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            SEPTEMBER 30, 1998
                               -----------------------------------------

                                       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 [   ]


<PAGE>



                                      INDEX


PART I - FINANCIAL INFORMATION                                          PAGE NO.
                                                                        --------

   Item 1 - Financial statements (unaudited):
       Balance Sheets
          September 30, 1998 and December 31, 1997...........................3

       Statements of Operations
          For the three and nine months ended September 30, 1998 and 1997....4

       Statement of Partners' Equity
          For the nine months ended September  30, 1998......................5

       Statements of Cash Flows
          For the nine months ended September 30, 1998 and 1997..............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 ...................................................15

       Signatures...........................................................16


                                       2
<PAGE>


                                   KFP 85-LTD.
                                 BALANCE SHEETS
                    SEPTEMBER 30, 1998 AND DECEMBER 31, 1997

<TABLE>
<CAPTION>
                                               SEPTEMBER 30,
                                                   1998             DECEMBER 31,
                                                (UNAUDITED)             1997
                                               -------------        ------------
<S>                                             <C>                 <C>        
ASSETS
------
Cash and interest-bearing deposits              $   191,366         $   210,373
Escrow deposits                                     135,563              91,888
Accounts receivable, net of allowance
   for doubtful accounts of $44,730
   and $27,199 in 1998 and 1997,
   respectively                                      15,326              26,644
Mortgage notes receivable, net of
   allowance for uncollectible amounts
   of $14,000 in 1998 and 1997                      382,451             391,850
Rental properties, at lower of cost or
   market, less accumulated depreciation          3,346,585           3,475,752
Land and land development, at
   lower of cost or market, less
   accumulated depreciation                         468,000             552,839
Other assets                                        131,214             132,683
                                                -----------         -----------

             Total assets                       $ 4,670,505         $ 4,882,029
                                                ===========         ===========

LIABILITIES AND PARTNERS' EQUITY
--------------------------------
LIABILITIES:
   Accounts payable                             $    18,098         $     6,895
   Accrued liabilities                              196,541             150,326
   Tenant security deposits                          32,659              42,812
   Mortgage payable                               4,401,098           4,456,922
                                                -----------         -----------
             Total liabilities                    4,648,396           4,656,955
                                                -----------         -----------

CONTINGENCIES (Note 6)

PARTNERS' EQUITY:
   General partners                                (124,809)           (120,750)
   Limited partners; 8,000 limited
      partnership units authorized;
      7,940 units issued and outstanding            146,918             345,824
                                                -----------         -----------
             Total partners' equity                  22,109             225,074
                                                -----------         -----------
             Total liabilities and
                partners' equity                $ 4,670,505         $ 4,882,029
                                                ===========         ===========
</TABLE>


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

                                       3
<PAGE>

                                   KFP 85-LTD.
                            STATEMENTS OF OPERATIONS
         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                  THREE MONTHS                            NINE MONTHS
                                        -------------------------------         -------------------------------
                                            1998                1997                1998               1997
                                        -----------         -----------         -----------         -----------
<S>                                     <C>                 <C>                 <C>                 <C>        
REVENUES:
   Rental income                        $   197,542         $   202,608         $   620,753         $   618,652
   Real estate sales                             --             155,000                  --           1,047,250
   Interest income                            8,097               8,867              24,657              23,285
   Other income                                  90                 307               9,285              37,369
                                        -----------         -----------         -----------         -----------

         Total revenues                     205,729             366,782             654,695           1,726,556
                                        -----------         -----------         -----------         -----------

EXPENSES:
   Interest and financing costs             115,018             117,058             346,514             358,786
   Property expenses                         67,982              56,628             200,080             211,965
   Cost of real estate sold                      --             142,629                  --             955,510
   Selling, administration
      and other                              26,584              24,417              97,060              75,235
   Depreciation and
      amortization                           43,055              42,816             129,167             141,822
   Provision for losses on land
      and land development                   84,839                  --              84,839                  --
                                        -----------         -----------         -----------         -----------

      Total expenses                        337,478             383,548             857,660           1,743,318
                                        -----------         -----------         -----------         -----------

      Net loss                          $  (131,749)        $   (16,766)        $  (202,965)        $   (16,762)
                                        ===========         ===========         ===========         ===========

