4


     Statements of Cash Flows for the Nine
     Months Ended September 30, 1998 and 1997 . . . . . . . . . 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
                                          1998       1997
                                          ---------  --------   
<S>                                       <C>        <C>
ASSETS

CURRENT ASSETS
Cash                                         309,511    156,000 
Accts Recvable Trade, Net of Allowance
   for Doubtful Accts of $17,492 for
   9/30/98 and $18,579 for 12/31/97           31,326    377,930 
Inventory                                          0     69,837 
Prepaid Expenses and Other                         0     90,797 
                                           __________  _________
      Total Current Assets                   340,837    694,564 

Rental Properties
   Abandonment                             3,082,157  3,082,157 
Rental Properties, (Net of accumulated
   depreciation of $0 at 9/30/97
    and $4,536,637 at 12/31/97                     0 14,485,000 
Intangible Assets
   Deferred Loan and
   Organizational Costs Net                        0     31,864 
                                         ___________ ___________
      Total Assets                         3,422,994 18,293,585 

LIABILITIES & PARTNERS' CAPITAL

CURRENT LIABILITIES
Current Maturities of Notes Mtgs Payable           0    722,549 
Accounts Payable, Trade                            0    405,986 
Accrued Expenses                               3,978    481,669 
Customer and Security Deposits                     0    504,885 
                                          __________  __________
      Total Current Liabilities                3,978  2,115,089 

Mtgs Payable related to Rental Prpty Mgmt  3,200,000  3,200,000 
Mtgs Payable, Less Current Maturities              0  4,804,961 

PARTNERS' CAPITAL
General Partners Capital                     (31,450)   (31,450)
Limited Partners Capital                  (6,459,108) 8,204,985 
Net Income                                 6,709,574          0 
                                          __________ ___________
   Total Partners' Equity                    219,016  8,173,535 

   Total Liabilities & Partners' Capitl    3,422,994 18,293,585 

</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
                      09/30/98   09/30/97  09/30/98    09/30/97
                      ___________________  __________  ____________
<S>                   <C>       <C>        <C>         <C>
REVENUES:

Sales Proceeds              0           0  19,969,322          0
Rental Income             273   2,000,000   4,917,401  8,170,907

Interest Income             4       4,986       1,371     12,731
                    _________   __________ __________  _________
   Total Revenues         277   2,004,986  24,888,094  8,183,638


COSTS AND EXPENSES:

Cost of Sales         (19,133)          0  14,735,723          0

Property Operating
   Expenses               859   1,901,722   2,842,713  6,123,398

Real Estate Taxes           0      48,525      90,000    145,575

Interest Expense            0     146,501     202,220    444,662

Depreciation                0     200,619     276,000    601,857

Amortization                0       3,615      31,864     10,846
                    __________  __________ __________  _________

Total Expenses        (18,274)  2,300,982  18,178,520  7,326,338

   Net Income (Loss)    18,551   (295,996)  6,709,574    857,300
                              

</TABLE>

See Accompanying Notes to the Financial Statements







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

                                         For The Nine Months Ended
                                         9/30/98     9/30/97   
                                         _________   __________
<S>                                      <C>         <C>       
Cash flows from operating activities:

Net Income                                6,709,574    857,300 
Adjustments to reconcile net income to
   net cash provided by operations:
      Cost of sales                      14,283,704          0 
      Depreciation & Amortization           307,864    612,703 
      (Increase) decrease in Accts recvble  346,604     61,084 
      Prepaid expenses and other             90,797    152,683 
   Inventory                                 69,837      3,242 
   Increase (decrease) in:
      Accounts payable and Accrued expense (883,677)  (555,046)
      Customer & security deposits         (504,885)    31,406 
                                         __________  _________
Net Cash flows provided by operating 
activities                               20,419,818  1,163,372 

