<PAGE>

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

                                  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, 1999
                                               ------------------

                         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)

                   411 West Putnam Avenue, Greenwich, CT 06830
              (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, 1999

                                      INDEX

                                                                      Page No.

Part I. Financial Information:

Balance Sheets - September 30, 1999 and December 31, 1998                  3

Statements of Operations -- Three and Nine Months Ended
   September 30, 1999 and 1998                                             4

Statement of Partners' Equity -- Nine Months Ended
   September 30, 1999                                                      5

Statements of Cash Flows -- Nine Months Ended
   September 30, 1999 and 1998                                             6

Notes to Financial Statements                                         7 - 13

Management's Discussion and Analysis of Financial
   Condition and Results of Operations                               14 - 16

Part II. Other Information:

Legal Proceedings, Exhibits and Reports on Form 8-K                       17


                                       2
<PAGE>

              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                         FORM 10-Q - SEPTEMBER 30, 1999

                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                                             September 30, 1999  December 31, 1998
                                             ------------------  -----------------
<S>                                              <C>                <C>
ASSETS

Real estate - net                                $32,036,575        $32,518,352
Cash and cash equivalents                          8,048,391          6,301,641
Other assets                                       1,954,291          1,847,273
Receivables                                          280,480            147,423
                                                 -----------        -----------

                                                 $42,319,737        $40,814,689
                                                 ===========        ===========

LIABILITIES AND PARTNERS' EQUITY


Accounts payable and accrued expenses            $ 1,441,275        $ 1,265,264
Distributions payable                                     --            395,799
Due to affiliates                                     51,785            362,440
                                                 -----------        -----------

                                                   1,493,060          2,023,503
                                                 -----------        -----------

Commitments and contingencies

PARTNERS' EQUITY:

   Limited partners' equity (400,010
      units issued and outstanding)               38,784,393         36,850,676
   General partners' equity                        2,042,284          1,940,510
                                                 -----------        -----------

                                                  40,826,677         38,791,186
                                                 -----------        -----------

                                                 $42,319,737        $40,814,689
                                                 ===========        ===========
</TABLE>

                        See notes to financial statements


                                       3
<PAGE>

              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                         FORM 10-Q - SEPTEMBER 30, 1999

                            STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                            For the Three Months Ended       For the Nine Months Ended
                                                    September 30,                  September 30,
                                           ----------------------------     ---------------------------
                                               1999             1998           1999             1998
                                           -----------      -----------     -----------     -----------
<S>                                        <C>              <C>             <C>             <C>
Rental Revenue                             $ 2,347,094      $ 2,740,578     $ 7,440,086     $ 7,507,188
                                           -----------      -----------     -----------     -----------

Costs and Expenses:

   Operating expenses                          667,294          870,212       2,226,112       2,775,832
   Depreciation and amortization               336,096          312,099       1,008,288         970,685
   Partnership management fee                   (4,049)         221,832         418,769         675,918
   Administrative expenses                     214,762          173,675       1,077,139         729,617
   Property management fee                      66,254           70,694         223,707         211,380
                                           -----------      -----------     -----------     -----------

                                             1,280,357        1,648,512       4,954,015       5,363,432
                                           -----------      -----------     -----------     -----------

Income before gain on sale of
property, interest and other
income                                       1,066,737        1,092,066       2,486,071       2,143,756

   Gain on sale of property                         --          389,359              --         389,359

   Interest income                              80,654           26,245         238,558         105,189

   Other income                                 13,180            3,560         102,460          23,010
                                           -----------      -----------     -----------     -----------

Net income                                 $ 1,160,571      $ 1,511,230     $ 2,827,089     $ 2,661,314
                                           ===========      ===========     ===========     ===========

Net income attributable to:

   Limited partners                        $ 1,102,543      $ 1,435,668     $ 2,685,735     $ 2,528,248

   General partners                             58,028           75,562         141,354         133,066
                                           -----------      -----------     -----------     -----------

Net income                                 $ 1,160,571      $ 1,511,230     $ 2,827,089     $ 2,661,314
                                           ===========      ===========     ===========     ===========

