<PAGE>1





                                    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                     September 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              (I.R.S. Employer Identification No.)
of incorporation or organization)

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  September  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 SEPTEMBER 30, 2003

                                                                        Page
                                                                        ----
PART I.       Financial Information

Item 1.       Financial Statements

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

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

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

              Statements of Cash Flows - for the nine months ended
                 September 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


<PAGE>3

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

                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                                                         September 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                            $ 30,187,602      $ 33,849,089
    Originated insured mortgages                            15,954,586        15,986,295
                                                          ------------      ------------
                                                            46,142,188        49,835,384


Investment in FHA-Insured Loans, at amortized cost,
  net of unamortized discount and premium:
    Acquired insured mortgages                               1,442,836         7,176,274
    Originated insured mortgages                             9,222,443         9,311,907
                                                          ------------      ------------
                                                            10,665,279        16,488,181

Investment in debentures, at fair value                     10,335,670                 -

Cash and cash equivalents                                    1,807,560        10,448,516

Receivables and other assets                                 1,662,494         1,465,453
                                                          ------------      ------------
      Total assets                                        $ 70,613,191      $ 78,237,534
                                                          ============      ============
           LIABILITIES AND PARTNERS' EQUITY

Distributions payable                                     $  1,634,066      $ 10,181,484

Accounts payable and accrued expenses                          127,663           115,799

Due to affiliate                                             5,409,105                 -
                                                          ------------      ------------
      Total liabilities                                      7,170,834        10,297,283
                                                          ------------      ------------
Partners' equity:
  Limited partners' equity, 15,000,000 Units authorized,
    12,079,514 Units issued and outstanding                 69,274,899        73,382,252
  General partner's deficit                                 (7,019,986)       (6,853,298)
  Accumulated other comprehensive income                     1,187,444         1,411,297
                                                          ------------      ------------
      Total partners' equity                                63,442,357        67,940,251
                                                          ------------      ------------
      Total liabilities and partners' equity              $ 70,613,191      $ 78,237,534
                                                          ============      ============
</TABLE>

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



<PAGE>4

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

           STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
                                  (Unaudited)

                                                         For the three months ended          For the nine months ended
                                                                September 30,                       September 30,
                                                           2003             2002               2003              2002
                                                       -----------       -----------       -----------       -----------
<S>                                                    <C>               <C>               <C>               <C>
Income:
  Mortgage investment income                           $ 1,161,982       $ 1,556,263       $ 3,745,842       $ 4,756,219
  Interest and other income                                 77,349            34,691           141,231           228,977
                                                       -----------       -----------       -----------       -----------
                                                         1,239,331         1,590,954         3,887,073         4,985,196
                                                       -----------       -----------       -----------       -----------
Expenses:
  Asset management fee to related parties                  148,703           189,662           469,277           571,168
  General and administrative                               106,163            98,586           329,205           320,922
                                                       -----------       -----------       -----------       -----------
                                                           254,866           288,248           798,482           892,090
                                                       -----------       -----------       -----------       -----------
Net earnings before gains on
  mortgage dispositions                                    984,465         1,302,706         3,088,591         4,093,106

Gains on mortgage dispositions                             627,469            86,839         1,373,339         1,264,766
                                                       -----------       -----------       -----------       -----------

Net earnings                                           $ 1,611,934       $ 1,389,545       $ 4,461,930       $ 5,357,872
                                                       ===========       ===========       ===========       ===========
Other comprehensive income (loss) - adjustment to
  unrealized gains and losses on investments in
  insured mortgages                                        244,552          (222,429)         (223,853)          584,702
                                                       -----------       -----------       -----------       -----------
Comprehensive income                                   $ 1,856,486       $ 1,167,116       $ 4,238,077       $ 5,942,574
                                                       ===========       ===========       ===========       ===========

Net earnings allocated to:
  Limited partners - 96.1%                             $ 1,549,069       $ 1,335,353       $ 4,287,915       $ 5,148,915
  General Partner -   3.9%                                  62,865            54,192           174,015           208,957
                                                       -----------       -----------       -----------       -----------
                                                       $ 1,611,934       $ 1,389,545       $ 4,461,930       $ 5,357,872
                                                       ===========       ===========       ===========       ===========
Net earnings per Unit of limited
  partnership interest - basic                         $      0.13       $      0.11       $      0.35       $      0.43
                                                       ===========       ===========       ===========       ===========
</TABLE>

