FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

For the quarterly period ended June 30, 2000

                                       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 2-93874

                                   KFP 85-LTD.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


       FLORIDA                                          59-2433930
-----------------------                     ------------------------------------
(State of organization)                     (I.R.S. employer identification no.)


          One Southeast Third Avenue, 11th Floor, Miami, Florida 33131
--------------------------------------------------------------------------------
          (Address of principal executive offices, including zip code)

Registrant's telephone number, including area code (305) 371-3592

                                 Not applicable
--------------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                          if changed since last report)


Indicate by check mark whether the registrant (1) has filed all reports to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding twelve 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 ninety days.

                                 Yes [X] No [ ]


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                                   KFP 85-LTD.

                                      INDEX

PART I - FINANCIAL INFORMATION                                          Page No.
                                                                        --------

         Item 1 - Financial statements (unaudited):
             Statements of Net Assets
                June 30, 2000 and December 31, 1999............................3

             Statements of Operations
                For the three and six months ended June 30, 2000 and 1999......4

             Statement of Changes in Partners' Equity in Net Assets
                For the six months ended June 30, 2000.........................5

             Statements of Cash Flows
                For the six months ended June 30, 2000 and 1999................6

             Notes to Financial Statements.....................................8

         Item 2 - Management's Discussion and Analysis of Financial
             Condition and Results of Operations..............................11


PART II - OTHER INFORMATION

             Items 1 through 6 ...............................................14

             Signatures.......................................................15


                                       2
<PAGE>
                                   KFP 85-LTD.
                           (IN PROCESS OF LIQUIDATION)
                            STATEMENTS OF NET ASSETS
                       JUNE 30, 2000 AND DECEMBER 31, 1999

                                                     June 30,
                                                       2000         December 31,
ASSETS at estimated realizable value                (UNAUDITED)        1999
------------------------------------                -----------     ------------
Cash and interest-bearing deposits                   $  348,304     $1,026,412
Accounts receivable, net                                     --         14,787
Mortgage notes receivable, net                          157,234        269,500
Rental properties                                            --         35,000
Land and land development, net                          425,000        468,000
Other assets                                              1,452          1,095
                                                     ----------     ----------
            Total assets                             $  931,990     $1,814,794
                                                     ==========     ==========


LIABILITIES AND PARTNERS' EQUITY IN NET ASSETS
----------------------------------------------
LIABILITIES at estimated settlement amounts:
   Accounts payable                                  $       --     $      302
   Accrued liabilities                                   77,598         97,784
                                                     ----------     ----------
            Total liabilities                            77,598         98,086
                                                     ----------     ----------

CONTINGENCIES (Note 4)

PARTNERS' EQUITY IN NET ASSETS:
   General partners                                          --             --
   Limited partners; 8,000 limited
      partnership units authorized;
      7,940 units issued and outstanding                854,392      1,716,708
                                                     ----------     ----------
            Total partners' equity in net assets        854,392      1,716,708
                                                     ----------     ----------
            Total liabilities and
                partners' equity in net asssets      $  931,990     $1,814,794
                                                     ==========     ==========


              The accompanying notes to financial statements are an
                       integral part of these statements.


                                       3
<PAGE>
                                   KFP 85-LTD.
                           (IN PROCESS OF LIQUDATION)
                            STATEMENTS OF OPERATIONS
            FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2000 AND 1999
                                   (UNAUDITED)

                                       THREE MONTHS            SIX MONTHS
                                  ---------------------   ---------------------
                                    2000        1999        2000        1999
                                  ---------   ---------   ---------   ---------
REVENUES:
   Rental income                  $      --   $ 213,185   $      --   $ 424,570
   Real estate sales,
      net of closing costs               --          --      31,843          --
   Interest income                    4,489       6,268      11,794      13,028
   Other income                          --       1,894          --       2,798
                                  ---------   ---------   ---------   ---------
            Total revenues            4,489     221,347      43,637     440,396
                                  ---------   ---------   ---------   ---------

