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, 1999

                                       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 333-10635

                      APPLE RESIDENTIAL INCOME TRUST, INC.
             (Exact name of registrant as specified in its charter)

            VIRGINIA                                          54-1816010
  (State or other jurisdiction                               (IRS Employer
of incorporation or organization)                          Identification No.)

      306 EAST MAIN STREET
       RICHMOND, VIRGINIA                                         23219
(Address of principal executive offices)                       (Zip Code)

                                (804) 643-1761
             (Registrant's telephone number, including area code)

                                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
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

At April 20, 1999, there were outstanding  30,495,187 shares of common stock, no
par value, of the registrant.

<PAGE>

                      APPLE RESIDENTIAL INCOME TRUST, INC.
                                    FORM 10-Q

                                      INDEX

<TABLE>
<CAPTION>
                                                                         Page Number
                                                                         -----------
<S>                                                                           <C>
PART I.           FINANCIAL INFORMATION

      Item 1.     Financial Statements (Unaudited)

                         Consolidated  Balance  Sheets  - March 31, 1999        3
                         and December 31, 1998

                         Consolidated Statements of Operations -                4
                         Three months ended March 31, 1999
                         and March 31, 1998

                         Consolidated Statement of Shareholders' Equity -       5
                         Three months ended March 31, 1999

                         Consolidated  Statements of Cash Flows -               6
                         Three months ended March 31, 1999
                         and March 31, 1998

                         Notes to Consolidated  Financial Statements            7

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

PART II.      OTHER INFORMATION:

      Item 1.     Legal Proceedings (not applicable).

      Item 2.     Changes in Securities and Use of Proceeds                    14

      Item 3.     Defaults Upon Senior Securities
                  (not applicable).

      Item 4.     Submission of Matters to a Vote of
                  Security Holders (not applicable).

      Item 5.     Other Information (not applicable)

      Item 6.     Exhibits and Reports on Form 8-K                             15

</TABLE>


<PAGE>


APPLE RESIDENTIAL INCOME TRUST, INC.
CONSOLIDATED BALANCE SHEETS  (UNAUDITED)

<TABLE>
<CAPTION>


                                                                    March 31,             December 31,
                                                                      1999                    1998
                                                                  --------------        ---------------
<S>                                                                   <C>                       <C>
ASSETS

Investment in rental property:
Land                                                             $  42,150,935          $  40,761,281
Buildings and property improvements                                217,067,397            197,807,725
Furniture and fixtures                                               3,781,247              3,190,919
                                                                 -------------          -------------

                                                                   262,999,579            241,759,925
Less accumulated depreciation                                       (9,999,170)            (7,686,479)
                                                                 -------------          -------------

                                                                   253,000,409            234,073,446

Cash and cash equivalents                                           45,705,746             40,073,198
Prepaid expenses                                                       198,152                339,605
Other assets                                                         5,264,649              7,360,903
                                                                 -------------          -------------

           Total Assets                                          $ 304,168,956          $ 281,847,152
                                                                 =============          =============


LIABILITIES and SHAREHOLDERS' EQUITY

Liabilities
Mortgage notes payable                                           $  32,038,329          $  25,165,861
Accounts payable                                                     2,445,788              1,565,453
Accrued expenses                                                     1,956,577              4,883,852
Rents received in advance                                               50,922                150,351
Tenant security deposits                                               877,096                882,014
                                                                 -------------          -------------

           Total Liabilities                                        37,368,712             32,647,531

Shareholders' equity
Common stock, no par value, authorized 50,000,000
   shares; issued and outstanding 30,495,187 shares
   and 28,331,274 shares, respectively                             271,283,376            251,890,553
Class B convertible stock, no par value, authorized
   200,000 shares; issued and outstanding 200,000 shares                20,000                 20,000
Net income  less  than distributions                                (4,503,132)            (2,710,932)
                                                                 -------------          -------------

           Total Shareholders' Equity                              266,800,244            249,199,621
                                                                 -------------          -------------

           Total Liabilities and Shareholders' Equity            $ 304,168,956          $ 281,847,152
                                                                 =============          =============

</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>


APPLE RESIDENTIAL INCOME TRUST, INC.
CONSOLIDATED STATEMENTS  OF OPERATIONS (UNAUDITED)


