8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Exchange Act of 1934

Date of Report (Date of earliest event reported): May 2, 2006

REAL ESTATE ASSOCIATES LIMITED III

(Exact name of registrant as specified in its charter)

   California

  0-10673

95-3547611

(State or other jurisdiction

(Commission

   (I.R.S. Employer

      of incorporation)

File Number)

    Identification

  Number)

55 Beattie Place

Post Office Box 1089

Greenville, South Carolina 29602

(Address of principal executive offices)

(864) 239-1000

(Issuer's telephone number)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:

[ ]

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ]

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ]

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ]

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.01

Completion of Acquisition or Disposition of Assets

Real Estate Associates Limited III (the “Registrant”) is the 99% limited partner of 300 Broadway Associates, a Rhode Island limited partnership (the “Partnership”), which owns Jenks School Apartments, an 83-unit affordable property in Pawtucket, Rhode Island (the “Property”). On May 2, 2006, the Registrant assigned all of its right, title and interest in the Partnership to Broadway Limited Partner, LLC, a Rhode Island limited liability corporation (the “Purchaser”), for a purchase price of $3,200,000.  The Purchaser is an affiliate of the Partnership’s general partner but is not affiliated with the Registrant or the Registrant’s general partner.

In accordance with the Partnership Agreement, the Registrant’s general partner is evaluating the cash requirements of the Registrant to determine whether any portion of the net proceeds will be distributed to the Registrant’s partners.

Item 9.01

Financial Statements and Exhibits

10.1

Assignment of Partnership Interests dated May 2, 2006 between Real Estate Associates Limited III, a California limited partnership by its general partner, National Partnership Investments Corp., Los Angeles, California, to Broadway Limited Partner, LLC, a Rhode Island limited liability corporation.

SIGNATURE

Pursuant to the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

REAL ESTATE ASSOCIATES LIMITED III

(a California limited partnership)

By:

National Partnership Investments Corp.

Corporate General Partner

By:

/s/Kathleen Danilchick

Kathleen Danilchick

Senior Vice President and

Chief Financial Officer

Date:

June 16, 2006

EX-1

Exhibit 10.1

ASSIGNMENT OF PARTNERSHIP INTERESTS

This Assignment (the "Assignment") is effective as of January 1, 2006, by and between Real Estate Associates Limited III, a California limited partnership by its general partner, National Partnership Investments Corp., with an address of 6100 Center Drive, Suite 800, Los Angeles, California 90045 ("Assignor^"), to Broadway Limited Partner, LLC, a Rhode Island limited liability corporation having an address of 475 Kilvert Street, Warwick, Rhode Island 02886 ("Assignee"), with reference to the following:

A.

Assignor owns all of the limited partner interests in and to 300 Broadway Associates a Rhode Island limited partnership (the "Partnership"), which holds title to the land and improvements known as the Jenks School or VJ Doyle Manor located in Pawtucket, Rhode Island.

B.

Assignor wishes to assign all of its right, title and_. interest in and to all of its limited partner interests in the Partnership (the "Partnership Interests") to Assignee with the intent that Assignee be admitted as a substitute limited partner pursuant to the terms of the Amended and Restated Certificate and Agreement of Limited Partnership, dated as of October 29, 1981, as amended by a First Amendment to Amended and Restated Certificate and Agreement of Limited Partnership, dated as of January 7, 1982, and a Second Amendment to Amended and Restated Certificate and Agreement of Limited Partnership, dated as of December 31,1994 (collectively, the "Amended Partnership Agreement").

C,

Assignee desires to accept such Assignment and to become a substitute limited partner of the Partnership pursuant to the terms of the Amended Partnership Agreement.

NOW, THEREFORE, in consideration of the covenants set forth below and other good and valuable consideration the receipt of all of which is hereby acknowledged the parties agree as follows:

1.

Assignor does hereby assign, transfer and set over to Assignee all of its right, title and interest in and to the Partnership Interests.

2.

Assignee hereby accepts such assignment, and, pursuant to the terms of the Amended Partnership Agreement, subscribes to and agrees to be bound by the terms and provisions of the Amended Partnership Agreement with respect to the Partnership Interests in the Partnership thus acquired and assumes all of Assignor's obligations thereunder.

3.

In consideration of the assignment of the Partnership Interests, Assignee shall pay to Assignor in cash or immediately available funds upon the full execution of this Assignment the sum of Three Million Two Hundred Thousand Dollars ($3,200,000.00).

4.

Assignor hereby warrants and represents that it owns the Partnership Interests and that they are free and clear of all liens, claims, security interests, restrictions and encumbrances of every kind and Assignor agrees to indemnify and hold harmless

Assignee with respect to any loss, cost, damages, liabilities, claims, suits, legal fees, etc. incurred by Assignee as a result of such representations and warranties not being accurate and/or correct as of the date hereof.

5.

Assignor further warrants and represents that it has the power and authority to transfer the Partnership Interest to Assignee; the transfer of the Partnership Interest will not conflict with or violate any agreement, judgment, order law or regulation by which the Assignor is bound. The representations in paragraphs 4 and 5 shall survive closing.

6.

