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                                  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, 1998

                         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.)


                   411 West Putnam Avenue, Greenwich, CT 06830
                    (Address of principal executive offices)

                                 (203) 862-7444
              (Registrant's telephone number, including area code)

                                      None
              (Former name, former address and former fiscal year,
                         if changed since last report)

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, 1998

                                      INDEX

                                                                                

         Part I. Financial Information:

         Balance Sheets - September 30, 1998 and December 31, 1997              

         Statements of Operations -- Three and Nine Months Ended
             September 30, 1998 and 1997                                        

         Statement of Partners' Equity -- Nine Months Ended
             September 30, 1998                                                 

         Statements of Cash Flows -- Nine Months Ended
             September 30, 1998 and 1997                                        

         Notes to Financial Statements                                          

         Management's Discussion and Analysis of Financial
             Condition and Results of Operations                                

         Part II. Other Information:

         Legal Proceedings, Exhibits and Reports on Form 8-K                    


<PAGE>
<TABLE>
<CAPTION>
             INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                         FORM 10-Q - SEPTEMBER 30, 1998
                                 BALANCE SHEETS


                                               September 30,        December 31,  
                                                    1998                1997
                                                -----------          -----------
<S>                                             <C>                  <C>        
ASSETS

Real estate - net ....................          $32,295,273          $33,033,710
Cash and cash equivalents ............            6,628,331            4,350,887
Other assets .........................            2,212,341            2,033,252
Receivables ..........................               90,439              182,568
                                                -----------          -----------

                                                $41,226,384          $39,600,417
                                                ===========          ===========


LIABILITIES AND PARTNERS' EQUITY

Accounts payable and accrued expenses           $ 1,631,857          $ 1,183,720
Distributions payable ................              395,799              395,799
Due to affiliates ....................              281,652              577,739
                                                -----------          -----------

                                                  2,309,308            2,157,258
                                                -----------          -----------

Commitments and contingencies

PARTNERS' EQUITY:

     Limited partners' equity (400,010
         units issued and outstanding)           36,970,271           35,570,050
     General partners' equity ........            1,946,805            1,873,109
                                                -----------          -----------

                                                 38,917,076           37,443,159
                                                -----------          -----------

                                                $41,226,384          $39,600,417
                                                ===========          ===========


</TABLE>
                        See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
                         INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                                    FORM 10-Q - SEPTEMBER 30, 1998
                                       STATEMENTS OF OPERATIONS


                                            For the Three Months Ended     For the Nine Months Ended
                                                    September 30,                September 30,
                                             -------------------------     ------------------------- 
                                                1998           1997           1998            1997
                                             ----------     ----------     ----------     ----------
<S>                                          <C>            <C>            <C>            <C>       
Rental Revenue .........................     $2,399,569     $2,172,283     $7,166,179     $6,926,885
                                             ----------     ----------     ----------     ----------

Costs and Expenses:

     Operating expenses ................        870,212        900,086      2,775,832      2,629,694
     Depreciation and amortization .....        312,099        349,935        970,685        969,805
     Partnership management fee ........        221,832        227,043        675,918        681,129
     Administrative expenses ...........        173,675        126,029        729,617        532,387
     Property management fee ...........         70,694         64,045        211,380        204,378
                                             ----------     ----------     ----------     ----------

                                              1,648,512      1,667,138      5,363,432      5,017,393
                                             ----------     ----------     ----------     ----------

Income before gain on sale of property,
       interest and other income .......        751,057        505,145      1,802,747      1,909,492

     Gain on sale of property ..........        730,368           --          730,368           --

     Interest income ...................         26,245         55,533        105,189        146,628

     Other income ......................          3,560         23,030         23,010         69,660
                                             ----------     ----------     ----------     ----------

Net income .............................     $1,511,230     $  583,708     $2,661,314     $2,125,780
                                             ==========     ==========     ==========     ==========

Net income attributable to:

     Limited partners ..................     $1,435,668     $  554,523     $2,528,248     $2,019,491

     General partners ..................         75,562         29,185        133,066        106,289
                                             ----------     ----------     ----------     ----------

Net income .............................     $1,511,230     $  583,708     $2,661,314     $2,125,780
                                             ==========     ==========     ==========     ==========

Net income per unit of limited
     partnership interest (400,010 units
     outstanding) ......................     $     3.59     $     1.39     $     6.32     $     5.05
                                             ==========     ==========     ==========     ==========

