SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C.  20549
                                
                           FORM 10-QSB
                                
           Quarterly Report Under Section 13 or 15(d)
             of The Securities Exchange Act of 1934
                                
             For the Quarter Ended:  March 31, 1999
                                
                Commission file number:  0-14264
                                
                                
            AEI REAL ESTATE FUND 85-B LIMITED PARTNERSHIP
(Exact Name of Small Business Issuer as Specified in its Charter)


      State of Minnesota                   41-1525197
(State or other Jurisdiction of         (I.R.S. Employer
Incorporation or Organization)        Identification No.)


  1300 Minnesota World Trade Center, St. Paul, Minnesota 55101
            (Address of Principal Executive Offices)
                                
                          (651) 227-7333
                   (Issuer's telephone number)
                                
                                
                         Not Applicable
 (Former name, former address and former fiscal year, if changed
                       since last report)
                                
Check  whether  the issuer (1) 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 (or for such shorter  period
that  the registrant was required to file such reports), and  (2)
has  been  subject to such filing requirements for  the  past  90
days.

                       Yes   [X]       No
                                
         Transitional Small Business Disclosure Format:
                                
                       Yes             No   [X]
                                
                                
                                
                                
          AEI REAL ESTATE FUND 85-B LIMITED PARTNERSHIP
                                
                                
                              INDEX
                                
                                
                                                     

PART I. Financial Information

 Item 1. Balance Sheet as of March 31, 1999 and December  31, 1998   

         Statements for the Periods ended March 31, 1999 and 1998:

            Income                                     

            Cash Flows                                 

            Changes in Partners' Capital               

         Notes to Financial Statements               

 Item 2. Management's Discussion and Analysis    

PART II. Other Information

 Item 1. Legal Proceedings                          

 Item 2. Changes in Securities                      

 Item 3. Defaults Upon Senior Securities            

 Item 4. Submission of Matters to a Vote of Security  Holders

 Item 5. Other Information                          

 Item 6. Exhibits and Reports on Form 8-K           


<PAGE>
        AEI REAL ESTATE FUND 85-B LIMITED PARTNERSHIP

                          BALANCE SHEET
                                
              MARCH 31, 1999 AND DECEMBER 31, 1998
                                
                           (Unaudited)
                                
                             ASSETS

                                                      1999          1998

CURRENT ASSETS:
  Cash and Cash Equivalents                       $   404,214    $   371,557
  Receivables                                             620         15,227
                                                   -----------    -----------
      Total Current Assets                            404,834        386,784
                                                   -----------    -----------
INVESTMENTS IN REAL ESTATE:
  Land                                              1,446,391      1,446,391
  Buildings and Equipment                           2,663,897      2,663,897
  Accumulated Depreciation                         (1,439,730)    (1,422,454)
                                                   -----------    -----------
      Net Investments in Real Estate                2,670,558      2,687,834
                                                   -----------    -----------
          Total Assets                            $ 3,075,392    $ 3,074,618
                                                   ===========    ===========


                        LIABILITIES AND PARTNERS' CAPITAL

CURRENT LIABILITIES:
  Payable to AEI Fund Management, Inc.            $    17,513    $     7,601
  Land Remediation Estimate                           211,000        211,000
  Distributions Payable                                94,294         68,770
  Unearned Rent                                         5,270              0
                                                   -----------    -----------
      Total Current Liabilities                       328,077        287,371
                                                   -----------    -----------
PARTNERS' CAPITAL (DEFICIT):
  General Partners                                    (37,124)       (36,724)
  Limited Partners, $1,000 Unit value;
   7,500 Units authorized and issued;
   6,638 outstanding                                2,784,439      2,823,971
                                                   -----------    -----------
      Total Partners' Capital                       2,747,315      2,787,247
                                                   -----------    -----------
        Total Liabilities and Partners' Capital   $ 3,075,392    $ 3,074,618
                                                   ===========    ===========



 The accompanying Notes to Financial Statements are an integral
                     part of this statement.
</PAGE>
<PAGE>
          AEI REAL ESTATE FUND 85-B LIMITED PARTNERSHIP
                                