EXPENSES:
   Interest and financing costs          --     113,467          --     227,464
   Property expenses                  8,659      64,435      13,599     124,107
   Cost of real estate sold              --          --      35,000          --
   Selling, administration
      and other                      30,749      39,452      51,796      63,806
   Depreciation and
      amortization                       --      43,056          --      86,112
   Provision for losses on
      rental properties and land
      and land development
      costs                          43,000       5,705      43,000       5,705
                                  ---------   ---------   ---------   ---------
            Total expenses           82,408     266,115     143,395     507,194
                                  ---------   ---------   ---------   ---------

            Net loss              $ (77,919)  $ (44,768)  $ (99,758)  $ (66,798)
                                  =========   =========   =========   =========

PER UNIT AMOUNTS TO
LIMITED PARTNERS:

Net loss after allocations
   to General Partners
   of  $0, $(895),$0 and
   $(1,336), respectively         $   (9.81)  $   (5.52)  $  (12.56)  $   (8.24)
                                  =========   =========   =========   =========

Weighted average units
  outstanding                         7,940       7,940       7,940       7,940
                                  =========   =========   =========   =========



              The accompanying notes to financial statements are an
                       integral part of these statements.

                                       4
<PAGE>
                                   KFP 85-LTD.
                           (IN PROCESS OF LIQUIDATION)
             STATEMENT OF CHANGES IN PARTNERS' EQUITY IN NET ASSETS
                     FOR THE SIX MONTHS ENDED JUNE 30, 2000
                                   (UNAUDITED)

                                     General      Limited
Partners' Equity in Net Assets       Partners     Partners       Total
------------------------------     -----------  -----------   -----------

December 31, 1999                  $        --  $ 1,716,708   $ 1,716,708

Net loss                                    --      (99,758)      (99,758)

Cash distributions to
   Limited Partners                         --     (762,558)     (762,558)
                                   -----------  -----------   -----------

June 30, 2000                      $        --  $   854,392   $   854,392
                                   ===========  ===========   ===========


              The accompanying notes to financial statements are an
                        integral part of this statement.


                                       5
<PAGE>
                                   KFP 85-LTD.
                           (IN PROCESS OF LIQUIDATION)
                            STATEMENTS OF CASH FLOWS
                 FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
                                   (UNAUDITED)

                                                          2000        1999
                                                        ---------   ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net loss                                           $ (99,758)  $ (66,798)
     Adjustments to reconcile net loss
     to net cash used in operating activities-
        Depreciation and amortization                          --      86,112
        Discounts on mortgage notes receivable
           allowed upon payoff                              9,483          --
        Provision for losses on rental properties
           and land and land development costs             43,000       5,705
        Provision for doubtful accounts                     8,827       3,992
        Loss on sale of real estate                         3,157          --
        Changes in assets and liabilities:
           Increase in escrow deposits                         --     (43,642)
           (Increase) decrease in accounts receivable       5,960     (43,520)
           Increase in other assets                          (357)    (15,996)
           Increase (decrease) in accounts payable           (302)     31,636
           Increase (decrease) in accrued liabilities     (20,186)     38,218
           Decrease in tenant security deposits                --        (290)
                                                        ---------   ---------

                 Net cash used in operating activities    (50,176)     (4,583)
                                                        ---------   ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Payments received on mortgage notes                  102,783       5,426
     Proceeds from sale of real estate,
        net of closing costs                               31,843          --
     Capital expenditures                                      --     (70,140)
                                                        ---------   ---------
                 Net cash provided by (used in)
                    investing activities                  134,626     (64,714)
                                                        ---------   ---------

                                   (Continued)

                                       6
<PAGE>
                                   KFP 85-LTD.
                           (IN PROCESS OF LIQUIDATION)
                            STATEMENTS OF CASH FLOWS
                 FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
                                   (UNAUDITED)
                                   (Continued)

                                               2000          1999
                                            -----------   -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
     Distributions to Limited Partners         (762,558)           --
     Repayment of  mortgage payable                  --       (40,730)
                                            -----------   -----------

                 Net cash used in
                      financing activities     (762,558)      (40,730)
                                            -----------   -----------

NET DECREASE IN CASH AND
     INTEREST-BEARING DEPOSITS                 (678,108)     (110,027)

CASH AND INTEREST-BEARING DEPOSITS,
     BEGINNING OF THE PERIOD                  1,026,412       167,076
                                            -----------   -----------

CASH AND INTEREST-BEARING DEPOSITS,
     END OF THE PERIOD                      $   348,304   $    57,049
                                            ===========   ===========

SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
      Cash paid for interest                $        --   $   226,419
                                            ===========   ===========

SUPPLEMENTAL DISCLOSURE OF
NONCASH INVESTING AND
FINANCING ACTIVITIES:

      Rental property acquired through
         foreclosure of mortgage
         note receivable                    $        --   $    36,344
                                            ===========   ===========


              The accompanying notes to financial statements are an
                       integral part of these statements.



