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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 JUNE 30, 2000
                                                 -------------

                         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.)


               5 Cambridge Center, 9th Floor, Cambridge, MA 02142
                    (Address of principal executive offices)

                                 (617) 234-3000
               ---------------------------------------------------
              (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, 2000


                                      INDEX

Part I.

 Item 1. Financial Information:
         Balance Sheets - June 30, 2000 and December 31, 1999..............  3
         Statements of Operations - Three and Six Months Ended
            June 30, 2000 and 1999.........................................  4
         Statement of Partners' Equity - Six Months Ended June 30, 2000....  5
         Statements of Cash Flows - Six Months Ended
            June 30, 2000 and 1999.........................................  6
         Notes to Financial Statements.....................................  7

 Item 2. Management's Discussion and Analysis of Financial
            Condition and Results of Operations............................ 13

 Item 3. Quantitative and Qualitative Disclosures About Market Risk........ 15

Part II. Other Information:

 Item 6. Exhibits and Reports on Form 8-K.................................. 16

Signatures  ............................................................... 17



                                                                              2

<PAGE>

              INTEGRATED RESOURCES HIGH EQUITY PARTNERS - SERIES 85

                            FORM 10-Q - JUNE 30, 2000

                                 BALANCE SHEETS

                                               JUNE 30, 2000  DECEMBER 31, 1999
                                               -------------  -----------------

ASSETS

Real estate - net                                $31,931,074     $32,352,714
Cash and cash equivalents                         10,775,882       8,521,370
Other assets                                       3,040,056       3,095,251
Receivables                                          304,493         209,418
                                                 -----------     -----------

                                                 $46,051,505     $44,178,753
                                                 ===========     ===========

LIABILITIES AND PARTNERS' EQUITY

Accounts payable and accrued expenses            $   996,602     $ 1,224,373
Due to affiliates                                    213,448         107,255
                                                 -----------     -----------
                                                   1,210,050       1,331,628
                                                 -----------     -----------
Commitments and contingencies

PARTNERS' EQUITY:

     Limited partners' equity (400,010
         units issued and outstanding)            42,598,433      40,703,819
     General partners' equity                      2,243,022       2,143,306
                                                 -----------     -----------
                                                  44,841,455      42,847,125
                                                 -----------     -----------
                                                 $46,051,505     $44,178,753
                                                 ===========     ===========


                       See notes to financial statements.

                                                                              3

<PAGE>

              INTEGRATED RESOURCES HIGH EQUITY PARTNERS - SERIES 85

                            FORM 10-Q - JUNE 30, 2000


                                 STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>

                                         FOR THE THREE MONTHS ENDED     FOR THE SIX MONTHS ENDED
                                                JUNE 30,                        JUNE 30,
                                         --------------------------     ------------------------
                                             2000        1999              2000         1999
                                          ----------   ----------       ----------   ----------
<S>                                       <C>          <C>              <C>          <C>
Rental Revenue                            $2,216,883   $2,224,919       $5,099,110   $5,092,992
                                          ----------   ----------       ----------   ----------
Costs and Expenses:
     Operating expenses                      713,743      725,468        1,541,746    1,558,818
     Depreciation and amortization           343,678      336,096          689,166      672,192
     Partnership management fee              172,519      211,409          345,038      422,818
     Administrative expenses                 298,761      159,067          587,045      862,377
     Property management fee                  81,360       71,949          169,104      157,453
                                          ----------   ----------       ----------   ----------
                                           1,610,061    1,503,989        3,332,099    3,673,658
                                          ----------   ----------       ----------   ----------
Income before interest and other income      606,822      720,930        1,767,011    1,419,334
     Interest income                         123,163       96,610          217,819      157,904
     Other income                              9,500        6,990            9,500       89,280
                                          ----------   ----------       ----------   ----------
Net income                                $  739,485   $  824,530       $1,994,330   $1,666,518
                                          ==========   ==========       ==========   ==========
Net income attributable to:
     Limited partners                     $  702,511   $  783,304       $1,894,614   $1,583,192
     General partners                         36,974       41,226           99,716       83,326
                                          ----------   ----------       ----------   ----------
Net income                                $  739,485   $  824,530       $1,994,330   $1,666,518
                                          ==========   ==========       ==========   ==========
Net income per unit of limited
     partnership interest (400,010 units
     outstanding)                         $     1.76   $     1.96       $     4.74   $     3.96
                                          ==========   ==========       ==========   ==========

</TABLE>


                       See notes to financial statements.

