SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549
                                   FORM 10-Q
(Mark One)

  X  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
-----
     EXCHANGE ACT OF 1934.

For the quarterly period ended June 30, 1997
                               -------------
                                      OR
     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
-----
     EXCHANGE ACT OF 1934.

For the transition period from              to             
                               ------------    ------------
Commission file number 0-14353
                       -------

                    BALCOR REALTY INVESTORS 85-SERIES I
                     A REAL ESTATE LIMITED PARTNERSHIP         
          -------------------------------------------------------
          (Exact name of registrant as specified in its charter)

          Illinois                                      36-3244978    
-------------------------------                     -------------------
(State or other jurisdiction of                      (I.R.S. Employer  
incorporation or organization)                      Identification No.)

2355 Waukegan Road
Bannockburn, Illinois                                      60015   
-----------------------------------------           -------------------
(Address of principal executive offices)                (Zip Code)

Registrant's telephone number, including area code (847) 267-1600
                                                   --------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes   X    No     
    -----     -----
<PAGE>
                     BALCOR REALTY INVESTORS 85 - SERIES I
                       A REAL ESTATE LIMITED PARTNERSHIP
                       (AN ILLINOIS LIMITED PARTNERSHIP)

                                BALANCE SHEETS
                      June 30, 1997 and December 31, 1996
                                  (Unaudited)

                                    ASSETS
                                                  1997            1996
                                            --------------  --------------
Cash and cash equivalents                   $   2,862,768   $  16,372,728
Accounts and accrued interest receivable           53,514         168,416
Prepaid expenses                                                   29,911
                                            --------------  --------------
                                                2,916,282      16,571,055
                                            --------------  --------------
Investment in real estate:
  Land                                                          1,958,223
  Buildings and improvements                                   15,033,831
                                                            --------------
                                                               16,992,054
  Less accumulated depreciation                                 6,849,503
                                                            --------------
Investment in real estate, net of
  accumulated depreciation                                     10,142,551
                                            --------------  --------------
                                            $   2,916,282   $  26,713,606
                                            ==============  ==============

                      LIABILITIES AND PARTNERS' CAPITAL 

Accounts payable                            $      72,160   $     120,413
Due to affiliates                                  98,010         130,331
Accrued liabilities, principally
  real estate taxes                                                91,810
Security deposits                                                  62,326
Losses in excess of investments in joint 
  ventures  with affiliates                       542,548         499,671
Mortgage notes payable                                         11,495,334
                                            --------------  --------------
     Total liabilities                            712,718      12,399,885

Commitments and contingencies

Limited Partners' capital (82,697  
  Interests issued and outstanding)             2,507,564      14,675,847
General Partner's deficit                        (304,000)       (362,126)
                                            --------------  --------------
     Total partners' capital                    2,203,564      14,313,721
                                            --------------  --------------
                                            $   2,916,282   $  26,713,606
                                            ==============  ==============

The accompanying notes are an integral part of the financial statements.
<PAGE>
                     BALCOR REALTY INVESTORS 85 - SERIES I
                       A REAL ESTATE LIMITED PARTNERSHIP
                       (AN ILLINOIS LIMITED PARTNERSHIP)

                       STATEMENTS OF INCOME AND EXPENSES
                for the six months ended June 30, 1997 and 1996
                                  (Unaudited)

                                                  1997            1996
                                            --------------  --------------
Income:
  Rental and service                        $     443,934   $   7,443,329
  Interest on short-term investments              192,432         117,891
  Other income                                     39,758
  Participation in (loss) income of joint 
    ventures with affiliates                      (11,792)        163,054
                                            --------------  --------------
    Total income                                  664,332       7,724,274
                                            --------------  --------------

Expenses:
  Interest on mortgage notes payable               99,717       2,046,463
  Lender participation                          1,025,000
  Depreciation                                     62,779         888,894
  Amortization of deferred expenses                                79,174
  Property operating                              263,437       2,465,601
  Real estate taxes                                12,325         429,759
  Property management fees                         17,151         368,429
  Administrative                                  163,376         302,674
                                            --------------  --------------
    Total expenses                              1,643,785       6,580,994
                                            --------------  --------------
(Loss) income before gains on sale of 
  properties and extraordinary item              (979,453)      1,143,280

Gains on sale of properties                    12,768,729       8,152,710
                                            --------------  --------------
Income before extraordinary item               11,789,276       9,295,990

