JMB MORTGAGE PARTNERS LTD III
10-Q, 1996-08-13
REAL ESTATE
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                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549



                                   FORM 10-Q



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




For the quarter ended June 30, 1996       Commission file number 0-16253     




                       JMB MORTGAGE PARTNERS, LTD. - III
            (Exact name of registrant as specified in its charter)




        Illinois                            36-3346551
(State of organization)        (IRS Employer Identification No.)




   900 N. Michigan Ave., Chicago, IL                     60611
(Address of principal executive office)                 (Zip Code)




Registrant's telephone number, including area code 312/915-1987



Indicate by check mark whether the registrant (1) 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 (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 . . . . . . . . . . . . . . . . .      3

Item 2.     Management's Discussion and Analysis
            of Financial Condition and Results of
            Operations . . . . . . . . . . . . . . . . . . . . . .     12



PART II     OTHER INFORMATION


Item 5.     Other Information. . . . . . . . . . . . . . . . . . .     14

Item 6.     Exhibits and Reports on Form 8-K . . . . . . . . . . .     15










<TABLE>
PART I.  FINANCIAL INFORMATION
     ITEM 1.  FINANCIAL STATEMENTS

                                           JMB MORTGAGE PARTNERS, LTD. - III
                                                (A LIMITED PARTNERSHIP)
                                               AND CONSOLIDATED VENTURES

                                              CONSOLIDATED BALANCE SHEETS

                                          JUNE 30, 1996 AND DECEMBER 31, 1995

                                                      (UNAUDITED)

                                                        ASSETS
                                                        ------
<CAPTION>
                                                                                      JUNE 30,        DECEMBER 31,
                                                                                       1996              1995     
                                                                                   -------------      ----------- 
<S>                                                                               <C>                <C>          
Current assets:
  Cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . . . . . .      $ 16,232,071        7,538,476 
  Interest and other receivables . . . . . . . . . . . . . . . . . . . . . . .           318,263          340,674 
  Due from affiliates. . . . . . . . . . . . . . . . . . . . . . . . . . . . .           227,395          251,872 
  Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            16,290           28,769 
                                                                                    ------------     ------------ 
     Total current assets. . . . . . . . . . . . . . . . . . . . . . . . . . .        16,794,019        8,159,791 

Investment property:
  Land. . . . . . . . . .  . . . . . . . . . . . . . . . . . . . . . . . . . .         3,588,126        9,561,468 
  Building and improvements. . . . . . . . . . . . . . . . . . . . . . . . . .         6,717,800       13,743,821 
                                                                                    ------------     ------------ 
                                                                                      10,305,926       23,305,289 

  Less accumulated depreciation. . . . . . . . . . . . . . . . . . . . . . . .          (925,196)      (2,321,280)
                                                                                    ------------     ------------ 
     Total investment property, net of depreciation. . . . . . . . . . . . . .         9,380,730       20,984,009 

Mortgage notes receivable (net of allowance for loan
 loss of $175,165 in 1995) . . . . . . . . . . . . . . . . . . . . . . . . . .        29,221,861       29,221,861 
Deferred interest receivable (net of allowances for
 loan loss of $1,691,218 in 1996 and 1995) . . . . . . . . . . . . . . . . . .         1,182,375        1,096,251 
Investment in unconsolidated venture, at equity. . . . . . . . . . . . . . . .         3,233,461        3,159,812 
Deferred costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           168,344          185,368 
                                                                                    ------------     ------------ 
                                                                                    $ 59,980,790       62,807,092 
                                                                                    ============     ============ 

                                 LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
                                 -----------------------------------------------------

Current liabilities:
  Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      $    141,816           88,880 
  Accrued real estate taxes. . . . . . . . . . . . . . . . . . . . . . . . . .            74,069          148,139 
  Other current liabilities. . . . . . . . . . . . . . . . . . . . . . . . . .           113,609          205,309 
                                                                                    ------------     ------------ 
     Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . .           329,494          442,328 
                                                                                    ------------     ------------ 
  Tenant security deposits . . . . . . . . . . . . . . . . . . . . . . . . . .            14,000           34,073 
                                                                                    ------------     ------------ 
  Commitments and contingencies 

     Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . .           343,494          476,401 
                                                                                    ------------     ------------ 

Venture partner's equity in ventures . . . . . . . . . . . . . . . . . . . . .         3,907,639        8,199,483 
Partners' capital accounts:
  General partners:
     Capital contributions . . . . . . . . . . . . . . . . . . . . . . . . . .             1,000            1,000 
     Cumulative net earnings (losses). . . . . . . . . . . . . . . . . . . . .         3,181,937        2,948,423 
     Cumulative cash distributions . . . . . . . . . . . . . . . . . . . . . .        (3,288,906)      (3,071,447)
                                                                                    ------------     ------------ 
                                                                                        (105,969)        (122,024)
                                                                                    ------------     ------------ 

