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 MARCH 31, 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
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          (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 [ ]

                                       1
<PAGE>



                                   KFP 85-LTD.

                                      INDEX

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

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

             Statements of Operations
                For the three months ended March 31, 2000 and 1999 .......4

             Statement of Changes in Partners' Equity in Net Assets
                 For the three months ended March 31, 2000................5

             Statements of Cash Flows
                For the three months ended March 31, 2000 and 1999........6

             Notes to Financial Statements................................7

         Item 2 - Management's Discussion and Analysis of Financial
             Condition and Results of Operations..........................10

PART II - OTHER INFORMATION

             Items 1 through 6............................................11

             Signatures...................................................14

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

                                                        MARCH 31,
                                                          2000           DECEMBER 31,
ASSETS AT ESTIMATED REALIZABLE VALUE                   (UNAUDITED)           1999
------------------------------------                   -----------       ------------
<S>                                                     <C>               <C>
Cash and interest-bearing deposits                      $  229,560        $1,026,412
Receivable from sale of real estate, net                    31,843                --
Accounts receivable                                          8,827            14,787
Mortgage notes receivable, net                             266,906           269,500
Rental properties                                               --            35,000
Land and land development , net                            468,000           468,000
Other assets                                                   498             1,095
                                                        ----------        ----------

            Total assets                                $1,005,634        $1,814,794
                                                        ==========        ==========


LIABILITIES AND PARTNERS' EQUITY IN NET ASSETS
----------------------------------------------

LIABILITIES at estimated settlement amounts:
   Accounts payable                                     $       --        $      302
   Accrued liabilities                                      73,323            97,784
                                                        ----------        ----------
            Total liabilities                               73,323            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                   932,311         1,716,708
                                                        ----------        ----------
            Total partners' equity in net assets           932,311         1,716,708
                                                        ----------        ----------
            Total liabilities and
                partners' equity in net assets          $1,005,634        $1,814,794
                                                        ==========        ==========
</TABLE>
              The accompanying notes to financial statements are an
                       integral part of these statements.

                                       3
<PAGE>
<TABLE>
<CAPTION>
                                   KFP 85-LTD.
                           (IN PROCESS OF LIQUIDATION)
                            STATEMENTS OF OPERATIONS
               FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
                                   (UNAUDITED)

                                                      2000              1999
                                                    ---------         ---------
<S>                                                 <C>               <C>
REVENUES:
     Rental income                                  $      --         $ 211,385
     Real estate sales, net of closing costs           31,843                --
     Interest income                                    7,305             6,760
     Other income                                          --               904
                                                    ---------         ---------
         Total revenues                                39,148           219,049
                                                    ---------         ---------

EXPENSES:
     Interest and financing costs                          --           113,997
     Property expenses                                  4,940            59,672
     Cost of real estate sold                          35,000                --
     Selling, administration and other                 21,047            24,354
     Depreciation and amortization                         --            43,056
                                                    ---------         ---------
         Total expenses                                60,987           241,079
                                                    ---------         ---------
         Net loss                                   $ (21,839)        $ (22,030)
                                                    =========         =========

PER UNIT AMOUNTS TO
   LIMITED PARTNERS:
      Net loss after allocation to
      General Partners of $0 and $441
      in 2000 and 1999, respectively                $   (2.75)        $   (2.72)
                                                    =========         =========

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

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

                                       4
<PAGE>
<TABLE>
<CAPTION>
                                   KFP 85-LTD.
                           (IN PROCESS OF LIQUIDATION)
             STATEMENT OF CHANGES IN PARTNERS' EQUITY IN NET ASSETS
                    FOR THE THREE MONTHS ENDED MARCH 31, 2000
                                   (UNAUDITED)

                                       GENERAL        LIMITED
PARTNERS' EQUITY IN NET ASSETS         PARTNERS       PARTNERS               TOTAL
------------------------------         --------      -----------         -----------
<S>                                    <C>           <C>                 <C>
December 31, 1999                      $   --        $ 1,716,708         $ 1,716,708

Net loss                                   --            (21,839)            (21,839)

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

March 31, 2000                         $   --        $   932,311         $   932,311
                                       ======        ===========         ===========
</TABLE>
              The accompanying notes to financial statements are an
                         integral part of this statement

                                       5
<PAGE>
<TABLE>
<CAPTION>
                                   KFP 85-LTD.
                           (IN PROCESS OF LIQUIDATION)
                            STATEMENTS OF CASH FLOWS
               FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
                                   (UNAUDITED)