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




<PAGE>5

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

                    STATEMENT OF CHANGES IN PARTNERS' EQUITY

                  For the nine months ended September 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                                           174,015         4,287,915                -         4,461,930

  Adjustment to unrealized gains and losses on
     investments in insured mortgages                          -                 -         (223,853)         (223,853)

  Distributions paid or accrued of $0.695 per Unit,
     including return of capital of $0.345 per Unit     (340,703)       (8,395,268)               -        (8,735,971)
                                                    ------------      ------------      -----------      ------------

Balance, September 30, 2003                         $ (7,019,986)     $ 69,274,899      $ 1,187,444      $ 63,442,357
                                                    ============      ============      ===========      ============

Limited Partnership Units outstanding - basic, as
  of September 30, 2003                                                 12,079,514
                                                                        ==========

</TABLE>

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



<PAGE>6

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

                            STATEMENTS OF CASH FLOWS

                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                         For the nine months ended
                                                                                                September 30,
                                                                                           2003             2002
                                                                                         -----------     ------------
<S>                                                                                      <C>             <C>
Cash flows from operating activities:
   Net earnings                                                                          $ 4,461,930     $ 5,357,872
   Adjustments to reconcile net earnings to net cash provided by operating activities:
      Gains on mortgage dispositions                                                      (1,373,339)     (1,264,766)
      Changes in assets and liabilities:
         Net decrease in receivables and other assets                                         37,306         976,412
         Increase in accounts payables and accrued expenses                                   11,864           8,054
         Increase (decrease) in due to affiliate                                              91,704         (42,487)
                                                                                         -----------     -----------

            Net cash provided by operating activities                                      3,229,465       5,035,085
                                                                                         -----------     -----------

Cash flows from investing activities:
   Proceeds from mortgage prepayments                                                      2,674,487       9,863,187
   Proceeds from mortgage assignments                                                      1,528,983      10,190,539
   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                                     465,339         575,047
                                                                                         -----------     -----------

            Net cash provided by investing activities                                      5,412,968      21,821,389
                                                                                         -----------     -----------
Cash flows used in financing activities:
   Distributions paid to partners                                                        (17,283,389)    (21,180,004)
                                                                                         -----------     -----------

Net (decrease) increase in cash and cash equivalents                                      (8,640,956)      5,676,470

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

Cash and cash equivalents, end of period                                                 $ 1,807,560     $10,042,555
                                                                                         ===========     ===========

Non-cash investing activity:

Portion of 7.5% debenture due from a third party
   in exchange for the mortgage on Fairlawn II                                           $         -     $   744,159
Portion of 6.375% debenture due from a third party in exchange
   for the mortgage on The Executive House                                                   810,660               -
Debentures received from HUD in exchange for assigned mortgages                           10,335,670               -
Portion of debentures due to affiliate                                                    (5,167,835)              -

</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 in
exchange for 125 units of limited partnership interest.

     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

<PAGE>8

the  provisions  thereof.  The  Partnership  is  required,  pursuant to the
Partnership Agreement, to dispose of its assets prior to this date.


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 September 30,
2003,  the  results  of its  operations  for the  three  and nine  months  ended
September  30,  2003 and  2002,  and its cash  flows for the nine  months  ended
September 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>
                                                               September 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                                                $29,106,992              $32,449,759
  Face Value                                                     29,300,978               33,076,449
  Fair Value                                                     30,187,602               33,849,089

Originated Mortgages:
  Number of:
    GNMA Mortgage-Backed Securities                                       1                        1
    FHA-Insured Certificates                                              1                        1
  Amortized Cost                                                $15,847,752              $15,974,329
  Face Value                                                     15,847,750               15,974,328
  Fair Value                                                     15,954,586               15,986,295

</TABLE>

<PAGE>9


(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 nine months ended September 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.
(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 nine months ended September 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 nine months ended September 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 nine months ended September 30,
     2003.  A  distribution  of  approximately  $0.04  per Unit  related  to the
     prepayment of this mortgage was declared in July and paid to Unitholders in
     November 2003.