</TABLE>

                        See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
                          INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                                     FORM 10-Q - SEPTEMBER 30, 1998
                                      STATEMENT OF PARTNERS' EQUITY


                                                          General           Limited 
                                                         Partners'         Partners'
                                                          Equity            Equity             Total
                                                      ------------      ------------      ------------   
<S>                                                   <C>               <C>               <C>         
Balance, January 1, 1998 ........................     $  1,873,109      $ 35,570,050      $ 37,443,159

Net income for the nine
     months ended September 30, 1998 ............          133,066         2,528,248         2,661,314

Distributions as a return of capital for the nine
     months ended September 30, 1998 ($2.82 per       
     limited partnership unit) ..................          (59,370)       (1,128,027)       (1,187,397)  
                                                      ------------      ------------      ------------   
Balance, September 30, 1998 .....................     $  1,946,805      $ 36,970,271      $ 38,917,076
                                                      ============      ============      ============


</TABLE>

                        See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
                INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                           FORM 10-Q - SEPTEMBER 30, 1998
                              STATEMENTS OF CASH FLOWS


                                                         For the Nine Months Ended
                                                                September 30,
                                                       ---------------------------- 
                                                          1998             1997
                                                       -----------      -----------
<S>                                                    <C>              <C>        
Cash Flows From Operating Activities:

     Net income ..................................     $ 2,661,314      $ 2,125,780
     Adjustments to reconcile net income
     to net cash provided by operating activities:
         Gain on sale of property ................        (730,368)            --
         Depreciation and amortization ...........         970,685          969,805
         Straight-line adjustment for stepped
           lease rentals .........................        (232,881)         (46,902)
     Changes in assets and liabilities:
         Accounts payable and accrued expenses ...         448,137          478,689
         Receivables .............................          92,129         (133,609)
         Due to affiliates .......................        (296,087)        (883,936)
         Other assets ............................         (27,160)        (183,173)
                                                       -----------      -----------

     Net cash provided by   operating activities ..      2,885,769        2,326,654
                                                       -----------      -----------

Cash Flows From Investing Activities:

     Proceeds from sale of property ..............       2,042,964             --
     Improvements to real estate .................      (1,463,892)        (708,233)
                                                       -----------      -----------
     Net cash provided by (used in) investing 
           activities ............................         579,072         (708,233)
                                                       -----------      -----------

Cash Flows From Financing Activities:

     Distributions to partners ...................      (1,187,397)        (964,234)
                                                       -----------      -----------

Increase In Cash And Cash Equivalents ............       2,277,444          654,187

Cash And Cash Equivalents, Beginning of Year .....       4,350,887        4,870,517
                                                       -----------      -----------

Cash And Cash Equivalents, End of Quarter ........     $ 6,628,331      $ 5,524,704
                                                       ===========      ===========
</TABLE>
                          See notes to financial statements
<PAGE>
                INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                           FORM 10-Q - SEPTEMBER 30, 1998
                            NOTES TO FINANCIAL STATEMENTS

l.       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, 1997.

         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.

2.       SIGNIFICANT ACCOUNTING POLICIES

         Impairment of Assets

         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 estimates
         the future 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.  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.
<PAGE>
                INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                           FORM 10-Q - SEPTEMBER 30, 1998
                            NOTES TO FINANCIAL STATEMENTS


2.       SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         Certain  reclassifications  were  made  to  the  prior  year  financial
         statements in order to conform them to the current period presentation.

         Results of operations for the nine months ended  September 30, 1998 are
         not necessarily indicative of the results to be expected for the entire
         year.

3.       CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES

         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.

         Effective as of November 28, 1997, Presidio has a management  agreement
         with NorthStar Presidio  Management Company LLC ("NorthStar  Presidio),
         an affiliate of NorthStar Capital Investment Corp.,  pursuant to which,
         NorthStar  Presidio will provide the day-to-day  management of Presidio
         and its direct and indirect  subsidiaries and affiliates.  For the nine
         months ended  September  30,  1998,  reimbursable  expenses incurred by
         NorthStar Presidio amounted to approximately $71,000.

         The  Partnership  has 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.  A
         portion  of the  property  management  fees were  paid to  unaffiliated
         management  companies  which are engaged for the purpose of  performing
         the management functions for certain properties. For the quarters ended
         September  30, 1998 and 1997,  Resources  Supervisory  was  entitled to
         receive $70,694 and $64,045 respectively,  of which $48,374 and $48,403
         was  paid  to  unaffiliated  management  companies,  respectively,  for
         on-site   management   and  the  balance  was   retained  by  Resources
         Supervisory.

