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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 March 31, 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 - MARCH 31, 1998

                                      INDEX

                                                                        

         Part I. Financial Information:

         Balance Sheets - March 31, 1998 and December 31, 1997          

         Statements of Operations -- Three Months Ended
             March 31, 1998 and 1997                                    

         Statement of Partners' Equity -- Three Months Ended
             March 31, 1998                                             

         Statements of Cash Flows -- Three Months Ended
             March 31, 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 - MARCH 31, 1998

                                 BALANCE SHEETS


                                                     March 31,       December 31, 
                                                       1998              1997 
                                                   -----------       -----------
<S>                                                <C>               <C>
ASSETS

Real estate - net ..........................       $33,210,936       $33,033,710
Cash and cash equivalents ..................         5,031,833         4,350,887
Other assets ...............................         1,986,863         2,033,252
Receivables ................................           148,703           182,568
                                                   -----------       -----------

                                                   $40,378,335       $39,600,417
                                                   ===========       ===========


LIABILITIES AND PARTNERS' EQUITY

Accounts payable and accrued expenses ......       $ 1,524,817       $ 1,183,720
Distributions payable ......................           395,799           395,799
Due to affiliates ..........................           485,898           577,739
                                                   -----------       -----------

                                                     2,406,514         2,157,258
                                                   -----------       -----------

Commitments and contingencies

PARTNERS' EQUITY:

     Limited partners' equity (400,010
         units issued and outstanding) .....        36,072,279        35,570,050
     General partners' equity ..............         1,899,542         1,873,109
                                                   -----------       -----------

                                                    37,971,821        37,443,159
                                                   -----------       -----------

                                                   $40,378,335       $39,600,417
                                                   ===========       ===========
</TABLE>
                        See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                           FORM 10-Q - MARCH 31, 1998
                                                    
                            STATEMENTS OF OPERATIONS


                                                         For the Three Months
                                                            Ended March 31,
                                                     ---------------------------
                                                        1998             1997
                                                     ----------       ----------
<S>                                                  <C>              <C>
Rental Revenue ...............................       $2,590,545       $2,356,528
                                                     ----------       ----------

Costs and Expenses:

     Operating expenses ......................          836,815          872,018
     Depreciation and amortization ...........          329,293          309,935
     Partnership management fee ..............          227,043          227,043
     Administrative expenses .................          225,750          202,260
     Property management fee .................           76,584           69,069
                                                     ----------       ----------

                                                      1,695,485        1,680,325
                                                     ----------       ----------

Income before interest and other income ......          895,060          676,203

     Interest income .........................           26,201           42,666

     Other income ............................            3,200           15,290
                                                     ----------       ----------

Net income ...................................       $  924,461       $  734,159
                                                     ==========       ==========

Net income attributable to:

     Limited partners ........................       $  878,238       $  697,451

     General partners ........................           46,223           36,708
                                                     ----------       ----------

Net income ...................................       $  924,461       $  734,159
                                                     ==========       ==========

Net income per unit of limited
     Partnership interest (400,010 units
     outstanding) ............................       $     2.20       $     1.74
                                                     ==========       ==========

</TABLE>
                        See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
                          INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                                       FORM 10-Q - MARCH 31, 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 three
     months ended March 31, 1998 .................           46,223           878,238           924,461

Distributions as a return of capital for the three
     months ended March 31, 1998 ($.94 per limited                                                            
     partnership unit.............................          (19,790)         (376,009)         (395,799)   
                                                       ------------      ------------      ------------  
  
Balance, March 31, 1998 ..........................     $  1,899,542      $ 36,072,279      $ 37,971,821
                                                       ============      ============      ============
</TABLE>

                       See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                           FORM 10-Q - MARCH 31, 1998

                            STATEMENTS OF CASH FLOWS


                                                            For the Three Months
                                                                Ended March 31,
                                                       ----------------------------
                                                                                                  
                                                            1998             1997
                                                       -----------      -----------
<S>                                                    <C>              <C>
Cash Flows From Operating Activities:

     Net income ..................................     $   924,461      $   734,159
     Adjustments to reconcile net income
     to net cash provided by operating activities:
         Depreciation and amortization ...........         329,293          309,935
         Straight-line adjustment for stepped
           lease rentals .........................           1,000          (13,228)
     Changes in assets and liabilities:
         Accounts payable and accrued expenses ...         341,097          196,472
         Receivables .............................          33,865           37,728
         Due to affiliates .......................         (91,841)        (884,348)
         Other assets ............................         (22,801)         (72,855)
                                                       -----------      -----------

     Net cash provided by operating activities ...       1,515,074          307,863
                                                       -----------      -----------