Net income per unit of limited
   partnership interest (400,010 units
   outstanding)                            $      2.76      $      3.59     $      6.71     $      6.32
                                           ===========      ===========     ===========     ===========
</TABLE>

                        See notes to financial statements


                                       4
<PAGE>

              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                         FORM 10-Q - SEPTEMBER 30, 1999

                          STATEMENT OF PARTNERS' EQUITY

<TABLE>
<CAPTION>
                                            General          Limited
                                           Partners'         Partners'
                                            Equity            Equity             Total
                                         ------------      ------------      ------------
<S>                                      <C>               <C>               <C>
Balance, January 1, 1999                 $  1,940,510      $ 36,850,676      $ 38,791,186

Net income for the nine
   months ended September 30, 1999            141,354         2,685,735         2,827,089

Distributions as a return of capital
   for the nine months ended
   September 30, 1999 ($1.88 per
   limited partnership unit)                  (39,580)         (752,018)         (791,598)
                                         ------------      ------------      ------------

Balance, September 30, 1999              $  2,042,284      $ 38,784,393      $ 40,826,677
                                         ============      ============      ============
</TABLE>

                        See notes to financial statements



                                       5
<PAGE>

              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                         FORM 10-Q - SEPTEMBER 30, 1999

<TABLE>
<CAPTION>
                           STATEMENTS OF CASH FLOWS
                           ------------------------
                                                            For the Nine Months Ended
                                                                   September 30,
                                                          ----------------------------
                                                              1999              1998
                                                           -----------      -----------
<S>                                                        <C>              <C>
Cash Flows From Operating Activities:

   Net income                                              $ 2,827,089      $ 2,661,314
   Adjustments to reconcile net income
   to net cash provided by operating activities:
      Gain on sale of property                                      --         (389,359)
      Depreciation and amortization                          1,008,288          970,685
      Straight-line adjustment for stepped
        lease rentals                                           25,557         (232,881)
   Changes in assets and liabilities:
      Accounts payable and accrued expenses                    176,011          448,137
      Receivables                                             (133,057)          92,129
      Due to affiliates                                       (310,655)        (296,087)
      Other assets                                            (297,851)        (368,169)
                                                           -----------      -----------

   Net cash provided by operating activities                 3,295,382        2,885,769
                                                           -----------      -----------

Cash Flows From Investing Activities:

   Proceeds from sale of property                                   --        2,042,964
   Improvements to real estate                                (361,235)      (1,463,892)
                                                           -----------      -----------

   Net cash provided by (used in) investing activities        (361,235)         579,072
                                                           -----------      -----------

Cash Flows From Financing Activities:

   Distributions to partners                                (1,187,397)      (1,187,397)
                                                           -----------      -----------

Increase In Cash And Cash Equivalents                        1,746,750        2,277,444

Cash And Cash Equivalents, Beginning of Year                 6,301,641        4,350,887
                                                           -----------      -----------

Cash And Cash Equivalents, End of Quarter                  $ 8,048,391      $ 6,628,331
                                                           ===========      ===========
</TABLE>

                        See notes to financial statement


                                       6
<PAGE>

              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                         FORM 10-Q - SEPTEMBER 30, 1999

                          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, 1998.

      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 nine months
      ended September 30, 1999 are not necessarily indicative of the results to
      be expected for the entire year.

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
      a 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.

      Investments in Joint Ventures

      Certain properties were purchased in joint venture ownership with
      affiliated partnerships that have the same, or affiliated, general
      partners as the Partnership. Thus, the joint ventures are, for practical
      purposes, not subject to joint control by such partnerships, but instead
      are controlled by the partnerships' general partners, all of which are
      under common ownership and control. 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.


                                       7
<PAGE>

              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                         FORM 10-Q - SEPTEMBER 30, 1999

                        NOTES TO FINANCIAL STATEMENTS

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. 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 provides the day-to-day
      management of Presidio and its direct and indirect subsidiaries and
      affiliates, including the Partnership. For the nine months ended September
      30, 1999 and 1998, reimbursable expenses incurred by NorthStar Presidio
      related to the Partnership amounted to approximately $76,500 and $71,000,
      respectively.