Limited partners (65,237.69 interests):
     Capital contributions, net of offering costs. . . . . . . . . . . . . . .        57,758,561       57,758,561 
     Cumulative net earnings . . . . . . . . . . . . . . . . . . . . . . . . .        35,621,345       32,031,226 
     Cumulative cash distributions . . . . . . . . . . . . . . . . . . . . . .       (37,544,280)     (35,536,555)
                                                                                    ------------     ------------ 
                                                                                      55,835,626       54,253,232 
                                                                                    ------------     ------------ 
        Total partners' capital accounts (deficits). . . . . . . . . . . . . .        55,729,657       54,131,208 
                                                                                    ------------     ------------ 
                                                                                    $ 59,980,790       62,807,092 
                                                                                    ============     ============ 

<FN>
                             See accompanying notes to consolidated financial statements.
</TABLE>




<TABLE>
                                           JMB MORTGAGE PARTNERS, LTD. - III
                                                (A LIMITED PARTNERSHIP)
                                               AND CONSOLIDATED VENTURES

                                         CONSOLIDATED STATEMENTS OF OPERATIONS

                                   THREE AND SIX MONTHS ENDED JUNE 30, 1996 AND 1995

                                                      (UNAUDITED)
<CAPTION>
                                                             THREE MONTHS ENDED              SIX MONTHS ENDED      
                                                                  JUNE 30                         JUNE 30          
                                                         --------------------------     -------------------------- 
                                                             1996           1995            1996           1995    
                                                         -----------     ----------     -----------     ---------- 
<S>                                                     <C>             <C>            <C>             <C>         
Income:
  Interest income. . . . . . . . . . . . . . . . . .     $   897,168        848,547       1,794,458      1,700,199 
  Rental income. . . . . . . . . . . . . . . . . . .         906,235        892,634       1,789,713      1,816,387 
                                                         -----------     ----------     -----------     ---------- 
                                                           1,803,403      1,741,181       3,584,171      3,516,586 
                                                         -----------     ----------     -----------     ---------- 
Expenses:
  Depreciation . . . . . . . . . . . . . . . . . . .          58,086        161,173         116,466        322,346 
  Property operating expenses. . . . . . . . . . . .         319,516        341,089         629,982        670,186 
  Mortgage investment servicing fees . . . . . . . .          18,632         18,994          36,645         39,128 
  Professional services. . . . . . . . . . . . . . .          22,621         24,920          43,621         56,329 
  Amortization of deferred expenses. . . . . . . . .           8,512          8,002          17,024         26,759 
  General and administrative . . . . . . . . . . . .          85,215         60,871         200,639        109,958 
                                                         -----------     ----------     -----------     ---------- 
                                                             512,582        615,049       1,044,377      1,224,706 
                                                         -----------     ----------     -----------     ---------- 

          Operating earnings (loss). . . . . . . . .       1,290,821      1,126,132       2,539,794      2,291,880 

          Partnership's share of 
            operations of uncon-
            solidated venture. . . . . . . . . . . .          29,609         50,300          73,648        111,858 

          Venture partner's share 
            of ventures' operations. . . . . . . . .        (195,768)      (145,656)       (395,337)      (329,173)
                                                         -----------     ----------     -----------     ---------- 

          Net operating earnings (loss). . . . . . .       1,124,662      1,030,776       2,218,105      2,074,565 

Gain on sale of investment properties,
  net of venture partner's share of
  gain of $973,220 . . . . . . . . . . . . . . . . .       1,605,528          --          1,605,528          --    
                                                         -----------     ----------     -----------     ---------- 

          Net earnings (loss)
                                                         $ 2,730,190      1,030,776       3,823,633      2,074,565 
                                                         ===========     ==========     ===========     ========== 

          Net earnings (loss) per 
           limited partnership 
           interest:
            Net operating loss . . . . . . . . . . .     $     13.91          14.14           30.67          28.47 
            Net gain on sale of
              investment property. . . . . . . . . .           24.36          --              24.36          --    
                                                         -----------     ----------     -----------     ---------- 

                                                         $     38.27          14.14           55.03          28.47 
                                                         ===========     ==========     ===========     ========== 

          Cash distributions per 
            limited partnership 
            interest . . . . . . . . . . . . . . . .     $     30.00          15.00            30.00         30.00 
                                                         ===========     ==========     ===========     ========== 











<FN>
                             See accompanying notes to consolidated financial statements.
</TABLE>




<TABLE>
                                           JMB MORTGAGE PARTNERS, LTD. - III
                                                (A LIMITED PARTNERSHIP)
                                               AND CONSOLIDATED VENTURES