<TABLE>
<CAPTION>


                                                                     Three Months Ended
                                                               March 31,           March 31,
                                                                 1999                1998
                                                             ---------------------------------
<S>                                                               <C>                 <C>
REVENUE:
           Rental income                                     $ 11,416,283          $  4,928,751

EXPENSES:
                     Property and maintenance                   2,812,974             1,236,828
                     Taxes and insurance                        1,680,693               738,151
                     Property management                          622,695               257,038
                     General and administrative                   187,278               162,873
                     Amortization  expense                        126,544                 8,484
                     Depreciation of rental property            2,330,543               889,545
                                                             ------------          ------------


                               Total expenses                   7,760,727             3,292,919
                                                             ------------          ------------

Income before interest  income (expense)                        3,655,556             1,635,832

   Interest income                                                388,121               336,387
   Interest expense                                              (402,995)              (12,501)
                                                             ------------          ------------

Net income                                                   $  3,640,682          $  1,959,718
                                                             ============          ============

Basic and diluted earnings per common share                  $       0.12          $       0.14
                                                             ============          ============

Distributions per common share                               $       0.21          $       0.20
                                                             ============          ============

</TABLE>

See accompanying notes to consolidated financial statements.


<PAGE>

APPLE RESIDENTIAL INCOME TRUST, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED)

<TABLE>
<CAPTION>


                                               Common Stock            Convertible Class B Stock
                                       ---------------------------------------------------------       Net Income         Total
                                         Number                         Number                          Less Than     Shareholders'
                                        of Shares         Amount       of Shares       Amount         Distributions       Equity
                                       --------------------------------------------------------------------------------------------
<S>                                    <C>            <C>              <C>            <C>            <C>             <C>
Balance at December 31, 1998           28,331,274     $ 251,890,553     200,000       $ 20,000       $ (2,710,932)    $ 249,199,621

Net proceeds from the sale of shares    1,849,175        16,560,184       -              -                   -           16,560,184
Net income                                   -                -           -              -              3,640,682         3,640,682
Cash distributions declared to
     shareholders ($.207 per share)          -                -           -              -             (5,432,882)       (5,432,882)
Shares issued through Additional
     Share Option                         314,738         2,832,639       -              -                   -            2,832,639
                                       --------------------------------------------------------------------------------------------
                                       30,495,187     $ 271,283,376     200,000       $ 20,000       $ (4,503,132)    $ 266,800,244
                                       ============================================================================================

</TABLE>


See accompanying notes to consolidated financial statements.

<PAGE>

APPLE RESIDENTIAL INCOME TRUST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

<TABLE>
<CAPTION>


                                                                                          Three Months Ended
                                                                                    March 31,             March 31,
                                                                                      1999                  1998
                                                                               ------------------------------------
<S>                                                                                   <C>                  <C>
Cash flow from operating activities:

   Net income                                                                    $  3,640,682          $  1,959,718
   Adjustments to reconcile net income to net cash
   provided by operating activities
     Depreciation and amortization                                                  2,439,239               898,029
     Amortization of deferred financing costs                                           2,000                12,501
     Amortization of mortgage notes payable premium                                   (52,230)                  -
     Changes in operating assets and liabilities:
       Prepaid expenses                                                               141,453                51,797
       Other assets                                                                 1,967,710              (351,234)
       Accounts payable                                                               880,335              (180,386)
       Accrued expenses                                                            (2,942,881)              (69,296)
       Rent received in advance                                                       (99,429)              (46,149)
       Tenant security deposits                                                       (39,375)                 (962)
                                                                                 ------------          ------------
                              Net cash provided by  operating activities            5,937,504             2,274,018

Cash flow from investing activities:

   Acquisitions of rental property, net of liabilities assumed                     (8,758,501)          (25,160,351)
   Capital improvements                                                            (5,438,309)           (1,595,174)
                                                                                 ------------          ------------
                              Net cash used in investing activities               (14,196,810)          (26,755,525)

Cash flow from financing activities:

   Repayments of mortgage notes payable                                               (68,087)                  -
   Net proceeds from issuance of shares                                            19,392,823            38,958,096
   Cash distributions paid to shareholders                                         (5,432,882)           (2,038,051)
                                                                                 ------------          ------------

