csp_113008nq.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED MANAGEMENT INVESTMENT COMPANY

Investment Company Act file number (811-07444)

American Strategic Income Portfolio Inc. III

(Exact name of registrant as specified in charter)

800 Nicollet Mall

Minneapolis, MN 55402

(Address of principal executive offices) (Zip code)

Charles D. Gariboldi, Jr.

800 Nicollet Mall Minneapolis, MN 55402

(Name and address of agent for service)

800-677-3863

Registrant's telephone number, including area code

Date of fiscal year end: 08/31/09

Date of reporting period: 11/30/08

Item 1. Schedule of Investments.

Schedule of INVESTMENTS (unaudited)

American Strategic Income Portfolio III (CSP)

November 30, 2008

DESCRIPTION	DATE ACQUIRED	PAR		COST		VALUE ¶

(Percentages of each investment category relate to total net assets)
U.S. Government Agency Mortgage-Backed Securities ■ — 2.7%
Fixed Rate — 2.7%
Federal Home Loan Mortgage Corporation,
5.50%, 1/1/18, #E93231		$	2,728,510	$	2,790,807	$	2,787,222
9.00%, 7/1/30, #C40149			175,118		179,137		192,434
Federal National Mortgage Association,
6.00%, 10/1/16, #607030			204,578		205,370		209,820
5.50%, 2/1/17, #623874			375,006		374,360		384,598
5.50%, 6/1/17, #648508			229,424		230,261		235,007
5.00%, 9/1/17, #254486			407,299		408,093		415,991
5.00%, 11/1/17, #657356			832,389		835,633		850,152
6.50%, 6/1/29, #252497			683,980		680,007		709,316
7.50%, 5/1/30, #535289			105,844		102,772		111,394
8.00%, 5/1/30, #538266			41,249		40,798		43,731
8.00%, 6/1/30, #253347			117,492		116,207		124,561
Total U.S. Government Agency Mortgage-Backed Securities					5,963,445		6,064,226
Corporate Notes ∞ ¶ — 11.0%
Fixed Rate — 11.0%
Sarofim Brookhaven, 6.90%, 1/1/11	12/21/07		10,040,375		10,040,375		9,912,862
Stratus Properties IV, 6.56%, 12/31/11	12/1/06		7,000,000		7,000,000		6,751,500
Stratus Properties VI, 6.92%, 12/31/11	6/1/07		8,000,000		8,000,000		7,796,000
Total Corporate Notes					25,040,375		24,460,362
Private Mortgage-Backed Security ∞ — 0.0%
Fixed Rate — 0.0%
First Gibraltar, Series 1992-MM, Class B, 6.06%, 10/25/21	7/30/93		97,398		58,939		—
Whole Loans ∞ & — 101.1%
Commercial Loans — 61.0%
150 North Pantano I, Tucson, AZ, 5.98%, 2/1/09 ¶ µ r	1/4/05		3,525,000		3,525,000		3,358,069
150 North Pantano II, Tucson, AZ, 14.88%, 2/1/09 ¶	1/4/05		440,000		440,000		308,000
8324 East Hartford Drive I, Scottsdale, AZ, 5.15%, 5/1/09 µ	4/8/04		3,724,259		3,724,259		3,667,424
Academy Spectrum, Colorado Springs, CO, 7.73%, 5/1/09 µ	12/18/02		4,969,061		4,969,061		3,478,343
Alliant University, Fresno, CA, 7.15%, 8/1/11 µ	7/12/06		2,794,541		2,794,541		2,663,937
Apple Blossom Convenience Center, Winchester, VA, 6.58%, 8/1/12 ¶	7/9/07		2,150,000		2,150,000		1,967,238
Biltmore Lakes Corporate Center, Phoenix, AZ, 6.00%, 9/1/09 µ	8/2/04		3,233,180		3,233,180		3,099,862
Carrier 360 I, Grand Prairie, TX, 5.40%, 7/1/09 µ	6/28/04		3,194,553		3,194,553		3,131,539
Carrier 360 II, Grand Prairie, TX, 5.88%, 7/1/09	12/16/05		332,248		332,248		324,999
Fairview Business Park, Salem, OR, 7.33%, 8/1/11 µ *	7/14/06		7,590,028		7,590,028		7,100,848
First Colony Marketplace, Sugar Land, TX, 6.43%, 9/1/10 ¶ µ	8/15/07		12,900,000		12,900,000		10,943,511
France Avenue Business Park II, Brooklyn Center, MN, 7.40%, 10/1/12 µ	9/12/02		4,324,097		4,324,097		4,017,131
France Avenue Business Park II (second), Brooklyn Center, MN, 7.38%, 10/1/12 ¶	1/17/08		600,000		600,000		555,151
Jilly’s American Grill, Scottsdale, AZ, 6.46%, 9/1/09 ¶ µ r	8/19/05		1,810,000		1,810,000		1,810,000
La Cholla Plaza I, Tucson, AZ, 5.76%, 8/1/09 ¶ µ r	7/26/06		11,135,604		11,135,604		11,135,604
La Cholla Plaza II, Tucson, AZ, 14.88%, 8/1/09 ¶	7/26/06		1,389,396		1,389,396		1,298,185
Memphis Medical Building, Memphis, TN, 6.40%, 9/1/12 ¶	8/22/07		4,250,000		4,250,000		3,814,820
NCH Commercial Pool I, Tucson, AZ, 11.93%, 4/1/10 ¶	3/27/07		5,500,000		5,500,000		5,133,453
NCH Commercial Pool II, Phoenix, AZ, 11.93%, 1/1/11 ¶	12/4/07		14,000,000		14,000,000		14,280,000
Noah's Ark Self Storage, San Antonio, TX, 6.48%, 9/1/10 ¶ µ	8/24/07		2,400,000		2,400,000		2,305,123
North Austin Business Center, Austin, TX, 5.65%, 11/1/11 µ	10/29/04		3,876,074		3,876,074		3,539,127
Outlets at Casa Grande I, Casa Grande, AZ, 6.93%, 3/1/11 ¶ µ	2/27/06		7,300,000		7,300,000		6,989,436

