<?xml version="1.0"?>
<edgarSubmission>

    <schemaVersion>X0708</schemaVersion>

    <submissionType>D</submissionType>

    <testOrLive>LIVE</testOrLive>

    <primaryIssuer>
        <cik>0001792368</cik>
        <entityName>Varde Mortgage Fund III Sub REIT, LLC</entityName>
        <issuerAddress>
            <street1>901 MARQUETTE AVE S.</street1>
            <street2>SUITE 3300</street2>
            <city>MINNEAPOLIS</city>
            <stateOrCountry>MN</stateOrCountry>
            <stateOrCountryDescription>MINNESOTA</stateOrCountryDescription>
            <zipCode>55402</zipCode>
        </issuerAddress>
        <issuerPhoneNumber>952-893-1554</issuerPhoneNumber>
        <jurisdictionOfInc>DELAWARE</jurisdictionOfInc>
        <issuerPreviousNameList>
            <value>None</value>
        </issuerPreviousNameList>
        <edgarPreviousNameList>
            <value>None</value>
        </edgarPreviousNameList>
        <entityType>Limited Liability Company</entityType>
        <yearOfInc>
            <withinFiveYears>true</withinFiveYears>
            <value>2019</value>
        </yearOfInc>
    </primaryIssuer>

    <relatedPersonsList>
        <relatedPersonInfo>
            <relatedPersonName>
                <firstName>N/A</firstName>
                <lastName>The Varde Mortgage Fund III Master, L.P.</lastName>
            </relatedPersonName>
            <relatedPersonAddress>
                <street1>901 Marquette Ave. S.</street1>
                <street2>Suite 3300</street2>
                <city>Minneapolis</city>
                <stateOrCountry>MN</stateOrCountry>
                <stateOrCountryDescription>MINNESOTA</stateOrCountryDescription>
                <zipCode>55402</zipCode>
            </relatedPersonAddress>
            <relatedPersonRelationshipList>
                <relationship>Promoter</relationship>
            </relatedPersonRelationshipList>
            <relationshipClarification>The manager of the Issuer.</relationshipClarification>
        </relatedPersonInfo>
        <relatedPersonInfo>
            <relatedPersonName>
                <firstName>N/A</firstName>
                <lastName>The Varde Mortgage Fund III GP, L.P.</lastName>
            </relatedPersonName>
            <relatedPersonAddress>
                <street1>901 Marquette Ave. S.</street1>
                <street2>Suite 3300</street2>
                <city>Minneapolis</city>
                <stateOrCountry>MN</stateOrCountry>
                <stateOrCountryDescription>MINNESOTA</stateOrCountryDescription>
                <zipCode>55402</zipCode>
            </relatedPersonAddress>
            <relatedPersonRelationshipList>
                <relationship>Promoter</relationship>
            </relatedPersonRelationshipList>
            <relationshipClarification>The general partner of the manager of the Issuer.</relationshipClarification>
        </relatedPersonInfo>
        <relatedPersonInfo>
            <relatedPersonName>
                <firstName>N/A</firstName>
                <lastName>The Varde Mortgage Fund III UGP, LLC</lastName>
            </relatedPersonName>
            <relatedPersonAddress>
                <street1>901 Marquette Ave. S.</street1>
                <street2>Suite 3300</street2>
                <city>Minneapolis</city>
                <stateOrCountry>MN</stateOrCountry>
                <stateOrCountryDescription>MINNESOTA</stateOrCountryDescription>
                <zipCode>55402</zipCode>
            </relatedPersonAddress>
            <relatedPersonRelationshipList>
                <relationship>Promoter</relationship>
            </relatedPersonRelationshipList>
            <relationshipClarification>The general partner of the general partner of the manager of the Issuer (the &quot;Ultimate GP&quot;).</relationshipClarification>
        </relatedPersonInfo>
        <relatedPersonInfo>
            <relatedPersonName>
                <firstName>N/A</firstName>
                <lastName>Varde Partners, L.P.</lastName>
            </relatedPersonName>
            <relatedPersonAddress>
                <street1>901 Marquette Ave. S.</street1>
                <street2>Suite 3300</street2>
                <city>Minneapolis</city>
                <stateOrCountry>MN</stateOrCountry>
                <stateOrCountryDescription>MINNESOTA</stateOrCountryDescription>
                <zipCode>55402</zipCode>
            </relatedPersonAddress>
            <relatedPersonRelationshipList>
                <relationship>Promoter</relationship>
            </relatedPersonRelationshipList>
            <relationshipClarification>The managing member of the Ultimate GP.</relationshipClarification>
        </relatedPersonInfo>
        <relatedPersonInfo>
            <relatedPersonName>
                <firstName>N/A</firstName>
                <lastName>Varde Partners, Inc.</lastName>
            </relatedPersonName>
            <relatedPersonAddress>
                <street1>901 Marquette Ave. S.</street1>
                <street2>Suite 3300</street2>
                <city>Minneapolis</city>
                <stateOrCountry>MN</stateOrCountry>
                <stateOrCountryDescription>MINNESOTA</stateOrCountryDescription>
                <zipCode>55402</zipCode>
            </relatedPersonAddress>
            <relatedPersonRelationshipList>
                <relationship>Promoter</relationship>
            </relatedPersonRelationshipList>
            <relationshipClarification>The general partner of the managing member of the Ultimate GP.</relationshipClarification>