                                         CONSOLIDATED STATEMENTS OF CASH FLOWS

                                        SIX MONTHS ENDED JUNE 30, 1996 AND 1995

                                                      (UNAUDITED)
<CAPTION>
                                                                                          1996             1995    
                                                                                      ------------     ----------- 
<S>                                                                                  <C>              <C>          
Cash flows from operating activities:
  Net earnings (loss). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    $  3,823,633       2,074,565 
  Items not requiring cash or cash equivalents:
    Total gain on sale of investment property. . . . . . . . . . . . . . . . . . .      (2,578,748)          --    
    Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         116,466         322,346 
    Amortization of deferred expenses. . . . . . . . . . . . . . . . . . . . . . .          17,024          26,759 
    Partnership's share of operations of unconsolidated venture, 
      net of distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . .         (73,648)         18,342 
    Venture partners' share of ventures' operations and
      gain on sale of its investment property. . . . . . . . . . . . . . . . . . .       1,368,556         329,173 
  Changes in:
    Interest and other receivables . . . . . . . . . . . . . . . . . . . . . . . .          21,886         (17,186)
    Due from affiliates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          24,477           --    
    Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           --             28,769 
    Deferred interest receivable . . . . . . . . . . . . . . . . . . . . . . . . .         (86,124)        (85,507)
    Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          52,409           6,184 
    Due to affiliates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           --           (382,428)
    Accrued real estate taxes. . . . . . . . . . . . . . . . . . . . . . . . . . .         (74,070)         32,748 
    Other current liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . .         (91,700)        (18,279)
    Tenant security deposits . . . . . . . . . . . . . . . . . . . . . . . . . . .         (20,661)        (15,541)
                                                                                       ------------   ------------ 

          Net cash provided by (used in) operating activities. . . . . . . . . . .       2,499,500       2,319,945 
                                                                                       ------------   ------------ 

Cash flows from investing activities:
  Partnership's distributions to venture partners. . . . . . . . . . . . . . . . .           --         (2,093,562)
  Net sales and maturities (purchases) of short-term investments . . . . . . . . .           --         (3,732,378)
  Cash proceeds from sale of investment property, net of 
    selling expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      14,178,883           --    
  Additions to investment properties . . . . . . . . . . . . . . . . . . . . . . .         (99,204)        (90,408)
  Partnership's contribution to unconsolidated venture . . . . . . . . . . . . . .           --             (3,607)
  Refund of deferred costs . . . . . . . . . . . . . . . . . . . . . . . . . . . .           --              2,436 
                                                                                       ------------   ------------ 
          Net cash provided in (used in) investing activities. . . . . . . . . . .      14,079,679      (5,917,519)
                                                                                       ------------   ------------ 
Cash flows from financing activities:
  Distributions to venture partners. . . . . . . . . . . . . . . . . . . . . . . .      (5,660,400)          --    
  Distributions to limited partners. . . . . . . . . . . . . . . . . . . . . . . .      (2,007,725)     (1,957,132)
  Distributions to general partners. . . . . . . . . . . . . . . . . . . . . . . .        (217,459)       (217,459)
                                                                                      ------------    ------------ 
     Net cash used in financing activities . . . . . . . . . . . . . . . . . . . .      (7,885,584)     (2,174,591)
                                                                                      ------------    ------------ 
     Net increase (decrease) in cash and cash equivalents. . . . . . . . . . . . .       8,693,595      (5,772,165)

     Cash and cash equivalents, beginning of year. . . . . . . . . . . . . . . . .       7,538,476      10,278,236 
                                                                                      ------------    ------------ 
     Cash and cash equivalents, end of period. . . . . . . . . . . . . . . . . . .    $ 16,232,071       4,506,071 
                                                                                      ============    ============ 
Supplemental disclosure for cash flow information:
  Cash paid for mortgage and other interest. . . . . . . . . . . . . . . . . . . .    $      --              --    
                                                                                      ============    ============ 
  Non-cash investing and financing activities:
   Balance due on mortgage note receivable (net of
    allowance for loan loss of $99,000). . . . . . . . . . . . . . . . . . . . . .    $      --          3,121,072 
   Partnership contribution to unconsolidated venture. . . . . . . . . . . . . . .           --              3,607 
                                                                                      ------------    ------------ 
   Net carrying value of investment property (reflected 
    as investment in unconsolidated venture) . . . . . . . . . . . . . . . . . . .    $      --          3,124,679 
                                                                                      ============    ============ 















<FN>
                             See accompanying notes to consolidated financial statements.
</TABLE>





                       JMB MORTGAGE PARTNERS, LTD. - III
                            (A LIMITED PARTNERSHIP)
                           AND CONSOLIDATED VENTURES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                            JUNE 30, 1996 AND 1995

                                  (UNAUDITED)

GENERAL

     Readers of this quarterly report should refer to the Partnership's
audited financial statements for the fiscal year ended December 31, 1995,
which are included in the Partnership's 1995 Annual Report, as certain
footnote disclosures which would substantially duplicate those contained in
such audited financial statements have been omitted from this report.

