AEI REAL ESTATE FUND 85-B LTD PARTNERSHIP
10QSB, 1995-08-10
REAL ESTATE
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	     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, 1995
			      
	      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)
			      
			(612) 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, 1995 and  December 31, 1994

	  Statements for the Periods ended June 30, 1995 and 1994:

	    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



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

			BALANCE SHEET
			      
	     JUNE 30, 1995 AND DECEMBER 31, 1994
			      
			 (Unaudited)
			      
			   ASSETS

<CAPTION>
						     1995              1994
<S>                                             <C>                <C>
CURRENT ASSETS:
   Cash                                          $  270,452         $  268,922

INVESTMENTS IN REAL ESTATE:
   Land                                           1,783,745          1,783,745
   Buildings and Equipment                        3,000,246          3,000,246
   Accumulated Depreciation                      (1,209,117)        (1,138,636)
						  ----------         ----------
	Net Investments in Real Estate            3,574,874          3,645,355
						  ----------         ----------
	      Total Assets                       $3,845,326         $3,914,277
						  ==========         ==========
			      
<CAPTION>                              
	       LIABILITIES AND PARTNERS' CAPITAL
			      
CURRENT LIABILITIES:
   Payable to AEI Fund Management, Inc.          $   26,902         $    9,953
   Distributions Payable                             87,579            120,864
   Unearned Rent                                      9,616                  0
						  ----------         ----------
	Total Current Liabilities                   124,097            130,817
						  ----------         ----------
PARTNERS' CAPITAL (DEFICIT):
   General Partners                                 (27,385)           (26,763)
   Limited Partners, $1,000 Unit value;
     7,500 Units authorized and issued;
     6,844 Units outstanding                      3,748,614          3,810,223
						  ----------         ----------
      Total Partners' Capital                     3,721,229          3,783,460
						  ----------         ----------
	Total Liabilities and Partners' Capital  $3,845,326         $3,914,277
						  ==========         ==========
<FN>



    The accompanying Notes to Financial Statements are an
	      integral part of this statement.

</TABLE>

<TABLE>
			      
	AEI REAL ESTATE FUND 85-B LIMITED PARTNERSHIP
			      
		     STATEMENT OF INCOME
			      
		FOR THE PERIODS ENDED JUNE 30
			      
			 (Unaudited)
			      
<CAPTION>
			       
					Second Quarter Ended   Six Months Ended
					 6/30/95   6/30/94     6/30/95  6/30/94
<S>                                   <C>        <C>        <C>        <C>
INCOME:
   Rent                                 $138,658  $138,030  $278,533  $274,067
   Investment Income                       3,553     1,921     7,156     4,148
					--------   -------  --------  --------
	Total Income                     142,211   139,951   285,689   278,215
					--------   -------  --------  --------

EXPENSES:
  Partnership Administration - Affiliates 21,208    25,649    50,169    47,328
  Partnership Administration and Property
      Management - Unrelated Parties      12,422     4,245    34,245    24,656
  Depreciation                            35,240    35,240    70,481    70,481
					--------  --------  --------  --------
	Total Expenses                    68,870    65,134   154,895   142,465
					--------  --------  --------  --------

NET INCOME                              $ 73,341  $ 74,817  $130,794  $135,750
					========  ========  ========  ========

NET INCOME ALLOCATED:
   General Partners                     $    733  $    749  $  1,308  $  1,358
   Limited Partners                       72,608    74,068   129,486   134,392
					--------  --------  --------  --------
					$ 73,341  $ 74,817  $130,794  $135,750
					========  ========  ========  ========

NET INCOME PER
  LIMITED PARTNERSHIP UNIT
  (6,844 and 6,867 weighted average
  Units outstanding in 1995 and 1994,
  respectively)                         $  10.61  $  10.79  $  18.92  $ 19.57
					========  ========  ========  ========

<FN>


    The accompanying Notes to Financial Statements are an
	      integral part of this statement.


</TABLE>


<TABLE>
			      
	AEI REAL ESTATE FUND 85-B LIMITED PARTNERSHIP
			      
		   STATEMENT OF CASH FLOWS
			      
		FOR THE PERIODS ENDED JUNE 30
			      
			 (Unaudited)
			      
<CAPTION>
						       1995             1994
<S>                                               <C>             <C>    
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net  Income                                    $  130,794      $  135,750

   Adjustments to Reconcile Net Income to Net Cash
   Provided by Operating Activities:
     Depreciation                                      70,481          70,481
     Decrease in Receivables                                0          23,403
     Increase (Decrease)in Payable to
	AEI Fund Management, Inc.                      16,949          (1,755)
     Increase in Unearned Rent                          9,616          30,077
						    ---------       ---------
	Total Adjustments                              97,046         122,206
						    ---------       ---------
	Net Cash Provided by
	Operating Activities                          227,840         257,956
						    ---------       ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Decrease in Long-Term Note Receivable                  0          20,060
						    ---------       ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Decrease in Distributions Payable                  (33,285)         (2,469)
   Distributions to Partners                         (193,025)       (216,153)
						    ---------       ---------
	Net Cash Used for
	Financing Activities                         (226,310)       (218,622)
						    ---------       ---------

NET INCREASE IN CASH                                    1,530          59,394

CASH, beginning of period                             268,922         206,767
						    ---------       ---------

CASH, end of period                                $  270,452      $  266,161
						    =========       =========

<FN>


    The accompanying Notes to Financial Statements are an
	      integral part of this statement.