Extraordinary item:
  Debt extinguishment expense                                    (427,340)
                                            --------------  --------------
Net income                                  $  11,789,276   $   8,868,650
                                            ==============  ==============
Income before extraordinary item 
  allocated to General Partner              $      58,126   $      92,960
                                            ==============  ==============
Income before extraordinary item 
  allocated to Limited Partners             $  11,731,150   $   9,203,030
                                            ==============  ==============
<PAGE>
                     BALCOR REALTY INVESTORS 85 - SERIES I
                       A REAL ESTATE LIMITED PARTNERSHIP
                       (AN ILLINOIS LIMITED PARTNERSHIP)

                       STATEMENTS OF INCOME AND EXPENSES
                for the six months ended June 30, 1997 and 1996
                                  (Unaudited)
                                  (Continued)


Income before extraordinary item 
  per Limited Partnership Interest
  (82,697 issued and outstanding)           $      141.86   $      111.29
                                            ==============  ==============
Extraordinary item allocated to
  General Partner                                    None   $      (4,273)
                                            ==============  ==============
Extraordinary item allocated to
  Limited Partners                                   None   $    (423,067)
                                            ==============  ==============
Extraordinary item per Limited
  Partnership Interest (82,697
  issued and outstanding)                            None   $       (5.12)
                                            ==============  ==============
Net income allocated to General Partner     $      58,126   $      88,687
                                            ==============  ==============
Net income allocated to Limited Partners    $  11,731,150   $   8,779,963
                                            ==============  ==============
Net income per Limited Partnership Interest
  (82,697 issued and outstanding)           $      141.86   $      106.17
                                            ==============  ==============
Distributions to Limited Partners           $  23,899,433   $   1,240,456
                                            ==============  ==============
Distributions per Limited Partnership
  Interest (82,697 issued and outstanding)  $      289.00   $       15.00
                                            ==============  ==============

The accompanying notes are an integral part of the financial statements.
<PAGE>
                     BALCOR REALTY INVESTORS 85 - SERIES I
                       A REAL ESTATE LIMITED PARTNERSHIP
                       (AN ILLINOIS LIMITED PARTNERSHIP)

                       STATEMENTS OF INCOME AND EXPENSES
                 for the quarters ended June 30, 1997 and 1996
                                  (Unaudited)

                                                  1997            1996
                                            --------------  --------------
Income:
  Rental and service                                        $   3,494,513
  Interest on short-term investments        $      68,427          82,804
  Other income                                     39,758
  Participation in (loss) income of joint 
    ventures with affiliates                      (11,265)         17,728
                                            --------------  --------------
    Total income                                   96,920       3,595,045
                                            --------------  --------------

Expenses:
  Interest on mortgage notes payable                              934,046
  Depreciation                                                    408,869
  Amortization of deferred expenses                                37,090
  Property operating                                            1,151,523
  Real estate taxes                                               196,531
  Property management fees                                        170,064
  Administrative                                   64,616         178,011
                                            --------------  --------------
    Total expenses                                 64,616       3,076,134
                                            --------------  --------------
Income before gain on sale of property and
  extraordinary item                               32,304         518,911

Gain on sale of property                                        3,525,579
                                            --------------  --------------
Income before extraordinary item                   32,304       4,044,490

Extraordinary item:
  Debt extinguishment expense                                    (176,336)
                                            --------------  --------------
Net income                                  $      32,304   $   3,868,154
                                            ==============  ==============
Income before extraordinary item 
  allocated to General Partner                       None   $      40,445
                                            ==============  ==============
Income before extraordinary item 
  allocated to Limited Partners             $      32,304   $   4,004,045
                                            ==============  ==============
<PAGE>
                     BALCOR REALTY INVESTORS 85 - SERIES I
                       A REAL ESTATE LIMITED PARTNERSHIP
                       (AN ILLINOIS LIMITED PARTNERSHIP)

                       STATEMENTS OF INCOME AND EXPENSES
                 for the quarters ended June 30, 1997 and 1996
                                  (Unaudited)
                                  (Continued)


