FORM 10-Q
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                   QUARTERLY REPORT UNDER SECTION 13 or 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934


For the quarter ended                                            June 30, 2003
                                                                 -------------

Commission file number                                              1-11059
                                                                    -------



              AMERICAN INSURED MORTGAGE INVESTORS - SERIES 85, L.P.
              -----------------------------------------------------
               (Exact name of registrant as specified in charter)


           California                                          13-3257662
-------------------------------                            -------------------
(State or other jurisdiction of                             (I.R.S. Employer
 incorporation or organization)                            Identification No.)

11200 Rockville Pike, Rockville, Maryland                        20852
-----------------------------------------                      ----------
(Address of principal executive offices)                       (Zip Code)

                                 (301) 816-2300
              ----------------------------------------------------
              (Registrant's telephone number, including area code)





     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the  Securities  Exchange Act of
1934  during the  preceding  12 months and (2) has been  subject to such  filing
requirements for the past 90 days. Yes [X] No [ ]

     Indicate by check mark whether the registrant is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

     As of June 30, 2003,  12,079,514  depositary  units of limited  partnership
interest were outstanding.

<PAGE>2





              AMERICAN INSURED MORTGAGE INVESTORS - SERIES 85, L.P.

                               INDEX TO FORM 10-Q

                       FOR THE QUARTER ENDED JUNE 30, 2003
<TABLE>
<CAPTION>
                                                                                                  Page
                                                                                                  ----
<S>           <C>                                                                                  <C>
PART I.       Financial Information

Item 1.       Financial Statements

              Balance Sheets - June 30, 2003  (unaudited) and December 31, 2002                     3

              Statements of Income and Comprehensive Income - for the three
                 and six months ended June 30, 2003  and 2002  (unaudited)                          4

              Statement of Changes in Partners' Equity - for the six months ended
                 June 30, 2003  (unaudited)                                                         5

              Statements of Cash Flows - for the six months ended June 30, 2003
                 and 2002  (unaudited)                                                              6

              Notes to Financial Statements (unaudited)                                             7

Item 2.       Management's Discussion and Analysis of Financial Condition and Results of
                 Operations                                                                        15

Item 3.       Qualitative and Quantitative Disclosures about Market Risk                           17

Item 4.       Controls and Procedures                                                              17

PART II.      Other Information

Item 6.       Exhibits and Reports on Form 8-K                                                     18

Signature                                                                                          19
</TABLE>

<PAGE>3

PART I.  FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS

              AMERICAN INSURED MORTGAGE INVESTORS - SERIES 85, L.P.

                                 BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                      June 30,           December 31,
                                                                        2003                 2002
                                                                    ------------         ------------
                                                                     (Unaudited)
                        ASSETS
<S>                                                                 <C>                  <C>
Investment in FHA-Insured Certificates and GNMA
  Mortgage-Backed Securities, at fair value
    Acquired insured mortgages                                      $ 30,063,214         $ 33,849,089
    Originated insured mortgages                                      15,960,354           15,986,295
                                                                    ------------         ------------
                                                                      46,023,568           49,835,384


Investment in FHA-Insured Loans, at amortized cost,
  net of unamortized discount and premium:
    Acquired insured mortgages                                         4,986,775            7,176,274
    Originated insured mortgages                                       9,252,864            9,311,907
                                                                    ------------         ------------
                                                                      14,239,639           16,488,181

Cash and cash equivalents                                              3,737,544           10,448,516

Receivables and other assets                                           1,835,135            1,465,453

Investment in debenture, at fair value                                 1,812,914                    -
                                                                    ------------         ------------
      Total assets                                                  $ 67,648,800         $ 78,237,534
                                                                    ============         ============

           LIABILITIES AND PARTNERS' EQUITY

Distributions payable                                               $  3,205,282         $ 10,181,484

Accounts payable and accrued expenses                                    126,350              115,799
Due to affiliate                                                       1,097,224                    -
                                                                    ------------         ------------
      Total liabilities                                                4,428,856           10,297,283
                                                                    ------------         ------------
Partners' equity:
  Limited partners' equity, 15,000,000 Units authorized,
    12,079,514 Units issued and outstanding                           69,296,174           73,382,252
  General partner's deficit                                           (7,019,122)          (6,853,298)
  Accumulated other comprehensive income                                 942,892            1,411,297
                                                                    ------------         ------------
      Total partners' equity                                          63,219,944           67,940,251
                                                                    ------------         ------------
      Total liabilities and partners' equity                        $ 67,648,800         $ 78,237,534
                                                                    ============         ============

</TABLE>

                   The accompanying notes are an integral part
                         of these financial statements.



<PAGE>4

PART I.  FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS

              AMERICAN INSURED MORTGAGE INVESTORS - SERIES 85, L.P.

                  STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

                                   (Unaudited)
<TABLE>
<CAPTION>
                                                           For the three months ended             For the six months ended
                                                                     June 30,                             June 30,
                                                             2003               2002               2003               2002
                                                         -------------      ------------       ------------       ------------
<S>                                                      <C>                <C>                <C>                <C>
Income:
  Mortgage investment income                             $  1,262,635       $  1,579,485       $  2,583,860       $  3,199,956
  Interest and other income                                    39,858             88,082             63,882            194,286
                                                         ------------       ------------       ------------       ------------
                                                            1,302,493          1,667,567          2,647,742          3,394,242
                                                         ------------       ------------       ------------       ------------

Expenses:
  Asset management fee to related parties                     157,123            191,725            320,574            381,506
  General and administrative                                  115,950            123,362            223,041            222,336
                                                         ------------       ------------       ------------       ------------
                                                              273,073            315,087            543,615            603,842
                                                         ------------       ------------       ------------       ------------
Net earnings before gains on
  mortgage dispositions                                     1,029,420          1,352,480          2,104,127          2,790,400

Gains on mortgage dispositions                                293,044              8,768            745,870          1,177,927
                                                         ------------       ------------       ------------       ------------

Net earnings                                             $  1,322,464       $  1,361,248       $  2,849,997       $  3,968,327
                                                         ============       ============       ============       ============
Other comprehensive (loss) income - adjustment to
  unrealized gains on investments in insured mortgages       (159,093)         1,911,262           (468,405)           807,131
                                                         ------------       ------------       ------------       ------------

Comprehensive income                                     $  1,163,371       $  3,272,510       $  2,381,592       $  4,775,458
                                                         ============       ============       ============       ============

Net earnings allocated to:
  Limited partners - 96.1%                               $  1,270,888       $  1,308,159       $  2,738,847       $  3,813,562
  General Partner -   3.9%                                     51,576             53,089            111,150            154,765
                                                         ------------       ------------       ------------       ------------
                                                         $  1,322,464       $  1,361,248       $  2,849,997       $  3,968,327
                                                         ============       ============       ============       ============

Net earnings per Unit of limited
  partnership interest - basic                           $       0.11       $       0.11       $       0.23       $       0.32
                                                         ============       ============       ============       ============
</TABLE>


                   The accompanying notes are an integral part
                         of these financial statements.