     The preparation of financial statements in accordance with GAAP
requires the Partnership to make estimates and assumptions that affect the
reported or disclosed amount of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period.  Actual results could differ from those
estimates.

     Statement of Financial Accounting Standards No. 121 was adopted by the
Partnership on January 1, 1996.


TRANSACTIONS WITH AFFILIATES

     The Partnership, pursuant to the Partnership Agreement, is permitted
to engage in various transactions involving the Corporate General Partner
and its affiliates including the reimbursement for salaries and salary-
related expenses of its employees, certain of its officers, and other
direct expenses relating to the administration of the Partnership and the
operation of the Partnership's investments.  Fees, commissions and other
expenses required to be paid by the Partnership to the General Partners and
their affiliates as of June 30, 1996 and for the three months ended June
30, 1996 and 1995 were as follows:

                                                                  Unpaid at  
                                                                  June 30,   
                                       1996          1995           1996     
                                     --------       ------        ---------  
Mortgage investment 
  servicing fees . . . . . . . .     $ 36,646       39,128          18,827   
Property management
 fees. . . . . . . . . . . . . .       51,311       52,757            --     
Reimbursement (at cost)
 for out-of-pocket
 expenses and salaries
 and salary-related 
 expenses. . . . . . . . . . . .       44,127       37,690          35,659   
                                     --------      -------          ------   
                                     $132,084      129,575          54,486   
                                     ========      =======          ======   

     The General Partners have deferred payment of $679,727 (approximately
$10 per Interest) of their distributions of prior net cash flow from the
Partnership at June 30, 1996, in accordance with the subordination
requirements of the Partnership Agreement.  All amounts deferred or
currently payable do not bear interest.

SPRING HILL FASHION CENTER

     A major tenant, which occupied approximately 24% of the leasable space
at the property and which was operating under Chapter 11 bankruptcy
protection, did not exercise its renewal option when its lease expired in
October 1995 and vacated its space.  The Spring Hill joint venture (the
"venture"), however, executed a ten-year lease (in February 1996) with a
replacement tenant for this space at rental rates lower than those of the
former tenant.  The replacement tenant's occupancy in late June 1996 has
resulted in the property being 93% leased occupied at June 30, 1996, up
from 67% at March 31, 1996.  The venture is conserving its working capital
in order to fund certain costs associated with the replacement tenant's
move-in.  Although, the venture is actively pursuing the sale of this
property, there can be no assurance that any satisfactory sale transaction
will be completed by the end of 1996.


RIVERPOINT CENTER

     The Silo Electronic store (12,100 sq. ft.) at Riverpoint Center
vacated its space in the third quarter 1995 and subsequently filed for
bankruptcy.  The borrower is pursuing its legal remedies regarding the
remaining amounts due.  The borrowers leased the space to the Old Navy
Clothing Co., for five years with rent commencing July 1996.  The borrower
had notified the lender that it was experiencing financial difficulties and
had approached the Lenders regarding a loan modification.  During July
1996, the Lenders and borrowers reached an agreement in principle to defer
payment of a portion of the scheduled debt service payments from September
15, 1995 to July 15, 1996.  In conjunction with the modification agreement
in principle, the scheduled maturity date of the loan would be accelerated
to December 31, 1997.  Finally, the lenders have agreed to accept at
certain dates through June 30, 1997 repayment of the loan at specified
amounts (all at premiums to the current principal balance).  However, there
can be no assurance that such agreement will be finalized under these terms
or any others.  As of the date of this report, certain escrow and real
estate tax payments are delinquent; however, the borrower is current in its
full monthly debt service payments.  The Partnership is recognizing
interest income only as collected.

     Subsequent to the end of the quarter, the borrower notified the
Lenders that a tenant which operates a dry cleaning plant at the site has
leaked a chemical associated with the dry cleaning process that can cause
environmental problems if not handled properly.  The borrower is currently
performing tests to assess the extent of the contamination.  At this time,
it is not possible to reasonably estimate what the cost of any required
remediation.  The Lenders do not currently expect that the value of the
borrower's property has been materially impaired; however, there can be no
assurance that the contamination will not have a material impact on the
value of the Lender's security until more information becomes available.