                       STATEMENT OF INCOME
                                
                 FOR THE PERIODS ENDED MARCH 31
                                
                           (Unaudited)

   
                                                     1999           1998

INCOME:
   Rent                                         $   109,399    $   118,556
   Investment Income                                  4,034          4,671
                                                 -----------    -----------
        Total Income                                113,433        123,227
                                                 -----------    -----------

EXPENSES:
   Partnership Administration - Affiliates           26,225         27,840
   Partnership Administration and Property
      Management - Unrelated Parties                  9,184         10,108
   Depreciation                                      17,276         17,988
                                                 -----------    -----------
        Total Expenses                               52,685         55,936
                                                 -----------    -----------

NET INCOME                                      $    60,748    $    67,291
                                                 ===========    ===========

NET INCOME ALLOCATED:
   General Partners                             $       607    $       673
   Limited Partners                                  60,141         66,618
                                                 -----------    -----------
                                                $    60,748    $    67,291
                                                 ===========    ===========

NET INCOME PER LIMITED PARTNERSHIP UNIT
 (6,638 and 6,711 weighted average Units
 outstanding in 1999 and 1998, respectively)    $      9.06    $      9.93
                                                 ===========    ===========



 The accompanying Notes to Financial Statements are an integral
                     part of this statement.
</PAGE>
<PAGE>
                                
          AEI REAL ESTATE FUND 85-B LIMITED PARTNERSHIP
                                
                     STATEMENT OF CASH FLOWS
                                
                 FOR THE PERIODS ENDED MARCH 31
                                
                           (Unaudited)
                                
 
                                                        1999         1998

CASH FLOWS FROM OPERATING ACTIVITIES:
   Net  Income                                     $    60,748   $    67,291

   Adjustments to Reconcile Net Income to Net Cash
   Provided by Operating Activities:
     Depreciation                                       17,276        17,988
     Decrease in Receivables                            14,607        22,744
     Increase in Payable to
        AEI Fund Management, Inc.                        9,912         4,375
     Increase in Unearned Rent                           5,270         4,343
                                                    -----------   -----------
        Total Adjustments                               47,065        49,450
                                                    -----------   -----------
        Net Cash Provided By
        Operating Activities                           107,813       116,741
                                                    -----------   -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Increase in Distributions Payable                    25,524             0
   Distributions to Partners                          (100,680)      (75,151)
                                                    -----------   -----------
        Net Cash Used For
            Financing Activities                       (75,156)      (75,151)
                                                    -----------   -----------

NET INCREASE IN CASH AND CASH EQUIVALENTS               32,657        41,590

CASH AND CASH EQUIVALENTS, beginning of period         371,557       333,257
                                                    -----------   -----------
CASH AND CASH EQUIVALENTS, end of period           $   404,214   $   374,847
                                                    ===========   ===========


 The accompanying Notes to Financial Statements are an integral
                     part of this statement.
</PAGE>
<PAGE>
                                
          AEI REAL ESTATE FUND 85-B LIMITED PARTNERSHIP
                                
            STATEMENT OF CHANGES IN PARTNERS' CAPITAL
                                
                 FOR THE PERIODS ENDED MARCH 31
                                
                           (Unaudited)
                                
                                

                                                                     Limited
                                                                   Partnership
                             General      Limited                     Units
                             Partners     Partners      Total      Outstanding


BALANCE, December 31, 1997  $ (36,304)  $ 2,865,559  $ 2,829,255     6,710.96

  Distributions                  (752)      (74,399)     (75,151)

  Net Income                      673        66,618       67,291
                             ---------   -----------  -----------   ----------
BALANCE, March 31, 1998     $ (36,383)  $ 2,857,778  $ 2,821,395     6,710.96
                             =========   ===========  ===========   ==========


BALANCE, December 31, 1998  $ (36,724)  $ 2,823,971  $ 2,787,247     6,637.66

  Distributions                (1,007)      (99,673)    (100,680)

  Net Income                      607        60,141       60,748
                             ---------   -----------  -----------   ----------
BALANCE, March 31, 1999     $ (37,124)  $ 2,784,439  $ 2,747,315     6,637.66
                             =========   ===========  ===========   ==========