<PAGE>5

PART I.  FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS

              AMERICAN INSURED MORTGAGE INVESTORS - SERIES 85, L.P.

                    STATEMENT OF CHANGES IN PARTNERS' EQUITY

                     For the six months ended June 30, 2003

                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                         Accumulated
                                                                                            Other
                                                       General          Limited         Comprehensive
                                                       Partner          Partners           Income             Total
                                                    -------------     -------------     -------------     -------------
<S>                                                 <C>               <C>               <C>               <C>
Balance, December 31, 2002                          $  (6,853,298)    $  73,382,252     $   1,411,297     $  67,940,251

  Net earnings                                            111,150         2,738,847                 -         2,849,997

  Adjustment to unrealized gains on
     investments in insured mortgages                           -                 -          (468,405)         (468,405)

  Distributions paid or accrued of $0.565 per Unit,
     including return of capital of $0.335 per Unit      (276,974)       (6,824,925)                -        (7,101,899)
                                                    -------------     -------------     -------------     -------------

Balance, June 30, 2003                              $  (7,019,122)    $  69,296,174     $     942,892     $  63,219,944
                                                    =============     =============     =============     =============

Limited Partnership Units outstanding - basic, as
  of June 30, 2003                                                       12,079,514
                                                                         ==========
</TABLE>


                   The accompanying notes are an integral part
                         of these financial statements.


<PAGE>6

PART I.  FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS

              AMERICAN INSURED MORTGAGE INVESTORS - SERIES 85, L.P.

                            STATEMENTS OF CASH FLOWS

                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                                  For the six months ended
                                                                                                          June 30,
                                                                                                   2003              2002
                                                                                               ------------      ------------
<S>                                                                                            <C>               <C>
Cash flows from operating activities:
   Net earnings                                                                                $  2,849,997      $  3,968,327
   Adjustments to reconcile net earnings to net cash provided by operating activities:
      Gains on mortgage dispositions                                                               (745,870)       (1,177,927)
      Changes in assets and liabilities:
         Net (increase) decrease in receivables and other assets                                     (4,049)          694,138
         Increase in accounts payables and accrued expenses                                          10,551            25,527
         Increase (decrease) in due to affiliate                                                     41,202           (42,487)
                                                                                               ------------      ------------

            Net cash provided by operating activities                                             2,151,831         3,467,578
                                                                                               ------------      ------------

Cash flows from investing activities:
   Proceeds from mortgage prepayments                                                             2,674,487         4,834,522
   Proceeds from mortgage assignments                                                             1,469,078         6,759,242
   Proceeds from redemption of debenture                                                            744,159         2,385,233
   Debenture proceeds paid to affiliate                                                                   -        (1,192,617)
   Receipt of mortgage principal from scheduled payments                                            327,574           384,095
                                                                                               ------------      ------------

            Net cash provided by investing activities                                             5,215,298        13,170,475
                                                                                               ------------      ------------

Cash flows used in financing activities:
   Distributions paid to partners                                                               (14,078,101)      (18,540,360)
                                                                                               ------------      ------------


Net decrease in cash and cash equivalents                                                        (6,710,972)       (1,902,307)

Cash and cash equivalents, beginning of period                                                   10,448,516         4,366,085
                                                                                               ------------      ------------

Cash and cash equivalents, end of period                                                       $  3,737,544      $  2,463,778
                                                                                               ============      ============

Non-cash investing activity:
Portion of 7.125% - 7.5% debentures due from a third party in exchange
   for the mortgages on Country Club Terrace Apartments,
   Nevada Hills Apartments and Dunhaven Apartments                                             $          -      $  3,431,297
Portion of 6.375% debenture due from a third party in exchange
   for the mortgage on The Executive House                                                          810,660
6.375% debenture received from HUD in exchange for the mortgage
   on Baypoint Shoreline Apartments                                                               1,812,914                 -
Portion of 6.375% debenture due to affiliate in exchange
   for the mortgage on Baypoint Shoreline Apartments                                               (906,456)                -
9% of proceeds due from HUD for the mortgage on Westbrook Apartments                                299,132                 -
Portion of Westbrook Apartments proceeds due to affiliate                                          (149,566)
</TABLE>

                   The accompanying notes are an integral part
                         of these financial statements.


<PAGE>7
              AMERICAN INSURED MORTGAGE INVESTORS - SERIES 85, L.P.

                          NOTES TO FINANCIAL STATEMENTS

                                   (Unaudited)

1.   ORGANIZATION

     American Insured Mortgage  Investors - Series 85, L.P. (the  "Partnership")
was  formed   pursuant  to  a  limited   partnership   agreement,   as  amended,
("Partnership Agreement") under the Uniform Limited Partnership Act of the state
of  California  on June 26,  1984.  During  the  period  from March 8, 1985 (the
initial closing date of the  Partnership's  public offering) through January 27,
1986 (the  termination date of the offering),  the Partnership,  pursuant to its
public offering of 12,079,389  Depository Units of limited partnership  interest
("Units")  raised a total of $241,587,780 in gross  proceeds.  In addition,  the
initial limited partner contributed $2,500 to the capital of the Partnership and
received 125 units of limited partnership interest in exchange therefor.

     CRIIMI, Inc., a wholly-owned  subsidiary of CRIIMI MAE Inc. ("CRIIMI MAE"),
acts as the General  Partner (the  "General  Partner") for the  Partnership  and
holds a partnership  interest of 3.9%. The General Partner  provides  management
and  administrative  services  on behalf  of the  Partnership.  AIM  Acquisition
Partners  L.P.  serves as the advisor (the  "Advisor") to the  Partnership.  The
general   partner  of  the  Advisor  is  AIM   Acquisition   Corporation   ("AIM
Acquisition")  and the  limited  partners  include,  but are not limited to, The
Goldman Sachs Group, L.P., Sun America  Investments,  Inc.  (successor to Broad,
Inc.) and CRI/AIM  Investment,  L.P.,  a  subsidiary  of CRIIMI MAE,  over which
CRIIMI  MAE  exercises  100%  voting  control.  AIM  Acquisition  is a  Delaware
corporation  that is primarily  owned by Sun America  Investments,  Inc. and The
Goldman Sachs Group, L.P.

