Dean Witter Realty Income Partnership III LP – ‘10-K’ for 10/31/97

As of:  Wednesday, 1/28/98   ·   For:  10/31/97   ·   Accession #:  784161-98-1   ·   File #:  0-18146

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Annual Report   —   Form 10-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K        Annual Report                                         40±   147K 
 2: EX-1        Underwriting Agreement                                 2±     7K 

10-K   —   Annual Report
Document Table of Contents

21                                                                              

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

FORM 10-K                   

[ X ]     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF                    
THE SECURITIES EXCHANGE ACT OF 1934               
For the fiscal year ended October 31, 1997              

OR                    

[   ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)                   
OF                    
THE SECURITIES EXCHANGE ACT OF 1934               
For the transition period from ________ to ________.              

Commission File Number 0-18146              

DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.               
(Exact name of registrant as specified in its charter)              

Delaware                                                          
13-3293754                                                                      
(State of organization)                      (IRS Employer                      
Identification No.)                                                             

2 World Trade Center, New York, NY                                        
10048                                                                           
(Address of principal executive offices)                                        
(Zip Code)                                                                      

Registrant's telephone number, including area code:    (212)                    
392-1054                                                                        

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

Title of each class                Name of each exchange on                     
which registered                                                                
None                                    None                          

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

Units of Limited Partnership Interest                   
(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 stock held by                    
non-affiliates of the registrant. N/A                                           

DOCUMENTS INCORPORATED BY REFERENCE                   

None                    
PART I.                   

ITEM 1.  BUSINESS                                                               

The  Registrant, Dean Witter Realty Income Partnership  III,                    
L.P. (the "Partnership"), is a limited partnership formed in                    
August 1985 under the Uniform Limited Partnership Act of the                    
State of Delaware for the purpose of investing primarily  in                    
income-producing office, industrial and retail properties.                      

The  Managing  General Partner of the  Partnership  is  Dean                    
Witter  Realty  Income Properties III  Inc.  (the  "Managing                    
General  Partner"), a Delaware corporation which  is  wholly                    
owned  by Dean Witter Realty Inc.  ("Realty"). The Associate                    
General Partner is Dean Witter Realty Income Associates III,                    
L.P.  (the "Associate General Partner"), a Delaware  limited                    
partnership,  the general partner of which is  the  Managing                    
General  Partner.  The Managing General Partner manages  and                    
controls  all  aspects of the business of  the  Partnership.                    
The  terms of transactions between the Partnership  and  its                    
affiliates are set forth below in Note 8 to the consolidated                    
financial statements included in Item 8 and in Item 13.                         

The  Partnership issued 534,020 units of limited partnership                    
interest (the "Units") with gross proceeds from the offering                    
of  $267,010,000.  The offering has been terminated  and  no                    
additional Units will be sold.                                                  

The  proceeds  from the offering were used  to  make  equity                    
investments in six office properties (one of which was  sold                    
in  fiscal  1997,  and one of which was sold  subsequent  to                    
fiscal 1997) and five retail properties (three of which were                    
sold  in  fiscal 1996) which were acquired without  mortgage                    
debt.  The properties are described in Item 2 below.                            

The  Partnership  currently plans to  market  for  sale  its                    
remaining  properties during fiscal 1998, with the objective                    
of  completing sales of such properties by the end of  1998.                    
There  is no assurance that the Partnership will be able  to                    
achieve these objectives.                                                       

The  Partnership  considers  its  business  to  include  one                    
industry  segment,  investment in real property.   Financial                    
information   regarding   the   Partnership   is   in    the                    
Partnership's financial statements in Item 8 below.                             

The  Partnership's real property investments are subject  to                    
competition  from  similar  types  of  properties   in   the                    
vicinities  in which they are located.  Further  information                    
regarding  competition  and  market  conditions  where   the                    
Partnership's properties are located is set forth in Item 7,                    
"Management's Discussion and Analysis of Financial Condition                    
and Results of Operations."                                                     

The Partnership has no employees.                                               

All of the Partnership's business is conducted in the United                    
States.                                                                         

ITEM 2.  PROPERTIES                                                             

The Partnership's principal offices are located at Two World                    
Trade Center, New York, New York 10048.  The Partnership has                    
no other offices.                                                               

As of October 31, 1997, the Partnership owned directly or                       
through partnership interests the following seven property                      
interests, none of which is encumbered by indebtedness.                         
Generally, the leases pertaining to the properties provide                      
for pass-throughs to the tenants of their pro-rata share of                     
certain operating expenses.  In the opinion of the Managing                     
General Partner, all of the properties are adequately                           
covered by insurance.                                                           

                                                                [Download Table]

                      Year  Acquisition Net Rentable        
Type of                                                     
                    Completed/         Cost        Area     
Ownership of land                                           
Property and Location       Acquired  ($000)   (000 sq. ft.)
and Improvements                                            
                                                            
Glenhardie III,     1984/1986        $ 9,646      64   Fee  
interest                                                    
 Valley Forge, PA                                           
 Office Building                                            

Glenhardie IV,      1985/1986        $10,354      64   99.9%
General                                                     
 Valley Forge, PA                              partnership  
 Office Building                               interest1    

Westland Crossing   1986/1986        $13,225      137  Fee  
interest                                                    
 Westland, MI                                               
 Shopping Center                                            

Taxter Corporate Park,      1987-1988/  $23,063        345  
44.6% General                                               
 Westchester, NY    1986-1988                               
Partnership                                                 
 2 Office Buildings                            interest2    

Business Park at Holcomb    1984/1986   $23,100        244  
Fee interest4                                               
 Woods, Roswell, GA                                         
 4 Office Buildings                                         

Laurel Lakes Centre,        1987/1987   $51,297        466  
99.999% General                                             
 Laurel, MD                                    Partnership  
 Shopping Center                               interest1    

Chesterbrook Corporate      1982-1987/  $32,430        621  
26.7% General                                               
 Center, Valley Forge, PA    1987                           
Partnership                                                 
 8 Office Buildings                            interest3    


1                  The remaining general partnership ("GP")                     
interest is held by the Managing Partner.                                 

2                  The remaining GP interests are held by                       
Dean Witter Realty Income partnership II, L.P. (14.8%)                      
and Dean Witter Realty Income Partnership IV, L.P.                          
(40.6%), affiliates of the Partnership.  The total cost                     
of the property was $51.8 million.                                          

3                  The remaining GP interests are owned by                      
Dean Witter Realty Income Partnership IV, L.P. (41.2%)                      
and an affiliate of the Managing General Partner (32.1%).                   
The total cost of the property was $121.3 million.                          

4                  Sold subsequent to year-end.  See note 5                     
to the consolidated financial statements.                                   

Each property was built with on-site parking facilities.                        

In   the  first  quarter  of  fiscal  1997  Technology  Park                    
Associates (which is owned 35% by the Partnership and 65% by                    
Dean   Witter  Realty  Income  Partnership  IV,   L.P.,   an                    
affiliated  public partnership), and DW Technology  Park  II                    
Associates,  L.P.  (which  is owned  by  affiliates  of  the                    
General Partner) sold the Technology Park Reston office park                    
("Tech  Park")  property.  See note 6  to  the  consolidated                    
financial statements.                                                           

An  affiliate of the Partnership is the property manager for                    
Laurel  Lakes  Centre, Taxter Corporate Park,  and  Westland                    
Crossing  and  the  co-property manager for  the  Glenhardie                    
buildings  and five buildings at the Chesterbrook  Corporate                    
Center.                                                                         

Further information relating to the Partnership's properties                    
is  included  in  Item 7 and footnotes 4, 5  and  6  to  the                    
consolidated financial statements in Item 8.                                    

ITEM 3.  LEGAL PROCEEDINGS                                                      

On  December 27, 1995, a purported class action lawsuit (the                    
"Grigsby   Action")  naming  various  public   real   estate                    
partnerships sponsored by Realty (including the  Partnership                    
and  its  Managing  General Partner  and  Associate  General                    
Partner),  Realty,  Dean Witter Reynolds  Inc.  ("DWR")  and                    
others  as  defendants  was  filed  in  Superior  Court   in                    
California.    The   complaint  alleged   fraud,   negligent                    
misrepresentation,  intentional  and  negligent  breach   of                    
fiduciary  duty,  unjust enrichment and related  claims  and                    
sought  compensatory  and punitive  damages  in  unspecified                    
amounts  and  injunctive and other  equitable  relief.   The                    
defendants  removed the case to the United  States  District                    
Court for the Southern District of California.  Pursuant  to                    
an  order  of  the  U.S.  District Court  for  the  southern                    
District  of  California entered May 24, 1996,  the  Grigsby                    
Action  was transferred to the U.S. District Court  for  the                    
Southern District of New York.                                                  

On  February 14, 1996, a purported class action lawsuit (the                    
"Schectman  Action")  naming  various  public  real   estate                    
partnerships sponsored by Realty (including the  Partnership                    
and  its  Managing  General Partner), Realty,  Dean  Witter,                    
Discover  & Co. ("DWD") and DWR as defendants was  filed  in                    
the  Chancery Court of Delaware for New Castle  County  (the                    
"Delaware  Chancery  Court").   On  February  23,  1996,   a                    
purported  class action lawsuit (the "Dosky Action")  naming                    
various public real estate partnerships sponsored by  Realty                    
(including   the   Partnership  and  its  Managing   General                    
Partner),  Realty,  DWD, DWR and others  as  defendants  was                    
filed in the Delaware Chancery Court.  On February 29, 1996,                    
a purported class action lawsuit (the "Segal Action') naming                    
various public real estate partnerships sponsored by  Realty                    
(including   the   Partnership  and  its  Managing   General                    
Partner),  Realty,  DWR, DWD and others  as  defendants  was                    
filed in the Delaware Chancery Court.  On March 13, 1996,  a                    
purported  class action lawsuit (the "Young Action")  naming                    
the  partnership,  other unidentified limited  partnerships,                    
DWD,  DWR and others as defendants was filed in the  Circuit                    
Court  for  Baltimore  City  in  Baltimore,  Maryland.   The                    
defendants  removed the Young Action to  the  United  States                    
District Court for the District of Maryland.                                    

