UNITED STATES
               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, 2003

                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


                                                     Page

PART I.   FINANCIAL INFORMATION

    Item 1.  Balance Sheet as of March 31, 2003
             and December 31, 2002                    3

             Statements for the Periods ended
             March 31, 2003 and 2002:

               Income                                 4

               Cash Flows                             5

               Changes in Partners' Capital           6

             Notes to Financial Statements           7-10

    Item 2.  Management's Discussion and Analysis   10-14

    Item 3.  Controls and Procedures                  14

PART II.  OTHER INFORMATION

    Item 1.  Legal Proceedings                        14

    Item 2.  Changes in Securities                    14

    Item 3.  Defaults Upon Senior Securities          14

    Item 4.  Submission of Matters to a
             Vote of Security Holders                 14

    Item 5.  Other Information                        15

    Item 6.  Exhibits and Reports on Form 8-K         15

               Signatures                             15

               Certifications                        16-17

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

                          BALANCE SHEET

              MARCH 31, 2003 AND DECEMBER 31, 2002

                           (Unaudited)

                             ASSETS

                                             2003       2002

CURRENT ASSETS:
  Cash and Cash Equivalents               $1,866,212 $1,132,725
  Receivables                                      0     14,117
                                            --------   --------
      Total Current Assets                 1,866,212  1,146,842
                                            --------   --------
INVESTMENTS IN REAL ESTATE:
  Land                                       324,940    836,367
  Buildings and Equipment                  1,018,599  1,987,725
  Accumulated Depreciation                  (654,612)(1,293,593)
                                            --------   --------
      Net Investments in Real Estate         688,927  1,530,499
                                            --------   --------
          Total Assets                    $2,555,139 $2,677,341
                                           =========  =========


                LIABILITIES AND PARTNERS' CAPITAL

CURRENT LIABILITIES:
  Payable to AEI Fund Management, Inc.    $   11,405  $   4,989
  Land Remediation Estimate                  211,000    211,000
  Distributions Payable                    1,272,656    878,036
  Unearned Rent                                3,334          0
                                            --------   --------
      Total Current Liabilities            1,498,395  1,094,025
                                            --------   --------
PARTNERS' CAPITAL:
  General Partners                                 0          0
  Limited Partners, $1,000 Unit value;
     7,500 Units authorized and issued;
     6,423 Units outstanding               1,056,744  1,583,316
                                            --------   --------
      Total Partners' Capital              1,056,744  1,583,316
                                            --------   --------
           Total Liabilities
           and Partners' Capital          $2,555,139 $2,677,341
                                           =========  =========

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)


                                             2003       2002

INCOME:
   Rent                                   $  69,627  $  97,366
   Investment Income                          2,281      1,257
                                          ---------  ---------
        Total Income                         71,908     98,623
                                          ---------  ---------

EXPENSES:
   Partnership Administration - Affiliates   15,614     29,366
   Partnership Administration and Property
      Management - Unrelated Parties          4,657     23,700
   Depreciation                              10,443     14,082
                                          ---------  ---------
        Total Expenses                       30,714     67,148
                                          ---------  ---------

OPERATING INCOME                             41,194     31,475
GAIN  ON  SALE OF REAL ESTATE               709,287          0
                                          ---------  ---------
NET INCOME                                $ 750,481  $  31,475
                                          =========  =========

NET INCOME ALLOCATED:
   General Partners                       $  12,771  $   4,315
   Limited Partners                         737,710     27,160
                                          ---------  ---------
                                          $ 750,481  $  31,475
                                          =========  =========

NET INCOME PER LIMITED PARTNERSHIP UNIT
  (6,423 and 6,425 weighted average
  Units outstanding in 2003 and 2002,
  respectively)                          $   114.85  $    4.23
                                          =========  =========

 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)


