EXHIBIT (c)(3)

                    2004 BUDGET FOR PARTNERSHIP PROPERTIES OF
       AMERICAN RETIREMENT VILLAS PROPERTIES III, L.P. (THE "PARTNERSHIP")

         ARV Assisted Living, Inc., as the general partner of the Partnership
("ARV"), prepares internal annual operating budgets for the Partnership's
properties which are used by management as performance targets for the purposes
of determining incentive compensation for employees. These budgets do not
represent management's expectations as to the future operating results of the
Partnership and were not used in determining the offer price that ARVP III
Acquisition, L.P. will pay to the holders of outstanding limited partnership
units of the Partnership (the "Units"). The annual budget set forth below for
the 2004 fiscal year (the "2004 Budget") was finalized in January 2004.



 Partnership Property                  Net Operating Income
 --------------------                  --------------------
                                    
Villa Los Posas                          $   1,936,327
Chandler Villas                                856,714
                                          ------------
         TOTAL                           $   2,793,041
                                         =============



         ARV prepared the 2004 Budget for property net operating income for the
2004 fiscal year, which it defined as direct property operating revenue, less
operating expenses, management fees and capital expense charges. ARV defined
direct property operating revenue as total revenues, less non-operating income
items, such as certain interest income and Partnership transfer fees. ARV
defined operating expenses as all expenses directly incurred by the Partnership
properties, except Partnership administrative fees, interest expense,
depreciation and amortization.



         ARV prepared the 2004 Budget by extrapolating trends from 2003,
adjusting for any unusual or non-recurring items on a property-specific basis.
When extrapolating trends from 2003, 4-5% inflationary increases were applied to
direct property operating revenue, and 3-4% inflationary increases were applied
to all operating expenses except property taxes and insurance. Property taxes
and insurance were adjusted on a property-specific basis to reflect prevailing
market conditions. ARV budgeted the census at each building to reflect the
property's trends but limited the overall occupancy of each building to 95% to
account for frictional vacancy. Revenue and expenses were then further adjusted
to reflect any change in census. ARV also assumed a standard charge of $500 per
residential unit for capital expenses relating to each property. The management
fee is equal to 5% of revenues of the Partnership.


         The 2004 Budget was not prepared in accordance with generally accepted
accounting principles, or with a view to compliance with the published
guidelines of the Securities and Exchange Commission or the American Institute
of Certified Public Accountants regarding projections, which would require a
more complete presentation of the data than as shown above. The 2004 Budget has
not been examined, reviewed or compiled by the Partnership's independent
auditors, and accordingly they have not expressed an opinion or any other
assurance regarding such materials.


         THE FORECASTED INFORMATION ABOVE IS PROVIDED SOLELY BECAUSE SUCH
INFORMATION WAS PREPARED BY ARV PRIOR TO THE COMMENCEMENT OF THE OFFER TO
PURCHASE THE UNITS. ACCORDINGLY, NONE OF ARV, THE PARTNERSHIP OR ANY OTHER
PERSON IS MAKING ANY REPRESENTATION AS TO THE 2004 BUDGET. IN ADDITION, BECAUSE
THE ESTIMATES AND ASSUMPTIONS UNDERLYING THE 2004 BUDGET ARE INHERENTLY SUBJECT
TO SIGNIFICANT ECONOMIC AND COMPETITIVE UNCERTAINTIES AND CONTINGENCIES, WHICH
ARE DIFFICULT OR IMPOSSIBLE TO PREDICT ACCURATELY AND ARE BEYOND THE CONTROL OF
ARV AND THE PARTNERSHIP,




THERE CAN BE NO ASSURANCE THAT RESULTS SET FORTH IN THE 2004 BUDGET WILL BE
REALIZED. IT IS LIKELY THAT THERE WILL BE DIFFERENCES BETWEEN ACTUAL AND
PROJECTED RESULTS, AND ACTUAL RESULTS MAY BE MATERIALLY HIGHER OR LOWER THAN
THOSE SET FORTH ABOVE.