<PAGE>

                                    FORM 10K

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended                              Commission File Number
December 31, 1999                                              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                         (IRS Employer
incorporation or organization)                      Identification Number)

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

Registrant's telephone number, including area code:      (617) 234-3000
                                                         --------------

           Securities registered pursuant to Section 12(b) of the Act:

                                      NONE

           Securities registered pursuant to Section 12(g) of the Act:

                      UNITS OF LIMITED PARTNERSHIP INTEREST

         Indicate by check mark whether 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 and (2) has been subject to such filing
requirements for the past 90 days.

                               Yes [X]       No    [ ]

             There is no public market for the Limited Partnership Units.
Accordingly, information with respect to the aggregate market value of Limited
Partnership Units held by non-affiliates of Registrant has not been supplied.

             Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [ X ]

                       Documents incorporated by reference
                       -----------------------------------
                                      None


<PAGE>


                                     PART I


Item 1.           Business
                  --------

                  Integrated Resources High Equity Partners, Series 85, a
California Limited Partnership (the "Partnership"), was formed as of August 19,
1983. The Partnership is engaged in the business of operating and holding for
investment previously acquired income-producing properties consisting of office
buildings, shopping centers and other commercial properties. See "Item 2.
Properties" for a description of the Partnership's properties.

                  Resources High Equity, Inc., a Delaware corporation and a
wholly owned subsidiary of Presidio Capital Corp., a British Virgin Islands
corporation ("Presidio"), is the Partnership's managing general partner (the
"Managing General Partner"). Effective July 31, 1998, Presidio is indirectly
controlled by NorthStar Capital Investment Corp., a Maryland corporation. Until
November 3, 1994, Resources High Equity, Inc. was a wholly owned subsidiary of
Integrated Resources, Inc. ("Integrated"). On November 3, 1994 Integrated
consummated its plan of reorganization under Chapter 11 of the United States
Bankruptcy Code at which time, pursuant to such plan of reorganization, the
newly-formed Presidio purchased substantially all of Integrated's assets.
Presidio AGP Corp., which is a wholly-owned subsidiary of Presidio, became the
associate general partner (the "Associate General Partner") on February 28, 1995
replacing Z Square G Partners II which withdrew as of that date. The Managing
General Partner and the Associate General Partner are referred to collectively
hereinafter as the "General Partners." Affiliates of the General Partners are
also engaged in businesses related to the acquisition and operation of real
estate. See "Management/Employees" below.

                  In 1986, the Partnership offered and sold 400,000 units of
limited partnership interest (the "Units") pursuant to a prospectus filed with
the Securities and Exchange Commission. Upon final admission of limited
partners, the Partnership had accepted subscriptions for 400,010 Units
(including the initial limited partner) for an aggregate of $100,002,500 in
gross proceeds, resulting in net proceeds from the offering of $98,502,500
(gross proceeds of $100,002,500 less organization and offering costs of
$1,500,000). All underwriting and sales commissions were paid by Integrated or
its affiliates and not by the Partnership.

                  The Partnership invested all of its net proceeds in real
estate. Revenues from the following properties represented 15% or more of the
Partnership's gross revenues during each of the last two fiscal years: in 1999,
Southport Shopping Center and 568 Broadway represented 34% and 28% of gross
revenues, respectively; during 1998, Southport Shopping Center and 568 Broadway
represented 33% and 28% of gross revenues, respectively. See "Item 2.
Properties" for a description of the Partnership's properties.

Settlement of Class Action 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

                                       2
<PAGE>

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.

                  In connection with this action, the Limited Partnership
Agreement provides for indemnification of the General Partners and their
affiliates in certain circumstances. The Partnership has agreed to reimburse the
General Partners for their actual costs incurred in defending this litigation
and the costs of preparing settlement materials. Through December 31, 1999, the
Partnership paid the General Partners a total of $1,080,404 for these costs.

Competition
-----------

                  The real estate business is highly competitive and, as
discussed more particularly in "Item 2, Properties", the properties acquired by
the Partnership may have active competition from similar properties in the
vicinity. In addition, various limited partnerships have been formed by the
Managing General Partner and/or its affiliates and agents that engage in
businesses that may be competitive with the Partnership. The Partnership will
also experience competition for potential buyers at such time as it seeks to
sell any of its properties.

                                       3
<PAGE>

Employees
---------

                  On-site personnel perform services for the Partnership at the
properties. Salaries for such on-site personnel are paid by unaffiliated
management companies that service the Partnership's properties. Services are
also performed by the Managing General Partner and by Resources Supervisory
Management Corp. ("Resources Supervisory"), an affiliate of the Managing General
Partner. Resources Supervisory currently provides supervisory management and
leasing services for all of the Partnership's properties and subcontracts
certain management and leasing functions to unaffiliated third parties.

                  The Partnership does not have any employees. Presidio
previously retained Wexford Management LLC ("Wexford") to provide consulting and
administrative services to Presidio and its affiliates, including the Managing
General Partner and the Partnership. The agreement with Wexford expired on May
3, 1998 at which time Presidio entered into a management agreement with
NorthStar Presidio Management Company, LLC ("NorthStar Presidio"). Under the
terms of the management agreement, NorthStar Presidio provided the day-to-day
management of Presidio and its direct and indirect subsidiaries and affiliates.

                  On 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
Partnership and other entities affiliated with Partnership.

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

                  In order to facilitate the Agent's provision of the asset
management services and the investor relation services, effective October 25,
1999, the officers and directors of the General Partner resigned and nominees of
the Agent were elected as the officers and directors of the General Partner. See
Item 10, "Directors and Executive Officers of the Partnership", The Agent is an
affiliate of Winthrop Financial Associates, a Boston based company that provides
asset management services, investor relation services and property management
services to over 150 limited partnerships which own commercial property and
other assets. The General Partner does not believe this transaction will have a
material effect on the operations of Partnership.

Item 2.           Properties
                  ----------

The Partnership owned the following properties as of March 15, 2000:

(1)               Southport Shopping Center
                  -------------------------

                  On April 15, 1986, the Partnership purchased the fee simple
interest in Southport Shopping Center ("Southport"), a regional shopping center
located on the 17th Street Causeway in Fort Lauderdale, Florida near the
intercoastal waterway and beach area. The center's three buildings,

                                       4
<PAGE>

comprising a total of 143,089 square feet, are situated on a 9.45 acre site.
Southport was built in phases from 1968 to 1977 and expanded again and renovated
in 1985. The site provides parking for 563 cars. Southport was 98% occupied as
of January 1, 2000 as compared to 99% on January 1, 1999. There are no leases
that represent at least 10% of the square footage of the center scheduled to
expire in 2000. The roof on the West quadrant of the main center building was
replaced in 1998 and the center was repainted. There are no significant capital
expenditures budgeted for 2000.

                  Southport is highly visible from S.E. 17th Street, the major
east/west artery in the commercially-oriented area. Developments in the area are
diversified and include hotels, restaurants, retail centers, office buildings
and the 750,000 square foot Broward County Convention Center, which opened in
1991 and is within walking distance. In 1996, the new 75,000 square foot,
three-story, mixed-use NorthPort Marketplace opened on county owned land
adjacent to the Convention Center. The development has attracted national
restaurant/entertainment chains and is not considered competition for
Southport's tenants. The center continues to maintain a solid tenant base and
anchor tenants, Publix, Eckerd and McCrory's lease approximately 39% of the
center's leasable area.

(2)               Loch Raven Plaza
                  ----------------

                  On June 26, 1986, the Partnership purchased the fee simple
interest in Loch Raven Plaza ("Loch Raven"), a retail/office complex located in
Towson, Maryland. It contains approximately 25,000 square feet of office and
storage space and 125,000 square feet of retail space, with parking for
approximately 655 vehicles.

                  The property was 92% occupied as of January 1, 2000, compared
to 93% at January 1, 1999. There are no leases which represent at least 10% of
the square footage of the center scheduled to expire during 2000, however, Super
Fresh (A&P) grocery has subleased its 26,648 square foot store to Joann Fabrics
and is relocating to a new superstore at Towson Marketplace Shopping Center
located less than a mile from Loch Raven Plaza. Towson Marketplace, which
competes directly with the Loch Raven for tenants, is being redeveloped and
includes Michael's Crafts, Marshall's, Target, Montgomery Ward and TOYS "R" US
as tenants.

                  There are no significant capital improvements budgeted for
2000 other than costs associated with leasing the remaining vacant space.

(3)               Century Park I
                  --------------

                  On November 7, 1986, a joint venture (the "Century Park Joint
Venture") comprised of the Partnership and High Equity Partners L.P. - Series 86
("HEP-86"), an affiliated public limited partnership, purchased the fee simple
interest in Century Park I ("Century Park I"), an office complex. The
Partnership and HEP-86 each have a 50% interest in the Century Park Joint
Venture.