        </relatedPersonInfo>
        <relatedPersonInfo>
            <relatedPersonName>
                <firstName>George</firstName>
                <middleName>G.</middleName>
                <lastName>Hicks</lastName>
            </relatedPersonName>
            <relatedPersonAddress>
                <street1>901 Marquette Ave. S.</street1>
                <street2>Suite 3300</street2>
                <city>Minneapolis</city>
                <stateOrCountry>MN</stateOrCountry>
                <stateOrCountryDescription>MINNESOTA</stateOrCountryDescription>
                <zipCode>55402</zipCode>
            </relatedPersonAddress>
            <relatedPersonRelationshipList>
                <relationship>Executive Officer</relationship>
                <relationship>Promoter</relationship>
            </relatedPersonRelationshipList>
            <relationshipClarification>Principal of Varde Partners, Inc.</relationshipClarification>
        </relatedPersonInfo>
        <relatedPersonInfo>
            <relatedPersonName>
                <firstName>Marcia</firstName>
                <middleName>L.</middleName>
                <lastName>Page</lastName>
            </relatedPersonName>
            <relatedPersonAddress>
                <street1>901 Marquette Ave. S.</street1>
                <street2>Suite 3300</street2>
                <city>Minneapolis</city>
                <stateOrCountry>MN</stateOrCountry>
                <stateOrCountryDescription>MINNESOTA</stateOrCountryDescription>
                <zipCode>55402</zipCode>
            </relatedPersonAddress>
            <relatedPersonRelationshipList>
                <relationship>Executive Officer</relationship>
                <relationship>Promoter</relationship>
            </relatedPersonRelationshipList>
            <relationshipClarification>Principal of Varde Partners, Inc.</relationshipClarification>
        </relatedPersonInfo>
        <relatedPersonInfo>
            <relatedPersonName>
                <firstName>Jeremy</firstName>
                <middleName>D.</middleName>
                <lastName>Hedberg</lastName>
            </relatedPersonName>
            <relatedPersonAddress>
                <street1>901 Marquette Ave. S.</street1>
                <street2>Suite 3300</street2>
                <city>Minneapolis</city>
                <stateOrCountry>MN</stateOrCountry>
                <stateOrCountryDescription>MINNESOTA</stateOrCountryDescription>
                <zipCode>55402</zipCode>
            </relatedPersonAddress>
            <relatedPersonRelationshipList>
                <relationship>Executive Officer</relationship>
                <relationship>Promoter</relationship>
            </relatedPersonRelationshipList>
            <relationshipClarification>Principal of Varde Partners, Inc.</relationshipClarification>
        </relatedPersonInfo>
        <relatedPersonInfo>
            <relatedPersonName>
                <firstName>Rick</firstName>
                <middleName>J.</middleName>
                <lastName>Noel</lastName>
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            <relatedPersonAddress>
                <street1>901 Marquette Ave. S.</street1>
                <street2>Suite 3300</street2>
                <city>Minneapolis</city>
                <stateOrCountry>MN</stateOrCountry>
                <stateOrCountryDescription>MINNESOTA</stateOrCountryDescription>
                <zipCode>55402</zipCode>
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            <relatedPersonRelationshipList>
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                <relationship>Promoter</relationship>
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            <relationshipClarification>Principal of Varde Partners, Inc.</relationshipClarification>
        </relatedPersonInfo>
        <relatedPersonInfo>
            <relatedPersonName>
                <firstName>Andrew</firstName>
                <middleName>P.</middleName>
                <lastName>Lenk</lastName>
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            <relatedPersonAddress>
                <street1>901 Marquette Ave. S.</street1>
                <street2>Suite 3300</street2>
                <city>Minneapolis</city>
                <stateOrCountry>MN</stateOrCountry>
                <stateOrCountryDescription>MINNESOTA</stateOrCountryDescription>
                <zipCode>55402</zipCode>
            </relatedPersonAddress>
            <relatedPersonRelationshipList>
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                <relationship>Promoter</relationship>
            </relatedPersonRelationshipList>
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        </relatedPersonInfo>
        <relatedPersonInfo>
            <relatedPersonName>
                <firstName>Ilfryn</firstName>
                <middleName>C.</middleName>
                <lastName>Carstairs</lastName>
            </relatedPersonName>
            <relatedPersonAddress>
                <street1>901 Marquette Ave. S.</street1>
                <street2>Suite 3300</street2>
                <city>Minneapolis</city>
                <stateOrCountry>MN</stateOrCountry>
                <stateOrCountryDescription>MINNESOTA</stateOrCountryDescription>
                <zipCode>55402</zipCode>
            </relatedPersonAddress>
            <relatedPersonRelationshipList>
                <relationship>Executive Officer</relationship>
                <relationship>Promoter</relationship>