                              Net cash provided by financing activities            13,891,854            36,920,045

                              Increase  in cash and cash equivalents                5,632,548            12,438,538

Cash and cash equivalents, beginning of year                                       40,073,198            24,162,572
                                                                                 ------------          ------------
Cash and cash equivalents, end of period                                         $ 45,705,746          $ 36,601,110
                                                                                 ============          ============

</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>

                       APPLE RESIDENTIAL INCOME TRUST, INC
                   Notes to Consolidated Financial Statements (Unaudited)
                                March 31, 1999

(1)  General Information and Summary of Significant Accounting Policies

      Basis of Presentation

      The  accompanying  unaudited  financial  statements  have been prepared in
      accordance  with  the  instructions  for  Form  10-Q  and  Article  10  of
      Regulation  S-X.  Accordingly,  they do not include all of the information
      required by generally accepted  accounting  principles.  In the opinion of
      management,  all  adjustments  (consisting of normal  recurring  accruals)
      considered necessary for a fair presentation have been included. Operating
      results for the three  months  ended  March 31,  1999 are not  necessarily
      indicative of the results that may be expected for the year ended December
      31, 1999.  These financial  statements  should be read in conjunction with
      the Company's December 31,1998 Annual Report on Form 10-K.

      In April 1998,  the American  Institute of  Certified  Public  Accountants
      issued Statement of Position (SOP) 98-5,  "Reporting the Costs of Start-up
      Activities".  The SOP is  effective  beginning  on January  1,  1999,  and
      requires  that  start-up  costs  capitalized  prior to  January 1, 1999 be
      written off and any future start-up costs to be expensed as incurred.  The
      unamortized balance of organization costs of $126,544 was written off as a
      cumulative  effect of an accounting  change as of January 1, 1999,  and is
      included  amortization  expense.  This write off did not  change  reported
      earnings per common share amounts.

      Certain  previously  reported  amounts have been  reclassified to conform
      with the current financial statement presentation.

      The  Company  did not have any  items of  comprehensive  income  requiring
      separate reporting and disclosure for the periods presented.

      On March 30, 1999, the Company's Board of Directors approved a merger with
      Cornerstone  Realty Income Trust, Inc.  ("Cornerstone")  subject to, among
      other requirements, an affirmative vote of the Company's shareholders. The
      transaction is valued at  approximately  $310 million.  Under the terms of
      the merger agreement, the Company's shareholder will receive .4 of a share
      of  Cornerstone's  $25 Series A convertible   preferred  stock  for   each
      share of the  Company's  common stock.  The Series A Preferred  Stock will
      have a first year dividend yield of 8.5%, which will increase to 9% in the
      second  year and 9.5% in the  third  year and  thereafter.  Each  share of
      Series A Preferred  Stock carries a $25 per share  liquidation  preference
      and is convertible into 1.5823 shares of Cornerstone's common stock, which
      reflects a  conversion  price of $15.80 for  Cornerstone's  common  stock.
      After five years,  the Series A Preferred  Stock will be redeemable at $25
      per share plus any accrued  dividends,  at the option of  Cornerstone,  in
      whole or in part,  for cash or stock,  subject to certain  conditions.  In
      addition,  Cornerstone  will  assume  approximately  $32.1  million of the
      Company's debt with an average interest rate of approximately  6.475%. The
      transaction has been structured as a tax-free  reorganization  and will be
      accounted for under the purchase method of accounting.

<PAGE>


(2)   Investment in Rental Property
      The Company  purchased  two  properties  located in the Dallas/ Fort Worth
      area of Texas and San Antonio,  Texas for $15,167,000.  The following is a
      summary of rental  property  acquired  during the three months ended March
      31, 1999:

                                   Initial                      Date
      Description             Acquisition Cost              Acquisition
      -----------             ----------------              -----------

      Sierra Ridge                  $ 5,817,000             January, 1999
      Grayson Square                  9,350,000             February, 1999

(3)  Notes Payable

      The  Company  assumed  one  mortgage  loan with a value of  $6,992,795  in
      connection  with the acquisition of Grayson Square  Apartments  during the
      first  quarter of 1999.  As of March 31,  1999,  the  Company  had assumed
      $31,151,804 in mortgage loans in connection  with the  acquisitions of the
      six properties.  The mortgage notes assumed in 1998  (principal  amount of
      $24,159,019)  were recorded at a fair value of  $25,418,421 at the date of
      assumption. The difference between the fair value and principal balance is
      being amortized as an adjustment to interest  expense over the term of the
      respective  notes.  At March 31, 1999,  the balance of the mortgage  notes
      payable was  $32,038,329  (inclusive of $1,102,713  unamortized  premium).
      Mortgage  notes  payable  are  due  in  monthly  installments,   including
      principal and interest.