                                             2003       2002

CASH FLOWS FROM OPERATING ACTIVITIES:
   Net Income                           $  750,481    $ 31,475

   Adjustments to Reconcile Net Income to Net Cash
   Provided by Operating Activities:
     Depreciation                            10,443     14,082
     Gain on Sale of Real Estate           (709,287)         0
     Decrease in Receivables                 14,117         42
     Increase (Decrease) in Payable to
        AEI Fund Management, Inc.             6,416    (19,499)
     Increase in Unearned Rent                3,334          0
                                           --------   --------
        Total Adjustments                  (674,977)    (5,375)
                                           --------   --------
        Net Cash Provided By
            Operating Activities             75,504     26,100
                                           --------   --------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Proceeds  from Sale of Real Estate       1,540,416           0
                                             --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Increase in Distributions Payable        394,620          0
   Distributions to Partners             (1,277,053)   (75,038)
                                           --------   --------
        Net Cash Used For
            Financing Activities           (882,433)   (75,038)
                                           --------   --------
NET INCREASE (DECREASE) IN CASH
   AND CASH EQUIVALENTS                     733,487    (48,938)

CASH AND CASH EQUIVALENTS,
beginning of period                       1,132,725    394,793
                                           --------   --------
CASH AND CASH EQUIVALENTS, end of period $1,866,212 $  345,855
                                          =========  =========



 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, 2001  $(16,444) $2,432,031  $2,415,587   6,425.16

  Distributions                 (751)    (74,287)    (75,038)

  Net Income                   4,315      27,160      31,475
                            --------   ---------    --------   --------
BALANCE, March 31, 2002     $(12,880) $2,384,904  $2,372,024   6,425.16
                            ========   =========   =========   ========


BALANCE, December 31, 2002  $      0  $1,583,316  $1,583,316   6,422.96

  Distributions              (12,771) (1,264,282) (1,277,053)

  Net Income                  12,771     737,710     750,481
                            --------   ---------    --------   --------
BALANCE, March 31, 2003     $      0  $1,056,744  $1,056,744   6,422.96
                            ========   =========   =========   ========





 The accompanying Notes to Financial Statements are an integral
                     part of this statement.
</PAGE>
          AEI REAL ESTATE FUND 85-B LIMITED PARTNERSHIP

                  NOTES TO FINANCIAL STATEMENTS

                         MARCH 31, 2003

                           (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.  Robert P. Johnson, the President and  sole
     shareholder of NLM, serves as the Individual General Partner
     and  an  affiliate of NLM, AEI Fund Management, Inc.  (AEI),
     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  offering  terminated  on
     February  4,  1986  when the maximum subscription  limit  of
     7,500  Limited  Partnership Units 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 operations, 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 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  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 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 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 -

     In  1996,  in  anticipation of selling a  property  in  Park
     Forest, Illinois, 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.  In  October
     1996,  an estimate for site remediation work, which included
     soil  removal, tank removal, soil sampling, backfilling  and
     reporting,  of  $211,000 was received from an  environmental
     engineering firm. It is reasonably possible that the  actual
     costs could materially differ from the estimate.  It has not
     been  determined when the reclamation work will  begin,  how
     long  it  will  take to complete or whether  there  are  any
     sources  available  for indemnification of  the  reclamation
     costs.     On  August  5,  1998, the  Partnership  sold  the
     property  to  the tenant.  The Partnership is reviewing  its
     legal  obligation  for  the  site  liability  and  may  have
     adjustments to the accrued liability in future periods.