                                                                              4

<PAGE>

              INTEGRATED RESOURCES HIGH EQUITY PARTNERS - SERIES 85

                            FORM 10-Q - JUNE 30, 2000


                          STATEMENT OF PARTNERS' EQUITY

                                  GENERAL       LIMITED
                                  PARTNERS'     PARTNERS'
                                   EQUITY        EQUITY        TOTAL
                                -----------   -----------   -----------

Balance, January 1, 2000        $ 2,143,306   $40,703,819   $42,847,125
Net income for the six months
     ended June 30, 2000             99,716     1,894,614     1,994,330
                                -----------   -----------   -----------
Balance, June 30, 2000          $ 2,243,022   $42,598,433   $44,841,455
                                ===========   ===========   ===========



                       See notes to financial statements.

                                                                              5

<PAGE>

              INTEGRATED RESOURCES HIGH EQUITY PARTNERS - SERIES 85

                            FORM 10-Q - JUNE 30, 2000


                            STATEMENTS OF CASH FLOWS

                                               FOR THE SIX MONTHS ENDED JUNE 30,
                                               ---------------------------------
                                                      2000              1999
                                               ---------------    --------------

Cash Flows From Operating Activities:
  Net income                                      $  1,994,330    $  1,666,518
  Adjustments to reconcile net income
  to net cash provided by operating activities:
      Depreciation and amortization                    689,165         672,192
      Straight-line adjustment for stepped
        lease rentals                                   21,674          17,038
  Changes in assets and liabilities:
      Accounts payable and accrued expenses           (227,771)        693,060
      Receivables                                      (95,075)        (34,410)
      Due to affiliates                                106,193         (94,952)
      Other assets                                     (92,247)       (164,725)
                                                  ------------    ------------
  Net cash provided by operating activities          2,396,269       2,754,721
                                                  ------------    ------------
Cash Flows From Investing Activities:
  Improvements to real estate                         (141,757)       (177,957)
                                                  ------------    ------------
Cash Flows From Financing Activities:
  Distributions to partners                               --          (791,598)
Increase In Cash And Cash Equivalents                2,254,512       1,785,166
Cash And Cash Equivalents, Beginning of Year         8,521,370       6,301,641
                                                  ------------    ------------
Cash And Cash Equivalents, End of Quarter         $ 10,775,882    $  8,086,807
                                                  ============    ============




                       See notes to financial statements.

                                                                              6


<PAGE>

             INTEGRATED RESOURCES HIGH EQUITY PARTNERS - SERIES 85

                            FORM 10-Q - JUNE 30, 2000

                          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, 1999.

     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 three and six
     months ended June 30, 2000 are not necessarily indicative of the results to
     be expected for the entire year.

2.   SIGNIFICANT ACCOUNTING POLICIES

     Investment in Joint Ventures

     Certain properties were purchased in joint ventures with affiliated
     partnerships that have the same, or affiliated, general partners as the
     Partnership. The Partnership owns an undivided interest and is severally
     liable for indebtedness it incurs in connection with its ownership interest
     in those properties. 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.

     Real Estate

     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 prepares estimates of
     the future undiscounted 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.


                                                                            7


<PAGE>

             INTEGRATED RESOURCES HIGH EQUITY PARTNERS - SERIES 85

                            FORM 10-Q - JUNE 30, 2000

                          NOTES TO FINANCIAL STATEMENTS


2.   SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     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 and the variances may be material. The Partnership
     may in the future provide additional write-downs, which could be material,
     if real estate markets or local economic conditions change.

