<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 June 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.)

                   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 - JUNE 30, 1999
                          -------------------------

                                    INDEX
                                    -----

                                                                    Page No.
Part I. Financial Information:

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

Statements of Operations -- Three and Six Months Ended
    June 30, 1999 and 1998                                                4

Statement of Partners' Equity -- Six Months Ended
    June 30, 1999                                                         5

Statements of Cash Flows -- Six Months Ended
    June 30, 1999 and 1998                                                6

Notes to Financial Statements                                        7 - 12

Management's Discussion and Analysis of Financial
    Condition and Results of Operations                             13 - 15


Part II. Other Information:

Legal Proceedings, Exhibits and Reports on Form 8-K                      16

                                       2

<PAGE>


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

                                 BALANCE SHEETS
                                 --------------

<TABLE>
<CAPTION>
                                                                        June 30, 1999             December 31, 1998
                                                                        -------------             -----------------

ASSETS

<S>                                                               <C>                              <C>
Real estate - net                                                 $         32,134,301             $       32,518,352
Cash and cash equivalents                                                    8,086,807                      6,301,641
Other assets                                                                 1,884,776                      1,847,273
Receivables                                                                    181,833                        147,423
                                                                   -------------------             ------------------

                                                                  $         42,287,717             $       40,814,689
                                                                  ====================             ==================


LIABILITIES AND PARTNERS' EQUITY

Accounts payable and accrued expenses                              $          1,958,324            $        1,265,264
Distributions payable                                                          395,799                        395,799
Due to affiliates                                                              267,488                        362,440
                                                                   -------------------             ------------------

                                                                             2,621,611                      2,023,503
                                                                   -------------------             ------------------

Commitments and contingencies

PARTNERS' EQUITY:

     Limited partners' equity (400,010
         units issued and outstanding)                                      37,681,850                     36,850,676
     General partners' equity                                                1,984,256                      1,940,510
                                                                   -------------------             ------------------

                                                                            39,666,106                     38,791,186
                                                                   -------------------             ------------------

                                                                   $        42,287,717             $       40,814,689
                                                                   ===================             ==================
</TABLE>






                        See notes to financial statements

                                       3

<PAGE>





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

                            STATEMENTS OF OPERATIONS
                            ------------------------

<TABLE>
<CAPTION>
                                                          For the Three Months Ended                 For the Six Months Ended
                                                                   June 30,                                  June 30,
                                                    ----------------------------------       ----------------------------------
                                                        1999               1998                    1999               1998
                                                       ------             ------                  ------             -------

<S>                                                 <C>                 <C>                   <C>                  <C>
Rental Revenue                                       $  2,224,919       $   2,186,065         $   5,092,992        $  4,766,610
                                                     ------------       -------------         -------------        ------------

Costs and Expenses:

     Operating expenses                                   725,468           1,068,805             1,558,818           1,905,620
     Depreciation and amortization                        336,096             329,293               672,192             658,586
     Partnership management fee                           211,409             227,043               422,818             454,086
     Administrative expenses                              159,067             330,192               862,377             555,942
     Property management fee                               71,949              64,102               157,453             140,686
                                                     ------------        ------------          ------------        ------------

                                                        1,503,989           2,019,435             3,673,658           3,714,920
                                                     ------------        ------------          ------------        ------------

Income before interest and other income                   720,930             166,630             1,419,334           1,051,690

     Interest income                                       96,610              52,743               157,904              78,944

     Other income                                           6,990              16,250                89,280              19,450
                                                     ------------        ------------          ------------        ------------

Net income                                           $    824,530        $    235,623          $  1,666,518        $  1,150,084
                                                     ============        ============          ============        ============

Net income attributable to:

     Limited partners                                $    783,304        $    223,842          $  1,583,192        $  1,092,580

     General partners                                      41,226              11,781                83,326              57,504
                                                     ------------        ------------          ------------        ------------

Net income                                           $    824,530        $    235,623          $  1,666,518        $  1,150,084
                                                     ============        ============          ============        ============

Net income per unit of limited
     partnership interest (400,010 units             $       1.96        $       0.56          $       3.96        $       2.73
     outstanding)                                    ============        ============          ============        ============

</TABLE>

                                       4



                        See notes to financial statements

<PAGE>

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

                          STATEMENT OF PARTNERS' EQUITY
                          -----------------------------

<TABLE>
<CAPTION>
                                                           General Partners'    Limited 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 six
     months ended June 30, 1999                                     83,326             1,583,192           1,666,518

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

Balance, June 30, 1999                                     $     1,984,256       $    37,681,850     $    39,666,106
                                                           ===============       ===============     ===============
</TABLE>
























                        See notes to financial statements

                                       5

<PAGE>




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

                            STATEMENTS OF CASH FLOWS
                            ------------------------

<TABLE>
<CAPTION>
                                                                         For the Six Months Ended June 30,
                                                                        ------------------------------------
                                                                             1999                  1998
                                                                             ----                  ----

