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, 1997

                         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, 1997


                                      INDEX

                                                                                

         Part I. Financial Information:

         Balance Sheets - September 30, 1997 and December 31, 1996              

         Statements of Operations -- Three and Nine Months Ended
             September 30, 1997 and 1996                                        

         Statement of Partners' Equity -- Nine Months Ended
             September 30, 1997                                                 

         Statements of Cash Flows -- Nine Months Ended
             September 30, 1997 and 1996                                        

         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, 1997


                                 BALANCE SHEETS

                                                  September 30,      December 31, 
                                                       1997              1996 
                                                   -----------       -----------
<S>                                                <C>               <C>
ASSETS

Real estate ................................       $32,064,436       $32,154,253
Cash and cash equivalents ..................         5,524,704         4,870,517
Other assets ...............................         2,165,531         2,107,211
Receivables ................................           291,813           158,204
                                                   -----------       -----------

                                                   $40,046,484       $39,290,185
                                                   ===========       ===========


LIABILITIES AND PARTNERS' EQUITY

Accounts payable and accrued expenses ......       $ 1,540,421       $ 1,061,732
Distributions payable ......................           395,799           252,638
Due to affiliates ..........................           280,185         1,164,121
                                                   -----------       -----------

                                                     2,216,405         2,478,491
                                                   -----------       -----------

Commitments and contingencies

PARTNERS' EQUITY:

     Limited partners' equity (400,010
         units issued and outstanding) .....        35,937,623        34,970,158
     General partners' equity ..............         1,892,456         1,841,536
                                                   -----------       -----------

                                                    37,830,079        36,811,694
                                                   -----------       -----------

                                                   $40,046,484       $39,290,185
                                                   ===========       ===========


</TABLE>
                        See notes to financial statements

<PAGE>
<TABLE>
<CAPTION>
                     INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                                  FORM 10-Q - SEPTEMBER 30, 1997


                                       STATEMENTS OF OPERATIONS


                                             For the Three Months Ended    For the Nine Months Ended
                                                   September 30,                   September 30,
                                             --------------------------    -------------------------
                                                1997           1996           1997           1996
                                             ----------     ----------     ----------     ----------
<S>                                          <C>            <C>            <C>            <C>
Rental Revenue .........................     $2,172,283     $2,157,450     $6,926,885     $6,721,339
                                             ----------     ----------     ----------     ----------
Costs and Expenses:

     Operating expenses ................        900,086        854,081      2,629,694      2,537,699
     Depreciation and amortization .....        349,935        319,366        969,805        958,096
     Partnership management fee ........        227,043        227,043        681,129        681,131
     Administrative expenses ...........        126,029        128,253        532,387        375,995
     Property management fee ...........         64,045         63,614        204,378        200,473
                                             ----------     ----------     ----------     ----------

                                              1,667,138      1,592,357      5,017,393      4,753,394
                                             ----------     ----------     ----------     ----------

Income before interest and other income         505,145        565,093      1,909,492      1,967,945

     Interest income ...................         55,533         39,651        146,628         92,834

     Other income ......................         23,030         22,654         69,660         52,464
                                             ----------     ----------     ----------     ----------

Net income .............................     $  583,708     $  627,398     $2,125,780     $2,113,243
                                             ==========     ==========     ==========     ==========

Net income attributable to:

     Limited partners ..................     $  554,523     $  596,028     $2,019,491     $2,007,581

     General partners ..................         29,185         31,370        106,289        105,662
                                             ----------     ----------     ----------     ----------

Net income .............................     $  583,708     $  627,398     $2,125,780     $2,113,243
                                             ==========     ==========     ==========     ==========

Net income per unit of limited
     Partnership interest (400,010 units
     outstanding) ......................     $     1.39     $     1.49     $     5.05     $     5.02
                                             ==========     ==========     ==========     ==========


</TABLE>
                        See notes to financial statements

<PAGE>
<TABLE>
<CAPTION>
              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                         FORM 10-Q - SEPTEMBER 30, 1997



                          STATEMENT OF PARTNERS' EQUITY


                                                          General            Limited
                                                         Partners'           Partners'
                                                           Equity            Equity           Total
                                                      ------------      ------------      ------------
<S>                                                   <C>               <C>               <C>
Balance, January 1, 1997 ........................     $  1,841,536      $ 34,970,158      $ 36,811,694

Net income for the nine
     months ended September 30, 1997 ............          106,289         2,019,491         2,125,780

Distributions as a return of capital for the nine
     months ended September 30, 1997 ($2.63 per .          (55,369)       (1,052,026)       (1,107,395)
                                                      ------------      ------------      ------------
     limited partnership unit)

