CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES 3, 10-K, 1999-03-26

CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES 3
10-K, 1999-03-26
REAL ESTATE INVESTMENT TRUSTS

Previous: VARIABLE ANNUITY ACCOUNT ONE OF FIRST SUNAMERICA LIFE INS CO, 485BPOS, 1999-03-26

Next: DELAWARE GROUP GOVERNMENT FUND INC, NSAR-A, 1999-03-26

FORM 10-K--ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

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

FORM 10-K

(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [No Fee Required]

For the fiscal year ended December 31, 1998

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [No Fee Required]

For the transition period from to

Commission file number 0-14187

CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3
(Exact name of registrant as specified in its charter)

California 94-2940208
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

55 Beattie Place, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code (864) 239-1000

Securities registered pursuant to Section 12(b) of the Act:

None

Securities registered pursuant to Section 12(g) of the Act:

Limited Partnership Units
(Title of class)

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.[X]

State the aggregate market value of the voting partnership interests held by
non-affiliates computed by reference to the price at which partnership interests
were sold, or the average bid and asked prices of such partnership interests as
of December 31, 1998. No market exists for the limited partnership interests of
the Registrant, and therefore, no aggregate market value can be determined.

DOCUMENTS INCORPORATED BY REFERENCE
None

PART I

ITEM 1. DESCRIPTION OF BUSINESS

Consolidated Capital Institutional Properties/3 (the "Registrant" or
"Partnership") was organized on May 23, 1984, as a limited partnership under the
California Uniform Limited Partnership Act. Commencing July 23, 1985, the
Partnership offered pursuant to Registration statement filed with the Securities
and Exchange Commission ("SEC") 800,000 Units of Limited Partnership Interests
(the "Units") at a purchase price of $250 per unit. The Units represent equity
interests in the Partnership and entitle the holders thereof to participate in
certain allocations and distributions of the Partnership. The sale of Units
terminated on May 15, 1987, with 383,033 units sold for an aggregate of
$95,758,250. Since its initial offering, the Registrant has not received, nor
are limited partners required to make, additional capital contributions.

The general partner of the Partnership is ConCap Equities, Inc. ("CEI" or the
"General Partner"), a Delaware corporation. The General Partner is a subsidiary
of Apartment Investment and Management Company ("AIMCO"). The Partnership
Agreement provides that the Partnership is to terminate on December 31, 2015
unless terminated prior to such date.

The Partnership is engaged in the business of operating and holding real
properties for investment. The Partnership was formed, for the benefit of its
Limited Partners (herein so called and together with the General Partner shall
be called the "Partners"), to lend funds to ConCap Equity Partners/3, ConCap
Equity Partners/4, and ConCap Equity Partners/5 ("EP/3", "EP/4" and "EP/5",
respectively). EP/3, EP/4 and EP/5 represent California limited partnerships
in which certain of the partners were former shareholders and former management
of Consolidated Capital Equities Corporation ("CCEC"), the former corporate
general partner of the Partnership.

Through December 31, 1994, the Partnership had made twelve specific loans
against a Master Loan agreement and advanced a total of $67,300,000 (the "Master
Loan"). EP/3 used $17,300,000 of the loaned funds to purchase two apartment
complexes and one office building. EP/4 used $34,700,000 of the loaned funds to
purchase four apartment complexes and one office building, which was
subsequently sold in 1989. EP/5 used $15,300,000 of the loaned funds to
purchase two apartment complexes and two office buildings. Through a series of
transactions, the Partnership has acquired all of EP/3, EP/4 and EP/5's
properties in full settlement of their liability under the Master Loan. For a
brief description of the properties owned by the Partnership refer to "Item 2.
Description of Properties".

Prior to 1989, the Partnership had loaned $17,300,000 to EP/3, $34,700,000 to
EP/4 and $15,300,000 to EP/5, subject to non-recourse notes with participation
interests (collectively referred to as the "Master Loan"), pursuant to a Master
Loan Agreement dated February 26, 1986, between the Partnership and EP/3, EP/4
and EP/5. The Partnership secured the Master Loan with deeds of trust or
mortgages on real properties and by the assignment and pledge of promissory
notes from the partners of EP/3, EP/4 and EP/5. In November 1994, the
Partnership entered into an agreement with EP/3 whereby one property was deeded
in lieu of foreclosure to the Partnership and foreclosure proceedings were
instituted by the Partnership on the other asset which collateralized the Master
Loan. The Partnership assumed a note payable of approximately $1,200,000 in
exchange for full settlement of EP/3's liability under the Master Loan. During
1992, the Partnership foreclosed on the last remaining EP/4 apartment complex in
full settlement of EP/4's liability under the Master Loan. Previously, the
Partnership foreclosed on three of EP/4's apartment complexes and EP/4's
interest in one note receivable secured by the office building sold in 1989, and
acquired EP/5's two apartment complexes and two office buildings through a
transfer of ownership in full settlement of EP/5's liability under the Master
Loan.

During 1993, the major tenant who occupied 95% of the Sutter D Office Building,
one of the three EP/3 properties collateralizing the Master Loan, did not renew
its lease and vacated the building. EP/3 was unable to replace the tenant under
terms that were economically viable for the property and defaulted on the
approximately $2,100,000 third party mortgage debt secured by the Sutter D
Office Building. During 1994, the Sutter D Office Building serving as collateral
for the Master Loan was posted for foreclosure by the first lienholder. This
foreclosure had no gain or loss effect to the Partnership.

In November 1994, the Partnership entered into a settlement with EP/3 whereby
the Williamsburg Manor Apartments were deeded in lieu of foreclosure to the
Partnership and foreclosure proceedings were initiated by the Partnership on the
Sandpiper I and II Apartments, the remaining properties collateralizing the
Master Loan. The Partnership also assumed a note payable of approximately
$1,200,000 in exchange for full settlement of EP/3's liability for the Master
Loan and recognized a net loss of approximately $413,000 on the settlement of
the Master Loan at December 31, 1994.

As a result of the fact that: (1) EP/3 had no equity in the Sandpiper I & II
Apartments, considering the then estimated fair value of the property; (2)
proceeds for repayment of the portion of the Master Loan collateralized by the
Sandpiper I & II Apartments were expected to come only from the operations or
sale of the property; and (3) EP/3 effectively abandoned control of the
Sandpiper I & II Apartments when EP/3 and the Partnership executed the
settlement agreement in November 1994, whereby EP/3 agreed to transfer to the
Partnership the full and unrestricted right to possession, management, and
control of the property and not to contest, hinder or delay a judicial
foreclosure action initiated by the Partnership, the Partnership deemed the
Sandpiper I & II Apartments in-substance foreclosed at November 30, 1994.
Foreclosure proceedings were initiated in 1994 and completed in 1995. As a
result of the transactions described above, the Master Loan was settled in full
during 1994.

Upon the Partnership's formation in 1984, CCEC, a Colorado corporation, was the
corporate general partner. In 1988, through a series of transactions, Southmark
Corporation ("Southmark") acquired controlling interest in CCEC. In December
1988, CCEC filed for reorganization under Chapter 11 of the United States
Bankruptcy Code ("Chapter 11"). In 1990, as part of CCEC's reorganization plan,
CEI acquired CCEC's general partner interests in the Partnership and in 15 other
affiliated public limited partnerships (the "Affiliated Partnerships") and CEI
replaced CCEC as managing general partner in all 16 partnerships. The selection
of CEI as the sole managing general partner was approved by a majority of the
limited partners in the Partnership and in each of the Affiliated Partnerships
pursuant to a solicitation of the Limited Partners dated August 10, 1990. As
part of this solicitation, the Limited Partners also approved an amendment to
the Partnership Agreement to limit changes of control of the Partnership.

Prior to December 1994, all of CEI's outstanding stock was owned by GII Realty,
Inc. In December 1994, the parent of GII Realty, Inc., entered into a
transaction (the "Insignia Transaction") in which an affiliate of Insignia
Financial Group, Inc. ("Insignia") acquired an option (exercisable in whole or
in part from time to time) to purchase all of the stock of GII Realty, Inc. and,
pursuant to a partial exercise of such option, acquired 50.5% of that stock. As
part of the Insignia Transaction, the Insignia affiliate also acquired all of
the outstanding stock of Coventry Properties, Inc., a property management
entity. In addition, confidentiality, non-competition, and standstill
arrangements were entered into between certain of the parties. Those
arrangements, among other things, prohibit GII Realty's former sole shareholder
from purchasing Partnership Units for a period of three years. On October 24,
1995, the Insignia affiliate exercised the remaining portion of its option to
purchase all of the remaining outstanding capital stock of GII Realty, Inc. As
of December 31, 1998, Insignia Properties Trust, an affiliate of AIMCO, owned
100% of the outstanding stock of CEI.

At December 31, 1998, the Partnership owned seven apartment complexes located in
Florida, North Carolina, Washington, Michigan, Utah and Colorado, one office
building located in Florida and one shopping center in California, which range
in age from 13 to 30 years old. These properties are hereinafter referred to as
the "Partnership Properties". The General Partner of the Partnership intends to
maximize the operating results and, ultimately, the net realizable value of each
of the Partnership's properties in order to achieve the best possible return for
the investors. Such results may best be achieved holding and operating
properties or through property sales or exchanges, refinancings, debt
restructurings or relinquishment of the assets. The Partnership intends to
evaluate each of its holdings periodically to determine the most appropriate
strategy for each of the assets.

During the first quarter of 1998, an affiliate of the General Partner acquired
47,865.5 units in the Partnership as a result of a tender offer commenced in
December 1997. During July 1998, a different affiliate of the General Partner
(the "Purchaser") commenced a tender offer for limited partnership interests in
the Partnership. The Purchaser offered to purchase up to 125,000 of the
outstanding units of limited partnership interest in the Partnership at $100 per
Unit, net to the seller in cash. An affiliate of the General Partner acquired
28,039.3 additional units in the Partnership as a result of this tender offer.
At December 31, 1998, affiliates of AIMCO owned 124,973 Units of the Partnership
or 32.627%.

A further description of the Partnership's business is included in "Management's
Discussion and Analysis of financial condition and Results of Operations"
included in "Item 7." of this Form 10-K.

The Registrant has no employees. Management and administrative services are
provided by the General Partner and by agents retained by the General Partner.
Effective October 1, 1998, property management services were provided at the
Partnership's commercial property by an unrelated party.

The real estate business in which the Partnership is engaged is highly
competitive. There are other residential and commercial properties within the
market area of the Partnership's properties. The number and quality of
competitive properties, including those which may be managed by an affiliate of
the General Partner, in such market area could have a material effect on the
rental market for the apartments and commercial space at the Partnership's
properties and the rents that may be charged for such apartments or space.
While the General Partner and its affiliates are a significant factor in the
United States in the apartment industry, competition for apartments is local.
In addition, various limited partnerships have been formed by the General
Partner and/or affiliates to engage in business which may be competitive with
the Partnership.

Both the income and expenses of operating the remaining properties owned by the
Partnership are subject to factors outside of the Partnership's control, such as
an oversupply of similar properties resulting from overbuilding, increases in
unemployment or population shifts, reduced availability of permanent mortgage
financing, changes in zoning laws, or changes in patterns or needs of users. In
addition, there are risks inherent in owning and operating residential and
commercial properties because such properties are susceptible to the impact of
economic and other conditions outside of the control of the Partnership.

There have been, and it is possible there may be other, Federal, state and local
legislation and regulations enacted relating to the protection of the
environment. The Partnership is unable to predict the extent, if any, to which
such new legislation or regulations might occur and the degree to which such
existing or new legislation or regulations might adversely affect the properties
owned by the Partnership.

The Partnership monitors its properties for evidence of pollutants, toxins and
other dangerous substances, including the presence of asbestos. In certain
cases environmental testing has been performed which resulted in no material
adverse conditions or liabilities. In no case has the Partnership received
notice that it is a potentially responsible party with respect to an
environmental clean up site.

Transfer of Control

Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia Financial Group, Inc. and Insignia Properties Trust
merged into Apartment Investment and Management Company, a publicly traded real
estate investment trust, with AIMCO being the surviving corporation (the
"Insignia Merger"). As a result, AIMCO ultimately acquired a 100% ownership
interest in Insignia Properties Trust ("IPT"), the entity which controls the
General Partner. The General Partner does not believe that this transaction
will have a material effect on the affairs and operations of the Partnership.

Segments

Segment data for the years ended December 31, 1998, 1997 and 1996 is included
in "Item 8. Financial Statements - Note N" and is an integral part of the
Form 10-K.

ITEM 2. DESCRIPTION OF PROPERTIES

The following table sets forth the Registrant's investment in properties:

Date of
Property Purchase Type of Ownership Use

Cedar Rim 4/12/91 Fee ownership subject Apartment
New Castle, Washington to first mortgage. 104 units

Corporate Center 4/13/90 Fee ownership. Commercial
Tampa, Florida 108,000 s.f.