FIRST AMERICAN MORTGAGE FUNDS 2008 Quarterly Report

Schedule of INVESTMENTS (unaudited)

American Strategic Income Portfolio III (CSP)

DESCRIPTION			DATE ACQUIRED		PAR/ SHARES			COST		VALUE ¶

		Outlets at Casa Grande II, Casa Grande, AZ, 6.90%, 3/1/11 ¶ µ	4/11/07	$		3,500,000	$	3,500,000	$	3,357,295
		Paradise Boulevard, Albuquerque, NM, 6.50%, 4/1/17 ¶ µ	3/26/07			4,600,000		4,600,000		3,700,796
		RealtiCorp Fund III, Orlando/Crystal River, FL, 7.51%, 7/1/09 ¶ r	2/28/06			4,222,755		4,222,755		4,222,755
		Shoppes at Jonathan's Landing, Jupiter, FL, 7.95%, 5/1/10 µ	4/12/00			2,709,574		2,709,574		2,682,253
		Silver Star Storage, Austin, TX, 6.40%, 4/1/11 ¶	3/25/08			4,160,000		4,160,000		3,922,956
		Spa Atlantis, Pompano Beach, FL, 6.93%, 4/1/09 ¶	9/30/05			19,281,600		19,281,600		19,089,193
		Tatum Ranch Center, Phoenix, AZ, 6.53%, 9/1/11 µ	8/25/04			3,496,115		3,496,115		3,256,942
								143,408,085		135,153,990
	Multifamily Loans — 40.1%
		Avalon Hills I, Omaha, NE, 6.93%, 3/1/10 ¶ µ	3/1/07			10,720,000		10,720,000		10,494,323
		Avalon Hills II, Omaha, NE, 9.88%, 3/1/10 ¶ ‡ ¿	3/1/07			2,448,800		2,448,800		1,792,243
		Chateau Club Apartments I, Athens, GA, 6.68%, 12/1/10 ¶	12/20/07			6,623,000		6,623,000		6,299,222
		Chateau Club Apartments II, Athens, GA, 6.88%, 12/1/10 ¶ ‡ ¿	12/20/07			1,439,024		1,439,024		1,023,484
		Citadel Apartments I, El Paso, TX, 6.53%, 4/1/10 ¶ µ	3/30/07			10,300,000		10,300,000		10,054,651
		Citadel Apartments II, El Paso, TX, 9.88%, 4/1/10 ¶	3/30/07			500,000		500,000		455,426
		Country Villa Apartments, West Lafayette, IN, 6.90%, 9/1/13 µ	8/29/03			2,457,840		2,457,840		2,026,754
		Courtyards at Mesquite I, Mesquite, TX, 6.53%, 11/1/09 µ	10/14/05			7,476,406		7,476,406		7,310,305
		Courtyards at Mesquite II, Mesquite, TX, 7.90%, 11/1/09 ¶ ‡ ¿	10/14/05			2,850,000		2,850,000		2,026,842
		El Dorado Apartments I, Tucson, AZ, 7.15%, 9/1/12 µ	8/26/04			2,522,991		2,522,991		2,352,654
		El Dorado Apartments II, Tucson, AZ, 7.13%, 9/1/12	8/26/04			495,046		495,046		458,517
		Geneva Village Apartments I, West Jordan, UT, 7.00%, 1/1/14 µ	12/24/03			1,224,755		1,224,755		1,118,259
		Geneva Village Apartments II, West Jordan, UT, 9.88%, 1/1/13	12/24/03			43,594		43,594		39,995
		Good Haven Apartments I, Dallas, TX, 5.76%, 9/1/07 ¶ r u §	8/24/04			6,737,000		6,737,000		4,715,900