Balance, September 30, 1997 .....................     $  1,892,456      $ 35,937,623      $ 37,830,079
                                                      ============      ============      ============



</TABLE>
                        See notes to financial statements

<PAGE>
<TABLE>
<CAPTION>
              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                         FORM 10-Q - SEPTEMBER 30, 1997



                            STATEMENTS OF CASH FLOWS
                                                                                                                              
                                                        For The Nine Months Ended
                                                                September 30,
                                                       ----------------------------
                                                           1997              1996
                                                       -----------      -----------
<S>                                                    <C>              <C>
Cash Flows From Operating Activities:

     Net income ..................................     $ 2,125,780      $ 2,113,243
     Adjustments to reconcile net income
     to net cash provided by operating activities:
         Depreciation and amortization ...........         969,805          958,096
         Straight-line adjustment for stepped
           lease rentals .........................         (46,902)         (31,268)
     Changes in assets and liabilities:
         Accounts payable and accrued expenses ...         478,689          852,157
         Receivables .............................        (133,609)         (70,809)
         Due to affiliates .......................        (883,936)         (69,003)
         Other assets ............................        (183,173)        (225,458)
                                                       -----------      -----------

     Net cash provided by operating activities ...       2,326,654        3,526,958
                                                       -----------      -----------

Cash Flows From Investing Activities:

     Improvements to real estate .................        (708,233)        (403,006)
                                                       -----------      -----------

Cash Flows From Financing Activities:

     Distributions to partners ...................        (964,234)        (757,914)
                                                       -----------      -----------

Increase In Cash And Cash Equivalents ............         654,187        2,366,038

Cash And Cash Equivalents, Beginning of Year .....       4,870,517        2,450,943
                                                       -----------      -----------

Cash And Cash Equivalents, End of Quarter ........     $ 5,524,704      $ 4,816,981
                                                       ===========      ===========


</TABLE>
                        See notes to financial statements
<PAGE>
              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                         FORM 10-Q - SEPTEMBER 30, 1997

                          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/A
         for the year ended December 31, 1996.

         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 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, 1997


                          NOTES TO FINANCIAL STATEMENTS

 2.      SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         Recently Issued Accounting Pronouncements

         The Financial  Accounting  Standards  Board has recently issued several
         new accounting pronouncements.  Statement No. 128, "Earnings per Share"
         establishes  standards for computing and presenting earnings per share,
         and is effective for financial  statements  for both interim and annual
         periods ending after December 15, 1997.  Statement No. 129, "Disclosure
         of  Information  about  Capital  Structure"  establishes  standards for
         disclosing  information  about an entity's  capital  structure,  and is
         effective for financial  statements  for periods  ending after December
         15,  1997.   Statement  No.  130,  "Reporting   Comprehensive   Income"
         establishes standards for reporting and display of comprehensive income
         and its  components and is effective for fiscal years  beginning  after
         December 15, 1997. Statement No. 131, "Disclosures about Segments of an
         Enterprise and Related Information"  establishes  standards for the way
         that public business  enterprises  report  information  about operating
         segments  in  annual  financial  statements  and  requires  that  those
         enterprises  report selected  information  about operating  segments in
         interim financial  reports issued to shareholders.  It also establishes
         standards  for  related   disclosures   about  products  and  services,
         geographic  areas, and major customers,  and is effective for financial
         statements for periods beginning after December 15, 1997.

         Management  does not  believe  that  these  new  standards  will have a
         material effect on the Partnership's  reported operating  results,  per
         unit amounts, financial position or cash flow.

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

         Results of operations for the nine months ended  September 30, 1997 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 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  rights  ofthe  Limited
         Partners, under the Limited Patnership Agreement, Presidio controls the
         Partnership  through its  indirect  ownership  of all the shares of the
         General  Partners.  On  November  2, 1997 the  Administrative  Services
<PAGE>
              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                         FORM 10-Q - SEPTEMBER 30, 1997

                         NOTES TO FINANCIAL STATEMENTS

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

         Agreement with Wexford  Management LLC ("Wexford"),  the  administrator
         for  Presidio,   expired  pursuant  to  its  terms.  Pursuant  to  that
         agreement,  Wexford had authority to designate directors of the General
         Partners. Effective November 3, 1997, Wexford and Presidio entered into
         an Administrative  Services Agreement dated as of November 3, 1997 (the
         "ASA").  The  ASA  provides  that  Wexford  will  continue  to  provide
         consulting and  administrative  services to Presidio and its affiliates
         for a term of six months.  During the quarter ended September 30, 1997,
         reimbursable  expenses to Wexford by the Partnership amount to $23,650.