Hidden Cove by the Lake 3/23/90 Fee ownership subject Apartment
Belleville, Michigan to first mortgage. 120 units

Lamplighter Park 4/12/91 Fee ownership subject Apartment
Bellevue, Washington to first mortgage. 174 units

Park Capitol 4/13/90 Fee ownership subject Apartment
Salt Lake City, Utah to first mortgage. 135 units

Tamarac Village 6/10/92 Fee ownership subject Apartment
I,II,III, and IV to first mortgage. 564 units
Denver, Colorado

Williamsburg Manor 11/30/94 Fee ownership subject Apartment
Cary, North Carolina to first mortgage. 183 units

Sandpiper I & II 11/30/94 Fee ownership subject Apartment
St. Petersburg, Florida to first mortgage. 276 units

South City Business 2/14/96 Fee ownership. Commercial
Center, Chula Vista, 169,000 s.f.
California

SCHEDULE OF PROPERTIES:

Set forth below for each of the Registrant's properties is the gross carrying
value, accumulated depreciation, depreciable life, method of depreciation and
Federal tax basis.

Gross

Carrying Accumulated Federal

Property Value Depreciation Rate Method Tax Basis

(in thousands) (in thousands)

Cedar Rim $ 4,990 $ 1,905 3-20 yrs S/L $ 4,656

Corporate Center 3,555 1,569 5-20 yrs S/L 3,691

Hidden Cove 5,330 2,410 3-20 yrs S/L 4,106

Lamplighter Park 8,115 2,323 3-20 yrs S/L 6,748

Park Capitol 3,012 1,362 5-20 yrs S/L 2,269

Tamarac Village 14,899 4,105 5-20 yrs S/L 11,961

Williamsburg Manor 7,071 1,157 5-22 yrs S/L 6,114

Sandpiper I & II 8,030 1,286 5-22 yrs S/L 6,958

South City 4,636 390 5-25 yrs S/L 4,455

$59,638 $16,507 $50,958

See "Note A" of the Notes to Financial Statements included in "Item 8" for a
description of the Partnership's depreciation policy.

SCHEDULE OF PROPERTY INDEBTEDNESS:

The following table sets forth certain information relating to the loans
encumbering the Registrant's properties.

Principal Principal

Balance At Stated Balance

December 31, Interest Maturity Due At

Property 1998 Rate Date Maturity (1)

(in thousands) (in thousands)

Cedar Rim $ 2,000 7.33% 11/01/03 $ 2,000

Hidden Cove 2,200 7.33% 11/01/03 2,200

Lamplighter Park 3,500 7.33% 11/01/03 3,500

Park Capitol 2,725 6.95% 12/01/05 2,725

Tamarac Village 9,400 7.33% 11/01/03 9,400

Williamsburg Manor 4,150 6.95% 12/01/05 4,150

Sandpiper I & II 3,950 6.95% 12/01/05 3,950

$27,925 $27,925

(1) See "Item 8. Financial Statements and Supplementary Data - Note G" for
information with respect to the Registrant's ability to prepay the loans
and other specific details about the loans.

SCHEDULE OF RENTAL RATES AND OCCUPANCY:

Average annual rental rate and occupancy for 1998 and 1997 for each property.

Average Annual Average Annual

Rental Rates (1) Occupancy

Property 1998 1997 1998 1997

Cedar Rim $10,262 $ 9,324 94% 96%

Corporate Center 5.73 5.71 97% 99%

Hidden Cove 8,412 8,469 91% 91%

Lamplighter Park 9,436 8,804 96% 95%

Park Capitol 7,985 7,708 93% 97%

Tamarac Village 7,239 7,006 96% 94%

Williamsburg Manor 8,912 8,569 95% 97%

Sandpiper I & II 7,342 6,963 95% 95%

South City 6.83 6.60 92% 89%

(1) The average annual rental rates for Corporate Center and South City are per
square foot. The rates are per unit for the apartment complexes.

The General Partner attributes the occupancy decrease at Park Capital to more
limited access to the property due to road construction as Salt Lake City
prepares for the upcoming 2000 Winter Olympics.

As noted under "Item 1. Description of Business," the real estate industry is
highly competitive. The Partnership's properties are subject to competition
from other residential apartment complexes and commercial buildings in the area.
The General Partner believes that all of the properties are adequately insured.
The multifamily residential properties' lease terms are for one year or less.
No residential tenant leases 10% or more of the available rental space. All of
the properties are in good physical condition, subject to normal depreciation
and deterioration as is typical for assets of this type and age.

SCHEDULE OF LEASE EXPIRATIONS:

The following is a schedule of lease expirations for the years 1999 - 2008:

Corporate Number of % of Gross

Center Expirations Square Feet Annual Rent Annual Rent

(in thousands)

1999 9 34,720 $201 39.8%

2000 7 20,630 122 24.0%

2001 4 13,040 83 16.4%

2002 2 4,800 31 6.1%

2003 2 8,240 46 9.1%

2004 - 2008 0 0 0 0

Number of % of Gross

South City Expirations Square Feet Annual Rent Annual Rent

(in thousands)

1999 35 49,528 $380 34.7%

2000 15 43,723 266 24.4%

2001 11 20,335 150 13.8%

2002 2 4,115 33 3.0%

2003 1 1,405 12 1.1%

2004 - 2008 2 12,971 55 5.1%

No tenant at South City occupies 10% or more of the leasable square feet.

The following schedule reflects information on tenants occupying 10% or more of
the leasable square feet for Corporate Center:

Nature of Square Footage Annual Rent Lease

Business Leased Per Sq Ft. Expiration

Soil Testing 11,940 $4.96 02/28/99

SCHEDULE OF REAL ESTATE TAXES AND RATES:

Real estate taxes and rates for each property were:

1998 1998

Taxes Rate

(in thousands)

Cedar Rim $ 55 1.31%

Corporate Center 69 2.48%

Hidden Cove 68 4.69%

Lamplighter Park 75 1.16%

Park Capitol 40 .78%

Tamarac Village 140 .73%

Williamsburg Manor 75 1.22%

Sandpiper I & II 173 2.42%

South City 74 1.28%

CAPITAL IMPROVEMENTS

Cedar Rim

During 1998, the Partnership completed $147,000 of capital improvements at the
property, consisting primarily of carpet replacements, maintenance equipment and
deck repairs. These improvements were funded primarily from the property's
capital improvements escrow. Based on a report received from an independent
third party consultant analyzing necessary exterior improvements and estimates
made by the General Partner on interior improvements, it is estimated that the
property requires approximately $152,000 of capital improvements over the near
term. Capital improvements budgeted for, but not limited to, approximately
$115,000 are planned for 1999, consisting of kitchen cabinet and countertop
replacements, parking lot repairs and other building upgrades.

Corporate Center

During 1998, the Partnership spent $91,000 on capital improvements, which
consisted primarily of tenant improvements and roof replacements. These
improvements were funded from operating cash flow. Based on a report received
from an independent third party consultant analyzing necessary exterior
improvements and estimates made by the General Partner on interior improvements,
it is estimated that the property requires approximately $28,000 of capital
improvements over the near term. Capital improvements budgeted for, but not
limited to, approximately $91,000 are planned for 1999, consisting of tenant
improvements, roof replacement and heating and air conditioning units.

Hidden Cove

During 1998, the Partnership spent $100,000 on capital improvements, consisting
primarily of carpet replacement, parking lot repairs and heating and air
conditioning units. These improvements were funded from replacement reserves.
Based on a report received from an independent third party consultant analyzing
necessary exterior improvements and estimates made by the General Partner on
interior improvements, it is estimated that the property requires approximately
$164,000 of capital improvements over the near term. Capital improvements
budgeted for, but not limited to, approximately $228,000 are planned for 1999,
consisting of building structural improvements, carpet, kitchen cabinets,
landscaping and appliances.

Lamplighter Park

In 1998, the Partnership spent $112,000 on capital improvements, consisting
primarily of roof replacement, handicapped/ADA renovations and carpeting. These
improvements were funded primarily with the property's capital improvement and
replacement reserve escrows. Based on a report received from an independent
third party consultant analyzing necessary exterior improvements and estimates
made by the General Partner on interior improvements, it is estimated that the
property requires approximately $200,000 of capital improvements over the near
term. Capital improvements budgeted for, but not limited to, approximately
$140,000 are planned for 1999, consisting of carpet replacement, landscaping,
pool repairs and other building improvements.

Park Capital

In 1998, the Partnership spent $94,000 on capital improvements consisting of
carpet replacement, swimming pool repairs and other building improvements.
These improvements were financed with operating cash flow. Based on a report
received from an independent third party consultant analyzing necessary exterior
improvements and estimates made by the General Partner on interior improvements,
it is estimated that the property requires approximately $165,000 of capital
improvements over the near term. Capital improvements budgeted for, but not
limited to, approximately $112,000 are planned for 1999, consisting of carpet
replacement and structural improvements.

Tamarac Village

During 1998, the Partnership spent $420,000 on capital improvements consisting
of siding, electrical upgrades, heat and air conditioning units, appliances,
carpet and vinyl replacement, office furniture and equipment and other building
improvements. These expenditures were funded from replacement reserves and
operating cash flow. Based on a report received from an independent third party
consultant analyzing necessary exterior improvements and estimates made by the
General Partner on interior improvements, it is estimated that the property
requires approximately $471,000 of capital improvements over the near term.
Capital improvements budgeted for, but not limited to, approximately $351,000
are planned for 1999, consisting of carpet replacement, outside lighting,
parking lot repairs, pool repairs, appliances, roof replacement and other
structural improvements.

Williamsburg Manor

In 1998, the Partnership spent $144,000 on capital improvements consisting of
swimming pool repairs, carpet and vinyl replacement and appliances. These
improvements were funded primarily from the replacement reserve. Based on a
report received from an independent third party consultant analyzing necessary
exterior improvements and estimates made by the General Partner on interior
improvements, it is estimated that the property requires approximately $205,000
of capital improvements over the near term. Capital improvements budgeted for,
but not limited to, approximately $134,000 are planned for 1999, including
carpet replacement, landscaping, outside lighting, parking lot repairs and pool
repairs.

Sandpiper I and II

In 1998, the Partnership spent $188,000 on capital improvements consisting
primarily of carpet and vinyl replacement, kitchen cabinet and countertop
replacement, roof replacement, air conditioning units and appliances. These
improvements were funded from operating cash flow. Based on a report received
from an independent third party consultant analyzing necessary exterior
improvements and estimates made by the General Partner on interior improvements,
it is estimated that the property requires approximately $611,000 of capital
improvements over the near term. Capital improvements budgeted for, but not
limited to, $579,000 are planned for 1999, consisting of carpet and vinyl
replacement, kitchen cabinets and countertops, landscaping, parking lot repairs,
pool repairs, roof replacement and other structural upgrades.

South City

In 1998, the Partnership spent $140,000 on capital improvements consisting
primarily of tenant improvements and parking lot repairs. These expenditures
were funded from operating cash flow. Based on a report received from an
independent third party consultant analyzing necessary exterior improvements and
estimates made by the General Partner on interior improvements, it is estimated
that the property requires approximately $40,000 of capital improvements over
the near term. Capital improvements budgeted for, but not limited to,
approximately $100,000 are planned for 1999, consisting of tenant improvements
and entrances.

The capital improvements planned for 1999 at the Partnership's properties will
be made only to the extent of cash available from operations and Partnership
reserves.

ITEM 3. LEGAL PROCEEDINGS

In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. in Superior Court of the State of California for
the County of San Mateo. The Plaintiffs named as defendants, among others, the
Partnership, the General Partner and several of their affiliated partnerships
and corporate entities. The complaint purports to assert claims on behalf of a
class of limited partners and derivatively on behalf of a number of limited
partnerships (including the Partnership) which are named as nominal defendants,
challenging the acquisition by Insignia and entities which were, at the time,
affiliates of Insignia ("Insignia Affiliates") of interests in certain general
partner entities, past tender offers by Insignia Affiliates to acquire limited
partnership units, the management of partnerships by Insignia Affiliates, as
well as a recently announced agreement between Insignia and AIMCO. The
complaint seeks monetary damages and equitable relief, including judicial
dissolution of the Partnership. On June 25, 1998, the General Partner filed a
motion seeking dismissal of the action. In lieu of responding to the motion,
the plaintiffs have filed an amended complaint. The General Partner has filed
demurrers to the amended complaint, which were heard during February 1999. No
ruling on such demurrers has been received. The General Partner does not
anticipate that costs associated with this case, if any, to be material to the
Partnership's overall operations.

In March 1998, a limited partner of the Partnership commenced an action entitled
Bond Purchase LLC. v. Concap Equities, Inc. c/o Consolidated Capital
Institutional Properties, III. The complaint claims that the General Partner
had breached certain contractual and fiduciary duties allegedly owed to the
claimant. The General Partner is unable to determine the costs associated
with this claim at this time.

