FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934


For Quarter Ended	June 30, 2002


Commission file number	0-16027

REAL ESTATE INCOME PARTNERS III, LIMITED PARTNERSHIP

(Exact name of registrant as specified in its charter)


Delaware		13-3341425
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

27611 La Paz Road, P.O. Box 30009, Laguna Niguel, California		92607-0009
(Address of principal executive offices)		(Zip Code)

(949) 643-7700

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year,
if changed since last report.)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 12(g), 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X] No [ ]

TABLE OF CONTENTS


PART I. FINANCIAL INFORMATION
	ITEM 1. FINANCIAL STATEMENTS
		STATEMENTS OF NET ASSETS IN LIQUIDATION
		STATEMENTS OF CHANGES OF NET ASSETS IN LIQUIDATION
	NOTES TO FINANCIAL STATEMENTS — UNAUDITED
	ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
PART II. OTHER INFORMATION
	ITEM 1. LEGAL PROCEEDINGS
	ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURES

REAL ESTATE INCOME PARTNERS III, LIMITED PARTNERSHIP
QUARTERLY REPORT ON FORM 10-Q
FOR THE THREE MONTHS ENDED JUNE 30, 2002

INDEX


			Page

PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements

		Statements of Net Assets in Liquidation - June 30, 2002 (Unaudited) and December 31, 2001 (Audited)	3

		Statements of Changes of Net Assets in Liquidation - Three and Six Months Ended June 30, 2002 and 2001 (Unaudited)	4

		Notes to Financial Statements (Unaudited)	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		11

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		12

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings		13

Item 6.	Exhibits and Reports on Form 8-K		17

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

REAL ESTATE INCOME PARTNERS III, LIMITED PARTNERSHIP
STATEMENTS OF NET ASSETS IN LIQUIDATION


		June 30,		December 31,
		2002		2001

		(unaudited)
ASSETS (Liquidation Basis):
Cash and cash equivalents		$	2,334,000	$	2,926,000
Receivables, net			4,000		—

	Total Assets		2,338,000		2,926,000

LIABILITIES (Liquidation Basis):
Accounts payable and accrued liabilities			93,000		102,000
Accrued expenses for liquidation			127,000		599,000

	Total Liabilities		220,000		701,000

Net Assets in Liquidation		$	2,118,000	$	2,225,000

The accompanying notes are an integral part of these financial statements.

REAL ESTATE INCOME PARTNERS III, LIMITED PARTNERSHIP
STATEMENTS OF CHANGES OF NET ASSETS IN LIQUIDATION
(Unaudited)


		Three Months Ended					Six Months Ended
		June 30,					June 30,

		2002		2001			2002			2001

Net assets in liquidation at beginning of period		$	2,073,000	$	2,602,000		$	2,225,000		$	2,557,000

Increase during period:
Operating activities- interest income			8,000		36,000			19,000			81,000

Liquidating activities:
	Distributions to partners		—		—			(411,000	)		—
	Decrease (increase) in provision for liquidation expenses		37,000		(283,000	)		285,000			(283,000	)

			37,000		(283,000	)		(126,000	)		(283,000	)

Net increase (decrease) in assets in liquidation			45,000		(247,000	)		(107,000	)		(202,000	)

Net assets in liquidation at end of period		$	2,118,000	$	2,355,000		$	2,118,000		$	2,355,000

The accompanying notes are an integral part of these financial statements.

REAL ESTATE INCOME PARTNERS III LTD PARTNERSHIP 10-Q