FORM 10-Q

Quarterly Report Under Section 13 or 15(d)

AMRECORP REALTY FUND III

(Exact name of registrant as specified in its charter)

2800 N Dallas Pkwy Suite 100

(Address of principal executive offices)

Registrants telephone number, including area code: (972) 836-8000.

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: Y No:

REGISTRANT IS A LIMITED PARTNERSHIP

Item 1. Financial Statements

The following Unaudited financial statements are filed herewith:

Consolidated Balance Sheet as of June 30, 2003 and

December 31, 2002 Page 3

Consolidated Statements of Operations for the Three and Six

months Ended June 30, 2003 and 2002 Page 4

Consolidated Statements of Cash Flows for the Three and Six

months Ended June 30, 2003 and 2002 Page 5

Item 2. Results of Operations and Managements Discussion and Analysis of

Financial Condition Page 6

Liquidity and Capital Resources Page 7

Other Information Page 8

Signatures Page 10

The statements, insofar as they relate to the period subsequent to

December 31, 2002 are Unaudited.

PART 1. FINANCIAL INFORMATION

See notes to Condensed Consolidated Financial Statements

See Notes to Condensed Consolidated Financial Statements

See Notes to Condensed Consolidated Financial Statements

At June 30, 2003 the Partnership owned Las Brisas Apartments, a 376-unit apartment community located at 2010 South Clark Street, Abilene, Taylor County, Texas 79606. The Partnership purchased a fee simple interest in Las Brisas Apartments on July 30, 1986. The property contains approximately 312,532 net rentable square feet, one clubhouse, and five laundry facilities located on approximately 19.11 acres of land.

The occupancy of Las Brisas averaged 91.6% during the second quarter of 2003 as compared to 91.9% for the second quarter of 2002.

Revenue from property operations increased $1,010, or 0.25%, for the second quarter of 2003, as compared to the second quarter of 2002 Other property income decreased $639 or 2.50% mainly due to decreased fee collections. The following table illustrates the components:

Property operating expenses: decreased by $3,118 or 0.67% for the second quarter of 2003 compared to the second quarter of 2002 due primarily to decreased maintenance and repair costs. Maintenance & repairs decreased $9,303 or 10.57% due to parking lot repairs. Utilities increased $6,092 or 18.05% from higher natural gas costs Insurance decreased $2,484 or 7.73% due to reduced flood insurance policy costs. Contract service decreased $2,452 or 9.94% due to lower lawn care costs for the property.. The following table illustrates the components:

Revenue from property operations decreased $2,928, or 0.94%, for the second quarter of 2002, as compared to the second quarter of 2001. Decreased occupancy to 91.9% in the second quarter of 2002 from 92.4% in the second quarter of 2001 accounted for the decrease in rental income of $685 or 0.23%. Other property income decreased $2,243 or 12.99% mainly due to decreased fee collections. The following table illustrates the components:

On July 31, 1986 the Partnership purchased the Las Brisas Apartments. The purchase provided for the sellers to receive cash at closing and notes totaling $660,000. On September 30, 1987 the principal balance due totaled $210,000. In order to obtain the necessary proceeds to finally retire these notes the General Partners offered 254 Units of the Partnership to two investors at the price of $200,660. No commissions were taken nor did the General Partner receive any fees in connection with these interests. The Partnership then obtained short term financing from Resource Savings Association totaling $260,000, bearing interest at the rate of 2% over prime and payable quarterly together with principal payments of $15,000 each. Security for the loan was provided by a $100,000 certificate of deposit and the personal guaranties of the Partnerships General Partners. The Resource Savings Association loan matured December 31,1983. In September, 1991 Mr. Werra paid $40,750 in satisfaction o f his personal guaranty of the Partnership loan.

The Partnership defaulted in its debt obligations in August, 1988. The Partnership was forced to seek protection under Chapter 11 of the United States Bankruptcy Code in December, 1988 when negotiations with Aetna Life Insurance Company, ("Aetna") the holder of the two underlying first mortgage notes and Las Brisas Apartments, Ltd. and Abilene Associates, Ltd., the holders of respective wrap mortgage notes ("Wrap Note Holders") failed to provide any relief.