     As of  November 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>
                                                               September 30,            December 31,
                                                                   2003                      2002
                                                               ------------             ------------
  <S>                                                          <C>                      <C>
  Acquired Loans:
    Number of Loans (1) through (5)                                       1                        6
    Amortized Cost                                              $ 1,442,836              $ 7,176,274
    Face Value                                                    1,711,751                8,519,762
    Fair Value                                                    1,714,975                8,513,052

  Originated Loans:
    Number of Loans                                                       2                        2
    Amortized Cost                                              $ 9,222,443              $ 9,311,907
    Face Value                                                    8,978,496                9,059,734
    Fair Value                                                    9,437,102                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  Partnership
     recognized a gain of  approximately  $228,000  during the nine months ended
     September 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. As of November 1, 2003,  the  Partnership
     has received the  remaining  amount due of  approximately  $330,000,  which
     includes  the  remaining  principal  balance  plus  accrued  interest.  The
     Partnership  has paid the amount due to AIM 84 for its 50%  portion of this
     amount  (approximately  $165,000) and expects to announce a distribution in
     November 2003 for the net amount received of $165,000.

<PAGE>10

(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.
(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.
(4)  In August 2003, HUD transferred  assignment  proceeds to the Partnership in
     the form of a 5.75%  debenture,  with a face  value of  approximately  $4.8
     million,  in exchange  for the  mortgage on Brougham  Estates II. Since the
     mortgage  on  Brougham  Estates  II  was  beneficially  owned  50%  by  the
     Partnership and 50% by AIM 84,  approximately $2.4 million of the debenture
     face is due to AIM 84. See further discussion in Note 5.
(5)  In August 2003, HUD transferred  assignment  proceeds to the Partnership in
     the form of a 5.75%  debenture,  with a face  value of  approximately  $1.2
     million,  in exchange for the mortgage on Town Park  Apartments.  Since the
     mortgage  on  Town  Park  Apartments  was  beneficially  owned  50%  by the
     Partnership and 50% by AIM 84, approximately $589,000 of the debenture face
     is due to AIM 84. See further discussion in Note 5.

     As of November 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 nine months ended  September 30, 2003, the  Partnership did
not receive additional  interest from the  Participations.  During the three and
nine months  ended  September  30, 2002,  the  Partnership  received  additional
interest of $0 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 November  1, 2003,  there is only one  Insured  Mortgage  held by the
Partnership,  as  discussed  below,  which  has 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,  a debenture 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").  The
debenture  generally  matures  10 years  from the date of  assignment  and bears
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 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, sold by the servicer or sold by the General Partner. Debentures sold by the
General Partner are based on the  recommendation of CMSLP, the sub-advisor,  and
the  consent of the  Advisor,  based upon,  in general,  but not limited to, the
interest  rates on debentures  issued by HUD and the costs and risks  associated
with continuing to hold the debentures.


<PAGE>11


     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) a debenture,  as discussed  above,  (ii) plus cash for accrued
interest on the debenture at the going Federal rate, from the Debenture Issuance
Date to the most  current  interest  payment  date.  Thereafter,  the  mortgagee
receives interest on the debenture on the semi-annual payment dates 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  debenture to the mortgagee
and/or  when the  Partnership  receives  cash for the  accrued  interest  on the
debenture.  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.

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

     In April 2003, the servicer of the mortgage on Kaynorth Apartments filed an
application to put this mortgage to HUD under the Section 221 Program.  The face
value of this  mortgage was  approximately  $1.7  million as of the  application
date. The Partnership no longer receives  monthly  principal and interest from a
mortgage  that is put to HUD under the Section 221  Program.  HUD  receives  the
monthly principal and interest and the Partnership earns semi-annual interest on
a debenture  issued by HUD, as discussed above. The Partnership has not received
approval for this assignment as of November 1, 2003, and will continue to accrue
interest on the mortgage until the debenture is  transferred to the  Partnership
and it begins  receiving the  debenture  interest.  The  amortized  cost of this
mortgage is included in Investment  in  FHA-Insured  Loans on the  Partnership's
balance sheet as of September 30, 2003.