3.   RELATED PARTY TRANSACTIONS

     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.

     From August 28, 1997 to October 21, 1999, Presidio was party to a
     management agreement with NorthStar Presidio Management Company LLC
     ("NorthStar Presidio"), an affiliate of NorthStar Capital Investment Corp.,
     pursuant to which NorthStar Presidio provided the day-to-day management of
     Presidio and its direct and indirect subsidiaries and affiliates, including
     the Partnership. Effective October 21, 1999, Presidio 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.

     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 was paid to unaffiliated management companies that are engaged for the
     purpose of performing the management functions for certain properties.


                                                                              8

<PAGE>

             INTEGRATED RESOURCES HIGH EQUITY PARTNERS - SERIES 85

                            FORM 10-Q - JUNE 30, 2000


                          NOTES TO FINANCIAL STATEMENTS


3.   RELATED PARTY TRANSACTIONS (CONTINUED)

     For the quarters ended June 30, 2000 and 1999, Resources Supervisory was
     entitled to receive $81,360 and $71,949 respectively, of which $77,930 and
     $53,370 was paid to unaffiliated management companies, respectively, for
     property management services and the balance was retained by Resources
     Supervisory. For the sixth months ended June 30, 2000 and 1999, Resources
     Supervisory was entitled to receive $169,104 and $157,453, respectively, of
     which $154,478 and $121,781 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, 2000 and 1999, the
     Managing General Partner received $37,500. For the six months ended June
     30, 2000 and 1999, 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. Pursuant
     to the amendment to the Partnership Agreement, which became effective on
     August 20, 1999, the annual partnership management fee for 1999 was reduced
     to $418,769. Further, the Partnership Agreement was amended (for the year
     2000 and beyond) so that the partnership management fee will be 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.

     For the quarters ended June 30, 2000 and 1999 the Managing General Partner
     earned partnership management fees of $172,519 and $211,409, respectively.
     For the six months ended June 30, 2000 and 1999, the Managing General
     Partner earned partnership management fees of $345,038 and $422,818,
     respectively.

     The General Partners are allocated 5% of the net income of the Partnership,
     which amounted to $36,974 and $41,226 for the quarters ended June 30, 2000
     and 1999, respectively. Net income allocated to the General Partners
     amounted to $99,716 and $83,326 for the six months ended June 30, 2000 and
     1999, respectively. The General Partners are also entitled to receive 5% of
     distributions, which amounted to $39,580 for the six months ended June 30,
     1999.

     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., a
     wholly owned indirect subsidiary of Presidio, purchased 39,123 units of the
     Partnership from various limited partners.


                                                                              9

<PAGE>

             INTEGRATED RESOURCES HIGH EQUITY PARTNERS - SERIES 85

                            FORM 10-Q - JUNE 30, 2000


                          NOTES TO FINANCIAL STATEMENTS


3.   RELATED PARTY TRANSACTIONS (CONTINUED)

     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, Presidio purchased 50% of those units
     owned by Olympia as a result of the Offer, or 15,566 units, for $101.81 per
     unit. In addition, Olympia has the right to cause Presidio to purchase its
     remaining units for a price based on procedures set forth in the agreement.
     Olympia recently exercised this right and it is anticipated that Presidio
     or its affiliates will acquire an additional 15,556 units.

     Subsequent to the expiration of the tender offer described above,
     Millennium Funding II Corp. purchased an additional 18,042 limited
     partnership units from August 1998 through July 1999. The total number of
     units purchased by Millennium Funding II Corp. represents approximately
     18.2% of the outstanding limited partnership units of the Partnership.