 The accompanying Notes to Financial Statements are an integral
                     part of this statement.
</PAGE>
<PAGE>
                                
          AEI REAL ESTATE FUND 85-B LIMITED PARTNERSHIP
                                
                  NOTES TO FINANCIAL STATEMENTS
                                
                         MARCH 31, 1999
                                
                                
                           (Unaudited)
                                

(1)  The  condensed  statements included herein have been  prepared
     by  the Partnership, without audit, pursuant to the rules  and
     regulations  of  the Securities and Exchange  Commission,  and
     reflect   all  adjustments  which  are,  in  the  opinion   of
     management,  necessary to a fair statement of the  results  of
     operations for the interim period, on a basis consistent  with
     the  annual audited statements.  The adjustments made to these
     condensed   statements  consist  only  of   normal   recurring
     adjustments.   Certain information, accounting  policies,  and
     footnote    disclosures   normally   included   in   financial
     statements  prepared  in  accordance with  generally  accepted
     accounting principles have been condensed or omitted  pursuant
     to  such  rules  and  regulations,  although  the  Partnership
     believes  that  the  disclosures  are  adequate  to  make  the
     information  presented not misleading.  It is  suggested  that
     these  condensed financial statements be read  in  conjunction
     with  the  financial statements and the summary of significant
     accounting  policies  and  notes  thereto  included   in   the
     Partnership's latest annual report on Form 10-KSB.
 
(2)  Organization -

     AEI  Real Estate Fund 85-B Limited Partnership (Partnership)
     was  formed  to  acquire and lease commercial properties  to
     operating tenants.  The Partnership's operations are managed
     by  Net  Lease  Management 85-B, Inc.  (NLM),  the  Managing
     General Partner of the Partnership.  Robert P. Johnson,  the
     President  and  sole  shareholder  of  NLM,  serves  as  the
     Individual General Partner of the Partnership.  An affiliate
     of   NLM,   AEI   Fund   Management,  Inc.,   performs   the
     administrative and operating functions for the Partnership.
     
     The   terms   of  the  Partnership  offering  call   for   a
     subscription  price of $1,000 per Limited Partnership  Unit,
     payable   on  acceptance  of  the  offer.   The  Partnership
     commenced  operations  on September 17,  1985  when  minimum
     subscriptions    of   1,300   Limited   Partnership    Units
     ($1,300,000)  were  accepted.   The  Partnership's  offering
     terminated on February 4, 1986 when the maximum subscription
     limit  of  7,500 Limited Partnership Units ($7,500,000)  was
     reached.
     
     Under  the  terms of the Limited Partnership Agreement,  the
     Limited  Partners and General Partners contributed funds  of
     $7,500,000  and $1,000, respectively.  During the  operation
     of the Partnership, any Net Cash Flow, as defined, which the
     General Partners determine to distribute will be distributed
     90% to the Limited Partners and 10% to the General Partners;
     provided,  however, that such distributions to  the  General
     Partners will be subordinated to the Limited Partners  first
     receiving an annual, noncumulative distribution of Net  Cash
     Flow equal to 10% of their Adjusted Capital Contribution, as
     defined,  and, provided further, that in no event  will  the
     General Partners receive less than 1% of such Net Cash  Flow
     per  annum.  Distributions to Limited Partners will be  made
     pro rata by Units.

     
          AEI REAL ESTATE FUND 85-B LIMITED PARTNERSHIP
                                
                  NOTES TO FINANCIAL STATEMENTS
                           (Continued)
                                
(2)  Organization - (Continued)

