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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
Commission file number 0-14438
INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
A CALIFORNIA LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
CALIFORNIA 13-3239107
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
411 West Putnam Avenue, Greenwich, CT 06830
(Address of principal executive offices)
(203) 862-7000
(Registrant's telephone number, including area code)
None
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [ X ] No [ ]
<PAGE>
INDEX
Part I. Financial Information:
Balance Sheets -- June 30, 1997 and December 31, 1996
Statements of Operations -- Three and Six Months Ended
June 30, 1997 and 1996
Statement of Partners' Equity -- Six Months Ended
June 30, 1997
Statements of Cash Flows -- Six Months Ended
June 30, 1997 and 1996
Notes to Financial Statements
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Part II. Other Information:
Legal Proceedings, Exhibits and Reports on Form 8-K
<PAGE>
<TABLE>
<CAPTION>
INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
FORM 10-Q - JUNE 30, 1997
BALANCE SHEETS
June 30, 1997 December 31, 1996
------------- -----------------
ASSETS
<S> <C> <C>
Real estate .................................. $32,123,077 $32,154,253
Cash and cash equivalents .................... 5,211,732 4,870,517
Other assets ................................. 2,144,382 2,107,211
Receivables .................................. 172,622 158,204
----------- -----------
$39,651,813 $39,290,185
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Accounts payable and accrued expenses ........ $ 1,329,176 $ 1,061,732
Distributions payable......................... 395,799 252,638
Due to affiliates............................. 284,668 1,164,121
----------- -----------
2,009,643 2,478,491
----------- -----------
Commitments and contingencies
PARTNERS' EQUITY:
Limited partners' equity (400,010
units issued and outstanding) ....... 35,759,109 34,970,158
General partners' equity ................ 1,883,061 1,841,536
----------- -----------
37,642,170 36,811,694
----------- -----------
$39,651,813 $39,290,185
=========== ===========
See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
FORM 10-Q - JUNE 30, 1997
STATEMENTS OF OPERATIONS
For the Three Months Ended For the Six Months Ended
June 30, June 30,
-------------------------- ------------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Rental Revenue ......................... $2,398,074 $2,150,499 $4,754,602 $4,563,889
---------- ---------- ---------- ----------
Costs and Expenses:
Operating expenses ................ 857,590 826,015 1,729,608 1,683,620
Depreciation and amortization ..... 309,935 319,365 619,870 638,730
Partnership management fee ........ 227,043 227,043 454,086 454,086
Administrative expenses ........... 204,098 116,282 406,358 247,742
Property management fee ........... 71,264 61,562 140,333 136,859
---------- ---------- ---------- ----------
1,669,930 1,550,267 3,350,255 3,161,037
---------- ---------- ---------- ----------
Income before interest and other income 728,144 600,232 1,404,347 1,402,852
Interest income ................... 48,429 25,897 91,095 53,183
Other income ...................... 31,340 15,360 46,630 29,810
---------- ---------- ---------- ----------
Net income ............................. $ 807,913 $ 641,489 $1,542,072 $1,485,845
========== ========== ========== ==========
Net income attributable to:
Limited partners .................. $ 767,517 $ 609,415 $1,464,968 $1,411,553
General partners .................. 40,396 32,074 77,104 74,292
---------- ---------- ---------- ----------
Net income ............................. $ 807,913 $ 641,489 $1,542,072 $1,485,845
========== ========== ========== ==========
Net income per unit of limited
partnership interest (400,010 units
outstanding) ...................... $ 1.92 $ 1.52 $ 3.66 $ 3.53
========== ========== ========== ==========
See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
FORM 10-Q - JUNE 30, 1997
STATEMENT OF PARTNERS' EQUITY
General Limited
Partners' Partners'
Equity Equity Total
------------ ------------ ------------
<S> <C> <C> <C>
Balance, January 1, 1997 ......................... $ 1,841,536 $ 34,970,158 $ 36,811,694
Net income for the six
months ended June 30, 1997 .................. 77,104 1,464,968 1,542,072
Distributions as a return of capital for the six
months ended June 30, 1997 ($1.69 per limited
partnership unit) ........................... (35,579) (676,017) (711,596)
------------ ------------ ------------
Balance, June 30, 1997 ........................... $ 1,883,061 $ 35,759,109 $ 37,642,170
============ ============ ============
See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
FORM 10-Q - JUNE 30, 1997
STATEMENTS OF CASH FLOWS
For The Six Months Ended
June 30,
---------------------------
1997 1996
----------- -----------
<S> <C> <C>
Cash Flows From Operating Activities:
Net income .................................. $ 1,542,072 $ 1,485,845
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization ........... 619,870 638,730
Straight-line adjustment for stepped
lease rentals ......................... (26,456) (20,884)
Changes in assets and liabilities:
Accounts payable and accrued expenses ... 267,444 265,753
Receivables ............................. (14,418) 18,546
Due to affiliates ....................... (879,453) (71,100)
Other assets ............................ (125,219) (130,264)
----------- -----------
Net cash provided by operating activities ... 1,383,840 2,186,626
----------- -----------