PER UNIT AMOUNTS TO
LIMITED PARTNERS:
      Net loss after allocations
         to General Partners of
         $(2,635), $(335),
         $(4,059) and $(335),
         respectively                   $    (16.26)        $     (2.07)        $    (25.05)        $     (2.07)
                                        ===========         ===========         ===========         ===========

      Weighted average units
         outstanding                          7,940               7,940               7,940               7,940
                                        ===========         ===========         ===========         ===========
</TABLE>


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


                                       4
<PAGE>


                                   KFP 85-LTD.
                          STATEMENT OF PARTNERS' EQUITY
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
                                   (UNAUDITED)

                                   GENERAL           LIMITED
PARTNERS' EQUITY (DEFICIT)         PARTNERS          PARTNERS            TOTAL
--------------------------         --------          --------            -----

December 31, 1997                 $(120,750)        $ 345,824         $ 225,074

Net loss                             (4,059)         (198,906)         (202,965)
                                  ---------         ---------         ---------

September 30, 1998                $(124,809)        $ 146,918         $  22,109
                                  =========         =========         =========





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


                                       5
<PAGE>



                                   KFP 85-LTD.
                            STATEMENTS OF CASH FLOWS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                     1998              1997
                                                                  ----------        ----------
<S>                                                               <C>               <C>       
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net loss                                                     $(202,965)        $ (16,762)
     Adjustments to reconcile net loss
     to net cash provided by (used in)
     operating activities-
        Depreciation and amortization                               129,167           141,822
        Gain on sales of real estate                                     --           (91,740)
        Provision for losses on land and
           land development                                          84,839                --
        Provision for doubtful accounts                              17,531                --
        Changes in assets and liabilities:
           Increase in escrow deposits                              (43,675)          (87,178)
           (Increase) decrease in accounts receivable                (6,213)           10,258
           (Increase) decrease in other assets                        1,469            (5,526)
           (Decrease) increase in accounts payable                   11,203           (22,418)
           Increase in accrued liabilities                           46,215            41,207
            Decrease in tenant security deposits                    (10,153)          (11,557)
                                                                  ---------         ---------
                 Net cash provided by (used in)
                    operating activities                             27,418           (41,894)
                                                                  ---------         ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Payments received on mortgage notes                              9,399            83,599
     Proceeds from sale of real estate, net of
        closings costs                                                   --            92,414
                                                                  ---------         ---------
                 Net cash provided by investing activities            9,399           176,013
                                                                  ---------         ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Repayment of mortgage payable                                  (55,824)          (56,079)
                                                                  ---------         ---------

NET INCREASE (DECREASE) IN CASH AND
     INTEREST-BEARING DEPOSITS                                      (19,007)           78,040

CASH AND INTEREST-BEARING DEPOSITS,
     BEGINNING OF THE PERIOD                                        210,373           145,585
                                                                  ---------         ---------

CASH AND INTEREST-BEARING DEPOSITS,
     END OF THE PERIOD                                            $ 191,366         $ 223,625
                                                                  =========         =========
</TABLE>

                                   (Continued)


                                       6
<PAGE>

                                   KFP 85-LTD.
                            STATEMENTS OF CASH FLOWS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
                                   (UNAUDITED)
                                   (Continued)

                                                     1998              1997
                                                 ------------     ------------
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:

   Cash paid for interest                        $    344,901     $    356,681
                                                 ============     ============

SUPPLEMENTAL DISCLOSURE OF
NONCASH INVESTING AND
FINANCING ACTIVITIES:

     Mortgage notes receivable accepted
        on sale of property                      $         --     $    124,000
                                                 ============     ============

     Purchase money mortgage loan payable
        satisfied at closing                     $         --     $    752,500
                                                 ============     ============



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


                                       7
<PAGE>

                                   KFP 85-LTD.
                          NOTES TO FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1998
                                   (UNAUDITED)

(1) BASIS OF PRESENTATION:

The balance sheet as of December 31, 1997, 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, 1997.

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 financial position of the Partnership
as of September 30, 1998 and December 31, 1997, the results of operations for
the three-month and nine-month periods ended September 30, 1998 and 1997,
partners' equity for the nine-month period ended September 30, 1998, and cash
flows for the nine-month periods ended September 30, 1998 and 1997.