		Good Haven Apartments II, Dallas, TX, 14.88%, 9/1/07 ¶ u §	8/24/04			842,000		842,000		589,400
		Good Haven Apartments III, Dallas, TX, 14.88%, 5/1/09 ¶ u	7/3/08			694,096		694,096		485,867
		Meadowview Village Apartments I, West Jordan, UT, 7.00%, 1/1/14	12/24/03			888,935		888,935		811,640
		Meadowview Village Apartments II, West Jordan, UT, 9.88%, 1/1/13	12/24/03			43,594		43,594		39,995
		Meridian Pointe Apartments, Kalispell, MT, 8.73%, 4/1/12 µ	3/7/97			1,037,063		1,037,063		1,019,467
		Montevista Apartments, Fort Worth, TX, 7.43%, 9/1/12 ¶ ¿	8/30/07			7,308,000		7,308,000		5,115,600
		NCH Multifamily Pool, Oklahoma City, OK, 11.93%, 11/1/09 ¶	10/17/06			5,800,000		5,800,000		5,347,277
		Parkway Village Apartments I, West Jordan, UT, 7.00%, 1/1/14	12/24/03			843,021		843,021		770,567
		Parkway Village Apartments II, West Jordan, UT, 9.88%, 1/1/13	12/24/03			43,594		43,594		39,995
		Plantation Pines I, Tyler, TX, 6.59%, 2/1/10 ¶ µ	1/17/07			3,328,000		3,328,000		3,245,436
		Plantation Pines II, Tyler, TX, 10.57%, 2/1/10 ¶	1/17/07			416,000		416,000		338,802
		RiverPark Land Lot III, Oxnard, CA, 5.98%, 11/1/09 ¶ r	10/9/07			3,650,000		3,650,000		3,686,500
		Villas of Woodgate, Lansing, MI, 6.40%, 2/1/12 µ	2/1/07			3,582,921		3,582,921		3,203,342
		Vista Village Apartments I, El Paso, TX, 6.53%, 4/1/10 ¶ µ	3/30/07			6,100,000		6,100,000		5,954,696
		Vista Village Apartments II, El Paso, TX, 9.88%, 4/1/10 ¶	3/30/07			350,000		350,000		320,373
		Whispering Oaks I, Little Rock, AR, 6.53%, 2/1/10 ¶ µ	1/10/07			6,800,000		6,800,000		6,596,028
		Whispering Oaks II, Little Rock, AR, 9.88%, 2/1/10 ¶ ‡ ¿	1/10/07			1,636,000		1,636,000		1,145,200
								99,201,680		88,878,760
Total Whole Loans								242,609,765		224,032,750
Preferred Stocks — 14.4%
	Real Estate Investment Trusts — 14.4%
		AMB Property, Series L				164,120		3,789,361		1,913,639
		AMB Property, Series M ■				41,240		950,889		475,910
		AMB Property, Series O ■				9,613		240,325		125,270
		AMB Property, Series P				21,200		429,300		273,480
		BRE Properties, Series C				66,300		1,317,381		955,383
		BRE Properties, Series D				5,250		104,318		81,375
		Developers Diversified Realty, Series G				57,600		997,080		387,648
		Developers Diversified Realty, Series H				69,320		1,234,880		382,646
		Developers Diversified Realty, Series I				4,270		89,030		23,485
		Duke Realty, Series J ■				20,956		535,385		205,369