Cash Flows From Investing Activities:

     Improvements to real estate .................        (438,329)        (249,772)
                                                       -----------      -----------

Cash Flows From Financing Activities:

     Distributions to partners ...................        (395,799)        (252,638)
                                                       -----------      -----------

Increase (Decrease) In Cash And Cash Equivalents .         680,946         (194,547)

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

Cash And Cash Equivalents, End of Quarter ........     $ 5,031,833      $ 4,675,970
                                                       ===========      ===========

</TABLE>
                        See notes to financial statements
<PAGE>
              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                           FORM 10-Q - MARCH 31, 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 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
<PAGE>
              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                           FORM 10-Q - MARCH 31, 1998


                          NOTES TO FINANCIAL STATEMENTS

 2.      SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         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.

         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 three months ended March 31, 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 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.

         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
         March 31, 1998 and 1997, Resources  Supervisory was entitled to receive
         $76,584 and $69,069 respectively, of which $65,229 and $53,839 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.  For each of the  quarters  ended March 31, 1998 and
         1997, 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 March 31, 1998 and 1997,  the  Managing  General
         Partner was entitled to receive $227,043.
<PAGE>
              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                           FORM 10-Q - MARCH 31, 1998


                          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 $46,223  and $36,708 for the  quarters
         ended March 31, 1998 and 1997, respectively.  They are also entitled to
         receive 5% of distributions,  which amounted to $19,790 and $15,790 for
         the quarters ended March 31, 1998 and 1997, 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  May 1, 1998,  Millenium  Funding  II Corp.,  a
         wholly owned indirect subsidiary of Presidio, purchased 39,123 units of
         the  Partnership  from  various  limited  partners,   which  represents
         approximately 9.8% of the outstanding  limited partnership units of the
         Partnership.

         Pursuant  to an  agreement  dated as of March 6,  1998  among  Presidio
         Capital Corp., American Real Estate Holding, L.P. and Olympia Investors
         L.P. (the  "Purchaser"),  on March 12, 1998, the Purchaser  commenced a
         tender offer to purchase up to 40% of the outstanding  units of limited
         partnership interest at a purchase price of $95.00 per unit.

4.       REAL ESTATE

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

<TABLE>
<CAPTION>
                                             March 31,      December  31, 
                                               1998              1997
                                          ------------      ------------
<S>                                       <C>               <C>

       Land .........................     $ 11,056,966      $ 11,056,966
       Building and improvements ....       37,223,037        36,784,708
                                          ------------      ------------
                                            48,280,003        47,841,674
       Less: Accumulated depreciation      (15,069,067)      (14,807,964)
                                          ------------      ------------

                                          $ 33,210,936      $ 33,033,710
                                          ============      ============
</TABLE>
         No write-downs  for impairment were recorded for the three months ended
March 31, 1998 or 1997.
<PAGE>
              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                           FORM 10-Q - MARCH 31, 1998


                          NOTES TO FINANCIAL STATEMENTS

5.       DISTRIBUTIONS PAYABLE
<TABLE>
<CAPTION>
                                                     March 31,   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 March 31,
         1998 and December 31, 1997, respectively.

6.       DUE TO AFFILIATES
<TABLE>
<CAPTION>
                                                        March 31,   December 31,  
                                                          1998         1997
                                                        --------     --------
<S>                                                     <C>          <C>
   Partnership management fee .....................     $227,043     $227,044
   Reorganization and litigation cost reimbursement
   (Note 7) .......................................      210,000      210,000
   Property management fee ........................       11,355      103,195
   Non-accountable expense reimbursement ..........       37,500       37,500
                                                        --------     --------

                                                        $485,898     $577,739
                                                        ========     ========
</TABLE>
         Such amounts were paid in the quarters subsequent to March 31, 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.
<PAGE>
              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                           FORM 10-Q - MARCH 31, 1998


                          NOTES TO FINANCIAL STATEMENTS

7.       COMMITMENTS AND CONTINGENCIES (CONTINUED)

         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.
         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  Seconded  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.
<PAGE>
              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                           FORM 10-Q - MARCH 31, 1998


                          NOTES TO FINANCIAL STATEMENTS

7.       COMMITMENTS AND CONTINGENCIES (CONTINUED)

         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 March 31, 1998,  the General
         Partners had billed the  Partnership  a total of  $1,034,510  for these
         costs, of which $824,510 was paid.

         The General  Partners  believe that each of the claims  asserted in the
         Second  Amended  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.