Cash Flows From Investing Activities:
Improvements to real estate ................. (474,190) (289,781)
----------- -----------
Cash Flows From Financing Activities:
Distributions to partners ................... (568,435) (505,276)
----------- -----------
Increase In Cash And Cash Equivalents ............ 341,215 1,391,569
Cash And Cash Equivalents, Beginning of Year ..... 4,870,517 2,450,943
----------- -----------
Cash And Cash Equivalents, End of Quarter ........ $ 5,211,732 $ 3,842,512
=========== ===========
See notes to financial statements
</TABLE>
<PAGE>
INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
FORM 10-Q - JUNE 30, 1997
NOTES TO FINANCIAL STATEMENTS
l. GENERAL
The accompanying financial statements, notes and discussions should be
read in conjunction with the financial statements, related notes and
discussions contained in the Partnership's annual report on Form 10-K/A
for the year ended December 31, 1996.
The financial information contained herein is unaudited; however, in
the opinion of management, all adjustments (consisting only of normal
recurring adjustments) necessary for a fair presentation of such
financial information have been included.
2. SIGNIFICANT ACCOUNTING POLICIES
Impairment of Assets
The Partnership evaluates the recoverability of the net carrying value
of its real estate and related assets at least annually, and more often
if circumstances dictate. If this review indicates that the carrying
value of the property may not be recoverable, the Partnership estimates
the future cash flows expected to result from the use of the property
and its eventual disposition, generally over a five-year holding
period. In performing this review, management takes into account, among
other things, the existing occupancy, the expected leasing prospects of
the property and the economic situation in the region where the
property is located.
If the sum of the expected future cash flows, undiscounted, is less
than the carrying amount of the property, the Partnership recognizes an
impairment loss, and reduces the carrying amount of the asset to its
estimated fair value. Fair value is the amount at which the asset could
be bought or sold in a current transaction between willing parties,
that is, other than in a forced or liquidation sale. Management
estimates fair value using discounted cash flows or market comparables,
as most appropriate for each property. Independent certified appraisers
are utilized to assist management, when warranted.
Impairment write-downs recorded by the Partnership do not affect the
tax basis of the assets and are not included in the determination of
taxable income or loss.
Because the cash flows used to evaluate the recoverability of the
assets and their fair values are based upon projections of future
economic events, such as property occupancy rates, rental rates,
operating cost inflation and market capitalization rates, the amounts
ultimately realized at disposition may differ materially from the net
carrying values at the balance sheet dates. The cash flows and market
comparables used in this process are based on good faith estimates and
assumptions developed by management. Unanticipated events and
circumstances may occur and some assumptions may not materialize;
therefore, actual results may materially vary from the estimates. The
Partnership may in the future provide additional write-downs, which
could be material, if real estate markets or local economic conditions
change.
<PAGE>
INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
FORM 10-Q - JUNE 30, 1997
NOTES TO FINANCIAL STATEMENTS
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Recently Issued Accounting Pronouncement
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 128, "Earning per Share" in February, 1997.
This pronouncement establishes standards for computing and presenting
earnings per share, and is effective for the Partnership's 1997
year-end financial statements. The Partnership's management has
determined that this standard will have no impact on the Partnership's
computation or presentation of net income per unit of limited
partnership interest.
Certain reclassifications were made to the prior year financial
statements in order to conform them to the current period presentation.
Results of operations for the six months ended June 30, 1997 are not
necessarily indicative of the results to be expected for the entire
year.
3. CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES
The Managing General Partner of the Partnership, Resources High Equity,
Inc. is a wholly-owned subsidiary of Presidio Capital Corp.,
("Presidio") See Part II Item 5, Other Events. Presidio AGP Corp.,
which is a wholly-owned subsidiary of Presidio is the Associate General
Partner (together with the Managing General Partner, the "General
Partners"). The General Partners and affiliates of the General Partners
are also engaged in businesses related to the acquisition and operation
of real estate. Presidio is also the parent of other corporations that
are or may in the future be engaged in businesses that may be in
competition with the Partnership. Accordingly, conflicts of interest
may arise between the Partnership and such other businesses. Wexford
Management LLC ("Wexford") has been engaged to perform administrative
services to Presidio and its direct and indirect subsidiaries as well
as the Partnership. During the quarter ended June 30, 1997,
reimbursable expenses to Wexford by the Partnership amounted to
$23,650. Wexford is engaged to perform similar services for other
similar entities that may be in competition with the Partnership.
