================================================================================
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 March 31, 1998
Commission file number 0-15753
HIGH EQUITY PARTNERS L.P. - SERIES 86
(Exact name of registrant as specified in its charter)
DELAWARE 13-3314609
(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) 862-7444
(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>
HIGH EQUITY PARTNERS L.P. - SERIES 86 - FORM 10-Q - MARCH 31, 1998
INDEX
Part I. Financial Information:
Balance Sheets--March 31, 1998 and December 31, 1997
Statements of Operations--Three Months Ended March 31, 1998
and 1997
Statement of Partners' Equity--Three Months Ended March 31, 1998
Statements of Cash Flows--Three Months Ended March 31, 1998 and 1997
Notes to Financial Statements
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Part II. Other Information:
Legal Proceedings, Other Events and Exhibits
and Reports on Form 8-K
<PAGE>
<TABLE>
<CAPTION>
HIGH EQUITY PARTNERS L.P. - SERIES 86 - FORM 10-Q - MARCH 31, 1998
BALANCE SHEETS
March 31, December 31,
1998 1997
----------- -----------
<S> <C> <C>
ASSETS
Real estate - net........................... $47,756,778 $48,015,174
Cash and cash equivalents .................. 9,943,139 9,828,701
Other assets ............................... 3,822,717 3,827,957
Receivables ................................ 392,465 247,714
----------- -----------
$61,915,099 $61,919,546
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Accounts payable and accrued expenses ...... $ 1,980,622 $ 2,018,260
Distributions payable ...................... 711,801 711,801
Due to affiliates .......................... 619,870 699,043
----------- -----------
3,312,293 3,429,104
----------- -----------
Commitments and contingencies
PARTNERS' EQUITY:
Limited partners' equity (588,010
units issued and outstanding) ......... 55,671,719 55,564,973
General partners' equity ................... 2,931,087 2,925,469
----------- -----------
58,602,806 58,490,442
----------- -----------
$61,915,099 $61,919,546
=========== ===========
</TABLE>
See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
HIGH EQUITY PARTNERS L.P. - SERIES 86 - FORM 10-Q - MARCH 31, 1998
STATEMENTS OF OPERATIONS
For the Three Months Ended
March 31,
---------------------------
1998 1997
---------- ----------
<S> <C> <C>
Rental Revenue ............................... $2,793,235 $3,097,821
---------- ----------
Costs and Expenses:
Operating expenses ...................... 941,269 1,120,568
Depreciation and amortization ........... 487,806 504,845
Partnership management fee .............. 321,358 351,551
Administrative expenses ................. 239,955 220,847
Property management fee ................. 82,931 92,826
---------- ----------
2,073,319 2,290,637
---------- ----------
Income before interest and other income ...... 719,916 807,184
Interest income ......................... 100,499 79,716
Other income ............................ 3,750 8,175
---------- ----------
Net income ................................... $ 824,165 $ 895,075
========== ==========
Net income attributable to:
Limited partners ........................ $ 782,957 $ 850,321
General partners ........................ 41,208 44,754
---------- ----------
Net income ................................... $ 824,165 $ 895,075
========== ==========
Net income per unit of limited
partnership interest (588,010 units
outstanding) ............................ $ 1.33 $ 1.45
========== ==========
</TABLE>
See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
HIGH EQUITY PARTNERS L.P. - SERIES 86 - FORM 10-Q - MARCH 31, 1998
STATEMENT OF PARTNERS' EQUITY
General Limited
Partners' Partners'
Equity Equity Total
----------- ----------- -----------
<S> <C> <C> <C>
Balance, January 1, 1998 ......... $ 2,925,469 $55,564,973 $58,490,442
Net income for the three
months ended March 31, 1998 ...... 41,208 782,957 824,165
Distributions as return of
capital for the three months ended
March 31, 1998 ($1.15 per
limited partnership unit) ........ (35,590) (676,211) (711,801)
----------- ----------- -----------
Balance, March 31, 1998 .......... $ 2,931,087 $55,671,719 $58,602,806
=========== =========== ===========
</TABLE>
See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
HIGH EQUITY PARTNERS L.P. - SERIES 86 - FORM 10-Q - MARCH 31, 1998
STATEMENTS OF CASH FLOWS
For the Three Months
Ended March 31,
------------------- --------
1998 1997
----------- -----------
<S> <C> <C>
Cash Flows From Operating Activities:
Net income ........................................ $ 824,165 $ 895,075
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization ................. 487,806 504,845
Straight line adjustment for stepped
lease rentals ............................... (19,455) (41,008)
Changes in asset and liabilities:
Accounts payable and accrued expenses ......... (37,638) (345,992)
Due to affiliates ............................. (79,173) (909,036)
Receivables ................................... (144,751) (62,222)
Other assets .................................. (108,633) (85,394)
----------- -----------
Net cash provided by (used in) operating activities 922,321 (43,732)
----------- -----------
Cash Flows From Investing Activities:
Improvements to real estate ....................... (96,082) (86,797)
----------- -----------
Cash Flows From Financing Activities:
Distributions to partners ......................... (711,801) (383,754)
----------- -----------
Increase (Decrease) in Cash and Cash Equivalents ....... 114,438 (514,283)
Cash and Cash Equivalents, Beginning of Year ........... 9,828,701 7,409,578
----------- -----------
Cash and Cash Equivalents, End of Quarter .............. $ 9,943,139 $ 6,895,295
=========== ===========
</TABLE>
See notes to financial statements
<PAGE>
HIGH EQUITY PARTNERS L.P. - SERIES 86 - FORM 10-Q - MARCH 31, 1998
NOTES TO FINANCIAL STATEMENTS
1. 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 l0-K for the year ended
December 3l, 1997.