The accompanying financial statements have been prepared on a going-concern
basis, which contemplates continuity of operations, realization of assets and
liquidation of liabilities through the ordinary course of business. The
Partnership has sustained significant recurring losses and has experienced
liquidity difficulties. Should the Partnership be unable to meet its debt
service requirements, the Partnership may be unable to continue as a going
concern. The financial statements do not include any adjustments relating to the
recoverability and classification of asset carrying amounts or the amount and
classification of liabilities that might result should the Partnership be unable
to continue as a going concern.

(2) RELATED PARTY TRANSACTIONS:

Property management fees paid to Keyes Asset Management, Inc., for management of
various rental properties, totaled $7,750 and $9,240 for the three months ended
September 30, 1998 and 1997, respectively, and $24,250 and $27,240 for the nine
months ended September 30, 1998 and 1997, respectively, and are included in
property expenses in the accompanying statements of operations.


                                       8
<PAGE>

Commissions paid to Keyes Asset Management, Inc. for leasing vacant space at
various rental properties totaled $1,957 and $12,891 for the three months ended
September 30, 1998 and 1997, respectively, and $11,388 and $20,560 for the nine
months ended September 30, 1998 and 1997, respectively. These amounts are
included in other assets in the accompanying balance sheets. The leasing
commissions paid are amortized over the respective life of each lease.

On January 31, 1997, the Partnership paid a selling commission of $26,767 to
Keyes Asset Management, Inc. in conjunction with the sale of Charlotte Commerce
Center, one of the commercial properties in the Partnership's investment
portfolio. On July 11, 1997, the Partnership paid selling commissions of $9,300
to Keyes Asset Management, Inc. in conjunction with the sale of four condominium
units at LeJeune Industrial Park. These amounts are included in the cost of real
estate sold in the accompanying statements of operations.

(3) MORTGAGE PAYABLE:

<TABLE>
<CAPTION>
                                                                 SEPTEMBER 30,            DECEMBER 31,
                                                                      1998                    1997
                                                                 -------------            -------------
<S>                                                                <C>                      <C>       
Mortgage loan secured by Northpark Commerce 
Center, bearing interest at 10.375%, payable in 
monthly installments of $44,525 representing 
principal and interest, due May 1, 2017.                           $4,401,098               $4,456,922
                                                                   ==========               ==========
</TABLE>

(4) DISPOSITIONS:

On January 31, 1997, the Partnership sold Charlotte Commerce Center located in
Altamonte Springs, Seminole County, Florida for a total of $892,250. The book
value of the center was $747,608 which was net of a 1989 reduction of $35,959 in
the Center's carrying value. Expenses related to the sale of the Center totaled
$65,273 which included a real estate sales commission of $53,535, one-half of
which was paid to Keyes Asset Management, Inc. The Partnership's net gain on
this disposition was $79,369. At closing, the Partnership received cash of
$21,358 which was net of selling expenses, 1995 and 1996 real estate taxes,
tenant security deposits, the outstanding purchase money mortgage balance and
accrued interest.

On July 11, 1997, the Partnership sold four condominium warehouse units located
at LeJeune Industrial Park, Opa-locka, Miami-Dade County, Florida for a total of
$155,000. The book value of these units was $129,567. Expenses related to the
sale of the units totaled $13,062 which included real estate sales commissions
of $9,300 which were paid to Keyes Asset Management, Inc. The Partnership's net
gain on these sales was $12,371. At closing, the Partnership accepted four
mortgage notes totaling $124,000 from the purchasers and received cash of
$15,937 which was net of selling expenses, July 1997 pro-rated rental income,
1997 pro-rated real estate taxes and tenant security deposits.


                                       9
<PAGE>

(5) PROVISION FOR LOSSES ON LAND AND LAND DEVELOPMENT:

During the third quarter of 1998, the carrying value of land and land
development costs of Commercial Boulevard Center, located in the city of
Lauderhill, Broward County, Florida, was reduced by $84,839 to its estimated net
realizable value of $468,000. The provision was recorded to reflect the net book
value of the property at its estimated selling price, net of anticipated selling
expenses. There is no guarantee that the estimated realizable value will be
achieved when the Center is ultimately sold.