     Pursuant to the settlement of a class action lawsuit (See Note 7), an
     affiliate of the General Partners, Millennium Funding II, LLC, made a
     tender offer to limited partners to acquire up to 26,936 Units
     (representing approximately 6.7% of the outstanding Units) at a price of
     $114.60 per Unit. The offer closed in January 2000 and all 26,936 Units
     were acquired in the offer. As a result of these purchases as well as the
     other purchases of Units by affiliates of the General Partners, affiliates
     of the General Partners own 118,903 Units representing approximately
     29.725% of the total outstanding Units.

4.   REAL ESTATE

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

                                     JUNE 30, 2000   DECEMBER 31, 1999
                                     -------------   -----------------
     Land                             $ 10,370,965     $ 10,370,965
     Building and improvements          37,857,836       37,716,078
                                      ------------     ------------
                                        48,228,801       48,087,043
     Less: Accumulated depreciation    (16,297,727)     (15,734,329)
                                      ------------     ------------

                                      $ 31,931,074     $ 32,352,714
                                       ============    ============

                                                                             10

<PAGE>

             INTEGRATED RESOURCES HIGH EQUITY PARTNERS - SERIES 85

                            FORM 10-Q - JUNE 30, 2000


                          NOTES TO FINANCIAL STATEMENTS


5.   DUE TO AFFILIATES

                                          JUNE 30, 2000       DECEMBER 31, 1999
                                          -------------       -----------------
     Partnership management fee              $172,519             $   --
     Property management fee                    3,429               32,255
     Non-accountable expense reimbursement     37,500               75,000
                                             --------             --------

                                             $213,448             $107,255
                                             ========             ========


     Such amounts were paid in the subsequent quarters.

6.   COMMITMENTS AND CONTINGENCIES

     A)   568 Broadway Joint Venture is currently involved in litigation with a
          number of present or former tenants who are in default on their lease
          obligations. Several of these tenants have asserted claims or counter
          claims seeking monetary damages. The plaintiffs' allegations include
          but are not limited to claims for breach of contract, failure to
          provide certain services, overcharging of expenses and loss of profits
          and income. These suits seek total damages in excess of $20 million
          plus additional damages of an indeterminable amount. The Broadway
          Joint Venture's action for rent against Solo Press was tried in 1992
          and resulted in a judgement in favor of the Broadway Joint Venture for
          rent owed. The Partnership believes this will result in dismissal of
          the action brought by Solo Press against the Broadway Joint Venture.
          Since the facts of the other actions which involve material claims or
          counterclaims are substantially similar, the Partnership believes that
          the Broadway Joint Venture will prevail in those actions as well.

     B)   A former retail tenant of 568 Broadway (Galix Shops, Inc.) and a
          related corporation which is a retail tenant of a building adjacent to
          568 Broadway filed a lawsuit in the Supreme Court of The State of New
          York, County of New York, against the Broadway Joint Venture which
          owns 568 Broadway. The action was filed on April 13, 1994. The
          Plaintiffs allege that by erecting a sidewalk shed in 1991, 568
          Broadway deprived plaintiffs of light, air and visibility to their
          customers. The sidewalk shed was erected, as required by local law, in
          connection with the inspection and restoration of the Broadway
          building facade, which is also required by local law.

          Plaintiffs further allege that the erection of the sidewalk shed for a
          continuous period of over two years is unreasonable and unjustified
          and that such conduct by defendants has deprived plaintiffs of the use
          and enjoyment of their property. The suit seeks a judgement requiring
          removal of the sidewalk shed (since removed), compensatory damages of
          $20 million, and punitive damages of $10 million. The Partnership
          believes that this suit is without merit and intends to vigorously
          defend it.


                                                                              11

<PAGE>

            INTEGRATED RESOURCES HIGH EQUITY PARTNERS - SERIES 85

                            FORM 10-Q - JUNE 30, 2000


                          NOTES TO FINANCIAL STATEMENTS


7.   SETTLEMENT OF LAWSUIT

     In April 1999, the California Superior Court approved the terms of the
     settlement of a class action and derivative litigation involving the
     Partnership. Under the terms of the settlement, the General Partners agreed
     to take the actions described below subject to first obtaining the consent
     of limited partners to amendments to the Agreement of Limited Partnership
     of the Partnership summarized below. The settlement became effective in
     August 1999 following approval of the amendments.