     Pursuant  to the terms of certain  origination  and  acquisition  services,
management services and disposition  services agreements between the Advisor and
the Partnership  (collectively the "Advisory  Agreements"),  the Advisor renders
services to the Partnership, including but not limited to, the management of the
Partnership's  portfolio of mortgages and the  disposition of the  Partnership's
mortgages. Such services are subject to the review and ultimate authority of the
General Partner. However, the General Partner is required to receive the consent
of the Advisor prior to taking certain  significant  actions,  including but not
limited to the  disposition of mortgages,  any transaction or agreement with the
General  Partner  or its  affiliates,  or any  material  change  as to  policies
regarding  distributions  or  reserves  of  the  Partnership  (collectively  the
"Consent Rights"). The Advisor is permitted and has delegated the performance of
services to CRIIMI MAE Services Limited Partnership  ("CMSLP"),  a subsidiary of
CRIIMI  MAE,   pursuant  to  a  sub-management   agreement  (the   "Sub-Advisory
Agreement").  The general partner and limited partner of CMSLP are  wholly-owned
subsidiaries  of CRIIMI MAE. The  delegation  of such services by the Advisor to
CMSLP does not relieve the Advisor of its  obligation to perform such  services.
Furthermore the Advisor has retained its Consent Rights.

     The General Partner also serves as the General Partner for American Insured
Mortgage Investors ("AIM 84"), American Insured Mortgage Investors L.P. - Series
86 ("AIM 86") and American  Insured  Mortgage  Investors  L.P. - Series 88 ("AIM
88") and  owns  general  partner  interests  therein  of  2.9%,  4.9% and  4.9%,
respectively.  The  Partnership,  AIM  84,  AIM 86 and  AIM 88 are  collectively
referred to as the "AIM Limited Partnerships".

     Prior to December  1993,  the  Partnership  was engaged in the  business of
originating  government insured mortgage loans ("Originated  Insured Mortgages")
and acquiring  government  insured mortgage loans ("Acquired  Insured Mortgages"
and, together with Originated Insured Mortgages,  referred to herein as "Insured
Mortgages").  In accordance  with the terms of the  Partnership  Agreement,  the
Partnership is no longer  authorized to originate or acquire  Insured  Mortgages
and, consequently,  its primary objective is to manage its portfolio of mortgage
investments,  all of which are insured under Section 221(d)(4) or Section 231 of
the National  Housing Act of 1937, as amended (the "National  Housing Act"). The
Partnership Agreement states that the Partnership will terminate on December 31,
2009, unless terminated earlier under the provisions thereof. The Partnership is
required,  pursuant to the Partnership Agreement, to dispose of its assets prior
to this date.

<PAGE>8

2. BASIS OF PRESENTATION

     The Partnership's financial statements are prepared on the accrual basis of
accounting in accordance with accounting  principles  generally  accepted in the
United States  ("GAAP").  The preparation of financial  statements in conformity
with GAAP requires  management to make estimates and assumptions that affect the
reported  amounts  of  assets  and  liabilities  at the  date  of the  financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.

     In the opinion of the General Partner, the accompanying unaudited financial
statements  contain all adjustments of a normal  recurring  nature  necessary to
present  fairly the financial  position of the  Partnership as of June 30, 2003,
the results of its  operations  for the three and six months ended June 30, 2003
and 2002, and its cash flows for the six months ended June 30, 2003 and 2002.

     These unaudited  financial  statements  have been prepared  pursuant to the
rules  and  regulations  of the  Securities  and  Exchange  Commission.  Certain
information  and  note  disclosures   normally   included  in  annual  financial
statements  prepared in  accordance  with GAAP have been  condensed  or omitted.
While the General Partner  believes that the disclosures  presented are adequate
to make the  information not misleading,  these financial  statements  should be
read in conjunction with the financial statements and the notes to the financial
statements included in the Partnership's Annual Report on Form 10-K for the year
ended December 31, 2002.


3.   INVESTMENT IN GNMA MORTGAGE-BACKED SECURITIES AND FHA-INSURED CERTIFICATES

     Listed   below  is  the   Partnership's   aggregate   investment   in  GNMA
Mortgage-Backed Securities and FHA-Insured Certificates:
<TABLE>
<CAPTION>
                                                                 June 30,               December 31,
                                                                   2003                     2002
                                                               ------------             ------------
<S>                                                            <C>                      <C>
Acquired Mortgages:
  Number of:
    GNMA Mortgage-Backed Securities                                       2                        2
    FHA-Insured Certificates (1) through (5)                             12                       17
  Amortized Cost                                               $ 29,189,951             $ 32,449,759
  Face Value                                                     29,388,272               33,076,449
  Fair Value                                                     30,063,214               33,849,089

Originated Mortgages:
  Number of:
    GNMA Mortgage-Backed Securities                                       1                        1
    FHA-Insured Certificates                                              1                        1
  Amortized Cost                                               $ 15,890,725             $ 15,974,329
  Face Value                                                     15,890,724               15,974,328
  Fair Value                                                     15,960,354               15,986,295
</TABLE>

(1)  In March 2003,  the mortgage on  Stonebridge  Apartments  was prepaid.  The
     Partnership received net proceeds of approximately  $950,000 and recognized
     a gain of approximately  $93,000 during the six months ended June 30, 2003.
     A distribution of  approximately  $0.075 per Unit related to the prepayment
     of this  mortgage was declared in April and paid to  Unitholders  in August
     2003.

<PAGE>9

(2)  In May 2003,  the mortgage on Willow  Dayton was prepaid.  The  Partnership
     received net proceeds of  approximately  $929,000 and  recognized a gain of
     approximately  $107,000  during  the six  months  ended  June 30,  2003.  A
     distribution of  approximately  $0.07 per Unit related to the prepayment of
     this mortgage was declared in June and paid to Unitholders in August 2003.
(3)  In May 2003,  the mortgage on Magnolia Place  Apartments  was prepaid.  The
     Partnership received net proceeds of approximately  $295,000 and recognized
     a gain of approximately  $29,000 during the six months ended June 30, 2003.
     A distribution of approximately $0.02 per Unit related to the prepayment of
     this mortgage was declared in June and paid to Unitholders in August 2003.
(4)  In May  2003,  HUD  issued  assignment  proceeds  in the  form of a  6.375%
     debenture in exchange for the mortgage on The  Executive  House.  Since the
     mortgage  on The  Executive  House  was  beneficially  owned  70.39% by the
     Partnership and the remainder by unrelated third parties,  the debenture is
     held by an unrelated third party and the face amount due to the Partnership
     is included in Receivables  and other assets on the  Partnership's  balance
     sheet. See further discussion in Note 5.
(5)  In June 2003,  the  mortgage on Ashley Oaks  Apartments  was  prepaid.  The
     Partnership received net proceeds of approximately  $525,000 and recognized
     a gain of approximately  $60,000 during the six months ended June 30, 2003.
     A distribution of approximately $0.04 per Unit related to the prepayment of
     this  mortgage  was  declared  in  July  and  is  expected  to be  paid  to
     Unitholders in November 2003.