FIRST AMERICAN MORTGAGE FUNDS 2008 Quarterly Report

Schedule of INVESTMENTS (unaudited)

American Strategic Income Portfolio III (CSP)

DESCRIPTION		SHARES		COST		VALUE ¶

	Duke Realty, Series L	19,220	$	367,486	$	177,785
	Duke Realty, Series M	55,040		1,110,800		721,024
	Duke Realty, Series O	44,550		1,051,380		642,856
	Equity Residential Properties, Series N	10,700		226,305		173,447
	Health Care Properties, Series E ■	7,690		197,633		129,653
	Health Care Properties, Series F ■	84,750		2,140,448		1,398,375
	Kimco Realty, Series F	163,000		3,797,000		2,037,500
	Kimco Realty, Series G	114,700		2,796,559		1,743,440
	Post Properties, Series B	1,600		39,940		21,648
	ProLogis Trust, Series F	33,905		835,567		254,288
	ProLogis Trust, Series G	8,300		174,300		72,625
	PS Business Parks, Series H	26,520		530,400		394,087
	PS Business Parks, Series I	94,300		1,634,731		1,324,915
	PS Business Parks, Series K	25,000		575,000		462,250
	PS Business Parks, Series L ■	7,000		179,550		114,800
	PS Business Parks, Series M	26,520		546,312		430,950
	PS Business Parks, Series O	100,000		2,050,000		1,550,000
	PS Business Parks, Series P	8,200		157,194		112,832
	Public Storage, Series A ■	38,000		921,909		640,300
	Public Storage, Series C	30,000		626,100		520,200
	Public Storage, Series E	9,300		186,000		162,843
	Public Storage, Series H	40,000		876,000		721,600
	Public Storage, Series I	26,520		576,810		530,400
	Public Storage, Series K	17,550		381,712		364,163
	Public Storage, Series L	20,000		430,000		345,000
	Public Storage, Series X	74,000		1,786,319		1,225,440
	Public Storage, Series Z	30,000		746,643		484,800
	Realty Income, Series D ■	97,500		2,474,125		1,852,500
	Realty Income, Series E	26,520		572,832		469,404
	Regency Centers, Series C	26,520		573,362		424,320
	Regency Centers, Series E	94,270		2,221,248		1,508,320
	UDR, Series G	26,520		567,528		397,800
	Vornado Realty Trust, Series E ■	7,400		186,598		110,852
	Vornado Realty Trust, Series F	7,800		164,970		101,478
	Vornado Realty Trust, Series H	163,000		2,771,000		2,262,440
	Weingarten Realty Investors, Series F ■	242,500		5,989,375		3,198,575
Total Preferred Stocks				50,151,085		31,907,115
Total Unaffiliated Investments				323,823,609		286,464,453
Short-Term Investment — 0.9%
	First American Prime Obligations Fund, Class Z þ	2,046,688		2,046,688		2,046,688
	Total Investments p — 130.1%		$	325,870,297	$	288,511,141
	Other Assets and Liabilities, Net — (30.1)%					(66,833,531)
	Total Net Assets — 100.0%				$	221,677,610

FIRST AMERICAN MORTGAGE FUNDS 2008 Quarterly Report

Schedule of INVESTMENTS (unaudited)

American Strategic Income Portfolio III (CSP)