                                       7
<PAGE>
                                   KFP 85-LTD.
                           (IN PROCESS OF LIQUIDATION)
                          NOTES TO FINANCIAL STATEMENTS
                                  JUNE 30, 2000
                                   (UNAUDITED)

(1) BASIS OF PRESENTATION:

The statement of net assets as of December 31, 1999, which has been derived from
audited statements, and the unaudited interim financial statements included
herein, have been prepared pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and note disclosures
normally included in annual financial statements prepared in accordance with
generally accepted accounting principles have been omitted pursuant to those
rules and regulations although the Partnership believes that the disclosures
made are adequate to make the information presented not misleading. It is
suggested that these financial statements be read in conjunction with the
financial statements and the notes thereto included in the Partnership's annual
report on Form 10-K as of December 31, 1999.

In the opinion of the Partnership, the accompanying unaudited financial
statements contain all adjustments (consisting of only normal recurring
accruals) necessary to present fairly the net assets of the Partnership as of
June 30, 2000 and December 31, 1999, the results of operations for the
three-month and six-month periods ended June 30, 2000 and 1999, changes in
partners' equity in net assets for the six-month period ended June 30, 2000, and
cash flows for the six-month periods ended June 30, 2000 and 1999.

Effective December 31, 1999, the Managing General Partner formulated a plan of
liquidation whereby the remaining rental properties, land and mortgage notes
receivable will be disposed of by sale. Upon completion of the sale of the
remaining assets and settlement of all liabilities, the Partnership will
distribute the remaining cash to the partners based upon terms contained in the
Partnership Agreement. The Managing General Partner anticipates that the
Partnership's liquidation will be completed by December 31, 2000. However, there
is no guarantee that the Partnership will be able to sell all of its assets in
2000.

Based upon the adoption of a plan of liquidation, the Partnership changed its
basis of accounting for periods subsequent to December 31, 1999 from the
going-concern basis to the liquidation basis. Accordingly, the accompanying
financial statements have been prepared on the liquidation basis and the
carrying value of the assets are presented at estimated realizable values and
all liabilities presented at estimated settlement amounts. It is not presently
determinable whether the amounts realizable from the disposition of the assets
or the amounts that creditors agree to accept in settlement of the obligations
due them will differ materially from the amounts shown in the accompanying
financial statements. The accompanying financial statements do not include any
adjustments that might result from the outcome of this uncertainty.


                                       8
<PAGE>

(2) RELATED PARTY TRANSACTIONS:

On March 30, 2000, the Partnership paid a selling commission of $2,259 to Keyes
Asset Management, Inc. ("KAMI") in conjunction with the sale of a warehouse
condominium unit at LeJeune Industrial Park ("LeJeune").

Property management fees paid to KAMI for management of various rental
properties totaled $7,500 for the three months ended June 30, 1999, $15,000 for
the six months ended June 30, 1999, and are included in property expenses in the
accompanying statements of operations.

During the three months and six months ended June 30, 1999, $40,584 and $37,424,
respectively, was paid or payable to KAMI in connection with the securing of
tenants for certain leases. The unamortized portions of leasing commissions to
KAMI was included in other assets in the Partnership's balance sheets and was
amortized on a straight-line basis over the lives of the respective leases. On
December 1, 1999, the remaining portion of unamortized deferred leasing
commissions was written off and included as part of the cost of real estate
sold.

(3) CASH DISTRIBTIONS TO LIMITED PARTNERS:

In February 2000, the Managing General Partner elected to make cash
distributions to all Limited Partners based on the number of Limited Partnership
units held by each Limited Partner. The total cash distributed to Limited
Partners was $762,558, the equivalent of $96 for each outstanding Limited
Partnership unit.