                  Century Park I, situated on approximately 8.6 acres, is
located in the center of San Diego County in Kearny Mesa, California, directly
adjacent to Highway 163 at the northeast corner of Balboa Avenue and Kearny
Villa Road. Century Park I is part of an office park consisting of six office
buildings and two parking garages, in which Century Park Joint Venture owns
three buildings, comprising 200,002 net rentable square feet and one garage with
approximately 810 parking spaces. One of the three buildings was completed in
the latter half of 1985, and the other two buildings were completed in February
1986. The property was 100% leased as of January 1, 2000 and January 1, 1999.
There are no leases that represent at least 10% of the square footage of the
center scheduled to expire in 2000. Capital expenditures budgeted for 2000
include removal of mineral deposits on the glass curtain wall and new controls
for the HVAC. Capital expenditures for 1999 included a refurbishment allowance
to San Diego Gas & Electric as provided in tenant's original lease.

                                       5
<PAGE>

                  Century Park I competes with other office parks and office
buildings in the Kearny Mesa sub-market. New competition in the sub-market
includes the redevelopment of the adjacent property into the Cabrillo Technology
Center with 141,800 square feet available plus an additional 284,000 square feet
planned and redevelopment of the 234 acre former General Dynamics site, now
known as New Century Center. Plans for New Century Center call for development
of the site with mixed use commercial, industrial, retail and entertainment
areas.

(4)               568 Broadway
                  ------------

                  On December 2, 1986, a joint venture (the "Broadway Joint
Venture") comprised of the Partnership and HEP-86 acquired a fee simple interest
in 568-578 Broadway ("568 Broadway"), a commercial building in New York City,
New York. Until February 1, 1990, the Partnership and HEP-86 each had a 50%
interest in the Broadway Joint Venture. On February 1, 1990, the Broadway Joint
Venture admitted a third joint venture partner, High Equity Partners L.P. -
Series 88 ("HEP-88"), an affiliated public limited partnership sponsored by
Integrated. HEP-88 contributed $10,000,000 for a 22.15% interest in the joint
venture. The Partnership and HEP-86 each retain a 38.925% interest in the joint
venture.

                  568 Broadway is located in the SoHo district of Manhattan on
the northeast corner of Broadway and Prince Street. 568 Broadway is a 12-story
plus basement and sub-basement building constructed in 1898. It is situated on a
site of approximately 23,600 square feet, has a rentable square footage of
approximately 299,000 square feet and a floor size of approximately 26,000
square feet. Formerly catering primarily to industrial light manufacturing, the
building has been converted to an office building and is currently being leased
to art galleries, photography studios, retail and office tenants. The last
manufacturing tenant vacated in January 1993. The building was 100% leased as of
January 1, 2000 and January 1, 1999. There are no leases which represent at
least 10% of the square footage of the property scheduled to expire during 2000.

                  Capital improvements for 2000 include approximately $60,000
for fire protection improvements, $90,000 for corridor and restroom upgrades and
$25,000 for window replacement.

                  568 Broadway competes with several other buildings in the SoHo
area.

(5)               Seattle Tower
                  -------------

                  On December 16, 1986, a joint venture (the "Seattle Landmark
Joint Venture") comprised of the Partnership and HEP-86 acquired a fee simple
interest in Seattle Tower, a commercial office building located in downtown
Seattle ("Seattle Tower"). The Partnership and HEP-86 each have a 50% interest
in the Seattle Landmark Joint Venture.

                  Seattle Tower is located at Third Avenue and University Street
on the eastern shore of Puget Sound in the financial and retail core of the
Seattle central business district. Seattle Tower, built in 1928, is a 27-story
commercial building containing approximately 141,000 rentable square feet,
including almost 10,000 square feet of retail space and approximately 2,211
square feet of storage space. The building also contains a 55-car garage.
Seattle Tower is connected to the Unigard Financial Center and the Olympic Four
Seasons Hotel by a skybridge system. Seattle Tower, formerly Northern Life
Tower, represented the first appearance in Seattle of a major building in the
Art Deco style. It was accepted into the National Register of Historic Places in
1975. Seattle Tower's occupancy at January 1, 2000 was 98%, as compared to 96%
at January 1, 1999. There are approximately seventy tenants occupying the
building. Leasing efforts are focused on consolidating

                                       6
<PAGE>

space to create single floor tenants. There are no leases which represent at
least 10% of the square footage of the property scheduled to expire during 2000.

                  Major capital improvements for 2000 include replacing
galvanized water pipes with copper, and $638,388 has been budgeted to modernize
the mechanics of the elevators.

                  The Partnership believes that Seattle Tower's primary direct
competition comes from three office buildings of similar size or age in the
immediate vicinity of Seattle Tower, which buildings have current occupancy
rates which are comparable to Seattle Tower's.



Item 3.           Legal Proceedings
                  -----------------

                  The 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 counterclaims
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 indeterminate
amount. The Broadway Joint Venture's action for rent against Solo Press was
tried in 1992 and resulted in a judgment 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 similar claims and counterclaims are
substantially similar, the Partnership believes that the Broadway Joint Venture
will prevail in those actions as well.

                  A former retail tenant of 568 Broadway (Galix Shops, Inc.) and
a related corporation that 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 alleged 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 568 Broadway
building facade, which is also required by local law. Plaintiffs further alleged
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 judgment
requiring removal of the sidewalk shed, compensatory damages of $20 million, and
punitive damages of $10 million. The Partnership believes that this suit is
meritless and intends to vigorously defend it.

                  See "Item 1. Business-Settlement of Class Action Lawsuit" for
information relating to the settlement of the class action lawsuit in which the
Partnership was a defendant.

Item 4.           Submission of Matters to a Vote of Security Holders
                  ---------------------------------------------------

                  No matters were submitted to a vote of security holders during
the fourth quarter of the fiscal year covered by this report through the
solicitation of proxies or otherwise.

                                       7

<PAGE>


                                     PART II


Item 5.           Market for Registrant's Securities and
                  Related Security Holder Matters
                  -------------------------------

                  Units of the Partnership are not publicly traded. There are
certain restrictions set forth in the Partnership's amended limited partnership
agreement (the "Limited Partnership Agreement") that may limit the ability of a
limited partner to transfer Units. Such restrictions could impair the ability of
a limited partner to liquidate its investment in the event of an emergency or
for any other reason.

                  In 1987, the Internal Revenue Service adopted certain rules
concerning publicly traded partnerships. The effect of being classified as a
publicly traded partnership would be that income produced by the Partnership
would be classified as portfolio income rather than passive income. In order to
avoid this effect, the Limited Partnership Agreement contains limitations on the
ability of a limited partner to transfer Units in circumstances in which such
transfers could result in the Partnership being classified as a publicly traded
partnership. However, due to the low volume of transfers of Units, it is not
anticipated that this will occur.

                  As of March 15, 2000, there were 8,973 holders of Units of the
Partnership, owning an aggregate of 400,010 Units (including Units held by the
initial limited partner).

                  Distributions per Unit of the Partnership for periods during
1998 and 1999 were as follows:

Distributions for the                 Amount of Distribution
Quarter Ended                                Per Unit
-------------                                --------

March 31, 1998                              $      0.94
June 30, 1998                               $      0.94
September 30, 1998                          $      0.94
December 31, 1998                           $      0.94
March 31, 1999                              $      0.94
June 30, 1999                               $      0.94
September 30, 1999                                   *
December 31, 1999                                    *

*Distributors have been suspended while the requirements of the settlement
agreement are completed.

                  The source of distributions in 1998 and 1999 was cash flow
from operations. In 1998 and 1999, capital expenditures were funded from cash
flow. There are no material legal restrictions set forth in the Limited
Partnership Agreement upon the Partnership's present or future ability to make
distributions.

                  See Item 7, "Management's Discussion and Analysis of Financial
Condition and Results of Operations", for a discussion of factors which may
affect the Partnership's ability to pay distributions.


                                       8
<PAGE>

                  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.

                  In connection with a tender offer for units of the Partnership
made March 12, 1998 (the "Offer") by Olympia Investors, L.P., a Delaware limited
partnership controlled by Carl Ichan ("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 the units owned by Olympia as a result of the Offer,
or 15,566 units, for $101.81 per unit.

                  Subsequent to the expiration of the tender offer described
above, Millennium Funding II Corp. purchased 18,042 limited partnership units
from August 1998 through July1999. The total of these purchases and the units
purchased from Olympia (as described above) represents approximately 18.2% of
the outstanding limited partnership units of the Partnership.

                  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 26,953 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.

                  Over the past few years, many companies have begun making
"mini-tenders" (offers to purchase an aggregate of less than 5% of the total
outstanding units) for limited partnership interests in the Registrant. Pursuant
to the rules of the Securities and Exchange Commission, when a tender offer is
commenced for Units, the Registrant is required to provide limited partners with
a statement setting forth whether it believes limited partners should tender or
whether it is remaining neutral with respect to the offer. Unfortunately, the
rules of the Securities and Exchange Commission do not require that the bidders
in certain tender offers provide the Registrant with a copy of their offer. As a
result, the General Partners often do not become aware of such offers until
shortly before they are scheduled to expire or even after they have expired.
Accordingly, the General Partners do not have sufficient time to advise you of
its position on the tender. In this regard, please be advised that pursuant to
the discretionary right granted to the General Partners of your partnership in
the Partnership Agreement to reject any transfers of units, the General Partners
will not permit the transfer of any Unit in connection with a tender offer
unless: (i) the Registrant is provided with a copy of the bidder's offering
materials, including amendments thereto, simultaneously with their distribution
to the limited partners; (ii) the offer provides for withdrawal rights at any
time prior to the expiration date of the offer and, if payment is not made
by the bidder within 60 days of the date of the offer, after such 60 day period;
and (iii) the offer must be open for at least 20 business days and, if a
material change is made to the offer, for at least 10 business days following
such change.