     As of  August  1,  2003,  all of the GNMA  Mortgage-Backed  Securities  and
FHA-Insured  Certificates  are current  with respect to the payment of principal
and interest.


4.   INVESTMENT IN FHA-INSURED LOANS

     Listed  below is the  Partnership's  aggregate  investment  in  FHA-Insured
Loans:

<TABLE>
<CAPTION>
                                                          June 30,               December 31,
                                                            2003                     2002
                                                        ------------             ------------
<S>                                                     <C>                      <C>
  Acquired Loans:
    Number of Loans (1)(2)(3)                                      4                        6
    Amortized Cost                                      $  4,986,775             $  7,176,274
    Face Value                                             5,918,742                8,519,762
    Fair Value                                             5,929,879                8,513,052

  Originated Loans:
    Number of Loans                                                2                        2
    Amortized Cost                                      $  9,252,864             $  9,311,907
    Face Value                                             9,006,143                9,059,734
    Fair Value                                             9,356,908                9,470,182
</TABLE>

(1)  In January 2003, the Partnership  received assignment proceeds from HUD for
     the mortgage on Westbrook Apartments. The servicer of this mortgage filed a
     Notice of Election to Assign in November  2002 as a result of principal and
     interest payments being over 60 days delinquent.  The Partnership  received
     net  proceeds of  approximately  $1.5  million,  which  included 90% of the
     unpaid principal  balance of this mortgage,  plus interest at the debenture
     rate of 9.875% from  September  2002 through  January  2003.  The remaining
     amount  due  from HUD is  approximately  $150,000  (representing  9% of the
     unpaid  principal  balance) and is included in Receivables and other assets
     on the  Partnership's  balance  sheet as of June  30,  2003.  In  addition,
     approximately $150,000 is due from HUD related to the mortgage on Westbrook
     Apartments,  which is due to AIM 84. The  Partnership  recognized a gain of
     approximately  $228,000  during  the six  months  ended  June 30,  2003.  A
     distribution of  approximately  $0.12 per Unit related to the assignment of
     this mortgage was declared in February 2003 and was paid to  Unitholders in
     May 2003.
(2)  In February 2003, HUD transferred assignment proceeds to the Partnership in
     the form of a 6.375%  debenture,  with a face value of  approximately  $1.8
     million,  in exchange  for the mortgage on Baypoint  Shoreline  Apartments.
     Since the mortgage on Baypoint Shoreline  Apartments was beneficially owned
     50% by the  Partnership  and 50% by AIM 84,  approximately  $906,000 of the
     debenture face is due to AIM 84. See further discussion in Note 5.

<PAGE>10

(3)  In July 2003, HUD transferred assignment proceeds to the Partnership in the
     form of a 5.75% debenture, with a face value of approximately $2.6 million,
     in  exchange  for the  mortgage  on  College  Green  Apartments.  Since the
     mortgage on College  Green  Apartments  was  beneficially  owned 50% by the
     Partnership and 50% by AIM 84,  approximately $1.3 million of the debenture
     face is due to AIM 84. See further discussion in Note 5.

     As of August 1,  2003,  all of the  Partnership's  FHA-Insured  Loans  were
current with respect to the payment of principal and interest.

     In addition to base interest payments under Originated  Insured  Mortgages,
the Partnership is entitled to additional  interest based on a percentage of the
net cash flow from the underlying development (referred to as "Participations").
During the three and six months ended June 30,  2003,  the  Partnership  did not
receive additional  interest from the  Participations.  During the three and six
months ended June 30, 2002,  the  Partnership  received  additional  interest of
$5,168 and $8,396, respectively, from the Participations. These amounts, if any,
are included in mortgage  investment  income on the  accompanying  Statements of
Income and Comprehensive Income.

     The Section 221 Program
     -----------------------

     As of August 1, 2003, there are three remaining  Insured  Mortgages held by
the Partnership,  as discussed  below,  that have been assigned to HUD under the
Section  221(g)(4)  program  of the  National  Housing  Act  (the  "Section  221
Program.") A mortgagee has the right to assign a mortgage  ("put") to the United
States Department of Housing and Urban Development  ("HUD") at the expiration of
20 years from the date of final endorsement ("Anniversary Date") if the mortgage
is not in default at such time. The mortgagee may exercise its option to put the
mortgage to HUD during the one year period  subsequent to the Anniversary  Date.
This assignment procedure is applicable to an Insured Mortgage, which had a firm
or conditional  commitment for HUD insurance  benefits on or before November 30,
1983. Any mortgagee  electing to assign an Insured Mortgage to HUD receives,  in
exchange  therefor,  debentures  having a total face value equal to (i) the then
outstanding principal balance of the Insured Mortgage (ii) plus accrued interest
on the mortgage to the date of assignment  ("Debenture  Issuance  Date").  These
debentures  generally  mature  10 years  from the  date of  assignment  and bear
interest  at a rate  announced  semi-annually  by HUD  in the  Federal  Register
("going  Federal rate") at such date. In some cases,  the Partnership is not the
named mortgagee for the FHA-Insured Certificate. In this case, the HUD debenture
is generally issued to an unrelated third party that is the named mortgagee. The
servicer  of the  applicable  mortgage  is  responsible  for  delivering  to the
Partnership all HUD insurance claim proceeds.  The debenture interest is paid to
the  Partnership  in the month it is received  by the  servicer.  The  debenture
proceeds are paid to the  Partnership  in the month the debenture is redeemed by
HUD  or  sold  by the  servicer.  Based  on the  recommendation  of  CMSLP,  the
sub-advisor,  and the consent of the Advisor,  the General  Partner may elect to
put Insured  Mortgages to HUD,  based upon, in general,  but not limited to, (i)
the interest rates on mortgages, (ii) the interest rates on debentures issued by
HUD and (iii) the costs and risks associated with continuing to hold the Insured
Mortgages.