(4) CONTINGENCIES:

(a) ESTIMATED REALIZABLE VALUE -

As disclosed in Note 1, the Managing General Partner has formulated a plan of
liquidation for the Partnership. Accordingly, the Partnership changed its basis
of accounting from the going-concern basis to the liquidation basis effective
December 31, 1999. The liquidation basis of accounting requires that the
carrying value of remaining assets be presented at estimated realizable values.
The Partnership has presented its assets at estimated realizable value in the
accompanying statements of net assets. However, it is not presently determinable
whether the amounts to be realized from future sales of the remaining assets
will differ materially from the amounts shown in the accompanying financial
statements. The accompanying financial statements do not include any adjustments
that might result from the outcome of this uncertainty.


                                       9
<PAGE>

(b) CONTINGENCIES -

Prior to 2000, the Partnership began actively marketing for sale Commercial
Boulevard Center, the one property remaining in its investment portfolio as of
June 30, 2000. The Partnership intends to continue looking for qualified
purchasers during 2000 but there is no guarantee that the Partnership will be
able to find a buyer for this property by the end of 2000. There is also no
guarantee that the estimated realizable value will be achieved when the property
is ultimately sold.

Prior to the end of 2000, the Partnership anticipates that it will reacquire two
warehouse condominium units located at LeJeune through foreclosure of mortgage
notes receivable that the Partnership holds. The unpaid principal balance of the
mortgage notes is $63,147 and the Partnership anticipates that it will be able
to sell those units for an amount at least equal to the unpaid mortgage balance.
However, there is no guarantee that the Partnership will be able to sell the
units for that amount. At the present time, it is not known exactly when the
units will be reacquired or how long the units will have to be held before they
are sold.


                                       10
<PAGE>
                                   KFP 85-LTD.

Item 2.

Management's Discussion and Analysis of Financial Condition and
Results of Operations

General

Effective December 31, 1999, the Managing General Partner formulated a plan of
liquidation for the Partnership whereby the remaining rental properties, land
and mortgage notes receivable will be disposed of by sale. Accordingly, the
Partnership has changed its basis of accounting for periods subsequent to
December 31, 1999 from the going-concern basis to the liquidation basis. The
carrying value of the remaining assets are presented at estimated realizable
values and all liabilities are presented at estimated settlement amounts. The
Partnership ceased operations on December 31, 1999 and moved into a liquidation
phase. For periods subsequent to December 31, 1999, the Partnership's focus will
be to sell its assets and it will not receive any operating revenues. Therefore,
the Partnership's current activities are not comparable to 1999 or to any other
prior periods.

Material Changes in Financial Condition

During the six months ended June 30, 2000, the Partnership's cash and
interest-bearing deposits decreased by $678,108 compared to a decrease of
$110,027 during the six months ended June 30, 1999. The decrease in cash and
interest-bearing deposits in 2000 was primarily attributable to cash
distributions in February 2000 of $762,558 to Limited Partners. The remaining
decrease in cash and interest-bearing deposits in 2000 was attributable to
payments of accrued liabilities and expense incurred during liquidation. These
items were partially offset by principal collections of $102,783 on mortgage
notes receivable, $5,960 of collections on accounts receivable and $11,794 of
interest income received. In addition, the Partnership received cash of $31,843
from the sale of a warehouse condominium unit more fully described below.

On March 30, 2000, the Partnership closed on the sale of a warehouse condominium
unit located at LeJeune Industrial Park ("LeJeune"). The selling price of the
unit was $35,000 but the Partnership incurred expenses of $3,157 related to the
sale, resulting in a net sale of $31,843. The Partnership had previously
reacquired this unit on April 9, 1999 through the foreclosure of a mortgage note
receivable held by the Partnership. At the time of foreclosure, the outstanding
principal balance of the mortgage note was $36,344 and the Partnership incurred
costs of $4,361 related to the foreclosure, a total of $40,705. During 1999, the
Partnership reduced the carrying value of the LeJeune unit to an estimated
realizable value of $35,000.