5. INVESTMENTS IN DEBENTURES AND DUE TO AFFILIATE

     Listed below are  debentures  issued to the  Partnership by HUD in exchange
for  mortgages  put to HUD under the Section 221  program.  As  indicated in the
table below, the Partnership's debentures have been called by HUD for redemption
on January 1, 2004.  The  Partnership  expects to receive the face  value,  plus
accrued  interest on the redemption  date. The application  date is the date the
servicer of the respective  mortgage filed an application for insurance benefits
under the Section 221  Program.  The  receipt  date is the date the  Partnership
received the  debenture  and reported a gain  related to the  assignment  of the
respective mortgage.  The debentures pay interest semi-annually on January 1 and
July  1.  Since  the  mortgages  listed  were  beneficially  owned  50%  by  the
Partnership and 50% by AIM 84,  approximately $5.2 million of the debenture face
plus  accrued  interest is due to AIM 84 and is included in Due to  affiliate on
the Partnership's balance sheet at September 30, 2003.


<PAGE>12

<TABLE>
<CAPTION>
                                                                                 Net Amount                            Gain on
                               Redemption   Interest      Face        Due to     Due to the  Application  Receipt    Assignment
Debenture for mortgage on:        Date       Rate        Value      Affiliate   Partnership     Date        Date     Of mortgage
--------------------------        -----     ------       ------    -----------  ------------   -----       -----    -----------
<S>                            <C>          <C>         <C>        <C>          <C>            <C>         <C>      <C>
Baypoint Shoreline
  Apartments                   01/01/2004    6.375%     $ 1,812,914  $  906,457   $  906,457   Jun-02      Feb-03    $  131,321
College Green Apartments       01/01/2004    5.750%       2,571,331   1,285,666    1,285,665   Feb-03      Jul-03       191,756
Brougham Estates II            01/01/2004    5.750%       4,773,594   2,386,797    2,386,797   Feb-03      Aug-03       349,286
Town Park Apartments           01/01/2004    5.750%       1,177,831     588,915      588,916   Feb-03      Aug-03        86,426
                                                        -----------  ----------   ----------                          ---------
Total debentures                                        $10,335,670  $5,167,835   $5,167,835                          $ 758,789
                                                        ===========  ==========   ==========                          =========
</TABLE>

     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.
This debenture has been called by HUD for redemption on January 1, 2004, at face
amount  plus  accrued  interest.  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 nine months ended September 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 September
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 nine months ended September 30, 2003 and 2002 are as follows:

                                      2003           2002
                                      ----           ----
Quarter ended March 31                $0.310 (1)     $1.325 (4)
Quarter ended June 30                  0.255 (2)      0.210 (5)
Quarter ended September 30             0.130 (3)      0.410 (6)
                                      ------         ------
                                      $0.695         $1.945
                                      ======         ======

     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 September 30, 2003:
           Ashley Oaks Apartments                                      Jun 2003     Prepayment      0.040
      (4) 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
      (5) Quarter ended June 30, 2002:
           Garden Court Apartments                                     Apr 2002     Prepayment      0.090
      (6) Quarter ended September 30, 2002:
           Interest on debenture related to mortgage on Fairlawn II    Jul 2002     Assignment      0.010
           Country Club Terrace Apartments                             Jul 2002     Assignment      0.120
           Nevada Hills Apartments                                     Jul 2002     Assignment      0.090
           Dunhaven Apartments                                         Jul 2002     Assignment      0.070

</TABLE>

<PAGE>14


     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-annual  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.
See also the  discussion of the redemption of debentures in January 2004 in Note
5.  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.  A final  distribution to
Unitholders will be based on the  Partnership's  remaining net assets,  and such
distribution to Unitholders is likely to be  substantially  less than the amount
referenced  in  limited   partners'  equity  in  the   Partnership's   financial
statements.







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:

                 COMPENSATION PAID OR ACCRUED TO RELATED PARTIES
                 -----------------------------------------------
<TABLE>
<CAPTION>
                                                                                     For the                  For the
                                                                               three months ended        nine months ended
                                                                                  September 30,            September 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           $ 63,729   $ 200,990    $ 340,703   $ 953,477

AIM Acquisition Partners, L.P.(2)      Advisor/Asset Management Fee            148,703     189,662      469,277     571,168

                                       Affiliate of General Partner/Expense
CRIIMI MAE Management, Inc.(3)         Reimbursement                            14,831       9,763       45,801      39,697

</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  $43,823  and  $138,300  for the three and nine  months  ended
     September  30, 2003,  respectively,  and $55,896 and $168,344 for the three
     and nine months ended September 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  September  30,  2003,  the  Partnership  had  invested in 19 Insured
Mortgages and five debentures with an aggregate  amortized cost of approximately
$61.6  million,  an aggregate face value of  approximately  $61.8 million and an
aggregate fair value of approximately $63.3 million. During the third quarter of
2003,  three  mortgages  were  approved  for  assignment  to HUD as discussed in
"Results of Operations."