Thereafter, the Schectman Action, the Dosky Action  and  the                    
Segal  Action  were  consolidated in a  single  action  (the                    
"Consolidated Action") in the Delaware Chancery Court.   The                    
Young   Action   was  dismissed  without   prejudice.    The                    
plaintiffs in the Young Action and the Grigsby Action joined                    
the  Consolidated Action.  The Grigsby Action remains stayed                    
indefinitely subject to being reopened for good cause.                          

On  October  7,  1996,  the plaintiffs in  the  Consolidated                    
Action  filed a First Consolidated and Amended Class  Action                    
Complaint  naming  various public real  estate  partnerships                    
sponsored  by  Realty  (including the  Partnership  and  its                    
Managing  General Partner), Realty, DWD, DWR and  others  as                    
defendants.  This complaint alleges breach of fiduciary duty                    
and seeks an accounting of profits, compensatory damages  in                    
an   unspecified   amount,  possible  liquidation   of   the                    
Partnership  under  a  receiver's  supervision   and   other                    
equitable relief.  The defendants filed a motion to  dismiss                    
this complaint on December 10, 1996.                                            

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

No  matter  was submitted during the fourth quarter  of  the                    
fiscal year to a vote of Unit holders.                                          

PART II.                    

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

An  established public trading market for the Units does not                    
exist,  and  it is not anticipated that such a  market  will                    
develop  in the future. Accordingly, information as  to  the                    
market  value of a Unit at any given date is not  available.                    
However,  the  Partnership does allow its  limited  partners                    
(the  "Limited  Partners")  to transfer  their  Units  if  a                    
suitable buyer can be located.                                                  

As  of January 6, 1998, there were 35,285 holders of limited                    
partnership interests.                                                          

The  Partnership is a limited partnership and,  accordingly,                    
does  not  pay dividends.  It does, however, make  quarterly                    
distributions  of  cash to its partners.   Pursuant  to  the                    
partnership  agreement, distributable cash, as  defined,  is                    
paid  90%  to  the Limited Partners and 10% to  the  general                    
partners (the "General Partners").                                              

During the year ended October 31, 1997, the Partnership paid                    
quarterly  cash  distributions aggregating $49.95  per  Unit                    
(including $31.55 of proceeds from the sale of the Tech Park                    
property.    Total  distributions  were  $27,765,758,   with                    
$26,673,984   distributed  to  the  Limited   Partners   and                    
$1,091,774  to  the General Partners.  The  distribution  of                    
proceeds  from the Tech Park property was paid 100%  to  the                    
Limited  Partners.  During the year ended October 31,  1996,                    
the    Partnership   paid   quarterly   cash   distributions                    
aggregating  $87.98 per Unit, including $66.40  of  proceeds                    
from  properties  sold  in 1996.  Total  distributions  were                    
$48,260,574,   with  $46,980,410  distributed   to   Limited                    
Partners and $1,280,164 to the General Partners.                                

On  November  25,  1997,  the Partnership  paid  the  fourth                    
quarter  distribution  of  $2.30 per  Unit  to  the  Limited                    
Partners.    The   total  cash  distribution   amounted   to                    
$1,364,718,  with  $1,228,246  distributed  to  the  Limited                    
Partners and $136,472 to the General Partners.                                  

On   November   26,   1997,   the  Partnership   distributed                    
$18,722,741 of the net proceeds from the sale of the Holcomb                    
Woods property ($35.06 per Unit). The distribution was  paid                    
100% to Limited Partners.                                                       

The Partnership anticipates making regular distributions  to                    
its partners in the future.  Future cash distribution levels                    
will   fluctuate  based  on  cash  flow  generated  by   the                    
Partnership's  remaining properties  and  proceeds  received                    
from property sales.                                                            

Sale  or  financing  proceeds will be  distributed,  to  the                    
extent  available,  first, to each  Limited  Partner,  until                    
there  has  been  a return of the Limited Partner's  capital                    
contribution  plus cumulative distributions of distributable                    
cash  and sale or financing proceeds in an amount sufficient                    
to  provide  a  9% cumulative annual return on  the  Limited                    
Partner's  adjusted capital contribution.   Thereafter,  any                    
remaining sale or financing proceeds will be distributed 85%                    
to  the  Limited  Partners and 15% to the  General  Partners                    
after the Managing General Partner receives a brokerage fee,                    
if  earned,  of up to 3% of the selling price of any  equity                    
investment.                                                                     

Taxable  income  generally will be  allocated  in  the  same                    
proportions as distributions of distributable cash  or  sale                    
or financing proceeds (except that the General Partners must                    
be  allocated at least 1% of taxable income from the sale or                    
financing).  In the event there is no distributable cash  or                    
sale or financing proceeds, taxable income will be allocated                    
90% to the Limited Partners and 10% to the General Partners.                    
Any  tax  loss will be allocated 90% to the Limited Partners                    
and 10% to the General Partners.                                                

ITEM 6.  SELECTED FINANCIAL DATA                                                

The  following  sets  forth a summary of selected  financial                    
data for the Partnership:                                                       

                                                                [Download Table]

                            For the years ended October 31, 

                  19971             19962               1995
1994            1993                                        
                                                            
Total  revenues        $ 14,751,226       $  16,198,761    $
8,946,798   $ 20,279,777       $  7,977,133                 

Net  income  (loss)    $  6,739,122       $  (4,954,508)   $
(3,564,379)3         $  9,711,910       $ (3,002,627)4      

Net income                                                  
 (loss) per                                                 
 Unit of                                                    
 limited                                                    
 partnership                                                
   interest    $       11.53        $        (8.35)        $
(6.24)      $      16.37       $      (5.06)                

Cash distribu-                                              
 tions paid                                                 
 per Unit of                                                
 limited                                                    
 partnership                                                
   interest5   $       49.95        $        87.98         $
22.81       $      20.00       $      20.00                 

Total assets at                                             
      October     31     $103,790,868           $124,778,502
$177,988,847         $195,350,000       $197,751,501        

1 Revenues and net income include the effect of the sale  of                    
the  Tech  Park  property. See Note 6 to the  consolidated                  
financial statements.                                                       

2 Revenues  and net loss include the effect of the  sale  of                    
the  Delta Center, Fashion Corners, and Hall Road shopping                  
centers.   Net loss also includes losses on impairment  of                  
the  Glenhardie  and  Holcomb  Woods  properties  of  $4.7                  
million and $7.7 million, respectively.                                     

3 Includes a $1.3 million writedown of real estate held  for                    
sale  and the Partnership's share ($11.5 million) of  loss                  
on impairment of the Chesterbrook property.                                 

4 Includes the Partnership's $12.4 million share of loss  on                    
impairment of the Taxter property.                                          

5 Distributions paid to limited partners include returns  of                    
capital  per  Unit  of  limited  partnership  interest  of                  
$49.95,  $87.98, $22.81, $8.69 and $20.00  for  the  years                  
ended  October  31,  1997, 1996,  1995,  1994,  and  1993,                  
respectively,   calculated   as   the   excess   of   cash                  
distributed  per Unit over accumulated earnings  per  Unit                  
not previously distributed.                                                 

The  above financial data should be read in conjunction with                    
the  consolidated financial statements and the related notes                    
in Item 8.                                                                      

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

Liquidity and Capital Resources                                                 

The Partnership raised $267,010,000 in a public offering  of                    
534,020 Units which was terminated in 1987.  The Partnership                    
has no plans to raise additional capital.                                       

The Partnership purchased, directly or through a partnership                    
interest  six office properties (one of which  was  sold  in                    
fiscal  1997, and one of which was sold subsequent to fiscal                    
1997)  and five retail properties (three of which were  sold                    
in  fiscal 1996).  The Partnership's acquisition program has                    
been completed.  No additional investments are planned.                         

In  1997  limited speculative construction  and  the  strong                    
economy, low unemployment and corporate growth continued  to                    
positively impact the demand for office properties.  In many                    
markets, tenant competition for a shrinking amount of office                    
space has had a positive influence on rental rates and lease                    
terms.   Capital  has been readily available for  investment                    
and   financing   of  real  estate.   Investors,   including                    
institutional, foreign and REIT investors, have been  buying                    
office buildings in many markets.                                               

In   the   retail  sector,  consolidation  among   retailers                    
continued  to  lessen  the demand  for  retail  space.   The                    
abundance  of  available retail space  and  sub-lease  space                    
being  offered  by  retailers (usually at lower  rents)  has                    
exerted downward pressure on rents in many markets.  Despite                    
the oversupply of retail space, new projects are being built                    
and  planned,  although  the pace of  new  construction  has                    
slowed  considerably.   Many outdated properties  are  being                    
redeveloped   in   order  to  compete  with   newer   retail                    
properties.                                                                     

On  December 31, 1996 Technology Park Associates  (which  is                    
owned  35% by the Partnership and 65% by Dean Witter  Realty                    
Income   Partnership   IV,  L.P.,   an   affiliated   public                    
partnership),  and  DW Technology Park II  Associates,  L.P.                    
(which  is owned by affiliates of the General Partner)  sold                    
the  Technology Park Reston office park.  See note 6 to  the                    
consolidated financial statements.                                              

The  Partnership's  liquidity depends upon  cash  flow  from                    
operations  of  its properties and expenditures  for  tenant                    
improvements and leasing commissions in connection with  the                    
leasing  of  space.   In  1997,  all  of  the  Partnership's                    
properties  and  joint venture interests generated  positive                    
cash  flow from operations, and it is anticipated that  they                    
will continue to do so in fiscal 1998.                                          

In  addition, the Partnership's liquidity has been and  will                    
continue  to  be  affected by the sale of the  Partnership's                    
properties.  The Holcomb Woods property was sold on November                    
7,   1997   (See  Note  5  to  the  consolidated   financial                    
statements),  and  the  Managing General  Partner  currently                    
plans  to market for sale the Partnership's remaining office                    
properties  in 1998, with the objective of completing  sales                    
of all the Partnership properties by the end of fiscal 1998.                    
There  is  no  assurance the Partnership  will  be  able  to                    
achieve  these objectives.  As the properties are sold,  the                    
Partnership  has  fewer  income  producing  investments  and                    
Partnership    cash   from   operations   and    Partnership                    
distributions will decline.                                                     

In   1997,  excluding  proceeds  and  distribution   amounts                    
relating  to  property sales, Partnership  distributions  to                    
investors,  capital expenditures, leasing  commissions,  and                    
contributions to its joint ventures exceeded cash flow  from                    
operations  and  distributions  received  from   its   joint                    
ventures.  This  shortfall was funded  from  cash  reserves,                    
which the MGP determined were in excess of the Partnership's                    
needs.   The  Partnership believes, remaining cash  reserves                    
will be sufficient for its future needs.                                        

In 1997, the Partnership (a) incurred approximately $753,000                    
of  tenant  improvements and leasing commissions,  primarily                    
relating  to  the  Glenhardie (approximately  $218,000)  and                    
Holcomb  Woods (approximately $424,000) properties; and  (b)                    
contributed approximately $346,000 to the Chesterbrook joint                    
venture  and  $232,000 to the Taxter joint venture  for  its                    
share of capital expenditures and leasing commissions.                          