The Partnership has a property management services agreement with
Resources Supervisory Management Corp. ("Resources Supervisory"), an
affiliate of the General Partners, to perform certain functions
relating to the management of the properties of the Partnership. A
portion of the property management fees were paid to unaffiliated
management companies which are engaged for the purpose of performing
the management functions for certain properties. For the quarters ended
June 30, 1997 and 1996, Resources Supervisory was entitled to receive
$71,264 and $61,562, respectively, of which $51,139 and $44,572 was
paid to unaffiliated management companies, respectively.
<PAGE>
INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
FORM 10-Q - JUNE 30, 1997
NOTES TO FINANCIAL STATEMENTS
3. CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES (CONTINUED)
For the administration of the Partnership, the Managing General Partner
is entitled to receive reimbursement of expenses up to a maximum of
$150,000 per year (exclusive of the administrative expenses paid to
Wexford ). For each of the quarters ended June 30, 1997 and 1996, the
Managing General Partner was entitled to receive $37,500.
For managing the affairs of the Partnership, the Managing General
Partner is entitled to receive an annual partnership management fee
equal to 1.05% of the amount of original gross proceeds paid or
allocable to the acquisition of property by the Partnership. For each
of the quarters ended June 30, 1997 and 1996, the Managing General
Partner was entitled to receive $227,043.
The General Partners are allocated 5% of the net income of the
Partnership, which amounted to $40,396 and $32,074 for the quarters
ended June 30, 1997 and 1996, respectively. They are also entitled to
receive 5% of distributions, which amounted to $19,789 and $12,632 for
the quarters ended June 30, 1997 and 1996, respectively.
During the liquidation stage of the Partnership, the Managing General
Partner or an affiliate may be entitled to receive certain fees, which
are subordinated to the limited partners receiving their original
invested capital and certain specified minimum returns on their
investment.
From July 1996 through July 1997, Millenium Funding II Corp., a wholly
owned indirect subsidiary of Presidio, purchased 21,517 units of the
Partnership from various limited partners. These units represent
approximately 5.4% of the outstanding limited partnership units of the
Partnership.
4. REAL ESTATE
The following table is a summary of the Partnership's real estate as
of:
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
------------ ------------
<S> <C> <C>
Land ................................... $ 11,056,966 $ 11,056,966
Building and improvements .............. 35,291,272 34,817,081
------------ ------------
46,348,238 45,874,047
Less: Accumulated depreciation ......... (14,225,161) (13,719,794)
------------ ------------
$ 32,123,077 $ 32,154,253
============ ============
</TABLE>
No write-downs were recorded for the six months ended June 30, 1997 or
1996.
<PAGE>
INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
FORM 10-Q - JUNE 30, 1997
NOTES TO FINANCIAL STATEMENTS
5. DISTRIBUTIONS PAYABLE
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
-------- --------
<S> <C> <C>
Limited partners ($.94 and $.60 per unit) ........ $376,009 $240,006
General partners ................................. 19,790 12,632
-------- --------
$395,799 $252,638
======== ========
</TABLE>
Such distributions were paid in the quarters subsequent to June 30,
1997 and December 31, 1996, respectively.
6. DUE TO AFFILIATES
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
---------- ----------
<S> <C> <C>
Partnership management fee ............................ $ 227,043 $ 227,044
Settlement and litigation cost reimbursement (Note 7) -- 824,510
Property management fee ............................... 20,125 75,067
Non-accountable expense reimbursement ................. 37,500 37,500
---------- ----------
$ 284,668 $1,164,121
========== ==========
</TABLE>
Such amounts were paid in the quarters subsequent to June 30, 1997 and
December 31, 1996, respectively.
7. COMMITMENTS AND CONTINGENCIES
On or about May 11, 1993 High Equity Partners L.P. - Series 86
("HEP-86"), an affiliated partnership, was advised of the existence of
an action (the "California Action') in which a complaint (the "HEP
Complaint") was filed in the Superior Court for the State of California
for the County of Los Angeles (the "Court") on behalf of a purported
class consisting of all of the purchasers of limited partnership
interests in HEP-86. On April 7, 1994 the plaintiffs were granted leave
to file an amended complaint (the "Amended Complaint").