On July 30, 1998, certain entities claiming to own limited partnership interests
in certain limited partnerships whose general partners were, at the time,
affiliates of Insignia filed a complaint entitled Everest Properties LLC. v.
Insignia Financial Group, Inc. in the Superior Court of the State of California,
County of Los Angeles. The action involves 44 real estate limited partnerships
(including the Partnership) in which the plaintiffs allegedly own interests and
which Insignia Affiliates allegedly manage or control (the "Subject
Partnerships"). This case was settled on March 3, 1999. The Partnership is
responsible for a portion of the settlement costs. The expense will not have a
material effect on the Partnership's net income.

The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.

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

During the quarter ended December 31, 1998, no matter was submitted to a vote of
the Unit holders through the solicitation of proxies or otherwise.

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDERS
MATTERS

The Partnership, a publicly held limited partnership, sold 383,033 limited
partnership units aggregating $95,758,250. The Partnership currently has 13,761
holders of record of Limited Partnership Units owning an aggregate of 383,033
units. Affiliates of the General Partner owned 124,973 units or 32.627% at
December 31, 1998. No public trading market has developed for the Units, and it
is not anticipated that such a market will develop in the future.

The Partnership made distributions of approximately $1,980,000 ($5.12 per
limited partnership unit), $14,007,000 ($36.13 per limited partnership unit) and
$7,318,000 ($18.98 per limited partnership unit) for the years ended December
31, 1998, 1997 and 1996, respectively which were generated from operations. In
addition, distributions of approximately $11,569,000 ($29.83 per limited
partnership unit) and $2,497,000 were made for the years ended December 31, 1997
and 1996, respectively and were generated from surplus funds. Future cash
distributions will depend on the levels of cash generated from operations,
refinancings, property sales and the availability of cash reserves as discussed
in "Note I - Commitment" in "Item 8" of this Form 10-K. The Partnership's
distribution policy will be reviewed on a quarterly basis. Subsequent to the
Partnership's fiscal year end, a distribution from operations of approximately
$4,113,000 ($10.63 per limited partnership unit) and from surplus funds from the
sale of City Heights of approximately $5,787,000 ($14.95 per limited partnership
unit) were paid during January 1999. There can be no assurance, however, that
the Partnership will generate sufficient funds from operations, after required
capital expenditures, to permit additional distributions to its partners in 1999
or subsequent periods. See "Item 7. Management Discussion and Analysis of
Financial Condition and Results of Operations" for a description of restrictions
on the payment of distributions as a result of certain reserve requirements.

ITEM 6. SELECTED FINANCIAL DATA

The following table sets forth a summary of certain financial data for the
Partnership. This summary should be read in conjunction with the Partnership's
financial statements and notes thereto appearing in "Item 8. Financial
Statements and Supplementary Data."

For the Years Ended December 31,

STATEMENTS OF OPERATIONS 1998(1) 1997 1996 1995 1994

(in thousands, except per unit data)

Revenues $ 20,964 $ 15,112 $ 13,881 $ 12,569 $ 10,814

Total expenses (12,756) (13,176) (12,728) (14,175) (10,929)

Income (loss) before extraordinary item 8,208 1,936 1,153 (1,606) (115)

Net loss on sales of securities -- -- -- -- (1)

Net loss on acquisition of real estate -- -- -- -- (413)

Income (loss) before

extraordinary item 8,208 1,936 1,153 (1,606) (529)

Extraordinary item (325) -- -- (18) --

Net income (loss) $ 7,883 $ 1,936 $ 1,153 $ (1,624) $ (529)

Net income (loss) per Limited

Partnership Unit:

Income (loss) from operations $ 21.21 $ 5.00 $ 2.98 $ (4.15) $ (.30)

Net loss on acquisition of real estate -- -- -- -- (1.07)

Income (loss) before extraordinary item 21.21 5.00 2.98 (4.15) (1.37)

Extraordinary item (.84) -- -- (.05) --

Net income (loss) $ 20.37 $ 5.00 $ 2.98 $ (4.20) $ (1.37)

Distributions per Limited

Partnership Unit $ 5.12 $ 36.13 $ 18.98 $ 9.42 $ 9.12

Limited Partnership

Units outstanding 383,033 383,033 383,033 383,033 383,033

</TABLE>

(1) See "Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations" for discussion of sale of City Heights.

As of December 31,

BALANCE SHEETS 1998 1997 1996 1995 1994

(in thousands)

Total assets $60,779 $ 57,086 $ 69,537 $ 62,863 $ 61,910

Notes payable $27,925 $ 30,525 $ 30,525 $ 17,995 $ 12,318

ITEM 7.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The matters discussed in this Form 10-K contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the disclosure
contained in this Form 10-K and the other filings with the Securities and
Exchange Commission made by the Registrant from time to time. The discussions
of the Registrant's business and results of operations, including forward-
looking statements pertaining to such matters, does not take into account the
effects of any changes to the Registrant's business and results of operations.
Accordingly, actual results could differ materially from those projected in the
forward-looking statements as a result of a number of factors, including those
identified herein.

This item should be read in conjunction with the financial statements and other
items contained elsewhere in this report.

Results of Operations

1998 Compared with 1997

The Partnership had net income of approximately $7,883,000 for the year ended
December 31, 1998 compared to approximately $1,936,000 for the year ended
December 31, 1997. The increase in net income is primarily attributable to an
increase in revenues and to a lesser extent, a decrease in expenses. The
increase in net income was offset by an extraordinary loss on early
extinquishment of debt as a result of the sale of City Heights. Revenues
increased primarily due to a gain realized on the sale of City Heights in
November 1998 and to a lessor extent, increased rental revenue. Rental revenue
increased as a result of improved occupancy at Lamplighter Park, Tamarac Village
and South City as well as increased rental rates at most of the Parnership's
investment properties, which more than offset decreases in occupancy at Cedar
Rim, Corporate Center, Park Capitol, and Williamsburg Manor. These increases in
revenue were partially offset by a decrease in other income. Other income
decreased as a result of reduced interest income due to lower average cash
balances resulting from larger distributions paid to the partners in 1997.
Total expenses decreased primarily as a result of a decrease in operating
expenses, partially offset by increases in general and administrative expenses
and depreciation expense. Operating expenses decreased primarily due to a
reduction in major repairs and maintenance expenses at Tamarac Village, Park
Capital, City Heights and Williamsburg Manor. Depreciation expense increased due
to the increase in the depreciable asset base at several of the Partnership's
properties from capital additions of approximately $1,590,000 and $1,692,000
during 1998 and 1997, respectively. General and administrative expenses
increased due primarily to increased printing and mailing costs related to
correspondence with the limited partners. Included in general and administrative
expenses at December 31, 1998, 1997 and 1996 are reimbursements to the General
Partner allowed under the Partnership Agreement associated with its management
of the Partnership. In addition, costs associated with the quarterly and annual
communications with investors and regulatory agencies and the annual audit
required by the Partnership Agreement are included.

In November 1998, City Heights Apartments, located in Seattle, Washington, was
sold to an unaffiliated party for $9,300,000. After payoff of the debt and
payment of closing expenses, the net sales proceeds received by the Partnership
were approximately $5,787,000. The proceeds were distributed to the partners in
January 1999. For financial statement purposes, the sale resulted in a gain of
approximately $5,482,000. The Partnership also recorded an extraordinary loss on
early extinguishment of debt of approximately $325,000 as the result of payment
of prepayment penalties and the write-off of the remaining unamortized loan
costs.

The following unaudited pro-forma information reflects the operations of the
Partnership for the years ended December 31, 1998, 1997 and 1996 as if City
Heights had been sold January 1, 1996.

Proforma Results of Operations
for the years ended December 31,
1998 1997 1996
(in thousands, except unit data)
(unaudited)
Revenues $14,437 $14,024 $12,896
Net income 2,487 1,723 961
Income per Limited Partnership Unit 6.43 4.45 2.48

1997 Compared with 1996

The Partnership had net income of approximately $1,936,000 for the year ended
December 31, 1997 compared to approximately $1,153,000 for the year ended
December 31, 1996. The increase in rental income was attributable to an increase
in revenues which was offset by an increase in expenses. The increase in
revenues was primarily attributable to increased rental income resulting from
improved occupancy and increased rental rates at several properties. In
addition, other income increased as a result of increased tenant charges,
including lease cancellation, application, and cleaning fees, as well as greater
interest income earned on increased average cash balances. Total revenues were
positively affected by South City's revenue for the full year ended December 31,
1997 compared to the period from February 14, 1996, the date of South City's
acquisition, to December 31, 1996. Total expenses increased as a result of
increases in interest expense and depreciation expense. The increase in interest
expense is due primarily to the refinancing of Tamarac Village and Lamplighter
Park and new debt on Hidden Cove, Cedar Rim and City Heights, whose debt
balances increased approximately $12,500,000 in November of 1996. Depreciation
expense increased due to the increase in the depreciable asset base at several
of the Partnership's properties from capital additions of approximately
$1,692,000 and $1,699,000 during 1997 and 1996, respectively. The increase in
expenses was offset by a decrease in general and administrative expenses for the
year ended December 31, 1997, due to a decrease in professional fees and expense
reimbursements and a decrease in operating expenses due to a decrease in
maintenance costs included in operating expense. The decrease in maintenance
expense is due to various rehabilitation projects in 1996 at Williamsburg Manor,
Lamplighter, Cedar Rim, and City Heights.

As part of the ongoing business plan of the Partnership, the General Partner
monitors the rental market environment of each of its investment properties to
assess the feasibility of increasing rents, maintaining or increasing occupancy
levels and protecting the Partnership from increases in expenses. As part of
this plan, the General Partner attempts to protect the Partnership from the
burden of inflation-related increases in expenses by increasing rents and
maintaining a high overall occupancy level. However, due to changing market
conditions, which can result in the use of rental concessions and rental
reductions to offset softening market conditions, there is no guarantee that the
General Partner will be able to sustain such a plan.

Liquidity and Capital Resources

At December 31, 1998, the Partnership held cash and cash equivalents of
approximately $14,189,000 compared to approximately $5,054,000 at December 31,
1997. The increase in cash and cash equivalents is due to $6,117,000 provided
by operating activities and $7,857,000 provided by investing activities, which
was partially offset by $4,839,000 used in financing activities. Cash provided
by investing activities consisted of sale proceeds from the sale of City
Heights, proceeds from an investment that matured in May of 1998 and withdrawals
from escrow accounts maintained by the mortgage lender offset by capital
improvements. Cash used in financing activities consisted of the payoff of
mortgage debt at City Heights as a result of the sale, prepayment penalties
incurred to extinguish City Height's debt and distributions to partners. The
Partnership invests its working capital reserves in money market accounts.

The sufficiency of existing liquid assets to meet future liquidity and capital
expenditure requirements is directly related to the level of capital
expenditures required at the properties to adequately maintain the physical
assets and other operating needs of the Registrant and to comply with Federal,
state, and local legal and regulatory requirements. The Partnership has
budgeted, but is not limited to, approximately $1,850,000 in capital
improvements for all of the Partnership's properties in 1999. Budgeted capital
improvements at Cedar Rim include kitchen cabinets and countertops, parking lot
repairs and other building upgrades. Budgeted improvements at Corporate Center
include tenant improvements, roof replacement and heating and air conditioning
units. Budgeted improvements at Hidden Cove include carpet replacement, kitchen
cabinets, landscaping, appliances and other structural improvements. Budgeted
improvements at Lamplighter Park include carpet replacement, outside lighting,
landscaping, pool repairs, and other building improvements. Budgeted
improvements at Park Capital include carpet replacement and structural
improvements. Budgeted improvements at Tamarac Village include carpet
replacement, appliances, parking lot repairs, pool repairs, roof replacement and
other structural improvements. Budgeted improvements at Williamsburg Manor
include carpet replacement, landscaping, outside lighting, parking lot repairs
and pool repairs. Budgeted improvements at Sandpiper include carpet and vinyl
replacement, kitchen cabinets and countertops, landscaping, parking lot repairs,
pool repairs, roof replacements and other structural upgrades. Budgeted
improvements at South City Business Center include tenant improvements and
entrances. The capital expenditures will be incurred only if cash is available
from operations or from Partnership reserves. To the extent that such budgeted
capital improvements are completed, the Registrant's distributable cash flow, if
any, may be adversely affected at least in the short term.

The Partnership is required by the Partnership Agreement to maintain working
capital reserves for contingencies of not less than 5% of Net Invested Capital
as defined in the Partnership Agreement. In the event expenditures are made
from this reserve, operating revenue shall be allocated to such reserve to the
extent necessary to maintain the foregoing level. Reserves, including cash and
securities available for sale, totaling approximately $14.2 million at December
31, 1998, were greater than the reserve requirement of approximately $3.4
million.