Income before extraordinary item 
  per Limited Partnership Interest
  (82,697 issued and outstanding)           $        0.39   $       48.42
                                            ==============  ==============
Extraordinary item allocated to
  General Partner                                    None   $      (1,763)
                                            ==============  ==============
Extraordinary item allocated to
  Limited Partners                                   None   $    (174,573)
                                            ==============  ==============
Extraordinary item per Limited
  Partnership Interest (82,697
  issued and outstanding)                            None   $       (2.12)
                                            ==============  ==============
Net income allocated to General Partner              None   $      38,682
                                            ==============  ==============
Net income allocated to Limited Partners    $      32,304   $   3,829,472
                                            ==============  ==============
Net income per Limited Partnership Interest
  (82,697 issued and outstanding)           $        0.39   $       46.30
                                            ==============  ==============
Distribution to Limited Partners            $  10,419,822   $     620,228
                                            ==============  ==============
Distribution per Limited Partnership
  Interest(82,697 issued and outstanding)   $      126.00   $        7.50
                                            ==============  ==============

The accompanying notes are an integral part of the financial statements.
<PAGE>
                     BALCOR REALTY INVESTORS 85 - SERIES I
                       A REAL ESTATE LIMITED PARTNERSHIP
                       (AN ILLINOIS LIMITED PARTNERSHIP)

                           STATEMENTS OF CASH FLOWS
                for the six months ended June 30, 1997 and 1996
                                  (Unaudited)

                                                  1997            1996
                                            --------------  --------------
Operating activities:
  Net income                                $  11,789,276   $   8,868,650
  Adjustments to reconcile net income to
    net cash (used in) or provided by
    operating activities:
    Gains on sale of properties               (12,768,729)     (8,152,710)
    Debt extinguishment expense                                   183,628
    Participation in loss (income) of 
      joint ventures with affiliates               11,792        (163,054)
    Depreciation of properties                     62,779         888,894
    Amortization of deferred expenses                              79,174
    Net change in:
      Accounts and accrued interest
        receivable                                114,902        (396,609)
      Escrow deposits                                              80,535
      Prepaid expenses                             29,911        (159,106)
      Accounts payable                            (48,253)       (125,525)
      Due to affiliates                           (32,321)         22,446
      Accrued liabilities                         (91,810)        (86,686)
      Security deposits                           (62,326)        (70,774)
                                            --------------  --------------
  Net cash (used in) or provided by 
  operating activities                           (994,779)        968,863
                                            --------------  --------------

Investing activities:
  Capital contributions to joint ventures
    with affiliates                                               (14,533)
  Distributions from joint ventures 
    with affiliates                                31,085         127,351
  Proceeds from sale of real estate            23,300,000      21,585,000
  Payment of selling costs                       (451,499)       (371,515)
                                            --------------  --------------
  Net cash provided by investing activities    22,879,586      21,326,303
                                            --------------  --------------
Financing activities:
  Distributions to Limited Partners           (23,899,433)     (1,240,456)
  Repayment of mortgage notes payable         (11,458,759)    (13,380,064)
  Principal payments on mortgage
    notes payable                                 (36,575)       (986,446)
  Disbursements from improvement escrows                          633,896
                                            --------------  --------------
  Net cash used in financing activities       (35,394,767)    (14,973,070)
                                            --------------  --------------
<PAGE>
                     BALCOR REALTY INVESTORS 85 - SERIES I
                       A REAL ESTATE LIMITED PARTNERSHIP
                       (AN ILLINOIS LIMITED PARTNERSHIP)

                           STATEMENTS OF CASH FLOWS
                for the six months ended June 30, 1997 and 1996
                                  (Unaudited)
                                  (Continued)


Net change in cash and cash equivalents       (13,509,960)      7,322,096
Cash and cash equivalents at 
  beginning of period                          16,372,728       2,369,231
                                            --------------  --------------
Cash and cash equivalents at end of period  $   2,862,768   $   9,691,327
                                            ==============  ==============

The accompanying notes are an integral part of the financial statements.
<PAGE>
                      BALCOR REALTY INVESTORS 85-SERIES I
                       A REAL ESTATE LIMITED PARTNERSHIP
                       (An Illinois Limited Partnership)

                         NOTES TO FINANCIAL STATEMENTS


1. Accounting Policies:

(a) In the opinion of management, all adjustments necessary for a fair
presentation have been made to the accompanying statements for the six months
and quarter ended June 30, 1997, and all such adjustments are of a normal and
recurring nature.

(b) A reclassification has been made to the previously reported 1996 statements
in order to provide comparability with the 1997 statements. This
reclassification has not changed the 1996 results. 

(c) For financial statement purposes, in previous years partners were allocated
income and loss in accordance with the profit and loss percentages in the
Partnership Agreement. In order for the capital accounts of the General Partner
and Limited Partners to appropriately reflect their respective remaining
economic interests as provided for in the Partnership Agreement, the General
Partner was allocated adjusted income in 1997 for financial statement purposes.