            </relatedPersonRelationshipList>
            <relationshipClarification>Principal of Varde Partners, Inc.</relationshipClarification>
        </relatedPersonInfo>
        <relatedPersonInfo>
            <relatedPersonName>
                <firstName>Haseeb</firstName>
                <lastName>Malik</lastName>
            </relatedPersonName>
            <relatedPersonAddress>
                <street1>901 Marquette Ave. S.</street1>
                <street2>Suite 3300</street2>
                <city>Minneapolis</city>
                <stateOrCountry>MN</stateOrCountry>
                <stateOrCountryDescription>MINNESOTA</stateOrCountryDescription>
                <zipCode>55402</zipCode>
            </relatedPersonAddress>
            <relatedPersonRelationshipList>
                <relationship>Executive Officer</relationship>
                <relationship>Promoter</relationship>
            </relatedPersonRelationshipList>
            <relationshipClarification>Principal of Varde Partners, Inc.</relationshipClarification>
        </relatedPersonInfo>
        <relatedPersonInfo>
            <relatedPersonName>
                <firstName>Bradley</firstName>
                <middleName>P.</middleName>
                <lastName>Bauer</lastName>
            </relatedPersonName>
            <relatedPersonAddress>
                <street1>901 Marquette Ave. S.</street1>
                <street2>Suite 3300</street2>
                <city>Minneapolis</city>
                <stateOrCountry>MN</stateOrCountry>
                <stateOrCountryDescription>MINNESOTA</stateOrCountryDescription>
                <zipCode>55402</zipCode>
            </relatedPersonAddress>
            <relatedPersonRelationshipList>
                <relationship>Executive Officer</relationship>
                <relationship>Promoter</relationship>
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            <relationshipClarification>Principal of Varde Partners, Inc.</relationshipClarification>
        </relatedPersonInfo>
        <relatedPersonInfo>
            <relatedPersonName>
                <firstName>Timothy</firstName>
                <middleName>J.</middleName>
                <lastName>Mooney</lastName>
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                <street2>Suite 3300</street2>
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                <stateOrCountry>MN</stateOrCountry>
                <stateOrCountryDescription>MINNESOTA</stateOrCountryDescription>
                <zipCode>55402</zipCode>
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                <relationship>Promoter</relationship>
            </relatedPersonRelationshipList>
            <relationshipClarification>Principal of Varde Partners, Inc.</relationshipClarification>
        </relatedPersonInfo>
        <relatedPersonInfo>
            <relatedPersonName>
                <firstName>Giuseppe</firstName>
                <lastName>Naglieri</lastName>
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            <relatedPersonAddress>
                <street1>901 Marquette Ave. S.</street1>
                <street2>Suite 3300</street2>
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                <stateOrCountry>MN</stateOrCountry>
                <stateOrCountryDescription>MINNESOTA</stateOrCountryDescription>
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                <relationship>Promoter</relationship>
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            <relationshipClarification>Principal of Varde Partners, Inc.</relationshipClarification>
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        <relatedPersonInfo>
            <relatedPersonName>
                <firstName>David</firstName>
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                <lastName>Marple</lastName>
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                <street1>901 Marquette Ave. S.</street1>
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                <stateOrCountryDescription>MINNESOTA</stateOrCountryDescription>
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                <relationship>Promoter</relationship>
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        <relatedPersonInfo>
            <relatedPersonName>
                <firstName>Jonathan</firstName>
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        <relatedPersonInfo>
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                <firstName>Brian</firstName>
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        <relatedPersonInfo>
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                <firstName>Francisco</firstName>
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        <relatedPersonInfo>
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    </relatedPersonsList>

    <offeringData>
        <industryGroup>
            <industryGroupType>Pooled Investment Fund</industryGroupType>
            <investmentFundInfo>
                <investmentFundType>Other Investment Fund</investmentFundType>
                <is40Act>false</is40Act>
            </investmentFundInfo>
        </industryGroup>
        <issuerSize>
            <aggregateNetAssetValueRange>Decline to Disclose</aggregateNetAssetValueRange>
        </issuerSize>
        <federalExemptionsExclusions>
            <item>06b</item>
            <item>3C</item>
            <item>3C.7</item>
        </federalExemptionsExclusions>
        <typeOfFiling>
            <newOrAmendment>
