________________________________________________________________________________

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2002  .

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from                                to                                .

Commission file no. 33-2462

DEL TACO RESTAURANT PROPERTIES III

a California limited partnership

(Exact name of registrant as specified in its charter)

California (State or other jurisdiction of incorporation or organization)	33-0139247 (I.R.S. Employer Identification Number)
23041 Avenida De La Carlota, Laguna Hills, California (Address of principal executive offices)	92653 (Zip Code)

(949) 462-9300

(Registrant’s telephone number, including area code)

     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 o

TABLE OF CONTENTS

		BALANCE SHEETS
		STATEMENTS OF INCOME
		STATEMENTS OF CASH FLOWS
		NOTES TO FINANCIAL STATEMENTS
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
PART II. OTHER INFORMATION
	Item 6. Exhibits and Reports on Form 8-K
SIGNATURE

INDEX

DEL TACO RESTAURANT PROPERTIES III

	PAGE NUMBER
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements and Supplementary Data
Balance Sheets at March 31, 2002 (Unaudited) and December 31, 2001		3
Statements of Income for the three months ended March 31, 2002 and 2001 (Unaudited)		4
Statements of Cash Flows for the three months ended March 31, 2002 and 2001 (Unaudited)		5
Notes to Financial Statements		6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		9
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K		11
SIGNATURE		12

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DEL TACO RESTAURANT PROPERTIES III

BALANCE SHEETS

			March 31,			December 31,
			2002			2001
			(Unaudited)
ASSETS
CURRENT ASSETS:
	Cash		$	219,665		$	248,445
	Receivable from General Partner			73,982			71,282
	Deposits			1,437			1,000
		Total current assets		295,084			320,727
RESTRICTED CASH				97,291			97,291
PROPERTY AND EQUIPMENT, at cost:
	Land and improvements			4,405,966			4,405,966
	Buildings and improvements			2,954,959			2,954,959
	Machinery and equipment			1,522,922			1,522,922
				8,883,847			8,883,847
	Less — accumulated depreciation			3,047,286			3,018,978
				5,836,561			5,864,869
			$	6,228,936		$	6,282,887
LIABILITIES AND PARTNERS’ EQUITY
CURRENT LIABILITIES:
	Payable to Limited Partners		$	40,099		$	38,961
	Accounts payable			8,305			15,258
		Total current liabilities		48,404			54,219
OBLIGATION TO GENERAL PARTNER				577,510			577,510
PARTNERS’ EQUITY:
	Limited Partners			5,642,520			5,690,174
	General Partner-Del Taco, Inc.			(39,498	)		(39,016	)
				5,603,022			5,651,158
			$	6,228,936		$	6,282,887

The accompanying notes are an
integral part of these financial statements.

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DEL TACO RESTAURANT PROPERTIES III

STATEMENTS OF INCOME

(Unaudited)

			Three Months Ended
			March 31,
			2002		2001
REVENUES:
	Rent		$	208,162	$	192,977
	Interest			1,201		3,484
	Other			1,025		675
				210,388		197,136
EXPENSES:
	General and administrative			25,463		23,930
	Depreciation			28,310		28,310
				53,773		52,240
		Net income	$	156,615	$	144,896
	Net income per limited partnership unit		$	3.28	$	3.03

The accompanying notes are an
integral part of these financial statements.

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DEL TACO RESTAURANT PROPERTIES III

STATEMENTS OF CASH FLOWS

(Unaudited)

			Three Months Ended
			March 31,
			2002			2001
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income			$	156,615		$	144,896
Adjustments to reconcile net income to net cash provided by operating activities:
	Depreciation			28,310			28,310
	Increase in receivable from General Partner			(2,700	)		(830	)
	(Increase) decrease in deposits			(437	)		311
	(Decrease) increase in accounts payable and payable to limited partners			(5,817	)		8,130
		Net cash provided by operating activities		175,971			180,817
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners				(204,751	)		(191,438	)
		Net cash used by financing activities		(204,751	)		(191,438	)
Net decrease in cash				(28,780	)		(10,621	)
Beginning cash balance				345,736			230,275
Ending cash balance			$	316,956		$	219,654

The accompanying notes are an
integral part of these financial statements.