2. Partnership Termination:

The Partnership Agreement provides for the dissolution of the Partnership upon
the occurrence of certain events, including the disposition of all interests in
real estate. During 1996, the Partnership sold six properties and its minority
joint venture interest in one additional property. During February 1997, the
Partnership sold the Templeton Park Apartments. Currently, the North Hill
Apartments, in which the Partnership holds a minority joint venture interest,
is under contract for sale. This property is the Partnership's remaining real
estate investment. The Partnership has retained a portion of the cash from
property sales to satisfy obligations of the Partnership as well as establish a
reserve for contingencies. The timing of the termination of the Partnership and
final distribution of cash will depend upon the nature and extent of
liabilities and contingencies which exist or may arise. Such contingencies may
include legal and other fees stemming from litigation involving the Partnership
including, but not limited to, the lawsuits discussed in Note 7 of Notes to the
Financial Statements. In the absence of any such contingency, the reserves will
be paid within twelve months of the last property being sold. In the event a
contingency exists, reserves may be held by the Partnership for a longer period
of time.

3. Interest Expense:

During the six months ended June 30, 1997 and 1996, the Partnership incurred
and paid interest expense on mortgage notes payable of $99,717 and $2,046,463,
respectively.
<PAGE>
4. Transactions with Affiliates:

Fees and expenses paid and payable by the Partnership to affiliates during the
six months and quarter ended June 30, 1997 are:

                                           Paid
                                    ----------------------
                                     Six Months    Quarter     Payable
                                    ------------  ---------   ----------
   Reimbursement of expenses to
     the General Partner, at cost   $61,252        $47,958    $98,010

5. Property Sale:

In February 1997, the Partnership sold the Templeton Park Apartments in an all
cash sale for $23,300,000. From the proceeds of the sale, the Partnership paid
$11,458,759 to the third party mortgage holder in full satisfaction of the
first mortgage loan, paid $451,499 in selling costs and $1,025,000 to the
mortgage holder as a participation fee. The lender participation fee represents
additional interest paid to the lender calculated as a percentage of the sales
price in excess of an amount specified in the loan agreement. The basis of the
property was $10,079,772, which is net of accumulated depreciation of
$6,912,282. For financial statement purposes, the Partnership recognized a gain
of $12,768,729 from the sale of this property.

6. Investment in Joint Venture with Affiliate:

North Hill Apartments is owned by a joint venture ("Joint Venture") in which
the Partnership and an affiliate have participating percentages of 25% and 75%,
respectively. The following information has been summarized from the financial
statements of the Joint Venture for the six months ended June 30, 1997:

    Net investment in real
      estate                     $13,909,854
    Total liabilities             18,064,092      
    Total income                   1,728,026
    Net loss                          47,170

7. Contingencies: 

The Partnership is currently involved in two lawsuits whereby the Partnership
and certain affiliates have been named as defendants alleging substantially
similar claims involving certain federal securities law violations with regard
to the adequacy and accuracy of disclosures of information concerning, as well
as marketing efforts related to, the offering of the Limited Partnership
Interests of the Partnership. The defendants continue to vigorously contest
these actions. A plaintiff class has not been certified in either action and,
no determinations of the merits have been made. It is not determinable at this
time whether or not an unfavorable decision in either action would have a
material adverse impact on the financial position, operations and liquidity of
the Partnership. The Partnership believes it has meritorious defenses to
contest the claims.
<PAGE>
                      BALCOR REALTY INVESTORS 85-SERIES I
                       A REAL ESTATE LIMITED PARTNERSHIP
                       (An Illinois Limited Partnership)

                     MANAGEMENT'S DISCUSSION AND ANALYSIS


Balcor Realty Investors 85 - Series I A Real Estate Limited Partnership (the
"Partnership") was formed in 1983 to invest in and operate income-producing
real property. The Partnership raised $82,697,000 through the sale of Limited
Partnership Interests and utilized these proceeds to acquire ten real property
investments and minority joint venture interests in three additional
properties. During February 1997, the Partnership sold the Templeton Park
Apartments. As of June 30, 1997, the Partnership has disposed of all ten
properties and two of its minority joint venture interests in properties. The
Partnership continues to own a minority joint venture interest in the North
Hill Apartments, which is under contract for sale. 

Inasmuch as the management's discussion and analysis below relates primarily to
the time period since the end of the last fiscal year, investors are encouraged
to review the financial statements and the management's discussion and analysis
contained in the annual report for 1996 for a more complete understanding of
the Partnership's financial position.