FRANKLIN FARM VILLAGE CENTER

     A tenant, which has a ground lease with the borrower, informed the
borrower and the appropriate state agencies that gasoline was discharged
into the ground.  The Lenders were then informed by the borrower.  The
Lenders have been informed that the tenant, which operates a gasoline
station at the site, is cooperating fully with all government agencies in
order to rectify this problem in a expeditious manner and that no nearby
underground water supplies were affected nor does it appear likely that any
will be affected in the future.  The tenant (an affiliate of a national
gasoline marketer) appears to have the financial resources to fully pay for
the clean up at the property.  At this time it is indeterminable what the
cost of the clean up will be.  The Lenders do not currently expect that the
value of the borrower's property has been materially affected.  However,
there can be no assurances that the gasoline leak, as reported, will not
have a material impact on the value of the Lenders' security in the future.

During July 1996, the Lenders executed an agreement with the borrower
regarding an early repayment of the mortgage loan.  Such agreement allows
the borrower to repay the loan at a predetermined amount (at a premium to
the Lender's current principal balances) prior to October 8, 1996.  There
can be no assurance that such loan will be prepaid.  As of the date of the
report, no amounts currently due from the borrower of this loan are in
arrears.


CALIBRE POINT APARTMENTS

     Calibre Pointe Associates entered into a purchase agreement in April
1996 with an independent third party to sell the property.  The sale price
of the apartments was $14,450,000, paid in cash at closing on May 30, 1996.

Calibre Pointe Associates will recognize a gain of approximately $2,578,000
for financial reporting purposes in 1996, of which approximately $1,605,000
will be allocable to the Partnership.  Calibre Pointe Associates expects to
recognize a gain of approximately $2,200,000 for Federal income tax
purposes in 1996 of which approximately $1,370,000 will be allocable to the
Partnership.

     The property was classified as held for sale or disposition as of
January 1, 1996 and therefore has not been subject to continued
depreciation.  The accompanying consolidated financial statements include
$983,667 and $904,947 of revenues and $379,002 and $594,373 of operating
expenses for the six months ended June 30, 1996 and 1995 (reflected as a
component of the Partnership's share of operations of unconsolidated
ventures).  The property had a net carrying value of approximately
$11,580,000 at June 30, 1996.


NORTH RIVERS MARKET SHOPPING CENTER

     Occupancy of North Rivers Market Shopping Center in North Charleston,
South Carolina was 83% at June 30, 1996.  Phar Mor, a major tenant at the
center filed for protection under Chapter 11 of the bankruptcy code.  The
Phar Mor store at the center has continued to operate since its bankruptcy
filing and has been current on all rent payments due subsequent to filing. 
The manager is aggressively attempting to lease the vacant space in the
center.  However, the competitiveness of the market given the Naval
facility closings in the nearby area is expected to make it difficult to
lease space in the center, thereby extending the period of time it will
take to complete the lease-up of the center and result in a decrease in
cash flow from operations over the near term.


SHOPPES AT RIVERGATE

     In May 1995, a tornado touched down in Goodlettsville, Tennessee and
severely damaged a significant percentage (17% or 29,000 square feet) of
the Shoppes at Rivergate.  The portion of the shopping center undamaged by
the tornado continued to operate while the damaged portion was being
repaired.  Substantially all of the loss, including any loss caused by
business interruption, is expected to be covered by the borrower's
insurance.  The borrower has substantially rebuilt the damaged portions of
the center with funds provided by the insurance company and the property is
currently 97% occupied.  Subsequent to the end of the quarter, a tenant
which occupied approximately 15,400 square feet vacated its space prior to
its lease expiration, decreasing the occupancy to 89%.  Total costs to
repair the center are estimated to be approximately $1,200,000 of which
approximately $1,080,000 has been spent as of June 30, 1996.  As of the
date of this report, the borrower is current with all payments due to the
Partnership.


SELECTED FINANCIAL INFORMATION

     Pursuant to the requirements of the Securities and Exchange
Commission, the following is a summary of historical income statement
information for Shoppes at Rivergate, Riverpoint Center and Franklin Farm
Village Center shopping centers for the six months ended June 30, 1996 and
1995.  Such properties secure the participating first mortgage investments
made by the Partnership.

                                                   1996            1995   
                                                ----------      --------- 

     Total revenues. . . . . . . . . . . . .    $4,147,591      4,053,636 
                                                ==========      ========= 
     Net income (loss) . . . . . . . . . . .    $  302,426        164,544 
                                                ==========      ========= 


ADJUSTMENTS

     In the opinion of the Corporate General Partner, all adjustments
(consisting solely of normal recurring adjustments) necessary for a fair
presentation have been made to the accompanying figures as of June 30, 1996
and for the three and six months ended June 30, 1996 and 1995.



PART I. FINANCIAL INFORMATION

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
        CONDITION AND RESULTS OF OPERATIONS

     Reference is made to the notes to the accompanying financial
statements for additional information concerning the Partnership's
investments.