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DEL TACO RESTAURANT PROPERTIES III

NOTES TO FINANCIAL STATEMENTS

MARCH 31, 2002

NOTE 1 — BASIS OF PRESENTATION

The accompanying financial statements, some of which are unaudited, have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements and should therefore be read in conjunction with the financial statements and notes thereto contained in the Registrant’s annual report on Form 10-K for the year ended December 31, 2001. In the opinion of management, all adjustments (consisting of normal recurring accruals) necessary to present fairly the partnership’s financial position at March 31, 2002, the results of operations and cash flows for the three month periods ended March 31, 2002 and 2001 have been included. Operating results for the three months ended March 31, 2002 are not necessarily indicative of the results that may be expected for the year ending December 31, 2002.

NOTE 2 — RESTRICTED CASH

At March 31, 2002, the partnership had a restricted cash balance of $97,291. The restricted cash is a death and disability redemption fund. Such fund is maintained in an interest bearing account at a major commercial bank. A limited partner has the right, under certain circumstances involving such limited partner’s death or disability, to tender to the partnership for redemption all of the units owned of record by such limited partner. The redemption price will be equal to the partners capital account balance as of the redemption date. The death and disability fund was established in 1987. The fund was limited to two percent of the gross proceeds from sale of the limited partnership units. Requests for redemption made after the funds in the death and disability fund are depleted will not be accepted.

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DEL TACO RESTAURANT PROPERTIES III

NOTES TO FINANCIAL STATEMENTS — CONTINUED

MARCH 31, 2002

NOTE 3 — NET INCOME PER LIMITED PARTNERSHIP UNIT

Net income per limited partnership unit is based upon the weighted average number of units outstanding during the periods presented which amounted to 47,331 in 2002 and 2001.

Pursuant to the partnership agreement, annual partnership income or loss is allocated one percent to the General Partner and 99 percent to the limited partners. Partnership gains from any sale or refinancing will be allocated one percent to the General Partner and 99 percent to the limited partners until allocated gains and profits equal losses, distributions and syndication costs, and until each class of limited partners receive their priority return as defined in the partnership agreement. Additional gains will be allocated 15 percent to the General Partner and 85 percent to the limited partners.

NOTE 4 — LEASING ACTIVITIES

The partnership leases certain properties for operation of restaurants to Del Taco, Inc. on a triple net basis. The leases are for terms of 35 years commencing with the completion of the restaurant facility located on each property and require monthly rentals equal to 12 percent of the gross sales of the restaurants. There is no minimum rental under any of the leases.

For the three months ended March 31, 2002, the nine restaurants operated by Del Taco, for which the partnership is the lessor, had combined, unaudited sales of $1,734,687 and net income of $99,760, as compared to $1,608,145 and $87,943, respectively, for the corresponding period in 2001. Net income by restaurant includes charges for general and administrative expenses incurred in connection with supervision of restaurant operations and interest expense.

For the three months ended March 31, 2002, the East Valley Blvd. restaurant in Walnut, California reported net income of $4,184 as compared to a net loss of $2,387 for the corresponding period in 2001.

For the three months ended March 31, 2002, the East Gale Blvd. restaurant in Puente Hills, California reported a net loss of $2,022 as compared to a net loss of $1,736 for the corresponding period in 2001.

For the three months ended March 31, 2002, the West Sepulveda Blvd. restaurant in Los Angeles, California reported a net loss of $2,460 as compared to net income of $471 for the corresponding period in 2001.

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DEL TACO RESTAURANT PROPERTIES III

NOTES TO FINANCIAL STATEMENTS — CONTINUED

MARCH 31, 2002

NOTE 5 — TRANSACTIONS WITH DEL TACO

The receivable from General Partner consists primarily of rent accrued for the month of March. The March rent was collected on April 12, 2002.