(6) CONTINGENCIES:

On August 18, 1998, the Partnership entered into an Agreement for Sale and
Purchase (the "Agreement") of Northpark Commerce Center with a purchaser who is
not affiliated with the Partnership or the Managing General Partner. The
Agreement provides for an investigation period during which the purchaser has
the absolute right to terminate the Agreement without any penalty or obligation
to proceed with the purchase. On November 2, 1998, in accordance with the terms
of the Agreement, the purchaser notified the Partnership that it elected to
terminate the Agreement.

The Partnership sustained significant losses in each of the last three calendar
years. Operations of the Partnership provided cash of $27,418 during the nine
months ended September 30, 1998. As of September 30, 1998, cash and
interest-bearing deposits were estimated to be sufficient to pay the
Partnership's current accounts payable and accrued expenses, exclusive of the
current portion of the mortgage loan payable. The Partnership also had an escrow
balance of $135,563 which was available to pay future real estate taxes that
were included as part of accrued liabilities.



                                       10
<PAGE>


                                   KFP 85-LTD.

Item 2.

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

MATERIAL CHANGES IN FINANCIAL CONDITION

Cash and interest-bearing deposits decreased by $19,007 during the nine months
ended September 30, 1998 compared to an increase of $78,040 during the same
period of 1997. The increase in cash and interest-bearing deposits for 1997 was
primarily attributable to the sale of Charlotte Commerce Center which provided
cash of $92,414 at closing in January 1997.

During the nine months ended September 30, 1998, cash of $27,418 was provided by
operations compared to cash of $41,894 used in operations during the nine months
ended September 30, 1997. For the three months ended September 30, 1998 cash of
$12,538 was provided by operations compared to cash of $13,402 used in
operations during the same time period of 1997. In 1997, the Partnership paid
certain accounts payable and accrued expenses related to properties which were
sold. There were no similar payments required in 1998 which accounts for the
primary difference from 1997.

As part of an agreement with the mortgage lender for Northpark Commerce Center,
an escrow agent designated by the lender holds tenant rents and escrow deposits
for the Partnership. A portion of the funds are held in escrow for payment of
future real estate taxes, property improvements and/or property insurance for
the Center. From time to time, excess amounts held in escrow are released into
the Partnership's general funds and the timing of such releases may vary over
the course of each year. As a result, the Partnership's balance of funds held in
escrow decreased by $26,058 during the three months ended September 30, 1998 and
increased by $43,675 during the nine months ended September 30, 1998. These
amounts are compared to increases of $37,852 and $87,178 during the three months
and nine months ended September 30, 1997, respectively.

There were no cash distributions to partners during the nine months ended
September 30, 1998 or 1997.

Principal payments on the Northpark Commerce Center mortgage totaled $19,091 and
$55,824 during the three and nine months ended September 30, 1998, respectively.
Excluding the payoff of the Charlotte Commerce Center mortgage of $752,500 which
took place at closing, principal payments of mortgages totaled $17,216 and
$56,079 for the three and nine months ended September 30, 1997, respectively.
During the remainder of 1998, the Partnership anticipates that it will make
principal payments of approximately $19,600 on the Northpark mortgage. There is
no outstanding mortgage obligation on Commercial Boulevard Center.


                                       11
<PAGE>

The Partnership does not intend to acquire any additional properties for its
investment portfolio. At various times, however, the Partnership may be required
to provide certain improvements at Northpark Commerce Center in order to retain
or attract tenants to space that is vacant. While the cost of future tenant
improvements, if any, is not known, the Partnership does not anticipate that the
required costs will be material.

During the third quarter of 1998, the Partnership reevaluated the carrying value
of land and land development costs for Commercial Boulevard Center which is
located in the city of Lauderhill, Broward County, Florida. In June 1998, the
Partnership received notice that the tenant of the Center filed for voluntary
bankruptcy and the Bankruptcy Court allowed the tenant to terminate the existing
land lease. Based upon the loss of the Center's tenant, the Partnership
determined that the Center will be actively marketed for sale. Accordingly, the
carrying value of the land and land development cost of the Center was reduced
by $84,839 to $468,000, its estimated net realizable value. This reduction was
based upon the estimated selling price net of anticipated selling expenses.
However, there is no guarantee that the Partnership will be able to find a
qualified buyer for the Center and there is no guarantee that the estimated
realizable value will be achieved when the Center is ultimately sold.