      On October 21, 1999, Presidio and certain of its affiliates entered into a
      Services Agreement with AP-PCC III, L.P. (the "Agent") pursuant to which
      the Agent was retained to provide asset management and investor relation
      services to the Partnership and other entities affiliated with the
      Partnership.

      As a result of this agreement, the Agent has the duty to direct the day to
      day affairs of the Partnership, including, without limitation, reviewing
      and analyzing potential sale, financing or restructuring proposals
      regarding the Partnership's assets, preparation of all Partnership
      reports, maintaining Partnership records and maintaining bank accounts of
      the Partnership. The Agent is not permitted, however, without the consent
      of Presidio, or as otherwise required under the terms of the Partnership's
      Agreement of Limited Partnership (the "Partnership Agreement") to, among
      other things, cause the Partnership to sell or acquire an asset or file
      for bankruptcy.

      In order to facilitate the provision by the Agent of the asset management
      services and the investor relation services, effective October 25,1999,
      the officers and directors of the General Partner resigned and nominees of
      the Agent were elected as the officers and directors of the General
      Partner. The Agent is an affiliate of Winthrop Financial Associates, a
      Boston based company that provides asset management services, investor
      relation services and property management services to over 150 limited
      partnerships which own commercial property and other assets. The General
      Partner does not believe that this transaction will have a material effect
      on the operations of the Partnership.

                                       8
<PAGE>

              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                         FORM 10-Q - SEPTEMBER 30, 1999

                          NOTES TO FINANCIAL STATEMENTS

3.    CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES

      (CONTINUED)

      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, 1999 and
      1998, Resources Supervisory was entitled to receive $66,254 and $70,694
      respectively, of which $47,920 and $48,374 was paid to unaffiliated
      management companies, respectively, for property management services and
      the balance was retained by Resources Supervisory. For the nine months
      ended September 30, 1999 and 1998, Resources Supervisory was entitled to
      receive $223,707 and $211,380, respectively, of which $169,701 and
      $166,138 was paid to unaffiliated management companies, respectively, for
      property management services 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 each of the quarters ended September 30, 1999 and 1998, the
      Managing General Partner received $37,500. For the nine months ended
      September 30, 1999 and 1998, the Managing General Partner received
      $112,500.

      During 1998, for managing the affairs of the Partnership, the Managing
      General Partner was 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, as adjusted
      for the properties sold. For the three and nine months ended September 30,
      1998, the Managing General Partner received $211,832 and $675,918,
      respectively. Pursuant to the amendment to the Partnership Agreement,
      which became effective on August 20, 1999, the annual partnership
      management fee for 1999 has been reduced to $418,769. For the three and
      nine months ended September 30, 1999, the Managing General Partner
      received ($4,049) and $418,769, respectively. Further, the Partnership
      Agreement has been amended (for the year 2000 and beyond) so that the
      partnership management fee will be calculated equal to 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.

                                       9
<PAGE>

              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                         FORM 10-Q - SEPTEMBER 30, 1999

                          NOTES TO FINANCIAL STATEMENTS

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

      The General Partners are allocated 5% of the net income of the
      Partnership, which amounted to $58,028 and $75,562 for the quarters ended
      September 30, 1999 and 1998, respectively. Net income allocated to the
      General Partners amounted to $141,354 and $133,066 for the nine months
      ended September 30, 1999 and 1998, respectively. They are also
      entitled to receive 5% of distributions, which amounted to $0 and
      $19,790 for the quarters ended September 30, 1999 and 1998, respectively.
      Distributions  allocated to the General Partners amounted to $39,580 and
      $59,370 for the nine months ended September 30, 1999 and 1998,
      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. 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.("MFII"), 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, MFII purchased 50% of those units
      owned by Olympia as a result of the Offer, or 15,566 units, for $101.81
      per unit. Presidio may be deemed to beneficially own the remaining units
      owned by Olympia as a consequence of the Agreement.