        The aggregate  maturities of mortgage notes payable  subsequent to March
        31, 1999 are as follows:


               Year              Amount
               ----              ------

               1999             456,120
               2000             658,434
               2001             691,472
               2002             726,976
               2003           7,953,572
               Thereafter    21,551,755
                             ----------
                             32,038,329
                             ----------

(4)  Shareholders' Equity

      During March 1999, the Company completed its "best efforts" offering.  The
      Company  received gross proceeds of $21,639,165 from the sale of 2,163,913
      shares,  including shares sold through the reinvestment of  distributions,
      during the first  quarter  ended March 31,  1999.  The net proceeds of the
      offering, after deducting selling commissions and other offering expenses,
      were $19,392,823.

(5)   Related Parties

      Prior to March 1, 1997, the Company had contracted with Apple  Residential
      Management Group,  Inc. (the "Management  Company") to manage the acquired
      properties, Apple Residential Advisors, Inc. (the "Advisor") to advise and
      provide the Company with day to day  management,  and Apple Realty  Group,
      Inc. to acquire and  dispose of real  estate  assets held by the  Company.
      Through  March  1,  1997,  the  Company  paid  the  Management  Company  a
      management fee equal to 5% of rental income plus  reimbursement of certain
      expenses  in the amount of  $52,375.  The  Company  paid the Advisor a fee
      equal to .25% of total contributions received by the Company in the amount
      of $14,894.  The Company paid Apple Realty Group,  Inc. a fee of 2% of the
      purchase price of the acquired properties in the amount of $624,382.

<PAGE>


      Effective  March 1, 1997,  with the approval of the Company,  Cornerstone,
      for which Glade M. Knight  (Chief  Executive  Officer and  Chairman of the
      Board  of the  Company)  also  serves  as  Chief  Executive  Officers  and
      Chairman,  entered into subcontract agreements with the Management Company
      and  Advisor  whereby  Cornerstone  will  provide  advisory  and  property
      management  services  to the  Company  in  exchange  for fees and  expense
      reimbursement  per the same terms described above. On January 1, 1999, the
      subcontract  arrangements were terminated and the Company  contracted with
      Cornerstone directly to provide management and advisory services.  For the
      three months ended March 31, 1999 and 1998,  the Company paid  Cornerstone
      $747,803 and $351,534, respectively, under the agreement.

      During 1997, with the consent of the Company, Cornerstone acquired all the
      assets of Apple Realty Group,  Inc. The sole material asset of the company
      was the  acquisition/disposition  agreement with the Company.  Cornerstone
      paid $350,000 in cash and issued  150,000 common shares (valued at $11 per
      common share for a total of  $1,650,000) in exchange for the assignment of
      the  rights  to  the  acquisition/disposition  agreement.  Cornerstone  is
      entitled, under the terms of the  acquisition/disposition  agreement, to a
      real  commission  equal to 2% of the gross purchase price of the Company's
      properties.  For the  three  months  ended  March 31,  1999 and 1998,  the
      Company   paid   Cornerstone    approximately   $313,484   and   $490,500,
      respectively, under the agreement.

      During the first  quarter  of 1997,  the  Company  granted  Cornerstone  a
      continuing right to acquire up to 9.8% of the common shares of the Company
      at  the  market  price,  net  of  selling  commissions.   In  April  1997,
      Cornerstone purchased 417,778 common shares of the Company at $9 per share
      for approximately  $3.76 million.  Cornerstone owns  approximately 1.4% of
      the total common shares of the Company outstanding as of March 31, 1999.


