[KRUPP FUNDS GROUP LETTERHEAD]

April 22, 1999

Dear Limited Partner:

As you are probably aware, Madison Liquidity Investors 104, LLC has made an
offer (the "Madison Offer") to purchase limited partnership units of Krupp
Realty Fund Ltd.-III (the "Partnership").

The General Partners of the Partnership will be carefully studying the Madison
Offer in consultation with the Partnership's outside advisors and, after
completing their evaluation, will announce their conclusion and recommendation
on or about May 4, 1999. Prior to that time, you are urged not to take any
action with respect to the Madison Offer.

KRUPP REALTY FUND, LTD.-III