         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 the quarters ended  September 30, 1998 and 1997,
         the Managing General Partner was entitled to receive $37,500.
<PAGE>
                INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                           FORM 10-Q - SEPTEMBER 30, 1998
                            NOTES TO FINANCIAL STATEMENTS


3.       CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES (CONTINUED)

         For  managing  the affairs of the  Partnership,  the  Managing  General
         Partner is entitled  to receive an annual  partnership  management  fee
         equal  to  1.05% of the  amount  of  original  gross  proceeds  paid or
         allocable to the  acquisition of property by the  Partnership.  For the
         quarters  ended  September  30,  1998 and 1997,  the  Managing  General
         Partner was entitled to receive $221,832 and $227,043, respectively The
         General Partners are allocated 5% of the net income of the Partnership,
         which amounted to $75,562 and $29,185 for the quarters ended  September
         30, 1998 and 1997,  respectively.  They are also entitled to receive 5%
         of  distributions,  which  amounted  to  $19,790  and  for  each of the
         quarters ended September 30, 1998 and 1997.

         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,  Millenium  Funding II Corp.,  a
         wholly owned indirect subsidiary of Presidio, purchased 39,123 units of
         the  Partnership  from  various  limited  partners.  Subsequent  to the
         expiration of the offer described  below,  Millennium  Funding II Corp.
         purchased  10,258  limited  partnership  units in August  1998  through
         November 1998. The total of these  purchases  represents  approximately
         12.3% of the outstanding limited partnership units of the Partnership.

         In  connection  with a tender offer for units of the  Partnership  made
         March 12, 1998 (the  "Offer") by Olympia  Investors,  L.P.,  a Delaware
         limited partnership  controlled by Carl Ichan ("Olympia"),  Olympia and
         Presido   entered   into  an   agreement   dated  March  6,  1998  (the
         "Agreement").  On July 28, 1998, Olympia announced that it had accepted
         for payment 32,078 units properly  tendered pursuant to the Offer. As a
         consequence  of the Agreement,  Presidio may be deemed to  beneficially
         own the units owned by Olympia.

 <PAGE>
               INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                           FORM 10-Q - SEPTEMBER 30, 1998
                            NOTES TO FINANCIAL STATEMENTS


4.       REAL ESTATE

         The following  table is a summary of the  Partnership's  real estate as
         of:
<TABLE>
<CAPTION>

                                          September 30,             December 31,  
                                               1998                     1997  
                                          ------------             ------------  
<S>                                       <C>                      <C>           
       Land .........................     $  9,632,166             $ 11,056,966  
       Building and improvements ....       36,910,215               36,784,708  
                                          ------------             ------------  
                                            46,542,381               47,841,674  
       Less: Accumulated depreciation      (14,247,108)             (14,807,964) 
                                          ------------             ------------  
                                           $ 32,295,273             $ 33,033,710  
                                          ============             ============  
</TABLE>                                                                  
         No write-downs  for impairment  were recorded for the nine months ended
September 30, 1998 or 1997.

         On August 28, 1998, the Partnership closed on the sale of the Westbrook
property,  located in Brooklyn  Center,  Minnesota,  to an unrelated  party.  In
connection  with the sale, the Partnership  received  proceeds of $2,042,964 and
recognized a gain on the sale of property of $730,368 under generallly  accepted
accounting principles.

5.       DISTRIBUTIONS PAYABLE
<TABLE>
<CAPTION>
                                                 September 30,       December 31,  
                                                     1998                1997
                                                 ---------           ---------
<S>                                               <C>                 <C>      
           Limited partners ($.94 per unit)       $ 376,009           $ 376,009
           General partners                          19,790              19,790
                                                  ---------           ---------

                                                  $ 395,799           $ 395,799
                                                  =========           =========
</TABLE>

         Such  distributions  were paid in the quarters  subsequent to September
         30, 1998 and December 31, 1997, respectively.
<PAGE>
              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                           FORM 10-Q - SEPTEMBER 30, 1998
                            NOTES TO FINANCIAL STATEMENTS

6.       DUE TO AFFILIATES
<TABLE>
<CAPTION>

                                                     September 30,  December 31,  
                                                          1998           1997
                                                       --------       --------
<S>                                                     <C>            <C>     
   Partnership management fee .....................     $221,832       $227,044
   Reorganization and litigation cost reimbursement
   (Note 7) .......................................         --          210,000
   Property management fee ........................       22,320        103,195
   Non-accountable expense reimbursement ..........       37,500         37,500
                                                        --------       --------

                                                        $281,652       $577,739
                                                        ========       ========
</TABLE>


         Such amounts were paid in the quarters subsequent to September 30, 1998
         and December 31, 1997, respectively.
 