¶		Security valuations for the fund’s investments (other than whole loans, participation mortgages, and mortgage servicing rights) are furnished by an independent pricing service that has been approved by the fund’s board of directors. Investments in equity securities that are traded on a national securities exchange (or reported on the Nasdaq national market system) are stated at the last quoted sales price if readily available for such securities on each business day. For securities traded on the Nasdaq national market system, the fund utilizes the Nasdaq Official Closing Price which compares the last trade to the bid/ask price of a security. If the last trade falls within the bid/ask range, then that price will be the closing price. If the last trade is outside the bid/ask range, and falls above the ask, the ask price will be the closing price. If the last trade is below the bid, the bid will be the closing price. Other equity securities traded in the over-the-counter market and listed equity securities for which no sale was reported on that date are stated at the last quoted bid price. Investments in open-ended mutual funds are valued at their respective net asset values on the valuation date. Debt obligations exceeding 60 days to maturity are valued by an independent pricing service. The pricing service may employ methodologies that utilize actual market transactions, broker-dealer supplied valuations, or other formula-driven valuation techniques. These techniques generally consider such factors as yields or prices of bonds of comparable quality, type of issue, coupon, maturity, ratings, and general market conditions. Securities for which prices are not available from an independent pricing service but where an active market exists are valued using market quotations obtained from one or more dealers that make markets in the securities or from a widely-used quotation system. Debt obligations with 60 days or less remaining until maturity may be valued at their amortized cost which approximates market value. The following investment vehicles, when held by the fund, are priced as follows: Exchange listed futures and options on futures are priced at their last sale price on the exchange on which they are principally traded, as determined by FAF Advisors, Inc. (“FAF Advisors”), on the day the valuation is made. If there were no sales on that day, futures and options on futures will be valued at the last reported bid price. Options on securities, indices, and currencies traded on Nasdaq or listed on a stock exchange, whether domestic or foreign, are valued at the last sale price on Nasdaq or on any exchange on the day the valuation is made. If there were no sales on that day, the options will be valued at the last sale price on the previous valuation date. Last sale prices are obtained from an independent pricing service. Forward contracts (other than currency forward contracts), swaps, and over-the-counter options on securities, indices, and currencies are valued at the quotations received from an independent pricing service, if available. When market quotations are not readily available, securities are valued at fair value as determined in good faith by procedures established and approved by the fund’s board of directors. Some of the factors which may be considered in determining fair value are fundamental analytical data relating to the investment; the nature and duration of any restrictions on disposition; trading in similar securities of the same issuer or comparable companies; information from broker-dealers; and an evaluation of the forces that influence the market in which the security is purchased or sold. If events occur that materially affect the value of securities (including non-U.S. securities) between the close of trading in those securities and the close of regular trading on the New York Stock Exchange, the securities will be valued at fair value.
		The fund’s investments in whole loans (single family, multifamily, and commercial), participation mortgages, and mortgage servicing rights are generally not traded in any organized market and therefore, market quotations are not readily available. These investments are valued at fair value according to procedures adopted by the fund’s board of directors. Pursuant to these procedures, whole loan investments are initially fair valued at cost and adjusted using a FAF Advisors pricing model designed to incorporate, among other things, the present value of the projected stream of cash flows on such investments. The pricing model takes into account a number of relevant factors including the projected rate of prepayments, the delinquency profile, the historical payment record, the expected yield at purchase, changes in prevailing interest rates, and changes in the real or perceived liquidity of whole loans, participation mortgages, and mortgage servicing rights as the case may be. The results of the pricing model may be further subject to price ceilings due to the illiquid nature of the loans. Changes in prevailing interest rates, real or perceived liquidity, yield spreads, and creditworthiness are factored into the pricing model each week. Certain mortgage loan information is received once a month. This information includes, but is not limited to, the projected rate of prepayments, projected rate and severity of defaults, the delinquency profile, and the historical payment record. Valuations of whole loans, participation mortgages, and mortgage servicing rights are determined no less frequently than weekly. Although FAF Advisors believes the pricing model to be reasonable and appropriate, the actual values that may be realized upon the sale of whole loans, participation mortgages, and mortgage servicing rights can only be determined in negotiations between the fund and third parties. In accordance with the valuation procedures adopted by the fund’s board of directors, real estate acquired through foreclosure, if any, is valued at estimated market value, as determined by independent third party appraisals, less estimated selling costs. As material capital improvements are made to the property, new market value appraisals are obtained. As of November 30, 2008, the fund held fair valued securities with a value of $248,493,112 or 112.1% of total net assets.