     The  Partnership's  five  debentures,  with  an  aggregate  face  value  of
approximately $11.1 million have been called for redemption by HUD on January 1,
2004.  Four of the  debentures,  with an aggregate  face value of $10.3 million,
were issued in exchange for  mortgages  that were held jointly by AIM 84 and AIM
85, therefore 50% of the debenture proceeds are due to AIM 84.

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

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

     Net earnings increased by approximately $222,000 for the three months ended
September 30, 2003, as compared to the corresponding  period in 2002,  primarily
due to an  increase  in gains on  mortgage  dispositions  partially  offset by a
decrease in mortgage  investment income. Net earnings decreased by approximately
$896,000  for the nine  months  ended  September  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 gains on mortgage  dispositions,  as
discussed below.

     Mortgage  investment  income decreased by  approximately  $394,000 and $1.0
million for the three and nine months ended September 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 14 mortgage


<PAGE>16

dispositions with an aggregate principal balance of approximately $14.6 million,
representing an approximate 21% decrease in the aggregate  principal  balance of
the total mortgage portfolio since September 2002.

     Interest and other income increased by approximately  $43,000 for the three
months  ended  September  30,  2003,  primarily  due to an increase in debenture
interest from debentures received in the third quarter 2003, as discussed below.
Interest and other income decreased by approximately $88,000 for the nine months
ended  September  30, 2003,  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  $41,000 and $102,000 for
the three and nine months ended September 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 increased by approximately  $8,000 for
the three and nine months ended September 30, 2003, respectively, as compared to
the  corresponding  periods in 2002,  primarily  due to an increase in legal and
audit fees related to the Partnership's Corporate Governance.

     Gains on mortgage  dispositions  increased  by  approximately  $541,000 and
$109,000 for the three and nine months ended  September 30, 2003,  respectively,
as compared to the corresponding  periods in 2002. During the three months ended
September 30, 2003, the Partnership  recognized gains of approximately  $627,000
from the assignment of three mortgages. During the first six months of 2003, the
Partnership  recognized gains of  approximately  $289,000 from the prepayment of
four mortgages and gains of approximately  $457,000 from the assignment of three
mortgages.  During the three months ended  September 30, 2002,  the  Partnership
recognized a gain of approximately  $95,000 from the assignment of one mortgage,
which was partially offset by a loss of approximately  $8,000  recognized on the
prepayment of one mortgage. During the first six months of 2002, the Partnership
recognized gains of approximately  $681,000 from the prepayment of two mortgages
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  during the
nine months ended September 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-  annual  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. See also the
discussion  of the  redemption  of  debentures  in  January  2004  in  "Mortgage
Investments."  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

<PAGE>17

Partnership  Agreement,  as amended. A final distribution to Unitholders will be
based on the  Partnership's  remaining  net  assets,  and such  distribution  to
Unitholders  is likely to be  substantially  less than the amount  referenced in
limited partners' equity in the Partnership's financial statements.

     Net cash provided by operating  activities  decreased by approximately $1.8
million  for the nine  months  ended  September  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 $16.4
million  for the nine  months  ended  September  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  $3.9
million  for the nine  months  ended  September  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 nine 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
September  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 and Chief
                                       Executive Officer of the General Partner
                                       (Filed herewith).

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

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

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


(b) Reports on Form 8-K

              Date
              ----

              July 23, 2003           To report a press release issued on
                                      July 22, 2003 announcing the July 2003
                                      distribution to the Partnership's
                                      Unitholders.

              August 14, 2003         To report a press release issued on
                                      August 13, 2003 announcing the
                                      Partnership's second quarter financial
                                      results.

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

              September 24, 2003      To report a press release issued on
                                      September 19, 2003 announcing the
                                      September 2003 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


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