The financial information contained herein is unaudited; however, in the opinion
of management, all adjustments necessary (consisting only of normal recurring
adjustments) 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 a
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 vary materially 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.
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 three months ended March 31, 1998 are not
necessarily indicative of the results to be expected for the entire year.
<PAGE>
HIGH EQUITY PARTNERS L.P. - SERIES 86 - FORM 10-Q - MARCH 31, 1998
NOTES TO FINANCIAL STATEMENTS
3. CONFLICTS INTEREST AND TRANSACTIONS WITH RELATED PARTIES
The Investment General Partner of the Partnership, Resources High Equity, Inc.
and the Administrative General Partner of the Partnership, Resources Capital
Corp., are wholly-owned subsidiaries of Presidio Capital Corp. ("Presidio").
Presidio AGP Corp., which is a wholly-owned subsidiary of Presidio, is the
Associate General Partner (together with the Investment and Administrative
General Partners, 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.
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 certain of the management functions for certain properties. For the
quarters ended March 31, 1998 and 1997, Resources Supervisory was entitled to
receive $82,932 and $92,826, respectively, of which $68,420 and $78,201 was paid
to unaffiliated management companies.
For the administration of the Partnership, the Administrative General Partner is
entitled to receive reimbursement of expenses of a maximum of $200,000 per year.
The Administrative General Partner was entitled to receive $50,000 for each of
the quarters ended March 31, 1998 and 1997.
For managing the affairs of the Partnership, the Administrative General Partner
is entitled to receive an annual partnership asset 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 March 31, 1998 and
1997, the Administrative General Partner was entitled to receive $321,358 and
$351,551, respectively.
The General Partners are allocated 5% of the net income of the Partnership,
which amounted to $41,208 and $44,754 for the quarters ended March 31, 1998 and
1997, respectively. They are also entitled to receive 5% of distributions, which
amounted to $35,590 and $20,734 for the quarters ended March 31, 1998 and 1997,
respectively.
During the liquidation stage of the Partnership, the Investment 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. All fees received by the General
Partners are subject to certain limitations as set forth in the Partnership
Agreement.
From July 1996 through May 1, 1998, Millenium Funding III Corp., a wholly owned
indirect subsidiary of Presidio, purchased 45,320 units of the Partnership from
various limited partners which represents approximately 7.7% of the outstanding
limited partnership units of the Partnership.
<PAGE>
HIGH EQUITY PARTNERS L.P. - SERIES 86 - FORM 10-Q - MARCH 31, 1998
NOTES TO FINANCIAL STATEMENTS
3. CONFLICTS INTEREST AND TRANSACTIONS WITH RELATED PARTIES (CONTINUED)
Pursuant to an agreement dated as of March 6, 1998 among Presidio, American Real
Estate Holding L.P. and Olympia Investors L.P. (the "Purchaser"), on March 12,
1998, the Purchaser commenced a tender offer to purchase up to 40% of the
outstanding units of limited partnership interest at a purchase price of $85.00
per unit.
4. REAL ESTATE
The following table is a summary of the Partnership's real estate as of:
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
------------ ------------
<S> <C> <C>
Land .......................... $ 11,669,652 $ 11,669,652
Buildings and improvements .... 56,916,727 56,768,084
------------ ------------
68,586,379 68,437,736
Less: Accumulated depreciation (20,829,601) (20,422,562)
------------ ------------
$ 47,756,778 $ 48,015,174
============ ============
</TABLE>
No write-downs for impairment were recorded for the three months ended March 31,
1998 or 1997.