7.       COMMITMENTS AND CONTINGENCIES

         On or about  May 11,  1993  High  Equity  Partners  L.P.  -  Series  86
         ("HEP-86"), an affiliated partnership,  was advised of the existence of
         an action (the  "California  Action")  in which a  complaint  (the "HEP
         Complaint") was filed in the Superior Court for the State of California
         for the County of Los  Angeles  (the  "Court") on behalf of a purported
         class  consisting  of all  of the  purchasers  of  limited  partnership
         interests  in the  Partnership.  On April 7, 1994 the  plaintiffs  were
         granted leave to file an amended complaint (the "Amended Complaint") on
         behalf  of  a  class  consisting  of  all  the  purchasers  of  limited
         partnership  interest  in  HEP-86,  the  Partnership,  and High  Equity
         Partners L.P. - Series 88 ("HEP-88"), another affiliated partnership.

         On  November  30,  1995,  after  the  Court  preliminarily  approved  a
         settlement of the California  Action but  ultimately  declined to grant
         final  approval and after the Court granted  motions to intervene,  the
         original and  intervening  plaintiffs  filed a  Consolidated  Class and
         Derivative Action Complaint (the "Consolidated  Complaint") against the
         managing  general  partner  of HEP-85  and  HEP-88  and the  Investment
         General Partner of HEP-86; the Administrative General Partner of HEP-86
         (the "General Partners"); a subsidiary of the indirect corporate parent
         of the  General  Partners;  and the  indirect  corporate  parent of the
         General Partners.  The Consolidated Complaint alleged various state law
         class and derivative  claims,  including claims for breach of fiduciary
         duties;  breach of contract;  unfair and fraudulent  business practices
         under California Bus. & Prof. Code Sec. 17200; negligence; dissolution,
         accounting and  receivership;  fraud; and negligent  misrepresentation.
<PAGE>
              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                           FORM 10-Q - SEPTEMBER 30, 1998
                            NOTES TO FINANCIAL STATEMENTS

7.       COMMITMENTS AND CONTINGENCIES (CONTINUED)

         The  Consolidated  Complaint  alleged,  among  other  things,  that the
         General  Partners  caused  a waste  of the HEP  partnership  assets  by
         collecting  management  fees in lieu of pursuing a strategy to maximize
         the value of the investments  owned by the limited  partners;  that the
         General  Partners  breached  their duty of loyalty  and due care to the
         limited partners by expropriating management fees from the partnerships
         without trying to run the HEP  partnerships  for the purposes for which
         they are intended; that the General Partners acted improperly to enrich
         themselves in their position of control over the HEP  partnerships  and
         that their actions  prevented  non-affiliated  entities from making and
         completing tender offers to purchase units in the HEP partnership; that
         by refusing to seek the sale of the HEP partnerships'  properties,  the
         General Partners  diminished the value of the limited  partners' equity
         in the HEP  partnerships;  that the  General  Partners  took a  heavily
         overvalued   partnership   asset   management  fee;  and  that  limited
         partnership  units were sold and marketed  through the use of false and
         misleading statements.

         The Court entered an order on January 14, 1997 rejecting the settlement
         and  concluding  that there had not been an adequate  showing  that the
         settlement  was fair and  reasonable.  On February 24, 1997,  the Court
         granted  the request of one  plaintiffs'  law firm to withdraw as class
         counsel.  Thereafter,  in June 1997, the plaintiffs again amended their
         complaint  (the  "Second  Amended   Complaint").   The  Second  Amended
         Complaint  asserts  substantially  the same claims as the  Consolidated
         Complaint,  except  that it no longer  contains  causes  of action  for
         fraud,  for  negligent   misrepresentation,   or  for  negligence.  The
         defendants   served  answers  denying  the  allegations  and  asserting
         numerous  affirmative  defenses.  In February 1998, the Court certified
         three plaintiff classes  consisting of the current unit holders in each
         of the three HEP partnerships.  On March 11, 1998, the Court stayed the
         California  Action  temporarily  to  permit  the  parties  to engage in
         renewed settlement discussions.  On July 30, 1998, the Court lifted the
         stay.