                                       9

<PAGE>


Item 6.  Selected Financial Data
         -----------------------
<TABLE>
<CAPTION>


                                                         For the Years Ended December 31,
                                 -----------------------------------------------------------------------------------

                                      1999            1998             1997             1996             1995
                                      ----            ----             ----             ----             ----
<S>                                  <C>           <C>                <C>             <C>              <C>
Revenue                              $10,941,322   $ 9,189,542(2)     $ 9,021,378     $ 8,888,016      $  7,877,64 (4)
Net Income (Loss)                      4,847,538     2,931,223(2)       2,134,659       2,134,717      (18,624,934)(1)
Net Income (Loss) per Unit(3)              11.51          6.96               5.07            5.07           (44.23)(1)
Distribution Per Unit                       1.88          3.76               3.57            2.40             2.40
Total Assets                          44,178,753    40,814,689         39,600,417      39,290,185       37,309,597
</TABLE>


1.       Net loss for the year ended December 31, 1995 includes a write-down for
         impairment on Century Park I, Seattle Tower, 568 Broadway, Loch Raven,
         Southport and Westbrook in the aggregate amount of $20,469,050, or
         $48.61 per unit.
2        Net income for the year ended December 31, 1998 includes a $389,359
         gain, or $0.92 per unit, from the sale of the Westbrook property.
3.       All distributions are in excess of accumulated undistributed net income
         and therefore represent a return of capital to investors on a generally
         accepted accounting principles basis.


Item 7.  Management's Discussion and Analysis of
         Financial Condition and Results of Operations
         ---------------------------------------------

         The matters discussed in this Form 10-K 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-K 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.

Liquidity and Capital Resources
-------------------------------

                  The Partnership's real estate properties are office buildings,
shopping centers and other commercial properties, all of which were acquired for
cash. The public offering of the Units commenced on February 4, 1985 and was
terminated on May 30, 1986. Upon termination, the Partnership had accepted
subscriptions for 400,010 Units for aggregate net proceeds of $98,502,500 (gross
proceeds of $100,002,500 less organization and offering expenses aggregating
$1,500,000). The Partnership generates rental revenues from the commercial
properties and is responsible for each property's operating expenses as well as
its administrative cost.

                  The Partnership uses working capital reserves remaining from
the net proceeds of its public offering and any undistributed cash from
operations as its primary source of liquidity. For the year ended December 31,
1999, all capital expenditures and distributions were funded from cash flow. As
of December 31, 1999 the Partnership had total working capital reserves of
approximately $7,189,742. The Partnership intends to distribute less than all of
its future cash flow from operations in order to maintain adequate reserves for
capital improvements and capitalized lease procurement costs. If real estate
market conditions deteriorate in any areas where the Partnership's properties
are

                                       10
<PAGE>

located, there is substantial risk that future cash flow distributions may
be reduced. Working capital reserves are temporarily invested in short-term
instruments and, together with operating cash flow, are expected to be
sufficient to fund anticipated capital improvements to the Partnership's
properties.

                  The Partnership had $8,521,370 of cash and cash equivalents at
December 31, 1999, as compared to $6,301,641 at December 31, 1998. During the
year ended December 31, 1999, cash and cash equivalents increased $2,219,729 as
a result of $4,163,401 of net cash provided by operating activities which was
partially offset by $756,274 of net cash used in investing activities and
$1,187,398 of net cash used in financing activities. Cash used in investing
activities consisted of capital and tenant improvements to the properties and
cash used in financing activities consisted of 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
$4,163,401 for the year ended December 31, 1999.

                  The following table sets forth, for each of the last three
fiscal years, the Partnership's expenditures at each of its properties for
capital improvements and capitalized tenant procurement costs:
<TABLE>
<CAPTION>

          Capital Improvements and Capitalized Tenant Procurement Costs
          -------------------------------------------------------------

                                                           1999                  1998                 1997
                                                    -------------------    ------------------    ---------------
<S>                                                 <C>                    <C>                   <C>
         Seattle Tower                                       $ 355,407             $ 490,322           $ 78,754
         Century Park I                                        173,239                89,729            506,704
         568 Broadway                                          154,616               293,021             84,805
         Loch Raven                                             95,206               908,324            990,911
         Southport                                             272,628               502,081            520,032
                                                    -------------------    ------------------    ---------------
         Totals                                             $1,051,096            $2,283,477         $2,181,206
                                                    ===================    ==================    ===============
</TABLE>

                  The Partnership has budgeted expenditures for capital
improvements and capitalized tenant procurement costs of $1,005,000 in 2000 in
the normal course of business which are expected to be funded from cash flow
from operations. However, such expenditures will depend upon the level of
leasing activity and other factors which cannot be predicted with certainty.

                  The Partnership expects to continue to utilize a portion of
its cash flow from operations to pay for various future capital and tenant
improvements to the properties and leasing commissions (the amount of which
cannot be predicted with certainty). Capital and tenant improvements may in the
future exceed the Partnership's cash flow from operations which would otherwise
be available for distributions. Current working capital is thought to be
sufficient for any near term needs of the Partnership. In that event, the
Partnership would utilize the remaining working capital reserves, eliminate or
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.


                                       11
<PAGE>

Real Estate Market
------------------

                  The real estate market has begun to recover (for selected
markets and property types) from the effects of the substantial decline in the
market value of existing properties which occurred in the early 1990's. However,
market values have been slow to recover and high vacancy rates continue to exist
in some areas. Technological changes are also occurring which may reduce the
office space needs of many users. As a result, the Partnership's potential for
realizing the full value of its investment in its properties is at continued
risk.

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 there is an indication that the carrying
amount of a property may not be recoverable, the Partnership prepares an
estimate 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 undiscounted cash flow 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 adjustments to reduce the carrying value of the
real estate assets 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 which are inherently subjective, 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 vary from the
estimates and the variances may be material. The Partnership may provide
additional adjustments to reduce the carrying value of the real estate assets,
which could be material in subsequent years if real estate markets or local
economic conditions change.

                  All of the Partnership's properties have experienced varying
degrees of operating difficulties and the Partnership recorded significant
impairment adjustments in 1995 and prior years. Improvements in the real estate
market and in the properties operations resulted in no adjustments for
impairment being needed in 1996 through 1999.

                  The following table represents the impairment adjustments
recorded against the Partnership's assets held as of 12/31/99:


                                       12
<PAGE>


                 Property
                 --------

                 Seattle Tower                        $6,050,000
                 Century Park I                       11,700,000
                 568 Broadway                         10,821,150
                 Loch Raven                            4,800,000
                 Southport                             4,900,000
                                                   -------------

                                                     $38,271,150
                                                   =============


Results Of Operations

1999 vs. 1998
-------------

         The Partnership experienced an increase in net income of 65.4% for the
year ended December 31, 1999 to $4,847,538 compared to the prior year net income
of $2,931,223 due to higher rental revenues and lower costs and expenses. The
increases to net income also reflected higher interest and other income during
1999.

         Rental revenues increased by 19.1% during the year ended December 31,
1999 to $10,941,322 from $9,189,542 for the same period in 1998 with Southport,
568 Broadway and Loch Raven reflecting higher rental rates on lease turnovers.


         Costs and expenses decreased by 4.7% during the year ended December 31,
1999 to $6,541,360 compared to $6,867,218 for the same period in 1998, primarily
due to decreases in partnership management and property management fees and
partially offset by an increase in administrative expenses. Administrative
expenses for the year ended December 31, 1999 increased $299,193 or 32.7%
compared to 1998 due to higher professional fees related to the settlement of
the litigation and reorganization of the Partnership. Depreciation and
amortization decreased $73,253 or 5.2% due to higher depreciation recorded in
1998 on certain capitalized tenant improvements. Partnership management fees
decreased $468,561 or 52.8% in 1999 due to an amendment to the partnership
agreement.

         Interest income increased by 80.3% to $334,116 in 1999 due to higher
interest rates and higher invested cash balances during the current year
compared to 1998. Other income increased by $79,210 during the year ended
December 31, 1999 to $113,460 compared to $34,250 in 1998 due to an increase in
fees from investor servicing primarily related to an increase in investor
transfers.

1998 vs. 1997
-------------

         The Partnership experienced an increase in net income of 37.3% for the
year ended December 31, 1998 to $2,931,223 compared to the prior year net income
of $2,134,659 due to the gain on the sale of the Westbrook property, higher
rental revenues and lower costs and expenses. These increases to net income were
partially offset by lower interest and other income during 1998.

         Rental revenues increased by 21% to $1,231,778 at Century Park and by
5.7% or $2,999,473

                                       13
<PAGE>

at Southport during the year ended December 31, 1998 compared to 1997, primarily
due to higher occupancy and rental rates, respectively. These increases were
partially offset by lower rental revenues at Westbrook during the second half of
1998 as a result of the sale of the property in August 1998, as previously
discussed.

