================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------------------- AMENDMENT NO. 2 to SCHEDULE 14D-9 Solicitation/Recommendation Statement Pursuant to Section 14(d)(4) of the Securities Exchange Act of 1934 --------------------------- KRUPP REALTY FUND, LTD. - III (Name of Subject Company) KRUPP REALTY FUND, LTD. - III (Name of Person Filing Statement) LIMITED PARTNERSHIP UNITS (Title of Class of Securities) N/A (CUSIP Number of Class of Securities) --------------------------- Laurence Gerber The Krupp Corporation 470 Atlantic Avenue Boston, Massachusetts 02210 (617) 423-2233 (Name, Address and Telephone Number of Person Authorized to Receive Notice and Communications on Behalf of the Person(s) filing Statement) COPY TO: Scott D. Spelfogel, Esq. James M. Dubin, Esq. The Berkshire Group Paul, Weiss, Rifkind, Wharton & Garrison 470 Atlantic Avenue 1285 Avenue of the Americas Boston, Massachusetts 02210 New York, New York 10019-6064 (617) 423-2233 (212) 373-3000 ================================================================================ This Amendment No. 2 amends and supplements the Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9") filed with the Securities and Exchange Commission (the "Commission") by Krupp Realty Fund, Ltd. - III, a Massachusetts limited partnership (the "Partnership"), on December 5, 1996, as amended by Amendment No. 1 filed with the Commission on December 11, 1996, and relates to the tender offer made by Krescent Partners L.L.C., a Delaware limited liability company, AP-GP Prom Partners, Inc., a Delaware corporation, American Holdings I, L.P., a Delaware limited partnership, American Holdings I-GP, Inc., a Delaware corporation, and American Property Investors, Inc., a Delaware corporation (collectively, the "Bidders"), disclosed in a Tender Offer Statement on Schedule 14D-1 originally filed with the Commission on November 21, 1996, as amended by Amendments Nos. 1, 2, 3 and 4 thereto, to purchase up to 5,117 of the Partnership's issued and outstanding Units of Investor Limited Partnership Interests (the "Units") at a purchase price of $370 per Unit, net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Purchaser's Offer to Purchase dated November 21, 1996, as amended by Amendments Nos. 1, 2, 3 and 4 thereto, and the related Letter of Transmittal. The purpose of this Amendment No. 2 is to amend Item 9 of the Partnership's Schedule 14D-9, as amended, as set forth below. Terms defined in the Schedule 14D-9, as amended, are used in this Amendment No. 2 with the same meanings as provided in the Schedule 14D-9, as amended. ITEM 9. MATERIAL TO BE FILED AS EXHIBITS Item 9 of the Schedule 14D-9, as previously amended, is hereby further amended by adding the following: (a)(iv) Form of letter to Unit holders from the Partnership dated January 14, 1997 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: January 14, 1997 KRUPP REALTY FUND, LTD. - III By: The Krupp Corporation, a general partner By: s/Laurence Gerber ------------------------------- Name: Laurence Gerber Title: President 2 EXHIBIT INDEX A new Exhibit 9 is hereby added to the Exhibit Index, as follows: Exhibit Description ------- ----------- 9. Form of letter to Unit holders from the Partnership dated January 14, 1997 3