         In September 1998, the parties in the lawsuit entered into a Memorandum
         of  Understanding  with  respect to a settlement  of the  lawsuit.  The
         Memorandum  of  Understanding  provides,  among  other  things,  for  a
         modification of the fees payable under the partnership  agreement and a
         release  of all  claims  against  the  defendants.  The  Memorandum  of
         Understanding is subject to a number of conditions, including agreement
         among the parties with respect to definitive documentation, approval by
         the court and  approval  by the limited  partners  of the  modification
         referred to above.  There can be no assurance that such conditions will
         be fulfilled.

         The Limited  Partnership  Agreement provides for indemnification of the
         General  Partners and their  affiliates in certain  circumstances.  The
         Partnership  has agreed to  reimburse  the General  Partners  for their
         actual costs  incurred in defending  this  litigation  and the costs of
         preparing  settlement  materials.   Through  September  30,  1998,  the
         Partnership  paid the general  partners a total of $1,034,510 for these
         costs.

         The General  Partners  believe that each of the claims  asserted in the
         Second  Amended  Complaint  is  meritless  and  intend to  continue  to
         vigorously defend the California  Action. It is impossible at this time
         to predict  what the defense of the  California  Action will cost,  the
         Partnership's  financial  exposure  as a result of the  indemnification
         agreement  discussed  above,  and whether the costs of defending  could
         adversely affect the Managing General  Partner's ability to perform its
         obligations to the Partnership.
<PAGE>
               INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                           FORM 10-Q - SEPTEMBER 30, 1998
 
                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS

LIQUIDITY AND CAPITAL RESOURCES

Working capital reserves 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. As of September 30,
1998, total working capital reserves amounted to approximately  $2,587,000.  The
Partnership  intends to  distribute  to its partners less than all of its future
cash flow from  operations  in order to assure  adequate  reserves  for  capital
improvements and capitalized lease procurement costs.

During the nine months  ended  September  30,  1998,  cash and cash  equivalents
increased  $2,277,444 as a result of cash  provided by  operations  and from the
sale  of  the  Westbrook   property  in  excess  of  capital   expenditures  and
distributions  to partners.  The  Partnership's  primary source of funds is cash
flow from the  operation of its  properties  (principally  rents  received  from
tenants) which  amounted to $2,885,769  for the nine months ended  September 30,
1998. In addition, the Partnership received proceeds of $2,042,964 from the sale
of Westbrook Mall in August 1998. The  Partnership  used  $1,463,892 for capital
expenditures  related to capital and tenant  improvements  to the properties and
$1,187,397 for distributions to partners for the nine months ended September 30,
1998.

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.  Although no additional  properties are under contract
for sale,  future cash flows will exclude cash flow from the Westbrook  property
which amounted to approximately $38,000 in 1998. 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 the 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.

RESULTS OF OPERATIONS

The  Partnership  experienced  an  increase in net income for the three and nine
months  ended  September  30, 1998 as compared to the same  periods in the prior
year due primarily to the gain of $730,368 on the sale of the Westbrook property
in August  1998.  Increases  in rental  revenues  and  slightly  lower costs and
expenses during the three months ended September 30, 1998 were partially  offset
by lower  interest  and other  income  during the current  period.  For the nine
months ended  September 30, 1998,  higher rental  revenues were offset by higher
costs and expenses  and lower  interest and other income as compared to the nine
months ended September 30, 1997.

Rental revenues  increased  during the three and nine months ended September 30,
1998 compared to 1997 at Century Park due to higher  occupancy and rental rates.
In  addition,  an increase in  revenues at  Southport  during the three and nine
months ended  September 30, 1998 was due to higher  overall  rental rates at the
property.
<PAGE>
             INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                           FORM 10-Q - SEPTEMBER 30, 1998
 
                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS

Costs and expenses  decreased  slightly  during the three months ended September
30, 1998 compared to the same period in 1997,  primarily due to lower  operating
expenses, depreciation expense and partnership management fee as a result of the
Westbrook  sale.  Operating  expenses  increased  during the nine  months  ended
September  30,1998  due to higher  repair  and  maintenance  costs  related to a
waterproofing  project at Southport and higher professional fees incurred at 568
Broadway.  Administrative  expenses  increased  during the three and nine months
ended  September  30, 1998 due to higher  legal and  accounting  fees related to
ongoing  litigation and a possible  reorganization of the Partnership.  Property
management  fees increased  during the three and nine months ended September 30,
1998 due to higher revenues, as previously discussed.

