================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q


[X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934


                  FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000
                                                 ------------------

                         Commission file number 0-14438
                                                -------


              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                        A CALIFORNIA LIMITED PARTNERSHIP
              ----------------------------------------------------
             (Exact name of registrant as specified in its charter)


          CALIFORNIA                                        13-3239107
  -------------------------------                      --------------------
  (State or other jurisdiction of                      (I.R.S. Employer
  incorporation or organization)                        Identification No.)


                CAMBRIDGE CENTER, 9TH FLOOR, CAMBRIDGE, MA 02142
                ------------------------------------------------
                   (Address of principal executive offices)


                                 (617) 234-3000
               ---------------------------------------------------
              (Registrant's telephone number, including area code)


Indicate by check whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (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
                                 ---------          --------

================================================================================

<PAGE>


              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                         FORM 10-Q - SEPTEMBER 30, 2000


                                      INDEX

                                                                      Page No.
                                                                      --------
Part I. Financial Information:

Balance Sheets - September 30, 2000 and December 31, 1999                3

Statements of Operations -- Three and Nine Months Ended
    September 30, 2000 and 1999                                          4

Statement of Partners' Equity -- Nine Months Ended
    September 30, 2000                                                   5

Statements of Cash Flows -- Nine Months Ended
    September 30, 2000 and 1999                                          6

Notes to Financial Statements                                          7 - 13

Management's Discussion and Analysis of Financial
    Condition and Results of Operations                               14 - 17

Part II. Other Information:

Legal Proceedings, Exhibits and Reports on Form 8-K                     18


                                       2

<PAGE>

              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                         FORM 10-Q - SEPTEMBER 30, 2000

                                 BALANCE SHEETS

                                          SEPTEMBER 30, 2000   DECEMBER 31, 1999
                                          ------------------   -----------------
ASSETS

Real estate - net                             $31,605,913         $32,352,714
Cash and cash equivalents                      12,062,920           8,521,370
Other assets                                    3,022,833           3,095,251
Receivables                                       299,170             209,418
                                              -----------         -----------
                                              $46,990,836         $44,178,753
                                              ===========         ===========
LIABILITIES AND PARTNERS' EQUITY

Accounts payable and accrued expenses         $ 1,022,120         $ 1,224,373
Due to affiliates                                 259,727             107,255
                                              -----------         -----------
                                                1,281,847           1,331,628
                                              -----------         -----------
Commitments and contingencies (Note 6)

PARTNERS' EQUITY:
     Limited partners' equity (400,010
         units issued and outstanding)         43,422,590          40,703,819
     General partners' equity                   2,286,399           2,143,306
                                              -----------         -----------

                                               45,708,989          42,847,125
                                              -----------         -----------

                                              $46,990,836         $44,178,753
                                              ===========         ===========




                        SEE NOTES TO FINANCIAL STATEMENTS


                                       3

<PAGE>

              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                         FORM 10-Q - SEPTEMBER 30, 2000

                            STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
                                                      FOR THE THREE MONTHS ENDED             FOR THE NINE MONTHS ENDED
                                                            SEPTEMBER 30,                          SEPTEMBER 30,
                                                    ------------------------------           ---------------------------
                                                       2000                1999                 2000             1999
                                                    -----------         ----------           ----------       ----------
<S>                                                 <C>                 <C>                  <C>              <C>
Rental Revenue                                      $ 2,444,132         $2,347,094           $7,543,242       $7,440,086
                                                    -----------         ----------           ----------       ----------
Costs and Expenses:
     Operating expenses                                 919,204            667,294            2,460,950        2,226,112
     Depreciation and amortization                      365,832            336,096            1,054,998        1,008,288
     Partnership management fee                         222,226             (4,049)             567,264          418,769
     Administrative expenses                            186,993            214,762              774,038        1,077,139
     Property management fee                             52,538             66,254              221,642          223,707
                                                    -----------         ----------           ----------       ----------
                                                      1,746,793          1,280,357            5,078,892        4,954,015
                                                    -----------         ----------           ----------       ----------
Income before interest and other income                 697,339          1,066,737            2,464,350        2,486,071
     Interest income                                    150,495             80,654              368,314          238,558
     Other income                                        19,700             13,180               29,200          102,460
                                                    -----------         ----------           ----------       ----------
Net income                                          $   867,534         $1,160,571           $2,861,864       $2,827,089
                                                    ===========         ==========           ==========       ==========
Net income attributable to:
     Limited partners                               $   824,157         $1,102,543           $2,718,771       $2,685,735
     General partners                                    43,377             58,028              143,093          141,354
                                                    -----------         ----------           ----------       ----------
Net income                                          $   867,534         $1,160,571           $2,861,864       $2,827,089
                                                    ===========         ==========           ==========       ==========
Net income per unit of limited
     partnership interest (400,010 units
     outstanding)                                   $      2.06         $     2.76           $     6.80       $     6.71
                                                    ===========         ==========           ==========       ==========