5. DISTRIBUTIONS PAYABLE
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
------------ ------------
<S> <C> <C>
Limited partners ($1.15 per unit) $676,211 $676,211
General partners ................ 35,590 35,590
-------- --------
$711,801 $711,801
======== ========
</TABLE>
Such distributions were paid in the quarters subsequent to March 31, 1998 and
December 31, 1997, respectively.
<PAGE>
HIGH EQUITY PARTNERS L.P. - SERIES 86 - FORM 10-Q - MARCH 31, 1998
NOTES TO FINANCIAL STATEMENTS
6. DUE TO AFFILIATES
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
-------- --------
<S> <C> <C>
Partnership asset management fee ........................ $321,358 $321,358
Reorganization and litigation cost reimbursement (Note 7) 234,000 234,000
Property management fee ................................. 14,512 93,685
Non-accountable expense reimbursement ................... 50,000 50,000
-------- --------
$619,870 $699,043
======== ========
</TABLE>
Such amounts were paid in the quarters subsequent to March 31, 1998 and December
31, 1997 respectively.
7. COMMITMENTS AND CONTINGENCIES
On or about May 11, 1993 the 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 the Partnership. On April 7, 1994 the plaintiffs were
granted leave to file an amended complaint (the "Amended Complaint") on
behalf of a class consisting of all the purchasers of limited
partnership interest in the Partnership, Integrated Resources High
Equity Partners, Series 85 ("HEP-85") and High Equity Partners L.P. -
Series 88 ("HEP-88"), which are both affiliated partnerships.
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
original and intervening plaintiffs filed a Consolidated Class and
Derivative Action Complaint (the "Consolidated Complaint") against the
managing general partner of HEP-85 and HEP-88 and the Investment
General Partner of the Partnership; the Administrative General Partner
of the Partnership (the "General Partners"); a subsidiary of the
indirect corporate parent of the General Partners; and the indirect
corporate parent of the General Partners. The Consolidated Complaint
alleged various state law class 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 alleged, among
other things, that the General Partners caused a waste of the HEP
partnership assets by collecting management fees in lieu of pursuing a
strategy to maximize the value of the investments owned by the limited
<PAGE>
HIGH EQUITY PARTNERS L.P. - SERIES 86 - FORM 10-Q - MARCH 31, 1998
NOTES TO FINANCIAL STATEMENTS
7. COMMITMENTS AND CONTINGENCIES (CONTINUED)
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 acted
improperly to enrich themselves in their position of control over the
HEP partnerships and that their actions prevented non-affiliated
entities from making and completing tender offers to purchase units in
the HEP partnership; that by refusing to seek the sale of the HEP
partnerships' properties, the General Partners diminished the value of
the limited partners' equity in the HEP partnerships; that the General
Partners took a heavily overvalued partnership asset management fee;
and that limited partnership units were sold and marketed through the
use of false and misleading statements.
The Court entered an order on January 14, 1997 rejecting the settlement
and concluding that there had not been an adequate showing that the
settlement was fair and reasonable. On February 24, 1997, the Court
granted the request of one plaintiffs' law firm to withdraw as class
counsel. Thereafter, in June 1997, the plaintiffs again amended their
complaint (the "Second Amended Complaint"). The Second Amended
Complaint asserts substantially the same claims as the Consolidated
Complaint, except that it no longer contains causes of action for
fraud, for negligent misrepresentation, or for negligence. The
defendants served answers denying the allegations and asserting
numerous affirmative defenses. In February 1998, the Court certified
three plaintiff classes consisting of the current unit holders in each
of the three HEP partnerships. On March 11, 1998, the Court stayed the
California Action temporarily to permit the parties to engage in
renewed settlement discussions.
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 March 31, 1998, the General
Partners had billed the Partnership a total of $1,058,511 for these
costs, of which $824,511 was paid.
The General Partners believe that each of the claims asserted in the
Second Amended 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>
HIGH EQUITY PARTNERS L.P. - SERIES 86 - FORM 10-Q - MARCH 31, 1998
NOTES TO FINANCIAL STATEMENTS
7. COMMITMENTS AND CONTINGENCIES (CONTINUED)
On February 6,1998, Everest Investors 8, LLC ("Everest") commenced an
action in the Superior Court of the State of California for the County
of Los Angeles (Case No. BC 185554), against, among others, the HEP
partnerships, Resources Pension Shares 5 LP (an affiliated
partnership), the general partners of each of the partnerships, and DCC
Securities Corp. In the action, Everest alleged, among other things,
that the partnerships and the general partners breached the provisions
of the applicable partnership agreements by refusing to recognize
transfers to Everest of limited partnership units purportedly acquired
pursuant to tender offers that had been made by Everest (the "Everest
Tender Units"). Everest sought injunctive relief (a) directing the
recognition of transfers to Everest of the Everest Tender Units and the
admission of Everest as a limited partner with respect to the Everest
Tender Units and (b) enjoining the transfer of the Everest Tender Units
to any either party. Everest seeks damages, including punitive damages,
for alleged breach of contract, defamation and intentional interference
with contractual relations. Everest's motion for a temporary
restraining order was denied on February 6, 1998. A hearing on
Everest's application for a preliminary injunction had been scheduled
for February 26, however, on February 20, 1998, Everest asked the Court
to take its application off calendar. The defendants served answers
denying the allegations and asserting numerous affirmative defenses.