The Partnership's current assets are thought to be sufficient for any near-term
needs (exclusive of capital improvements) of the Registrant. The mortgage
indebtedness of approximately $27,925,000 has maturity dates ranging from 2003
to 2005. The General Partner will attempt to refinance such indebtedness and/or
sell the properties prior to such maturity dates. If a property cannot be
refinanced or sold for a sufficient amount, the Registrant will risk losing such
property through foreclosure.

Cash distributions from operations of approximately $1,980,000, $14,007,000 and
$7,318,000 were made during the years ended December 31, 1998, 1997 and 1996,
respectively. During the first quarter of fiscal 1999, the Partnership made
distributions in the amount of $4,113,000 from operations and $5,787,000 from
sales proceeds from City Heights. The Partnership's distribution policy is
reviewed on a quarterly basis. There can be no assurance, however, that the
Partnership will generate sufficient funds from operations after required
capital expenditures to permit further distributions to its partners in 1999 or
subsequent periods.

Year 2000 Compliance

General Description of the Year 2000 Issue and the Nature and Effects of the
Year 2000 on Information Technology (IT) and Non-IT Systems

The Year 2000 issue is the result of computer programs being written using two
digits rather than four digits to define the applicable year. The Partnership
is dependent upon the General Partner and its affiliates for management
and administrative services ("Managing Agent"). Any of the computer programs or
hardware that have date-sensitive software or embedded chips may recognize a
date using "00" as the year 1900 rather than the year 2000. This could result
in a system failure or miscalculations causing disruptions of operations,
including, among other things, a temporary inability to process transactions,
send invoices, or engage in similar normal business activities.

Over the past two years, the Managing Agent has determined that it will be
required to modify or replace significant portions of its software and certain
hardware so that those systems will properly utilize dates beyond December 31,
1999. The Managing Agent presently believes that with modifications or
replacements of existing software and certain hardware, the Year 2000 issue can
be mitigated. However, if such modifications and replacements are not made or
not completed in time, the Year 2000 issue could have a material impact on the
operations of the Partnership.

The Managing Agent's plan to resolve Year 2000 issues involves four Phases:
assessment, remediation, testing, and implementation. To date, the Managing
Agent has fully completed its assessment of all the information systems that
could be significantly affected by the Year 2000, and has begun the remediation,
testing and implementation phases on both hardware and software systems.
Assessments are continuing in regards to embedded systems. The status of each
is detailed below.

Status of Progress in Becoming Year 2000 Compliant, Including Timetable for
Completion of Each Remaining Phase

Computer Hardware:

During 1997 and 1998, the Managing Agent identified all of the computer systems
at risk and formulated a plan to repair or replace each of the affected systems.
In August 1998, the mainframe system used by the Managing Agent became fully
functional. In addition to the mainframe, PC-based network servers and routers
and desktop PCs were analyzed for compliance. The Managing Agent has begun to
replace each of the non-compliant network connections and desktop PCs and, as of
December 31, 1998, had completed approximately 75% of this effort.

The total cost to the Managing Agent to replace the PC-based network servers,
routers and desktop PCs is expected to be approximately $1.5 million of which
$1.3 million has been incurred to date. The remaining network connections and
desktop PCs are expected to be upgraded to Year 2000 compliant systems by March
31, 1999.

Computer software:

The Managing Agent utilizes a combination of off-the-shelf, commercially
available software programs as well as custom-written programs that are designed
to fit specific needs. Both of these types of programs were studied, and
implementation plans written and executed with the intent of repairing or
replacing any non-compliant software programs.

During 1998, the Managing Agent began converting the existing property
management and rent collection systems to its management properties Year 2000
compliant systems. The estimated additional costs to convert such systems at
all properties, is $200,000, and the implementation and the testing process is
expected to be completed by March 31, 1999.

The final software area is the office software and server operating systems.
The Managing Agent has upgraded all non-compliant office software systems on
each PC and has upgraded 80% of the server operating systems. The remaining
server operating systems are planned to be upgraded to be Year 2000 compliant by
March 31, 1999.

Operating Equipment:

The Managing Agent has operating equipment, primarily at the property sites,
which needed to be evaluated for Year 2000 compliance. In September 1997, the
Managing Agent began taking a census and inventory of embedded systems
(including those devices that use time to control systems and machines at
specific properties, for example elevators, heating, ventilating, and air
conditioning systems, security and alarm systems, etc.).

The Managing Agent has chosen to focus its attention mainly upon security
systems, elevators, heating, ventilating and air conditioning systems, telephone
systems and switches, and sprinkler systems. While this area is the most
difficult to fully research adequately, management has not yet found any major
non-compliance issues that put the Managing Agent at risk financially or
operationally. The Managing Agent intends to have a third-party conduct an
audit of these systems and report their findings by March 31, 1999.

Any of the above operating equipment that has been found to be non-compliant to
date has been replaced or repaired. To date, these have consisted only of
security systems and phone systems. As of December 31, 1998 the Managing Agent
has evaluated approximately 86% of the operating equipment for the Year 2000
compliance.

The total cost incurred for all properties managed by the Managing Agent as of
December 31, 1998 to replace or repair the operating equipment was approximately
$400,000. The Managing Agent estimates the cost to replace or repair any
remaining operating equipment is approximately $325,000, which is expected to be
completed by April 30, 1999.

The Managing Agent continues to have "awareness campaigns" throughout the
organization designed to raise awareness and report any possible compliance
issues regarding operating equipment within our enterprise.

Nature and Level of Importance of Third Parties and Their Exposure to the Year
2000

The Managing Agent continues to conduct surveys of its banking and other vendor
relationships to assess risks regarding their Year 2000 readiness. The Managing
Agent has banking relationships with three major financial institutions, all of
which have indicated their compliance efforts will be complete before May 1999.
The Managing Agent has updated data transmission standards with two of the three
financial institutions. The Managing Agent's contingency plan in this regard is
to move accounts from any institution that cannot be certified Year 2000
compliant by June 1, 1999.

The Partnership does not rely heavily on any single vendor for goods and
services, and does not have significant suppliers and subcontractors who share
information systems (external agent). To date the Partnership is not aware of
any external agent with a Year 2000 compliance issue that would materially
impact the Partnership's results of operations, liquidity, or capital resources.
However, the Partnership has no means of ensuring that external agents will be
Year 2000 compliant.

The Managing Agent does not believe that the inability of external agents to
complete their Year 2000 remediation process in a timely manner will have a
material impact on the financial position or results of operations of the
Partnership. However, the effect of non-compliance by external agents is not
readily determinable.

Costs to Address Year 2000

The total cost of the Year 2000 project to the Managing Agent is estimated at
$3.5 million and is being funded from operating cash flows. To date, the
Managing Agent has incurred approximately $2.8 million ($0.6 million expensed
and $2.2 million capitalized for new systems and equipment) related to all
phases of the Year 2000 project. Of the total remaining project costs,
approximately $0.5 million is attributable to the purchase of new software and
operating equipment, which will be capitalized. The remaining $0.2 million
relates to repair of hardware and software and will be expensed as incurred.
The Partnership's portion of these costs are not material.

Risks Associated with the Year 2000

The Managing Agent believes it has an effective program in place to resolve the
Year 2000 issue in a timely manner. As noted above, the Managing Agent has not
yet completed all necessary phases of the Year 2000 program. In the event that
the Managing Agent does not complete any additional phases, certain worst case
scenarios could occur. The worst case scenarios could include elevators,
security and heating, ventilating and air conditioning systems that read
incorrect dates and operate with incorrect schedules (e.g., elevators will
operate on Monday as if it were Sunday). Although such a change would be
annoying to residents, it is not business critical.

In addition, disruptions in the economy generally resulting from Year 2000
issues could also adversely affect the Partnership. The Partnership could be
subject to litigation for, among other things, computer system failures,
equipment shutdowns or failure to properly date business records. The amount of
potential liability and lost revenue cannot be reasonably estimated at this
time.

Contingency Plans Associated with the Year 2000

The Managing Agent has contingency plans for certain critical applications and
is working on such plans for others. These contingency plans involve, among
other actions, manual workarounds and selecting new relationships for such
activities as banking relationships and elevator operating systems.

ITEM 7A. MARKET RISK FACTORS

The Partnership is exposed to market risks from adverse changes in interest
rates. In this regard, changes in U.S. interest rates affect the interest
earned on the Partnership's cash and cash equivalents as well as interest paid
on its indebtedness. As a policy, the Partnership does not engage in speculative
or leveraged transactions, nor does it hold or issue financial instruments for
trading purposes. The Partnership is exposed to changes in interest rates
primarily as a result of its borrowing activities used to maintain liquidity and
fund business operations. To mitigate the impact of fluctuations in U.S.
interest rates, the Partnership maintains its debt as fixed rate in nature by
borrowing on a long-term basis. Based on interest rates at December 31, 1998, a
1% increase or decrease in market interest rates would not have a material
impact on the Partnership.

The following table summarizes the Partnership's debt obligations at December
31, 1998. The interest rates represent the weighted-average rates. The fair
value of the Partnership's debt approximates its carrying amount as of December
31, 1998.

Principal amount by expected maturity:

Long Term Debt
Fixed Rate Debt Average Interest Rate
(in thousands)
1999 $ -- --
2000 -- --
2001 -- --
2002 -- --
2003 17,100 7.33%
Thereafter 10,825 6.95%
Total $27,925 7.18%

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3

LIST OF FINANCIAL STATEMENTS

Report of Ernst & Young, LLP, Independent Auditors

Balance Sheets - December 31, 1998 and 1997

Statements of Operations - Years Ended December 31, 1998, 1997 and 1996

Statements of Changes in Partners' Capital (Deficit) - Years Ended December 31,
1998, 1997 and 1996

Statements of Cash Flows - Years Ended December 31, 1998, 1997 and 1996

Notes to Financial Statements

Schedules are not submitted because either they are not applicable or the
information required is included in the Financial Statements, including the
notes thereto.

Report of Ernst & Young LLP, Independent Auditors

The Partners
Consolidated Capital Institutional Properties/3

We have audited the accompanying balance sheets of Consolidated Capital
Institutional Properties/3 as of December 31, 1998 and 1997, and the related
statements of operations, changes in partners' capital (deficit) and cash flows
for each of the three years in the period ended December 31, 1998. These
financial statements are the responsibility of the Partnership's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by the
Partnership's management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Consolidated Capital
Institutional Properties/3 as of December 31, 1998 and 1997, and the results of
its operations and its cash flows for each of the three years in the period
ended December 31, 1998 in conformity with generally accepted accounting
principles.

/s/ERNST & YOUNG LLP

Greenville, South Carolina
March 3, 1999

CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3

BALANCE SHEETS
(in thousands, except unit data)

Years Ended December 31,

1998 1997

Assets

Cash and cash equivalents $ 14,189 $ 5,054

Receivables and deposits 1,266 960

Restricted escrows 1,440 2,141

Other assets 753 1,079

Investment properties: (Notes A, G, and L)

Land 11,428 12,371

Buildings and related personal property 48,210 50,955

59,638 63,326

Less accumulated depreciation (16,507) (15,474)

43,131 47,852

$ 60,779 $ 57,086

Liabilities and Partners' Capital (Deficit)

Liabilities

Accounts payable $ 161 $ 172

Tenant security deposit liabilities 435 460

Accrued property taxes 254 264

Other liabilities 876 440

Mortgage notes payable (Note G) 27,925 30,525

29,651 31,861

Partners' Capital (Deficit)

General partner's (530) (589)

Limited partners' (383,033 units outstanding) 31,658 25,814

31,128 25,225

$ 60,779 $ 57,086

See Accompanying Notes to Financial Statements

CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3

STATEMENTS OF OPERATIONS
(in thousands, except unit data)

For the Years Ended December 31,

1998 1997 1996

Revenues:

Rental income $14,326 $13,805 $12,815

Other income 1,156 1,307 952

Gain on casualty events (Note D) -- -- 114

Gain on sale of investment property (Note F) 5,482 -- --

Total revenues 20,964 15,112 13,881

Expenses:

Operating 6,044 6,619 6,926

General and administrative 600 501 618

Depreciation 2,988 2,852 2,741

Interest 2,295 2,316 1,573

Property taxes 829 888 870

Total expenses 12,756 13,176 12,728

Income before extraordinary item 8,208 1,936 1,153

Extraordinary loss on early extinguishment

of debt (Note F) (325) -- --

Net income $ 7,883 $ 1,936 $ 1,153

Net income allocated to general partner (1%) $ 79 $ 19 $ 12

Net income allocated to limited partners (99%) 7,804 1,917 1,141

$ 7,883 $ 1,936 $ 1,153

Net income per Limited Partnership Unit:

Income before extraordinary item $ 21.21 $ 5.00 $ 2.98

Extraordinary item (.84) -- --

Net income $ 20.37 $ 5.00 $ 2.98

Distributions per Limited Partnership Unit $ 5.12 $ 36.13 $ 18.98

See Accompanying Notes to Financial Statements

CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3

STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)

For the Years Ended December 31, 1998, 1997 and 1996
(in thousands, except unit data)

Limited

Partnership General Limited

Units Partner's Partners' Total

Original capital contributions 383,033 $ 1 $ 95,758 $ 95,759

(Deficit) capital at 383,033 $ (407) $ 43,868 $ 43,461

December 31, 1995

Net income for the year ended

December 31, 1996 -- 12 1,141 1,153

Distributions to partners -- (48) (7,270) (7,318)

(Deficit) capital at

December 31, 1996 383,033 (443) 37,739 37,296

Net income for the year ended

December 31, 1997 -- 19 1,917 1,936

Distributions to partners -- (165) (13,842) (14,007)

(Deficit) capital at

December 31, 1997 383,033 (589) 25,814 25,225

Net income for the year ended

December 31, 1998 -- 79 7,804 7,883

Distribution to partners -- (20) (1,960) (1,980)

(Deficit) capital at

December 31, 1998 383,033 $ (530) $ 31,658 $ 31,128

See Accompanying Notes to Financial Statements

CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3

STATEMENTS OF CASH FLOWS
(in thousands)

For the Years Ended December 31,

1998 1997 1996

Cash flows from operating activities:

Net income $ 7,883 $ 1,936 $ 1,153

Adjustments to reconcile net income

to net cash provided by operating activities:

Depreciation 2,988 2,852 2,741

Amortization of lease commissions

and loan costs 159 146 68

Loss (gain) on casualty event -- 8 (114)

Loss on disposal of property 58 41 149

Gain on sale of investment property (5,482) -- --

Extraordinary loss on extinguishment of debt 325 -- --

Changes in accounts:

Receivables and deposits (205) 236 (36)

Other assets 1 (60) (9)

Accounts payable (11) (408) (201)

Tenant security deposit liability (25) 26 23

Property taxes (10) 81 6

Other liabilities 436 (79) 140

Net cash provided by

operating activities 6,117 4,779 3,920

Cash flows from investing activities:

Property improvements and replacements (1,590) (1,692) (1,699)

Net receipts from (deposits to)

restricted escrows 701 33 (986)

Proceeds from sale of investment property 8,646 -- --

Proceeds from sales of investments 100 -- --

Net cash received in foreclosure -- -- 74

Net insurance proceeds from casualty events -- 126 --

Dividends received -- 4 --

Net cash provided by (used in)

investing activities 7,857 (1,529) (2,611)

See Accompanying Notes to Financial Statements

CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3

STATEMENTS OF CASH FLOWS (continued)
(in thousands)

For the Years Ended December 31,

1998 1997 1996

Cash flows from financing activities:

Payments on mortgage notes payable $ -- $ -- $ (158)

Proceeds from refinancing -- -- 19,700

Repayment of mortgage notes payable (2,600) -- (7,012)

Loan costs paid -- (2) (579)

Debt extinguishment costs (259) -- --

Partners' distributions (1,980) (14,007) (7,318)

Net cash (used in) provided by

financing activities (4,839) (14,009) 4,633

Net increase (decrease) in cash and

cash equivalents 9,135 (10,759) 5,942

Cash and cash equivalents at beginning of year 5,054 15,813 9,871

Cash and cash equivalents at end of year $ 14,189 $ 5,054 $ 15,813

Supplemental disclosure of cash

flow information:

Cash paid for interest $ 2,193 $ 2,196 $ 1,372

At December 31, 1998, in connection with a fire at Lake Villa Apartments,
property improvements and replacements and receivables and deposits were
adjusted by $101,000 for non-cash activity.

At December 31, 1996, in connection with a fire at Lamplighter Park, property
improvements and replacements, receivables and deposits, and accounts payable
were adjusted $134,000, $265,000 and $269,000, respectively, for non-cash
activity.

Also, notes receivable and property improvements and replacements were adjusted
by $4,400,000 and $4,383,000 to reflect the acquisition of South City through
foreclosure of the note receivable (see "Note F").

See Accompanying Notes to Financial Statements

CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3

NOTES TO FINANCIAL STATEMENTS

December 31, 1998

NOTE A - ORGANIZATION OF SIGNIFICANT ACCOUNTING POLICIES

Organization:

Consolidated Capital Institutional Properties/3 (the "Partnership" or the
"Registrant"), a California limited partnership, was formed on May 23, 1984, to
lend funds through non-recourse notes with participation interests (the "Master
Loan"). The loans were made to, and the real properties that secure the Master
Loan were purchased and owned by, ConCap Equity Partners/3, ConCap Equity
Partners/4, and ConCap Equity Partners/5, ("EP/3", "EP/4", and "EP/5",
respectively), California limited partnerships, in which certain of the partners
were former shareholders and former management of Consolidated Capital Equities
Corporation ("CCEC"). The Partnership entered into a Master Loan Agreement with
EP/3, EP/4, and EP/5, pursuant to which the aggregate principal would not exceed
the net amount raised by the Partnership's offering of approximately
$96,000,000.

Upon the Partnership's formation in 1984, CCEC, a Colorado corporation, was the
corporate general partner. In December 1988, CCEC filed for reorganization under
Chapter 11 of the United States Bankruptcy Code ("Chapter 11"). In 1990, as
part of CCEC's reorganization plan, ConCap Equities, Inc., a Delaware
corporation (the "General Partner" or "CEI") acquired CCEC's general partner
interests in the Partnership and in 15 other affiliated public limited partner-
ships and replaced CCEC as managing general partner in all 16 partnerships. The
General Partner is a subsidiary of Apartment Investment and Management Company
("AIMCO"). See "Note B - Transfer of Control". The directors and officers of
the General Partner also serve as executive officers of AIMCO. The Partnership
Agreement provides that the Partnership is to terminate on December 31, 2015
unless terminated prior to such date.

The Partnership operates seven apartment properties and two commercial
properties located throughout the United States.

The principal place of business for the Partnership and for the General Partner
is 55 Beattie Place, Greenville, South Carolina, 29602.

Cash and Cash Equivalents:

The Partnership considers all highly liquid investments with a maturity, when
purchased, of three months or less to be cash equivalents. At certain times,
the amount of cash deposited at a bank may exceed the limit on insured deposits.

Tenant Security Deposits:

The Partnership requires security deposits from lessees for the duration of the
lease, and such deposits are included in receivables and deposits. The security
deposits are refunded when the tenant vacates, provided the tenant has not
damaged its space and is current on its rental payments.

Restricted Escrows:

As a result of the refinancing of Williamsburg Manor, Sandpiper I & II and Park
Capitol in 1995 and Lamplighter Park, Tamarac Village, Hidden Cove and Cedar Rim
in 1996, the following reserves were established:

Capital Improvement Reserve - As part of the refinancings, the properties
deposited $1,416,000 in 1996 and $843,000 in 1995 with the mortgage companies
to establish a Capital Reserve designated for certain capital improvements. At
December 31, 1998, this reserve totaled approximately $593,000.

Replacement Reserve - As a result of the refinancings, each property will make
monthly deposits to establish and maintain a Replacement Reserve designated for
repairs and replacements at the properties. At December 31, 1998, this reserve
totaled approximately $848,000.

Note Receivable Impairment:

In 1995, the Partnership adopted Statement of Financial Accounting Standards
("SFAS") No. 114, "Accounting By Creditors for Impairment of a Loan". Under the
new standard, the provision for credit losses, related to loans that are
identified for evaluation in accordance with SFAS No. 114, is based on
discounted cash flows using the loan's initial effective interest rate or the
fair value of the collateral for certain collateral dependent loans. During
1995, it was determined that the note secured by the South City Business Center
was impaired. Accordingly, during 1995, the Partnership recorded a write-down
of $3,255,000 ($1,500,000 in the fourth quarter) on the note receivable to
adjust the note balance to the estimated net realizable value of the collateral.
See "Note E - Notes and Interest Receivable" regarding the 1996 foreclosure
proceedings.

Investment Properties:

Investment properties consist of seven apartment complexes and two commercial
properties and are stated at cost. Acquisition fees are capitalized as a cost
of real estate. In accordance with SFAS No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of", the
Partnership records impairment losses on long-lived assets used in operations
when events and circumstances indicate that the assets might be impaired and the
undiscounted cash flows estimated to be generated by those assets are less than
the carrying amounts of those assets. Costs of investment properties that have
been permanently impaired have been written down to appraised value. No
adjustments for impairment of value were recorded in the years ended December
31, 1998, 1997 or 1996.

Depreciation:

Depreciation is provided by the straight-line method over the estimated lives of
the apartment properties and related personal property. For Federal income tax
purposes, the accelerated cost recovery method is used (1) for real property
over 15 years for additions prior to March 16, 1984, 18 years for additions
after March 15, 1984 and before May 9, 1985, and 19 years for additions after
May 8, 1985, and before January 1, 1987, and (2) for personal property over 5
years for additions prior to January 1, 1987. As a result of the Tax Reform Act
of 1986, for additions after December 31, 1986, the modified accelerated cost
recovery method is used for depreciation of (1) real property over 27 1/2 years
and (2) personal property additions over 7 years.

Leases:

The Partnership leases its residential properties under short-term operating
leases. Lease terms are generally one year or less in duration. The Partnership
expects that in the normal course of business these leases will be renewed or
replaced by other leases. The Partnership recognizes income as earned on its
leases. In addition, the General Partner's policy is to offer rental
concessions during periods of declining occupancy or in response to heavy
competition from other similar complexes in the area. Concessions are charged
against rental income as incurred.

The Partnership leases certain commercial space to tenants under various lease
terms. For leases containing fixed rental increases during their term, rents are
recognized on a straight-line basis over the terms of the leases. For all other
leases, rents are recognized over the terms of the leases as earned.

Deferred Costs:

Loan costs of approximately $2,000 and $579,000 were capitalized in 1997 and
1996, respectively (in conjunction with property refinancings). No loan costs
were capitalized during 1998. At December 31, 1998 and 1997, a total of
approximately $846,000 and $941,000 less accumulated amortization of
approximately $261,000 and $171,000, respectively, are included in other assets.
Loan costs are amortized on a straight-line basis over the life of the loans.

Leasing commissions are deferred and amortized over the lives of the related
leases. At December 31, 1998 and 1997, a total of approximately $189,000 and
$143,000 less accumulated amortization of $96,000 and $56,000, respectively, are
included in other assets.

Allocation of Net Income and Net Loss:

The Partnership Agreement provides for net income and net losses for both
financial and tax reporting purposes to be allocated 99% to the Limited Partners
and 1% to the general partner.

Fair Value of Financial Instruments:

SFAS No. 107, "Disclosures about Fair Value of Financial Instruments", as
amended by SFAS No. 119, "Disclosures about Derivative Financial Instruments and
Fair Value of Financial Instruments", requires disclosure of fair value
information about financial instruments, whether or not recognized in the
balance sheet, for which it is practicable to estimate fair value. Fair value is
defined in the SFAS as the amount at which the instruments could be exchanged in
a current transaction between willing parties, other than in a forced or
liquidation sale. The Partnership believes that the carrying amount of its
financial instruments (except for long term debt) approximates their fair value
due to the short term maturity of these instruments. The fair value of the
Partnership's long term debt, after discounting the scheduled loan payments to
maturity, approximates its carrying balance.

Use of Estimates:

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.

Segment Reporting:

In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
Disclosure about Segments of an Enterprise and Related Information ("Statement
131"), which is effective for years beginning after December 15, 1997. Statement
131 establishes standards for the way that public business enterprises report
information about operating segments in annual financial statements and requires
that those enterprises report selected information about operating segments in
interim financial reports. It also establishes standards for related
disclosures about products and services, geographic areas, and major customers
(See "Note N - Segment Reporting").

Advertising:

The Partnership expenses the costs of advertising as incurred. Advertising
expense, included in operating expenses, was $243,000, $242,000, and $292,000
during the years ended December 31, 1998, 1997 and 1996, respectively.

Reclassifications: Certain reclassifications have been made to the 1997 and
1996 information to conform to the 1998 presentation.

NOTE B - TRANSFER OF CONTROL

NOTE C - RELATED PARTY TRANSACTIONS

The Partnership has no employees and is dependent on the General Partner and its
affiliates for the management and administration of all partnership activities.
The limited partnership agreement ("Partnership Agreement") provides for
payments to affiliates for property management services based on a percentage of
revenue. The Partnership Agreement also provides for reimbursement to the
General Partner and its affiliates for costs incurred in connection with
administration of Partnership activities. The following payments were paid to
the General Partner and affiliates during each of the years ending December 31,
1998, 1997 and 1996:

1998 1997 1996
(in thousands)
Property management fees (included in
operating expenses) $748 $737 $658

Reimbursement for services of affiliates
(included in investment properties,
general and administrative expenses
and operating expenses) (1) 384 374 403

Real estate brokerage commissions
(included in gain on sale of
investment property 465 -- --

(1) Included in "reimbursements for services of affiliates" for the years ended
December 31, 1998, 1997 and 1996 is approximately $35,000, $33,000 and
$27,000, respectively, in reimbursements for construction oversight costs.