         Costs and expenses decreased by 4.1% during the year ended December 31,
1998 to $6,867,218 compared to $7,162,829 in the same period in 1997, primarily
due to decreases in operating expenses, partnership management fees and
administrative expenses. Operating expenses decreased by 4.4% during 1998 to
$3,276,169 due to the sale of Westbrook in August 1998 and a decrease in
insurance expenses at all of the properties due to the payment of lower premiums
while coverage remained the same. Administrative expenses for the year ended
December 31, 1998 decreased $200,905 or 17.9% compared to 1997 due to lower
legal and accounting fees related to the ongoing litigation and possible
reorganization of the Partnership. Depreciation and amortization increased
$55,581 or 4.1% due to higher depreciation recorded in 1998 on certain
capitalized tenant improvements. Property management fees increased 5.9% to
$371,144 in 1998 due to higher revenues, as previously discussed.

         Interest income decreased by 10.7% to $185,290 in 1998 due to lower
interest rates and lower invested cash balances during the current year compared
to 1997. Other income decreased by 50.1% to $34,250 for the year ended December
31, 1998 compared to 1997 due to a decrease in fees from investor servicing
primarily related to a decrease in investor transfers.

Legal Proceedings
-----------------

                  The Partnership is a party to certain litigation. See "Item 3.
Litigation" and "Item 8. Financial Statements-Note 7" for a description thereof.





                                       14

<PAGE>



Item 8.  Financial Statements and Supplementary Data
         -------------------------------------------

              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85,
              -----------------------------------------------------
                        A CALIFORNIA LIMITED PARTNERSHIP
                        --------------------------------

                              FINANCIAL STATEMENTS
                              --------------------

                  YEARS ENDED DECEMBER 31, 1999, 1998 and 1997
                  --------------------------------------------

                                    I N D E X
                                    ---------
<TABLE>
<CAPTION>

                                                                                                              Page
                                                                                                             Number
                                                                                                             ------
<S>                                                                                                             <C>
Independent Auditors' Report.....................................................................................16

Financial statements, years ended December 31, 1999, 1998 and 1997

         Balance Sheets..........................................................................................17

         Statements of Operations................................................................................18

         Statements of Partners' Equity..........................................................................19

         Statements of Cash Flows................................................................................20

         Notes to Financial Statements...........................................................................21
</TABLE>





                                       15

<PAGE>



INDEPENDENT AUDITORS' REPORT


To the Partners of Integrated Resources High Equity Partners, Series 85

We have audited the accompanying balance sheets of Integrated Resources High
Equity Partners, Series 85 (a California limited partnership) as of December 31,
1999 and 1998, and the related statements of operations, partners' equity and
cash flows for each of the three years in the period ended December 31, 1999.
Our audits also included the financial statement schedule listed in the Index at
Item 14(a) 2. These financial statements and the financial statement schedule
are the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements and the financial statement
schedule based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material
respects, the financial position of Integrated Resources High Equity Partners,
Series 85 at December 31, 1999 and 1998, and the results of its operations and
its cash flows for each of the three years in the period ended December 31, 1999
in conformity with generally accepted accounting principles. Also, in our
opinion, such financial statement schedule, when considered in relation to the
basic financial statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.





DELOITTE & TOUCHE LLP
March 17, 2000
Boston, MA



                                       16
<PAGE>
<TABLE>
<CAPTION>


              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
              ----------------------------------------------------

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


                                                                                December 31,
                                                                   ----------------------------------
                                                                        1999                 1998
                                                                   --------------       -------------

ASSETS
------
<S>                                                                 <C>                   <C>
Real estate, net                                                    $32,352,714           $32,687,435
Cash and cash equivalents                                             8,521,370             6,301,641
Other assets                                                          3,095,251             1,678,190
Receivables, net of allowance of $226,500 and
$51,500, respectively                                                   209,418               147,423
                                                                    -----------           -----------

TOTAL ASSETS                                                        $44,178,753           $40,814,689
                                                                    ===========           ===========

LIABILITIES AND PARTNERS' EQUITY
--------------------------------

Accounts payable and accrued expenses                               $ 1,224,373           $ 1,265,264
Due to affiliates                                                       107,255               362,440
Distributions payable                                                        --               395,799
                                                                    -----------           -----------

     Total liabilities                                                1,331,628             2,023,503
                                                                    -----------           -----------

COMMITMENTS AND CONTINGENCIES (Note 7)

PARTNERS' EQUITY:

  Limited partners' equity (400,010
    units issued and outstanding)                                    40,703,819            36,850,676
  General partners' equity                                            2,143,306             1,940,510
                                                                    -----------           -----------

     Total partners' equity                                          42,847,125            38,791,186
                                                                    -----------           -----------

TOTAL LIABILITIES AND PARTNERS' EQUITY                              $44,178,753           $40,814,689
                                                                    ===========           ===========

</TABLE>

                        See notes to financial statements


                                       17

<PAGE>
<TABLE>
<CAPTION>
                            INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
                            ----------------------------------------------------

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



                                                                                For the Year Ended December 31
                                                                  ------------------------------------------------------------
                                                                       1999                     1998                  1997
                                                                  ------------------------------------------------------------
<S>                                                                   <C>                     <C>                  <C>
Rental Revenue                                                        $10,941,322             $9,189,542           $9,021,378
                                                                  ----------------     ------------------    -----------------

Costs and Expenses:
            Operating                                                   3,272,085              3,276,169            3,426,267
            Depreciation and amortization                               1,343,257              1,416,510            1,360,929
            Partnership management fee                                    418,768                887,329              908,172
            Administrative expenses                                     1,215,259                916,066            1,116,971
            Property management fee                                       291,991                371,144              350,490
                                                                  ----------------     ------------------    -----------------
                                                                        6,541,360              6,867,218            7,162,829
                                                                  ----------------     ------------------    -----------------

Income before gain on sale of property, interest and other              4,399,962              2,322,324            1,858,549
income
         Gain on sale of property                                              --                389,359                   --
         Interest income                                                  334,116                185,290              207,420
         Other income                                                     113,460                 34,250               68,690
                                                                  ----------------     ------------------    -----------------

Net Income                                                            $ 4,847,538             $2,931,223           $2,134,659
                                                                  ================     ==================    =================

Net income attributable to:

        Limited partners                                                4,605,161             $2,784,662           $2,027,926

        General partners                                                  242,377                146,561              106,733
                                                                  ----------------     ------------------    -----------------

Net income                                                            $ 4,847,538             $2,931,223           $2,134,659
                                                                  ================     ==================    =================

Net income per unit of limited partnership
     Interest (400,010 units outstanding)                             $     11.51             $     6.96           $     5.07
                                                                  ================     ==================    =================
</TABLE>

                        See notes to financial statements


                                       18
<PAGE>
<TABLE>
<CAPTION>

              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
              ----------------------------------------------------

                         STATEMENTS OF PARTNERS' EQUITY
                         ------------------------------


                                                               General             Limited
                                                              Partners'           Partners'
                                                                Equity             Equity              Total
                                                            ---------------    ----------------    ---------------
<S>                                                         <C>                <C>                 <C>
Balance, December 31, 1996                                       1,841,536          34,970,158         36,811,694

Net Income                                                         106,733           2,027,926          2,134,659

Distributions as return of capital                                 (75,160)         (1,428,034)        (1,503,194)
($3.57 per limited partnership unit)                        ---------------    ----------------    ---------------



Balance, December 31, 1997                                       1,873,109          35,570,050         37,443,159

Net Income                                                         146,561           2,784,662          2,931,223

Distributions as a return of capital                               (79,160)         (1,504,036)        (1,583,196)
($3.76 per limited partnership unit)                        ---------------    ----------------    ---------------



Balance, December 31, 1998                                       1,940,510          36,850,676         38,791,186

Net Income                                                         242,377           4,605,161          4,847,538

Distributions as a return of capital                               (39,581)           (752,018)          (791,599)
($1.88 per limited partnership unit)                        ---------------    ----------------    ---------------


Balance, December 31, 1999                                      $2,143,306         $40,703,819        $42,847,125
                                                            ===============    ================    ===============

</TABLE>
                        See notes to financial statements


                                       19

<PAGE>
<TABLE>
<CAPTION>


              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
              ----------------------------------------------------

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



                                                                             For the Years Ended December 31,
                                                               -------------------------------------------------------------
                                                                     1999                     1998              1997
                                                               -----------------    ------------------    ------------------
<S>                                                            <C>                  <C>                   <C>
CASH FLOW FROM OPERATING ACTIVITIES:

Net Income                                                           $4,847,538            $2,931,223            $2,134,659
Adjustments to reconcile net income to net
cash provided by operating activities:
    Gain on sale of property                                                 --              (389,359)                   --
     Depreciation and amortization                                    1,343,257             1,416,510             1,360,929
     Straight line adjustment for stepped lease rentals              (1,250,983)              (41,629)                3,999
Changes in operating assets and liabilities:
     Accounts payable and accrued expenses                              (40,891)               81,544               121,988
     Receivables                                                        (61,995)               35,145               (24,364)
     Due to affiliates                                                 (255,185)             (215,299)             (586,382)
     Other assets                                                      (418,340)             (243,961)             (202,800)
                                                               -----------------    ------------------    ------------------
Net cash provided by operating activities                             4,163,401             3,574,184             2,808,029
                                                               -----------------    ------------------    ------------------