<PAGE>


(5) Earnings Per Share

            The following  table sets forth the computation of basic and diluted
        earnings per share in accordance with FAS 128:

<TABLE>
<CAPTION>

                                                        Three Months           Three Months
                                                           Ended                  Ended
                                                      March 31, 1999         March 31, 1998
                                                      --------------         ---------------
<S>                                                     <C>                     <C>
Numerator:
    Net income                                       $  3,640,682               $  1,959,718
        Numerator for basic and diluted earnings        3,640,682                  1,959,718
Denominator:
                  Denominator for basic
                  earnings per share-weighted-
                  average shares                       29,243,930                 13,882,117
Effect of dilutive securities:
       Stock options                                         -                         -
---------------------------------------------------------------------------------------------
Denominator for diluted earnings
        per share-adjusted weighted-
        average shares and assumed
        conversions

                                                       29,243,930                  13,882,117
---------------------------------------------------------------------------------------------
Basic and diluted earnings per
        common share                                 $       0.12               $        0.14
---------------------------------------------------------------------------------------------

</TABLE>



(6)  Subsequent Events

      During  April  1999,   the  Company   distributed   to  its   shareholders
      approximately $5,843,616 (20.7 cents per share).

      During April 1999,  the Company  purchased  Hunter's Creek  Apartments,  a
      240-unit apartment community for $7,750,000.

      On April 15, 1999,  the Board of Directors of the Company and  Cornerstone
      agreed to modify  Cornerstone's  right of first  refusal to  purchase  the
      Company's common shares or business and the service  contracts between the
      Company and Cornerstone to allow for termination of such agreements in the
      event of a change of control of Cornerstone. The Company has agreed to pay
      Cornerstone $1.5 million for the contract modifications.  The Company will
      expense the payment made to obtain these contract modifications

<PAGE>

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

      This  report  contains  forward-looking  statements  within the meaning of
      Section 27A of the Securities Act of 1993, as amended,  and Section 21E of
      the  Securities  Exchange Act of 1934,  as amended.  Such  forward-looking
      statements include, without limitation,  statements concerning anticipated
      improvements in financial  operations from completed and planned  property
      renovations.   Such   statements   involve   known  and   unknown   risks,
      uncertainties,  and other  factors  which may  cause the  actual  results,
      performance,  or  achievements  of the Company to be materially  different
      from the  results  of  operations  or plans  expressed  or implied by such
      forward-looking  statements.  Such factors  include,  among other  things,
      unanticipated adverse business  developments  affecting the Company or the
      properties  or  Apple,  as the case may be,  adverse  changes  in the real
      estate markets and general and local economies and business conditions and
      Year 2000  issues.  Although  the Company  believes  that the  assumptions
      underlying the forward-looking statements contained herein are reasonable,
      any of the assumptions could be inaccurate,  and therefore there can be no
      assurance  that such  statements  included in this  quarterly  report will
      prove to be accurate. In light of the significant  uncertainties  inherent
      in the  forward-looking  statements included herein, the inclusion of such
      information  should not be regarded as a representation  by the Company or
      any  other  person  that  the  results  or  conditions  described  in such
      statements or the objectives and plans of the Company will be achieved.

       On March 30, 1999,  the  Company's  Board of Directors  approved a merger
       with  Cornerstone  subject to, among other  requirements,  an affirmative
       vote  of  the  Company's  shareholders.  The  transaction  is  valued  at
       approximately $310 million. Under the terms of the merger agreement,  the
       Company's shareholder will receive .4 of a share of the Cornerstone's $25
       Series A  convertible  preferred  stock for each  share of the  Company's
       common  stock.  The  Series A  Preferred  Stock  will  have a first  year
       dividend yield of 8.5%,  which will increase to 9% in the second year and
       9.5% in the third year and  thereafter.  Each share of Series A Preferred
       Stock carries a $25 per share  liquidation  preference and is convertible
       into 1.5823 shares of the  Cornerstone's  common stock,  which reflects a
       conversion  price of $15.80 for  Cornerstone's  common stock.  After five
       years,  the Series A Preferred  Stock will be redeemable at $25 per share
       plus any accrued dividends, at the option of the Cornerstone, in whole or
       in part, for cash or stock,  subject to certain conditions.  In addition,
       the Cornerstone will assume  approximately $32.1 million of the Company's
       debt  with  an  average  interest  rate  of  approximately   6.475%.  The
       transaction has been structured as a tax-free  reorganization and will be
       accounted for under the purchase method of accounting.