     As amended, the Partnership Agreement (a) provides for a Partnership
     Management Fee equal to 1.25% of the Gross Asset Value of the Partnership
     and a fixed 1999 Partnership Management Fee of $418,769 or $426,867 less
     than the amount that would have been paid for 1999 under the prior formula
     and (b) fixes the amount that the General Partners will be liable to pay to
     limited partners upon liquidation of the Partnership as repayment of fees
     previously received (the "Fee Give-Back Amount"). As of December 31, 1999,
     the Fee Give-Back Amount was $8.80 per Unit which amount will be reduced by
     approximately $.98 per Unit for each full calendar year after 1999 in which
     a liquidation does not occur. As amended, the Partnership Agreement
     provides that, upon a reorganization of the Partnership into a real estate
     investment trust or other public entity, the General Partners will have no
     further liability to pay the Fee Give-Back Amount. In accordance with the
     terms of the settlement, Presidio Capital Corp., an affiliate of the
     General Partners, guaranteed payment of the Fee Give-Back Amount.

     As required by the settlement, an affiliate of the General Partners,
     Millennium Funding II, LLC, made a tender offer to limited partners to
     acquire up to 26,936 Units (representing approximately 6.7% of the
     outstanding Units) at a price of $114.60 per Unit. The offer closed in
     January 2000 and all 26,936 Units were acquired in the offer.

     The final requirement of the settlement obligated the General Partners to
     use their best efforts to reorganize the Partnership into a real estate
     investment trust or other entity whose shares were listed on a national
     securities exchange or on the NASDAQ National Market System. A Registration
     Statement was filed with the Securities and Exchange Commission on February
     11, 2000 with respect to the restructuring of the Partnership into a
     publicly-traded real estate investment trust. The Registration Statement
     has not yet become effective and the consent of a majority of limited
     partners will be needed to effect the restructuring.


                                                                             12

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            INTEGRATED RESOURCES HIGH EQUITY PARTNERS - SERIES 85

                            FORM 10-Q - JUNE 30, 2000


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

        The matters discussed in this form 10-Q contain certain
        forward-looking statements and involve risks and uncertainties
        (including changing market conditions, competitive and regulatory
        matters, etc.) detailed in the disclosures contained in this Form 10-Q
        and the other filings with the Securities and Exchange Commission made
        by the Partnership from time to time. The discussion of the
        Partnership's liquidity, capital resources and results of operations,
        including forward-looking statements pertaining to such matters, does
        not take into account the effects of any changes to the Partnership's
        operations. Accordingly, actual results could differ materially from
        those projected in the forward-looking statements as a result of a
        number of factors, including those identified herein.

        This item should be read in conjunction with the consolidated
        financial statements and other items contained elsewhere in the
        report.

        LIQUIDITY AND CAPITAL RESOURCES

        The Partnership had $10,775,882 in cash and cash equivalents at June
        30, 2000. Cash and cash equivalents 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.

        The Partnership's level of liquidity based upon cash and cash
        equivalents increased by $2,254,512 for the six months ended June 30,
        2000 as compared to December 31, 1999. The increase is due to
        $2,396,269 of cash provided by operating activities which was
        partially offset by $141,757 of cash used in investing activities for
        capital expenditures. The Partnership's primary source of funds is
        cash flow from the operation of its properties, principally rents
        received from the tenants less property operating expenses.

        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 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.

        As discussed in "Item 1. Financial Statements-Note 7", the Partnership
        entered into a settlement agreement relating to a class action
        lawsuit. In light of the current implementation of the settlement and
        the filing of the Registration Statement pursuant to which the General
        Partners are using their best efforts to reorganize the Partnership
        into a real estate investment trust, the General Partners have
        suspended any distributions until such reorganization is either
        approved or disapproved.