                                       11
<PAGE>

Principal payments on the Northpark Commerce Center ("Northpark") mortgage
payable totaled $40,730 during the first six months of 1999. Northpark was sold
on December 1, 1999 and the mortgage balance remaining at that date was paid
from the sales proceeds. Therefore, there were no principal payments during the
first six months of 2000.

Prior to 2000, the Partnership began actively marketing for sale Commercial
Boulevard Center ("Commercial"), the one property remaining in its investment
portfolio as of June 30, 2000. During the second quarter of 2000, the
Partnership reevaluated the estimated realizable value of Commercial and reduced
its carrying value by $43,000 to $425,000. This reduction in estimated value was
based upon an informal survey of market conditions, property values and other
factors in the commercial areas adjoining the property. The Partnership will
continue to look for qualified purchasers during the remainder of 2000. However,
there is also no guarantee that the Partnership will be able to find a buyer for
Commercial by the end of 2000 and there is no guarantee that the revised
estimated realizable value will be achieved when the property is ultimately
sold.

Prior to the end of 2000, the Partnership anticipates that it will reacquire two
warehouse condominium units located at LeJeune through foreclosures of mortgage
notes receivable held by the Partnership. The unpaid principal balance of the
mortgage notes is $63,147 and the Partnership anticipates that it will be able
to sell those units for an amount at least equal to the unpaid mortgage balance.
However, there is no guarantee that the Partnership will be able to sell the
units for that amount. Presently, it is not known exactly when the units will be
reacquired or how long the units will have to be held before they are sold.

The Partnership is also seeking qualified purchasers for the mortgage notes
receivable held by the Partnership. Alternatively, the Partnership is offering
discounts to the mortgagors for early payoffs of the mortgage notes. The
mortgage notes, which earn interest at rates ranging from 8% to 10% annually,
were originally accepted in previous years by the Partnership when it sold
warehouse condominium units at LeJeune. The Partnership anticipates that it will
be able to collect or sell these mortgage notes at the June 30, 2000 carrying
value of $94,087, an amount net of the mortgage balance that is anticipated to
be foreclosed. However, there is no guarantee that the Partnership will be able
to collect or sell the remaining mortgage notes prior to the end of 2000.

The Partnership is in the process of liquidation and anticipates that all
remaining assets will be sold or collected at their estimated realizable values
and all liabilities will be paid at their estimated settlement amounts. The cash
remaining will be distributed to partners in accordance with provisions
contained in the Partnership Agreement.

Material Changes in Results of Operations

Effective December 31, 1999, the Managing General Partner formulated a plan of
liquidation. The Partnership ceased operations on December 31, 1999 and moved
into a liquidation phase. For periods subsequent to December 31, 1999, the
Partnership's focus will be to sell its assets and it will not receive any
future operating revenues. Therefore, the Partnership's current activities are
not comparable to 1999 or any other prior periods.


                                       12
<PAGE>

Forward Looking Statements

Certain items discussed in this report may constitute forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended and, as such, may
involve known and unknown risks, uncertainties and other factors which may cause
the actual results, performance or achievements of the Partnership to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such forward-looking
statements speak only as of the date of this quarterly report. The Partnership
expressly disclaims any obligation or undertaking to publicly release updates or
revisions to any forward-looking statements contained herein, to reflect any
change in the Partnership's expectations with regard thereto or any change in
events, conditions or circumstances on which any such statement is based.


                                       13
<PAGE>
                                   KFP 85-LTD.

                                     PART II

                                OTHER INFORMATION

Item 1.  Legal Proceedings.

         None

Item 2.  Changes in Securities.

         None

Item 3.  Defaults Upon Senior Securities.

         None

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

         None

Item 5.  Other Information.

         None

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

          (a)  27 Financial Data Schedule

          (b)  None


                                       14
<PAGE>
                                   KFP 85-LTD.

                                   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.

                                   KFP 85-Ltd.
                                   (Registrant)

                                   By: KPA, Inc.
                                       Managing General Partner


Date: August 8, 2000               By: /s/ Timothy D. Pappas
                                       -----------------------------
                                       Timothy D. Pappas,
                                       Vice President, Treasurer and
                                       Principal Accounting Officer


                                       15

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                                 EXHIBIT INDEX

EXHIBIT NO.     DESCRIPTION
-----------     -----------

   27           Financial Data Schedule