     During the second quarter some of the Limited Partners in the
Partnership received from an unaffiliated third party an unsolicited tender
offer to purchase up to 3,070 Interests in the Partnership at between $450
and $500 per Interest.  The Partnership recommended against acceptance of
this offer on the basis that, among other things, the offer price was
inadequate.  In June such offer expired with approximately 896 Interests
being purchased by such unaffiliated third party pursuant to such offer. 
In addition, the Partnership has, from time to time, received inquires from
other third parties that may consider making offers for Interests,
including requests for the list of Limited Partners in the Partnership. 
These inquiries are generally preliminary in nature.  There is no assurance
that any other third party will commence an offer for Interests, the terms
of any such offer or whether any such offer, if made, will be consummated,
amended or withdrawn.  The board of directors of JMB Realty Corporation
("JMB") the corporate general partner of the Partnership, has established a
special committee (the "Special Committee") consisting of certain directors
of JMB to deal with all matters relating to tender offers for Interests in
the Partnership, including any and all responses to such tender offers. 
The Special Committee has retained independent counsel to advise it in
connection with any potential tender offers for Interests and has retained
Lehman Brothers Inc. as financial advisor to assist the Special Committee
in evaluating and responding to any additional potential tender offers for
Interests.  Expenses incurred in connection with the previous tender
offer(s) and additional potential tender offers for Interests are expected
to increase Partnership operating expenses in the third quarter.

     After reviewing the properties and competitive market places in the
portfolio, the General Partners of the Partnership expect to be able to
liquidate the remaining assets as quickly as practicable.  Therefore, the
affairs of the Partnership are expected to be wound up no later than 1999,
barring unforeseen economic developments including the inability to sell
the Franklin Farm Village Center note prior to its maturity in 2001.

RESULTS OF OPERATIONS

     The increase in cash and cash equivalents at June 30, 1996 as compared
to December 31, 1995 is due primarily to the temporary investment of
approximately $9,340,000 representing the Partnership's share of the sales
proceeds received from Calibre Pointe Apartments in May 1996.

     The decreases in prepaid expenses, land, building and improvements,
accumulated depreciation, accrued real estate taxes, other current
liabilities, and tenant security deposits at June 30, 1996 as compared to
December 31, 1995 is primarily due to the May 30, 1996 sale of Calibre
Pointe Apartments.

     The increase in deferred interest receivable at June 30, 1996 as
compared to December 31, 1995 is due to the continuing deferral of
additional interest earned under the terms of the mortgage loan receivable
secured by the Franklin Farm Village Center.

     Interest income increased for the three and six months ended June 30,
1996 as compared to the same period in 1995 due primarily to additional
interest paid in 1996 on the Franklin Farm Village Center note, relating to
1995 operations, not previously accrued, (as interest income is recognized
as collected), and due to a higher interest payment rate in effect for
Riverpoint in 1996.

     The decreases in depreciation expense for the three and six months
ended June 30, 1996 as compared to the same period in 1995 is due to the
Calibre Pointe property being classified as held for sale or disposition as
of January 1, 1996.

     The increases in general and administrative expenses for the three and
six months ended June 30, 1996 as compared to the three and six months
ended June 30, 1995 are attributable primarily to the timing of the
recognition of costs for certain outsourcing services, the recognition of
certain prior year reimbursable costs to affiliates of the General Partners
and the timing of the recognition of certain printing costs in 1996.

     The decrease in Partnership's share of operations of unconsolidated
venture for the three and six months ended June 30, 1996 as compared to the
three and six months ended June 30, 1995 is attributable primarily to the
decrease in rental income at the Spring Hill Fashion Center due to a
decrease in average occupancy arising from the vacating of a major tenant
during the fourth quarter of 1995.  The Spring Hill joint venture executed
a ten-year lease in February 1996 with a replacement tenant for this space
at rental rates lower than those of the former tenant, with the replacement
tenant taking occupancy in late June 1996.



<TABLE>
PART II.  OTHER INFORMATION

     ITEM 5.  OTHER INFORMATION


                                                       OCCUPANCY

     The following is a listing of approximate occupancy levels by quarter for the Partnership's investment
properties.

<CAPTION>
                                                        1995                                   1996               
                                         -------------------------------------      ------------------------------
                                        At          At          At         At       At       At       At       At 
                                       3/31        6/30        9/30      12/31     3/31     6/30     9/30    12/31
                                       ----        ----        ----      -----     ----     ----    -----    -----
<S>                                  <C>         <C>         <C>        <C>       <C>      <C>      <C>     <C>   
1.  Calibre Pointe Apartments
      Atlanta, Georgia . . . . .       98%          90%         98%        96%      99%      N/A

2.  North Rivers Market
      Shopping Center
      North Charleston,
      South Carolina . . . . . .       80%          80%         80%        88%      85%      83%

3.  Spring Hill Fashion Center
      Shopping Center
      West Dundee, Illinois. . .       94%*         94%         92%        75%      67%      93%

- -----------------

<FN>

     An "N/A" indicates that the property was not owned by the Partnership at the end of the quarter.