CASH FLOWS FROM INVESTING ACTIVITIES:

     Proceeds from sale of real estate                                       --             2,042,964                    --
     Improvements to real estate                                       (756,274)           (2,083,198)           (1,967,626)
                                                               -----------------    ------------------    ------------------
Net cash used in investing activities                                  (756,274)              (40,234)           (1,967,626)
                                                               -----------------    ------------------    ------------------

CASH FLOWS FROM FINANCING ACTIVITIES:

     Distributions to partners                                       (1,187,398)           (1,583,196)           (1,360,033)
                                                               -----------------    ------------------    ------------------

Increase (Decrease) in Cash and Cash Equivalents                      2,219,729             1,950,754              (519,630)

Cash and Cash Equivalents, Beginning of Year                          6,301,641             4,350,887             4,870,517
                                                               -----------------    ------------------    ------------------

Cash and Cash Equivalents, End of Year                               $8,521,370            $6,301,641            $4,350,887
                                                               =================    ==================    ==================

</TABLE>

                        See notes to financial statements


                                       20
<PAGE>

              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
              ----------------------------------------------------

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



1.       ORGANIZATION
         ------------

         Integrated Resources High Equity Partners, Series 85, A California
         Limited Partnership (the "Partnership"), is a limited partnership,
         organized under the Uniform Limited Partnership Laws of California on
         August 19, 1983 for the purpose of investing in, holding and operating
         income-producing real estate. The Partnership will terminate on
         December 31, 2008 or sooner, in accordance with terms of the Agreement
         of Limited Partnership. The Partnership invested in three shopping
         centers (one of which was sold in 1998) and four office properties (one
         of which was sold in 1994), none of which are encumbered by debt. See
         "Note 9."

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
         ------------------------------------------

         Financial statements
         --------------------

         The financial statements are prepared on the accrual basis of
         accounting. The preparation of financial statements in conformity with
         generally accepted accounting principles requires management to make
         estimates and assumptions that affect the reported amounts of assets
         and liabilities and disclosure of contingent assets and liabilities at
         the date of the financial statements and the reported amounts of
         revenues and expenses during the reporting period. Actual results could
         differ from those estimates.

         Reclassifications
         -----------------

         Certain reclassifications have been made to the financial statements
         for the prior years in order to conform to the current year's
         classifications.

         Cash and cash equivalents
         -------------------------

         For purposes of the balance sheets and statements of cash flows, the
         Partnership considers all short-term investments that have original
         maturities of three months or less from the date of issuance to be cash
         equivalents.

         Revenue Recognition
         -------------------

         Base rents are recognized on a straight line basis over the terms of
         the related leases. Percentage rents charged to retail tenants based on
         sales volume are recognized when earned. Recoveries from tenants for
         taxes, insurance and other operating expenses are recognized as revenue
         in the period the applicable costs are incurred.

                                       21

<PAGE>
              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
              ----------------------------------------------------

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



2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
         ------------------------------------------------------

         Investments in Joint Ventures
         -----------------------------

         Certain properties were purchased in joint venture ownership with
         affiliated partnerships that have the same, or affiliated, general
         partners as the Partnership. 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
         -----------

         Real Estate is carried at cost, net of adjustments for impairment.
         Repairs and maintenance are charged to expense as incurred.
         Replacements and betterments are capitalized. 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 there is an indication that the carrying amount of the
         property may not be recoverable, the Partnership prepares an estimate
         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 undiscounted future cash flows 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 which are
         inherently subjective, 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.


                                       22

<PAGE>
              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
              ----------------------------------------------------

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


2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
         ------------------------------------------------------

         Unanticipated events and circumstances may occur and some assumptions
         may not materialize; therefore, actual results may vary from the
         estimates and the variances may be material. The Partnership may
         provide additional write-downs, which could be material in subsequent
         years if real estate markets or local economic conditions change.

         Depreciation
         ------------

         Depreciation is computed using the straight-line method over the useful
         life of the property, which is estimated to be 40 years. The cost of
         properties represents the initial cost of the properties to the
         Partnership plus acquisition and closing costs less impairment
         adjustments. Tenant improvements are amortized over the applicable
         lease term.

         Income Taxes
         ------------

         No provision has been made for income taxes for federal, state, and
         local income taxes since they are the personal responsibility of the
         partners.

         Net income and distributions per unit of limited partnership interest
         ---------------------------------------------------------------------

         Net income and distributions per unit of limited partnership interest
         are calculated based upon the number of units outstanding (400,010) for
         each of the years ended December 31, 1999, 1998, and 1997.

         Recently Issued Accounting Pronouncements
         -----------------------------------------

         In June of 1998, the Financial Accounting Standards Board issued
         Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting
         for Derivative Instruments and Hedging Activities" as amended by SFAS
         No. 137, "Accounting for Derivative Instruments and Hedging Activities
         - Deferral of the Effective Date of FASB Statement No. 133." This
         statement establishes accounting and reporting standards for derivative
         instruments and for hedging activities, and will be effective for the
         Partnership in January of 2000. Because the Partnership does not
         currently utilize derivatives or engage in hedging activities,
         management does not believe that implementation of this standard will
         have a material effect on the Partnership's financial statements.

                                       23


<PAGE>
              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
              ----------------------------------------------------

                          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 also a wholly owned
         subsidiary of Presidio, is the Associate General Partner (together with
         the Managing General Partner, the "General Partners"). 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 business that may be in competition with the
         Partnership. Accordingly, conflicts of interest may arise between the
         Partnership and such other businesses. Subject to the rights of the
         Limited Partners under the Limited Partnership Agreement, Presidio
         controls the Partnership through its indirect ownership of all the
         shares of the General Partners. Effective July 31, 1998, Presidio is
         indirectly controlled by NorthStar Capital Investment Corp., a Maryland
         Corporation.

         Effective as of August 28, 1997, 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 will provide the day-to-day management of Presidio
         and its direct and indirect subsidiaries and affiliates. For the years
         ended December 31, 1999 and December 31, 1998, reimbursable expenses
         incurred by NorthStar Presidio amounted to approximately $57,739 and
         $102,007, respectively. 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 Partnership and other entities affiliated
         with Partnership.

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

         In order to facilitate the Agent's provision of the asset management
         services and the investor relation services, effective October 25,
         1999, the officers and directors of the General Partner resigned and
         nominees of the Agent were elected as the officers and directors of the
         General Partner. The Agent is an affiliate of Winthrop Financial
         Associates, a Boston based company that provides asset management
         services, investor relation services and property management services
         to over 150 limited partnerships which own commercial property and


                                       24

<PAGE>
              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
              ----------------------------------------------------

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


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

         other assets. The General Partner does not believe this transaction
         will have a material effect on the operations of Partnership.

         The Partnership has a property management services agreement with
         Resources Supervisory Management Corp. ("Resources Supervisory"), an
         affiliate of the Managing General Partner, to perform certain functions
         relating to the management of the properties of the Partnership.
         Portions 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 years ended
         December 31, 1999, 1998, and 1997, Resources Supervisory was entitled
         to receive an aggregate of $291,991, $371,144 and $350,490
         respectively, of which $220,011, $212,371 and $196,300 was paid to
         unaffiliated management companies, respectively.

         For the administration of the Partnership the Managing General Partner
         is entitled to receive reimbursement of expenses of a maximum of
         $150,000 per year for each of the years ended December 31, 1999, 1998
         and 1997.

         During 1998, for managing the affairs of the Partnership, the Managing
         General Partner was entitled to receive an annual partnership
         management fee equal to 1.05% of the amount of original gross proceeds
         paid or allocable to the acquisition of property by the Partnership, as
         adjusted for the properties sold. Pursuant to the amendment to the
         Partnership Agreement, which became effective on August 20, 1999, the
         annual partnership management fee for 1999 has been reduced to
         $418,769. Further, the Partnership Agreement has been amended (for the
         year 2000 and beyond) so that the partnership management fee will be
         calculated equal to 1.25% of the Gross Asset Value of the Partnership,
         defined as the appraised value of all the assets of the Partnership
         based on the most recent appraisal. For the years ended December 31,
         1999, 1998, and 1997 the Managing General Partner earned $418,769,
         $887,329 and $908,172, respectively.

         The General Partners are allocated 5% of the net income of the
         Partnership which amounted to $242,377, $146,561 and $106,733 in 1999,
         1998 and 1997, respectively. The General Partners are also entitled to
         receive 5% of distributions which amounted to $39,581, $79,160 and
         $75,160 in 1999, 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 returns on their investments.
         All fees received by the General Partners are subject to certain
         limitations as set forth in the Partnership Agreement.

                                       25
<PAGE>


              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
              ----------------------------------------------------

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

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

         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.

         In connection with a tender offer for units of the Partnership made
         March 12, 1998 (the "Offer") by Olympia Investors, L.P., a Delaware
         limited partnership controlled by Carl Ichan ("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 the 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,
         Millennium Funding II Corp. purchased 18,042 limited partnership units
         from August 1998 through July 1999. The total of these purchases and
         the units purchased from Olympia (as described above) represents
         approximately 18.2% of the outstanding limited partnership units of the
         Partnership.