<S>                                                                      <C>                 <C>
Cash Flows From Operating Activities:

     Net income                                                          $  1,666,518        $    1,150,084
     Adjustments to reconcile net income
     to net cash provided by operating activities:

         Depreciation and amortization                                        672,192               658,586
         Straight-line adjustment for stepped
           lease rentals                                                       17,038                 2,000
     Changes in assets and liabilities:
         Accounts payable and accrued expenses                                693,060               392,426
         Receivables                                                          (34,410)              105,001
         Due to affiliates                                                    (94,952)             (301,629)
         Other assets                                                        (164,725)             ( 39,986)
                                                                         -------------       ---------------

     Net cash provided by operating activities                              2,754,721             1,966,482
                                                                         ------------        --------------

Cash Flows From Investing Activities:

     Improvements to real estate                                             (177,957)           (1,045,670)
                                                                         -------------       --------------

Cash Flows From Financing Activities:

     Distributions to partners                                               (791,598)             (791,598)
                                                                         -------------       --------------

Increase In Cash And Cash Equivalents                                       1,785,166               129,214

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

Cash And Cash Equivalents, End of Quarter                                $  8,086,807        $    4,480,101
                                                                         ============        ==============
</TABLE>


                        See notes to financial statement



                                       6
<PAGE>



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

                          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, 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
         six months ended June 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.

                                       7
<PAGE>

              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
              ----------------------------------------------------
                            FORM 10-Q - JUNE 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 six months ended June 30, 1999 and 1998,
         reimbursable expenses incurred by NorthStar Presidio related to the
         Partnership amounted to approximately $51,000 and $47,300,
         respectively.

         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
         June 30, 1999 and 1998, Resources Supervisory was entitled to receive
         $71,949 and $64,102 respectively, of which $53,370 and $52,535 was paid
         to unaffiliated management companies, respectively, for property
         management services and the balance was retained by Resources
         Supervisory. For the six months ended June 30, 1999 and 1998, Resources
         Supervisory was entitled to receive $157,453 and $140,686,
         respectively, of which $121,781 and $117,764 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 June 30, 1999 and
         1998, the Managing General Partner received $37,500. For the six months
         ended June 30, 1999 and 1998, the Managing General Partner received
         $75,000.

         For managing the affairs of the Partnership, the Managing General
         Partner is also 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 quarters ended June 30, 1999
         and 1998, the Managing General Partner received $211,409 and $227,043,
         respectively. For the six months ended June 30, 1999 and 1998, the
         Managing General Partner received $422,818 and $454,086, respectively.


                                       8

<PAGE>


              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
              ----------------------------------------------------
                            FORM 10-Q - JUNE 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 $41,226 and $11,781 for the quarters
         ended June 30, 1999 and 1998, respectively. Net income allocated to the
         General Partners amounted to $83,326 and $57,504 for the six months
         ended June 30, 1999 and 1998, respectively. They are also entitled to
         receive 5% of distributions, which amounted to $19,790 and for each of
         the quarters ended June 30, 1999 and 1998. Distributions allocated to
         the General Partners amounted to $39,580 for the six months ended June
         30, 1999 and 1998.

         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.

                                        9


<PAGE>

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

                          NOTES TO FINANCIAL STATEMENTS
                          -----------------------------

4.       REAL ESTATE
         -----------

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

<TABLE>
<CAPTION>
                                                                    June 30, 1999             December  31, 1998
                                                                    -------------             ------------------

<S>                                                                <C>                        <C>
         Land                                                      $     10,370,965            $     10,370,965
         Building and improvements                                       36,968,677                  36,790,720
                                                                   ----------------            ----------------
                                                                         47,339,642                  47,161,685
         Less: Accumulated depreciation                                 (15,205,341)                (14,643,333)
                                                                   -----------------           -----------------

                                                                   $     32,134,301            $     32,518,352
                                                                   ================            ================
</TABLE>


5.       DISTRIBUTIONS PAYABLE
         ---------------------

<TABLE>
<CAPTION>
                                                                June 30, 1999           December 31, 1998
                                                                -------------           -----------------

<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 subsequent quarters.

6.       DUE TO AFFILIATES
         -----------------

<TABLE>
<CAPTION>
                                                                   June 30, 1999        December 31, 1998
                                                                   -------------        -----------------

<S>                                                              <C>                     <C>
         Partnership management fee                              $       211,409         $        211,409
         Property management fee                                          18,579                  113,531
         Non-accountable expense reimbursement                            37,500                   37,500
                                                                 ---------------         ----------------

                                                                 $       267,488         $        362,440
                                                                 ===============         ================

</TABLE>

         Such amounts were paid in the subsequent quarters.


                                       10

<PAGE>

              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
              ----------------------------------------------------
                            FORM 10-Q - JUNE 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.