         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, 1997 and 1996,  Resources  Supervisory  was  entitled to
         receive $64,045 and $63,614 respectively,  of which $48,403 and $44,527
         was paid to unaffiliated management companies, respectively.

         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  (exclusive  of the  reimbursement  expenses  paid to
         Wexford ). For each of the quarters ended  September 30, 1997 and 1996,
         the Managing General Partner was entitled to receive $37,500.

         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 each
         of the quarters ended September 30, 1997 and 1996, the Managing General
         Partner was entitled to receive $227,043.

         The  General  Partners  are  allocated  5% of  the  net  income  of the
         Partnership,  which  amounted to $29,185  and $31,370 for the  quarters
         ended September 30, 1997 and 1996, respectively. They are also entitled
         to receive 5% of  distributions,  which amounted to $19,790 and $12,632
         for the quarters ended September 30, 1997 and 1996, respectively.

         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.

         From July 1996 through  October  1997,  Millenium  Funding II Corp.,  a
         wholly owned indirect subsidiary of Presidio, purchased 22,171 units of
         the Partnership  from various limited  partners.  These units represent
         approximately 5.6% of the outstanding  limited partnership units of the
         Partnership.
<PAGE>
              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                         FORM 10-Q - SEPTEMBER 30, 1997

                         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,
                                                   1997                 1996
                                               ------------        ------------
<S>                                            <C>                 <C>
                                                                  
Land ...................................       $ 11,056,966        $ 11,056,966
Building and improvements ..............         35,525,315          34,817,081
                                               ------------        ------------
                                                 46,582,281          45,874,047
Less: Accumulated depreciation .........        (14,517,845)        (13,719,794)
                                               ------------        ------------
                                               $ 32,064,436        $ 32,154,253
                                               ============        ============

</TABLE>
         No write-downs  for impairment  were recorded for the nine months ended
September 30, 1997 or 1996.


5.       DISTRIBUTIONS PAYABLE
<TABLE>
<CAPTION>

                                                      September 30,  December 31,
                                                           1997           1996
                                                         --------       --------
<S>                                                      <C>            <C>
Limited partners ($.94 and $.60 per unit) ........       $376,009       $240,006
General partners .................................         19,790         12,632
                                                         --------       --------

                                                         $395,799       $252,638
                                                         ========       ========
</TABLE>
         Such  distributions  were paid in the quarters  subsequent to September
         30, 1997 and December 31, 1996, respectively.
<PAGE>
              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                         FORM 10-Q - SEPTEMBER 30, 1997

                         NOTES TO FINANCIAL STATEMENTS

6.       DUE TO AFFILIATES

<TABLE>
<CAPTION>
                                                    September 30,    December 31,
                                                       1997               1996
                                                     ----------       ----------
<S>                                                  <C>              <C>
Partnership management fee ...................       $  227,043       $  227,044
Settlement  and  litigation cost reimbursement
(Note 7) .....................................             --            824,510
Property management fee ......................           15,642           75,067
Non-accountable expense reimbursement ........           37,500           37,500
                                                     ----------       ----------

                                                     $  280,185       $1,164,121
                                                     ==========       ==========

</TABLE>

         Such amounts were paid in the quarters subsequent to September 30, 1997
         and December 31, 1996, 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 HEP-86. On April 7, 1994 the plaintiffs were granted leave
         to file an amended complaint (the "Amended Complaint").

         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
         Administrative  and Investment General Partners of HEP-86, the managing
         general  partner of the  Partnership,  the managing  general partner of
         HEP-88 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.  The Consolidated
         Complaint alleged, among other things, that the general partners caused
         a waste of 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
<PAGE>
              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                         FORM 10-Q - SEPTEMBER 30, 1997

                         NOTES TO FINANCIAL STATEMENTS

7.       COMMITMENTS AND CONTINGENCIES (CONTINUED)

         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 are acting  improperly to enrich  themselves in their
         position of control over the HEP  Partnerships  and that their  actions
         prevent  non-affiliated  entities  from  making and  completing  tender
         offers to purchase HEP Partnership  Units; that by refusing to seek the
         sale of the HEP  Partnerships'  properties,  the general  partners have
         diminished  the  value  of the  limited  partners'  equity  in the  HEP
         Partnerships; that the general partners have taken a heavily overvalued
         partnership  asset management fee; and that limited  partnership  units
         were  sold  and  marketed  through  the  use of  false  and  misleading
         statements.