FIRST AMERICAN MORTGAGE FUNDS 2008 Quarterly Report

Schedule of INVESTMENTS (unaudited)

American Strategic Income Portfolio III (CSP)

■

Securities pledged as collateral for outstanding reverse repurchase agreements. On November 30, 2008, securities valued at $8,287,530 were pledged as collateral for the following outstanding reverse repurchase agreements:

Name of Broker

Acquisition

Accrued

and Description

Amount

Date

Rate*

Due

Interest

of Collateral

$ 5,432,000

11/28/08

1.75%

12/12/08

$ 792

(1)

1,257,000

11/05/08

4.12%

12/05/08

3,729

(2)

$ 6,689,000

$ 4,521

* Interest rate as of November 30, 2008. Rate is based on the London Interbank Offered Rate (“LIBOR”) plus a spread and reset monthly.

Name of broker and description of collateral:

(1)

Goldman Sachs:

Federal Home Loan Mortgage Corporation, 5.50%, 1/1/18, $2,728,510 par

Federal Home Loan Mortgage Corporation, 9.00%, 7/1/30, $175,118 par

Federal National Mortgage Association, 6.00%, 10/1/16, $204,578 par

Federal National Mortgage Association, 5.50%, 2/1/17, $375,006 par

Federal National Mortgage Association, 5.50%, 6/1/17, $229,424 par

Federal National Mortgage Association, 5.00%, 9/1/17, $407,299 par

Federal National Mortgage Association, 5.00%, 11/1/17, $832,389 par

Federal National Mortgage Association, 6.50%, 6/1/29, $683,980 par

Federal National Mortgage Association, 7.50%, 5/1/30, $105,844 par

Federal National Mortgage Association, 8.00%, 5/1/30, $41,249 par

Federal National Mortgage Association, 8.00%, 6/1/30, $117,492 par

(2)

Dresdner Bank:

AMB Property, Series M, 21,240 shares

AMB Property, Series O, 9,613 shares

Duke Realty, Series J, 20,956 shares

Health Care Properties, Series E, 7,690 shares

Health Care Properties, Series F, 1,950 shares

PS Business Parks, Series L, 7,000 shares

Public Storage, Series A, 38,000 shares

Realty Income, Series D, 17,000 shares

Vornado Realty Trust, Series E, 7,400 shares

Weingarten Realty Investors, Series F, 22,500 shares

The fund has entered into lending commitments with Goldman Sachs and Dresdner Bank. The monthly agreements permit the fund to enter into reverse repurchase agreements using U.S. government agency mortgage-backed securities and/or preferred stocks as collateral.

∞

Securities purchased as part of a private placement which have not been registered with the Securities and Exchange Commission under the Securities Act of 1933 and which are considered to be illiquid. These securities are fair valued in accordance with the board approved valuation procedures. See ¶ footnote above.

Interest only - Represents securities that entitle holders to receive only interest payments on the mortgage. Principal balance on the loan is due at maturity. The interest rate disclosed represents the net coupon rate in effect as of November 30, 2008.

Interest rates on commercial and multifamily loans are the net coupon rates in effect (after reducing the coupon rate by any mortgage servicing fees paid to mortgage servicers) on November 30, 2008. For participating loans the rates are based on the annual cash flow payments expected at the time of purchase.

Securities pledged as collateral for outstanding borrowings under a loan agreement. On November 30, 2008, securities valued at $133,613,155 were pledged as collateral for the following outstanding borrowings:

Name of Broker

Acquisition

Accrued

and Description

Amount

Date

Rate*

Due

Interest

of Collateral

$62,000,000

11/28/08

5.00%

12/31/08

$ 25,833

(1)

* Interest rate as of November 30, 2008. Rate is based on the London Interbank Offered Rate (“LIBOR”) plus 2.625% and reset monthly.