     In  May 2001, Huntington Restaurants Group, Inc. (HRG),  the
     lessee  of  the  Denny's restaurant  in  Fort  Worth,  Texas
     notified  the Partnership that it was experiencing financial
     problems  and would not make the lease payments  while  they
     worked  out  a  plan  which would enable  them  to  continue
     operations   without  seeking  bankruptcy  protection.    On
     December 31, 2001, the Lease expired and was not renewed  by
     the  lessee. Through December 31, 2001, HRG owed $25,117 for
     past due rent, which was not accrued for financial reporting
     purposes.   In  the fourth quarter of 2001, the  Partnership
     incurred $27,410 of real estate tax expense related to  2001
     taxes  due  on  the  property.  Due to  the  uncertainty  of
     collection, the Partnership expensed these taxes, which  are
     normally  the  responsibility of the  lessee.   In  December
     2002,  in  exchange for a payment of $14,067 from  HRG,  the
     Partnership  agreed to forgive the balance of the  past  due
     rent  and real estate taxes.  While the property was vacant,
     the  Partnership was responsible for real estate  taxes  and
     other costs required to maintain the property.

     In  December 2001, the Partnership received an offer to  buy
     the  restaurant for $625,000 from an unrelated third  party.
     In  the  fourth quarter of 2001, a charge to operations  for
     real estate impairment of $140,337 was recognized, which was
     the  difference between the book value at December 31,  2001
     of $715,337 and the estimated net sale proceeds of $575,000.
     The  charge  was recorded against the cost of the  land  and
     building.   On  November 5, 2002, the sale closed  with  the
     Partnership receiving net sale proceeds of $582,182 for  the
     property, which resulted in a net gain of $7,182.

     In August 2002, the Partnership entered into an Agreement to
     sell  the All Tune and Lube in Merrillville, Indiana  to  an
     unrelated third party.  On October 28, 2002, the sale closed
     with   the  Partnership  receiving  net  sale  proceeds   of
     $238,879, which resulted in a net gain of $59,384.   At  the
     time  of sale, the cost and related accumulated depreciation
     was $304,432 and $124,937, respectively.



          AEI REAL ESTATE FUND 85-B LIMITED PARTNERSHIP

                  NOTES TO FINANCIAL STATEMENTS

                   DECEMBER 31, 2002 AND 2001

(3)  INVESTMENTS IN REAL ESTATE - (Continued)

     On  February  25, 2003, the Partnership sold  the  Cheddar's
     restaurant  to an affiliate of the tenant.  The  Partnership
     received net sale proceeds of $1,540,416, which resulted  in
     a  net gain of $709,287.  At the time of the sale, the  cost
     and  related  accumulated depreciation  was  $1,480,553  and
     $649,424, respectively.

     In  December  2002, the Partnership distributed $808,081  of
     net sale proceeds to the Limited and General Partners, which
     represented  a  return  of capital of  $124.55  per  Limited
     Partnership   Unit.    In   March  2003,   the   Partnership
     distributed  $1,212,121 of net sale proceeds to the  Limited
     and  General Partners, which represented a return of capital
     of  $186.83 per Limited Partnership Unit.  The remaining net
     sale  proceeds  will be distributed to the Partners  in  the
     future.

(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

        The Management's Discussion and Analysis contains various
"forward  looking  statements"  within  the  meaning  of  federal
securities  laws  which  represent management's  expectations  or
beliefs  concerning future events, including statements regarding
anticipated  application of cash, expected  returns  from  rental
income,  growth  in revenue, taxation levels, the sufficiency  of
cash to meet operating expenses, rates of distribution, and other
matters.  These, and other forward looking statements made by the
Partnership,  must be evaluated in the context  of  a  number  of
factors that may affect the Partnership's financial condition and
results of operations, including the following:

       - Market  and  economic conditions which affect the  value
          of  the  properties the Partnership owns and  the  cash
          from rental income such properties generate;

       - the  federal  income tax consequences of rental  income,
          deductions,  gain  on  sales and other  items  and  the
          affects of these consequences for the Partners;

       - resolution  by  the General Partners of  conflicts  with
          which they may be confronted;

       - the   success  of  the  General  Partners  of   locating
          properties with favorable risk return characteristics;

       - the effect of tenant defaults; and

       - the condition of the industries in which the tenants of
          properties owned by the Partnership operate.