         On February 24, 1997,  after the Court again  preliminarily  approved a
         settlement of the California  Action but again  ultimately  declined to
         grant final  approval,  the Court  recused  itself from  considering  a
         motion to intervene and to file a new complaint in  intervention by two
         of the objectors to the Revised Settlement,  granted the request of one
         plaintiffs' law firm to withdraw as class counsel and scheduled  future
         hearings on various matters.

         Thereafter,  the  Intervening  Plaintiffs  filed  and then  revised  an
         Amended  Consolidated Class Action and Derivative Action Complaint (the
         Second Amended  Consolidated  Complaint) which asserts many of the same
         claims  as  the  Consolidated   Complaint,   eliminates  certain  legal
         infirmities  from  that  Consolidated  Complaint,   and  presents  more
         detailed factual  allegations.  In particular,  that pleading no longer
         asserts  claims of fraud and negligent  misrepresentation.  The General
         Partners  believed  that  the  Second  Amended  Consolidated  Complaint
         continued  to be  subject  to  challenge  on legal  grounds  and  filed
         demurrers and a motion to strike. On October 7, 1997, the Court granted
         substantial portions of these motions. Thereafter, the General Partners
         served  answers  denying  the   allegations   and  asserting   numerous
         affirmative defenses.

         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 December 31, 1996, the General
         Partners had billed the Partnership a total of $824,510 for these costs
         which was paid in February 1997.

         The General  Partners  believe that each of the claims  asserted in the
         Consolidated   Complaint  are  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, 1997

                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,
1997, total working capital reserves amounted to approximately  $3,426,000.  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 lease procurement costs.

During the nine months  ended  September  30,  1997,  cash and cash  equivalents
increased  $654,187  as a result of cash  provided  by  operations  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 $2,326,654 for the nine months
ended September 30, 1997. The Partnership used $708,233 for capital expenditures
related to capital and tenant  improvements  to the  properties and $964,234 for
distributions to partners for the nine months ended September 30, 1997.

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 commission,  the amount of which cannot be predicted with certainty.
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  or sell  one or more
properties.  Except as  discussed  herein,  management  is not aware of  trends,
events,  commitments  or  uncertainties  that  will have  significant  impact on
liquidity.

RESULTS OF OPERATIONS

The Partnership  experienced a slight increase in net income for the nine months
ended  September  30,  1997  compared  to the same  period in the prior year due
primarily  to  higher  rental  revenues,  interest  income,  and  other  income,
partially  offset by higher costs and expenses  during 1997.  Net income for the
three months ended September 30, 1997 decreased compared to the prior period due
to higher  costs and  expenses,  partially  offset  by higher  rental  revenues,
interest income and other income.

Rental  revenues  increased  at Southport  and 568 Broadway  during the nine and
three months ended September 30, 1997 compared to 1996,  primarily due to higher
percentage  rents  collected  during 1997 at Southport and lease renewals at 568
Broadway at rates  higher than those in 1996.  These  increases  were  partially
offset by lower rental revenues at Westbrook for both current periods, primarily
due to lower occupancy rates in 1997 as compared to the same periods in 1996.

Costs and expenses  increased  during the nine and three months ended  September
30, 1997  compared  to the same  periods in 1996,  primarily  due to increase in
operating and administrative expenses.  Operating expenses increased during both
periods in 1997 due to higher  repairs and  maintenance  costs at Southport  and
Century Park and higher  utility  expenses at various  properties  due to higher
occupancy and service  rates.  Administrative  expenses  increased due to higher
legal and  accounting  fees  during  both  periods  in 1997  related  to ongoing
litigation.
<PAGE>
              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                         FORM 10-Q - SEPTEMBER 30, 1997

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS


Interest income  increased due to higher cash balances during the nine and three
months ended  September  30, 1997  compared to the same  periods in 1996.  Other
income increased during the nine months ended September 30, 1997 compared to the
same period in 1996 due to a greater number of investor transfers,  which result
in transfer fees received by the Partnership.

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.
<PAGE>
              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                         FORM 10-Q - SEPTEMBER 30, 1997


                          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: 

                  Current report on Form 8-K dated August 7, 1997.
                  Current report on Form 8-K dated September 19, 1997.

<PAGE>
              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                         FORM 10-Q - SEPTEMBER 30, 1997


                                   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 14, 1997             By:      /S/ Richard Sabella
                                                -------------------
                                                Richard Sabella
                                                President
                                                (Duly Authorized Officer)




Dated:   November 14, 1997             By:      /S/ Kevin Reardon
                                                -----------------
                                                Kevin Reardon
                                                Vice President, Secretary
                                                and Treasurer
                                                (Principal Financial and
                                                Accounting Officer)