                <isAmendment>false</isAmendment>
            </newOrAmendment>
            <dateOfFirstSale>
                <value>2020-12-07</value>
            </dateOfFirstSale>
        </typeOfFiling>
        <durationOfOffering>
            <moreThanOneYear>false</moreThanOneYear>
        </durationOfOffering>
        <typesOfSecuritiesOffered>
            <isPooledInvestmentFundType>true</isPooledInvestmentFundType>
        </typesOfSecuritiesOffered>
        <businessCombinationTransaction>
            <isBusinessCombinationTransaction>false</isBusinessCombinationTransaction>
            <clarificationOfResponse></clarificationOfResponse>
        </businessCombinationTransaction>
        <minimumInvestmentAccepted>1000</minimumInvestmentAccepted>
        <salesCompensationList>
            <recipient>
                <recipientName>Iroquois Capital Advisors, LLC</recipientName>
                <recipientCRDNumber>145235</recipientCRDNumber>
                <associatedBDName>None</associatedBDName>
                <associatedBDCRDNumber>None</associatedBDCRDNumber>
                <recipientAddress>
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                    <street2>Suite 910</street2>
                    <city>Nashville</city>
                    <stateOrCountry>TN</stateOrCountry>
                    <stateOrCountryDescription>TENNESSEE</stateOrCountryDescription>
                    <zipCode>37203</zipCode>
                </recipientAddress>
                <statesOfSolicitationList>
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                    <description>ALABAMA</description>
                    <state>CA</state>
                    <description>CALIFORNIA</description>
                    <state>FL</state>
                    <description>FLORIDA</description>
                    <state>GA</state>
                    <description>GEORGIA</description>
                    <state>IL</state>
                    <description>ILLINOIS</description>
                    <state>MA</state>
                    <description>MASSACHUSETTS</description>
                    <state>NC</state>
                    <description>NORTH CAROLINA</description>
                    <state>OH</state>
                    <description>OHIO</description>
                    <state>SC</state>
                    <description>SOUTH CAROLINA</description>
                    <state>TN</state>
                    <description>TENNESSEE</description>
                    <state>TX</state>
                    <description>TEXAS</description>
                </statesOfSolicitationList>
                <foreignSolicitation>false</foreignSolicitation>
            </recipient>
            <recipient>
                <recipientName>REIT Investment Group, LLC</recipientName>
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                <associatedBDCRDNumber>None</associatedBDCRDNumber>
                <recipientAddress>
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                    <description>FLORIDA</description>
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                    <description>GEORGIA</description>
                    <state>IL</state>
                    <description>ILLINOIS</description>
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                    <state>OH</state>
                    <description>OHIO</description>
                    <state>SC</state>
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                    <state>TN</state>
                    <description>TENNESSEE</description>
                    <state>TX</state>
                    <description>TEXAS</description>
                </statesOfSolicitationList>
                <foreignSolicitation>false</foreignSolicitation>
            </recipient>
        </salesCompensationList>
        <offeringSalesAmounts>
            <totalOfferingAmount>125000</totalOfferingAmount>
            <totalAmountSold>125000</totalAmountSold>
            <totalRemaining>0</totalRemaining>
            <clarificationOfResponse></clarificationOfResponse>
        </offeringSalesAmounts>
        <investors>
            <hasNonAccreditedInvestors>false</hasNonAccreditedInvestors>
            <totalNumberAlreadyInvested>125</totalNumberAlreadyInvested>
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        <salesCommissionsFindersFees>
            <salesCommissions>
                <dollarAmount>22000</dollarAmount>
            </salesCommissions>
            <findersFees>
                <dollarAmount>0</dollarAmount>
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            <clarificationOfResponse></clarificationOfResponse>
        </salesCommissionsFindersFees>
        <useOfProceeds>
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                <dollarAmount>0</dollarAmount>
            </grossProceedsUsed>
            <clarificationOfResponse></clarificationOfResponse>
        </useOfProceeds>
        <signatureBlock>
            <authorizedRepresentative>false</authorizedRepresentative>
            <signature>
                <issuerName>Varde Mortgage Fund III Sub REIT, LLC</issuerName>
                <signatureName>/s/ Molly Mammen</signatureName>
                <nameOfSigner>Molly Mammen</nameOfSigner>
                <signatureTitle>Managing Director of Varde Partners, Inc.</signatureTitle>
                <signatureDate>2020-12-18</signatureDate>
            </signature>
        </signatureBlock>
    </offeringData>
</edgarSubmission>