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

The Application of Critical Accounting Policies

        The preparation of the Partnership's financial statements
requires  management to make estimates and assumptions  that  may
affect the reported amounts of assets, liabilities, revenues  and
expenses,  and  related  disclosure  of  contingent  assets   and
liabilities. Management evaluates these estimates on  an  ongoing
basis,  including  those related to the carrying  value  of  real
estate  and  the  allocation  by AEI  Fund  Management,  Inc.  of
expenses  to  the  Partnership as opposed  to  other  funds  they
manage.

        The Partnership purchases properties and records them  in
the  financial  statements  at the lower  of  cost  or  estimated
realizable   value.   The  Partnership  initially   records   the
properties  at cost (including capitalized acquisition expenses).
The Partnership is required to periodically evaluate the carrying
value  of properties to determine whether their realizable  value
has  declined.   For  properties the Partnership  will  hold  and
operate, management determines whether impairment has occurred by
comparing the property's probability-weighted cash flows  to  its
current carrying value.  For properties held for sale, management
determines  whether  impairment has  occurred  by  comparing  the
property's estimated fair value less cost to sell to its  current
carrying  value.   If  the carrying value  is  greater  than  the
realizable  value, an impairment loss is recorded to  reduce  the
carrying value of the property to its realizable value.  A change
in  these assumptions or analysis could cause material changes in
the carrying value of the properties.

        The  Partnership accrues a liability for land remediation
costs  when  information obtained by the Partnership, through  an
environmental  study, indicates it is possible that  a  liability
has  been  incurred  and  the amount  of  the  liability  can  be
reasonably   estimated.   Future  environmental  study   results,
changes  in the party responsible for the liability, or estimates
of  actual  clean-up costs could cause material  changes  in  the
liability accrued.

       AEI Fund Management Inc. allocates expenses to each of the
funds  they manage primarily on the basis of the number of  hours
devoted  by  their employees to each fund's affairs.   They  also
allocate  some  expenses at the end of each month  that  are  not
directly related to a fund's operations based upon the number  of
investors  in the fund and the fund's capitalization relative  to
other  funds  they  manage.   The  Partnership  reimburses  these
expenses  subject  to  detailed  limitations  contained  in   the
Partnership Agreement.

         Management   of  the  Partnership  has   discussed   the
development  and selection of the above accounting estimates  and
the management discussion and analysis disclosures regarding them
with the managing partner of the Partnership.

Results of Operations

        For  the three months ended March 31, 2003 and 2002,  the
Partnership  recognized  rental income of  $69,627  and  $97,366,
respectively.   During the same periods, the  Partnership  earned
investment income of $2,281 and $1,257, respectively.   In  2003,
rental income decreased due to property sales.

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

       In May 2001, Huntington Restaurants Group, Inc. (HRG), the
lessee  of  the Denny's restaurant in Fort Worth, Texas  notified
the  Partnership that it was experiencing financial problems  and
would  not make the lease payments while they worked out  a  plan
which  would  enable them to continue operations without  seeking
bankruptcy  protection.  On December 31, 2001, the Lease  expired
and was not renewed by the lessee. Through December 31, 2001, HRG
owed  $25,117  for  past  due rent, which  was  not  accrued  for
financial reporting purposes.  In the fourth quarter of 2001, the
Partnership  incurred $27,410 of real estate tax expense  related
to  2001  taxes  due on the property.  Due to the uncertainty  of
collection,  the  Partnership expensed  these  taxes,  which  are
normally the responsibility of the lessee.  In December 2002,  in
exchange  for  a  payment of $14,067 from  HRG,  the  Partnership
agreed  to  forgive  the balance of the past due  rent  and  real
estate taxes.  While the property was vacant, the Partnership was
responsible  for  real estate taxes and other costs  required  to
maintain the property.