                                                                             13

<PAGE>

            INTEGRATED RESOURCES HIGH EQUITY PARTNERS - SERIES 85

                            FORM 10-Q - JUNE 30, 2000


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

        RESULTS OF OPERATIONS

        The Partnership experienced a decrease in net income of $85,045 for
        the three months ended June 30, 2000 and an increase in net income of
        $327,812 for the six months ended June 30, 2000 as compared to the
        same periods in the prior year.

        The three-month decrease in net income was due to an increase in costs
        and expenses of $106,072 and a decrease in rental revenue of $8,036,
        which more than offset an increase in interest and other income of
        $29,063. The six-month increase in net income was due to a decrease in
        costs and expenses of $347,677 and an increase in rental revenue of
        $6,118 that was partially offset by a decrease in interest and other
        income of $19,865.

        Rental revenues decreased during the three months ended June 30, 2000
        compared to June 30, 1999 due to 1999 operating expense and real
        estate tax abatements given to tenants being greater than the previous
        years. Rental revenues increased for the six months ended June 30,
        2000 compared to the same period in 1999 due to higher overall rental
        rates at Southport and Seattle Tower.

        The increase in costs and expenses for the three months ended June 30,
        2000 as compared to the three months ended June 30, 1999 is primarily
        due to legal costs associated with the conversion of the Partnership
        to a Real Estate Investment Trust (REIT).

        The decrease in cost and expenses for the six months ended June 30,
        2000 as compared to the six months ended June 30, 1999 is due to
        decreases in partnership management fees and administrative expense
        which more than offset an increase in depreciation and amortization
        expense. The decrease in administrative expense is primarily
        attributable to the costs incurred during the six months ended June
        30, 1999 in connection with the settled class action litigation.
        Partnership management fees paid during the first two quarters of 2000
        decreased by $77,780 as compared to the first two quarters of 1999 as
        a result of an amendment to the Partnership Agreement which changed
        the calculation of such fee. See, Item 1. Financial Statements, Note
        3. Property operating expenses and property management fees remained
        relatively stable. The Partnership experienced higher depreciation
        expense due to real estate improvements in 1999.

        Interest income increased during the three months and six months ended
        June 30, 2000 due to higher cash balances during both periods as
        compared to the comparable periods in 1999. Other income increased
        during the three months ended June 30, 2000 and decreased during the
        six months ended June 30, 2000 as compared to the same periods in 1999
        due to an increase/decrease in investor transfer fees, respectively.

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


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            INTEGRATED RESOURCES HIGH EQUITY PARTNERS - SERIES 85

                            FORM 10-Q - JUNE 30, 2000


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

        The Partnership is not subject to market risk as its cash and cash
        equivalents are invested in short term money market mutual funds. The
        Partnership has no loans outstanding.

                                                                              15


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            INTEGRATED RESOURCES HIGH EQUITY PARTNERS - SERIES 85

                            FORM 10-Q - JUNE 30, 2000


PART II. OTHER INFORMATION

Item 6  - Exhibits and Reports on Form 8-K

          (a)  Exhibits: There were no exhibits filed.

               27.  Financial data schedule is filed as an Exhibit to this
                    report

          (b)  Reports on Form 8-K:

               No report of Form 8-K was filed during the period.


                                                                             16

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            INTEGRATED RESOURCES HIGH EQUITY PARTNERS - SERIES 85

                            FORM 10-Q - JUNE 30, 2000


                                   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 14, 2000            By:  /s/  MICHAEL L. ASHNER
                                         -----------------------------
                                           Michael L. Ashner
                                           President and Director
                                           (Principal Executive Officer)


Dated:   August 14, 2000            By:  /s/  CAROLYN B. TIFFANY
                                         ----------------------------------
                                           Carolyn B. Tiffany
                                           Vice President and Treasurer
                                           (Principal Financial and
                                           Accounting Officer)

                                                                             17