SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, DC  20549

                                   FORM 8-K

                                CURRENT REPORT

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

      Date of Report (date of earliest event reported)  December 2, 1996

                         BALCOR PENSION INVESTORS-III
         ------------------------------------------------------------
                           Exact Name of Registrant


Illinois                                0-11129
-----------------------------------     -----------------------------------
State or other jurisdiction             Commission file number

2355 Waukegan Road
Suite A200
Bannockburn, Illinois                   36-3164211
-----------------------------------     -----------------------------------
Address of principal                    I.R.S. Employer
executive offices                       Identification
                                        Number

60015
-----------------------------------
Zip Code

              Registrant's telephone number, including area code:
                                (847) 267-1600
<PAGE>
ITEM 2.  ACQUISITION OR DISPOSITION OF ASSETS
----------------------------------------------------------------------

Perimeter 400 Center

In 1983, the Partnership and three affiliates (the "Participants") funded a
$37,000,000  first mortgage loan collateralized by the Perimeter 400 Center,
Fulton County, Georgia. The Partnership's share of the loan was $4,692,683 for
a participating percentage of 12.68%.  In 1991, in exchange for a release of
its obligations under the loan, the borrower conveyed title to the property to
a general partnership consisting of the Participants (the "General
Partnership") in which each Participant holds an interest equal to its
participating percentage in the loan.

On December 2, 1996, the General Partnership contracted to sell the property
for a sale price of $40,700,000 to an unaffiliated party, Devon Properties,
Inc., a New York corporation.  The purchaser has deposited $750,000 into an
escrow account as earnest money.  The remainder of the sale price will be
payable in cash at closing, scheduled for December 19, 1996.  From the proceeds
of the sale, the General Partnership will pay $814,000 as a brokerage
commission to an affiliate of the third party providing property management
services for the property and will receive the remaining proceeds of
approximately $39,886,000.  Of such proceeds, $1,750,000 will be retained by
the General Partnership and will not be available for use or distribution by
the General Partnership until nine months after the closing.  The Partnership's
share of the total proceeds will be approximately $5,100,000, less the
Partnership's share of closing costs.  Neither the General Partner nor any
affiliate will receive a brokerage commission in connection with the sale of
the property.  The General Partner will be reimbursed by the General
Partnership for actual expenses incurred in connection with the sale.

The closing is subject to the satisfaction of numerous terms and conditions.
There can be no assurance that all of the terms and conditions will be complied
with and, therefore, it is possible the sale of the property may not occur.  

 
ITEM 7.  FINANCIAL STATEMENTS AND EXHIBITS
----------------------------------------------------------------------

     (A)  FINANCIAL STATEMENTS AND EXHIBITS:

            None

     (B)  PRO FORMA FINANCIAL INFORMATION:

            None

     (C)  EXHIBITS:

          (2)  Agreement of Sale and attachment thereto relating to the sale of
               Perimeter 400 Center, Fulton County, Georgia.

     No information is required under Items 1, 3, 4, 5, 6 and 8 and these items
have, therefore, been omitted.
<PAGE>
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 hereunto duly authorized.


                    BALCOR PENSION INVESTORS-III

                         By:  Balcor Mortgage Advisors-II, an Illinois 
                              general partnership, its general partner

                         By:  RGF-Balcor Associates-II, an Illinois general 
                              partnership, a partner

                         By:  The Balcor Company, a Delaware corporation,
                              a partner

                         By:   /s/ Jerry M. Ogle
                              ------------------------------------
                                   Jerry M. Ogle, Vice President 
                                   and Secretary