</TABLE>


                        SEE NOTES TO FINANCIAL STATEMENTS


                                        4


<PAGE>

              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                         FORM 10-Q - SEPTEMBER 30, 2000

                          STATEMENT OF PARTNERS' EQUITY

                                         GENERAL       LIMITED
                                        PARTNERS'      PARTNERS'
                                         EQUITY         EQUITY        TOTAL
                                       ----------    -----------   -----------
Balance, January 1, 2000               $2,143,306    $40,703,819   $42,847,125

Net income for the nine
  months ended September 30, 2000         143,093      2,718,771     2,861,864
                                       ----------    -----------   -----------
Balance, September 30, 2000            $2,286,399    $43,422,590   $45,708,989
                                       ==========    ===========   ===========







                        SEE NOTES TO FINANCIAL STATEMENTS


                                       5

<PAGE>

              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                         FORM 10-Q - SEPTEMBER 30, 2000

                            STATEMENTS OF CASH FLOWS

                                                      FOR THE NINE MONTHS ENDED
                                                           SEPTEMBER 30,
                                                      --------------------------
                                                          2000          1999
                                                      -----------   ------------

Cash Flows From Operating Activities:
     Net income                                      $ 2,861,864    $ 2,827,089
     Adjustments to reconcile net income
     to net cash provided by operating activities:
         Depreciation and amortization                 1,054,998      1,008,288
         Straight-line adjustment for stepped
           lease rentals                                 (12,500)        25,557
     Changes in assets and liabilities:
         Accounts payable and accrued expenses          (202,253)       176,011
         Receivables                                     (89,752)      (133,057)
         Due to affiliates                               152,472       (310,655)
         Other assets                                   (116,470)      (297,851)
                                                     -----------    -----------
     Net cash provided by operating activities         3,648,359      3,295,382
                                                     -----------    -----------
Cash Flows From Investing Activities:
     Improvements to real estate                        (106,809)      (361,235)
                                                     -----------    -----------
Cash Flows From Financing Activities:
     Distributions to partners                              --       (1,187,397)
                                                     -----------    -----------
Increase In Cash And Cash Equivalents                  3,541,550      1,746,750
Cash And Cash Equivalents, Beginning of Year           8,521,370      6,301,641
                                                     -----------    -----------
Cash And Cash Equivalents, End of Quarter            $12,062,920    $ 8,048,391
                                                     ===========    ===========





                        SEE NOTES TO FINANCIAL STATEMENT


                                       6

<PAGE>

              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                         FORM 10-Q - SEPTEMBER 30, 2000


                          NOTES TO FINANCIAL STATEMENTS

1.   GENERAL

     The accompanying financial statements, notes and discussions should be read
     in conjunction with the financial statements, related notes and discussions
     contained in the Partnership's Annual Report on Form 10-K for the year
     ended December 31, 1999.

     The financial information contained herein is unaudited; however, in the
     opinion of management, all adjustments (consisting only of normal recurring
     adjustments) necessary for a fair presentation of such financial
     information have been included. Results of operations for the three and
     nine months ended September 30, 2000 are not necessarily indicative of the
     results to be expected for the entire year.

2.   SIGNIFICANT ACCOUNTING POLICIES

     Investment in Joint Ventures

     Certain properties were purchased in joint ventures with affiliated
     partnerships that have the same, or affiliated, general partners as the
     Partnership. The Partnership owns an undivided interest and is severally
     liable for indebtedness it incurs in connection with its ownership interest
     in those properties. Therefore, the Partnership's financial statements
     present the assets, liabilities, revenues and expenses of the joint
     ventures on a pro rata basis in accordance with the Partnership's
     percentage of ownership.