     Once the  servicer  of an Insured  Mortgage  has filed an  application  for
insurance  benefits  ("HUD put date") under the Section 221 program on behalf of
the Partnership,  the Partnership  will no longer receive the monthly  principal
and interest on the applicable  mortgage,  and instead, HUD will begin receiving
the  monthly  principal  and  interest.  HUD issues  debentures  at the time the
mortgage  is  assigned  to HUD  (approximately  30 days after the HUD put date);
however, the debentures are not transferred to the mortgagee until HUD completes
its assignment  process of the Insured Mortgage.  Based on the General Partner's
experience,  HUD's assignment process is generally six to eighteen months. After
HUD completes its assignment process for the Insured Mortgage,  HUD transfers to
the mortgagee (i) HUD debentures, as discussed above, (ii) plus cash for accrued
interest  on the  debentures  at the  going  Federal  rate,  from the  Debenture
Issuance  Date to the  most  current  interest  payment  date.  Thereafter,  the
mortgagee  receives interest on the debentures on the semi-annual  payment dates

<PAGE>11

of January 1 and July 1. The going Federal rate for HUD debentures  issued under
the  Section  221  Program  for the period  January 1 through  June 30, 2003 was
5.75%.  The  Partnership  will recognize a gain on a mortgage  assignment at the
time it  receives  notification  that  the  assignment  has been  approved.  HUD
assignment  approval  generally  occurs when HUD transfers the debentures to the
mortgagee and/or when the Partnership  receives cash for the accrued interest on
the debentures.  The Partnership recognizes a loss on a mortgage assignment when
it becomes probable that a loss will be incurred. The gain or loss recognized is
generally  equal to proceeds  received  from HUD, as discussed  above,  less the
amortized cost of the Insured Mortgage.

     Mortgages in the Section 221 HUD assignment process
     ---------------------------------------------------

     The  mortgages  on Brougham  Estates,  Town Park  Apartments  and  Kaynorth
Apartments  were put to HUD under the  Section  221  Program  by the  respective
servicers in February,  March and April 2003,  respectively.  The aggregate face
value of these mortgages was approximately $4.7 million as of the HUD put dates.
The Partnership no longer receives monthly principal and interest from mortgages
that are put to HUD under the  Section 221  Program.  HUD  receives  the monthly
principal  and  interest  and the  Partnership  earns  semi-annual  interest  on
debentures  issued by HUD, as discussed  above. The Partnership has not received
approval for these assignments as of August 1, 2003, and will continue to accrue
interest  on  the  mortgages   until  the  debentures  are  transferred  to  the
Partnership and it begins receiving the debenture  interest.  The amortized cost
of these  mortgages  is  included  in  Investment  in  FHA-Insured  Loans on the
Partnership's balance sheet as of June 30, 2003.


5.   INVESTMENTS IN DEBENTURES AND DUE TO AFFILIATE

     In February 2003, HUD transferred assignment proceeds to the Partnership in
the  form of a  6.375%  debenture  in  exchange  for the  mortgage  on  Baypoint
Shoreline  Apartments.  The servicer of this mortgage filed an  application  for
insurance  benefits  under the Section 221 Program in June 2002.  The debenture,
with a face value of approximately $1.8 million, pays interest  semi-annually on
January 1 and July 1 with a maturity date of June 27, 2012. The debenture may be
called by HUD prior to its maturity date. A distribution  will be declared after
the debenture  proceeds are received by the  Partnership.  Since the mortgage on
Baypoint Shoreline  Apartments was beneficially owned 50% by the Partnership and
50% by AIM 84,  approximately  $906,000 of the debenture  face is due to AIM 84.
The  Partnership  recognized  a gain of  approximately  $131,000  during the six
months ended June 30, 2003. The fair value of this debenture and the portion due
to AIM 84  are  included  in  Investment  in  debenture  and  Due to  affiliate,
respectively,  on the  Partnership's  balance  sheet as of June 30, 2003.

     In May  2003,  HUD  issued  assignment  proceeds  in the  form of a  6.375%
debenture in exchange for the mortgage on The Executive  House.  The mortgage on
The Executive House was put to HUD under the Section 221 Program by the servicer
in April  2002.  The  debenture,  with a face  value due to the  Partnership  of
approximately $811,000, pays interest semi-annually on January 1 and July 1 with
a maturity  date of April 3, 2012.  The  debenture may be called by HUD prior to
its maturity date. A distribution will be declared after the debenture  proceeds
are  received  by  the  Partnership.   The  Partnership  recognized  a  gain  of
approximately  $97,000  during the six months  ended  June 30,  2003.  Since the
Partnership  only owned  70.39% of the FHA  insured  certificate  secured by the
mortgage on The Executive  House and the  remainder was held by unrelated  third
parties,  the debenture is held by an unrelated  third party and the face amount
of approximately  $811,000 due to the Partnership is included in Receivables and
other assets on the Partnership's balance sheet as of June 30, 2003.

<PAGE>12

     In July 2003, HUD transferred assignment proceeds to the Partnership in the
form of a 5.75% debenture,  with a face value of approximately $2.6 million,  in
exchange  for the  mortgage on College  Green  Apartments.  The servicer of this
mortgage  filed an  application  for  insurance  benefits  under the Section 221
Program in February 2003. The debenture pays interest semi-annually on January 1
and July 1 with a maturity  date of February  25,  2013.  The  debenture  may be
called by HUD prior to its maturity date. A distribution  will be declared after
the debenture  proceeds are received by the  Partnership.  Since the mortgage on
College Green Apartments was  beneficially  owned 50% by the Partnership and 50%
by AIM 84,  approximately  $1.3 million of the debenture  face is due to AIM 84.
The Partnership expects to recognize a gain of approximately $192,000 during the
third  quarter  2003.  The amortized  cost of the  Partnership's  portion of the
mortgage on College Green  Apartments  is included in Investment in  FHA-Insured
Loans on the Partnership's balance sheet as of June 30, 2003.

     In addition, as discussed in Note 4, approximately $300,000 is due from HUD
related to the  mortgage  on  Westbrook  Apartments  and amount is  included  in
Receivables and other assets on the  Partnership's  balance sheet as of June 30,
2003.  Approximately $150,000 of this amount is due to AIM 84 and is included in
Due to affiliate on the Partnership's balance sheet as of June 30, 2003.

     Redemption of debenture
     -----------------------

     In January  2003,  HUD  redeemed the 7.5%  debenture  with a face amount of
approximately  $758,000,  issued in July 2002 in  exchange  for the  mortgage on
Fairlawn  II. A  distribution  of  approximately  $0.06 per Unit  related to the
debenture  proceeds was declared in February 2003 and was paid to Unitholders in
May  2003.  The  accrued  interest  of  approximately  $28,000  related  to this
debenture  was also  received in January 2003 and is being  distributed  through
regular cash flow  distributions.  This amount was included in  Receivables  and
other Assets on the Partnership's balance sheet at December 31, 2002.