 Assignor further agrees that, at any time, upon request of Assignee, to take such other action as Assignee shall reasonably request to convey and transfer more effectively to Assignee the Partnership Interests in accordance with the terms hereof and Assignee will, at any time, execute and deliver such further instruments and take such other action as Assignor reasonably may request to evidence the purchase by Assignee of the Partnership Interests in accordance with the terms hereof. Without limiting the generality of the foregoing, Assignor shall execute and deliver an amendment to the Amended Partnership Agreement in the form attached hereto as Exhibit A.

7.

This Assignment may be executed in counterparts and all such counterparts, as so executed, shall constitute one agreement binding on all parties hereto.

IN WITNESS WHEREOF, the parties have executed this Assignment Agreement as of this 2 day of May, 2006.

ASSIGNOR:

REAL ESTATE ASSOCIATES LIMITED III,

a California limited partnership

By National Partnership Investments Corp., a California  corporation, its General Partner

By:     /s/Brian Flaherty

     Brian Flaherty

Its:

Vice President

(Signatures continued on next page)

ASSIGNEE:

BROADWAY LIMITED PARTNER, LLC

A Rhode Island limited liability corporation

By: /s/T. Paul Dimeo, Jr.

      T. Paul Dimeo, Jr.

Its Managing Member

The undersigned, as the General Partners of the Partnership, are executing this Assignment for the purpose of providing consent to the within Assignment as required under Section 8.2 of the Amended Partnership Agreement.

Jenks Property Corp.,

a Rhode Island corporation

By:

/s/Thomas P. Dimeo

Thomas P. Dimeo

Its

President

/s/Thomas P. Dimeo

Thomas P. Diemo

/s/Lorraine S. Dimeo

Lorraine S. Dimeo

EX-2

Exhibit A

THIRD AMENDMENT TO AMENDED AND RESTATED
CERTIFICATE AND AGREEMENT OF LIMITED PARTNERSHIP OF
300 BROADWAY ASSOCIATES

This Third Amendment to Amended and Restated Certificate and Agreement of Limited Partnership (the "Amendment^"), effective as of January 1, 2006 (the ,Effective Date"), is entered into by Jenks School Corp., a Rhode Island corporation, Thomas P. Dimeo and Lorraine S. Dimeo (collectively, the "General Partner"); Broadway Limited Partner, LLC, a Rhode Island limited liability corporation (the "Incoming Limited Partner"), and Real Estate Associates Limited Ill, a California limited partnership (the "Withdrawing Partner"), with

reference to the following facts:

A.

300 Broadway Associates, a Rhode Island limited partnership (the "Partnership"), was formed as a limited partnership pursuant to the filing of a certificate of limited partnership with the Rhode Island Secretary of State on October 27, 1981.

B.

The parties hereto, being all of the partners of the Partnership, desire to enter into this Amendment to provide for, among other things (i) the withdrawal of the Withdrawing Partner from the Partnership, (ii) the admission of the Incoming Limited Partner into the Partnership in the place and stead of the Withdrawing Partner, and (iii) other amendments to the Amended and Restated Certificate and Agreement of Limited Partnership of the Partnership, dated as of October 29, 1981, as amended (the "Amended Partnership Agreement^"), as set

forth herein.

NOW, THEREFORE, in consideration of the covenants and agreements hereinafter set forth, and for such other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree that the Amended Partnership Agreement is hereby amended as follows:

1.

Capitalized terms used herein have the same meanings as set forth in the Amended Partnership Agreement, unless specifically defined herein.

2.

The Withdrawing Partner withdraws from the Partnership and acknowledges that it has no further interest therein.

3.

All Profits, Losses, Cash Flow, Sale or Refinancing Transaction Proceeds and other Partnership assets allocated or to be distributed to the Withdrawing Partner shall be allocated or to be distributed to the incoming Limited Partner.

4.

This Amendment may be signed in any number of counterparts, each of which shall be an original for all purposes, but all of which taken together shall constitute only one agreement.

5.

The Partners shall execute and deliver such further instruments and do such further acts and things as may be reasonably required to carry out the intent and purposes of this Amendment.

Except as set forth above, all of the terms and provisions of the Amended Partnership Agreement remain unmodified and in full force and effect.

IN WITNESS WHEREOF, this Amendment has been duly executed as of this day of May, 2006.

GENERAL PARTNERS:

Jenks School Corp.,

a Rhode Island corporation

By:

/s/Thomas P. Dimeo

Thomas P. Dimeo

Its President

/s/Thomas P. Dimeo

Thomas P. Diemo

/s/Lorraine S. Dimeo

Lorraine S. Dimeo

INCOMING LIMITED PARTNER:

BROADWAY LIMITED PARTNER, LLC

A Rhode Island limited liability corporation

By: /s/T. Paul Dimeo, Jr.

      T. Paul Dimeo, Jr.

Its Managing Member

(Signatures continued on next page)

WITHDRAWING PARTNER:

REAL ESTATE ASSOCIATES LIMITED III,

a California limited partnership

By National Partnership Investments Corp., a California corporation, its General Partner

By:   /s/Brian Flaherty

      Brian Flaherty

Its:  Vice President