On August 18, 1998, the Partnership entered into an Agreement for Sale and
Purchase of Northpark Commerce Center with a purchaser who is not affiliated
with the Partnership or the Managing General Partner. The Agreement provided the
purchaser with a minimum 60-day investigation period of the Center and, under
certain circumstances, provided for extensions to the investigation period. As
provided for under the Agreement, the Partnership allowed the purchaser
additional time beyond the original 60-day period for its inspection. In
accordance with the terms of the Agreement, on November 2, 1998, the purchaser
notified the Partnership that it elected to terminate the Agreement without any
penalty or obligation to proceed with the purchase. The Partnership is still
actively marketing Northpark Commerce Center for sale; however, it is not
presently known if, or when, a qualified purchaser might be found for the
Center.

Prior to the end of 1998, the Partnership anticipates that it will reacquire a
condominium warehouse unit located at LeJeune Industrial Park through
foreclosure of a mortgage note receivable which the Partnership holds. The
unpaid balance of the mortgage note is approximately $36,000 and the Partnership
anticipates that it will be able to re-sell that unit for an amount equal to the
unpaid mortgage balance. However, there is no guarantee that the Partnership
will be able to sell the unit for that amount. At the present time, it is not
known exactly when the unit will be reacquired or how long the unit will have to
be held before it is re-sold.

Other than those items discussed above, the Partnership does not anticipate any
material changes to its financial condition during the remainder of 1998.


                                       12
<PAGE>

MATERIAL CHANGES IN RESULTS OF OPERATIONS

Rental and other income, when combined, decreased in the nine months ended
September 30, 1998 when compared to the same period of the previous year. This
decline was primarily attributable to the disposal in 1997 of two rental
properties: Charlotte Commerce Center which closed in the first quarter of 1997;
and four condominium warehouse units at LeJeune Industrial Park which closed in
the third quarter of 1997. Rental and other income, when combined, decreased in
the three months ended September 30, 1998 when compared to the same period of
1997. This decrease was primarily attributable to the loss of rent from
voluntary bankruptcy in June 1998 of the tenant at Commercial Boulevard Center.

Interest income remained at approximately the same levels during the three and
nine months ended September 30, 1998 when compared to the same periods for 1997.

Partnership expenses, excluding cost of real estate sold and the provision for
losses on land and land development, decreased in the three and nine months
ended September 30, 1998 from 1997 levels primarily due to the sales in 1997 of
Charlotte Commerce Center and LeJeune Industrial Park. The decrease of expenses
in the nine months ended September 30, 1998 was partially offset by
approximately $28,000 of costs incurred for planned improvements and repairs to
paving and interior space at Northpark Commerce Center during the first and
third quarters of 1998.

During the three months ended September 30, 1997, the Partnership recognized a
gain of $12,371 from the sale of units at LeJeune Industrial Park. There were no
comparable sales in the three months ended September 30, 1998.

As discussed above under Material Changes in Financial Condition, the
Partnership reevaluated the carrying value of land and land development at
Commercial Boulevard Center. In the third quarter of 1998, the Partnership
recorded a provision of $84,839 as a result of the write-down in the carrying
value.

For the remainder of 1998, the Partnership anticipates that operating revenues
and expenses will continue to be lower when compared to 1997. For the fourth
quarter of 1998, Partnership expenses might be slightly higher than the previous
quarters of 1998 due to expenses that might be required to maintain Commercial
Boulevard Center which were previously the responsibility of the tenant.
However, the Partnership does not anticipate that revenues or expenses will vary
materially from the first nine months of 1998.


                                       13
<PAGE>


OTHER

Certain items discussed in the quarterly report may constitute forward-looking
statements 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 release
publicly 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.



                                       14
<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



                                       15
<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:     NOVEMBER 13, 1998                 By:   /S/ TIMOTHY D. PAPPAS
     ---------------------------                  ---------------------
                                                  Timothy D. Pappas,
                                                  Vice President, Treasurer and
                                                  Principal Accounting Officer


                                       16
<PAGE>


                                 EXHIBIT INDEX


EXHIBIT                                 DESCRIPTION
-------                                 -----------

  27                    Financial Data Schedule