     Real Estate

     Real Estate is carried at cost, net of adjustments for impairment. Repairs
     and maintenance are charged to expense as incurred. Replacement and
     betterments are capitalized. The Partnership evaluates the recoverability
     of the net carrying value of its real estate and related assets at least
     annually, and more often if circumstances dictate. If this review indicates
     that the carrying value of the property may not be recoverable, the
     Partnership prepares estimates of the future undiscounted cash flows
     expected to result from the use of the property and its eventual
     disposition, generally over a five-year holding period. In performing this
     review, management takes into account, among other things, the existing
     occupancy, the expected leasing prospects of the property and the economic
     situation in the region where the property is located.

     If the sum of the expected future cash flows, undiscounted, is less than
     the carrying amount of the property, the Partnership recognizes an
     impairment loss, and reduces the carrying amount of the asset to its
     estimated fair value. Fair value is the amount at which the asset could be
     bought or sold in a current transaction between willing parties, that is,
     other than in a forced or liquidation sale.


                                       7


<PAGE>

              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                         FORM 10-Q - SEPTEMBER 30, 2000

                          NOTES TO FINANCIAL STATEMENTS

2.   SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     Real Estate (continued)

     Management estimates fair value using discounted cash flows or market
     comparables, as most appropriate for each property. Independent certified
     appraisers are utilized to assist management, when warranted.

     Impairment write-downs recorded by the Partnership do not affect the tax
     basis of the assets and are not included in the determination of taxable
     income or loss. Because the expected cash flows used to evaluate the
     recoverability of the assets and their fair values are based upon
     projections of future economic events, such as property occupancy rates,
     rental rates, operating cost inflation and market capitalization rates, the
     amounts ultimately realized at disposition may differ materially from the
     net carrying values at the balance sheet dates. The cash flows and market
     comparables used in this process are based on good faith estimates and
     assumptions developed by management. Unanticipated events and circumstances
     may occur and some assumptions may not materialize; therefore, actual
     results may materially vary from the estimates. The Partnership may in the
     future provide additional write-downs, which could be material, if real
     estate markets or local economic conditions change.

     Revenue Recognition

     The Securities and Exchange Commission released staff accounting bulletin
     No. 101, "Revenue Recognition in Financial Statements" on December 3, 1999.
     The Partnership has reviewed its revenue recognition policies and as a
     result there will be no material change in the revenue recognized by the
     Partnership.

3.   RELATED PARTY TRANSACTIONS

     The Managing General Partner of the Partnership, Resources High Equity,
     Inc., is a wholly-owned subsidiary of Presidio Capital Corp., ("Presidio").
     Presidio AGP Corp., which is a wholly-owned subsidiary of Presidio is the
     Associate General Partner (together with the Managing General Partner, the
     "General Partners"). The General Partners and affiliates of the General
     Partners are also engaged in businesses related to the acquisition and
     operation of real estate. Presidio is also the parent of other corporations
     (and affiliated with other entities) that are or may in the future be
     engaged in businesses that may be in competition with the Partnership.
     Accordingly, conflicts of interest may arise between the Partnership and
     such other businesses. Subject to the right of the limited partners under
     the Limited Partnership Agreement, Presidio controls the Partnership
     through its indirect ownership of the General Partners. Effective July 31,
     1998, Presidio is indirectly controlled by NorthStar Capital Investment
     Corp., a Maryland corporation.

                                       8

<PAGE>

              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                         FORM 10-Q - SEPTEMBER 30, 2000

                          NOTES TO FINANCIAL STATEMENTS

3.   RELATED PARTY TRANSACTIONS (CONTINUED)

     From August 28, 1997 to October 21, 1999, Presidio was party to a
     management agreement with NorthStar Presidio Management Company LLC
     ("NorthStar Presidio"), an affiliate of NorthStar Capital Investment Corp.,
     pursuant to which NorthStar Presidio provided the day-to-day management of
     Presidio and its direct and indirect subsidiaries and affiliates, including
     the Partnership. Effective October 21, 1999, Presidio entered into a
     Services Agreement with AP-PCC III, L.P. (the "Agent") pursuant to which
     the Agent was retained to provide the asset management and investor
     relation services to the Partnership and other entities affiliated with the
     Partnership previously provided by NorthStar Presidio. The Partnership does
     not pay any fees to the Agent.

