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:  June 30, 2000

                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 June 30, 2000 and December 31, 1999

         Statements for the Periods ended June 30, 2000 and 1999:

             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

               JUNE 30, 2000 AND DECEMBER 31, 1999

                           (Unaudited)

                             ASSETS

                                                      2000           1999

CURRENT ASSETS:
  Cash and Cash Equivalents                       $   427,858     $   402,868
  Receivables                                             400             834
                                                   -----------     -----------
      Total Current Assets                            428,258         403,702
                                                   -----------     -----------
INVESTMENTS IN REAL ESTATE:
  Land                                              1,446,391       1,446,391
  Buildings and Equipment                           2,663,897       2,663,897
  Accumulated Depreciation                         (1,526,110)     (1,491,558)
                                                   -----------     -----------
      Net Investments in Real Estate                2,584,178       2,618,730
                                                   -----------     -----------
          Total Assets                            $ 3,012,436     $ 3,022,432
                                                   ===========     ===========


                       LIABILITIES AND PARTNERS' CAPITAL

CURRENT LIABILITIES:
  Payable to AEI Fund Management, Inc.            $     3,485     $     9,560
  Land Remediation Estimate                           211,000         211,000
  Distributions Payable                                69,062          69,024
  Unearned Rent                                         5,315               0
                                                   -----------     -----------
      Total Current Liabilities                       288,862         289,584
                                                   -----------     -----------
PARTNERS' CAPITAL (DEFICIT):
  General Partners                                    (37,361)        (37,268)
  Limited Partners, $1,000 Unit value;
   7,500 Units authorized and issued;
   6,600 outstanding                                2,760,935       2,770,116
                                                   -----------     -----------
     Total Partners' Capital                        2,723,574       2,732,848
                                                   -----------     -----------
       Total Liabilities and Partners' Capital    $ 3,012,436     $ 3,022,432
                                                   ===========     ===========

 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 JUNE 30

                           (Unaudited)


                                Three Months Ended        Six Months Ended
                              6/30/00       6/30/99    6/30/00       6/30/99

INCOME:
   Rent                      $ 110,745    $ 109,006   $ 220,058    $ 218,405
   Investment Income             5,908        3,963      11,139        7,997
                              ---------    ---------   ---------    ---------
        Total Income           116,653      112,969     231,197      226,402
                              ---------    ---------   ---------    ---------

EXPENSES:
   Partnership Administration -
    Affiliates                  21,253       22,109      45,793       48,334
   Partnership Administration
    and Property Management -
    Unrelated Parties            2,684        3,236       9,268       12,420
   Depreciation                 17,276       17,276      34,552       34,552
                              ---------    ---------   ---------    ---------
        Total Expenses          41,213       42,621      89,613       95,306
                              ---------    ---------   ---------    ---------

NET INCOME                   $  75,440    $  70,348   $ 141,584    $ 131,096
                              =========    =========   =========    =========

NET INCOME ALLOCATED:
   General Partners          $     755    $     703   $   1,416    $   1,310
   Limited Partners             74,685       69,645     140,168      129,786
                              ---------    ---------   ---------    ---------
                             $  75,440    $  70,348   $ 141,584    $ 131,096
                              =========    =========   =========    =========

NET INCOME PER
 LIMITED PARTNERSHIP UNIT
 (6,600 and 6,638 weighted average
 Units outstanding in 2000 and 1999,
 respectively)               $   11.32    $   10.49   $   21.24    $   19.55
                              =========    =========   =========    =========

 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 JUNE 30

                           (Unaudited)


                                                        2000          1999

CASH FLOWS FROM OPERATING ACTIVITIES:
   Net  Income                                      $   141,584   $   131,096

   Adjustments to Reconcile Net Income to Net Cash
   Provided by Operating Activities:
     Depreciation                                        34,552        34,552
     Decrease in Receivables                                434        13,888
     Decrease in Payable to
        AEI Fund Management, Inc.                        (6,075)       (5,985)
     Increase in Unearned Rent                            5,315         8,603
                                                     -----------   -----------
        Total Adjustments                                34,226        51,058
                                                     -----------   -----------
        Net Cash Provided By
        Operating Activities                            175,810       182,154
                                                     -----------   -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Increase in Distributions Payable                         38           291
   Distributions to Partners                           (150,858)     (176,108)
                                                     -----------   -----------
        Net Cash Used For
        Financing Activities                           (150,820)     (175,817)
                                                     -----------   -----------