Del Taco, Inc. serves in the capacity of general partner in other partnerships which are engaged in the business of operating restaurants, and three other partnerships which were formed for the purpose of acquiring real property in California for construction of Mexican-American restaurants for lease under long-term agreements to Del Taco, Inc. for operation under the Del Taco trade name.

In addition, see Note 6 with respect to certain distributions to the General Partner.

NOTE 6 — DISTRIBUTIONS

On April 16, 2002, a distribution to the limited partners of $173,047, or approximately $3.66 per limited partnership unit, was approved. Such distribution was paid on April 19, 2002. The General Partner also received a distribution of $1,730 with respect to its 1% partnership interest.

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

Liquidity and Capital Resources

The partnership offered limited partnership units for sale between February 1986 and June 1987. 14.7% of the $12 million raised through sale of limited partnership units was used to pay commissions to brokers and to reimburse the General Partner for offering costs incurred. Approximately $9.5 million of the remaining funds were used to acquire sites and build ten restaurants. In February of 1992, approximately $281,000 raised during the offering but not required to acquire sites and build restaurants was distributed to the limited partners. One restaurant was sold in November 1997.

The nine restaurants leased to Del Taco make up almost all of the income producing assets of the partnership. Therefore, the business of the partnership is almost entirely dependent on the success of the Del Taco trade name restaurants that lease the properties. The success of the restaurants is dependent on a large variety of factors, including, but not limited to, consumer demand and preference for fast food, in general, and for Mexican-American food in particular.

As described in Note 2 to the Notes to the Financial Statements, the partnership has a death and disability redemption fund totaling $97,291 at March 31, 2002. Investors should contact the General Partner with all questions regarding the eligibility of a limited partner or the estate of a deceased limited partner to participate in the redemption fund.

Results of Operations

The partnership owns nine properties that are under long-term lease to Del Taco for restaurant operations.

The following table sets forth rental revenue earned by restaurant:

		Three Months Ended
		March 31,
		2002		2001
Rancho California Plaza, Temecula, CA		$	30,272	$	29,319
East Vista Way, Vista, CA			20,665		18,493
Plaza at Puente Hills, Industry, CA			14,136		12,627
4th Street, Perris, CA			29,908		25,768
Foothill Blvd., Upland, CA			24,290		24,644
East Valley Blvd., Walnut, CA			14,124		12,088
Lassen Street, Chatsworth, CA			30,920		28,423
Hesperia Road, Victorville, CA			27,802		25,554
W. Sepulveda Blvd., Los Angeles, CA			16,045		16,061
	Total	$	208,162	$	192,977

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Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations — continued

The partnership receives rental revenues equal to 12 percent of gross sales from the restaurants. The partnership earned rental revenue of $208,162 during the three month period ended March 31, 2002, which represents an increase of $15,185 from 2001. The increase in rental revenue was caused by an increase in sales at the restaurants under lease.

The following table breaks down general and administrative expenses by type of expense:

	Percentage of Total
	General & Administrative Expense
	Three Months Ended
	March 31,
	2002			2001
Accounting fees		64.50	%		64.98	%
Distribution of information to Limited Partners		35.50			35.02
		100.00	%		100.00	%

General and administrative costs increased from 2001 to 2002 due to increased costs for the annual audit and income tax preparation and the additional costs incurred in 2002 to lease new software.

Net income increased by $11,719 from 2001 to 2002 due to the increase in revenues of $13,252, which was partially offset by the $1,533 increase in general and administrative expenses.

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PART II. OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K

(b) No reports on Form 8-K were filed during the three months ended March 31, 2002.

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SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

DEL TACO RESTAURANT PROPERTIES III
(a California limited partnership)
Registrant


Del Taco, Inc.
General Partner

Date: May 1, 2002   /s/   Robert J. Terrano Robert J. Terrano
Executive Vice President, Chief Financial Officer

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