     The Partnership had a property management services agreement with Resources
     Supervisory Management Corp. ("Resources Supervisory"), an affiliate of the
     General Partners, to perform certain functions relating to the management
     of the properties of the Partnership. Resources Supervisory in turn
     sub-contracted with management companies to provide property management
     services for specific properties. For the quarter ended September 30, 2000
     Resources Supervisory was entitled to receive $52,538 for property
     management services, $48,114 of which was paid to Kestrel Management L.P.
     ("Kestrel"), an affiliate of the General Partners and the Agent, with the
     balance being retained by Resources Supervisory. For the quarter ended
     September 30, 1999 Resources Supervisory was entitled to receive $66,254
     for property management services, $47,920 of which was paid to unaffiliated
     management companies with the balance being retained by Resources
     Supervisory. For the nine months ended September 30, 2000 Resources
     Supervisory was entitled to receive $221,642 for property management
     services, $137,022 of which was paid to Kestrel and $78,652 of which was
     paid to unaffiliated management companies with the balance being retained
     by Resources Supervisory. For the nine months ended September 30, 1999
     Resources Supervisory was entitled to receive $223,707 for property
     management services, $169,701 of which was paid to unaffiliated management
     companies with the balance being retained by Resources Supervisory. As of
     October 1, 2000 all property management services for the Partnership were
     being performed directly by Kestrel and Resources Supervisory was no longer
     performing any property management services.

     For the administration of the Partnership, the Managing General Partner is
     entitled to receive reimbursement of expenses up to a maximum of $150,000
     per year. For each of the quarters ended September 30, 2000 and 1999, the
     Managing General Partner received $37,500. For the nine months ended
     September 30, 2000 and 1999, the Managing General Partner received
     $112,500.

     For managing the affairs of the Partnership, the Managing General Partner
     is also entitled to receive an annual partnership management fee. Pursuant
     to the amendment to the Partnership Agreement, which became effective on
     August 20, 1999, the annual partnership management fee for 1999 was reduced
     to $418,769.

                                       9

<PAGE>


              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                         FORM 10-Q - SEPTEMBER 30, 2000

                          NOTES TO FINANCIAL STATEMENTS

3.   RELATED PARTY TRANSACTIONS (CONTINUED)

     Further, the Partnership Agreement was amended (for the year 2000 and
     beyond) so that the partnership management fee will be 1.25% of the Gross
     Asset Value of the Partnership, defined as the appraised value of all the
     assets of the Partnership based on the most recent appraisal. For the
     quarters ended September 30, 2000 and 1999 the Managing General Partner
     earned partnership management fees of $222,226 and ($4,049), respectively.
     The 1999 partnership management fee reflects an adjustment to reduce the
     fees as a result of the settlement of the class action suit as discussed in
     Note 7. For the nine months ended September 30, 2000 and 1999, the Managing
     General Partner earned partnership management fees of $567,264 and
     $418,769, respectively.

     The General Partners are allocated 5% of the net income of the Partnership,
     which amounted to $43,377 and $58,028 for the quarters ended September 30,
     2000 and 1999, respectively. Net income allocated to the General Partners
     amounted to $143,093 and $141,354 for the nine months ended September 30,
     2000 and 1999, respectively. The General Partners are also entitled to
     receive 5% of distributions, which amounted to $39,580 for the nine months
     ended September 30, 1999.

     During the liquidation stage of the Partnership, the Managing General
     Partner or an affiliate may be entitled to receive certain fees, which are
     subordinated to the limited partners receiving their original invested
     capital and certain specified minimum returns on their investment. All fees
     received by the General Partners are subject to certain limitations as set
     forth in the Partnership Agreement.

     From July 1996 through March 12, 1998, Millennium Funding II Corp., a
     wholly owned indirect subsidiary of Presidio, purchased 39,123 units of the
     Partnership from various limited partners.

     In connection with a tender offer for units of the Partnership made on
     March 12, 1998 (the "Offer") by Olympia Investors, L.P. ("Olympia"),
     Olympia and Presidio entered into an agreement dated March 6, 1998 (the
     "Agreement"). Subsequent to the expiration of the Offer, Olympia announced
     that it had accepted for payment 31,132 units properly tendered pursuant to
     the Offer. Pursuant to the Agreement, Presidio purchased 50% of those units
     owned by Olympia as a result of the Offer, or 15,566 units, for $101.81 per
     unit. In addition, Olympia had the right to cause Presidio to purchase its
     remaining units for a price based on procedures set forth in the agreement.
     Olympia recently exercised this right and Millennium Funding II, LLC , an
     affiliate of the General Partners acquired 15,556 units.