<PAGE>13


6.   DISTRIBUTIONS TO UNITHOLDERS

     The  distributions  paid or accrued to  Unitholders on a per Unit basis for
the six months ended June 30, 2003 and 2002 are as follows:

                                       2003           2002
                                      ------         ------
Quarter ended March 31                $0.310(1)      $1.325(3)
Quarter ended June 30                  0.255(2)       0.210(4)
                                      ------         ------
                                      $0.565         $1.535
                                      ======         ======

     The following disposition proceeds are included in the distributions listed
above:
<TABLE>
<CAPTION>
                                                                         Date                       Net
                                                                       Proceeds       Type of     Proceeds
           Complex Name(s)                                             Received     Disposition   Per Unit
           ---------------                                             --------     -----------   --------
      <S>                                                              <C>          <C>            <C>
      (1) Quarter ended March 31, 2003:
           Walnut Hills                                                Dec 2002     Prepayment     $0.040
           Westbrook Apartments                                        Jan 2003     Assignment      0.120
           Fairlawn II (redemption of 7.5% debenture)                  Jan 2003     Assignment      0.060
      (2) Quarter ended June 30, 2003:
           Stonebridge Apartments                                      Mar 2003     Prepayment      0.075
           Magnolia Place Apartments                                   May 2003     Prepayment      0.020
           Willow Dayton                                               May 2003     Prepayment      0.070
      (3) Quarter ended March 31, 2002:
           The Gate House Apartments                                   Dec 2001     Prepayment      0.220
           Longleaf Lodge                                              Jan 2002     Prepayment      0.290
           Fox Run Apartments (redemption of 7.125% debenture)         Jan 2002     Assignment      0.090
           Interest on debentures related to mortgages on Summit
              Square Manor, Park Place, Park Hill Apts, Fairfax
              House, Woodland Villas, Country Club Terrace Apts,       Jan - Feb
              Dunhaven Apts and Nevada Hills Apts                        2002       Assignment      0.060
           Summit Square Manor (redemption of 7.125% debenture)        Jan 2002     Assignment      0.150
           Park Place (redemption of 7.125% debenture)                 Jan 2002     Assignment      0.060
           Park Hill Apartments (redemption of 7.5% debenture)         Jan 2002     Assignment      0.140
           Fairfax House (redemption of 7.5% debenture)                Jan 2002     Assignment      0.170
           Woodland Villas (redemption of 7.125% debenture)            Jan 2002     Assignment      0.025
      (4) Quarter ended June 30, 2002:
           Garden Court Apartments                                     Apr 2002     Prepayment      0.090
</TABLE>

     The basis for paying  distributions  to  Unitholders  is net proceeds  from
mortgage and/or debenture  dispositions,  if any, and cash flow from operations,
which includes regular interest income and principal from Insured  Mortgages and
interest on  debentures.  Although  the Insured  Mortgages  pay a fixed  monthly
mortgage payment and the debentures have a fixed semi-monthly  interest payment,
the cash distributions paid to the Unitholders will vary during each quarter due
to (1) the fluctuating  yields in the short-term  money market where the monthly
mortgage payments and debenture  interest are temporarily  invested prior to the
payment of  quarterly  distributions,  (2) the  reduction  in the asset base and
monthly mortgage  payments  resulting from monthly mortgage payments received or
mortgage  and  debenture   dispositions,   (3)   variations  in  the  cash  flow
attributable to the delinquency or default of Insured Mortgages and professional
fees and foreclosure  costs incurred in connection with those Insured  Mortgages
and (4) variations in the Partnership's  operating expenses.  As the Partnership
continues  to  liquidate  its  mortgage   investments  and  Unitholders  receive
distributions of return of capital and taxable gains,  Unitholders should expect
a reduction in earnings and distributions  due to the decreasing  mortgage base.
Upon the termination  and  liquidation of the Partnership, on or before December
31, 2009, distributions to Unitholders will be made in accordance with the terms
of the  Partnership  Agreement,  as  amended,  which is not based on GAAP.  As a
result, it is likely that the amounts that Unitholders  receive upon termination
and liquidation of the Partnership  will be substatially  lower than the amounts
reflected in the Partnership's financial statements.


<PAGE>14


7.   TRANSACTIONS WITH RELATED PARTIES

     The  General  Partner and certain  affiliated  entities  earned or received
compensation or payments for services from the Partnership as follows:

<TABLE>
<CAPTION>
                 COMPENSATION PAID OR ACCRUED TO RELATED PARTIES
                 -----------------------------------------------
                                                                                  For the                    For the
                                                                             three months ended         six months ended
                                                                                  June 30,                   June 30,
      Name of Recipient                Capacity in Which Served/Item         2003         2002          2003         2002
      -----------------                -----------------------------         ----         ----          ----         ----
<S>                                 <C>                                   <C>          <C>           <C>          <C>
CRIIMI, Inc. (1)                    General Partner/Distribution          $  125,006   $  102,946    $  276,974   $  752,487

AIM Acquisition Partners, L.P.(2)   Advisor/Asset Management Fee             157,123      191,725       320,574      381,506


CRIIMI MAE Management, Inc.(3)      Affiliate of General Partner/
                                        Expense Reimbursement                 12,735       14,592        30,970       29,934
</TABLE>

     (1)  The  General  Partner,  pursuant  to  the  Partnership  Agreement,  is
          entitled to receive 3.9% of the Partnership's  income,  loss,  capital
          and distributions,  including,  without limitation,  the Partnership's
          adjusted cash from  operations  and proceeds of mortgage  prepayments,
          sales or insurance (as defined in the Partnership Agreement).

     (2)  The Advisor,  pursuant to the Partnership Agreement, is entitled to an
          Asset  Management  Fee  equal to 0.95% of Total  Invested  Assets  (as
          defined  in  the  Partnership  Agreement).   CMSLP,  pursuant  to  the
          Sub-Advisory  Agreement,  is  entitled  to a fee  of  0.28%  of  Total
          Invested  Assets  from the  Advisor's  Asset  Management  Fee.  Of the
          amounts paid to the  Advisor,  CMSLP earned a fee equal to $46,305 and
          $94,477   for  the  three  and  six  months   ended  June  30,   2003,
          respectively,  and $56,503 and  $112,448  for the three and six months
          ended June 30,  2002,  respectively.  The general  partner and limited
          partner of CMSLP are wholly owned subsidiaries of CRIIMI MAE.