As  of October 31, 1997, the Partnership has commitments  to                    
fund  capital expenditures and leasing commissions  totaling                    
approximately   $1,219,000,  primarily  at  the   Glenhardie                    
property.   The  Partnership also has  commitments  to  fund                    
approximately $332,000 for its share of capital expenditures                    
and  leasing  commissions  at the  Taxter  and  Chesterbrook                    
properties.                                                                     

In  connection  with a new lease at Westland  Crossing,  the                    
Partnership  committed  to  demolish  approximately   20,000                    
square  feet  of existing tenant space and to  construct  an                    
additional  7,000 square feet of new space  for  a  PetsMart                    
store  at a cost of approximately $1.7 million. Construction                    
is  to  commence  in  the spring of 1998.   The  Partnership                    
anticipates  funding  the  construction  costs   from   cash                    
reserves and proceeds from future property sales.                               
The  Partnership may incur material capital expenditures  to                    
lease  vacant  space  at  the Laurel Lakes  Centre  shopping                    
center.   The  amount of such expenditures is  uncertain  at                    
this  time.   To  the extent that the vacant  space  at  the                    
property is not re-leased, the Partnership's cash flow  will                    
be reduced.                                                                     

A portion of capital expenditures and leasing commissions is                    
expected  to  be  funded from Partnership cash  reserves  in                    
1998.   The Managing General Partner believes cash  reserves                    
will be sufficient for the Partnership's future needs.                          

Total  distributions in fiscal 1997 were  $27,765,758,  with                    
$26,673,984  ($49.95 per Unit) distributed  to  the  Limited                    
Partners,  of which $16,848,016 ($31.55 per Unit)  was  from                    
the  sale  of  Tech  Park,  and $1,091,774  to  the  General                    
Partners.   The Partnership decreased its cash  distribution                    
per  Unit  from $4.25 per quarter to $2.30 for the quarterly                    
distribution  paid  on  November 25, 1997.  The  total  cash                    
distribution   amounted  to  $1,364,718,   with   $1,228,246                    
distributed  to  the Limited Partners and  $136,472  to  the                    
General Partners.                                                               

On   November   26,   1997,   the  Partnership   distributed                    
$18,722,741 of the net proceeds from the sale of the Holcomb                    
Woods property ($35.06 per Unit). The distribution was  paid                    
100%  to  Limited Partners.  See note 5 to the  consolidated                    
financial statements.                                                           

Future cash distribution levels will fluctuate based on cash                    
flow generated by the Partnership's remaining properties and                    
proceeds received from future property sales.                                   

Except  as described above and in the consolidated financial                    
statements, the Managing General Partner is not aware of any                    
trends  or  events,  commitments or uncertainties  that  may                    
impact liquidity in a material way.                                             

Operations                                                                      

Fluctuations in the Partnership's operating results for  the                    
year  ended  October 31, 1997 compared to 1996 and  for  the                    
year  ended October 31, 1996 compared to 1995 were primarily                    
attributable to the following:                                                  

Rental  revenues  decreased  in the  respective  comparative                    
periods due to decreased revenues at the Laurel Lakes Centre                    
of   approximately  $605,000  and  $803,000  due  to   lower                    
occupancy and reduced passthrough income and the absence  of                    
rental  income  of approximately $441,000 and  $4.7  million                    
from  three  shopping centers which were sold in  the  first                    
quarter of fiscal 1996 (the "Shopping Centers Sold").  These                    
decreases in 1996 vs. 1995 were offset by increases  at  the                    
Partnership's  other  properties;  no  individual   property                    
accounted for a material portion of the change.                                 

No individual factor accounted for a material portion of the                    
increase  in  equity in earnings of joint ventures  in  1997                    
compared  to  1996.  The increase in equity in  earnings  of                    
joint ventures in 1996 compared to 1995 was primarily due to                    
the  1995  recognition  by  the  Partnership  of  its  share                    
(approximately  $11.5  million)  of  the  writedown  on  the                    
impairment of the Chesterbrook property.                                        

Operating  expenses decreased in the respective  comparative                    
periods,  primarily due to the absence of operating expenses                    
of  the  Shopping  Centers  Sold.  Operating  expenses  also                    
decreased  in  1997  vs. 1996 because of decreased  building                    
service   expenses   and   other   operating   expenses   of                    
approximately $255,000 at Laurel Lakes Centre.                                  

Depreciation decreased by approximately $1.2 million in 1996                    
compared to 1995 due to the absence of depreciation in  1996                    
on  the  Shopping  Centers Sold and  the  writedown  of  the                    
Glenhardie and Holcomb Woods properties in January 1996.                        

The  1996 loss on impairment of real estate was due  to  the                    
impairment  writedowns on the Glenhardie and  Holcomb  Woods                    
properties totaling approximately $12.4 million.   The  1995                    
loss on writedown of real estate held for sale is due to the                    
reduction  of  the  carrying values of the Shopping  Centers                    
Sold  and  Westland Crossing to the price at  which  it  was                    
agreed they would be sold, net of closing costs.                                

A  summary of the markets in which the Partnership's  office                    
properties are located and the performance of each  property                    
is as follows:                                                                  

The  Business Park at Holcomb Woods is located in the  north                    
central   corridor  of  suburban  Atlanta  where   continued                    
economic   recovery   has  resulted  in   increased   office                    
occupancies.    The   current   market   vacancy   rate   is                    
approximately 3%.  During fiscal 1997, the average occupancy                    
at  the  property  was  98%, and at  October  31,  1997  the                    
property was 99% leased to 26 tenants.  The property was 96%                    
leased  at October 31, 1996. The Holcomb Woods property  was                    
sold subsequent to year end.  See note 5 to the consolidated                    
financial statements.                                                           

The   office  market  in  Valley  Forge,  Pennsylvania,  the                    
location  of  the Chesterbrook Corporate Center,  has  shown                    
continued  improvement with rental rates rising and  limited                    
availability  of larger space.  Market vacancy  improved  to                    
less  than 12%.  At October 31, 1997 the property  was  100%                    
leased  to  29 tenants, compared to 99% at the prior  fiscal                    
year-end. The average occupancy during fiscal 1997 was  99%.                    
Leases for approximately 16% of total space expire in fiscal                    
1998.   The  leases  of Philadelphia Electric  Company  (for                    
approximately  20% of total space), Aetna Health  Plan  (for                    
approximately 12% of total space) and Dun & Bradstreet  (for                    
approximately  12%  of total space) expire  in  fiscal  year                    
2000.  There are no other significant tenants.                                  

Glenhardie  Corporate Center III & IV  is  also  located  in                    
Valley  Forge, Pennsylvania.  During 1997, average occupancy                    
at  the  property  was  94%, and at  October  31,  1997  the                    
property was 100% leased to 26 tenants, compared to  97%  at                    
the prior fiscal year-end.  Significant tenants and the year                    
of  their lease expiration are:  Allstate Insurance  Company                    
which vacated in May 1997 on expiration of its lease and, in                    
October leased approximately 11% of total space - 2002;  New                    
England  Life,  which  signed a lease in  October  1997  for                    
approximately 14% of space - 2004; and Dean Witter Reynolds,                    
(an   affiliate  of  the  Managing  General   Partner)   for                    
approximately 10% of total space - 2005.                                        

The   overall  vacancy  level  in  the  office   market   in                    
Westchester  County,  New  York,  the  location  of   Taxter                    
Corporate  Park,  decreased from 24% to  17%  in  1997.  The                    
vacancy  level in the west Westchester market in  which  the                    
building  is  located  is currently  11%,  reflecting  a  4%                    
absorption in fiscal 1997 over the prior year.  During 1997,                    
average occupancy at the property was approximately 99%, and                    
at  October  31, 1997, the property was 100%  occupied.  The                    
property  is leased to 21 tenants.  KLM Royal Dutch Airlines                    
owns a long-term leasehold in approximately 20% of the space                    
at  the  property.  Leases aggregating approximately 15%  of                    
the  property's space expire in fiscal 1999.  The  lease  of                    
Fuji  Photo  Film (for approximately 28% of  the  property's                    
space) expires in fiscal 2001. No other tenants occupy  more                    
than 10% of the property.                                                       

Tech Park Reston, located in the Reston Virgnia market,  was                    
100%  leased  during  1996  to Sprint  Communications.   The                    
property was sold on December 31, 1996.  See Note 6  to  the                    
consolidated financial statements.                                              

A  summary of the markets in which the Partnership's  retail                    
properties  are  located  and the  leasing  status  of  each                    
property is as follows:                                                         

Laurel Lakes Centre is located in a suburb of Baltimore  and                    
Washington,   D.C.,   where  retail  centers   continue   to                    
experience lower net rental rates.  The market vacancy  rate                    
is  currently  approximately 16%.  Some  retailers  in  this                    
market  are  experiencing financial difficulties.   However,                    
the  property's design, location and tenant mix has  enabled                    
it  to  maintain relatively stable rental rates.  At October                    
31, 1997, occupancy at the property decreased to 79% (leased                    
to   29  tenants)  from  81%  at  October  31,  1996.    The                    
Partnership is considering the consolidation of portions  of                    
the  vacant  small  shop  space  at  the  center  and  other                    
redevelopment alternatives which would enhance the value  of                    
the   property,  some  of  which  would  require  additional                    
investment by the Partnership.  The leases of K-Mart (18% of                    
total  space),  Hoyts Cinemas (10% of total space),  Safeway                    
Stores  (11%  of  total space) and Best Buy  (11%  of  total                    
space),  expire in 2005, 2005, 2006 and 2010,  respectively.                    
No  other tenant occupies more than 10% of the property, and                    
no  leases  for  significant amounts of space  expire  until                    
2005.                                                                           