       In December 2001, the Partnership received an offer to buy
the  restaurant for $625,000 from an unrelated third  party.   In
the  fourth  quarter  of 2001, a charge to  operations  for  real
estate  impairment  of  $140,337 was recognized,  which  was  the
difference  between  the  book value  at  December  31,  2001  of
$715,337  and  the estimated net sale proceeds of $575,000.   The
charge  was  recorded against the cost of the land and  building.
At  December  31, 2001, the land and building were classified  as
Real  Estate Held for Sale.  On November 5, 2002, the sale closed
with the Partnership receiving net sale proceeds of $582,182  for
the property, which resulted in a net gain of $7,182.

       During the three months ended March 31, 2003 and 2002, the
Partnership   paid   Partnership   administration   expenses   to
affiliated  parties of $15,614 and $29,366, 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  $4,657  and $23,700, 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 decrease in
these  expenses  in 2003, when compared to 2002,  is  mainly  the
result  of  expenses  incurred in 2002  related  to  the  Denny's
restaurant.

        In  1996, in anticipation of selling a property  in  Park
Forest, Illinois, 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.   In  October 1996, an estimate for  site  remediation
work,  which included soil removal, tank removal, soil  sampling,
backfilling  and  reporting, of $211,000  was  received  from  an
environmental  engineering firm.  It is reasonably possible  that
the  actual costs could materially differ from the estimate.   It
has not been determined when the reclamation work will begin, how
long  it  will take to complete or whether there are any  sources
available  for  indemnification of  the  reclamation  costs.   On
August  5, 1998, the Partnership sold the property to the tenant.
The  Partnership is reviewing its legal obligation for  the  site
liability  and may have adjustments to the accrued  liability  in
future periods.

        As  of March 31, 2003, 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
were  allocated  to  Limited  Partners  and  1%  to  the  General
Partners.

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

        Inflation  has  had  a  minimal  effect  on  income  from
operations.   Leases  may contain rent increases,  based  on  the
increase  in  the  Consumer Price Index over a specified  period,
which  will result in an increase in rental income over the  term
of  the  leases.   In addition, leases may contain  rent  clauses
which  entitle  the  Partnership to receive  additional  rent  in
future  years  if gross receipts for the property exceed  certain
specified  amounts.  Increases in sales volumes of  the  tenants,
due to inflation and real sales growth, may result in an increase
in rental income over the term of the leases.  Inflation also may
cause the real estate to appreciate in value.  However, inflation
and  changing prices may have an adverse impact on the  operating
margins  of  the  properties' tenants, which could  impair  their
ability  to  pay rent and subsequently reduce the Net  Cash  Flow
available for distributions.

Liquidity and Capital Resources

        During  the  three  months  ended  March  31,  2003,  the
Partnership's  cash balances increased $733,487 as  a  result  of
cash  generated  from the sale of property, which  was  partially
offset  by  cash distributions of net sale proceeds paid  to  the
Partners.   Net  cash provided by operating activities  increased
from $26,100 in 2002 to $75,504 in 2003 as a result of a decrease
in  Partnership  administration expenses in 2003 and  net  timing
differences  in the collection of payments from the  lessees  and
the  payment  of  expenses,  which were  partially  offset  by  a
decrease in income in 2003.

        In August 2002, the Partnership entered into an Agreement
to  sell  the  All Tune and Lube in Merrillville, Indiana  to  an
unrelated third party.  On October 28, 2002, the sale closed with
the  Partnership  receiving net sale proceeds of $238,879,  which
resulted in a net gain of $59,384.  At the time of sale, the cost
and  related accumulated depreciation was $304,432 and  $124,937,
respectively.

        On  February 25, 2003, the Partnership sold the Cheddar's
restaurant  to  an  affiliate  of the  tenant.   The  Partnership
received net sale proceeds of $1,540,416, which resulted in a net
gain  of $709,287.  At the time of the sale, the cost and related
accumulated    depreciation   was   $1,480,553   and    $649,424,
respectively.

       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.  Redemption  payments
are  paid  to  redeeming Partners in the fourth quarter  of  each
year.