Interest income  decreased  during the three and nine months ended September 30,
1998 due to lower  average cash  balances  during the first nine months of 1998.
Other income decreased during the three and nine months ended September 30, 1998
as compared to the same periods in 1997 due to fewer investor transfers.

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

Legal Proceedings

The  Partnership is a party to certain  litigation.  See Note 7 to the financial
statements for a description thereof.

Forward-looking Statements

When  used  in this  quarterly  report  on  Form  10-Q,  the  words  "believes,"
"anticipates,"  "expects"  and  similar  expressions  are  intended  to identify
forward-looking  statements.  Statements looking forward in time are included in
this  quarterly  report on Form 10-Q pursuant to the "safe harbor"  provision on
the  Private  Securities  Litigation  Reform Act of 1995.  Such  statements  are
subject to certain risks and  uncertainties  which could cause actual results to
differ  materially,   including,   but  not  limited  to,  those  set  forth  in
"management's  discussion  and  analysis of financial  condition  and results of
operations."  Readers  are  cautioned  not to  place  undue  reliance  on  these
forward-looking  statements,  which  speak  only  as of  the  date  hereof.  The
Partnership  undertakes no obligation to publicly  revise these  forward-looking
statements to reflect events or circumstances occurring after the date hereof or
to reflect the occurrence of unanticipated events.

Year 2000 Compliance

The Year 2000 compliance issue concerns the inability of computerized
information systems and equipment to accurately  calculate,  store or use a date
after  December  31,  1999,  as a result of the year being stored as a two digit
number.  This  could  result  in a system  failure  or  miscalculations  causing
disruptions of operations.  The Partnership and its Manager (NorthStar  Presidio
Management  Co.,  LLC)  recognize  the  importance of ensuring that its business
operations  are not disrupted as a result of Year 2000 related  computer  system
and software issues.
<PAGE>
            INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                           FORM 10-Q - SEPTEMBER 30, 1998
 
                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS

The manager is in the process of  assessing  its internal  computer  information
systems and is now taking the further steps necessary to remediate these systems
so that they will be Year 2000 compliant.  In connection therewith,  the manager
is currently in the process of installing a new fully  compliant  accounting and
reporting  system.  The Manager is also  currently  reviewing its other internal
systems and programs,  along with those of its unaffiliated  third party service
providers, in order to insure compliance.

Further,  the Manager and these service  providers are currently  evaluating and
assessing those computer  systems not related to information  technology.  These
systems,  that  generally  operate in a building  include,  without  limitation,
telecommunication  systems,  security  systems  (such as  card-access  door lock
systems),  energy management  systems and elevator  systems.  As a result of the
technology  used in this type of equipment,  it is possible that this  equipment
may not be repairable, and accordingly may require complete replacement. Because
this assessment is ongoing, the total cost of bringing all systems and equipment
into Year 2000  compliance has not been fully  quantified.  Based upon available
information,  the Manager does not believe that these costs will have a material
adverse effect on the Partnership's  business,  financial  condition or results.
However,  it is  possible  that  there  could  be  adverse  consequences  to the
Partnership  as a result of Year 2000 issues that are outside the  Partnership's
control. The Manager is in the preliminary stages of evaluating these issues and
will be developing contingency plans.
<PAGE>
             INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                           FORM 10-Q - SEPTEMBER 30, 1998
 

                          Part II. - Other Information

Item 1 - Legal Proceedings

         (a)      See   Management's   Discussion   and  Analysis  of  Financial
                  Condition  and Results of  Operations  and Notes to  Financial
                  Statements - Note 7 which is herein incorporated by reference.

Item 6 - Exhibits and Reports on Form 8-K

         (a)      Exhibits: There were no exhibits filed.

         (b)      Reports on Form 8-K:
                  None



<PAGE>



                                   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 12, 1998                By:   /S/ Allan Rothschild
                                                --------------------
                                                Allan Rothschild
                                                President
                                                (Duly Authorized Officer)




Dated:   November12, 1998                 By:   /S/ Lawrence Schachter
                                                ----------------------
                                                Lawrence Schachter
                                                Senior Vice President and
                                                Chief Financial Officer
                                                (Principal Financial and
                                                Accounting Officer)