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)  May 20, 1996

                      BALCOR EQUITY PENSION INVESTORS-III
                       A REAL ESTATE LIMITED PARTNERSHIP
         ------------------------------------------------------------
                           Exact Name of Registrant

Illinois                                0-14348
- ---------------------------             -------------------------
State or other jurisdiction             Commission file number

2355 Waukegan Road
Suite A200
Bannockburn, Illinois                   36-3354308
- ---------------------------             -------------------------
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 5.  OTHER INFORMATION
- ----------------------------------------------------------------------

Westlake Meadows Apartments

In 1986, the Partnership acquired the Westlake Meadows Apartments, Lake Oswego,
Oregon, utilizing $9,114,050 of Partnership proceeds.  On May 22, 1996, the
Partnership contracted to sell the property for a sale price of $10,800,000 to
RREEF America L.L.C., a Delaware limited liability company.  The purchaser has
deposited $300,000 into an escrow account as earnest money and will pay the
remaining $10,500,000 at closing, scheduled for June 13, 1996.  From the
proceeds of the sale, the Partnership will pay closing costs and $216,000 to an
unaffiliated party as a brokerage commission. Neither the General Partner nor
any affiliate will receive a brokerage commission in connection with the sale
of the property. An affiliate of the third party providing property management
services for the Partnership and certain affiliates will receive a fee for
services in connection with the sale of the property of $108,000.  The General
Partner will be reimbursed by the Partnership for its 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, its 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:

          (99)  Agreement of Sale and attachment thereto relating to the sale
                of Westlake Meadows Apartments, Lake Oswego, Oregon.

     No information is required under Items 1, 2, 3, 4, 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 EQUITY PENSION INVESTORS-III
                    A REAL ESTATE LIMITED PARTNERSHIP

                         By:  Balcor Equity Partners-III, an Illinois
                                 general partnership, its general
                                 partner

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

                         By:  /s/  Jerry M. Ogle
                            ------------------------------------
                                 Jerry M. Ogle, Vice President 
                                 and Secretary
Dated:  June 6, 1996
<PAGE>
[{"type": "8-K", "sequence": "1", "description": "JUNE 6, 1996 8-K FOR BEPI - III", "secsgml_size_bytes": 4108}]
{"company-data": {"conformed-name": "BALCOR EQUITY PENSION INVESTORS III", "cik": "0000768605", "assigned-sic": "6500", "irs-number": "363354308", "state-of-incorporation": "IL", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "000-14348", "film-number": "96577743"}, "business-address": {"street1": "4849 GOLF RD", "street2": "BALCOR PLZ", "city": "SKOKIE", "state": "IL", "zip": "60077-9894", "phone": "7086772900"}, "mail-address": {"street1": "4849 GOLF ROAD", "city": "SKOKIE", "state": "IL", "zip": "60077"}}
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)  May 20, 1996

                      BALCOR EQUITY PENSION INVESTORS-III
                       A REAL ESTATE LIMITED PARTNERSHIP
         ------------------------------------------------------------
                           Exact Name of Registrant

Illinois                                0-14348
- ---------------------------             -------------------------
State or other jurisdiction             Commission file number

2355 Waukegan Road
Suite A200
Bannockburn, Illinois                   36-3354308
- ---------------------------             -------------------------
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 5.  OTHER INFORMATION
- ----------------------------------------------------------------------

Westlake Meadows Apartments

In 1986, the Partnership acquired the Westlake Meadows Apartments, Lake Oswego,
Oregon, utilizing $9,114,050 of Partnership proceeds.  On May 22, 1996, the
Partnership contracted to sell the property for a sale price of $10,800,000 to
RREEF America L.L.C., a Delaware limited liability company.  The purchaser has
deposited $300,000 into an escrow account as earnest money and will pay the
remaining $10,500,000 at closing, scheduled for June 13, 1996.  From the
proceeds of the sale, the Partnership will pay closing costs and $216,000 to an
unaffiliated party as a brokerage commission. Neither the General Partner nor
any affiliate will receive a brokerage commission in connection with the sale
of the property. An affiliate of the third party providing property management
services for the Partnership and certain affiliates will receive a fee for
services in connection with the sale of the property of $108,000.  The General
Partner will be reimbursed by the Partnership for its 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, its 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:

          (99)  Agreement of Sale and attachment thereto relating to the sale
                of Westlake Meadows Apartments, Lake Oswego, Oregon.

     No information is required under Items 1, 2, 3, 4, 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 EQUITY PENSION INVESTORS-III
                    A REAL ESTATE LIMITED PARTNERSHIP

                         By:  Balcor Equity Partners-III, an Illinois
                                 general partnership, its general
                                 partner

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

                         By:  /s/  Jerry M. Ogle
                            ------------------------------------
                                 Jerry M. Ogle, Vice President 
                                 and Secretary
Dated:  June 6, 1996