During the years ended December 31, 1998, 1997 and 1996, affiliates of the
General Partner were entitled to receive 5% of gross receipts from all the
Registrant's residential properties as compensation for providing property
management services. The Partnership paid to such affiliates approximately
$678,000, $648,000 and $593,000 for management fees for the years ended December
31, 1998, 1997 and 1996, respectively. For the nine months ended September 30,
1998 and the years ended December 31, 1997 and 1996, affiliates of the General
Partner were entitled to receive varying percentages of gross receipts from all
of the Registrant's commercial properties for providing property management
services. The Registrant paid to such affiliates approximately $70,000,
$89,000, and $65,000 for the nine months ended September 30, 1998 and the years
ended December 31, 1997 and 1996, respectively. Effective October 1, 1998 (the
effective date of the Insignia Merger (See "Note B")) these services for the
commercial properties were provided by an unrelated party.

An affiliate of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $384,000, $374,000 and
$403,000 for the years ended December 31, 1998 1997 and 1996, respectively.

Additionally, the Partnership paid $41,000, $36,000 and $32,000 during the years
ended December 31, 1998, 1997 and 1996, respectively, to an affiliate of the
General Partner for lease commissions at the Partnership's commercial
properties. These lease commissions are included in other assets and are
amortized over the terms of the respective leases. The Partnership also paid
$98,000 to affiliates of the General Partner for reimbursements of costs related
to the loan refinancings in November of 1996. These loan costs are included in
other assets are being amortized over the term of the loans.

For acting as real estate broker in connection with the sale of City Heights, an
affiliate of the General Partner was paid a real estate commission of 5% of the
sale price or $465,000 during the year ended December 31, 1998. No similar
commissions were earned during the years ended December 31, 1997 and 1996.
(See "Note "F" for additional information about the sale.)

A director of an affiliate of the General Partner was affiliated with a
professional legal association that received fees in connection with the 1996
refinancing of certain of the Partnership's properties (see "Note G"). These
fees totaled $60,000 and have been capitalized as loan costs and are being
amortized over the term of the loans.

During the first quarter of 1998, an affiliate of the General Partner acquired
an additional 47,865.5 units in the Partnership as a result of a tender offer
commenced in December 1997. During July 1998, an affiliate of the General
Partner (the "Purchaser") commenced a tender offer for limited partnership
interests in the Partnership. The Purchaser offered to purchase up to 125,000
of the outstanding units of limited partnership interest in the Partnership at
$100 per Unit, net to the Seller in cash. The Purchaser acquired 28,039.3 units
pursuant to this tender offer. AIMCO currently owns, through its affiliates,
a total of 124,973 limited partnership units or 32.27%. Consequently, AIMCO
could be in a position to significantly influence all voting decisions with
respect to the Registrant. Under the Partnership Agreement, unit holders
holding a majority of the Units are entitled to take action with respect
to a variety of matters. When voting on matters, AIMCO would in all
likelihood vote the Units it acquired in a manner favorable to the
interest of the General Partner because of their affiliation with the General
Partner.

For the period from January 1997 to August 1997, the Partnership insured its
properties under a master policy through an agency affiliated with the General
Partner with an insurer unaffiliated with the General Partner. An affiliate of
the General Partner acquired, in the acquisition of a business, certain
financial obligations from an insurance agency, which was later acquired by the
agent who placed the master policy. The agent assumed the financial obligations
to the affiliate of the General Partner, which received payments on these
obligations from the agent. The amount of the Partnership's insurance premiums
that accrued to the benefit of the affiliate of the General Partner by virtue of
the agent's obligations was not significant.

NOTE D - CASUALTY EVENTS

In October 1996, a fire damaged twelve units at the Lamplighter Park Apartments.
The unit where the fire started suffered extensive damage, and as a result, the
asset and related accumulated depreciation were written off in 1996. At
December 31, 1996, an insurance proceeds receivable was recorded, as well as a
miscellaneous payable representing the estimated cost of restoring the damaged
units. The net gain recognized in 1996 relating to this fire was $114,000. In
1997, the restoration was completed, and additional unanticipated charges were
incurred. The net effect of these charges was a casualty loss of approximately
$24,000 being recognized in 1997 relating to the 1996 fire. The 1997 loss is
included in operating expense on the Partnership's statement of operations.

In 1997, a fire at Hidden Cove by the Lake Apartments damaged ten units in one
building at the complex. The units affected suffered primarily smoke and water
damages, and the restoration was completed in the second quarter of 1997. A
casualty gain of $16,000 was recognized in 1997 as a result of this fire and is
included as an offset to operating expense.

In June 1998, another fire occurred at Hidden Cove by the Lake Apartments, which
caused major damage to three units in one building of the complex, and as a
result, the building and its related accumulated depreciation were written off.
The restoration was completed early in 1999. No loss was recognized related to
the fire as the casualty is covered by insurance and the proceeds are expected
to equal or exceed the net book value of the destroyed units.

NOTE E - NOTES AND INTEREST RECEIVABLE

The borrower on the note receivable secured by the South City Business Center
placed the property under Chapter 11 protection in September 1992. In April
1993, the Bankruptcy Court approved the borrower's reorganization plan pursuant
to which the General Partner and the borrower agreed to a restructure agreement.
During 1995, the debtor stopped making note payments on the South City note in
June and officially defaulted on the note in August. The Partnership obtained
an appraisal of the collateral and it was determined that this note receivable
was impaired. Accordingly, during 1995, the Partnership recorded a write-down of
$3,255,000 related to South City Business Center to adjust the note balance to
the estimated net realizable value of the collateral. An affiliate of the
General Partner was appointed receiver in September 1995, and the foreclosure
proceedings were finalized during the first quarter of 1996.

NOTE F - SALE OF REAL ESTATE

Net sale price, net of selling costs $ 8,646
Net real estate (1) (3,164)
Gain on sale of real estate $ 5,482

(1) Real estate at cost, net of accumulated depreciation of approximately
$1,900,000.

NOTE G - MORTGAGE NOTES PAYABLE

Notes payable at December 31, 1998, consist of the following:

Principal Monthly Principal

Balance At Payment Stated Balance

December 31, Including Interest Maturity Due At

1998 Interest Rate Date Maturity

(in thousands) (in thousands)

Property

Cedar Rim $ 2,000 $ 12 7.33% 11/01/03 $ 2,000

Hidden Cove 2,200 14 7.33% 11/01/03 2,200

Lamplighter Park 3,500 21 7.33% 11/01/03 3,500

Park Capitol 2,725 16 6.95% 12/01/05 2,725

Tamarac Village 9,400 57 7.33% 11/01/03 9,400

Williamsburg Manor 4,150 24 6.95% 12/01/05 4,150

Sandpiper I & II 3,950 23 6.95% 12/01/05 3,950

$27,925 $ 167 $27,925

In November of 1996, four of the Partnership's investment properties, Cedar Rim,
Hidden Cove, Lamplighter Park and Tamarac Village, obtained initial financing or
refinanced existing notes. Proceeds from this transaction totaled $17,100,000.
The debt accrues interest at a rate of 7.33% per year, matures on November 1,
2003, and requires balloon payments at maturity for the full principal amount.
Throughout the mortgage term, interest-only payments are made. Loan costs of
$485,000 were incurred by the properties as a result of the refinancings, and
are included in other assets on the balance sheet.

The mortgage notes payable are non-recourse and are secured by pledge of the
respective properties. Also, all notes require prepayment penalties if repaid
prior to maturity and prohibit resale of the properties subject to existing
indebtedness.

NOTE H- SUMMARY OF NONCASH INVESTING AND FINANCING ACTIVITY

On February 14, 1996, the Partnership foreclosed on South City Business Center,
the investment property collateralizing the note receivable between the
Partnership and Lincoln South City Business Center Limited Partnership. In
connection with this transaction, the following accounts were adjusted by the
amounts noted in 1996 (in thousands):

Accounts receivable $ 15
Security deposit liability (72)
Investment properties 4,383
Note receivable (4,400)

No gain or loss was recorded upon the foreclosure due to the carrying value of
the note receivable being adjusted to the value of the underlying collateral
during 1995.

NOTE I- COMMITMENT

The Partnership is required by the Partnership Agreement to maintain working
capital reserves for contingencies of not less than 5% of Net Invested Capital,
as defined in the Partnership Agreement. Reserves, including cash and
securities available for sale, totaling approximately $14.2 million, were
greater than the reserve requirement of $3,400,000 at December 31, 1998.

NOTE J - PARTNERS' EQUITY (DEFICIT)

Net profits, net losses, and distributions are allocated 99% to the Limited
Partners and 1% to the general partner.

The Partnership made distributions of cash generated from operations of
approximately $1,980,000, $2,438,000 and $4,821,000 for the years ended December
31, 1998, 1997 and 1996, respectively. The Partnership also made distributions
of cash from surplus funds of approximately $11,569,000 and $2,497,000 for the
years ended December 31, 1997 and 1996, respectively. Subsequent to the
Partnership's year-end, distributions from operations of approximately
$4,113,000 and surplus funds from the sale of City Heights of approximately
$5,787,000 were paid during January 1999.

NOTE K - OPERATING LEASES

Tenants of the Partnership's commercial properties are responsible for payment
of their proportionate share of real estate taxes. Insurance, common area
maintenance expenses and a portion of the real estate taxes are paid directly by
the Partnership. The Partnership is then reimbursed by the tenants for their
proportionate share of the real estate taxes.

The future minimum rental payments to be received under operating leases that
have initial or remaining noncancellable lease terms in excess of one year as of
December 31, 1998, are as follows (in thousands):

1999 $1,130

2000 656

2001 311

2002 175

2003 95

Thereafter 318

$2,685

NOTE L - INVESTMENT PROPERTIES AND ACCUMULATED DEPRECIATION

Initial Cost

To Partnership

(in thousands)

Cost

Buildings Capitalized

and Related (Removed)

Personal Subsequent to

Description Encumbrances Land Property Acquisition

(in thousands) (in thousands)

Cedar Rim $ 2,000 $ 778 $ 4,322 $ (110)

Corporate Center -- 1,071 2,949 (465)

Hidden Cove by the Lake 2,200 184 4,416 730

Lamplighter Park 3,500 2,458 5,167 490

Park Capitol 2,725 280 2,100 632

Tamarac Village 9,400 2,464 10,536 1,899

I, II, III, & IV

Williamsburg Manor 4,150 1,281 5,124 666

Sandpiper I & II 3,950 1,463 5,851 716

South City Business Center -- 2,006 2,376 254

Totals $27,925 $11,985 $42,841 $ 4,812

Gross Amount At Which Carried

at December 31, 1998

(in thousands)

Buildings

And

Related Date of

Personal Accumulated Construc- Date Depreciable

Description Land Property Total Depreciation tion Acquired Life-Years

(in thousands)

Cedar Rim $ 618 $ 4,372 $ 4,990 $ 1,905 1980 4/12/91 3 - 20

Corporate Center 782 2,773 3,555 1,569 1982 4/13/90 5 - 20

Hidden Cove 184 5,146 5,330 2,410 1972 3/23/90 3 - 20

Lamplighter Park 2,351 5,764 8,115 2,323 1968 4/12/91 3 - 20

Park Capitol 280 2,732 3,012 1,362 1974 4/13/90 5 - 20

Tamarac Village 2,464 12,435 14,899 4,105 1978 6/10/92 5 - 20

Williamsburg Manor 1,281 5,790 7,071 1,157 1970 11/30/94 5 - 22

Sandpiper 1,463 6,567 8,030 1,286 1976/1985 11/30/94 5 - 22

South City 2,005 2,631 4,636 390 1974/1976 2/14/96 5 - 25

$11,428 $48,210 $59,638 $16,507

</TABLE>

Reconciliation of "Investment Properties and Accumulated Depreciation":

For the Years Ended December 31,

1998 1997 1996

(in thousands)

Investment Properties:

Balance at beginning of year $63,326 $61,821 $55,835

Additions 1,590 1,558 1,833

Acquisition through foreclosure -- -- 4,383

Sale of investment property (5,028) -- --

Disposal of property (250) (53) (230)

Balance at end of year $59,638 $63,326 $61,821

Accumulated Depreciation:

Balance at beginning of year $15,474 $12,634 $ 9,958

Depreciation of real estate 2,988 2,852 2,741

Sale of investment property (1,864) -- --

Disposal of property (91) (12) (65)

Balance at end of year $16,507 $15,474 $12,634

The aggregate cost for Federal income tax purposes is:

1998 $50,958
1997 $56,544
1996 $57,213

NOTE M - INCOME TAXES

The Partnership has received a ruling from the Internal Revenue Service that it
will be classified as a partnership for Federal income tax purposes.
Accordingly, no provision for income taxes is made in the financial statements
of the Partnership. Taxable income or loss of the Partnership is reported in the
income tax returns of its partners.