     Subsequent to the expiration of the tender offer described above,
     Millennium Funding II Corp. purchased an additional 18,042 limited
     partnership units from August 1998 through July 1999.

     Pursuant to the settlement of a class action lawsuit (See Note 7),
     Millennium Funding II, LLC made a tender offer to limited partners to
     acquire up to 26,936 Units (representing approximately 6.7% of the
     outstanding Units) at a price of $114.60 per unit. The offer closed in
     January 2000 and all 26,936 Units were acquired in the offer.


                                       10

<PAGE>

              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                         FORM 10-Q - SEPTEMBER 30, 2000

                          NOTES TO FINANCIAL STATEMENTS

3.   RELATED PARTY TRANSACTIONS (CONTINUED)

     As a result of these purchases as well as the other purchases of units by
     affiliates of the General Partners, affiliates of the General Partners own
     118,903 units representing approximately 29.725% of the total outstanding
     Units.

4.   REAL ESTATE

     The following table is a summary of the Partnership's real estate as of:

                                         SEPTEMBER 30, 2000  DECEMBER 31, 1999
                                         ------------------  -----------------
     Land                                   $10,370,965        $10,370,965
     Building and improvement                37,822,888         37,716,078
                                            -----------        -----------
                                             48,193,853         48,087,043
     Less: Accumulated depreciation         (16,587,940)       (15,734,329)
                                            -----------        -----------

                                            $31,605,913        $32,352,714
                                            ===========        ===========



5.   DUE TO AFFILIATES

                                        SEPTEMBER 30, 2000     DECEMBER 31, 1999
                                        ------------------     -----------------
     Partnership management fee              $222,227               $    --
     Property management fee                      --                  32,255
     Non-accountable expense reimbursement     37,500                 75,000
                                             --------               --------
                                             $259,727               $107,255
                                             ========               ========


     Such amounts were paid in the subsequent quarters .


                                       11

<PAGE>

              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                         FORM 10-Q - SEPTEMBER 30, 2000

                          NOTES TO FINANCIAL STATEMENTS

6.   COMMITMENTS AND CONTINGENCIES

     568 Broadway Joint Venture is currently involved in litigation with a
     number of present or former tenants who are in default on their lease
     obligations. Several of these tenants have asserted claims or counter
     claims seeking monetary damages. The plaintiffs' allegations include but
     are not limited to claims for breach of contract, failure to provide
     certain services, overcharging of expenses and loss of profits and income.
     These suits seek total damages in excess of $20 million plus additional
     damages of an indeterminable amount.

  a) The Broadway Joint Venture's action for rent against Solo Press was tried
     in 1992 and resulted in a judgement in favor of the Broadway Joint Venture
     for rent owed. The Partnership believes this will result in dismissal of
     the action brought by Solo Press against the Broadway Joint Venture. Since
     the facts of the other actions which involve material claims or
     counterclaims are substantially similar, the Partnership believes that the
     Broadway Joint Venture will prevail in those actions as well.

  b) A former retail tenant of 568 Broadway (Galix Shops, Inc.) and a related
     corporation which is a retail tenant of a building adjacent to 568 Broadway
     filed a lawsuit in the Supreme Court of The State of New York, County of
     New York, against the Broadway Joint Venture which owns 568 Broadway. The
     action was filed on April 13, 1994. The Plaintiffs allege that by erecting
     a sidewalk shed in 1991, 568 Broadway deprived plaintiffs of light, air and
     visibility to their customers. The sidewalk shed was erected, as required
     by local law, in connection with the inspection and restoration of the
     Broadway building facade, which is also required by local law.

     Plaintiffs further allege that the erection of the sidewalk shed for a
     continuous period of over two years is unreasonable and unjustified and
     that such conduct by defendants has deprived plaintiffs of the use and
     enjoyment of their property. The suit seeks a judgement requiring removal
     of the sidewalk shed (since removed), compensatory damages of $20 million,
     and punitive damages of $10 million. The Partnership believes that this
     suit is without merit and intends to vigorously defend it.

7.   SETTLEMENT OF LAWSUIT

     In April 1999, the California Superior Court approved the terms of the
     settlement of a class action and derivative litigation involving the
     Partnership. Under the terms of the settlement, the General Partners agreed
     to take the actions described below subject to first obtaining the consent
     of limited partners to amendments to the Agreement of Limited Partnership
     of the Partnership summarized below. The settlement became effective in
     August 1999 following approval of the amendments.