Name of broker and description of collateral:

(1)

Massachusetts Mutual:

FIRST AMERICAN MORTGAGE FUNDS 2008 Quarterly Report

Schedule of INVESTMENTS (unaudited)

American Strategic Income Portfolio III (CSP)

		150 North Pantano I, Tucson, AZ, 5.98%, 2/1/09, $3,525,000 par
		8324 East Hartford Drive I, Scottsdale, AZ, 5.15%, 5/1/09, $3,724,259 par
		Academy Spectrum, Colorado Springs, CO, 7.73%, 5/1/09, $4,969,061 par
		Alliant University, Fresno, CA, 7.15%, 8/1/11, $2,794,541 par
		Biltmore Lakes Corporate Center, Phoenix, AZ, 6.00%, 9/1/09, $3,233,180 par
		Carrier 360 I, Grand Prairie, TX, 5.40%, 7/1/09, $3,194,553 par
		Fairview Business Park, Salem, OR, 7.33%, 8/1/11, $7,590,028 par
		First Colony Marketplace, Sugar Land, TX, 6.43%, 9/1/10, $12,900,000 par
		France Avenue Business Park II, Brooklyn Center, MN, 7.40%, 10/1/12, $4,324,097 par
		Jilly’s American Grill, Scottsdale, AZ, 6.46%, 9/1/09, $1,810,000 par
		La Cholla Plaza I, Tucson, AZ, 5.76%, 8/1/09, $11,135,604 par
		Noah's Ark Self Storage, San Antonio, TX, 6.48%, 9/1/10, $2,400,000 par
		North Austin Business Center, Austin, TX, 5.65%, 11/1/11, $3,876,074 par
		Outlets at Casa Grande I, Casa Grande, AZ, 6.93%, 3/1/11, $7,300,000 par
		Outlets at Casa Grande II, Casa Grande, AZ, 6.90%, 3/1/11, $3,500,000 par
		Paradise Boulevard, Albuquerque, NM, 6.50%, 4/1/17, $4,600,000 par
		Shoppes at Jonathan's Landing, Jupiter, FL, 7.95%, 5/1/10, $2,709,574 par
		Tatum Ranch Center, Phoenix, AZ, 6.53%, 9/1/11, $3,496,115 par
		Avalon Hills I, Omaha, NE, 6.93%, 3/1/10, $10,720,000 par
		Citadel Apartments I, El Paso, TX, 6.53%, 4/1/10, $10,300,000 par
		Country Villa Apartments, West Lafayette, IN, 6.90%, 9/1/13, $2,457,840 par
		Courtyards at Mesquite I, Mesquite, TX, 6.53%, 11/1/09, $7,476,406 par
		El Dorado Apartments I, Tucson, AZ, 7.15%, 9/1/12, $2,522,991 par
		Geneva Village Apartments I, West Jordan, UT, 7.00%, 1/1/14, $1,224,755 par
		Meridian Pointe Apartments, Kalispell, MT, 8.73%, 4/1/12, $1,037,063 par
		Plantation Pines I, Tyler, TX, 6.59%, 2/1/10, $3,328,000 par
		Villas of Woodgate, Lansing, MI, 6.40%, 2/1/12, $3,582,921 par
		Vista Village Apartments I, El Paso, TX, 6.53%, 4/1/10, $6,100,000 par
		Whispering Oaks I, Little Rock, AR, 6.53%, 2/1/10, $6,800,000 par
	The fund has entered into a loan agreement with Massachusetts Mutual Life Insurance Company (“MMLIC”) under which MMLIC made a term loan to the fund of $54,400,000, which matures on July 31, 2011, and agreed to make revolving loans to the fund of up to $15,600,000. Loans made under the loan agreement are secured by whole loans in the fund’s portfolio and bear interest at the one-month LIBOR plus 2.625% with a floor interest rate of 5.00%. In addition, the fund pays an annual fee of 1.28% on any unused portion of the fund’s revolving loan commitment.
r	Variable Rate Security - The rate shown is the net coupon rate in effect as of November 30, 2008.
*	This loan made only a partial payment for November 2008.
¿	Participating Loan. A participation loan is one which contains provisions for the fund to participate in the income stream provided by the property, including net cash flows and capital proceeds. Monthly cash flow proceeds are only required to the extent excess cash flow is generated by the property as determined by the loan documents.
‡	This participating loan is not currently making monthly cash flow payments.
u	Loan is in default.
§	Loan has matured and the fund is anticipating payoff or refinancing.
þ	Investment in affiliated security. This money market fund is advised by FAF Advisors, Inc., which also serves as advisor for the fund.
p	On November 30, 2008, the cost of investments for federal income tax purposes was approximately $325,870,297. The aggregate gross unrealized appreciation and depreciation of investments, based on this cost, were as follows:
	Gross unrealized appreciation		$	420,866
	Gross unrealized depreciation			(37,780,022	)
	Net unrealized depreciation		$	(37,359,156	)
Summary of Fair Value Exposure
The fund adopted Statement of Financial Accounting Standard No. 157, Fair Value Measurements ("FAS 157"), on September 1, 2008. FAS 157 requires the fund to classify its securities based on valuation method, using the following three levels: Level 1 - Quoted prices in active markets for identical securities. Generally, the types of securities included within Level 1 of the fund are investments in mutual funds and preferred stocks with quoted prices.