On November 30, 1995, after the Court preliminarily approved a
settlement of the California Action but ultimately declined to grant
final approval and after the Court granted motions to intervene, the
<PAGE>
INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
FORM 10-Q - JUNE 30, 1997
NOTES TO FINANCIAL STATEMENTS
7 COMMITMENTS AND CONTINGENCIES (CONTINUED)
original and Intervening Plaintiffs filed a Consolidated Class and
Derivative Action Complaint ( the "Consolidated Complaint") against the
Administrative and Investment General Partners of HEP-86, the managing
general partner of the Partnership, the managing general partner of
HEP-88 and the indirect corporate parent of the General Partners. The
Consolidated Complaint alleges various state law class and and
derivative claims, including claims for breach of fiduciary duties;
breach of contract; unfair and fraudulent business practices under
California Bus. & Prof. Code Sec. 17200; negligence; dissolution,
accounting and receivership; fraud; and negligent misrepresentation.
The Consolidated Complaint alleges, among other things, that the
general partners caused a waste of HEP Partnership assets by collecting
management fees in lieu of pursuing a strategy to maximize the value of
the investments owned by the limited partners; that the general
partners breached their duty of loyalty and due care to the limited
partners by expropriating management fees from the partnerships without
trying to run the HEP Partnerships for the purposes for which they are
intended; that the general partners are acting improperly to enrich
themselves in their position of control over the HEP Partnerships and
that their actions prevent non-affiliated entities from making and
completing tender offers to purchase HEP Partnership Units; that by
refusing to seek the sale of the HEP Partnerships' properties, the
general partners have diminished the value of the limited partners'
equity in the HEP Partnerships; that the general partners have taken a
heavily overvalued partnership asset management fee; and that limited
partnership units were sold and marketed through the use of false and
misleading statements.
On February 24, 1997, after the Court again preliminarily approved a
settlement of the California Action but again ultimately declined to
grant final approval, the Court recused itself from considering a
motion to intervene and to file a new complaint in intervention by two
of the objectors to the Revised Settlement, granted the request of one
plaintiffs' law firm to withdraw as class counsel and scheduled future
hearings on various matters.
Thereafter, the Intervening Plaintiffs filed and then revised an
Amended Consolidated Class Action and Derivative Action Complaint (the
Second Amended Consolidated Complaint) which asserts substantially the
same claims as the Consolidated Complaint, eliminates certain legal
infirmities from that Consolidated Complaint, and presents more
detailed factual allegations. The General Partners believe that the
Second Amended Consolidated Complaint continues to be subject to
challenge on legal grounds and have filed demurrers and a motion to
strike. These matters likely will be heard and determined by the court
in early September 1997.
<PAGE>
INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
FORM 10-Q - JUNE 30, 1997
NOTES TO FINANCIAL STATEMENTS
7 COMMITMENTS AND CONTINGENCIES (CONTINUED)
The Limited Partnership Agreement provides for indemnification of the
General Partners and their affiliates in certain circumstances. The
Partnership has agreed to reimburse the General Partners for their
actual costs incurred in defending this litigation and the costs of
preparing settlement materials. Through December 31, 1996, the General
Partners had billed the Partnership a total of $824,510 for these costs
which was paid in February 1997.
The General Partners believe that each of the claims asserted in the
Consolidated Complaint are meritless and intend to continue to
vigorously defend the California Action. It is impossible at this time
to predict what the defense of the California Action will cost, the
Partnership's financial exposure as a result of the indemnification
agreement discussed above, and whether the costs of defending could
adversely affect the Managing General Partner's ability to perform its
obligations to the Partnership.
<PAGE>
INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
FORM 10-Q - JUNE 30, 1997
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Working capital reserves are temporarily invested in short-term instruments and,
together with cash flow from operations, are expected to be sufficient to fund
future capital improvements to the Partnership's properties. As of June 30,
1997, total working capital reserves amounted to approximately $3,426,000. The
Partnership intends to distribute to its partners less than all of its future
cash flow from operations in order to assure adequate reserves for capital
improvements and capitalized lease procurement costs.
During the six months ended June 30, 1997, cash and cash equivalents increased
$341,215 as a result of cash provided by operations in excess of capital
expenditures and distributions to partners. The Partnership's primary source of
funds is cash flow from the operation of its properties, principally rents
received from tenants, which amounted to $1,383,840 for the six months ended
June 30, 1997. The Partnership used $474,190 for capital expenditures related to
capital and tenant improvements to the properties and $568,435 for distributions
to partners for the six months ended June 30, 1997.