      Subsequent to the expiration of the tender offer described above, MFII
      purchased an additional 18,042 limited partnership units from August 1998
      through July 1999. The total number of units purchased by MFII represents
      approximately 18.2% of the outstanding limited partnership units of the
      Partnership.
                                       10
<PAGE>

              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                         FORM 10-Q - SEPTEMBER 30, 1999

                          NOTES TO FINANCIAL STATEMENTS

4.    REAL ESTATE


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

                                      September 30, 1999    December 31, 1998
                                      ------------------    -----------------

      Land                                $ 10,370,965       $ 10,370,965
      Building and improvements             37,151,955         36,790,720
                                          ------------       ------------
                                            47,522,920         47,161,685
      Less: Accumulated depreciation       (15,486,345)       (14,643,333)
                                          ------------       ------------

                                          $ 32,036,575       $ 32,518,352
                                          ============       ============

5.    DISTRIBUTIONS PAYABLE

                                      September 30, 1999    December 31, 1998
                                      ------------------    -----------------

      Limited partners                    $         --       $    376,009
      General partners                              --             19,790
                                          ------------       ------------

                                          $         --       $    395,799
                                          ============       ============

      Such distributions were paid in the subsequent quarters.

6.    DUE TO AFFILIATES

                                      September 30, 1999    December 31, 1998
                                      ------------------    -----------------

      Partnership management fee          $     (4,049)      $    211,409
      Property management fee                   18,334            113,531
      Non-accountable expense
        reimbursement                           37,500             37,500
                                          ------------       ------------

                                          $     51,785       $    362,440
                                          ============       ============

      Such amounts were paid in the subsequent quarters.

                                       11
<PAGE>

              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                         FORM 10-Q - SEPTEMBER 30, 1999

                          NOTES TO FINANCIAL STATEMENTS

7.    COMMITMENTS AND CONTINGENCIES

      In May 1993, limited partners in High Equity Partners L.P. - Series 86
      ("HEP-86"), an affiliated partnership, commenced an action (the "Action")
      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
      the purchasers of limited partnership interests in HEP-86. On April 7,
      1994 the plaintiffs were granted leave to file an amended complaint on
      behalf of a class consisting of all the purchasers of limited partnership
      interests in HEP-86, the Partnership, and High Equity Partners L.P.
      Series 88 ("HEP-88"), another affiliated partnership (collectively, the
      "HEP Partnerships").

      In November, 1995, the original plaintiffs and intervening plaintiffs
      filed a consolidated class and derivative action complaint (the
      "Consolidated Complaint") alleging various state law class and derivative
      claims, including claims for breach of fiduciary duty; breach of contract;
      unfair and fraudulent business practices under California Bus. & Prof.
      Code Section 17200; negligence; dissolution, accounting, receivership and
      removal of general partner; fraud; and negligent misrepresentation

      In early 1996, the parties submitted a proposed settlement to the Court
      (the "Proposed Settlement"), which contemplated a reorganization of the
      three HEP Partnerships into a single real estate investment trust
      ("REIT"), pursuant to which approximately 85% of the shares of the REIT
      would have been allocated to investors in the three HEP Partnerships
      (assuming each of the HEP Partnerships participated in the
      reorganization), and approximately 15% of the shares would have been
      allocated to the HEP General Partners. In early 1997, the Court declined
      to grant final approval of the Proposed Settlement because the Court was
      not persuaded that the Proposed Settlement was fair, adequate or
      reasonable as to the proposed class.

      In July 1997, the plaintiffs filed an amended complaint, which generally
      asserts the same claims as the earlier Consolidated Complaint but contains
      more detailed factual assertions and eliminates some claims they had
      previously asserted. The HEP General Partners challenged the amended
      complaint on legal grounds and filed demurrers and a motion to strike. In
      October 1997, the Court granted substantial portions of the HEP General
      Partners' motions. Thereafter, the HEP General Partners served answers
      denying the allegations and asserting numerous defenses. In February 1998,
      the Court certified three separate plaintiff classes consisting of the
      current owners of record of HEP Units (but excluding all defendants or
      entities related to such defendants), and appointed class counsel and
      liaison counsel.
                                       12
<PAGE>