     As amended, the Partnership Agreement (a) provides for a Partnership
     Management Fee equal to 1.25% of the Gross Asset Value of the Partnership
     for 2000 and thereafter and a fixed 1999 Partnership Management Fee of
     $418,769 or $426,867 less than the amount that would have been paid for
     1999 under the prior formula and (b) fixes the amount that the General
     Partners will be


                                       12

<PAGE>

              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                         FORM 10-Q - SEPTEMBER 30, 2000

                          NOTES TO FINANCIAL STATEMENTS

7.   SETTLEMENT OF LAWSUIT (CONTINUED)

     liable to pay to limited partners upon liquidation of the Partnership as
     repayment of fees previously received (the "Fee Give-Back Amount"). As of
     December 31, 1999, the Fee Give-Back Amount was $8.80 per Unit which amount
     will be reduced by approximately $.98 per Unit for each full calendar year
     after 1999 in which liquidation does not occur. As amended, the Partnership
     Agreement provides that, upon a reorganization of the Partnership into a
     real estate investment trust or other public entity, the General Partners
     will have no further liability to pay the Fee Give-Back Amount. In
     accordance with the terms of the settlement, Presidio Capital Corp., an
     affiliate of the General Partners, guaranteed payment of the Fee Give-Back
     Amount.

     As required by the settlement, an affiliate of the General Partners,
     Millennium Funding II, LLC, made a tender offer to limited partners to
     acquire up to 26,936 Units (representing approximately 6.7% of the
     outstanding Units) at a price of $114.60 per Unit. The offer closed in
     January 2000 and all 26,936 Units were acquired in the offer.

     The final requirement of the settlement obligated the General Partners to
     use their best efforts to reorganize the Partnership into a real estate
     investment trust or other entity whose shares were listed on a national
     securities exchange or on the NASDAQ National Market System. A Registration
     Statement was filed with the Securities and Exchange Commission on February
     11, 2000 with respect to the restructuring of the Partnership into a
     publicly-traded real estate investment trust. The Registration Statement
     has not yet become effective and the consent of a majority of limited
     partners will be needed to effect the restructuring.


                                       13

<PAGE>

              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                         FORM 10-Q - SEPTEMBER 30, 2000


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

        The matters discussed in this form 10-Q contain certain forward-looking
        statements and involve risks and uncertainties (including changing
        market conditions, competitive and regulatory matters, etc.) detailed
        in the disclosures contained in this Form 10-Q and the other filings
        with the Securities and Exchange Commission made by the Partnership
        from time to time. The discussion of the Partnership's liquidity,
        capital resources and results of operations, including forward-looking
        statements pertaining to such matters, does not take into account the
        effects of any changes to the Partnership's operations. Accordingly,
        actual results could differ materially from those projected in the
        forward-looking statements as a result of a number of factors,
        including those identified herein.

        This item should be read in conjunction with the financial statements
        and other items contained elsewhere in the report.

        Liquidity and Capital Resources

        The Partnership is engaged in the business of operating and holding for
        investment previously acquired income-producing properties consisting
        of office buildings, shopping centers and other commercial properties.
        The Partnership holds an interest in five properties. The Partnership
        generates rental revenues from the commercial properties and is
        responsible for each property's operating expenses as well as its
        administrative costs.

        The Partnership had $12,062,920 in cash and cash equivalents at
        September 30, 2000. Cash and cash equivalents are temporarily invested
        in short-term instruments and, together with cash flow from operations,
        are expected to be sufficient to fund future capital improvements to
        the Partnership's properties.

        The Partnership's level of liquidity based upon cash and cash
        equivalents increased by $3,541,550 for the nine months ended September
        30, 2000 as compared to December 31, 1999. The increase is due to
        $3,648,359 of cash provided by operating activities which was partially
        offset by $106,089 of cash used in investing activities for capital
        expenditures. The Partnership's primary source of funds is cash flow
        from the operation of its properties, principally rents received from
        the tenants less property operating expenses.

        The Partnership expects to continue to utilize a portion of its cash
        flow from operations to pay for various capital and tenant improvements
        to the properties and leasing commissions. Capital and tenant
        improvements and leasing commissions may in the future exceed the
        Partnership's cash flow from operations. In that event, the Partnership
        would utilize its remaining working capital reserves, reduce
        distributions, or sell one or more properties. Except as discussed
        above, management is not aware of any other trends, events, commitments
        or uncertainties that will have a significant impact on liquidity.