The Partnership expects to continue to utilize a portion of its cash flow from
operations to pay for various capital and tenant improvements to the properties
and leasing commissions. Capital and tenant improvements and leasing commissions
may in the future exceed the Partnership's cash flow from operations. In that
event, the Partnership would utilize the remaining working capital reserves or
sell one or more properties.
RESULTS OF OPERATIONS
The Partnership experienced an increase in net income for the six and three
months ended June 30, 1997 compared to the same periods in the prior year due
primarily to slightly higher rental revenues, interest income, and other income,
partially offset by higher costs and expenses during 1997.
Rental revenues increased at Southport and 568 Broadway during the six and three
months ended June 30, 1997 compared to 1996, primarily due to higher percentage
rents collected during the second quarter of 1997 at Southport and lease
renewals at 568 Broadway at rates higher than those in 1996. These increases
were partially offset by lower rental revenues at Westbrook for both current
periods, primarily due to lower occupancy rates in the current period.
Costs and expenses increased during the six and three months ended June 30, 1997
compared to the same periods in 1996, primarily due to an increase in
administrative expenses, which increased due to higher legal and accounting fees
related to ongoing litigation and the HEP settlement.
Interest income increased due to higher cash balances during the six and three
months ended June 30, 1997 compared to the same periods in 1996. Other income
increased during the six and three months ended June 30, 1997 compared to the
same periods in 1996 due to a greater number of investor transfers.
<PAGE>
INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
FORM 10-Q - JUNE 30, 1997
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Inflation is not expected to have a material impact on the Partnership's
operations or financial position.
Legal Proceedings
The Partnership is a party to certain litigation. See Note 7 to the financial
statements for a description thereof.
<PAGE>
INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
FORM 10-Q - JUNE 30, 1997
Part II. Other Information
Item 1 - Legal Proceedings
(a) See Management's Discussion and Analysis of Financial
Condition and Results of Operations and Notes to Financial
Statements - Note 7 which is herein incorporated by reference.
Item 5 - Other Events
On July 25, 1997, Wexford Management LLC ("Wexford"), the administrator
for Presidio Capital Corp. ("Presidio"), the parent company of
Resources High Equity, Inc. and Presidio AGP Corp., the Managing and
Associate General Partners, respectively, of Integrated Resources High
Equity Partners, Series 85, A California Limited Partnership, (the
"Partnership"), received notice from Presidio Holding Company, LLC,
which stated that it was the holder of 63% of the outstanding Class A
common shares of Presidio, and that it was seeking to remove the three
current Class A directors and replace them with Edward Scheetz, David
Hamamoto and David King effective as of 12:00 p.m. on September 2,
1997. There exists substantial doubt as to the effectiveness of such
notice. On August 15, 1997, Presidio applied to the Judge of the High
Court in the British Virgin Islands for a declaration that the written
resolution of Presidio Holding LLC dated July 25, 1997 was invalid and
of no effect insofar as it purports to be a written resolution of the
Class A Members of Presidio.
As of August 18, 1997, there have been no changes in the composition of
the officers or directors of the general partners. In addition, the
administrative services agreement with Wexford remains in effect and is
scheduled to terminate in November 1997.
Item 6 Exhibits and Reports on Form 8K
(a) Exhibits: There were no exhibits filed.
(b) Reports on Form 8K: None
<PAGE>
INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85
FORM 10-Q - JUNE 30, 1997
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.
Integrated Resources High Equity
Partners, Series 85,
A California Limited Partnership
By: Resources High Equity, Inc.,
Managing General Partner
Dated: August 18, 1997 By: /S/ Joseph M. Jacobs
--------------------
Joseph M. Jacobs
President
(Duly Authorized Officer)
Dated: August 18, 1997 By: /S/ Jay L. Maymudes
-------------------
Jay L. Maymudes
Vice President, Secretary
and Treasurer
(Principal Financial and
Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary information extracted from the financial
statements of the June 30, 1997 Form 10-Q of Integrated Resources High Equity
Partners, Series 85 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 5,211,732
<SECURITIES> 0
<RECEIVABLES> 172,622
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 39,651,813
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 37,642,170
<TOTAL-LIABILITY-AND-EQUITY> 39,651,813
<SALES> 0
<TOTAL-REVENUES> 4,754,602
<CGS> 0
<TOTAL-COSTS> 1,729,608
<OTHER-EXPENSES> 1,620,647
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,542,072
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,542,072
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,542,072
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