     Any  Net  Proceeds  of Sale, as defined, from  the  sale  or
     financing of the Partnership's properties which the  General
     Partners determine to distribute will, after provisions  for
     debts  and  reserves, be paid in the following  manner:  (i)
     first,  99%  to the Limited Partners and 1% to  the  General
     Partners until the Limited Partners receive an amount  equal
     to:  (a)  their Adjusted Capital Contribution  plus  (b)  an
     amount  equal  to 6% of their Adjusted Capital  Contribution
     per  annum, cumulative but not compounded, to the extent not
     previously distributed from Net Cash Flow; (ii) next, 99% to
     the  Limited  Partners and 1% to the General Partners  until
     the Limited Partners receive an amount equal to 14% of their
     Adjusted Capital Contribution per annum, cumulative but  not
     compounded, to the extent not previously distributed;  (iii)
     next, to the General Partners until cumulative distributions
     to the General Partners under Items (ii) and (iii) equal 15%
     of cumulative distributions to all Partners under Items (ii)
     and (iii).  Any remaining balance will be distributed 85% to
     the  Limited  Partners  and  15% to  the  General  Partners.
     Distributions to the Limited Partners will be made pro  rata
     by Units.
     
     For  tax  purposes,  profits  from  operations,  other  than
     profits  attributable  to  the  sale,  exchange,  financing,
     refinancing   or  other  disposition  of  the  Partnership's
     property,  will  be  allocated first in the  same  ratio  in
     which,  and  to the extent, Net Cash Flow is distributed  to
     the Partners for such year.  Any additional profits will  be
     allocated 90% to the Limited Partners and 10% to the General
     Partners.   In the event no Net Cash Flow is distributed  to
     the  Limited  Partners,  90% of  each  item  of  Partnership
     income,  gain  or credit for each respective year  shall  be
     allocated to the Limited Partners, and 10% of each such item
     shall be allocated to the General Partners.  Net losses from
     operations will be allocated 98% to the Limited Partners and
     2% to the General Partners.
     
     For  tax purposes, profits arising from the sale, financing,
     or  other disposition of the Partnership's property will  be
     allocated  in  accordance with the Partnership Agreement  as
     follows:  (i) first, to those Partners with deficit balances
     in  their capital accounts in an amount equal to the sum  of
     such  deficit  balances; (ii) second,  99%  to  the  Limited
     Partners  and 1% to the General Partners until the aggregate
     balance in the Limited Partners' capital accounts equals the
     sum  of the Limited Partners' Adjusted Capital Contributions
     plus  an  amount  equal  to 14% of  their  Adjusted  Capital
     Contributions  per annum, cumulative but not compounded,  to
     the  extent  not previously allocated; (iii) third,  to  the
     General Partners until cumulative allocations to the General
     Partners equal 15% of cumulative allocations.  Any remaining
     balance  will  be allocated 85% to the Limited Partners  and
     15%  to the General Partners.  Losses will be allocated  98%
     to the Limited Partners and 2% to the General Partners.
     
     The  General Partners are not required to currently  fund  a
     deficit capital balance. Upon liquidation of the Partnership
     or  withdrawal  by  a General Partner, the General  Partners
     will  contribute to the Partnership an amount equal  to  the
     lesser of the deficit balances in their capital accounts  or
     1%  of total Limited Partners' and General Partners' capital
     contributions.
     
          AEI REAL ESTATE FUND 85-B LIMITED PARTNERSHIP
                                
                  NOTES TO FINANCIAL STATEMENTS
                           (Continued)
                                
(3)  Investments in Real Estate -

     The Fair Muffler property, located in Park Forest, Illinois,
     is  a  one-story  brick  building with  approximately  2,450
     square feet on a 19,388 square foot parcel of land.  It  was
     acquired  in August, 1986 subject to a long-term triple  net
     Lease  for  20  years.   In  1989,  the  lessee  filed   for
     bankruptcy and the Partnership re-leased the property  to  a
     Fair  Muffler franchisee who had been operating the property
     as  a  sublessee.  The franchisee continued to  operate  the
     property  until December, 1996.  In January,  1997,  it  was
     leased on a month-to-month basis to a car care operator  for
     $2,600 per month.
     
     In  1996,  in  anticipation  of selling  the  property,  the
     Partnership  conducted an environmental  soil  contamination
     investigation  of the property.  The investigation  revealed
     contamination  of approximately 2,750 cubic yards  exceeding
     Tier  1  soil migration to Class II groundwater, which  will
     need   to   be  remediated.   The  contamination  has   been
     identified as petroleum constituents and is believed to have
     been  caused by underground storage tanks in place when  the
     property  was operated as a gasoline station, prior  to  the
     Partnership's ownership.
     