Westland  Crossing is situated outside downtown Detroit  and                    
is  in  an overbuilt market with a current vacancy  rate  of                    
approximately 20%. Nevertheless, a significant amount of new                    
retail  space  is under construction which,  when  complete,                    
will  compete  with  Westland  Crossing  for  tenants.   The                    
property has a current occupancy rate of 69%, leased  to  14                    
tenants,  (vs.  67%  at the prior fiscal year-end),  and  an                    
average occupancy rate of 58% in fiscal 1997.  In the fourth                    
quarter of fiscal 1997 the Partnership leased 25,000  square                    
feet  of  vacant anchor space to Office Depot.  As described                    
above,  a  lease  agreement  was signed  with  PetsMart  for                    
approximately 27,000 square feet of space.  The  Partnership                    
continues  to  look for opportunities to consolidate  vacant                    
small  shop  space to make room for larger tenants.   Leases                    
for  approximately  9%  of the property's  space  expire  in                    
fiscal  1998.   The  lease  of  Frank's  Supercrafts,  which                    
occupies  approximately 16% of the shopping center,  expires                    
in  fiscal 2006.  No other tenant occupies more than 10%  of                    
the property.                                                                   

Inflation                                                                       

Inflation  has  been  consistently low  during  the  periods                    
presented in the financial statements and, as a result,  has                    
not  had  a  significant  effect on the  operations  of  the                    
Partnership or its properties.                                                  
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                            

DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.                   

INDEX                   

                            Page

Independent Auditors' Report                        [UPDATE]                    
Consolidated Balance Sheets at October 31, 1997 and 1996                        
Consolidated Statements of Operations for the years ended                       
October 31, 1997, 1996 and 1995                                               
Consolidated Statements of Partners' Capital for the                            
years ended October 31, 1997, 1996 and 1995                                   
Consolidated Statements of Cash Flows for the years ended                       
October 31, 1997, 1996, and 1995                                              
Notes to Consolidated Financial Statements                                      

Real Estate and Accumulated Depreciation Schedule                               
         III

All  schedules  other than those indicated above  have  been                    
omitted  because  either  the required  information  is  not                    
applicable  or the information is shown in the  consolidated                    
financial statements or notes thereto.                                          

Independent Auditors' Report                                                    

To The Partners of                                                              
Dean Witter Realty Income Partnership III, L.P.:                                

We have audited the accompanying consolidated balance sheets                    
of  Dean  Witter  Realty Income Partnership  III,  L.P.  and                    
consolidated partnerships (the "Partnership") as of  October                    
31, 1997 and 1996 and the related consolidated statements of                    
operations, partners' capital and cash flows for each of the                    
three  years  in  the period ended October  31,  1997.   Our                    
audits also included the financial statement schedule listed                    
in  the  Index  at Item 8.  These financial  statements  and                    
financial statement schedule are the responsibility  of  the                    
Partnership's management.  Our responsibility is to  express                    
an   opinion  on  the  financial  statements  and  financial                    
statement schedule 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                    
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,  such  consolidated  financial  statements                    
present  fairly,  in  all material respects,  the  financial                    
position of Dean Witter Realty Income Partnership III,  L.P.                    
and  consolidated partnerships as of October  31,  1997  and                    
1996  and  the  results of their operations and  their  cash                    
flows  for  each  of  the three years in  the  period  ended                    
October  31,  1997  in  conformity with  generally  accepted                    
accounting principles.  Also, in our opinion, such financial                    
statement schedule, when considered in relation to the basic                    
consolidated financial statements taken as a whole, presents                    
fairly  in  all material respects the information set  forth                    
therein.                                                                        
                         /s/Deloitte   &
Touche LLP                                                                      
                       DELOITTE & TOUCHE
LLP                                                                             

January 16, 1998                                                                

                                                                [Download Table]
         DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.       

                   CONSOLIDATED BALANCE SHEETS                 

                 As of October 31, 1997 and 1996               

                                            1997        1996   
                                                               
                             ASSETS                            
Cash and cash equivalents                 $  1,967,110 $       
2,380,612                                                      

Real estate, at cost:                                          
 Land                                       10,023,904         
11,263,904                                                     
 Buildings and improvements                 72,927,556         
90,921,733                                                     
                                            82,951,460         
102,185,637                                                    
 Accumulated depreciation                  (20,484,407)        
(25,226,740)                                                   
                                            62,467,053         
76,958,897                                                     

Real estate held for sale                   11,941,818        -

Investments in joint ventures               24,127,982         
41,727,417                                                     

Deferred leasing commissions, net              799,948         
938,381                                                        

Other assets                                 2,486,957         
2,773,195                                                      
                                          $103,790,868         
$124,778,502                                                   

                LIABILITIES AND PARTNERS' CAPITAL              

Accounts payable and accrued liabilities  $    652,515 $       
615,102                                                        

Security deposits                              156,945         
155,356                                                        

                                               809,460         
770,458                                                        

Partners' capital (deficiency):                                
 General partners                           (8,453,230)        
(7,942,412)                                                    
 Limited partners ($500 per Unit 534,020 Units issued)         
111,434,638                                131,950,456         

  Total partners' capital                  102,981,408         
124,008,044                                                    

                                          $103,790,868         
$124,778,502                                                   

  See accompanying notes to consolidated financial statements. 
                                                                [Download Table]
         DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.         

              CONSOLIDATED STATEMENTS OF OPERATIONS              

      For the years ended October 31, 1997, 1996, and 1995       

                                         1997                1996
1995                                                             
                                                                 
Revenues:                                                        
 Rental                                       $10,824,205        
$11,897,566                         $16,677,181                  
 Equity in earnings (losses) of joint ventures                   
3,599,828                             3,477,991                  
(8,222,327)                                                      
 Interest                               243,119                  
668,471                                 234,446                  
 Other                                             84,074        
154,733                                 257,498                  

                                     14,751,226                  
16,198,761                            8,946,798                  

Expenses:                                                        
 Property operating                   3,530,892                  
4,418,272                             5,381,373                  
 Depreciation                         3,133,640                  
3,046,695                             4,565,589                  
 Amortization                           308,136                  
274,820                                 277,901                  
 General and administrative           1,039,436                  
990,610                               1,021,431                  
 Losses on impairment of real estate                -            
12,422,872                                 -                     
 Loss on writedown of real estate held for                       
  sale                                              -         -  
1,264,883                                                        

                                      8,012,104                  
21,153,269                           12,511,177                  

Net income (loss)                   $ 6,739,122                  
$(4,954,508)                        $(3,564,379)                 

Net income (loss) allocated to:                                  
 Limited partners                   $ 6,158,166                  
$(4,459,057)                        $(3,334,429)                 
 General partners                       580,956                  
(495,451)                              (229,950)                 

                                    $ 6,739,122                  
$(4,954,508)                        $(3,564,379)                 

Net income (loss) per Unit of limited                            
 partnership interest               $     11.53         $        
(8.35)                              $     (6.24)                 

  See accompanying notes to consolidated financial statements.   
                                                                [Download Table]
         DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.        

           CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL          

       For the years ended October 31, 1997, 1996 and 1995      


                                 Limited     General            
                                 Partners    Partners      Total
                                                                
Partners' capital (deficiency) at                               
 November 1, 1994              $198,906,684                     
$(4,583,254)                   $194,323,430                     

Net loss                                     (3,334,429)        
(229,950)                        (3,564,379)                    

Cash distributions              (12,182,332)                    
(1,353,593)                     (13,535,925)                    

Partners' capital (deficiency) at                               
 October 31, 1995               183,389,923                     
(6,166,797)                     177,223,126                     

Net loss                                     (4,459,057)        
(495,451)                        (4,954,508)                    

Cash distributions              (46,980,410)                    
(1,280,164)                     (48,260,574)                    

Partners' capital (deficiency) at                               
 October 31, 1996               131,950,456                     
(7,942,412)                     124,008,044                     

Net income                        6,158,166                     
580,956                           6,739,122                     

Cash distributions              (26,673,984)                    
(1,091,774)                     (27,765,758)                    

Partners' capital (deficiency) at                               
 October 31, 1997              $111,434,638                     
$(8,453,230)                   $102,981,408                     

  See accompanying notes to consolidated financial statements.  
                                                                [Download Table]
         DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.         

              CONSOLIDATED STATEMENTS OF CASH FLOWS              

       For the years ended October 31, 1997, 1996 and 1995       


                                        1997      1996      1995 
                                                                 
Cash flows from operating activities:                            
   Net   income  (loss)                  $   6,739,122          $
(4,954,508)                        $ (3,564,379)                 
  Adjustments to reconcile net income                            
  (loss) to net cash provided by operating                       
  activities:                                                    
            Depreciation                                3,133,640
3,046,695                             4,565,589                  
            Amortization                                  308,136
274,820      277,901                                             
   Equity in (earnings) losses of joint                          
              ventures                                (3,599,828)
(3,477,991)                           8,222,327                  
   Loss on writedown of real estate held                         
        for    sale                                -            -
1,264,883                                                        
     Loss   on   impairment  of  real   estate                  -
12,422,872                                -                      
   (Increase) decrease in operating assets:                      
          Deferred     leasing     commissions          (169,703)
(244,999)                              (517,660)                 
           Other       assets                             286,238
130,897     (410,290)                                            
   Increase(decrease) in operating liabilities:                  
         Accounts     payable     and     accrued     liabilities
37,413        18,626                    (15,805)                 
           Security       deposits                          1,589
(13,889)                                (20,402)                 

      Net cash provided by operating                             
                activities                              6,736,607
7,202,523                             9,802,164                  

Cash flows from investing activities:                            
   Proceeds   from  sale  of   real   estate                    -
35,256,585                                -                      
     Additions    to    real    estate                  (583,614)
(1,040,895)                          (1,021,987)                 
     Investment    in    joint    ventures              (578,613)
(678,346)                            (1,816,036)                 
     Distributions     from    joint    ventures       21,777,876
5,213,755                             5,576,322                  

      Net cash provided by investing                             
                activities                             20,615,649
38,751,099                            2,738,299                  

                           (continued)                           
                                                                [Download Table]
         DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.         