                                       11

<PAGE>

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

                          NOTES TO FINANCIAL STATEMENTS
                          -----------------------------

7.       COMMITMENTS AND CONTINGENCIES (CONTINUED)
         -----------------------------------------

         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.

         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. As the first
         step in implementing the settlement, the General Partners are currently
         soliciting the consent of limited partners to the amendments to the
         Partnership Agreements referred to above. The settlement is subject to
         a number of conditions. There can be no assurance that such conditions
         will be fulfilled.

         The General Partners believe that each of the claims asserted in the
         Action are meritless and, if for any reason a final settlement pursuant
         to the Settlement Stipulation is not consummated, intend to continue to
         vigorously defend the Action. 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. Accordingly, the Partnership accrued $542,000
         at March 31, 1999 related to these costs, which are expected to be paid
         in the third quarter of 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 June 30, 1999, the Partnership paid the General
         Partners a total of $1,034,510 for these costs.


                                       12

<PAGE>
              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
              ----------------------------------------------------
                            FORM 10-Q - JUNE 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 June 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 six months ended June 30, 1999, cash and cash equivalents increased
$1,785,166 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
$2,754,721 for the six months ended June 30, 1999. The Partnership used $177,957
for capital expenditures related to capital and tenant improvements to the
properties and $791,598 for distributions to partners for the six months ended
June 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 an increase in net income for the three and six
months ended June 30, 1999 as compared to the same periods in the prior year.
These increases were primarily due to higher revenues and lower costs and
expenses during both the three and six months ended June 30, 1999.

Rental revenues increased during the three and six months ended June 30, 1999
compared to the same periods in 1998 at 568 Broadway due to higher overall
rental rates at the property. These increases were partially offset by lower
revenues during the three and six months ended June 30, 1999 due to the sale of
the Westbrook property in late 1998.

                                       13

<PAGE>
              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
              ----------------------------------------------------
                            FORM 10-Q - JUNE 30, 1999
                            -------------------------

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

Costs and expenses decreased during the three and six months ended June 30, 1999
compared to the same periods in 1998, primarily due to lower operating expenses
and partnership management fees due to the sale of the Westbrook property in
1998, as previously discussed. These decreases were partially offset by an
increase in depreciation expense during both periods due to real estate
improvements in 1998 and an increase in property management fees due to higher
revenues, as previously discussed. Administrative expenses increased for the six
months ended June 30, 1999 due to higher legal fees incurred during the first
quarter of 1999 pursuant to the Settlement Agreement related to the ongoing
litigation and possible reorganization of the Partnership (see Note 7). However,
administrative fees for the three months ended June 30, 1999 decreased as
compared to the same period in the prior year due to lower legal fees incurred
during the second quarter as a result of the potential settlement.

Interest income increased during the three and six months ended June 30, 1999
due to higher cash balances during the current periods as compared to the same
periods in 1998. Other income increased during the six months ended June 30,
1999 as compared to the same period in 1998 due to a greater number of investor
transfers (primarily during the first quarter of 1999) on which the Partnership
earns a transfer fee. However, other income decreased during the three months
ended June 30, 1999 compared to the prior period due to fewer such transfers
during the second quarter.

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.

                                       14

<PAGE>

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

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

YEAR 2000 COMPLIANCE
--------------------

The Year 2000 compliance issue concerns the inability of computerized
information systems and equipment to accurately calculate, store or use a date
after December 31, 1999, as a result of the year being stored as a two digit
number. This could result in a system failure or miscalculations causing
disruptions of operations. The Partnership and its Manager (NorthStar Presidio
Management Co., LLC) recognize the importance of ensuring that its business
operations are not disrupted as a result of Year 2000 related computer system
and software issues.

The manager has assessed its internal computer information systems and is now
taking the further steps necessary to remediate these systems so that they will
be Year 2000 compliant. In connection therewith, the manager installed a new
fully compliant accounting and reporting system in December 1998. Further, the
Manager anticipates that the internal computer systems will be fully Year 2000
compliant by the end of the third quarter of 1999. The Manager is also currently
reviewing other systems and programs of its unaffiliated third party service
providers, in order to insure compliance. This process is expected to be
completed during the third quarter of 1999.

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

                                       15
<PAGE>


              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
              ----------------------------------------------------
                            FORM 10-Q - JUNE 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: There were no exhibits filed.

         (b)      Reports on Form 8-K:
                  None


                                       16

<PAGE>



              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
              ----------------------------------------------------
                            FORM 10-Q - JUNE 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:   August 12, 1999            By:      /S/ Allan Rothschild
                                             ---------------------------
                                             Allan Rothschild
                                             President
                                             (Duly Authorized Officer)

Dated:   August 12, 1999            By:      /S/ Lawrence Schachter
                                             ---------------------------------
                                             Lawrence Schachter
                                             Senior Vice President and
                                             Chief Financial Officer
                                             (Principal Financial and
                                             Accounting Officer)


                                       17