The following is a reconciliation of reported net income and Federal taxable
income (loss) (in thousands, except unit data):

1998 1997 1996

Net income as reported $ 7,883 $ 1,936 $ 1,153
Add (deduct):
Gain on sale of property (1,523) -- --
Fixed asset write-offs and casualty
gain 57 25 35
Loss on foreclosure -- -- (7,732)
Depreciation differences 499 568 661
Change in prepaid rental income (71) 240 (89)
Other 19 99 77

Federal taxable income (loss) $ 6,864 $ 2,868 $(5,895)
Federal taxable income (loss) per
limited partnership unit $ 17.74 $ 7.41 $(15.24)

The tax basis of the Partnership's assets and liabilities is approximately
$19,924,000 greater than the assets and liabilities as reported in the financial
statements.

NOTE N - SEGMENT REPORTING

Description of the types of products and services from which each reportable
segment derives its revenues: As defined by SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information" the Partnership has two
reportable segments: residential properties and commercial properties. The
Partnership's residential property segment consists of seven apartment complexes
in six states in the United States. The Partnership rents apartment units to
people for terms that are typically twelve months or less. The commercial
property segment consists of two business parks located in Florida and
California. These properties lease space to a variety of businesses at terms
ranging from month to month to ten years.

Measurement of segment profit or loss: The Partnership evaluates performance
based on net income. The accounting policies of the reportable segments are the
same as those described in the summary of significant accounting policies.

Factors management used to identify the enterprise's reportable segments: The
Partnership's reportable segments are investment properties that offer different
products and services. The reportable segments are each managed separately
because they provide distinct services with different types of products and
customers.

Segment information for the years 1998, 1997 and 1996 is shown in the tables
below. The "Other" column includes partnership administration related items and
income and expense not allocated to the reportable segments (in thousands).

1998
Residential Commercial Other Totals
Rental income $12,670 $ 1,656 $ -- $14,326
Other income 767 68 321 1,156
Interest expense (2,295) -- -- (2,295)
Depreciation (2,683) (305) -- (2,988)
General and administrative expenses -- -- (600) (600)
Gain on sale of investment property 5,482 -- -- 5,482
Loss on extraordinary item (325) -- -- (325)
Segment profit (loss) 7,660 502 (279) 7,883
Total assets 28,063 6,855 25,861 60,779
Capital expenditures for investment
properties 1,359 231 -- 1,590

1997
Residential Commercial Other Totals
Rental income $12,244 $ 1,561 $ -- $13,805
Other income 776 85 446 1,307
Interest expense (2,316) -- -- (2,316)
Depreciation (2,559) (293) -- (2,852)
General and administrative expenses -- -- (501) (501)
Segment profit (loss) 1,589 402 (55) 1,936
Total assets 32,633 6,775 17,678 57,086
Capital expenditures for investment
properties 1,538 154 -- 1,692

1996
Residential Commercial Other Totals
Rental income $11,418 $ 1,397 $ -- $12,815
Other income 573 30 349 952
Interest expense (1,573) -- -- (1,573)
Depreciation (2,464) (277) -- (2,741)
General and administrative expenses -- -- (618) (618)
Gain on casualty events 114 -- -- 114
Segment profit (loss) 1,070 352 (269) 1,153
Total assets 34,665 7,076 27,796 69,537
Capital expenditures for investment
properties 1,665 34 -- 1,699

NOTE O - LEGAL PROCEEDINGS

In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, the General Partner and several of their affiliated
partnerships and corporate entities. The complaint purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition by Insignia and entities which were, at
the time, affiliates of Insignia ("Insignia Affiliates") of interests in certain
general partner entities, past tender offers by Insignia Affiliates as well as a
recently announced agreement between Insignia and AIMCO. The complaint seeks
monetary damages and equitable relief, including judicial dissolution of the
Partnership. On June 25, 1998, the General Partner filed a motion seeking
dismissal of the action. In lieu of responding to the motion, the plaintiffs
have filed an amended complaint. The General Partner has filed demurrers to the
amended complaint which were heard during February 1999. No ruling on such
demurrers had been received. The General Partner does not anticipate that costs
associated with this case, if any, to be material to the Partnership's overall
operations.

On July 30, 1998, certain entities claiming to own limited partnership interests
in certain limited partnerships whose general partners were, at the time,
affiliates of Insignia filed a complaint entitled Everest Properties, LLC, et.
al. v. Insignia Financial Group, Inc., et. al. in the Superior Court of the
State of California, County of Los Angeles. The action involves 44 real estate
limited partnerships (including the Partnership) in which the plaintiffs
allegedly own interests and which Insignia Affiliates allegedly manage or
control (the "Subject Partnerships"). This case was settled on March 3, 1999.
The Partnership is responsible for a portion of the settlement costs. The
expense will not have a material effect on the Partnership's net income.

The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.

ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

There were no disagreements with Ernst & Young, LLP regarding the 1998, 1997 or
1996 audits of the Partnership's financial statements.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Consolidated Capital Institutional Properties/3 (the "Partnership" or the
"Registrant") has no officers or directors. ConCap Equities, Inc. ("CEI" or the
"General Partner") manages and controls the Registrant and has general
responsibility and authority in all matters affecting its business.

The names of the directors and executive officers of the General Partner, their
ages and the nature of all positions with CEI presently held by them are set
forth below:

Name Age Position

Patrick J. Foye 41 Executive Vice President and Director

Timothy R. Garrick 42 Vice President _ Accounting and Director

Patrick J. Foye has been Executive Vice President and Director of the General
Partner since October 1, 1998. Mr. Foye has served as Executive Vice President
of AIMCO since May 1998. Prior to joining AIMCO, Mr. Foye was a partner in the
law firm of Skadden, Arps, Slate, Meagher & Flom LLP from 1989 to 1998 and was
Managing Partner of the firm's Brussels, Budapest and Moscow offices from 1992
through 1994. Mr. Foye is also Deputy Chairman of the Long Island Power
Authority and serves as a member of the New York State Privatization Council.
He received a B.A. from Fordham College and a J.D. from Fordham University Law
School.

Timothy R. Garrick has served as Vice President-Accounting of AIMCO and Vice
President - Accounting and Director of the General Partner since October 1,
1998. Prior to that date, Mr. Garrick served as Vice President-Accounting
Services of Insignia Financial Group since June of 1997. From 1992 until June
of 1997, Mr. Garrick served as Vice President of Partnership Accounting and from
1990 to 1992 as an Asset Manager for Insignia Financial Group. From 1984 to
1990, Mr. Garrick served in various capacities with U.S. Shelter Corporation.
From 1979 to 1984, Mr. Garrick worked on the audit staff of Ernst & Whinney.
Mr. Garrick received his B.S. Degree from the University of South Carolina and
is a Certified Public Accountant.

ITEM 11. EXECUTIVE COMPENSATION

No direct compensation was paid or payable by the Partnership to directors or
officers for the year ended December 31, 1998, nor was any direct compensation
paid or payable by the Partnership to directors or officers of the General
Partner for the year ended December 31, 1998. The Partnership has no plans to
pay any such remuneration to any directors or officers of the General Partner in
the future. However, reimbursements and other payments have been made to the
Partnership's General Partner and its affiliates, as described in "Item 13"
below.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Security Ownership of Certain Beneficial Owners

Except as provided below, as of March 1998, no person was known to CEI to own of
record or beneficially more than 5 percent of the Units of the Partnership:

NAME AND ADDRESS NUMBER OF UNITS PERCENT OF TOTAL

Insignia Properties, L.P. 44,825.8 11.703%
(an affiliate of AIMCO)
Madison River Properties LLC 46,747.4 12.205%
(an affiliate of AIMCO)
Cooper River Properties LLC 28,039.3 7.320%
(an affiliate of AIMCO)
AIMCO Properties LP 5,360.5 1.399%
(an affiliate of AIMCO)

Insignia Properties LP, Cooper River Properties LLC and Madison River Properties
LLC are indirectly ultimately owned by AIMCO. Their business address is 55
Beattie Place, Greenville, SC 29602. AIMCO Properties LP is also owned by
AIMCO, its business address is 1873 South Bellaire Street, 17th Floor, Denver,
CO 80222.

On October 1, 1998, Insignia Financial Group, Inc. merged into AIMCO, a real
estate investment trust, whose Class A Common Shares are listed on the New York
Stock Exchange. As a result of such merger, AIMCO and AIMCO Properties, L.P., a
Delaware limited partnership and the operating partnership of AIMCO ("AIMCO OP")
acquired indirect control of the General Partner. AIMCO and its affiliates
currently own 32.627% of the limited partnership interests in the Partnership.
AIMCO is presently considering whether it will engage in an exchange offer for
additional limited partnership interests in the Partnership. There is a
substantial likelihood that, within a short period of time, AIMCO OP will offer
to acquire limited partnership interests in the Partnership for cash or
preferred units or common units of limited partnership interests in AIMCO OP.
While such an exchange offer is possible, no definite plans exist as to when or
whether to commence such an exchange offer, or as to the terms of any such
exchange offer, and it is possible that none will occur.

A registration statement relating to these securities has been filed with the
Securities and Exchange Commission but has not yet become effective. These
securities may not be sold nor may offers to buy be accepted prior to the time
the registration statement becomes effective. This Form 10-K shall not
constitute an offer to sell or the solicitation of an offer to buy nor shall
there be any sale of these securities in any state in which such offer,
solicitation or sale would be unlawful prior to the registration or
qualification under the securities laws of any such state.

Beneficial Owners of Management

Except as described in Item 12(a) above, neither CEI nor any of the directors,
officers or associates of CEI own any Units of the Partnership of record or
beneficially.

Changes in Control

Beneficial Owners of CEI

As of December 31, 1998, the following persons were known to CEI to be the
beneficial owners of more than 5 percent of its common stock:

NAME AND ADDRESS NUMBER OF CEI SHARES PERCENT OF TOTAL
Insignia Properties, L.P. 100,000 100%
55 Beattie Place
Greenville, SC 29602

Insignia Properties, L.P. is an affiliate of AIMCO (see "Item 1. Description of
Business").

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Partnership has no employees and is dependent on the General Partner and its
affiliates for the management and administration of all partnership activities.
The Limited Partnership Agreement ("Partnership Agreement") provides for
payments to affiliates for property management services based on a percentage of
revenue. The Partnership Agreement also provides for reimbursement to the
General Partner and its affiliates for costs incurred in connection with
administration of Partnership activities. The following payments were paid to
the General Partner and affiliates during each of the years ending December 31,
1998, 1997 and 1996:

1998 1997 1996
(in thousands)

Property management fees $748 $737 $658

Reimbursement for services of affiliates (1) 384 374 403

Real estate brokerage commission 465 -- --

During the years ended December 31, 1998, 1997 and 1996, affiliates of the
General Partner were entitled to receive 5% of gross receipts from all the
Registrant's residential properties as compensation for providing property
management services. The Partnership paid to such affiliates approximately
$678,000, $648,000 and $593,000 for management fees for the years ended December
31, 1998, 1997 and 1996, respectively. For the nine months ended September 30,
1998 and the years ended December 31, 1997 and 1996, affiliates of the General
Partner were entitled to receive varying percentages of gross receipts from all
of the Registrant's commercial properties for providing property management
services. The Registrant paid to such affiliates approximately $70,000,
$89,000, and $65,000 for the nine months ended September 30, 1998 and the years
ended December 31, 1997 and 1996, respectively. Effective October 1, 1998 (the
effective date of the Insignia Merger these services for the commercial
properties were provided by an unrelated party.

A director of an affiliate of the General Partner was affiliated with a
professional legal association that received fees in connection with the 1996
refinancing of certain of the Partnership's properties. These
fees totaled $60,000 and have been capitalized as loan costs and are being
amortized over the term of the loans.