              CONSOLIDATED STATEMENTS OF CASH FLOWS              

       For the years ended October 31, 1997, 1996 and 1995       
                           (continued)                           

                                        1997      1996      1995 
                                                                 
Cash flows from financing activities:                            
       Cash       distributions                      (27,765,758)
(48,260,574)                        (13,535,925)                 

Decrease   in  cash  and  cash  equivalents             (413,502)
(2,306,952)                            (995,462)                 

Cash    and    cash    equivalents   at   beginning    of    year
2,380,612                                               4,687,564
5,683,026                                                        

Cash  and  cash equivalents at end of year     $   1,967,110    $
2,380,612                          $  4,687,564                  

Supplemental disclosure of non-cash investing                    
 activities:                                                     
  Reclassification of real estate held for sale                  
  and writeoff of related assets and liabilities:                
   Real estate, at cost                                          
      Land                                     $  1,240,000     $
- $  5,843,309                                                   
      Buildings  and improvements     18,111,954                -
52,939,906                                                       
      Accumulated  depreciation       (7,410,136)               -
(12,355,956)                                                     

      Real  estate, net               11,941,818                -
46,427,259                                                       

      Deferred   leasing   commissions             -            -
224,508                                                          
       Other    assets                             -            -
333,386                                                          
       Accounts    payable                         -            -
(175,752)                                                        
      Tenant   security   deposits                 -            -
(48,890)                                                         
   Loss on writedown of real estate held                         
     for sale                            -         -             
(1,264,883)                                                      

   Real estate held for sale       $11,914,818         $     -   
$ 45,495,628                                                     

 Reclassification of real estate from held                       
  for sale to real estate:                                       
   Land                                      $     -   $         
1,023,904                          $      -                      
   Buildings and improvements            -     9,215,139         
-                                                                

  Real estate, net                 $     -   $10,239,043    $    
-                                                                
  See accompanying notes to consolidated financial statements.   

DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.                   

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                    

October 31, 1997, 1996 and 1995                   

1.   The Partnership                                                            

Dean   Witter   Realty   Income  Partnership   III,   L.P.   (the               
"Partnership")  is  a  limited partnership  organized  under  the               
laws  of  the  State  of Delaware in 1985.   The  Partnership  is               
managed  by  Dean  Witter  Realty  Income  Properties  III   Inc.               
(the  "Managing  General  Partner").   The  Partnership's  fiscal               
year ends on October 31.                                                        

In  1986  and  1987,  the  Partnership issued  534,020  units  of               
limited  partnership  interest (the  "Units")  for  $267,010,000.               
No   additional  Units  will  be  sold.   The  proceeds  of   the               
offering  were  used  to  make  investments  in  income-producing               
office,   industrial  and  retail  properties  which   were   not               
encumbered by debt.                                                             

2.   Summary of Significant Accounting Policies                                 

The   financial   statements  include   the   accounts   of   the               
Partnership,  Part  Six  Associates  (owner  of  Glenhardie   IV)               
and   Laurel-Vincent   Place   Associates   Limited   Partnership               
(owner  of  the  Laurel  Lakes Centre) on a  consolidated  basis.               
The  Partnership  owns  99.9%  and  99.999%  General  Partnership               
interests  in  Part  Six  Associates  and  Laurel-Vincent   Place               
Associates  Limited  Partnership,  respectively.   The  remaining               
interests  in  these  partnerships  are  held  by  the   Managing               
General Partner.                                                                

The   Partnership's   44.6%  general  partnership   interest   in               
Taxter  Corporate  Park,  35%  general  partnership  interest  in               
Tech  Park  Reston  and  26.7% general  partnership  interest  in               
the    partnership   which   owns   interests   in   Chesterbrook               
Corporate Center are accounted for on the equity method.                        

The   Partnership's  records  are  maintained  on   the   accrual               
basis   of   accounting   for   financial   reporting   and   tax               
purposes.    The   preparation   of   financial   statements   in               
conformity   with   generally  accepted   accounting   principles               
requires  management  to  make  estimates  and  assumptions  that               
affect  the  reported  amounts  of  assets  and  liabilities  and               
disclosure  of  contingent assets and  liabilities  at  the  date               
of              the              financial             statements               

DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.                   

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                    

and  the  reported  amounts of revenues and expenses  during  the               
reporting  period.   Actual  results  could  differ  from   those               
estimates.                                                                      

Cash  and  cash  equivalents consist of cash  and  highly  liquid               
investments  with  maturities, when purchased,  of  three  months               
or less.                                                                        

The   carrying  value  of  real  estate  includes  the   purchase               
price   paid  by  the  Partnership  and  acquisition   fees   and               
expenses.    Costs   of  improvements  to  the   properties   are               
capitalized,   and   repairs  are  expensed.    Depreciation   is               
recorded  on  the  straight-line method.  The  Partnership  stops               
recording  depreciation  on a property when  it  is  reclassified               
as held for sale.                                                               

At  least  annually,  and  more often if  circumstances  dictate,               
the   Partnership  evaluates  the  recoverability  of   the   net               
carrying  value  of  its  real estate  and  any  related  assets.               
As  part  of  this  evaluation, the Partnership  assesses,  among               
other  things,  whether  there has been  a  significant  decrease               
in  the  market  value of any of its properties.   If  events  or               
circumstances  indicate  that  the  net  carrying  value   of   a               
property  may  not  be  recoverable,  the  expected  future   net               
cash  flows  from  the property are estimated  for  a  period  of               
approximately   five   years  (or  a  shorter   period   if   the               
Partnership  expects  that  the  property  may  be  disposed   of               
sooner),  along  with  estimated sales proceeds  at  the  end  of               
the  period.   If  the  total of these future  undiscounted  cash               
flows  were  less  than  the carrying  amount  of  the  property,               
the  property  would  be  written  down  to  its  fair  value  as               
determined  (in  some  cases  with  the  assistance  of   outside               
real  estate  consultants) based on discounted  cash  flows,  and               
a  loss  on  impairment  recognized  by  a  charge  to  earnings.               
The  Partnership's  accounting  policy  complies  with  Statement               
of  Financial  Accounting  Standards  No.  121,  "Accounting  for               
the   Impairment   of  Long-Lived  Assets  and   for   Long-Lived               
Assets to be Disposed Of".                                                      

Because   the   determination  of  fair  value  is   based   upon               
projections   of   future  economic  events  such   as   property               
occupancy  rates,  rental  rates, operating  cost  inflation  and               
market  capitalization  rates which  are  inherently  subjective,               
the   amounts  ultimately  realized  at  disposition  may  differ               
materially  from  the  net  carrying values  as  of  October  31,               
1997.                                                                           

DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.                   

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                    

The  cash  flows  used  to  evaluate the  recoverability  of  the               
assets  and  to  determine fair value are  based  on  good  faith               
estimates  and  assumptions developed  by  the  Managing  General               
Partner.   Unanticipated  events  and  circumstances  may   occur               
and  some  assumptions  may  not  materialize;  therefore  actual               
results  may  vary  from the estimates and the variances  may  be               
material.    The   Partnership  may  provide  additional   write-               
downs,  which  could  be material, in subsequent  years  if  real               
estate markets or local economic conditions change.                             

Deferred    leasing   commissions   are   amortized   over    the               
applicable lease terms.                                                         

Rental  income  is  accrued  on a straight-line  basis  over  the               
terms  of  the  leases.  Accruals in excess  of  amounts  payable               
by   tenants  pursuant  to  their  leases  (resulting  from  rent               
concessions  or  rents  which  periodically  increase  over   the               
term  of  a  lease) are recorded as receivables and  included  in               
other assets.                                                                   

Net   income   (loss)   per  Unit  amounts  are   calculated   by               
dividing  net  income  (loss) allocated to Limited  Partners,  in               
accordance  with  the  Partnership  Agreement,  by  the  weighted               
average number of Units outstanding.                                            

No  provision  for  income taxes has been made in  the  financial               
statements,  since  the  liability for  such  taxes  is  that  of               
the partners rather than the Partnership.                                       

For   income  tax  purposes,  Partnership  results  are  reported               
for  the  calendar year.  The accounting policies  used  for  tax               
reporting   purposes  differ  from  those  used   for   financial               
reporting  as  follows:  (a)  depreciation  is  calculated  using               
accelerated  methods;  (b)  rental  income  is  recognized  based               
on   the  payment  terms  in  the  applicable  leases;  and   (c)               
writedowns  for  impairment of real estate  are  not  deductible.               
In  addition,  offering  costs are treated  differently  for  tax               
and   financial  reporting  purposes.   The  tax  basis  of   the               
Partnership's                     assets                      and               

DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.                   

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                    

liabilities  is  approximately  $48.5  million  higher  than  the               
amounts reported for financial statement purposes.                              

The  Financial  Accounting Standards Board  has  recently  issued               
several  new  accounting  pronouncements.   Statement  No.   128,               
"Earnings  per  Share" establishes standards  for  computing  and               
presenting   earnings   per  share,  and   Statement   No.   129,               
"Disclosure    of    Information   about    Capital    Structure"               
establishes  standards  for  disclosing  information   about   an               
entity's  capital  structure.   These  two  standards   will   be               
effective   for   the   Partnership's  1998  year-end   financial               
statements.    Statement   No.  130,   "Reporting   Comprehensive               
Income"  establishes  standards  for  reporting  and  display  of               
comprehensive  income  and its components.   Statement  No.  131,               
"Disclosures  about  Segments  of  an  Enterprise   and   Related               
Information"  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  issued   to               
shareholders.    It  also  establishes  standards   for   related               
disclosure   about  products  and  services,  geographic   areas,               
and  major  customers.   These two standards  are  effective  for               
the Partnership's 1999 financial statements.                                    