The Partnership emerged from bankruptcy on May 15, 1990, having negotiated a modification of its debt with its major creditors. In June, 1989 an affiliate of the individual General Partner provided $401,910.77 to bring the Aetna notes current. At the same time the Wrap Note Holders agreed to reduced the payments due on their respective wrap notes in order to mirror the payments made on the underlying Aetna notes. The term of each wrap note will be extended from July 31, 1995 to July 1, 2002 and July 1, 2007 respectively. The $401,910.77 note is collateralized by junior mortgage on the property. In addition, the affiliate has the option to purchase the wrap notes for $85,000 at any time prior to the respective maturity dates of the wrap notes.

Commencing on July 1,1992, payments on the notes reverted to the original amounts of $19,442 and $15,454. During the prior two years the Partnership deferred $214,460 in debit service payments. The modification gave the Partnership room to deal with the economic difficulties experienced in the market at the time.

In February 1991, Amrecorp Realty Inc. resigned as the Managing General Partner of the Partnership. As was communicated to all limited partners, this step was taken in order to minimize any effect that Amrecorps financial difficulties might have on the partnership. Management of the Partnerships assets is performed by Univesco, Inc., a Texas corporation, Robert J. Werra, CEO.

On November 12, 1993 the Partnership refinanced the properties secured debt with an 8.15%, ten year, mortgage loan from Lexington Mortgage Company. The $3,250,000 mortgage loan provides for monthly payments of $415,000 based on an amortized schedule of 300 months with a final payment of the entire remaining principal balance in December 2003. The proceeds of this new loan were used to pay off the $2,500,000 and $2,300,000 mortgage notes which previously held the first mortgage position. The old first mortgagee provided a discount of approximately ten percent of the outstanding principal balances of two old notes. The balance of funds needed to retire the old notes (approximately $100,000) was provided by Robert J. Werra. In addition Robert J. Werra exercised his option in the propertys wrap mortgage notes. The new lender prohibited subordinate debt. To meet this requirement the subordinate debt held by Mr. Werra was converted to a class of equity with the same terms and conditions as it possessed as debt. The wrap mortgage lender would not agree to the change in status so Mr. Werra paid $85,000 to complete his purchase of the wrap notes and now holds an equity position in the partnership as a Special Limited partner.

The partnership agreement was amended by vote of the limited partners to include the appointment of a new corporate general partner, LBAL, Inc., a Texas corporation wholly owned by Robert J. Werra.

While it is the General Partners primary intention to operate and manage the existing real estate investment, the General Partner also continually evaluates this investment in light of current economic conditions and trends to determine if this asset should be considered for disposal. At this time, there is no plan to dispose of Las Brisas Apartments.

As of June 30, 2003, the Partnership had $26,363 in cash and cash equivalents as compared to $23,824 as of December 31, 2002. The net decrease in cash of $2,539 was cash flow from operations.

The property is encumbered by a non-recourse mortgage with a principal balance of $4,021,506 as of June 30, 2003. During the year ended December 31, 2001, the Partnership refinanced the mortgage payable. The mortgage payable bears interest at a rate of 6.18% and is payable in monthly installments of principal and interest of $25,058 through December 2011, at which time a lump sum payment of approximately $3,447,000 is due. This mortgage note is secured by real estate with a net book value of $3,418,117.

For the foreseeable future, the Partnership anticipates that mortgage principal payments (excluding balloon mortgage payments), improvements and capital expenditures will be funded by net cash from operations. The primary source of capital to fund future Partnership acquisitions and balloon mortgage payments will be proceeds from the sale financing or refinancing of the Property.

Item 1. Legal Proceedings.

None

Item 2. Changes in Securities.

None

Item 3. Defaults upon Senior Securities.

None

Item 4. Submission of Matters to a vote of Security Holders.

None

Item 5. Other Information.

None

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

1. The following documents are filed herewith or incorporated herein by reference as indicated as Exhibits:

Exhibit Designation Document Description

3 Certificate of Limited Partnership,

4 Certificate of Limited Partnership,

9 Not Applicable.

10 None.

11 Not Applicable.

12 Not Applicable.

13 Not Applicable.

18 Not Applicable.

19 Not Applicable.

22 Not Applicable.

23 Not Applicable.

24 Not Applicable.

25 Power of Attorney,

1. None.