     (3)  CRIIMI MAE Management,  Inc., an affiliate of the General Partner,  is
          reimbursed for personnel and administrative services on an actual cost
          basis.

<PAGE>15

PART I.  FINANCIAL INFORMATION
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
         AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS. When used in this Quarterly Report on Form 10-Q, the
words  "believe,"  "anticipate,"  "expect,"  "contemplate,"  "may,"  "will," and
similar  expressions  are  intended  to  identify  forward-looking   statements.
Statements looking forward in time are included in this Quarterly Report on Form
10-Q  pursuant  to  the  "safe  harbor"  provision  of  the  Private  Securities
Litigation  Reform Act of 1995. Such statements are subject to certain risks and
uncertainties,   which  could  cause  actual   results  to  differ   materially.
Accordingly,  the following information contains or may contain  forward-looking
statements:  (1)  information  included or  incorporated  by  reference  in this
Quarterly Report on Form 10-Q,  including,  without limitation,  statements made
under Item 2,  Management's  Discussion and Analysis of Financial  Condition and
Results of Operations,  (2) information included or incorporated by reference in
prior and future  filings by the  Partnership  with the  Securities and Exchange
Commission ("SEC")  including,  without  limitation,  statements with respect to
growth,  projected  revenues,  earnings,  returns and yields on its portfolio of
mortgage assets, the impact of interest rates, costs and business strategies and
plans and (3)  information  contained  in written  material,  releases  and oral
statements  issued by or on  behalf  of,  the  Partnership,  including,  without
limitation,  statements with respect to growth,  projected  revenues,  earnings,
returns and yields on its portfolio of mortgage  assets,  the impact of interest
rates, costs and business  strategies and plans.  Factors which may cause actual
results  to  differ  materially  from  those  contained  in the  forward-looking
statements  identified above include,  but are not limited to (i) regulatory and
litigation  matters,  (ii)  interest  rates,  (iii) trends in the economy,  (iv)
prepayment  of  mortgages,  (v)  defaulted  mortgages,  (vi) errors in servicing
defaulted  mortgages and (vii) sales of mortgage  investments  below fair market
value.   Readers  are   cautioned   not  to  place   undue   reliance  on  these
forward-looking statements, which speak only of the date hereof. The Partnership
undertakes no obligation to publicly revise these forward-looking  statements to
reflect events or  circumstances  occurring  after the date hereof or to reflect
the occurrence of unanticipated events.

Mortgage Investments
--------------------

     As of June 30, 2003, the Partnership  had invested in 22 Insured  Mortgages
and two  debentures  with an aggregate  amortized  cost of  approximately  $61.0
million, an aggregate face value of approximately $61.9 million and an aggregate
fair value of  approximately  $63.0 million.  As of June 30, 2003, four of these
mortgages  were in the  Section  221 HUD  assignment  process,  one of which was
approved for  assignment  in July 2003,  as discussed  below.  During the second
quarter of 2003,  one  mortgage was  approved  for  assignment  to HUD and three
mortgages prepaid as discussed in "Results of Operations."

     In July 2003, HUD transferred assignment proceeds to the Partnership in the
form of a 5.75% debenture,  with a face value of approximately $2.6 million,  in
exchange  for the  mortgage on College  Green  Apartments.  The servicer of this
mortgage  filed an  application  for  insurance  benefits  under the Section 221
Program in February 2003. The debenture pays interest semi-annually on January 1
and July 1 with a maturity  date of February  25,  2013.  The  debenture  may be
called by HUD prior to its maturity date. A distribution  will be declared after
the debenture  proceeds are received by the  Partnership.  Since the mortgage on
College Green Apartments was  beneficially  owned 50% by the Partnership and 50%
by AIM 84,  approximately  $1.3 million of the debenture  face is due to AIM 84.
The Partnership expects to recognize a gain of approximately $192,000 during the
third quarter 2003.

     As of August 1, 2003, all of the Insured Mortgages are current with respect
to the payment of principal and interest.

Results of Operations
---------------------

     Net earnings decreased by approximately  $39,000 for the three months ended
June 30, 2003, as compared to the corresponding period in 2002, primarily due to
a decrease in mortgage  investment  income,  partially  offset by an increase in

<PAGE>16

gains on mortgage  dispositions.  Net earnings  decreased by approximately  $1.1
million for the six months ended June 30, 2003, as compared to the corresponding
period in 2002,  primarily due to a decrease in mortgage  investment  income and
gains on mortgage dispositions, as discussed below.

     Mortgage investment income decreased by approximately $317,000 and $616,000
for the three and six months ended June 30, 2003,  respectively,  as compared to
the corresponding  periods in 2002, primarily due to a reduction in the mortgage
base. The mortgage base decreased as a result of 12 mortgage  dispositions  with
an aggregate principal balance of approximately  $16.2 million,  representing an
approximate  21%  decrease  in the  aggregate  principal  balance  of the  total
mortgage portfolio since June 2002.

     Interest and other income decreased by  approximately  $48,000 and $130,000
for the three and six months ended June 30, 2003,  respectively,  as compared to
the  corresponding  periods in 2002,  primarily  due to a decrease in  debenture
interest and due to  variations  in the amounts and the timing of the  temporary
investment of mortgage disposition proceeds prior to distribution.

     Asset  management fees decreased by  approximately  $35,000 and $61,000 for
the three and six months ended June 30, 2003,  respectively,  as compared to the
corresponding  periods in 2002,  primarily  due to the reduction in the mortgage
base, as previously discussed.

     General and administrative  expenses decreased by approximately  $7,000 for
the three months ended June 30, 2003, as compared to the corresponding period in
2002,   primarily  due  to  a  decrease  in  professional   fees.   General  and
administrative  expenses  during the six months  ended June 30, 2003 were fairly
consistent with 2002.

     Gains on mortgage dispositions  increased by approximately $284,000 for the
three months ended June 30, 2003,  and decreased by  approximately  $432,000 for
the six months ended June 30, 2003, as compared to the corresponding  periods in
2002.  During the three months ended June 30, 2003, the  Partnership  recognized
gains of  approximately  $196,000 from the  prepayment of three  mortgages and a
gain of  approximately  $97,000 from the assignment of one mortgage.  During the
first  quarter  of 2003,  the  Partnership  recognized  a gain of  approximately
$93,000 from the prepayment of one mortgage and gains of approximately  $359,000
from the  assignment  of two  mortgages.  During the three months ended June 30,
2002,  the  Partnership  recognized  a gain of  approximately  $9,000  from  the
prepayment of one mortgage.  During the first quarter of 2002,  the  Partnership
recognized a gain of approximately  $672,000 from the prepayment of one mortgage
and gains of approximately $497,000 from the assignment of three mortgages.