Dated:  December 17, 1996
       ----------------------
<PAGE>
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{"company-data": {"conformed-name": "BALCOR PENSION INVESTORS III", "cik": "0000357329", "assigned-sic": "6500", "irs-number": "363164211", "state-of-incorporation": "IL", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "000-11128", "film-number": "96681998"}, "business-address": {"street1": "2355 WAUKEGAN ROAD", "street2": "SUITE A200", "city": "DEERFIELD", "state": "IL", "zip": "60015", "phone": "7086772900"}, "mail-address": {"street1": "2355 WAUKEGAN ROAD", "street2": "SUITE A200", "city": "DEERFIELD", "state": "IL", "zip": "60015"}}
SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, DC  20549

                                   FORM 8-K

                                CURRENT REPORT

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

      Date of Report (date of earliest event reported)  December 2, 1996

                         BALCOR PENSION INVESTORS-III
         ------------------------------------------------------------
                           Exact Name of Registrant

Illinois                                0-11129
-----------------------------------     -----------------------------------
State or other jurisdiction             Commission file number

2355 Waukegan Road
Suite A200
Bannockburn, Illinois                   36-3164211
-----------------------------------     -----------------------------------
Address of principal                    I.R.S. Employer
executive offices                       Identification
                                        Number

60015
-----------------------------------
Zip Code

              Registrant's telephone number, including area code:
                                (847) 267-1600
ITEM 2.  ACQUISITION OR DISPOSITION OF ASSETS
----------------------------------------------------------------------

Perimeter 400 Center

In 1983, the Partnership and three affiliates (the "Participants") funded a
$37,000,000  first mortgage loan collateralized by the Perimeter 400 Center,
Fulton County, Georgia. The Partnership's share of the loan was $4,692,683 for
a participating percentage of 12.68%.  In 1991, in exchange for a release of
its obligations under the loan, the borrower conveyed title to the property to
a general partnership consisting of the Participants (the "General
Partnership") in which each Participant holds an interest equal to its
participating percentage in the loan.

On December 2, 1996, the General Partnership contracted to sell the property
for a sale price of $40,700,000 to an unaffiliated party, Devon Properties,
Inc., a New York corporation.  The purchaser has deposited $750,000 into an
escrow account as earnest money.  The remainder of the sale price will be
payable in cash at closing, scheduled for December 19, 1996.  From the proceeds
of the sale, the General Partnership will pay $814,000 as a brokerage
commission to an affiliate of the third party providing property management
services for the property and will receive the remaining proceeds of
approximately $39,886,000.  Of such proceeds, $1,750,000 will be retained by
the General Partnership and will not be available for use or distribution by
the General Partnership until nine months after the closing.  The Partnership's
share of the total proceeds will be approximately $5,100,000, less the
Partnership's share of closing costs.  Neither the General Partner nor any
affiliate will receive a brokerage commission in connection with the sale of
the property.  The General Partner will be reimbursed by the General
Partnership for actual expenses incurred in connection with the sale.

The closing is subject to the satisfaction of numerous terms and conditions.
There can be no assurance that all of the terms and conditions will be complied
with and, therefore, it is possible the sale of the property may not occur.  

 
ITEM 7.  FINANCIAL STATEMENTS AND EXHIBITS
----------------------------------------------------------------------

     (A)  FINANCIAL STATEMENTS AND EXHIBITS:

            None

     (B)  PRO FORMA FINANCIAL INFORMATION:

            None

     (C)  EXHIBITS:

          (2)  Agreement of Sale and attachment thereto relating to the sale of
               Perimeter 400 Center, Fulton County, Georgia.

     No information is required under Items 1, 3, 4, 5, 6 and 8 and these items
have, therefore, been omitted.
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 hereunto duly authorized.

                    BALCOR PENSION INVESTORS-III

                         By:  Balcor Mortgage Advisors-II, an Illinois 
                              general partnership, its general partner

                         By:  RGF-Balcor Associates-II, an Illinois general 
                              partnership, a partner

                         By:  The Balcor Company, a Delaware corporation,
                              a partner

                         By:   /s/ Jerry M. Ogle
                              ------------------------------------
                                   Jerry M. Ogle, Vice President 
                                   and Secretary

Dated:  December 17, 1996
       ----------------------