         As required by the settlement (See Note 9), 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.


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

         The Partnership recorded substantial write-downs prior to 1996. No
         write-downs were required for 1997, 1998 or 1999. The following table
         summarizes write-downs recorded on the properties held by the
         Partnership at 12/31/99:

                   Property
                   --------

                   Seattle Tower                      $ 6,050,000
                   Century Park I                      11,700,000
                   568 Broadway                        10,821,150
                   Loch Raven                           4,800,000
                   Southport                            4,900,000
                                                      -----------

                                                      $38,271,150
                                                      ===========



                                       26

<PAGE>
              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
              ----------------------------------------------------

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


     4.  REAL ESTATE (continued)
         -----------------------

         The following table is a summary of the Partnership's real estate as
         of:
<TABLE>
<CAPTION>
                                                                                           December 31,
                                                                            --------------------------------------------
                                                                                   1999                     1998
                                                                            --------------------     -------------------
<S>                                                                                <C>                     <C>
          Land                                                                     $ 10,370,965            $ 10,370,965

          Buildings and improvements                                                 37,716,078              36,959,803
                                                                            --------------------     -------------------
                                                                                     48,087,043              47,330,768

          Less:  Accumulated depreciation                                           (15,734,329)            (14,643,333)
                                                                            --------------------     -------------------

                                                                                    $32,352,714             $32,687,435
                                                                            ====================     ===================
</TABLE>

         During 1999, revenues from the Southport and 568 Broadway properties
         represented 34% and 28% of gross revenues, respectively. No single
         tenant accounted for more than 10% of the Partnership's rental
         revenues.

         The following is a summary of the Partnership's share of anticipated
         future receipts under noncancellable leases:

<TABLE>
<CAPTION>

                          2000           2001         2002         2003         2004      Thereafter      Total
                          ----           ----         ----         ----         ----      ----------      -----
<S>                    <C>            <C>          <C>          <C>          <C>          <C>          <C>
          Total:       $7,369,000     $6,733,000   $5,848,000   $4,530,000   $3,433,000   $5,293,000   $33,206,000
                       ==========     ==========   ==========   ==========   ==========   ==========   ===========
</TABLE>

5.       DISTRIBUTIONS PAYABLE
         ---------------------
<TABLE>
<CAPTION>
                                                                                          December 31,
                                                                            ------------------------------------------
                                                                                   1999                   1998
                                                                            -------------------     ------------------
<S>                                                                                  <C>                   <C>
          Limited Partners                                                           $      --             $  376,009
          General Partners                                                                  --                 19,790
                                                                            -------------------     ------------------
                                                                                     $      --             $  395,799
                                                                            ===================     ==================
</TABLE>
          Such distributions were paid in the subsequent quarter.


                                       27

<PAGE>
              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
              ----------------------------------------------------

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



6.       DUE TO AFFILIATES
         -----------------
<TABLE>
<CAPTION>
                                                                                           December 31,
                                                                                -----------------------------------
                                                                                     1999               1998
                                                                                ---------------    ----------------
<S>                                                                             <C>                <C>
         Partnership management fee                                                   $     --            $211,409
         Property management fee                                                        32,255             113,531
         Non-accountable expense reimbursement                                          75,000              37,500
                                                                                ---------------    ----------------
                                                                                      $107,255            $362,440
                                                                                ===============    ================
</TABLE>
         Such amounts were  paid in the subsequent quarters

7.       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, 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.



                                       28
<PAGE>
              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
              ----------------------------------------------------

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



8.       RECONCILIATION OF NET INCOME AND NET ASSETS PER FINANCIAL
         ---------------------------------------------------------
         STATEMENTS TO TAX REPORTING
         ---------------------------

         The Partnership files its tax returns on an accrual basis and has
         computed depreciation for tax purposes using the accelerated cost
         recovery systems, which is not in accordance with generally accepted
         accounting principles. The following is a reconciliation of the net
         income per the financial statements to the net taxable income.
<TABLE>
<CAPTION>

                                                                                  Years Ended December 31,
                                                                    ------------------------------------------------------
                                                                         1999              1998                 1997
                                                                    ---------------    --------------     ----------------
<S>                                                                    <C>               <C>                  <C>
         Net income per financial statements                           $ 4,847,538       $ 2,931,223          $ 2,134,659

         Difference in gain/loss on sale of Westbrook                           --        (2,357,221)                  --

         Tax depreciation and straight-line rent in excess of
            financial statement depreciation                            (2,719,001)       (1,499,402)          (1,524,130)
                                                                    ---------------    --------------     ----------------

         Net taxable income (loss)                                     $ 2,128,537       $  (925,400)         $   610,529
                                                                    ===============    ==============     ================
</TABLE>

         The differences between the Partnership's assets and liabilities for
         tax purposes and financial reporting purposes are as follows:
<TABLE>
<CAPTION>

                                                                                                     December 31,
                                                                                                         1999
                                                                                                   -----------------
<S>                                                                                                     <C>
         Net assets per financial statements                                                            $42,847,125

         Write-down for impairment                                                                       38,271,150

         Tax depreciation and straight-line rent in excess of financial statement depreciation         (17,737,590)

         Gain on admission of joint venture partner not recognized for tax purposes                       (307,093)

         Organization costs not charged to partners' equity for tax purposes                              1,500,000
                                                                                                   -----------------

         Net assets per tax reporting                                                                   $64,573,592
                                                                                                   =================
</TABLE>



                                       29

<PAGE>


              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
              ----------------------------------------------------

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


9.       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.

         In connection with this action, the Limited Partnership Agreement
         provides for indemnification of the General Partners and their
         affiliates in certain circumstances. The Partnership has agreed to
         reimburse the General Partners for their actual costs incurred in
         defending this litigation and the costs of preparing settlement
         materials. Through December 31, 1999, the Partnership paid the General
         Partners a total of $1,080,404 for these costs, which have historically
         been included in administrative expenses in the Statement of
         Operations.


                                       30
<PAGE>


Item 9.  Changes in and Disagreements with Accountants on Accounting
         and Financial Disclosure
         ------------------------

                  None













                                       31

<PAGE>


                                    PART III

Item 10. Directors and Executive Officers of the Registrant
         --------------------------------------------------

         The Partnership has no officers or directors. The Managing General
Partner manages and controls substantially all of the Partnership's affairs and
has general responsibility and ultimate authority in all matters affecting its
business. The names and positions held by the officers and directors of the
Managing General Partner are described below.
<TABLE>
<CAPTION>

                                       Position Held with the                 Has Served as a Director
Name                                  Managing General Partner                    or Officer Since
----                                  ------------------------                    ----------------
<S>                                   <C>                                              <C>
Michael L. Ashner                     President and Director                           10-99

David G. King, Jr.                    Vice President                                   11-97

Peter Braverman                       Executive Vice President                         10-99

Lara K. Sweeney                       Vice President and Secretary                     10-99

Carolyn Tiffany                       Vice President and Treasurer                     10-99
</TABLE>

                  Michael L. Ashner, age 47, has been the Chief Executive
Officer of Winthrop Financial Associates, A Limited Partnership ("WFA") since
January 15, 1996. From June 1994 until January 1996, Mr. Ashner was a Director,
President and Co-chairman of National Property Investors, Inc., a real estate
investment company ("NPI"). Mr. Ashner was also a Director and executive officer
of NPI Property Management Corporation ("NPI Management") from April 1984 until
January 1996. In addition, since 1981 Mr. Ashner has been President of Exeter
Capital Corporation, a firm which has organized and administered real estate
limited partnerships.

                  David G. King, Jr., 37, has been a Vice President and
Assistant Treasurer of NorthStar Capital Investment Corp. since November 1997.
He is also a Vice President of the General Partner. For more than the previous
five years he was a Senior Vice President of Finance at Olympia & York Companies
(USA).

                  Peter Braverman, age 48, has been a Vice President of WFA
since January 1996. From June 1995 until January 1996, Mr. Braverman was a Vice
President of NPI and NPI Management. From June 1991 until March 1994, Mr.
Braverman was President of the Braverman Group, a firm specializing in
management consulting for the real estate and construction industries. From 1988
to 1991, Mr. Braverman was a Vice President and Assistant Secretary of Fischbach
Corporation, a publicly traded, international real estate and construction firm.


                                       32
<PAGE>

                  Lara K. Sweeney, age 27, has been a Senior Vice President of
WFA since January 1996. Prior to joining WFA, Ms. Sweeney was an officer of NPI
and NPI Management in the asset management and investor relations departments.

                  Carolyn Tiffany, age 33, has been employed with WFA since
January 1993. From 1993 to September 1995, Ms. Tiffany was a Senior Analyst and
Associate in WFA's accounting and asset management departments. From October
1995 to present Ms. Tiffany was a Vice President in the asset management and
investor relations departments of WFA until December 1997, at which time she
became the Chief Operating Officer of WFA.

                  Each director and officer of the General Partner will hold
office until the next annual meeting of stockholders of the General Partner and
until his successor is elected and qualified.