Liquidity and Capital Resources
-------------------------------

     The  Partnership's  operating  cash  receipts,  derived  from  payments  of
principal and interest on Insured  Mortgages,  interest on  debentures  and cash
receipts from interest on short-term investments,  were sufficient for the three
months ended June 30, 2003 to meet operating requirements.  The basis for paying
distributions  to  Unitholders  is net proceeds from mortgage  and/or  debenture
dispositions,  if any, and cash flow from  operations,  which  includes  regular
interest income and principal from Insured Mortgages and interest on debentures.
Although the Insured  Mortgages  pay a fixed  monthly  mortgage  payment and the
debentures have a fixed  semi-monthly  interest payment,  the cash distributions
paid to the Unitholders will vary during each quarter due to (1) the fluctuating
yields in the short-term  money market where the monthly  mortgage  payments and
debenture  interest are  temporarily  invested prior to the payment of quarterly
distributions, (2) the reduction in the asset base and monthly mortgage payments
resulting  from monthly  mortgage  payments  received or mortgage and  debenture
dispositions, (3) variations in the cash flow attributable to the delinquency or
default  of  Insured  Mortgages  and  professional  fees and  foreclosure  costs
incurred in connection  with those Insured  Mortgages and (4)  variations in the
Partnership's  operating expenses. As the Partnership continues to liquidate its
mortgage investments and Unitholders receive  distributions of return of capital
and  taxable  gains,  Unitholders  should  expect a reduction  in  earnings  and
distributions  due to the decreasing  mortgage base.  Upon the  termination  and
liquidation of the Partnership, on or before December 31, 2009, distributions to
Unitholders  will  be made in  accordance  with  the  terms  of the  Partnership
Agreement,  as amended,  which is not based on GAAP.  As a result,  it is likely
that the amounts that  Unitholders  receive upon  termination and liquidation of
the Partnership  will be substantially  lower than the amounts  reflected in the
Partnership's financial statements.

<PAGE>17

     Net cash provided by operating  activities  decreased by approximately $1.3
million for the six months ended June 30, 2003, as compared to the corresponding
period  in  2002,  primarily  due to a  decrease  in  the  receipt  of  interest
previously accrued on mortgages  awaiting  assignment from HUD under the Section
221 program and a reduction in mortgage investment income.

     Net cash provided by investing  activities  decreased by approximately $8.0
million for the six months ended June 30, 2003, as compared to the corresponding
period in 2002,  primarily  due to decreases in proceeds  received from mortgage
prepayments,  mortgage assignments and redemption of debentures. These decreases
were partially offset by debenture proceeds paid to an affiliate in 2002.

     Net cash used in  financing  activities  decreased  by  approximately  $4.5
million for the six months ended June 30, 2003, as compared to the corresponding
period  in 2002,  due to a  decrease  in the  amount  of  distributions  paid to
partners in the first six months of 2003 compared to the same period in 2002.


ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

     Management has determined  that there has not been a material  change as of
June 30,  2003,  in market  risk  from  December  31,  2002 as  reported  in the
Partnership's Annual Report on Form 10-K as of December 31, 2002.


ITEM 4. CONTROLS AND PROCEDURES

     Within 90 days prior to the date of filing  this  Quarterly  Report on Form
10-Q, the General Partner  carried out an evaluation,  under the supervision and
with the  participation  of the  General  Partner's  management,  including  the
General  Partner's  Chairman of the Board and Chief Executive  Officer (CEO) and
the Chief  Financial  Officer  (CFO),  of the  effectiveness  of the  design and
operation of its  disclosure  controls and  procedures  pursuant to Exchange Act
Rule  13a-14.  Based  on that  evaluation,  the  General  Partner's  CEO and CFO
concluded that its  disclosure  controls and procedures are effective and timely
in alerting them to material information relating to the Partnership required to
be included in the Partnership's periodic SEC filings. There were no significant
changes in the General  Partner's  internal  controls or in other  factors  that
could significantly affect these internal controls subsequent to the date of its
most  recent  evaluation,  including  any  corrective  actions  with  regard  to
significant deficiencies and material weaknesses.

<PAGE>18

PART II. OTHER INFORMATION
ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits

     Exhibit No.                            Purpose


        31.1             Certification   pursuant  to  the   Exchange  Act  Rule
                         13a-14(a)  from  Barry  S.  Blattman,  Chairman  of the
                         Board,  Chief  Executive  Officer and  President of the
                         General Partner (Filed herewith).

        31.2             Certification   pursuant  to  the   Exchange  Act  Rule
                         13a-14(a)   from   Cynthia  O.   Azzara,   Senior  Vice
                         President, Chief Financial Officer and Treasurer of the
                         General Partner (Filed herewith).

        99.1             Certification   pursuant   to   Section   906   of  the
                         Sarbanes-Oxley  Act of 2002  from  Barry  S.  Blattman,
                         Chairman  of the Board,  Chief  Executive  Officer  and
                         President of the General Partner (Filed herewith).

        99.2             Certification   pursuant   to   Section   906   of  the
                         Sarbanes-Oxley  Act of 2002  from  Cynthia  O.  Azzara,
                         Senior  Vice  President,  Chief  Financial  Officer and
                         Treasurer of the General Partner (Filed herewith).


(b)  Reports on Form 8-K

     Date
     ----

     April 23, 2003      To  report a press  release  issued on  April  21, 2003
                         announcing the April  distribution to the Partnership's
                         Unitholders.

     May 8, 2003         To   report a  press  release  issued  on  May 6,  2003
                         announcing  the  Partnership's first quarter  financial
                         results.

     May 21, 2003        To  report a  press  release  issued  on  May  20, 2003
                         announcing the May  distribution to  the  Partnership's
                         Unitholders.

     June 20, 2003       To  report  a  press  release  issued  on June 20, 2003
                         announcing the June  distribution to the  Partnership's
                         Unitholders.

<PAGE>19
                                    SIGNATURE

     Pursuant to the  requirements  of the  Securities  Exchange Act of 1934, as
amended,  the  Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.



                                        AMERICAN INSURED MORTGAGE
                                        INVESTORS L.P. - SERIES 85
                                        (Registrant)

                                        By: CRIIMI, Inc.
                                            General Partner



August 13, 2003                         /s/ Cynthia O. Azzara
---------------                         ----------------------------------------
DATE                                    Cynthia O. Azzara
                                        Senior Vice President,
                                        Chief Financial Officer and
                                        Treasurer (Principal Accounting Officer)