         On February 6,1998,  Everest Investors 8, LLC ("Everest")  commenced an
         action in the Superior  Court of the State of California for the County
         of Los Angeles (Case No. BC 185554),  against,  among  others,  the HEP
         partnerships,   Resources   Pension   Shares   5  LP   (an   affiliated
         partnership), the general partners of each of the partnerships, and DCC
         Securities Corp. In the action,  Everest  alleged,  among other things,
         that the partnerships and the general partners  breached the provisions
         of the  applicable  partnership  agreements  by refusing  to  recognize
         transfers to Everest of limited partnership units purportedly  acquired
         pursuant to tender  offers that had been made by Everest (the  "Everest
         Tender  Units").  Everest  sought  injunctive  relief (a) directing the
         recognition of transfers to Everest of the Everest Tender Units and the
         admission  of Everest as a limited  partner with respect to the Everest
         Tender Units and (b) enjoining the transfer of the Everest Tender Units
         to any either party. Everest seeks damages, including punitive damages,
         for alleged breach of contract, defamation and intentional interference
         with   contractual   relations.   Everest's   motion  for  a  temporary
         restraining  order was  denied  on  February  6,  1998.  A  hearing  on
         Everest's  application for a preliminary  injunction had been scheduled
         for February 26, however, on February 20, 1998, Everest asked the Court
         to take its  application  off calendar.  The defendants  served answers
         denying the allegations and asserting  numerous  affirmative  defenses.
         Merits  discovery  has  commenced.  The  Partnerships  and the  General
         Partners  believe that Everest  claims are without  merit and intend to
         vigorously contest the action.

         On March 27, 1998,  Everest  commenced  an action in the United  States
         District Court for the Central  District of California  against,  among
         others,  the general partners of the HEP  Partnerships.  In the action,
         Everest alleged, among other things, various violations of the Williams
         Act Section 14(d) of the Securities  Exchange Act of 1934 in connection
         with the general partners' refusal to recognize transfers to Everest of
         limited partnership units purportedly  acquired pursuant to the Everest
         tender  offers and the  letters  sent by the  general  partners  to the
<PAGE>
              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                           FORM 10-Q - MARCH 31, 1998


                          NOTES TO FINANCIAL STATEMENTS

7.       COMMITMENTS AND CONTINGENCIES (CONTINUED)

         limited partners advising them of the general  partners'  determination
         that the Everest tender offers violated applicable securities laws. The
         general  partners  believe that Everest's  claims are without merit and
         intend to vigorously contest the action.
<PAGE>
              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                           FORM 10-Q - MARCH 31, 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 March 31,
1998, 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 capitalized lease procurement costs.

During  the  three  months  ended  March  31,  1998,  cash and cash  equivalents
increased  $680,946  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 $1,515,074 for the three months
ended March 31, 1998.  The  Partnership  used $438,329 for capital  expenditures
related to capital and tenant  improvements  to the  properties and $395,799 for
distributions to partners for the three months ended March 31, 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. 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 months ended
March 31, 1998  compared to the same period in the prior year due  primarily  to
higher rental revenues,  partially offset by higher costs and expenses and lower
interest and other income during 1998.

Rental revenues  increased  primarily at Southport  during the three ended March
31, 1998 compared to 1997, due to higher  percentage rents collected during 1998
as a result of higher sales volume.  This increase was partially offset by lower
rental revenues at Westbrook,  primarily due to lower occupancy rates in 1998 as
compared to the same period in 1997.

Costs and  expenses  increased  during the three  months  ended  March 31,  1998
compared  to  the  same  period  in  1997,   primarily   due  to   increases  in
administrative expenses and depreciation expense, partially offset by a decrease
in operating expenses. Administrative expenses increased due to higher legal and
accounting fees during 1998 related to ongoing litigation and the HEP settlement
and  depreciation  increased due to the significant  capital  additions in 1997.
Operating  expenses decreased during the first three months of 1998 due to lower
repair and maintenance costs at various properties.
<PAGE>
              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                           FORM 10-Q - MARCH 31, 1998


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

Interest  income  decreased  due to lower cash  balances  during the three ended
March 31,  1998  compared  to the same period in 1997.  Other  income  decreased
during the three months ended March 31, 1998 compared to the same period 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.
<PAGE>
              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                           FORM 10-Q - MARCH 31, 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>
              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                           FORM 10-Q - MARCH 31, 1998


                                   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:   May 12, 1998                      By: /S/ Richard Sabella
                                               -------------------
                                               Richard Sabella
                                               President
                                               (Duly Authorized Officer)




Dated:   May 12, 1998                      By: /S/ Lawrence Schachter
                                               ----------------------
                                               Lawrence Schachter
                                               Senior Vice President and
                                               Chief Financial Officer
                                               (Principal Financial and
                                               Accounting Officer)