Operations
----------

Summary of Operations
---------------------

During February 1997, the Partnership sold the Templeton Park Apartments and
recognized a significant gain on the sale. During March and June 1996, the
Partnership sold the Willowbend and Forest Ridge apartment complexes and also
recognized gains on these sales. The higher gain on sale recognized in 1997 was
the primary reason for the increase in net income during the six months ended
June 30, 1997 as compared to the same period in 1996. This increase in net
income was partially offset by a decrease in income generated from property
operations resulting from the sale of properties in 1996 and 1997. The gain on
sale recognized in June 1996 was the primary reason for the decrease in net
income during the quarter ended June 30, 1997 as compared to the same period in
1996. Further discussion of the Partnership's operations are summarized below.

1997 Compared to 1996
---------------------
 
Unless otherwise noted, discussions of fluctuations between 1997 and 1996 refer
to both the six months and quarters ended June 30, 1997 and 1996.
<PAGE>
The Partnership sold six properties during 1996, which were generating income
prior to their sales. The Partnership sold the Templeton Park Apartments in
February 1997 and recognized a gain in connection with the sale of $12,768,729.
The Partnership sold the Willowbend and Forest Ridge apartment complexes in
March and June 1996, respectively and recognized gains in connection with these
sales of $8,152,710.  These sales resulted in decreases in rental and service
income, interest expense on mortgage notes payable, depreciation, amortization,
property operating expense, real estate taxes, and property management fees
during 1997 as compared to 1996.

The Partnership had higher average cash balances during the six months ended
June 30, 1997 and lower average cash balances during the quarter ended June 30,
1997 as a result of the timing of the distribution of the proceeds received in
connection with the 1996 and 1997 property sales. This resulted in an increase
in interest income on short-term investments during the six months ended June
30, 1997 and a decrease during the quarter ended June 30, 1997 when compared to
the same periods in 1996. 

The Partnership recognized other income in 1997 relating to an insurance
premium refund for one of the properties sold in 1996.

Seabrook Apartments, in which the Partnership held a minority joint venture
interest, was sold during February 1996. The Partnership recognized
participation in income during 1996 in connection with the gain on the sale of
the Seabrook Apartments and participation in loss from joint ventures with
affiliates from the operations of North Hill Apartments during 1997. 

The Partnership paid a fee of $1,025,000 to the holder of the first mortgage
loan in connection with the sale of the Templeton Park Apartments during
February 1997. This amount has been recorded as lender participation and
represents additional interest calculated as a percentage of the sale price in
excess of an amount specified in the loan agreement.

The Partnership incurred printing, postage and investor processing costs in
connection with responses to tender offers during the first quarter 1996. In
addition, portfolio management fees decreased during 1997. As a result,
administrative expenses decreased in 1997 as compared to 1996.

The Partnership paid a prepayment penalty of $243,712 in connection with the
1996 sale of the Willowbend Apartments. In addition, the Partnership also wrote
off the remaining unamortized deferred expenses of $183,628 in connection with
the 1996 sales of the Willowbend and Forest Ridge apartment complexes. These
amounts were recognized as debt extinguishment expense and classified as an
extraordinary item for financial statement purposes.
<PAGE>
Liquidity and Capital Resources
-------------------------------

The cash position of the Partnership decreased by approximately $13,510,000 as
of June 30, 1997 as compared to December 31, 1996, primarily due to the special
distributions made in January and April 1997 to Limited Partners from the 1997
and 1996 property sales proceeds, which were partially offset by the net
proceeds received from the sale of the Templeton Park Apartments in February
1997. The Partnership used cash in operating activities of approximately
$995,000 to pay administrative expenses and the lender participation related to
the sale of Templeton Park Apartments, which were offset by cash flow from the
operation of the Partnership's property and interest income earned on
short-term investments. Cash of approximately $22,880,000 was provided by the
Partnership's investing activities consisting primarily of the net proceeds
received from the sale of the Templeton Park Apartments and distributions from
joint ventures with affiliates. Cash was used in the Partnership's financing
activities, consisting of the repayment of the mortgage note in connection with
the sale of the Templeton Park Apartments of approximately $11,459,000,
principal payments on the mortgage note of approximately $36,000 and
distributions to Limited Partners of approximately $23,900,000. 
       