FIRST AMERICAN MORTGAGE FUNDS 2008 Quarterly Report

Schedule of INVESTMENTS (unaudited)

American Strategic Income Portfolio III (CSP)

Level 2 - Other significant observable inputs (including quoted prices for similar securities, with similar interest rates, prepayment speeds, credit risk, etc.). Generally, the types of securities included in Level 2 of the fund are U.S. government securities.

Level 3 - Significant unobservable inputs (including the funds’ own assumptions in determining the fair value of investments). Generally, the types of securities included in Level 3 of the fund are whole loans and corporate notes. These securities have limited observable fair value inputs available, and as such the fair value is determined through management's fair value procedures established by the board of directors. Pursuant to these procedures, whole loan investments are initially valued at cost and their values are subsequently monitored and adjusted using a FAF Advisors pricing model designed to incorporate, among other things, the present value of the projected stream of cash flows on such investments. The pricing model takes into account a number of relevant factors including the projected rate of prepayments, the prevailing interest rates, and changes in the real or perceived liquidity of whole loans.

As of November 30, 2008, the fund's investments were classified as follows:

	Investments in
	Securities
Level 1 - Quoted prices in active markets for identical assets	$	33,953,803
Level 2 - Other significant observable inputs		6,064,226
Level 3 - Significant unobservable inputs		248,493,112
Total	$	288,511,141

The valuation levels are not necessarily an indication of the risk associated with investing in these securities. While uniformity of presentation is the objective of the standard, industry implementation has just begun and it is likely that there will be a range of practices utilized. It may be some period of time before industry practices become more uniform. For this reason, care should be exercised in interpreting this information and/or using it for comparison with other mutual funds.

The following is a reconciliation of Level 3 investments for which significant unobservable inputs were used in determining fair value:

	Investments in
	Securities
Balance as of August 31, 2008	$	274,791,933
Accrued discounts (premiums)		756
Realized gain (loss)		1,653
Net change in unrealized appreciation or depreciation		(3,968,837	)
Net purchases (sales)		(22,332,393	)
Net transfers in and/or (out) of Level 3		—
Balance as of November 30, 2008	$	248,493,112

FIRST AMERICAN MORTGAGE FUNDS 2008 Quarterly Report

Item 2. Controls and Procedures.

(a)

The Registrant’s President/Chief Executive Officer and Treasurer/Chief Financial Officer have concluded that the Registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “1940 Act”)) are effective as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act and Rule 15d-15(b) under the Securities Exchange Act of 1934, as amended.

(b)

There were no changes in the Registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the Registrant's last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Registrant's internal control over financial reporting.

Item 3. Exhibits.

Separate certifications for each principal executive officer and principal financial officer of the Registrant as required by Rule 30a-2(a) under the 1940 Act (17 CFR 270.30a-2(a)) are filed herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

American Strategic Income Portfolio Inc. III

By: /s/Thomas S. Schreier, Jr.

Thomas S. Schreier, Jr.

President

Date: January 21, 2009

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By: /s/Thomas S. Schreier, Jr.

Thomas S. Schreier, Jr.

President

Date: January 21, 2009

By: /s/Charles D. Gariboldi, Jr.

Charles D. Gariboldi, Jr.

Treasurer

Date: January 21, 2009