                                       14


<PAGE>

              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                         FORM 10-Q - SEPTEMBER 30, 2000

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

        Liquidity and Capital Resources (continued)

        As discussed in "Item 1. Financial Statements-Note 7", the Partnership
        entered into a settlement agreement relating to a class action lawsuit.
        In light of the current implementation of the settlement and the filing
        of the Registration Statement pursuant to which the General Partners
        are using their best efforts to reorganize the Partnership into a real
        estate investment trust, the General Partners have suspended any
        distributions until such reorganization is either approved or
        disapproved.

        Results of Operations

        The Partnership experienced a decrease in net income of $293,037 for
        the three months ended September 30, 2000 and an increase in net income
        of $34,775 for the nine months ended September 30, 2000 as compared to
        the same periods in the prior year.

        The three-month decrease in net income was due to an increase in costs
        and expenses of $466,436, which was partially offset by an increase in
        rental revenue of $97,038, interest income of $69,841 and other income
        of $6,520. The nine-month increase in net income was due to an increase
        in rental revenue of $103,156, and an increase in interest income of
        $129,756 which were offset by a decrease in other income of $73,260
        along with an increase in costs and expenses of $124,877.

        Rental revenues increased during the three and nine months ended
        September 30, 2000 compared to the same periods ended September 30,
        1999 due to increased rental rates on new leasing activities.

        The increase in cost and expenses for the nine months ended September
        30, 2000 as compared to the nine months ended September 30, 1999 was
        the result of increased operating expenses, depreciation and
        amortization expense and partnership management fees. Property
        operating expenses increased due to higher real estate taxes as a
        result of increased assessed values of the properties. Depreciation and
        amortization expense increased due to expenditures for capital and
        tenant improvements in the previous year.

        Partnership management fee expense during the first three quarters of
        2000 increased by $148,495 as compared to the first three quarters of
        1999 as a result of an amendment to the Partnership Agreement which
        changed the calculation of such fee. (See Item 1. Financial Statements,
        Note 3.) These increased expenses were partially offset by a decrease
        in administrative expenses. This decrease was primarily attributed to
        non-recurring professional fees in connection with the settled class
        action litigation during the nine months ended September 30, 1999.

        The increase in costs and expenses for the three months ended
        September 30, 2000 as compared to the three months ended September 30,
        1999 is the result of increased operating expenses, depreciation and
        amortization and partnership management fees partially offset by
        decrease in administrative expenses and property management fees.

                                       15


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              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                         FORM 10-Q - SEPTEMBER 30, 2000

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS (CONTINUED)


         Results of Operations (continued)

         Interest income increased during the three months and nine months ended
         September 30, 2000 due to higher cash balances during both periods as
         compared to the comparable periods in 1999. Other income increased
         during the three months ended September 30, 2000 and decreased during
         the nine months ended September 30, 2000 as compared to the same
         periods in 1999 due to an increase/decrease in investor transfer fees,
         respectively.

         Inflation is not expected to have a material impact on the
         Partnership's operations or financial position.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The Partnership is not subject to market risk as its cash and cash
         equivalents are invested in short term money market mutual funds. The
         Partnership has no loans outstanding.


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              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                         FORM 10-Q - SEPTEMBER 30, 2000

PART II. OTHER INFORMATION

Item 6 - Exhibits and Reports on Form 8-K

         (a)  Exhibits

         27.  Financial data schedule is filed as an Exhibit to this report

         (b)  Reports on Form 8-K:

              No report of Form 8-K was filed during the period.


                                       17

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              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                         FORM 10-Q - SEPTEMBER 30, 2000


                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



                                     Integrated Resources High Equity Partners,
                                     Series 85, A California Limited Partnership


                                     By:      Resources High Equity, Inc.,
                                              Managing General Partner


Dated:   November ___, 2000                    By: /s/  MICHAEL L. ASHNER
                                                  ------------------------------
                                                  Michael L. Ashner
                                                  President and Director
                                                  (Principal Executive Officer)


Dated:   November ___, 2000                     By: /s/  CAROLYN B. TIFFANY
                                                  ------------------------------
                                                  Carolyn B. Tiffany
                                                  Vice President and Treasurer
                                                  (Principal Financial and
                                                  Accounting Officer)


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