NET INCREASE IN CASH AND CASH EQUIVALENTS                24,990         6,337

CASH  AND  CASH  EQUIVALENTS, beginning of  period      402,868       371,557
                                                     -----------   -----------
CASH AND CASH EQUIVALENTS, end of period            $   427,858   $   377,894
                                                     ===========   ===========

 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 JUNE 30

                           (Unaudited)



                                                                     Limited
                                                                   Partnership
                             General      Limited                     Units
                             Partners     Partners      Total      Outstanding


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

  Distributions               (1,761)      (174,347)     (176,108)

  Net Income                   1,310        129,786       131,096
                             ---------   -----------   -----------  ----------
BALANCE, June 30, 1999      $(37,175)   $ 2,779,410   $ 2,742,235    6,637.66
                             =========   ===========   ===========  ==========


BALANCE, December 31, 1999  $(37,268)   $ 2,770,116   $ 2,732,848    6,599.66

  Distributions               (1,509)      (149,349)     (150,858)

  Net Income                   1,416        140,168       141,584
                             ---------   -----------   -----------  ----------
BALANCE, June 30, 2000      $(37,361)   $ 2,760,935   $ 2,723,574    6,599.66
                             =========   ===========   ===========  ==========

 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

                          JUNE 30, 2000

                           (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 ($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 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

                          JUNE 30, 2000
                           (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

                          JUNE 30, 2000
                           (Continued)

(3)  Investments in Real Estate -

     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.  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, how long it will take
     to  complete or whether there are any sources available  for
     indemnification of the reclamation costs.  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.   In  the  first
     quarter of 2000, the purchaser of the tax liability received
     an  Order  declaring their purchase of the tax liability  in
     error.   The Partnership has not received notification  from
     the  taxing  authorities  as to  this  Order  and  has  been
     informed  by  legal counsel that the taxes  will  likely  be
     resold at a tax sale.

     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 site liability  and
     may  have  adjustments to the accrued  liability  in  future
     periods.

(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  six  months ended June 30, 2000 and  1999,  the
Partnership  recognized rental income of $220,058  and  $218,405,
respectively.   During the same periods, the  Partnership  earned
investment income of $11,139 and $7,997, respectively.

        During  the six months ended June 30, 2000 and 1999,  the
Partnership   paid   Partnership   administration   expenses   to
affiliated  parties of $45,793 and $48,334, 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  $9,268  and $12,420, 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.  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, how long it will take to complete or
whether  there  are any sources available for indemnification  of
the reclamation costs.  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.  In the  first
quarter  of 2000, the purchaser of the tax liability received  an
Order  declaring  their purchase of the tax liability  in  error.
The  Partnership  has not received notification from  the  taxing
authorities  as  to  this Order and has been  informed  by  legal
counsel that the taxes will likely be resold at a tax sale.


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

        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 site liability and may have adjustments to the
accrued liability in future periods.

        As  of  June 30, 2000, 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.

Liquidity and Capital Resources

         During   the  six  months  ended  June  30,  2000,   the
Partnership's cash balances increased $24,990 as the  Partnership
distributed  less  cash to the Partners than  it  generated  from
operating  activities.  Net cash provided by operating activities
decreased from $182,154 in 1999 to $175,810 in 2000 as  a  result
of  net timing differences in the collection of payments from the
lessees and the payment of expenses, which were partially  offset
by an increase in income and a decrease in expenses in 2000.

       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.


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

       During 1999, eight Limited Partners redeemed a total of 38
Partnership  Units for $16,420 in accordance with the Partnership
Agreement.  The Partnership acquired these Units using  Net  Cash
Flow  from  operations.  In prior years, a total  of  eighty-four
Limited  Partners redeemed 862.14 Partnership Units for $640,259.
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.

Cautionary Statement for Purposes of the "Safe Harbor" Provisions
of the Private Securities Litigation Reform Act of 1995

         The   foregoing  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:

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

<BULLET>  the federal income tax consequences of rental
          income,  deductions, gain on sales and other items  and
          the affects of these consequences for investors;

<BULLET>  resolution  by  the  General   Partners   of
          conflicts with which they may be confronted;

<BULLET>  the  success  of  the  General  Partners   of
          locating   properties   with  favorable   risk   return
          characteristics;

<BULLET>  the effect of tenant defaults; and

<BULLET>  the condition of the industries in which  the
          tenants of properties owned by the Partnership operate.


                   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.


                   PART II - OTHER INFORMATION
                           (Continued)

ITEM 3.DEFAULTS UPON SENIOR SECURITIES

      None.

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 June 30, 2000.

      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:  August 2, 2000        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)