     *  This property was reflected as owned at March 31, 1995 although title did not transfer to the Partnership
and its affiliated lenders (through a joint venture) pursuant to a deed in lieu of foreclosure until May 1995.

</TABLE>




PART II.  OTHER INFORMATION

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

       (a)     The following documents are filed as part of this report:

               3-A.    The Prospectus of the Partnership dated July 18,
1986, as supplemented January 27, 1986, April 29, 1986, June 11, 1986,
August 14, 1986, September 27, 1986 as filed with the Commission pursuant
to Rules 424(b) and 424(c), is hereby incorporated herein by reference to
Exhibit 3-A to the Partnership's Report for December 31, 1992 on Form 10-K
(File No. 0-16253) dated March 19, 1993.

               3-B.    Amended and Restated Agreement of Limited
Partnership set forth as Exhibit A to the Prospectus, which is hereby
incorporated herein by reference to the Partnership's Registration
Statement on Form S-11 (File No. 2-95948) dated July 24, 1985.

               3-C.    Acknowledgement of rights and duties of the General
Partners of the Partnership between AGPP Associates, L.P. (a successor
Associated General Partner of the Partnership) and JMB Realty Corporation
as of December 31, 1995 is filed herewith.

               10-A.   Loan documents related to the Partnership's
participation in the funding of a non-recourse first mortgage loan on
Calibre Pointe Apartments located in Atlanta, Georgia is hereby
incorporated herein by reference to the Partnership's Form 8-K (File No. 2-
95948) dated March 25, 1987.

               10-B.   Loan documents related to the Partnership's
participation in the funding of a first mortgage loan secured by a first
mortgage loan on North Rivers Market Shopping Center located in North
Charleston, South Carolina, is hereby incorporated herein by reference to
the Partnership's Form 8-K (File No. 2-95948) dated September 15, 1987.

               10-C.   Loan documents related to the Partnership's
participation in the funding of a first mortgage loan secured by a first
mortgage loan on Riverpoint Center Shopping Center located in Chicago,
Illinois, is hereby incorporated herein by reference to the Partnership's
Form 8-K (File No. 0-16253) dated September 5, 1989. 

               10-D.   Loan document related to the Partnership's
participation in the funding of a first mortgage secured by a first
mortgage on Shops at Rivergate Shopping Center located in Goodlettsville,
Tennessee, dated August 24, 1987 is hereby incorporated herein by reference
to Exhibit 10-D of the Partnership's Report for December 31, 1992 on Form
10-K (File No. 0-16253) dated March 19, 1993.

               10-E.   Loan documents related to the Partnership's
participation in the funding of a participating first mortgage loan secured
by Franklin Farm Village Center located in Fairfax County, Virginia, are
hereby incorporated by reference to the Partnership's Report for December
31, 1994 on Form 10-K (File No. 0-16253) dated March 27, 1995.

               10-F.   First and Second Amendments to the Loan Documents
dated September 28, 1993 and November 23, 1994, respectively, between
Rosenfeld/Franklin Farm Village Center L.P. and Mortgage Partners, Ltd.-IV,
relating to additional loan amounts, are hereby incorporated by reference
to the Partnership's Report for December 31, 1994 on Form 10-K (File No. 0-
16253) dated March 27, 1995.

               10-G.   Real Property Purchase Agreement between Calibre
Pointe Associates and Security Capital Atlantic Incorporated, dated April
29, 1996 are hereby incorporated by reference to the Partnership's report
on Form 8-K (File No. 0-16253) dated May 30, 1996.

               27.     Financial Data Schedule




                                  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.


                               JMB MORTGAGE PARTNERS, LTD. - III

                               BY:  JMB Realty Corporation
                                    (Corporate General Partner)



                                            GAILEN J. HULL
                                    By:     Gailen J. Hull,
                                            Senior Vice President
                                    Date:   August 9, 1996

     Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following person in the capacity
and on the date indicated. 