Merits discovery has commenced. The Partnerships and the General
Partners believe that Everest claims are without merit and intend to
vigorously contest the action.
On March 27, 1998, Everest commenced an action in the United States
District Court for the Central District of California against, among
others, the general partners of the HEP Partnerships. In the action,
Everest alleged, among other things, various violations of the Williams
Act Section 14(d) of the Securities Exchange Act of 1934 in connection
with the general partners' refusal to recognize transfers to Everest of
limited partnership units purportedly acquired pursuant to the Everest
tender offers and the letters sent by the general partners to the
limited partners advising them of the general partners' determination
that the Everest tender offers violated applicable securities laws. The
general partners believe that Everest's claim are without merit and
intend to vigorously contest the action.
<PAGE>
HIGH EQUITY PARTNERS L.P. - SERIES 86 - FORM 10-Q - MARCH 31, 1998
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 money market
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 March 31, 1998, total working capital reserves amounted to approximately
$5,179,000. 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 three months ended March 31, 1998, cash and cash equivalents
increased $114,438 as a result of net 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 $922,321 for the three months
ended March 31, 1998. The Partnership used $96,082 for capital expenditures
related to capital and tenant improvements to the properties and $711,801 for
distributions to partners during the three months ended March 31, 1998.
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,
reduce distributions, or sell one or more properties. Except as discussed above,
management is not aware of any other trends, events, commitments or
uncertainties that will have a significant impact on liquidity.
RESULTS OF OPERATIONS
The Partnership experienced a decrease in net income for the three months ended
March 31, 1998 compared to the same period in 1997, primarily due to lower
rental revenues, partially offset by a decrease in costs and expenses and higher
interest income.
Rental revenues decreased during the three months ended March 31, 1998 at 230
East Ohio due to the sale of the property in October 1997 and at Sutton Square
due to lower percentage from certain tenants.
Costs and expenses decreased during the three months ended March 31, 1998
compared to the same period in 1997 primarily due to a decrease in operating
expenses, depreciation and partnership asset and property management fees due to
the sale of 230 East Ohio, as previously discussed. These decreases were
partially offset by an increase in administrative expenses for the three months
ended March 31, 1998 due to higher legal and accounting fees related to ongoing
litigation and the HEP settlement.
Interest income increased during the three months ended March 31, 1998 as
compared to the same periods in 1997 due to higher cash balances. Other income
decreased during the three months ended March 31, 1998 compared to the same
periods in 1997 due to fewer investor transfers.
<PAGE>
HIGH EQUITY PARTNERS L.P. - SERIES 86 - FORM 10-Q - MARCH 31, 1998
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>
HIGH EQUITY PARTNERS L.P. - SERIES 86 - FORM 10-Q - MARCH 31, 1998
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 6 - Exhibits and Reports on Form 8-K
(a) Exhibits: There were no exhibits filed
(b) Reports on Form 8-K:
None
<PAGE>
HIGH EQUITY PARTNERS L.P. - SERIES 86 - FORM 10-Q - MARCH 31, 1998
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.
High Equity Partners L.P. - Series 86
By: Resources Capital Corp.,
Administrative General Partner
Dated: May 12, 1998 By: /S/ Richard Sabella
--------------------
Richard Sabella
President
(Duly Authorized Officer)
Dated: May 12, 1998 By: /S/ Lawrence Schachter
-----------------------
Lawrence Schachter
Senior Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary information extracted from the financial
statements of the March 31, 1998 Form 10-Q of High Equity Partners L.P.-Series
86 and is qualified in its entirety by reference to such financial statemens.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 9,943,139
<SECURITIES> 0
<RECEIVABLES> 392,465
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 61,915,099
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 58,602,806
<TOTAL-LIABILITY-AND-EQUITY> 61,915,099
<SALES> 0
<TOTAL-REVENUES> 2,793,235
<CGS> 0
<TOTAL-COSTS> 941,269
<OTHER-EXPENSES> 1,132,050
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 824,165
<INCOME-TAX> 0
<INCOME-CONTINUING> 824,165
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 824,165
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