During 1996, the Partnership sold six properties and its minority joint venture
in one additional property. During February 1997, the Partnership sold the
Templeton Park Apartments. Currently, the North Hill Apartments, in which the
Partnership holds a minority joint venture interest, is under contract for a
sales price of $21,000.000. This property is the Partnership's remaining real
estate investment. The Partnership has retained a portion of the cash from
property sales to satisfy obligations of the Partnership as well as establish a
reserve for contingencies. The timing of the termination of the Partnership and
final distribution of cash will depend upon the nature and extent of
liabilities and contingencies which exists or may arise.  Such contingencies
may include legal and other fees stemming from litigation involving the
Partnership including, but not limited to, the lawsuits discussed in Note 7 of
Notes to Financial Statements. In the absence of any such contingency, the
reserves will be paid within twelve months of the last property sale. In the
event a contingency arises, reserves may be held by the Partnership for a
longer period of time.

In February 1997, the Partnership sold the Templeton Park Apartments in an all
cash sale for $23,300,000. From the proceeds of the sale, the Partnership paid
$11,458,759 to the third party mortgage holder in full satisfaction of the
first mortgage loan, paid $451,499 in selling costs and paid $1,025,000 to the
mortgage holder as a participation fee to the lender representing additional
interest calculated as a percentage of the sales price in excess of an amount
specified in the loan agreement. The remaining available proceeds were
distributed to Limited Partners in April 1997. See Note 5 of Notes to Financial
Statements for additional information.
<PAGE>
Pursuant to the sale agreement for the Forestwood Apartments, $250,000 of the
sale proceeds was retained by the Partnership and was unavailable for
distribution until February 1997, at which time the funds were released in
full. Pursuant to the sale agreement for the Boulder Springs Apartments,
$500,000 of the sale proceeds was retained by the Partnership and was
unavailable for distribution until June 1997, at which time the funds were
released in full.

To date, Limited Partners have received cumulative cash distributions of
$562.50 per $1,000 Interest as well as certain tax benefits. Of this amount,
$92.50 has been from Net Cash Receipts and $470.00 has been from Net Cash
Proceeds. A future distribution may be made from available proceeds received
from the sale of the Partnership's interest in the remaining property, as to
the amount of which there can be no assurances. Investors will not recover all
of their original investment. 

Inflation has several types of potentially conflicting impacts on real estate
investments. Short-term inflation can increase real estate operating costs
which may or may not be recovered through increased rents and/or sales prices
depending on general or local economic conditions. In the long-term, inflation
can be expected to increase operating costs and replacement costs and may lead
to increased rental revenues and real estate values.
<PAGE>
                      BALCOR REALTY INVESTORS 85-SERIES I
                       A REAL ESTATE LIMITED PARTNERSHIP
                       (An Illinois Limited Partnership)

                          PART II - OTHER INFORMATION

Item 5. Other Information
-------------------------

North Hill Apartments
---------------------

As previously reported, on May 22, 1997, a limited partnership consisting of
the Partnership and an affiliate (the "Joint Venture"), contracted to sell the
North Hill Apartments, DeKalb County, Georgia, to an unaffiliated party, ERP
Operating Limited Partnership, an Illinois limited partnership. Pursuant to an
amendment to the agreement of sale, the purchase price was reduced from
$22,500,000 to $21,000,000 and the closing date was extended from July 7, 1997
to August 20, 1997.

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

(a) Exhibits:

(4) The Subscription Agreement as set forth as Exhibit 4.1 to Amendment No. 1
to Registrant's Registration Statement on Form S-11 dated November 29, 1984
(Registration No. 2-92777) and Form of Confirmation regarding Interests in the
Partnership as set forth as Exhibit 4.2 to the Partnership's Report on Form
10-Q for the quarter ended June 30, 1995 are incorporated herein by reference.

(10) Material Contracts:

(a)(i) Agreement of Sale and attachments thereto relating to the sale of
Forestwood Apartments, East Baton Rouge Parish, Louisiana, previously filed as
Exhibit (2) to the Partnership's Current Report on Form 8-K dated October 14,
1996, is incorporated herein by reference.

(ii) First Amendment to Agreement of Sale and Escrow Agreement relating to the
sale of Forestwood Apartments, East Baton Rouge, Louisiana previously filed as
Exhibit (10)(a)(ii) to the Partnership's Report on Form 10-Q for the quarter
ended September 30, 1996, is incorporated herein by reference.

(iii) Second Amendment to Agreement of Sale relating to the sale of Forestwood 
Apartments, East Baton Rouge, Louisiana previously filed as Exhibit
(10)(a)(iii) to the Partnership's Report on Form 10-Q for the quarter ended
September 30, 1996, is incorporated herein by reference.