                                                                 2000                1999
                                                              -----------         -----------
<S>                                                           <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net loss                                                 $   (21,839)        $   (22,030)
     Adjustments to reconcile net loss
     to net cash used in operating activities -
        Depreciation and amortization                                  --              43,056
        Provision for doubtful accounts                                --               3,328
        Loss on sale of real estate                                 3,157                  --
        Changes in assets and liabilities:
           Increase in escrow deposits                                 --             (81,504)
           (Increase) decrease  in accounts receivable              5,960              (9,314)
           Decrease in other assets                                   597               9,812
           Increase (decrease) in accounts payable                   (302)                760
           Increase (decrease) in accrued liabilities             (24,461)              1,361
                                                              -----------         -----------
                 Net cash used in operating activities            (36,888)            (54,531)
                                                              -----------         -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Payments received on mortgage notes                            2,594               2,686
                                                              -----------         -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Distributions to limited partners                           (762,558)                 --
     Repayment of mortgage payable                                     --             (20,102)
                                                              -----------         -----------
                 Net cash used in financing activities           (762,558)            (20,102)
                                                              -----------         -----------

NET DECREASE IN CASH AND
     INTEREST-BEARING DEPOSITS                                   (796,852)            (71,947)

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

CASH AND INTEREST-BEARING DEPOSITS,
     END OF THE PERIOD                                        $   229,560         $    95,129
                                                              ===========         ===========

SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
     Cash paid for interest                                   $        --         $   113,473
                                                              ===========         ===========
</TABLE>
              The accompanying notes to financial statements are an
                       integral part of these statements.

                                       6
<PAGE>
                                   KFP 85-LTD.
                           (IN PROCESS OF LIQUIDATION)
                          NOTES TO FINANCIAL STATEMENTS
                                 MARCH 31, 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
March 31, 2000 and December 31, 1999, changes in net assets for the three-month
period ended March 31, 2000, results of operations for the three-month periods
ended March 31, 2000 and 1999, and cash flows for the three-month periods ended
March 31, 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 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 prior to 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 are 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.

                                       7
<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 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 March 31, 1999 and are
included in property expenses in the accompanying statement of operations.

During the three months ended March 31, 1999, $3,160 was paid to KAMI in
connection with the securing of tenants for certain leases. The unamortized
portion 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 related 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 DISTRIBUTIONS 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.

                                       8
<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
March 31, 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
condominium warehouse units located at LeJeune through foreclosures 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.

                                       9
<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 quarter ended March 31, 2000, the Partnership's cash and
interest-bearing deposits decreased by $796,852 compared to a decrease of
$71,947 during the first quarter of 1999. The decrease in cash and
interest-bearing deposits in 2000 was primarily attributable to cash
distributions 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 expenses incurred during liquidation. These items were partially
offset by principal collections of $2,594 on mortgage notes receivable, $5,960
of collections on accounts receivable and $7,305 of interest income received.

On March 30, 2000, the Partnership closed on the sale of a 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.

Principal payments on the Northpark Commerce Center ("Northpark") mortgage
payable totaled $20,102 during the first quarter 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
quarter of 2000.

                                       10
<PAGE>

Prior to 2000, the Partnership began actively marketing for sale Commercial
Boulevard Center, the one property remaining in its investment portfolio as of
March 31, 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
condominium warehouse units located at LeJeune through foreclosure of two
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.

The Partnership is also seeking a qualified purchaser or purchasers for the
mortgage notes receivable it holds. These mortgage notes, which earn interest at
rates ranging from 8% to 10% annually, were originally accepted by the
Partnership when it sold condominium warehouse units at LeJeune. The Partnership
anticipates that it will be able to collect or sell these mortgage notes at the
March 31, 2000 carrying value of $266,906. However, there is no guarantee that
the Partnership will be able to realize that amount when the mortgage notes are
ultimately collected or sold. There is also no guarantee that the Partnership
will be able to collect or sell the 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 at their estimated realizable value 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.

                                       11
<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.

                                       12
<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

                                       13
<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:    MAY 15, 2000              By:       /S/ TIMOTHY D. PAPPAS
                                             ----------------------------
                                            Timothy D. Pappas,
                                            Vice President, Treasurer and
                                            Principal Accounting Officer

                                       14


<PAGE>

                                 EXHIBIT INDEX

EXHIBIT       DESCRIPTION
-------       -----------
 27           Financial Data Schedule