                  One or more of the above persons are also directors or
officers of a general partner (or general partner of a general partner) of a
number of limited partnerships which either have a class of securities
registered pursuant to Section 12(g) of the Securities and Exchange Act of 1934,
or are subject to the reporting requirements of Section 15(d) of such Act.

                  There are no family relationships among the officers and
directors of the General Partner.

Item 11. Executive Compensation
         ----------------------

                  The Partnership is not required to and did not pay
remuneration to the officers and directors of the Managing General Partner or
the partners of the Associate General Partner. Certain officers and directors of
the Managing General Partner receive compensation from the Managing General
Partner and/or its affiliates (but not from the Partnership) for services
performed for various affiliated entities, which may include services performed
for the Partnership; however, the Managing General Partner believes that any
compensation attributable to services performed for the Partnership is
immaterial. See also "Item 13. Certain Relationships and Related Transactions."







                                       33
<PAGE>


Item 12. Security Ownership of Certain Beneficial Owners and Management
         --------------------------------------------------------------

         (a)  Security Ownership of Certain Beneficial Owners.
              -----------------------------------------------

         Except as set forth below, no person or group is known by the
Partnership to be the beneficial owner of more than 5% of the outstanding Units
at March 1, 2000:
<TABLE>
<CAPTION>

                                                   Number of
         Name of Beneficial Owner                 Units owned                % of Class
         ------------------------                 -----------                ----------
<S>                                              <C>                        <C>
         Millennium Funding II Corp. (1)             73,033                     18.26%
         Millennium Funding II LLC (1)               26,953                      6.74%
</TABLE>

(1)      The principal business address of both Millennium Funding II Corp. and
         Millennium Funding II LLC, both of which are affiliates of the General
         Partners, is 527 Madison Avenue, New York, New York 10022.

         (b)  Security Ownership of Management.
              --------------------------------

         At March 1, 2000, Presidio, the General Partner and their affiliates,
officers and directors owned as a group own 103,338 Units representing
approximately 25.83% of the total number of Units outstanding.

         (c)  Changes in Control.
              ------------------

         There exists no arrangement known to the Partnership the operation of
which may at a subsequent date result in a change in control of the Partnership.






                                       34
<PAGE>


Item 13.  Certain Relationships and Related Transactions
          ----------------------------------------------

               The General Partners and certain affiliated entities have, during
the year ended December 31, 1999, earned or received compensation or payments
for services or reimbursements from the Partnership or Presidio subsidiaries as
follows:
<TABLE>
<CAPTION>

                                                                                                Compensation from
Name of Recipient                                            Capacity in Which Served            the Partnership
-----------------                                            ------------------------            ---------------
<S>                                                          <C>                                <C>
Resources High Equity Inc.                                   Managing General Partner              $607,556(1)

Presidio AGP Corp.                                           Associate General Partner                  792(2)

Resources Supervisory Management Corp.                       Affiliated Property Managers            71,980(3)
</TABLE>

1        Of this amount $38,788 represents the Managing General Partner's share
         of distributions of cash from operations, $150,000 represents payment
         for non-accountable expenses of the Managing General Partner and
         $418,768 represents a Partnership Management Fee for managing the
         affairs of the Partnership. Furthermore, under the Partnership's
         Limited Partnership Agreement, 5% of the Partnership's net income and
         net loss is allocated to the General Partners (0.1% to the Associate
         General Partner and 4.9% to the Managing General Partner). Pursuant
         thereto, for the year ended December 31, 1999, $104,298 of the
         Partnership's taxable income was allocated to the Managing General
         Partner.

2         This amount represents the Associate General Partner's share of
          distributions of cash from operations. In addition, for the year ended
          December 31, 1999, $2,129 of the Partnership's taxable income was
          allocated to the Associate General Partner.

3         This amount was earned pursuant to a management agreement with
          Resources Supervisory, a wholly owned subsidiary of Presidio, for
          performance of certain functions relating to the management of the
          Partnership's properties. The total fee payable to Resources
          Supervisory was $291,991, of which $220,011 was paid to unaffiliated
          management companies.





                                       35

<PAGE>



                                     PART IV


Item 14. Exhibits, Financial Statement Schedules,
         and Reports on Form 8-K
         -----------------------

(a) (1)  Financial Statements: see Index to Financial Statements in Item 8.

(a) (2)  Financial Statement Schedule:

                  III.     Real Estate and Accumulated Depreciation

(a) (3)  Exhibits:

3.4.              (a) Amended and Restated Partnership Agreement ("Partnership
                  Agreement") of the Partnership, incorporated by reference to
                  Exhibit A to the Prospectus of the Partnership dated February
                  4, 1985, included in the Partnership's Registration Statement
                  on Form S-11 (Reg. No. 2-92319).

                  (b) Amendment dated April 1, 1985 to the Partnership's
                  Partnership Agreement, incorporated by reference to the
                  Partnership's Annual Report on Form 10-K for the year ended
                  December 31, 1985.

                  (c) Restatement of Amendment dated December 1, 1986 to the
                  Partnership's Partnership Agreement, incorporated by reference
                  to the Partnership's Current Report on Form 8-K dated December
                  8, 1986.

                  (d) Amendment dated as of April 1, 1988 to the Partnership's
                  Partnership Agreement, incorporated by reference to the
                  Partnership's Annual Report on Form 10-K for the year ended
                  December 31, 1988.

                  (e) Amendment to the Amended and Restated Agreement of Limited
                  Partnership dated August 20, 1999, incorporated by reference
                  to the Partnership's Quarterly Report on Form 10-Q for the
                  three months ended September 30, 1999.

10.               (a) Agent's Agreement between the Partnership and Resources
                  Property Management Corp., incorporated by reference to
                  Exhibit 10(b) to the Partnership's Registration Statement on
                  Form S-11 (Reg. No. 2-92319).

                  (b) Acquisition and Disposition Services Agreement among the
                  Partnership and Realty Resources Inc., and Resources
                  Acquisitions, Inc., incorporated by reference to Exhibit 10(c)
                  to the Partnership's Registration Statement on Form S-11 (Reg.
                  No. 2-92319).


                                       36
<PAGE>


                  (c) Agreement among Resources High Equity, Inc., Integrated
                  Resources, Inc. and Z Square G Partners II, incorporated by
                  reference to Exhibit 10(d) to the Partnership's Registration
                  Statement on Form S-11 (Reg. No. 2-92319).

                  (d) Lease Agreement dated June 12, 1985, between the
                  Partnership and First Federal Savings and Loan Association of
                  South Carolina for the First Federal Office Building,
                  incorporated by reference to Exhibit 10(g) to the
                  Partnership's Post-Effective Amendment No. 1 to Registration
                  Statement on Form S-11 (Reg. No. 2-92319).

                  (e) Joint Venture Agreement dated November 2, 1986 between the
                  Partnership and High Equity Partners, L.P. - Series 86, A
                  California Limited Partnership, with respect to Century Park
                  I, incorporated by reference to Exhibit 10(b) to the
                  Partnership's Current Report on Form 8-K dated November 7,
                  1986.

                  (f) Joint Venture Agreement dated October 27, 1986 between the
                  Partnership and High Equity Partners, L.P. - Series 86, with
                  respect to 568 Broadway, incorporated by reference to Exhibit
                  10(b) to the Partnership's Current Report on Form 8-K dated
                  November 19, 1986.

                  (g) Joint Venture Agreement dated November 24, 1986 between
                  the Partnership and High Equity Partners, L.P. - Series 86,
                  with respect to Seattle Tower, incorporated by reference to
                  Exhibit 10(b) to the Partnership's Current Report on Form 8-K
                  dated December 8, 1986.

                  (h) Amended and Restated Joint Venture Agreement dated
                  February 1, 1990 among the Partnership, High Equity Partners,
                  L.P. - Series 86 and High Equity Partners, L.P. - Series 88,
                  with respect to 568 Broadway, incorporated by reference to
                  Exhibit 10(a) to the Partnership's Current Report on Form 8-K
                  dated February 1, 1990.

                  (i) First Amendment to Amended and Restated Joint Venture
                  Agreement of 568 Broadway Joint Venture, dated as of February
                  1, 1990, among the Partnership, High Equity Partners, L.P. -
                  Series 86 and High Equity Partners, L.P. - Series 88,
                  incorporated by reference to Exhibit 10(p) to the
                  Partnership's Annual Report on Form 10-K for the year ended
                  December 31, 1990.

                  (j) Agreement, dated as of March 23, 1990, among the
                  Partnership, Resources High Equity Inc. and Resources Property
                  Management Corp., with respect to the payment of deferred
                  fees, incorporated by reference to Exhibit 10(q) to the
                  Partnership's Annual Report on Form 10-K for the year ended
                  December 31, 1990.

                  (k) Amending Agreement, dated as of December 31, 1991, to
                  Agreement dated


                                       37
<PAGE>

                  as of March 23, 1990, among the Partnership, Resources High
                  Equity Inc. and Resources Property Management Corp., with
                  respect to the payment of deferred fees, incorporated by
                  reference to Exhibit 10(r) to the Partnership's Annual Report
                  on Form 10-K for the year ended December 31, 1991.