(b)(i) Agreement of Sale and attachments thereto relating to Forest Ridge
Apartments, Phase I, Arlington, Texas previously filed as Exhibit (2) to the
Partnership's Current Report on Form 8-K dated April 23, 1996 is incorporated
herein by reference.
<PAGE>
(ii) Master Amendment and Agreement dated May 22, 1996 relating to the sale of
Forest Ridge Apartments, Phase I, Dallas, Texas previously filed as Exhibit
(99)(a) to the Partnership's Current Report on Form 8-K dated June 28, 1996 is
incorporated herein by reference.

(iii) Master Amendment and Agreement #2 dated May 22, 1996 relating to the sale
of Forest Ridge Apartments, Phase I, Dallas, Texas previously filed as Exhibit
(99)(b) to the Partnership's Current Report on Form 8-K dated June 28, 1996 is
incorporated herein by reference.

(c)(i) Agreement of Sale and attachment thereto relating to the sale of Boulder
Springs Apartments, Chesterfield County, Virginia, previously filed as Exhibit
(2)(a)(i) to the Partnership's Current Report on Form 8-K dated August 8, 1996,
is incorporated herein by reference.

(ii) Letter dated August 19, 1996 relating to the sale of Boulder Springs
Apartments, Chesterfield County, Virginia, previously filed as Exhibit
(2)(a)(ii) to the Partnership's Current Report on Form 8-K dated August 8,
1996, is incorporated herein by reference.

(iii) Amendment to Agreement of Sale relating to the sale of Boulder Springs
Apartments, Chesterfield County, Virginia, previously filed as Exhibit
(99)(b)(i) to the Partnership's Current Report on Form 8-K dated October 14,
1996, is incorporated herein by reference.

(iv) Second Amendment of Agreement of Sale relating to the sale of Boulder
Springs Apartments, Chesterfield County, Virginia, previously filed as Exhibit
(99)(b)(ii) to the Partnership's Current Report on Form 8-K dated October 14,
1996, is incorporated herein by reference.

(d)(i) Agreement of Sale and attachment thereto relating to the sale of
Timberlake Apartments, Phase I, Altamonte Springs, Florida, previously filed as
Exhibit (2)(b) to the Partnership's Current Report on Form 8-K dated August 8,
1996, is incorporated herein by reference.

(ii) Letter Agreement relating to the sale of Timberlake Apartments, Phase I,
Altamonte Springs, Florida, previously filed as Exhibit (99)(c) to the
Partnership's Current Report on Form 8-K dated October 14, 1996, is
incorporated herein by reference.

(e)(i) Agreement of Sale and Attachments thereto relating to the sale of
Templeton Park Apartments, Colorado Springs, Colorado, previously filed as
Exhibit (2) to the Partnership's Current Report on Form 8-K dated August 26,
1996, is incorporated herein by reference.

(ii) Letter agreements relating to the sale of the Templeton Park Apartments,
Colorado Springs, Colorado, previously filed as Exhibit (99)(a) to the
Partnership's Current Report on Form 8-K dated October 14, 1996, is
incorporated herein by reference.
<PAGE>
(iii) Letter agreement and Notice of Disapproval dated October 25, 1996,
regarding the sale of Templeton Park Apartments, Colorado Springs, Colorado
previously filed as Exhibit (10)(e)(iii) to the Partnership's Report on Form
10-Q for the quarter ended September 30, 1996, is incorporated herein by
reference.

(iv) First Amendment to Agreement of Sale and Escrow Agreement relating to the
sale of Templeton Park Apartments, Colorado Springs, Colorado previously filed
as Exhibit (10)(e)(iv) to the Partnership's Report on Form 10-Q for the quarter
ended September 30, 1996, is incorporated herein by reference.

(v)  Letter Agreements dated November 21, 1996, December 6, 1996, December 11,
1996, December 13, 1996, December 20, 1996, and January 20, 1997, relating to
the sale of the Templeton Park Apartments, Colorado Springs, Colorado, 
previously filed as Exhibit (99)(i) to the Partnership's Current Report on Form
8-K dated February 21, 1997 is incorporated herein by reference.

(vi) Second Amendment to Agreement of Sale and Escrow Agreement dated January
3, 1997, relating to the sale of the Templeton Park Apartments, Colorado
Springs, Colorado, previously filed as Exhibit (99)(ii) to the Partnership's
Current Report on Form 8-K dated February 21, 1997 is incorporated herein by
reference.