     An  estimate  for  site  remediation  work,  which  includes
     contaminated  soil  removal, tank  removal,  soil  sampling,
     backfilling and reporting, of $211,000 was received from  an
     environmental engineering firm.  The Partnership has engaged
     legal  counsel  to  investigate what sources,  if  any,  are
     available  for  indemnification of these reclamation  costs.
     In  the  third  quarter of 1996, the Partnership  accrued  a
     current liability of $211,000 to remediate the site.  It has
     not been determined when the reclamation work will begin  or
     how  long  it  will  take  to complete.   It  is  reasonably
     possible that the actual costs could materially differ  from
     the estimate.
     
     Since  1995, the Partnership has not paid real estate  taxes
     on  the Park Forest property while  the tax valuation of the
     property   was  unsuccessfully  appealed.   In   1997,   the
     outstanding  tax  liability  of approximately  $128,958  was
     purchased  by  an  unrelated third  party.   Since  the  tax
     liability  exceeded the fair market value of  the  property,
     the  Partnership did not redeem the tax sale.   Accordingly,
     an   additional  real  estate  impairment  of  $117,823  was
     recognized  in the third quarter of 1997 to write  down  the
     carrying  value of the property to zero.  The  purchaser  of
     the tax liability has not petitioned for issuance of the tax
     deed.
     
     On  August  5,  1998, the Partnership sold the Fair  Muffler
     property  to  the  current  tenant  for  $5,000.   The  sale
     resulted  in  a  net  gain  of  $704.   The  Partnership  is
     reviewing   its   legal  obligation  for  the  contamination
     reclamation  liability  and  may  have  adjustments  to  the
     accrued liability in future periods.
     
     On  January 21, 1998, the Cheddar's restaurant was destroyed
     by  fire.  The lessee rebuilt the restaurant and reopened on
     November  16,  1998.   The  lessee  had  adequate  insurance
     coverage  to  cover the cost of rebuilding  and  the  rental
     payments in the interim.


          AEI REAL ESTATE FUND 85-B LIMITED PARTNERSHIP
                                
                  NOTES TO FINANCIAL STATEMENTS
                           (Continued)
                                
(4)  Payable to AEI Fund Management -

     AEI  Fund  Management, Inc. performs the administrative  and
     operating functions for the Partnership.  The payable to AEI
     Fund   Management  represents  the  balance  due  for  those
     services.    This  balance  is  non-interest   bearing   and
     unsecured  and  is  to  be  paid in  the  normal  course  of
     business.
     
     
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS

Results of Operations

        For  the three months ended March 31, 1999 and 1998,  the
Partnership  recognized rental income of $109,399  and  $118,556,
respectively.   During the same periods, the  Partnership  earned
investment income of $4,034 and $4,671, respectively.   In  1999,
rental  income decreased mainly as a result of the  sale  of  the
Fair Muffler property.

       During the three months ended March 31, 1999 and 1998, the
Partnership   paid   Partnership   administration   expenses   to
affiliated  parties of $26,225 and $27,840, respectively.   These
administration  expenses  include  costs  associated   with   the
management of the properties, processing distributions, reporting
requirements and correspondence to the Limited Partners.   During
the   same   periods,   the  Partnership   incurred   Partnership
administration  and property management expenses  from  unrelated
parties  of  $9,184  and $10,108, respectively.   These  expenses
represent  direct payments to third parties for legal and  filing
fees,  direct administrative costs, outside audit and  accounting
costs, taxes, insurance and other property costs.

        The  Fair  Muffler  property,  located  in  Park  Forest,
Illinois,  is  a one-story brick building of approximately  2,450
square  feet  on  a 19,388 square foot parcel of  land.   It  was
acquired in August, 1986 subject to a long-term triple net  Lease
for  20 years.  In 1989, the lessee filed for bankruptcy and  the
Partnership  re-leased the property to a Fair Muffler  franchisee
who  had  been  operating  the property  as  a  sublessee.   That
franchisee  continued  to  operate the property  until  December,
1996.   In January, 1997, it was leased on a month-to-month basis
to a car care operator for $2,600 per month.