Management  of  the  Partnership  does  not  believe  that  these               
new   standards   will  have  any  effect  on  the  Partnership's               
computation  or  presentation of net income  or  net  income  per               
Unit  of  limited  partnership interest, or  its  disclosures  of               
capital structure, or other disclosures.                                        

3. Partnership Agreement                                                        

The  Partnership  Agreement  provides  that  distributable  cash,               
as  defined,  will  be paid 90% to the Limited Partners  and  10%               
to the General Partners.                                                        
Sale   or  financing  proceeds  will  be  distributed,   to   the               
extent   available,  first,  to  each  Limited   Partner,   until               
there  has  been  a  return  of  the  Limited  Partner's  capital               
contribution   plus  cumulative  distributions  of  distributable               
cash  and  sale  or  financing proceeds in an  amount  sufficient               
to   provide  a  9%  cumulative  annual  return  on  the  Limited               
Partner's   adjusted  capital  contribution.    Thereafter,   any               
remaining                         sale                         or               

DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.                   

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                    

financing  proceeds  will  be  distributed  85%  to  the  Limited               
Partners  and  15%  to the General Partners  after  the  Managing               
General  Partner  receives a brokerage  fee,  if  earned,  of  up               
to 3% of the selling price of any equity investment.                            

Taxable  income  generally is allocated in  the  same  proportion               
as  distributions  of  distributable cash or  sale  or  financing               
proceeds  (except  that the General Partners  must  be  allocated               
at  least  1%  of  taxable income from sales or financings).   In               
the   event   there  is  no  distributable  cash   or   sale   or               
financing  proceeds,  taxable income  is  allocated  90%  to  the               
Limited  Partners  and  10%  to the General  Partners.   Any  tax               
loss  will  be  allocated  90% to the Limited  Partners  and  10%               
to the General Partners.                                                        

Distributions  paid  to  Limited  Partners  include  returns   of               
capital  per  Unit  of  limited partnership interest  of  $49.95,               
$87.98  and  $22.81 for the years ended October  31,  1997,  1996               
and   1995,  respectively,  calculated  as  the  excess  of  cash               
distributed  per  Unit  over accumulated earnings  per  Unit  not               
previously distributed.                                                         

4. Real Estate Investments                                                      

The  location,  year  of acquisition and net carrying  values  of               
the properties are as follows:                                                  

                                                                [Download Table]

                            Year of             October 31,      
       Property           Acquisition       1997      1996       
                                                                 
Glenhardie III and IV                                            
    Valley    Forge,    PA             1986           $11,275,058
$11,883,930                                                      

Westland    Crossing,   Westland,    MI                      1986
9,536,379                   9,862,785                            

Holcomb   Woods,  Roswell,  GA                1986              -
12,428,082                                                       

Laurel   Lakes   Centre,   Laurel,   MD                      1987
41,655,616                 42,784,100                            
                                                      $62,467,053
$76,958,897                                                      

DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.                   

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                    

The   net   carrying   value  of  Holcomb  Woods   property   was               
reclassified  to  Real  Estate  Held  For  Sale  in  the   fourth               
quarter of fiscal 1997.  See Note 5.                                            

In  the  first  quarter of fiscal 1996, in  accordance  with  the               
impairment   evaluation  policy  described   in   Note   2,   the               
Partnership  evaluated  the  recoverability  of  its  investments               
in   real   estate   and  concluded  that,   based   on   revised               
expectations  as  to  the  holding  periods  of  the  properties,               
the  Partnership  would  be  unable to  recover  its  investments               
in    the    Glenhardie    and    Holcomb    Woods    properties.               
Accordingly,  the  Partnership wrote  these  properties  down  to               
fair  value  (based  on  independent  appraisals),  and  recorded               
losses  on  impairment  of approximately $4.7  million  and  $7.7               
million, respectively.                                                          

5. Real Estate Held for Sale                                                    

Pursuant  to  an  agreement  dated as  of  October  1,  1997  (as               
amended)  the  Partnership  agreed  to  sell  the  Holcomb  Woods               
property to an unaffiliated party, for $19,112,500.                             

The  closing  of  the sale took place on November  7,  1997.   At               
closing,  the  Partnership  received  proceeds  of  approximately               
$18.7   million  net  of  closing  costs  and  other  deductions.               
The   net   proceeds  from  the  sale  $35.06  per   Unit)   were               
distributed 100% to Limited Partners in November 1997.                          

Net  income  and  cash flow from the Holcomb  Woods  property  in               
fiscal  year  1997  were  approximately $927,000  and  $1,873,000               
respectively.                                                                   

6. Investments in Joint Ventures                                                

Taxter Corporate Park, Westchester County, New York                             

The   Partnership  owns  a  44.6%  partnership  interest  in  the               
general  partnership  which  owns the  property.   Affiliates  of               
the                                                                             

DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.                   

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                    

Partnership,  Dean  Witter Realty Income  Partnership  II,  L.P.,               
and  Dean  Witter  Realty Income Partnership IV,  L.P.,  own  the               
remaining interests of 14.8% and 40.6%, respectively.                           

The  partners  each  receive cash flow  and  profits  and  losses               
according to their interests.                                                   

Summarized  balance  sheet information of the  joint  venture  is               
as follows:                                                                     

                                                                [Download Table]

                                              October 31,        
                                       1997        1996          
                                                                 
Land and buildings, net            $17,203,009 $17,781,234       
Other                                1,718,650   1,990,515       

Total assets                       $18,921,659 $19,771,749       

Liabilities                        $   153,159 $   176,478       
Partners' capital                   18,768,500  19,595,271       

Total liabilities and capital      $18,921,659 $19,771,749       

Summarized  results  of operations of the joint  venture  are  as
follows:                                                         

                                     Years ended October 31,     
                                 1997      1996      1995        

Rental   income                  $5,511,684            $5,954,030
$6,267,312                                                       
Other   income                      181,367                43,394
92,483                                                           

                                  5,693,051             5,997,424
6,359,795                                                        

Property   operating  expenses     3,111,753            3,111,267
3,168,141                                                        
Depreciation  and  amortization   1,164,659             1,196,229
1,119,284                                                        

                                  4,276,412             4,307,496
4,287,425                                                        

Net   income                      $1,416,639           $1,689,928
$2,072,370                                                       

DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.                   

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                    

Chesterbrook Corporate Center, Valley Forge, Pennsylvania                       

The  Partnership,  Dean  Witter  Realty  Income  Partnership  IV,               
L.P.  and  an  affiliate  of  the Managing  General  Partner  own               
26.7%,  41.2%  and  32.1%  interests in the  general  partnership               
which owns the property.                                                        

The   partners   receive  cash  flow  and  profits   and   losses               
according to their interests.                                                   

In  fiscal  1995,  the  partners concluded  that  the  property's               
value  was  impaired  and,  in accordance  with  its  policy  for               
evaluating  the  recoverability of  its  real  estate  (which  is               
the  same  as  the  Partnership's), the  partnership  which  owns               
the   property  recorded  an  impairment  loss  of  approximately               
$43.2  million  at  October 31, 1995.   The  Partnership's  share               
of  this  loss  (approximately $11.5  million)  was  included  in               
equity   in  earnings  (losses)  of  joint  ventures  in   fiscal               
1995.                                                                           

Summarized  balance  sheet information of the  joint  venture  is               
as follows:                                                                     

                                                                [Download Table]

                                              October 31, 
                                       1997        1996   
                                                          
Land and buildings, net            $60,751,413 $62,641,806
Other                                3,658,647   3,059,694

Total assets                       $64,410,060 $65,701,500

Liabilities                        $ 2,240,900 $ 1,792,898
Partners' capital                   62,169,160  63,908,602

Total liabilities and capital      $64,410,060 $65,701,500
                                                                [Download Table]
       DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.           

         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS              

Summarized  results  of operations of the joint  venture  are  as
follows:                                                         

                                     Years ended October 31,     
                                 1997      1996      1995        
                                                                 
Rental             income                             $14,128,854
$13,604,130                   $ 13,532,187                       
Other             income                                   43,550
35,957                             212,134                       

                                                       14,172,404
13,640,087                      13,744,321                       

Property         operating         expenses             4,323,012
4,818,114                        4,528,817                       
Depreciation         and         amortization           3,305,764
3,186,022                        4,664,856                       
Loss  on  impairment  of  real  estate              -           -
43,161,160                                                       

                                                        7,628,776
8,004,136                       52,354,833                       

Net    income    (loss)               $    6,543,628            $
5,635,951                     $(38,610,512)                      

Tech Park Reston, Reston, Virginia                                              

In   1987,   the   Partnership  purchased   a   35%   partnership               
interest  in  the  general partnership  ("TPA")  which  owns  the               
property,  which  consists  of  three  office  buildings  in  the               
Technology   Park   Reston  office  park.   The   remaining   65%               
interest   in   TPA  is  owned  by  Dean  Witter  Realty   Income               
Partnership IV, L.P.                                                            

The   partners  received  cash  flow  and  profits   and   losses               
according to their interests.                                                   

On  December  31,  1996,  TPA and an affiliate  of  the  Managing               
General   Partner  (the  "Affiliate"),  which  owns  the   fourth               
building   at   the  property,  sold  the  property   to   Sprint               
Communications   Company   L.P.,   the   sole   tenant   at   the               
property,   for   a   negotiated  sale  price   of   $76,300,000.               
$51,483,000  of  the  sales  price  was  allocated  to  TPA   and               
$24,817,000  was  allocated  to  the  Affiliate,  based  on   the               
relative  square  footage  of the buildings  each  owned  at  the               
property.                                                                       

The   sale   price  was  received  in  cash  at   closing.    The               
Partnership   received  approximately  $17.7  million   of   such               
cash,  representing  its  35%  share  of  the  cash  received  by               
TPA,      net      of     closing     costs.      In     February               

DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.                   

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                    

1997,   the  Partnership  distributed  $16,848,016  of  the   net               
proceeds  from  the  sale  ($31.55 per Unit).   The  distribution               
was paid 100% to Limited Partners.                                              

Cash  flow  from  operations  for the  Tech  Park  joint  venture               
was approximately $273,000 in 1997.                                             

Summarized  balance  sheet information of the  joint  venture  is               
as follows:                                                                     

                                                                [Download Table]

                                              October 31,        
                                       1997        1996          
                                                                 
Land and buildings, net            $     -     $46,158,784       
Other                                    -       1,692,571       

Total assets                       $     -     $47,851,355       

Total partners' capital            $     -     $47,851,355       

Summarized  results  of operations of the joint  venture  are  as
follows:                                                         

                                     Years ended October 31,     
                                 1997      1996      1995        

Rental   income                  $   843,004           $5,219,899
$5,058,016                                                       
Gain   on   sale  of  property        3,169,132                 -
-                                                                
                                  4,012,136             5,219,899
5,058,016                                                        

Depreciation                       262,751              1,576,508
1,576,372                                                        
Amortization                        17,827                106,960
106,960                                                          
Property  operating  expense          5,604                52,191
53,532                                                           

                                    286,182             1,735,659
1,736,864                                                        
Net   income                      $3,725,954           $3,484,240
$3,321,152                                                       
                                                                [Download Table]
       DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.           