              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                         FORM 10-Q - SEPTEMBER 30, 1999

                          NOTES TO FINANCIAL STATEMENTS

7.    COMMITMENTS AND CONTINGENCIES (CONTINUED)

      In mid-1998, the parties actively engaged in negotiations concerning a
      possible settlement of the Action. In September 1998, the parties reached
      an agreement in principle, and, during the following months, negotiated
      a more formal settlement stipulation (the "Settlement Stipulation"),
      which they executed in December 1998. The Settlement Stipulation was
      submitted to the Court for preliminary approval in early January 1999.
      In February 1999, the Court gave preliminary approval to the Settlement
      Stipulation and directed that notice of the proposed settlement be sent
      to the previously certified class. The settlement contemplates (I)
      amendments to the Partnership Agreement that would modify the existing fee
      structure; (II) a tender offer whereby the General Partners would purchase
      up to 6.7% of the units from limited partners; and (III) that the General
      Partners would use their best efforts to effect a reorganization of the
      HEP Partnerships into separate REIT's or other publicly traded entities.
      At a hearing held on April 29, 1999, the Court approved the settlement in
      its entirety and directed entry of judgement to that effect. In August
      1999, the settlement was consummated following approval of the amendments
      to the Partnership Agreement.

      At a hearing held on April 29, 1999, the Court also awarded a total of
      $2.5 million in attorneys' fees and reimbursement of expenses to Class
      and objectors' counsel. Of that total, $875,000 is to be paid by the
      General Partners and the balance by the HEP Partnerships. In connection
      with the Settlement Stipulation, the Partnership paid $602,667 during
      the nine months ended September 30, 1999. 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, 1999, the Partnership paid the General Partners a
      total of $1,034,510 for these costs.

                                       13
<PAGE>


              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                         FORM 10-Q - SEPTEMBER 30, 1999

                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,
1999 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, 1999, cash and cash equivalents
increased $1,746,750 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 less property operating expenses) which amounted to
$3,295,382 for the nine months ended September 30, 1999. The Partnership used
$361,235 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, 1999.

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
(sold in 1998) 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 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.

RESULTS OF OPERATIONS

The Partnership experienced a decrease in net income of approximately $351,000
for the three months ended September 30, 1999 as compared to the 1998 period
primarily due to the fact that the Partnership recorded a $389,359 gain on the
sale of the Westbrook property in August 1998. Costs and expenses decreased
approximately $368,000 during the three months ended September 30, 1999 as
compared to the same period in 1998.

Rental revenues decreased $393,484 during the three months ended September 30,
1999 compared to the 1998 period due to a $618,585 decrease at Westbrook (as a
result of the sale of the property including the effect of the straight-line
rent adjustment) partially offset by increases of $146,948 and $35,875 at 568
Broadway and Seattle Tower, respectively, due to higher overall rental rates at
the properties.

                                       14
<PAGE>

              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                         FORM 10-Q - SEPTEMBER 30, 1999

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

Costs and expenses decreased $368,155 during the three months ended September
30, 1999 compared to the 1998 period. The $202,918 decrease in operating
expenses was primarily due to a $104,080 decrease at the Southport property due
to lower repairs and maintenance costs and a $95,481 decrease at the 568
Broadway property due to lower professional fees related to tenant issues. The
$225,881 decrease in partnership management fees was due a $10,423 reduction due
to the sale of the Westbrook property and an amendment  to the partnership
agreement (see Note 3) approved in August 1999 which resulted in a $215,458
reduction in management fees for the 1999 period. For the three months ended
September 30, 1999, these decreases were partially offset by a $23,997 increase
in depreciation expense during 1999 due to real estate improvements in 1998 and
a $41,087 increase in administrative expenses in 1999 due to higher legal fees
incurred in 1999 pursuant to the Settlement Agreement related to the ongoing
litigation and possible reorganization of the Partnership (see Note 7).