        In  1996,  in  anticipation of selling the property,  the
Partnership   conducted  an  environmental   soil   contamination
investigation  of  the  property.   The  investigation   revealed
contamination of approximately 2,750 cubic yards exceeding Tier 1
soil  migration to Class II groundwater, which will  need  to  be
remediated.   The contamination has been identified as  petroleum
constituents  and is believed to have been caused by  underground
storage  tanks  in  place when the property  was  operated  as  a
gasoline station, prior to the Partnership's ownership.

        An  estimate  for site remediation work,  which  includes
contaminated   soil   removal,  tank  removal,   soil   sampling,
backfilling  and  reporting, of $211,000  was  received  from  an
environmental  engineering  firm.  The  Partnership  has  engaged
legal  counsel to investigate what sources, if any, are available
for  indemnification of these reclamation costs.   In  the  third
quarter  of 1996, the Partnership accrued a current liability  of
$211,000 to remediate the site.  It has not been determined  when
the  reclamation  work will begin or how long  it  will  take  to
complete.  It is reasonably possible that the actual costs  could
materially differ from the estimate.


ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS.  (Continued)

       Since 1995, the Partnership has not paid real estate taxes
on  the  Park  Forest property while  the tax  valuation  of  the
property  was unsuccessfully appealed.  In 1997, the  outstanding
tax  liability  of  approximately $128,958 was  purchased  by  an
unrelated third party.  Since the tax liability exceeded the fair
market value of the property, the Partnership did not redeem  the
tax  sale.  Accordingly, an additional real estate impairment  of
$117,823  was  recognized in the third quarter of 1997  to  write
down  the  carrying value of the property to zero.  The purchaser
of  the tax liability has not petitioned for issuance of the  tax
deed.

        On  August 5, 1998, the Partnership sold the Fair Muffler
property to the current tenant for $5,000.  The sale resulted  in
a  net  gain  of  $704.  The Partnership is reviewing  its  legal
obligation  for the contamination reclamation liability  and  may
have adjustments to the accrued liability in future periods.

         On  January  21,  1998,  the  Cheddar's  restaurant  was
destroyed  by  fire.   The  Lessee  rebuilt  the  restaurant  and
reopened on November 16, 1998.  The lessee had adequate insurance
coverage  to cover the cost of rebuilding and the rental payments
in the interim.

        As  of March 31, 1999, the Partnership's annualized  cash
distribution  rate  was  5.0%,  based  on  the  Adjusted  Capital
Contribution.   Distributions of Net Cash  Flow  to  the  General
Partners were subordinated to the Limited Partners as required in
the Partnership Agreement.  As a result, 99% of distributions and
income  were allocated to Limited Partners and 1% to the  General
Partners.

        Inflation  has  had  a  minimal  effect  on  income  from
operations.   It is expected that increases in sales  volumes  of
the  tenants, due to inflation and real sales growth, will result
in  an  increase  in rental income over the term of  the  leases.
Inflation  also  may  cause  the  Partnership's  real  estate  to
appreciate in value.  However, inflation and changing prices  may
also  have  an  adverse impact on the operating  margins  of  the
properties' tenants which could impair their ability to pay  rent
and subsequently reduce the Partnership's Net Cash Flow available
for distributions.

       The Year 2000 issue is the result of computer systems that
use  two  digits rather than four to define the applicable  year,
which  may prevent such systems from accurately processing  dates
ending  in  the  Year  2000 and beyond.   This  could  result  in
computer  system failures or disruption of operations, including,
but not limited to, an inability to process transactions, to send
or  receive  electronic data, or to engage  in  routine  business
activities.

        AEI  Fund  Management, Inc. (AEI) performs all management
services  for  the  Partnership.   In  1998,  AEI  completed   an
assessment of its computer hardware and software systems and  has
replaced or upgraded certain computer hardware and software using
the  assistance  of  outside vendors.  AEI has  received  written
assurance  from  the equipment and software manufacturers  as  to
Year  2000  compliance.   The  costs associated  with  Year  2000
compliance have not been, and are not expected to be, material.