         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS              

Activity in investments in joint ventures is as follows:         

                                     Years ended October 31,     
                                 1997      1996      1995        
                                                                 
Investments   at   beginning   of   year          $    41,727,417
$42,784,835                   $54,767,448                        
Equity       in       earnings      (losses)            3,599,828
3,477,991                      (8,222,327)                       
Distributions                                        (21,777,876)
(5,213,755)                    (5,576,322)                       
Contributions                                             578,613
678,346                         1,816,036                        
Investments     at     end    of     year        $     24,127,982
$41,727,417                   $42,784,835                        

The  accounting  policies  of the Joint  Ventures  are  the  same               
as those of the Partnership.                                                    

7.   Leases                                                                     

Minimum  future  rental  income  under  noncancellable  operating               
leases  (excluding  the  leases of  space  at  real  estate  held               
for sale) as of October 31, 1997 is as follows:                                 

                                                                [Download Table]

      Year ending October 31,  
                               
1998           $ 6,467,265     
1999             5,857,793     
2000             4,900,476     
2001             4,557,242     
2002             4,008,475     
Thereafter           14,464,566
Total               $40,255,817

The  Partnership  has  determined that  all  leases  relating  to               
its  properties  are  operating leases.   The  terms  range  from               
one   to  twenty-one  years,  and  generally  provide  for  fixed               
minimum    rents   with   rental   escalation   and/or    expense               
reimbursement clauses.                                                          

8.   Related Party Transactions                                                 

An   affiliate   of   the  Managing  General   Partner   provided               
property  management  services for five properties  in  1997  and               
eight  properties  in  1996  and  1995,  as  well  as  for   five               
buildings  at  the Chesterbrook Corporate Center  in  each  year.               
The   Partnership   incurred   management   fees   of   $244,266,               
$478,220  and  $466,198  for the years ended  October  31,  1997,               
1996                                                          and               

DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.                   

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                    

1995,  respectively.   These amounts  are  included  in  property               
operating expenses.                                                             

Another  affiliate  of  the  Managing  General  Partner  performs               
administrative   functions,   processes   investor   transactions               
and   prepares   tax   information  for  the  Partnership.    The               
Partnership   incurred  approximately  $630,000,   $661,000   and               
$756,000   for  these  services  in  each  of  the  years   ended               
October  31,  1997,  1996 and 1995.  These amounts  are  included               
in general and administrative expenses.                                         

As  of  October  31, 1997, the affiliates were owed  a  total  of               
approximately $70,000 for these services.                                       

9.  Litigation                                                                  

Various  public  partnerships sponsored  by  Dean  Witter  Realty               
Inc.   (including  the  Partnership  and  its  Managing   General               
Partner)  are  defendants in a number of  class  action  lawsuits               
pending  in  state  and  federal courts.  The  complaints  allege               
a   variety  of  claims,  including  breach  of  fiduciary  duty,               
fraud,   misrepresentation   and   related   claims,   and   seek               
compensatory  and  other  damages  and  equitable  relief.    The               
defendants  intend  to  vigorously defend  the  actions.   It  is               
impossible  to  predict  the  effect,  if  any,  the  outcome  of               
these   actions   might  have  on  the  Partnership's   financial               
statements.                                                                     

10.  Distributions Subsequent to Year-End                                       

On   November   25,   1997,   the   Partnership   paid   a   cash               
distribution  of  $2.30  per Unit to the Limited  Partners.   The               
total   cash   distribution   amounted   to   $1,364,718,    with               
$1,228,246  distributed  to  the Limited  Partners  and  $136,472               
to the General Partners.                                                        

On  November  26,  1997  the partnership distributed  $18,722,741               
of   the  net  proceeds  from  the  sale  of  the  Holcomb  Woods               
property  ($35.06  per  Unit).  The distribution  was  paid  100%               
to Limited Partners.  See Note 5.                                               

DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.                   

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

None.                                                                           

PART III.                   

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                    

The   Partnership  is  a  limited  partnership   which   has   no               
directors or officers.                                                          

The  directors  and  executive officers of the  Managing  General               
Partner are as follows:                                                         
           Position with the
Name                               Managing General Partner                     
William  B.  Smith                   Chairman  of  the  Board  of               
Directors                                                                       
E. Davisson Hardman, Jr.           President and Director                       
Lawrence Volpe                Controller and Director                           
Ronald T. Carman                   Secretary and Director                       

All  of  the  directors  have been elected  to  serve  until  the               
next   annual   meeting  of  the  shareholder  of  the   Managing               
General  Partner  or  until  their  successors  are  elected  and               
qualify.   Each  of the executive officers has  been  elected  to               
serve until his successor is elected and qualifies.                             

William  B.  Smith,  age  54, has been  a  Managing  Director  of               
Morgan   Stanley   and   co-head   of   Morgan   Stanley   Realty               
Incorporated  since  1997,  and  a  Managing  Director  of   Dean               
Witter  Realty  Inc.,  which  he  joined  in  1982.   He  is   an               
Executive Vice President of Dean Witter Reynolds Inc.                           

E.   Davisson  Hardman,  Jr.,  age  48,  has  been   a   Managing               
Director  of  Morgan  Stanley  Asia,  Ltd.  since  1997,  and   a               
Managing   Director  of  Dean  Witter  Realty  Inc.,   which   he               
joined in 1982.                                                                 

Lawrence  Volpe,  age  50, is a Director and  the  Controller  of               
Dean  Witter  Realty  Inc.   He is a Senior  Vice  President  and               
Controller  of  Dean  Witter Reynolds Inc., which  he  joined  in               
1983.                                                                           

DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.                   

Ronald  T.  Carman, age 46, is a Director and  the  Secretary  of               
Dean  Witter  Realty Inc.  He is an Assistant  Secretary  of  MWD               
and  a  Senior  Vice President and Associate General  Counsel  of               
Dean Witter Reynolds Inc., which he joined in 1984.                             

There  is  no  family  relationship among any  of  the  foregoing               
persons.                                                                        

ITEM 11.  EXECUTIVE COMPENSATION                                                

The    General   Partners   are   entitled   to   receive    cash               
distributions,  when  and  as  cash  distributions  are  made  to               
the  Limited  Partners,  and a share of  taxable  income  or  tax               
loss.    Descriptions  of  such  distributions  and   allocations               
are  in  Item  5  above.   The  General  Partners  received  cash               
distributions   of   $1,091,774,   $1,280,164   and    $1,353,593               
during  the  years  ended  October  31,  1997,  1996  and   1995,               
respectively.                                                                   

The  General  Partners  and their affiliates  were  paid  certain               
fees   and   reimbursed   for  certain   expenses.    Information               
concerning  such  fees and reimbursements is  contained  in  Note               
8 to the consolidated financial statements in Item 8 above.                     

The   directors  and  officers  of  the  Partnership's   Managing               
General    Partner    received   no   remuneration    from    the               
Partnership.                                                                    

DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.                   

ITEM   12.         SECURITY   OWNERSHIP  OF  CERTAIN   BENEFICIAL               
OWNERS AND                                                                      
MANAGEMENT                                                      

(a)   No  person  is  known to the Partnership  to  be  the         
beneficial owner of more than five percent of the Units.                        

(b)    The  directors  and  executive  officers   of   the        
Managing   General  Partner  own  the  following  Units   as   of               
December 31, 1997:                                                              

Amount and                              
Title  of                Name  of                       Nature            
of                                                                              
Class                Beneficial  Owner            Beneficial          
Ownership                                                                       
Limited        All directors and                    *                           
Partnership         executive officers of                                       
Interests      the Managing General                                             
Partner, as a group                               

*   Own,   by   virtue   of  ownership  of  limited   partnership               
interests  in  the Associate General Partner,  less  than  1%  of               
the Units of the Partnership.                                                   

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                        

As  a  result  of  their being partners of a limited  partnership               
which   is   the   Limited  Partner  of  the  Associate   General               
Partner,  certain  current  and  former  officers  and  directors               
of    the    Managing   General   Partner   also   own   indirect               
partnership   interests  in  the  Partnership.   The  Partnership               
Agreement    of    the    Partnership    provides    that    cash               
distributions  and  allocations  of  income  and  loss   to   the               
General  Partners  shall  be  distributed  or  allocated  50%  to               
the   Managing   General  Partner  and  50%  to   the   Associate               
General   Partner.    The  General  Partners'   share   of   cash               
distributions  and  income  or  loss  is  described  in  Item   5               
above.                                                                          

All   of   the  outstanding  shares  of  common  stock   of   the               
Managing  General  Partner  are  owned  by  Dean  Witter   Realty               
Inc.  ("Realty"),  a  Delaware corporation  which  is  a  wholly-               
owned  subsidiary  of  Morgan Stanley, Dean  Witter,  Discover  &               
Co.   The  general  partner of the Associate General  Partner  is               
the  Managing  General  Partner.   The  limited  partner  of  the               
Associate  General  Partner is LSA 86 L.P.,  a  Delaware  limited               
partnership.  Realty  and  certain current  and  former  officers               
and                directors                of                the               

DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.                   

Managing   General  Partner  are  partners   of   LSA   86   L.P.               
Additional   information  with  respect  to  the  directors   and               
executive  officers  and  compensation of  the  Managing  General               
Partner  and  affiliates  is  contained  in  Items  10   and   11               
above.                                                                          

The  General  Partners  and their affiliates  were  paid  certain               
fees   and   reimbursed   for  certain   expenses.    Information               
concerning  such  fees and reimbursements is  contained  in  Note               
8  to  the  Consolidated Financial Statements in  Item  8  above.               
The  Partnership  believes  that the  payment  of  fees  and  the               
reimbursement  of  expenses  to the General  Partners  and  their               
affiliates  are  on  terms  as favorable  as  would  be  obtained               
from unrelated third parties.                                                   

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

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

1.          Financial  Statements  (see   Index   of  
Financial  Statements  filed  as  part  of  Item  8  of     
this Annual Report).                                        

2.         Financial Statement Schedules  (see  Index   
to  Financial  Statements filed as part of  Item  8  of     
this Annual Report).                                        

3.        Exhibits                                        

(3)(a)      Certificate   of   Limited   Partnership  
included  in  the  Registration  Statement  Number  33-     
1912 is incorporated by reference.                          