Interest income increased $54,409 during the three months ended September 30,
1999 due to higher cash balances during the current period as compared to the
1998 period. Other income increased $9,620 during the three months ended
September 30, 1999 as compared to the 1998 period due to a greater number of
investor transfers on which the Partnership earns a transfer fee.

The Partnership experienced an increase in net income of approximately $166,000
for the nine months ended September 30, 1999 as compared to the 1998 period
primarily due to higher rental revenues, interest and other income, and lower
costs and expenses. These items were partially offset by the $389,359 gain
recorded on the sale of the Westbrook property in August 1998

Rental revenues decreased $67,102 during the nine months ended September 30,
1999 compared to the 1998 period primarily due to $364,721 and $106,912
increases in revenues at 568 Broadway and Seattle Tower, respectively, due to
higher overall rental rates at the properties, offset by a $669,439 reduction in
revenues due to the sale of the Westbrook property, as previously discussed.

Costs and expenses decreased $409,417 during the nine months ended September 30,
1999 compared to the 1998 period due to lower operating expenses and partnership
management fees, partially offset by an increase in administrative expenses. The
$549,720 decrease in operating expenses was primarily due to a $160,728 decrease
at Westbrook due to the sale, a $212,287 decrease in repairs and maintenance
costs at Southport, and a $95,481 decrease in professional fees at 568 Broadway.
The $257,149 decrease in partnership management fees was due a $41,691 reduction
due to the sale of the Westbrook property and an amendment to the partnership
agreement (see Note 3) approved in August 1999 which resulted in a $215,458
reduction in fees for the 1999 period. These decreases were partially offset by
an $37,603 increase in depreciation expense during the 1999 period due to real
estate improvements in 1998 and a $347,522 increase in administrative expenses
for the 1999 period due to higher legal fees pursuant to the Settlement
Agreement related to the ongoing litigation and possible reorganization of the
Partnership (see Note 7).

                                       15
<PAGE>

              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                         FORM 10-Q - SEPTEMBER 30, 1999

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

Interest income increased $133,369 during the nine months ended September 30,
1999 due to higher cash balances during the current period as compared to the
same period in 1998. Other income increased $79,450 during the nine months ended
September 30, 1999 as compared to the 1998 period due to a greater number of
investor transfers on which the Partnership earns a transfer fee.

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 programs 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. The Partnership is dependent upon the General Partner and its affiliates
for management and administrative services. This could result in system failure
or miscalculations causing disruptions of operations, including, among other
things, a temporary inability to process transactions, send invoices, or engage
in similar normal business activities.

During the third quarter of 1999, the General Partner and its affiliates
completed their assessment of computer systems used in connection with the
management of the Partnership. The General Partner and its affiliates have
completed upgrading those systems where required. The Partnership has to date
not borne, nor is it expected that the Partnership will bear, any significant
costs in connection with the upgrade of those systems requiring remediation.

To date, the General Partner is not aware of any external agent or service
provider with a Year 2000 issue that would materially impact the Partnership's
results of operations, liquidity or capital resources. However, the General
Partner has no means of ensuring that external agents and service providers will
be Year 2000 compliant. The General Partner does not believe that the inability
of external agents or service providers to complete their Year 2000 resolution
process in a timely manner will have a material impact on the financial position
or results of operations of the Partnership. However, the effect of
non-compliance by external agents is not readily determinable.

                                       16
<PAGE>

              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                         FORM 10-Q - SEPTEMBER 30, 1999

                          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:
            (i)   Amendment to the Amended and Restated Agreement of Limited
                  Partnership dated August 20, 1999.
            (ii)  Guarantee by Presidio Capital Corp. dated August 20, 1999.

      (b)   Reports on Form 8-K:
            None


                                       17
<PAGE>

              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                         FORM 10-Q - SEPTEMBER 30, 1999

                                   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 15, 1999                  By:   /S/ Allan Rothschild
                                                --------------------------------
                                                Allan Rothschild
                                                (Duly Authorized Officer)


Dated: November 15, 1999                  By:   /S/ Lawrence Schachter
                                                --------------------------------
                                                Lawrence Schachter
                                                (Principal Financial and
                                                Accounting Officer)


                                       18