        The  Partnership intends to monitor and communicate  with
tenants regarding Year 2000 compliance, although there can be  no
assurance  that the systems of the various tenants will  be  Year
2000 compliant.


ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS.  (Continued)

Liquidity and Capital Resources

        During  the  three  months  ended  March  31,  1999,  the
Partnership's cash balances increased $32,657 as the  Partnership
distributed  less  cash to the Partners than  it  generated  from
operating  activities.  Net cash provided by operating activities
decreased from $116,741 in 1998 to $107,813 in 1999 mainly  as  a
result of a decrease in total income in 1999.

       The Partnership's primary use of cash flow is distribution
and  redemption  payments to Partners.  The Partnership  declares
its  regular  quarterly  distributions before  the  end  of  each
quarter and pays the distribution in the first week after the end
of  each quarter.  The Partnership attempts to maintain a  stable
distribution rate from quarter to quarter.  However,  in  certain
quarters,   the   Partnership   will   increase   the   quarterly
distribution to pay out contingent rent received as a  result  of
an  increase  in  sales at a property.  The distribution  of  the
contingent  rent  can  cause  the  total  distributions  and  the
distribution payable to fluctuate from year to year.   Redemption
payments are paid to redeeming Partners in the fourth quarter  of
each year.

       In March, 1999, the Partnership distributed $8,656 of sale
proceeds  to  the Limited and General Partners as part  of  their
regular  quarterly distribution, which represented  a  return  of
capital of $1.29 per Limited Partnership Unit.

        The  Partnership may acquire Units from Limited  Partners
who  have tendered their Units to the Partnership. Such Units may
be  acquired at a discount.  The Partnership is not obligated  to
purchase  in  any  year  more than 5%  of  the  number  of  Units
originally sold.  In no event shall the Partnership be  obligated
to  purchase  Units if, in the sole discretion  of  the  Managing
General  Partner,  such  purchase would  impair  the  capital  or
operation of the Partnership.

        During  1998, seven Limited Partners redeemed a total  of
73.30   Partnership  Units  for  $33,738  accordance   with   the
Partnership  Agreement.   The Partnership  acquired  these  Units
using Net Cash Flow from operations.  In prior years, a total  of
seventy-seven Limited Partners redeemed 788.84 Partnership  Units
for  $606,521.   The  redemptions increase the remaining  Limited
Partners' ownership interest in the Partnership.

       The continuing rent payments from the properties, together
with  the Partnership's cash reserve, should be adequate to  fund
continuing  distributions and meet other Partnership obligations,
including  those  obligations  associated  with  remediation   of
contaminated  soil at the Fair Muffler property located  in  Park
Forest, Illinois, on both a short-term and long-term basis.

                                
                   PART II - OTHER INFORMATION
                                
ITEM 1.LEGAL PROCEEDINGS

       There  are no material pending legal proceedings to  which
  the  Partnership  is  a  party or of  which  the  Partnership's
  property is subject.

ITEM 2.CHANGES IN SECURITIES

      None.

ITEM 3.DEFAULTS UPON SENIOR SECURITIES

      None.
                                
                   PART II - OTHER INFORMATION
                           (Continued)

ITEM 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

      None.

ITEM 5.OTHER INFORMATION

      None.

ITEM 6.EXHIBITS AND REPORTS ON FORM 8-K

       a. Exhibits -
                          Description

          27    Financial Data Schedule  for  period
                ended March 31, 1999.

       b. Reports filed on Form 8-K - None.


                           SIGNATURES
                                
        In  accordance with the requirements of the Exchange Act,
the  Registrant has caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.


Dated:  May 7, 1999           AEI Real Estate Fund 85-B
                              Limited Partnership
                              By:  Net Lease Management  85-B, Inc.
                              Its: Managing General Partner



                              By: /s/ Robert P. Johnson
                                      Robert P. Johnson
                                      President
                                      (Principal Executive Officer)



                              By: /s/ Mark E. Larson
                                      Mark E. Larson
                                      Chief Financial Officer
                                      (Principal Accounting Officer)