Cash flows from investing activities:
   Acquisition of and improvements to 
    rental properties                       (74,704)  (138,170)
                                         ___________ __________
Net cash used in investing activities       (74,704)  (138,170)

Cash flows from financing activities:
   Partner distributions paid           (14,664,093)  (478,115)
   Repayment of long term borrowing      (5,527,510)  (289,423)
                                         __________  __________
   Net cash flows used by financing 
   activities                           (20,191,603)  (767,538)

   Net increase (decrease) in cash          153,511    257,664 

   Cash December 31                         156,000    101,108 

   Cash September 30                        309,511    358,772 

</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, 1998
                              (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, 1997. 
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 $0 were incurred during the third quarter of 1998.  This compares to
$664,829 of costs that were incurred during the third quarter of 1997. 
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 $0 in
management fees in accordance with the Partnership agreement.  This
compares to $120,115 in management fees which were incurred during the
third quarter of 1997.


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, 1998, was $309,511.  This compares to its cash position of
$156,000 at December 31, 1997.  The Partnership's cash position at
September 30, 1997, was $358,772.





PAGE 6<PAGE>
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Liquidity - Continued

For the nine months ended September 30, 1998, the Partnership's cash
increased $153,511.  The increase in cash was due to cash flow from
operations of $20,419,818; cash outlays for capital improvements of
$74,704; cash outlays for partner distributions of $14,664,093 and net
repayment of long term debt of $5,527,510.

The Partnership's total investment in properties for its portfolio at
September 30, 1998, was $3,846,621.  This compares to its total property
investment of $22,868,258 at December 31, 1997.  

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.  The final judgment of foreclosure was executed on
September 22, 1998.  The foreclosure sale took place October 22, 1998 at
which time the property reverted to the lender.

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.  

During the first quarter of 1998, the Partnership entered into a
Purchase Agreement with a hotel company to sell the Pink Shell.  Limited
Partners approval of this proposed transaction was solicited in April of
1998.  The sale was approved and closed May 1, 1998 as reported in an 
8-K filed May 13, 1998.  The sale generated approximately $14,191,000
which was distributed to the partners.  The general partners will adopt
a formal plan of liquidation, in accordance with the Partnership
agreement, which will be implemented as soon as all the terms and
conditions of the sale are satisfied.

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.



PAGE 7<PAGE>
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Capital Resources

The Partnership paid down $5,527,510 of principal on long term
borrowings during the nine month period.  Partnership debt as of
September 30, 1998, was $3,200,000 as compared to $8,727,510 as of
December 31, 1997.

Also during the nine months, the Partnership paid $74,704 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 $6,709,574 for the nine months ended
September 30, 1998.  This compares with net income of $857,300 for the
nine month period ended September 30, 1997.  The increase in net income
is due to the sale of Pink Shell which netted $5,233,599 in income,
revenues decreasing by $3,253,506, property operating expenses
decreasing by $3,280,685, real estate taxes decreasing by $55,575,
interest expense decreasing by $242,442 and depreciation and
amortization decreasing by $304,839.

Pink Shell's revenues decreased $3,253,506 due to the sale of the
property on May 1, 1998.  Interest income decreased $11,360 due to a
smaller amount of funds being invested in short term Government
Securities.  

Property operating expenses have decreased for the nine months by
$3,280,685 as a result of the sale of the property.  

Real Estate Taxes have decreased $55,575.

Interest expense decreased by $242,442.

Depreciation and amortization have decreased $304,839.


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>
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                               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)





          11/13/98       By: /s/ ALLEN G. TEN BROEK  
                         --------------------------------
                         Allen G. Ten Broek  
                         President, Director and CEO
                         Mariner Capital Management, Inc.
                         (Principal Executive Officer)
                         





          11/13/98       By: /s/ ELAINE HAWKINS
                         --------------------------------
                         Elaine Hawkins  
                         Secretary/Treasurer
                         Mariner Capital Management, Inc.
                         (Principal Financial and Accounting Officer)
                         










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