During the first quarter of 1998, an affiliate of the General Partner acquired
an additional 47,865.5 units in the Partnership as a result of a tender offer
commenced in December 1997. During July 1998, an affiliate of the General
Partner (the "Purchaser") commenced a tender offer for limited partnership
interests in the Partnership. The Purchaser offered to purchase up to 125,000
of the outstanding units of limited partnership interest in the Partnership at
$100 per Unit, net to the Seller in cash. The Purchaser acquired 28,039.3 units
pursuant to this tender offer. AIMCO currently owns, through its affiliates,
a total of 124,973 limited partnership units or 32.27%. Consequently, AIMCO
could be in a position to significantly influence all voting decisions with
respect to the Registrant. Under the Partnership Agreement, unit holders
holding a majority of the Units are entitled to take action with respect to
a variety of matters. When voting on matters, AIMCO would in all likelihood
vote the Units it acquired in a manner favorable to the interest of the
General Partner because of their affiliation with the General Partner.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K

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

1. Financial Statements

Balance Sheets as of December 31, 1998 and 1997

Statements of Operations for the Years Ended December 31, 1998, 1997 and
1996

Statements of Changes in Partners' Capital (Deficit) for the Years Ended
December 31, 1998, 1997 and 1996

Statements of Cash Flows for the Years Ended December 31, 1998, 1997 and
1996

Notes to Financial Statements

2. Schedules

All schedules are omitted because they are not required, are not applicable
or the financial information is included in the financial statements or
notes thereto.

3. Exhibits

S-K REFERENCE
NUMBER DOCUMENT DESCRIPTION

2.1 Agreement and Plan of Merger, dated as of October 1, 1998, by
and between AIMCO and IPT incorporated by reference to
Current Report on Form 8-K dated October 1, 1998.

3 Certificates of Limited Partnership, as amended.

10.3 Participating Note Master Loan Agreement (Incorporated by
reference to Registration Statement of Partnership (File No.
2-97664) filed July 23, 1985).

10.4 Participating Note Security Agreement (Incorporated by
reference to Registration Statement of Partnership (File No.
2-97664) filed July 23, 1985).

10.5 Form of Deed of Trust and Rider (Incorporated by reference to
Registration Statement of Partnership (File No. 2-97664)
filed July 23, 1985).

10.6 Several Promissory Notes (Incorporated by reference to
Registration Statement of Partnership (File No. 2-97664)
filed July 23, 1985).

10.7 Property Management Agreement No. 101 dated October 23, 1990,
by and between the Partnership and CCEC (Incorporated by
reference to the Quarterly Report on Form 10-Q for the
quarter ended September 30, 1990).

10.8 Property Management Agreement No. 301 dated October 23, 1990,
by and between the Partnership and CCEC (Incorporated by
reference to the Quarterly Report on Form 10-Q for the
quarter ended September 30, 1990).

10.9 Property Management Agreement No. 315 dated April 12, 1991,
by and between the Partnership and CCMLP. (Incorporated by
reference to the Annual Report on Form 10-K for the year
ended December 31, 1991).

10.10 Bill of Sale and Assignment dated October 23, 1990, by and
between CCEC and ConCap Services Company (Incorporated by
reference to the Quarterly Report on Form 10-Q for the
quarter ended September 30, 1990).

10.11 Assignment and Assumption dated October 23, 1990, by and
between CCEC and ConCap Management Limited Partnership
("CCMLP") (Incorporated by reference to the Quarterly Report
on Form 10-Q for the quarter ended September 30, 1990).

10.12 Assignment and Agreement as to Certain Property Management
Services dated October 23, 1990, by and between CCMLP and
ConCap Capital Company (Incorporated by reference to the
Quarterly Report on Form 10-Q for the quarter ended September
30, 1990).

10.13 Assignment and Agreement as to Certain Property Management
Services dated April 12, 1991, by and between CCMLP and
ConCap Capital Company. (Incorporated by reference to the
1991 Annual Report on Form 10-K for the year ended December
31, 1991).

10.14 Assignment and Agreement dated October 23, 1990, by and
between CCMLP and The Hayman Company (100 Series of Property
Management Contracts) (Incorporated by reference to the
Quarterly Report on Form 10-Q for the quarter ended September
30, 1990).

10.15 Assignment and Agreement dated October 23, 1990, by and
between CCMLP and Metro ConCap, Inc. (300 Series of Property
Management Contracts) (Incorporated by reference to the
Quarterly Report on Form 10-Q for the quarter ended September
30, 1990).

10.16 Construction Management Cost Reimbursement Agreement dated
January 1, 1991, by and between the Partnership and Metro
ConCap, Inc. (Incorporated by reference to the Annual Report
on Form 10-K for the year ended December 31, 1991).

10.17 Construction Management Cost Reimbursement Agreement dated
April 12, 1991, by and between the Partnership and Metro
ConCap, Inc. (Incorporated by reference to the Annual Report
on Form 10-K for the year ended December 31, 1991).

10.18 Construction Management Cost Reimbursement Agreement dated
January 1, 1991, by and between the Partnership and The
Hayman Company. (Incorporated by reference to the Annual
Report on Form 10-K for the year ended December 31, 1991).

10.19 Investor Services Agreement dated October 23, 1990, by and
between the Partnership and CCEC (Incorporated by reference
to the Quarterly Report on Form 10-Q for the quarter ended
September 30, 1990).

10.20 Assignment and Assumption Agreement October 23, 1990, by and
between CCEC and ConCap Services Company (Incorporated by
reference to the Annual Report on Form 10-K for the year
ended December 31, 1990).

10.21 Letter of Notice dated December 20, 1991, from Partnership
Services, Inc. ("PSI") to the Partnership regarding the
change in ownership and dissolution of ConCap Services
Company whereby PSI assumed the Investor Services Agreement.
(Incorporated by reference to the Annual Report on Form 10-K
for the year ended December 31, 1991).

10.22 Financial Services Agreement dated October 23, 1990, by and
between the Partnership and CCEC (Incorporated by reference
to the Quarterly Report on Form 10-Q for the quarter ended
September 30, 1990).

10.23 Assignment and Assumption Agreement (Financial Services
Agreement) dated October 23, 1990, by and between CCEC and
ConCap Capital Company (Incorporated by reference to the
Quarterly Report on Form 10-Q for the quarter ended September
30, 1990).

10.24 Letter of Notice dated December 20, 1991, from PSI to the
Partnership regarding the change in ownership and dissolution
of ConCap Capital Company whereby PSI assumed the Financial
Services Agreement. (Incorporated by reference to the Annual
Report on Form 10-K for the year ended December 31, 1991).

10.25 Joint Application for Approval of Settlement Agreement dated
August 10, 1990, between James W. Cunningham (EP/4's Trustee)
and the Partnership (Incorporated by reference to the
Quarterly Report on Form 10-Q for the quarter ended September
30, 1990).

10.26 Property Management Agreement No. 415 dated May 13, 1993, by
and between the Partnership and Coventry Properties, Inc.
(Incorporated by reference to the Quarterly Report on Form
10-Q for the quarter ended September 30, 1993)

10.27 Assignment and Assumption Agreement (Property Management
Agreement No. 415) dated May 13, 1993, by and between
Coventry Properties, Inc., R&B Apartment Management Company
Inc. and Partnership Services, Inc. (Incorporated by
reference to the Quarterly Report on Form 10-Q for the
quarter ended September 30, 1993)

10.28 Assignment and Agreement as to Certain Property Management
Services as related to Property Management Agreement No. 415
dated May 13, 1993, by and between Coventry Properties, Inc.
and Partnership Services, Inc. (Incorporated by reference to
the Quarterly Report on Form 10-Q for the quarter ended
September 30, 1993)

10.29 Property Management Agreement No. 425 dated May 13, 1993, by
and between the Partnership and Coventry Properties, Inc.
(Incorporated by reference to the Quarterly Report on Form
10-Q for the quarter ended September 30, 1993)

10.30 Assignment and Assumption Agreement (Property Management
Agreement No. 425) dated May 13, 1993, by and between
Coventry Properties, Inc., R&B Apartment Management Company
Inc. and Partnership Services, Inc. (Incorporated by
reference to the Quarterly Report on Form 10-Q for the
quarter ended September 30, 1993)

10.31 Assignment and Agreement as to Certain Property Management
Services as related to Property Management Agreement No. 425
dated May 13, 1993, by and between Coventry Properties, Inc.
and Partnership Services, Inc. (Incorporated by reference to
the Quarterly Report on Form 10-Q for the quarter ended
September 30, 1993)

10.32 Property Management Agreement No. 509 dated June 1, 1993, by
and between the Partnership and Coventry Properties, Inc.

10.33 Assignment and Assumption Agreement as to Certain Property
Management Services dated November 17, 1993, by and between
Coventry Properties, Inc. and Partnership Services, Inc.

10.34 Multifamily Note dated November 30, 1995 between CCIP/3, a
California limited partnership, and Lehman Brothers Holdings
Inc. d/b/a Lehman Capital, A Division of Lehman Brothers
Holdings Inc.(Incorporated by reference to the Annual Report
on Form 10-K for the year ended December 31, 1995)

10.35 Multifamily Note dated November 30, 1995 between CCIP/3, a
California limited partnership, and Lehman Brothers Holdings
Inc. d/b/a Lehman Capital, A Division of Lehman Brothers
Holdings Inc. (Incorporated by reference to the Annual Report
on Form 10-K for the year ended December 31, 1995)

10.36 Multifamily Note dated November 30, 1995 between CCIP/3, a
California limited partnership, and Lehman Brothers Holdings
Inc. d/b/a Lehman Capital, A Division of Lehman Brothers
Holdings Inc. (Incorporated by reference to the Annual Report
on Form 10-K for the year ended December 31, 1995)

10.37 Multifamily Note dated November 1, 1996 between CCIP/3, a
California limited partnership, and Lehman Brothers Holdings
Inc. d/b/a Lehman Capital, A Division of Lehman Brothers
Holdings Inc. (Incorporated by reference to the Annual Report
on Form 10-K for the year ended December 31, 1996)

10.38 Multifamily Note dated November 1, 1996 between CCIP/3, a
California limited partnership, and Lehman Brothers Holdings
Inc. d/b/a Lehman Capital, A Division of Lehman Brothers
Holdings Inc. (Incorporated by reference to the Annual Report
on Form 10-K for the year ended December 31, 1996)

10.39 Multifamily Note dated November 1, 1996 between CCIP/3, a
California limited partnership, and Lehman Brothers Holdings
Inc. d/b/a Lehman Capital, A Division of Lehman Brothers
Holdings Inc. (Incorporated by reference to the Annual Report
on Form 10-K for the year ended December 31, 1996)

10.40 Multifamily Note dated November 1, 1996 between CCIP/3, a
California limited partnership, and Lehman Brothers Holdings
Inc. d/b/a Lehman Capital, A Division of Lehman Brothers
Holdings Inc. (Incorporated by reference to the Annual Report
on Form 10-K for the year ended December 31, 1996)

10.41 Multifamily Note dated November 1, 1996 between CCIP/3, a
California limited partnership, and Lehman Brothers Holdings
Inc. d/b/a Lehman Capital, A Division of Lehman Brothers
Holdings Inc. (Incorporated by reference to the Annual Report
on Form 10-K for the year ended December 31, 1996)

11 Statement regarding computation of Net Income per Limited
Partnership Unit (Incorporated by reference to Note 8 of Item
8 - Financial Statements of this Form 10-K)

16 Letter, Dated August 12, 1992, from Ernst & Young to the
Securities and Exchange Commission regarding change in
certifying accountant. (Incorporated by reference to Form 8-
K dated August 6, 1992)

27 Financial Data Schedule.

28.1 Fee Owner's General Partnership Agreement (Incorporated by
reference to Registration Statement of Partnership (File No.
2-97664) filed July 23, 1985).

28.2 Fee Owner's Certificate of Partnership (Incorporated by
reference to Registration Statement of Partnership (File No.
2-97664) filed July 23, 1985).

(b)Reports on Form 8-K, filed during the fourth quarter of 1998:

Current Report on Form 8-K dated October 1, 1998 and filed October 16, 1998,
disclosing change in control of Registrant from Insignia Financial Group,
Inc. to AIMCO.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3

By: CONCAP EQUITIES, INC.
Its General Partner,

By: /s/ Patrick J. Foye
Patrick J. Foye
Executive Vice President

By: /s/ Timothy R. Garrick
Timothy R. Garrick
Vice President - Accounting

Date: March 26, 1999

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dated indicated.

/s/ Patrick J. Foye Executive Vice President Date: March 26, 1999
Patrick J. Foye and Director

/s/ Timothy R. Garrick Vice President - Accounting Date: March 26, 1999
Timothy R. Garrick and Director

<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Consolidated
Capital Institutional Properties/3 1998 Year-End 10-K and is qualified in its
entirety by reference to such 10-K filing.
</LEGEND>
<CIK> 0000768890
<NAME> CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 14,189
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 59,638
<DEPRECIATION> 16,507
<TOTAL-ASSETS> 60,779
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 27,925
0
0
<COMMON> 0
<OTHER-SE> 31,128
<TOTAL-LIABILITY-AND-EQUITY> 60,779
<SALES> 0
<TOTAL-REVENUES> 20,964
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 12,756
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,295
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,883
<EPS-PRIMARY> 20.37<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>

</TABLE>