                                            GAILEN J. HULL
                                            Gailen J. Hull
                                            Principal Accounting Officer
                                    Date:   August 9, 1996



EXHIBIT 3-C

                            JMB MORTGAGE PARTNERS, LTD.-III

                                    ACKNOWLEDGMENT


       This Acknowledgment is made and executed as of the 31st day of
December, 1995 by AGPP Associates, L.P., a limited partnership organized
under the laws of the State of Illinois ("AGPP"), and JMB Realty
Corporation, a Delaware corporation ("JMBRC").
       WHEREAS, AGPP has acquired all of the partnership interests in
Mortgage Associates-III, L.P., an Illinois limited partnership, which has
served as the Associate General Partner of JMB Mortgage Partners, Ltd.-III,
an Illinois limited partnership (the "Partnership"), and AGPP has elected
to continue the business of the Partnership and has agreed to continue as
the Associate General Partner of the Partnership; and
       WHEREAS, JMBRC has agreed to continue as the Corporate General
Partner of the Partnership.
       NOW, THEREFORE, the parties hereby agree and acknowledge as follows:
       1.     AGPP and JMBRC both shall continue as general partners of the
Partnership, each with all of the rights and powers of general partners
therein, as set forth in the agreement of limited partnership of the
Partnership, as amended to date (the "Partnership Agreement") and in the
Revised Uniform Limited Partnership Act of the State of Illinois, and the
Partnership and its business shall be continued in all respects.
       2.     AGPP hereby agrees that it is a signatory to the Partnership
Agreement, together with JMBRC, and adopts and agrees to be bound by all of
the provisions of the Partnership Agreement, as amended from time to time
in accordance with the provisions of the Partnership Agreement.

       3.     AGPP and JMBRC agree that JMBRC is hereby authorized and
empowered, on behalf of AGPP, JMBRC, the Partnership or any of the
foregoing, to execute any and all documents, enter into any and all
agreements, or take any and all other actions (in each case in accordance
with  and subject to the terms of the Partnership Agreement), in the name
of the Partnership or otherwise, as shall be necessary or appropriate in
connection with the business of the Partnership at any time.  It is further
understood and agreed that the Chairman, President or any Vice President of
JMBRC (including any partner of AGPP who is Chairman, President or Vice
President of JMBRC) may act for and in the name of JMBRC in the exercise by
JMBRC of any of its rights and powers hereunder.  In dealing with JMBRC (or
the Chairman, President or any Vice President thereof) so acting on behalf
of AGPP, JMBRC or the Partnership, no person shall be required to inquire
into the authority of JMBRC or such individual to bind the Partnership. 
Persons dealing with the Partnership are entitled to rely conclusively upon
the power and authority of JMBRC (and of the Chairman, President or any
Vice President of JMBRC) as set forth herein.
       4.     AGPP and JMBRC agree to take any and all other actions as shall
be necessary or appropriate to reflect the continuation of the
Partnership's business, including the filing with any agency of any
document which shall be necessary or appropriate in connection therewith.
       5.     Nothing contained herein or contemplated hereby shall be deemed
to render AGPP or JMBRC liable for any obligations for which they would
otherwise not be liable as general partners of the Partnership.

       IN WITNESS WHEREOF, the parties hereto have executed this
Acknowledgment as of the date first above written.

AGPP ASSOCIATES, L.P.

By:    JMB Realty Corporation
       General Partner


       By:    ______________________
       Its:


JMB REALTY CORPORATION

By:    ______________________
Its:

<TABLE> <S> <C>

<ARTICLE> 5

<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-Q FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
INCLUDED IN SUCH REPORT.
</LEGEND>

       
<S>                     <C>
<PERIOD-TYPE>           6-MOS
<FISCAL-YEAR-END>       DEC-31-1996
<PERIOD-END>            JUN-30-1996

<CASH>                          16,232,071 
<SECURITIES>                          0    
<RECEIVABLES>                      561,948 
<ALLOWANCES>                          0    
<INVENTORY>                           0    
<CURRENT-ASSETS>                16,794,019 
<PP&E>                          10,305,926 
<DEPRECIATION>                     925,196 
<TOTAL-ASSETS>                  59,980,790 
<CURRENT-LIABILITIES>              329,494 
<BONDS>                               0    
<COMMON>                              0    
                 0    
                           0    
<OTHER-SE>                      55,729,657 
<TOTAL-LIABILITY-AND-EQUITY>    59,980,790 
<SALES>                          1,789,713 
<TOTAL-REVENUES>                 3,584,171 
<CGS>                                 0    
<TOTAL-COSTS>                      746,448 
<OTHER-EXPENSES>                   297,929 
<LOSS-PROVISION>                      0    
<INTEREST-EXPENSE>                    0    
<INCOME-PRETAX>                  2,539,794 
<INCOME-TAX>                          0    
<INCOME-CONTINUING>              2,218,105 
<DISCONTINUED>                   1,605,528 
<EXTRAORDINARY>                       0    
<CHANGES>                             0    
<NET-INCOME>                     3,823,633 
<EPS-PRIMARY>                        55.03 
<EPS-DILUTED>                        55.03 

        


</TABLE>


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