                  (l) Form of Termination of Supervisory Management Agreement
                  (separate agreement entered into with respect to each
                  individual property) and Form of Supervisory Management
                  Agreement between the Partnership and Resources Supervisory
                  (separate agreement entered into with respect to each
                  property), incorporated by reference to Exhibit 10(s) to the
                  Partnership's Annual Report on Form 10-K for the year ended
                  December 31, 1991.

                  (m) Amending Agreement, dated as of December 30, 1992, to
                  Agreement dated as of March 23, 1990, among the Partnership,
                  Resources High Equity, Inc. and Resources Property Management
                  Corp., with respect to the payment of deferred fees,
                  incorporated by reference to Exhibit 10(m) to the
                  Partnership's Annual Report on Form 10-K for the year ended
                  December 31, 1992.

                  (n) Amending Agreement, dated as of December 29, 1993, to
                  Agreement dated as of March 23, 1990, among the Partnership,
                  Resources High Equity, Inc. and Resources Property Management
                  Corp., incorporated by reference with respect to the payment
                  of deferred fees.

                  (p) Guarantee by Presidio Capital Corp. dated August 20, 1999,
                  incorporated by reference to the Partnership's Quarterly
                  Report on Form 10-Q for the three months ended September 30,
                  1999.

         (b)      Reports on Form 8-K:
                  -------------------

         The Partnership filed the following reports on Form 8-K during the last
         quarter of the fiscal year:

                  None.

                                       38

<PAGE>



                 Financial Statement Schedule Filed Pursuant to
                 ----------------------------------------------
                                  Item 14(a)(2)
                                  -------------


              INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85,
                        A CALIFORNIA LIMITED PARTNERSHIP
                        --------------------------------

                             ADDITIONAL INFORMATION
                             ----------------------

                   YEARS ENDED DECEMBER 31, 1999 1998 AND 1997
                   -------------------------------------------

                                      INDEX
                                      -----
<TABLE>
<CAPTION>

                                                                                                               Page
                                                                                                              Number
                                                                                                              ------
<S>                                                                                                           <C>
Additional financial information furnished pursuant to the requirements of Form
    10-K:

    Schedules - December 31, 1999, 1998 and 1997 and years then ended, as
      required:

         Schedule III      - Real estate and accumulated depreciation                                           S-1

                           - Notes to Schedule III - Real estate and                                            S-2
                                    accumulated depreciation

</TABLE>

         All other schedules have been omitted because they are inapplicable,
not required, or the information is included in the financial statements or
notes thereto.











                                       39

<PAGE>



                                   SIGNATURES
                                   ----------

         Pursuant to the requirements of Section 13 or 15(d) 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: March 29, 2000               By: /s/ Michael L. Ashner
                                        ----------------------
                                        Michael L. Ashner
                                        President and Director
                                        (Principal Executive Officer)


         Pursuant to the requirements of the Securities Exchange Act of 1934,
This report has been signed below by the following persons on behalf of the
registrant and in their capacities on the dates indicated.



Dated: March 29, 2000               By: /s/ Michael L. Ashner
                                        ----------------------
                                        Michael L. Ashner
                                        President and Director
                                        (Principal Executive Officer)



Dated: March 29, 2000               By: /s/ Carolyn Tiffany
                                        --------------------
                                        Carolyn Tiffany
                                        Vice President and Treasurer
                                        (Principal Financial and Accounting
                                        Officer)






                                       40



<PAGE>
<TABLE>
<CAPTION>

INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
    A California Limited Partnership

SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1999
============================================================================================================================

                                                                                              Costs               Reductions
                                                                                           Capitalized             Recorded
                                                                                            Subsequent            Subsequent
                                                                                                to                    to
                                                                   Initial Cost             Acquisition           Acquisition
                                                                   ------------             -----------           -----------
                                                                          Buildings
                                                                             And                      Carrying
                             Description       Encumbrances    Land     Improvements   Improvement     Costs      Write Downs
                             -----------       ------------    ----     ------------   -----------   ---------    -----------
<S>                         <C>                <C>            <C>       <C>            <C>           <C>          <C>
RETAIL:

The Southport Shopping      Ft. Lauderdale, FL   $      --    $6,961,667   $13,723,333   $ 2,050,648  $ 1,866,962  $(4,900,000)

The Loch Raven Shopping     Towson, MD                  --     2,469,871     6,860,748     2,903,791      953,837   (4,800,000)
                                                ----------  ------------  ------------  ------------  ----------- ------------
                                                        --     9,431,538    20,584,081     4,954,439    2,820,799   (9,700,000)
                                                ----------  ------------  ------------  ------------  ----------- ------------

OFFICE:

Century Park Office         Kearny Mesa, CA             --     3,122,064    12,717,936     2,124,576    1,353,130  (11,700,000)
Complex                                         ----------

568 Broadway Office         New York, NY                --     2,318,801     9,821,517     5,160,541    1,556,212  (10,821,150)

Seattle Tower Office        Seattle, WA                 --     2,163,253     5,030,803     2,589,111      609,392   (6,050,000)
                                                ----------  ------------  ------------  ------------  ----------- ------------
                                                        --     7,604,118    27,570,256     9,874,228    3,518,734  (28,571,150)
                                                ----------  ------------  ------------  ------------  ----------- ------------

                                                $       --   $17,035,656   $48,154,337   $14,828,667   $6,339,533 $(38,271,150)
                                                ==========  ============  ============  ============  =========== ============

<CAPTION>
                                                    Gross Amount at Which
                                                 Carried at Close of Period
                                                 --------------------------
                                                         Buildings
                                                           And                    Accumulated
                                           Land        Improvements    Total      Depreciation    Date Acquired
                                           ----        ------------    -----      ------------    -------------

<S>                                       <C>          <C>             <C>        <C>             <C>
RETAIL:

The Southport Shopping                    $ $5,998,194   $13,704,416  $19,702,610   $5,366,739        1986

The Loch Raven Shopping                      1,507,227     6,881,020    8,388,247    2,528,416        1986
                                          ------------   -----------  -----------  -----------
                                             7,505,421    20,585,436   28,090,857    7,895,155
                                          ------------   -----------  -----------  -----------

OFFICE:

Century Park Office Complex                  1,123,811     6,493,895    7,617,706    3,242,309        1986

568 Broadway Office                            977,120     7,058,801    8,035,921    3,060,871        1986

Seattle Tower Office                           764,613     3,577,947    4,342,559    1,535,994        1986
                                          ------------   -----------  -----------  -----------
                                             2,865,544    17,130,643   19,996,187    7,839,174
                                          ------------   -----------  -----------  -----------

                                           $10,370,965   $37,716,078  $48,087,043  $15,734,329
                                          ============   ===========  ===========  ===========
</TABLE>


Note:    The aggregate cost for Federal income tax purposes is $86,358,193 at
December 31, 1999.


                                       S-1

<PAGE>
<TABLE>
<CAPTION>


INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
   A California Limited Partnership

NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1999
===============================================================================================================

(A)    RECONCILIATION OF REAL ESTATE OWNED:

                                                                  For the Years Ended December 31,
                                                       --------------------------------------------------------
                                                            1999                1998                 1997
                                                       ----------------    ----------------     ---------------
<S>                                                       <C>                 <C>                 <C>
BALANCE AT BEGINNING OF YEAR                              $ 47,330,768        $ 48,010,757        $ 46,043,130

ADDITIONS DURING THE YEAR
  Improvements to Real Estate                                  756,275           2,083,198           1,967,627

SUBTRACTIONS DURING THE YEAR
      Sales - Net
                                                                    --          (2,763,187)                 --
                                                       ----------------    ----------------     ---------------

BALANCE AT END OF YEAR (1)                                 $48,087,043         $47,330,768         $48,010,757
                                                       ================    ================     ===============
</TABLE>

       (1) INCLUDES THE INITIAL COST OF THE PROPERTIES PLUS ACQUISITION AND
CLOSING COSTS.

(B)    RECONCILIATION OF ACCUMULATED DEPRECIATION:
<TABLE>
<CAPTION>

                                                                  For the Years Ended December 31,
                                                       --------------------------------------------------------
                                                            1999                1998                 1997
                                                       ----------------    ----------------     ---------------
<S>                                                        <C>                 <C>                 <C>
BALANCE AT BEGINNING OF YEAR                               $14,643,333         $14,807,964         $13,719,794

ADDITIONS DURING THE YEAR
     Depreciation Expense(1)                                 1,090,996           1,164,109           1,088,170

SUBTRACTIONS DURING THE YEAR
     Sales                                                          --          (1,328,740)                 --
                                                       ----------------    ----------------     ---------------

BALANCE AT END OF YEAR                                     $15,734,329         $14,643,333         $14,807,964
                                                       ================    ================     ===============
</TABLE>

(1)      DEPRECIATION IS PROVIDED ON BUILDINGS USING THE STRAIGHT-LINE METHOD
         OVER THE USEFUL LIFE OF THE PROPERTY, WHICH IS ESTIMATED TO BE 40 YEARS
         AN ON TENANT IMPROVEMENTS OVER THE ESTIMATED TERM OF THE RELATED LEASE.

                                       S-2