</TABLE>


<TABLE>                              
	AEI REAL ESTATE FUND 85-B LIMITED PARTNERSHIP
			      
	  STATEMENT OF CHANGES IN PARTNERS' CAPITAL
			      
		FOR THE PERIODS ENDED JUNE 30
			      
			 (Unaudited)
			      
			      
<CAPTION>
				       General       Limited
				       Partners      Partners       Total

<S>                                 <C>            <C>            <C>
BALANCE,  December 31, 1993          $  (25,229)    $3,962,017     $3,936,788

   Distributions                         (2,162)      (213,991)      (216,153)

   Net  Income                            1,358        134,392        135,750
				       ----------    ----------     ----------
BALANCE,  June 30, 1994              $  (26,033)    $3,882,418     $3,856,385
				       ==========    ==========     ==========


BALANCE,  December 31, 1994          $  (26,763)    $3,810,223     $3,783,460

   Distributions                         (1,930)      (191,095)      (193,025)

   Net  Income                            1,308        129,486        130,794
				       ----------    ----------     ----------
BALANCE,  June 30, 1995              $  (27,385)    $3,748,614     $3,721,229
				       ==========    ==========     ==========

<FN>


    The accompanying Notes to Financial Statements are an
	      integral part of this statement.

</TABLE>

			      
	AEI REAL ESTATE FUND 85-B LIMITED PARTNERSHIP
			      
		NOTES TO FINANCIAL STATEMENTS
			      
			JUNE 30, 1995
			      
			 (Unaudited)
			      

(1)The   condensed  statements  included  herein  have  been
   prepared  by the Partnership, without audit, 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 - (Continuted)
     
     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)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 Partnership's rental income is derived from long-
term  Lease Agreements on the Partnership's properties.   In
March, 1995, the Partnership recognized $1,426 of additional
rent   from  the  lessee  of  the  Automax  in  Minneapolis,
Minnesota, as a result of an increase in sales for the lease
year ended December 31, 1994.

      During  the  first six months of 1995  and  1994,  the
Partnership incurred Partnership administration and property
management  expenses from unrelated parties of  $34,245  and
$24,656,  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 Partnership
administration  expenses  incurred from  affiliates  include
costs  associated  with the management  of  the  properties,
processing   distributions,   reporting   requirements   and
correspondence to the Limited Partners.

      As of June 30, 1995, the Partnership's annualized cash
distribution  rate was 6.0%, 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.

     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  total
number of Units originally sold and in no event obligated to
purchase Units if such purchase would impair the capital  or
operation of the Partnership.

      During 1994, four Limited Partners redeemed a total of
22.5  Partnership Units for $14,798 in accordance  with  the
Partnership Agreement.  The Partnership acquired these Units
using  Net  Cash  Flow from operations.  In prior  years,  a
total  of  sixty  Limited Partners redeemed 633  Partnership
Units  for $518,898.  The redemptions increase the remaining
Limited Partners' ownership interest in the Partnership.

      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 terms 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.
			      
		 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.

ITEM 5.OTHER INFORMATION

      None.

ITEM 6.EXHIBITS AND REPORTS ON FORM 8-K

      a.   Exhibits - None.
      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 10, 1995       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



			      By:  /s/ Mark E. Larson
				       Mark E. Larson
				       Chief Financial Officer



<TABLE> <S> <C>

<ARTICLE> 5
<CIK> 0000771677
<NAME> AEI REAL ESTATE FUND 85-B LTD PARTNERSHIP
       
<S>                             <C>
<PERIOD-TYPE>                   6-MOS
<FISCAL-YEAR-END>                          DEC-31-1994
<PERIOD-END>                               JUN-30-1995
<CASH>                                         270,452
<SECURITIES>                                         0
<RECEIVABLES>                                        0
<ALLOWANCES>                                         0
<INVENTORY>                                          0
<CURRENT-ASSETS>                               270,452
<PP&E>                                       4,783,991
<DEPRECIATION>                             (1,209,117)
<TOTAL-ASSETS>                               3,845,326
<CURRENT-LIABILITIES>                          124,097
<BONDS>                                              0
<COMMON>                                             0
                                0
                                          0
<OTHER-SE>                                   3,721,229
<TOTAL-LIABILITY-AND-EQUITY>                 3,845,326
<SALES>                                              0
<TOTAL-REVENUES>                               285,689
<CGS>                                                0
<TOTAL-COSTS>                                  154,895
<OTHER-EXPENSES>                                     0
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                                   0
<INCOME-PRETAX>                                130,794
<INCOME-TAX>                                         0
<INCOME-CONTINUING>                            130,794
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                   130,794
<EPS-PRIMARY>                                    18.92
<EPS-DILUTED>                                    18.92
        

</TABLE>


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