Results of Operations

      Income and occupancy
      The results of the Company's  property  operations  for three months ended
      March  31, 1999  include  the  results of operations  from the  properties
      acquired before 1999 and from the 2 properties acquired in 1999 from their
      respective  acquisition  dates.  The increased rental income and operating
      expenses  from the  first  quarter  1999 over the  first  quarter  1998 is
      primarily due to a full quarter of operation of the 1998  acquisitions  as
      well as the incremental effect of the 1999 acquisitions.

      Substantially  all of the Company's income is from the rental operation of
      apartment communities.  Rental income for the first three months increased
      132% to  $11,416,283  in 1999 from  $4,928,751  in 1998 due to the factors
      stated above.

      Overall  economic  occupancy for the Company's  properties was 90% and 92%
      for the three months ended March 31, 1999 and 1998, respectively. Overall,
      the average  rental rates for the portfolio was $587 and $588 per month at
      March 31, 1999 and 1998, respectively.


<PAGE>

      The  Company's  other source of income is the  investment  of its cash and
      cash reserves.  Interest  income for the three months ended March 31, 1999
      and 1998 was $388,121 and $336,387,  respectively. The increase during the
      three  months  ended  March 31,  1999 is due to the  Company's  investment
      balance held pending  acquisitions.  It is anticipated the interest income
      will decrease with future acquisitions.

      Expenses
      Total expenses for the first three months  increased 136% to $7,760,727 in
      1999 from  $3,292,919 in 1998. The increase is due largely to the increase
      in the number of  apartments.  The  operating  expense ratio (the ratio of
      rental expenses,  excluding general and  administrative,  amortization and
      depreciation expense, to rental income) was 45% for the three months ended
      March 31, 1999 and 1998, respectively.

      General and  administrative  expenses  totaled 1.6% of total rental income
      for the three  months ended March 31, 1999 and 3.3% for the same period in
      1998.  This percentage is expected to decrease as the Company's asset base
      and rental  income  grow.  These  expenses  represent  the  administrative
      expenses  of the  Company  as  distinguished  from the  operations  of the
      Company's properties.

      Depreciation  expense for the three months has  increased to $2,330,543 in
      1999 from $889,545 in 1998. The increase is directly  attributable  to the
      acquisition of additional apartment communities in 1999 and 1998.

Liquidity and Capital Resources

      There was a significant change in the Company's liquidity during the three
      months ended March 31, 1999,  as the Company  continued to raise equity to
      acquire  properties.  During the three months  ended March 31,  1999,  the
      Company  closed the sale to  investors of  2,163,913  shares  representing
      gross  proceeds  to the  Company of  $21,639,130  and net  proceeds  after
      payment of brokerage fees and other offering-related costs of $19,392,823.

      Using  proceeds from the sale of common shares,  the Company  acquired 430
      apartment units in two residential rental communities during first quarter
      of 1999. The following is information on these two acquisitions:

      Property Name       Date Acquired  Units  Purchase Price     Location
      -------------       -------------  -----  --------------     --------

      Sierra Ridge        January 1999    230    $ 5,817,000   San Antonio, TX
      Grayson Square      February 1999   200      9,350,000     Grapevine, TX

      On April 9, 1999 the Company acquired Hunter's Creek, a 240-unit apartment
      complex for $7,750,000.

      Notes payable
      The  Company  assumed  one  mortgage  loan with a value of  $6,992,795  in
      connection  with the acquisition of Grayson Square  Apartments  during the
      first quarter of 1999.  As of March 31, 1999,  the Company had assumed $31
      million  in  mortgage  loans in  connection  with the  acquisition  of six
      properties.  The total of the  mortgage  loans at March  31,  1999 was $32
      million which includes  unamortized premium of $1.1 million.

<PAGE>


      Cash and cash equivalents
      Cash and cash equivalents  totaled  $45,705,746 at March 31, 1999.  During
      the first  quarter in 1999,  the  Company  distributed  $5,432,882  to its
      shareholders,  of which  $2,201,954  was  reinvested in additional  shares
      through the  Additional  Share  Option.  The  reinvested  funds netted the
      Company  $2,832,639 after payment of brokerage fees.  During this quarter,
      the Company  distributed  $83,550 to  Cornerstone  on shares that had been
      purchased by Cornerstone.