(f)(i) Agreement of Sale and attachment thereto relating to the sale of North
Hill Apartments, Atlanta, Georgia, previously filed as Exhibit (2)(a)(i) to the
Partnership's Current Report on Form 8-K dated February 21, 1997, is
incorporated herein by reference.

(ii) Termination Notice relating to the sale of North Hill Apartments, Atlanta,
Georgia, previously filed as Exhibit (2)(a)(ii) to the Partnership's Current
Report on Form 8-K dated February 21, 1997, is incorporated herein by
reference.

(iii) Reinstatement of, and First Amendment to the Agreement of Sale and Escrow
Agreement relating to the sale of North Hill Apartments, Atlanta, Georgia,
previously filed as Exhibit (2)(a)(iii) to the Partnership's Current Report on
Form 8-K dated February 21, 1997, is incorporated herein by reference.

(iv) Second Amendment to Agreement of Sale and Escrow Agreement relating to the
sale of North Hill Apartments, Atlanta, Georgia, previously filed as Exhibit
(10)(f)(iv) to the Partnership's Report on Form 10-Q for the quarter ended
March 31, 1997, is incorporated herein by reference.

(v) Termination Notice relating to the sale of North Hill Apartments, Atlanta,
Georgia, previously filed as Exhibit (10)(f)(v) to the Partnership's Report on
Form 10-Q for the quarter ended March 31, 1997, is incorporated herein by
reference.

(vi) Reinstatement and Third Amendment to Agreement of Sale and Escrow
Agreement relating to the sale of North Hill Apartments, Atlanta, Georgia,
previously filed as Exhibit (10)(f)(iv) to the Partnership's Report on Form
10-Q for the quarter ended March 31, 1997, is incorporated herein by reference.
<PAGE>
(vii) Termination notice relating to the agreement of sale dated February 21,
1997, is attached hereto.

(viii) Agreement of Sale entered into May 22, 1997 relating to the sale of
North Hill Apartments previously filed as Exhibit (2) to the Partnership's
Current Report on Form 8-K dated May 22, 1997, is incorporated herein by
reference.

(ix) First Amendment to Agreement of Sale and Escrow Agreement relating to the
sale of the North Hill Apartments, De Kalb County, Georgia, is attached hereto.

(x) Second Amendment to Agreement of Sale and Escrow Agreement relating to the
sale of the North Hill Apartments, De Kalb County, Georgia, is attached hereto.

(xi) Third Amendment to Agreement of Sale and Escrow Agreement relating to the
sale of the North Hill Apartments, De Kalb County, Georgia, is attached hereto.

(xii) Fourth Amendment to Agreement of Sale and Escrow Agreement relating to
the sale of the North Hill Apartments, De Kalb County, Georgia, is attached
hereto.

(xiii) Fifth Amendment to Agreement of Sale and Escrow Agreement relating to
the sale of the North Hill Apartments, De Kalb County, Georgia, is attached
hereto.

(xiv) Sixth Amendment to Agreement of Sale and Escrow Agreement relating to the
sale of the North Hill Apartments, De Kalb County, Georgia, is attached hereto.

(xv) Letter dated June 30, 1997, relating to the sale of the North Hill
Apartments, De Kalb County, Georgia, is attached hereto.

(xvi) Seventh Amendment to Agreement of Sale and Escrow Agreement relating to
the sale of the North Hill Apartments, De Kalb County, Georgia, is attached
hereto.

(27) Financial Data Schedule of the Partnership for the six months ended June
30, 1997 is attached hereto.

(b) Reports on Form 8-K:

(i) A Current Report on Form 8-K dated May 22, 1997, was filed reporting the
agreement of sale for the North Hill Apartments, DeKalb County, Georgia.
<PAGE>
SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.


                        BALCOR REALTY INVESTORS 85-SERIES I
                        A REAL ESTATE LIMITED PARTNERSHIP



                        By:    /s/ Thomas E. Meador                           
                              --------------------------------
                              Thomas E. Meador
                              President and Chief Executive Officer (Principal
                              Executive Officer) of Balcor Partners-XVI, the 
                              General Partner



                        By:    /s/ Jayne A. Kosik                          
                              --------------------------------
                              Jayne A. Kosik
                              Managing Director and Chief Financial Officer 
                              (Principal Accounting Officer) of Balcor 
                              Partners-XVI, the General Partner


Date:  August 13, 1997             
      --------------------
<PAGE>