        In December 2002, the Partnership distributed $808,081 of
net  sale  proceeds  to the Limited and General  Partners,  which
represented   a  return  of  capital  of  $124.55   per   Limited
Partnership  Unit.  In March of 2003, the Partnership distributed
$1,212,121  of  net  sale  proceeds to the  Limited  and  General
Partners,  which represented a return of capital of  $186.83  per
Limited  Partnership Unit.  The remaining net sale proceeds  will
be distributed to the Partners in the future.

        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.



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

        During 2002, one Limited Partner redeemed 2.2 Partnership
Units for $805 in accordance with the Partnership Agreement.  The
Partnership  acquired  these  Units  using  Net  Cash  Flow  from
operations.   In  prior  years, a total of 103  Limited  Partners
redeemed   1,074.84   Partnership  Units   for   $727,895.    The
redemptions  increase the remaining Limited  Partners'  ownership
interest in the Partnership.

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

ITEM 3.         CONTROLS AND PROCEDURES.

       (a) Evaluation of disclosure controls and procedures

        Under  the  supervision  and with  the  participation  of
management, including its President and Chief Financial  Officer,
the  Managing  General Partner of the Partnership  evaluated  the
effectiveness  of  the  design and operation  of  its  disclosure
controls and procedures (as defined in Rule [13a-14(c)/15d-14(c)]
under  the Exchange Act) related to the Partnership as of a  date
(the  "Evaluation Date") within 90 days prior to the filing  date
of  this  report.  Based upon that evaluation, the President  and
Chief Financial Officer of the Managing General Partner concluded
that,  as  of  the Evaluation Date, the disclosure  controls  and
procedures are effective in timely alerting them to the  material
information  relating to the Partnership required to be  included
in periodic SEC filings.

       (b)  Changes in internal controls

         There   were   no  significant  changes  made   in   the
Partnership's internal controls during the period covered by this
report or, to the Managing General Partner's knowledge, in  other
factors that could significantly affect these controls subsequent
to the date of their evaluation.


                   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.

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

      None.
                   PART II - OTHER INFORMATION
                          (Continued)

ITEM 5. OTHER INFORMATION

      None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

      a. Exhibits -
                           Description

99.1 Certification of Chief Executive Officer of General Partner
     pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

99.2 Certification of Chief Financial Officer of General Partner
     pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


      b. Reports on Form 8-K - During the  quarter ended March 31,
                           2003, the Partnership filed a Form 8-K,
                           dated  February   28, 2003,   reporting
                           the  sale  of  a  Cheddar's  restaurant
                           in Fort Wayne, IN.


                           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 12, 2003          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/ Patrick W. Keene
                                 Patrick W. Keene
                                 Chief Financial Officer
                                 (Principal Accounting Officer)


                         CERTIFICATIONS

I, Robert P. Johnson, certify that:

1.  I  have reviewed this quarterly report on Form 10-QSB of  AEI
Real Estate Fund 85-B Limited Partnership;

2.  Based on my knowledge, this quarterly report does not contain
any  untrue  statement of a material fact  or  omit  to  state  a
material fact necessary to make the statements made, in light  of
the  circumstances  under which such statements  were  made,  not
misleading  with respect to the period covered by this  quarterly
report;

3.  Based  on my knowledge; the financial statements,  and  other
financial  information included in this quarterly report,  fairly
present in all material respects the financial condition, results
of  operations and cash flows of the registrant as of,  and  for,
the periods presented in this quarterly report;

4.   The  registrant's  other  certifying  officers  and  I   are
responsible for establishing and maintaining disclosure  controls
and  procedures (as defined in Exchange Act Rules 13a-14 and 15d-
14) for the registrant and have;

       a)   designed  such disclosure controls and procedures  to
ensure  that  material information relating  to  the  registrant,
including its consolidated subsidiaries, is made known to  us  by
others  within those entities, particularly during the period  in
which this quarterly report is being prepared;

        b)   evaluated  the  effectiveness  of  the  registrant's
disclosure  controls and procedures as of a date within  90  days
prior   to  the  filing  date  of  this  quarterly  report   (the
"Evaluation Date"); and

       c)   presented  in this quarterly report  our  conclusions
about the effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date;