(3)(b)      Amended   and  Restated   Agreement   of  
Limited  Partnership  dated as  of  February  11,  1986     
set  forth  in  Exhibit  A to  the  Prospectus  in  the     
Registration     Statement    Number     33-1912     is     
incorporated herein by reference.                           

(4)(a)      Certificate   of   Limited   Partnership  
included  in  the  Registration  Statement  Number  33-     
1912 is incorporated by reference.                          

DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.                   

(4)(b)      Amended   and  Restated   Agreement   of  
Limited  Partnership  dated as  of  February  11,  1986     
set  forth  in  Exhibit  A to the  Prospectus  included     
in   the  Registration  Statement  Number  33-1912   is     
incorporated herein by reference.                           

(10)(a)     Purchase   and   Sale   Agreements   for  
properties  purchased  filed as Exhibits  to  Form  8-K     
on  June  27,  1986,  December 29, 1986,  December  29,     
1986,   December   29,   1986,   December   29,   1986,     
December  30,  1986,  December  30,  1986k,   June   1,     
1987,  December  7,  1987, and December  15,  1987  are     
incorporated herein by reference.                           

    (b)   Purchase   and  Sale  Agreement,   dated
October  19,  1995  between Dean Witter  Realty  Income     
Partnership   II,   L.P.,   Midway   Crossing   Limited     
Partnership,  Dean  Witter  Realty  Income  Partnership     
III,   L.P.,   Genesee  Crossing  Limited  Partnership,     
Farmington/9   Mile  Associates,  a  Michigan   Limited     
Partnership,      Hampton     Crossing      Associates,     
Rochester   Hills  Limited  Partnership,  Dean   Witter     
Realty  Yield  Plus,  L.P. and New  Plan  Realty  Trust     
(including  Exhibit  J thereto)  filed  as  exhibit  to     
Form   8-K   on   December  11,  1995  is  incorporated     
herein by reference.                                        

 (c)    First  Amendment to Agreement of  Purchase
and  Sale  by  and  between Dean Witter  Realty  Income     
Partnership   II,   L.P.,   Midway   Crossing   Limited     
Partnership,  Dean  Witter  Realty  Income  Partnership     
III,   L.P.,   Genesee  Crossing  Limited  Partnership,     
Farmington/9   Mile  Associates,  a  Michigan   Limited     
Partnership,      Hampton     Crossing      Associates,     
Rochester   Hills  Limited  Partnership,  Dean   Witter     
Realty  Yield  Plus,  L.P. and New  Plan  Realty  Trust     
(including  Exhibit  J thereto)  filed  as  exhibit  to     
Form   8-K   on   December  11,  1995  is  incorporated     
herein by reference.                                        

  (d)     Purchase  and  Sale  Agreement   between
Technology   Park  Associates,  Dean  Witter/Technology     
Park     II     Associates,    L.P.,     and     Sprint     
Communications   Company,  L.P.  a   Delaware   Limited     
Partnership  filed  as exhibit 2  to  the  Registrant's     
Report   on   Form  8-K  on  December   31,   1996   is     
incorporated herein by reference.                           
DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.         

 (e)    Purchase and Sale Agreement, dated  as  of
October  1,  1997,  First  Amendment  to  Purchase  and     
Sale  Agreement  dated  as  of  October  15,  1997  and     
Second   Amendment  to  Purchase  and  Sale   Agreement     
dated  as  of  October  27, 1997  between  Dean  Witter     
Realty  Income  Partnership III, L.P.,  as  Seller  and     
LPC  Commercial  Services,  Inc.  as  Purchaser,  filed     
as  Exhibit  2 to the Registrant's Report  on  Form  8-     
K  on  November  7,  1997  is  incorporated  herein  by     
reference.                                                  

(21)   Subsidiaries:    Park   Six   Associates,   a  
Pennsylvania   limited  partnership.   Laurel   Vincent     
Place Associates, a Maryland limited partnership.           

  (b)     No   Forms  8-K  were   filed   by   the
Partnership  during  the last  quarter  of  the  period     
covered by this report.                                     

                                                                [Download Table]
       DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.           

                        SCHEDULE III                             

       DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.           

          Real Estate and Accumulated Depreciation               

                      October 31, 1997                           

                 Initial cost to Partnership                     


                                                             Cost
Capital-                                                         
                                                             ized
Subsequent                                                       
        Description      Land     Improvements              Total
To Acquisition                                                   
                                                                 
Glenhardie III & IV                                              
Valley     Forge,    PA     $    2,000,000            $18,805,786
$20,805,786       $2,616,392                                     

Westland Crossing                                                
Westland,       MI             1,376,659               12,389,933
13,766,592           428,135                                     

Laurel Lakes Centre                                              
Laurel,       MD               7,800,000               45,536,882
53,336,882           614,523                                     

                          $11,176,659                 $76,732,601
$87,909,260       $3,659,050                                     

                                    Gross Amount at which        
                                   Carried   at  End  of   Period
(A)                                                              
                   Loss on                                       
                  Impairment                                     
                      of              Building and               
           Description      Real      Estate                 Land
Improvements         Total                                       

Glenhardie III & IV                                              
Valley     Forge,    PA     $4,664,675             $    1,200,000
$17,557,503       $18,757,503                                    

Westland Crossing                                                
Westland,       MI            3,952,1751                1,023,904
9,218,648          10,242,552                                    

Laurel Lakes Centre                                              
Laurel,   MD              -       7,800,000            46,151,405
53,951,405                                                       

                          $8,616,850                  $10,023,904
$72,927,556       $82,951,460                                    
1  Westland  Crossing  was reclassified  from  Real  Estate  Held
For  Sale  to  Real  Estate in fiscal  1996.   Amount    includes
accumulated   depreciation   of  $3,023,690   and   a   loss   on
impairment of real estate of $928.485.                           
                                                                [Download Table]
      1DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.           

                  (SCHEDULE III (continued)                      

                                                      Life     on
which                                                            

Depreciation in                                                  
                                                           Latest
Income                                                           
                   Accumulated             Date  of     Statement
is                                                               
Description       Depreciation(B)         Construction       Date
Acquired        Computed                                         
                                                                 
Glenhardie III & IV                                              
Valley   Forge,  PA            $  7,482,445              1984   -
1985            June 1968  up to 40 years                        

Westland Crossing                                                
Westland,   MI          706,173              1986        December
1986            up to 40 years                                   

Laurel Lakes Centre                                              
Laurel,   MD        12,295,789             1987       June   1987
up to 40 years                                                   
                $20,484,407                                      
                                                                [Download Table]
Notes:                                                           

(A)Reconciliation of real estate owned at October 31:            

                                 1997      1996      1995        
                                                                 
   Balance    at    beginning   of    year           $102,185,637
   $103,328,571$161,364,133                                      

   Additions (deletions) during period:                          
    Purchases                      -         -         -         
           Improvements                                   583,614
   1,040,895      1,021,987                                      
          Write-offs      due      to      lease      expirations
   (465,837)         -           (274,334)                       
    Reclass (to) from real estate held                           
             for         sale                        (19,351,954)
   10,239,0431  (58,783,215)                                     
       Loss    on    impairment   of   Real    Estate           -
   (12,422,872)      -                                           
   Balance     at     end     of     period      $     82,951,460
   $102,185,637$103,328,571                                      

Except   for  losses  on  impairment  of  real  estate  and   the               
adjustment  to  Westland  Crossing for  accumulated  depreciation               
described  in  note 1, there is no difference  between  cost  for               
financial  reporting  purposes and cost for  federal  income  tax               
purposes.                                                                       

                                                                [Download Table]
       DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.           

                  (SCHEDULE III (continued)                      

                                 1997      1996      1995        
                                                                 
(B)Reconciliation of accumulated                                 
    depreciation:                                                
   Balance   at   beginning   of   period        $25,226,740    $
   22,180,045  $ 30,244,746                                      
             Depreciation         expense               3,133,640
   3,046,695      4,565,589                                      
    Write-offs due to lease                                      
            expirations                                 (465,837)
   -    (274,334)                                                
    Reclass to real estate held for                              
        sale                        (7,410,136)                 -
   (12,355,956)                                                  
       Balance    end   of   period      $20,484,407            $
   25,226,740  $ 22,180,045                                      

DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.                   
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                    

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.                                         

DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.                                 

By: Dean Witter Realty Income Properties III Inc.                               
Managing General Partner                                          

By:    /s/E.   Davisson   Hardman,   Jr.                    Date:               
January 28, 1998                                                                
E. Davisson Hardman, Jr.                                                  
President                                                                 

By:     /s/Lawrence    Volpe                                Date:               
January 28, 1998                                                                
Lawrence Volpe                                                            
Controller                                                                
(Principal Financial and Accounting Officer)                              

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 dates indicated.                                                     

DEAN WITTER REALTY INCOME PROPERTIES III INC.                                   
Managing General Partner                                                        

/s/William    B.    Smith                                   Date:               
January 28, 1998                                                                
William B. Smith                                                                
Chairman of the Board of Directors                                              

/s/E.    Davisson   Hardman,   Jr.                          Date:               
January 28, 1998                                                                
E. Davisson Hardman, Jr.                                                        
Director                                                                        

/s/Lawrence      Volpe                                      Date:               
January 28, 1998                                                                
Lawrence Volpe                                                                  
Director                                                                        

/s/Ronald    T.    Carman                                   Date:               
January 28, 1998                                                                
Ronald T. Carman                                                                
Director                                                                        
DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.                   

Year Ended October 31, 1997                   

Exhibit Index                   

Exhibit                                                               
No.                                                               

27                Financial Data Schedule                         

E1                    
_______________________________                                                 
1                                                                               

Dates Referenced Herein   and   Documents Incorporated by Reference

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