5.   The  registrant's  other  certifying  officers  and  I  have
disclosed,   based  on  our  most  recent  evaluation,   to   the
registrant's  auditors  and the audit committee  of  registrant's
board   of   directors  (or  persons  performing  the  equivalent
functions):

      a)  all significant deficiencies in the design or operation
of   internal   controls   which  could  adversely   affect   the
registrant's  ability  to record, process, summarize  and  report
financial data and have identified for the registrant's  auditors
any material weaknesses in internal controls; and

       b)   any  fraud,  whether or not material,  that  involves
management or other employees who have a significant role in  the
registrant's internal controls; and

6.   The  registrant's  other  certifying  officers  and  I  have
indicated  in  this quarterly report whether or  not  there  were
significant changes in internal controls or in other factors that
could  significantly affect internal controls subsequent  to  the
date  of  our  most recent evaluation, including  any  corrective
actions  with  regard  to significant deficiencies  and  material
weaknesses.



Dated:  May 12, 2003             /s/ Robert P. Johnson
                                 Robert P. Johnson, President
                                 Net Lease Management 85-B, Inc.
                                 Managing General Partner



                         CERTIFICATIONS

I, Patrick W. Keene, certify that:

1.  I  have reviewed this quarterly report on Form 10-QSB of  AEI
Real Estate Fund 85-B Limited Partnership;

2.  Based on my knowledge, this quarterly report does not contain
any  untrue  statement of a material fact  or  omit  to  state  a
material fact necessary to make the statements made, in light  of
the  circumstances  under which such statements  were  made,  not
misleading  with respect to the period covered by this  quarterly
report;

3.  Based  on my knowledge; the financial statements,  and  other
financial  information included in this quarterly report,  fairly
present in all material respects the financial condition, results
of  operations and cash flows of the registrant as of,  and  for,
the periods presented in this quarterly report;

4.   The  registrant's  other  certifying  officers  and  I   are
responsible for establishing and maintaining disclosure  controls
and  procedures (as defined in Exchange Act Rules 13a-14 and 15d-
14) for the registrant and have;

       a)   designed  such disclosure controls and procedures  to
ensure  that  material information relating  to  the  registrant,
including its consolidated subsidiaries, is made known to  us  by
others  within those entities, particularly during the period  in
which this quarterly report is being prepared;

        b)   evaluated  the  effectiveness  of  the  registrant's
disclosure  controls and procedures as of a date within  90  days
prior   to  the  filing  date  of  this  quarterly  report   (the
"Evaluation Date"); and

       c)   presented  in this quarterly report  our  conclusions
about the effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date;

5.   The  registrant's  other  certifying  officers  and  I  have
disclosed,   based  on  our  most  recent  evaluation,   to   the
registrant's  auditors  and the audit committee  of  registrant's
board   of   directors  (or  persons  performing  the  equivalent
functions):

      a)  all significant deficiencies in the design or operation
of   internal   controls   which  could  adversely   affect   the
registrant's  ability  to record, process, summarize  and  report
financial data and have identified for the registrant's  auditors
any material weaknesses in internal controls; and

       b)   any  fraud,  whether or not material,  that  involves
management or other employees who have a significant role in  the
registrant's internal controls; and

6.   The  registrant's  other  certifying  officers  and  I  have
indicated  in  this quarterly report whether or  not  there  were
significant changes in internal controls or in other factors that
could  significantly affect internal controls subsequent  to  the
date  of  our  most recent evaluation, including  any  corrective
actions  with  regard  to significant deficiencies  and  material
weaknesses.



Dated:  May 12, 2003             /s/ Patrick W. Keene
                                 Patrick W. Keene, Chief Financial Officer
                                 Net Lease Management 85-B, Inc.
                                 Managing General Partner