      Capital requirements
      The  Company has an ongoing  capital  expenditure  commitment  to fund its
      renovation  program for recently  acquired  properties.  In addition,  the
      Company is always assessing potential  acquisitions and intends to acquire
      additional  properties  during  1999.  As of April 20,  1998,  no material
      definitive  commitments existed for the purchase of additional properties.
      The potential  sources to fund the improvements  and acquisitions  include
      additional equity and cash reserves.

      The  Company  capitalized  $5.4  million of  improvements  to its  various
      properties  during the first quarter of 1999. It is anticipated  that some
      $10 million in additional  capital  improvements  will be completed during
      the next year on the current  portfolio,  which are  expected to be funded
      through cash reserves and dividend reinvestment.

      The  Company  has  short-term  cash  flow  needs in order to  conduct  the
      operation  of  its  properties.  The  rental  income  generated  from  the
      properties  supplies  sufficient  cash to provide for the payment of these
      operating expenses and distributions.

      During March 1999,  the Company  completed  its "best  efforts"  offering.
      Capital  resources  are  expected to grow with the future  offering of its
      shares and the cash flow from operations.  Approximately  52% of all first
      quarter 1999  distributions,  $2,832,639,  were  reinvested  in additional
      common shares. In general,  the Company's  liquidity and capital resources
      are expected to be adequate to meet its cash requirements in 1999.

      Impact of Year 2000
      The year 2000 issue is the result of computer programs being written using
      two digits  rather  than four to define the  applicable  year.  Any of the
      Company's computer programs or hardware that have date-sensitive  software
      or embedded  chips may recognize a date using "00" as the year 1900 rather
      than  the  year  2000.   This  could   result  in  a  system   failure  or
      miscalculations causing disruptions of operations,  including, among other
      things, a temporary inability to process  transactions,  send invoices, or
      engage in similar normal business activities.

      There  have  been no  significant  changes  to the Year  2000  disclosures
      included in the 1998 Form 10-K.

      The Company's external management company,  which provides all significant
      computer  systems,  believes it is devoting  the  resources  necessary  to
      achieve year 2000 readiness in a timely manner.


<PAGE>


 Part II, Item 2.  Changes in Securities and Use of Proceeds

 The following table set forth  information  concerning the Offering and the use
of proceeds from the Offering as of March 31, 1999:

<TABLE>
<CAPTION>
<S>                                 <C>                                     <C>
      Common Shares Registered:
            1,666,666.67         Common Shares $ 9 per Common Shares    $ 15,000,000
           28,500,000.00         Common Shares $10 per Common Shares    $285,000,000
           -------------

Totals:    30,166,666.67         Common Shares
           -------------

      Common Shares Sold:
            1,666,666.67         Common Shares $ 9 per Common Share     $ 15,000,000
           28,410,732.33         Common Shares $10 per Common Share     $284,107,323
           -------------                                                ------------
Totals:    30,077,399.00         Common Shares                          $299,107,323
           -------------


      Expenses of Issuance and Distribution of Common Shares

            1.    Underwriting discounts and commissions                $ 29,910,732
            2.    Expenses of underwriters                              $          -
            3.    Direct or indirect payments to directors or officers
                  of the Company or their associates, to ten percent
                  shareholders, or to affiliates of the Company         $          -
            4.    Fees and expenses of third parties                    $  1,673,201
                                                                        ------------
            Total Expenses of Issuance and Distribution of
                 Common Shares                                          $267,523,390

      Net Proceeds to the Company

            1.    Purchase of real estate (including repayment of
                  indebtedness incurred to purchase real estate)        $196,622,916
            2.    Interest on indebtedness                              $  1,599,254
            3.    Working capital                                       $ 59,773,035
            4.    Fees to the following (all affiliates of officers of
                  the Company):
                  a.  Apple Advisors, Inc.                              $     14,894
                  b.  Apple Realty Group, Inc.                          $    624,382
                  c.  Cornerstone Realty Income Trust, Inc.             $  8,888,909

            5.   Fees and expenses of third parties:                    $          -
                  a.  Legal                                             $          -
                  b.  Accounting                                        $          -

            6. Other (specify________)                                  $          -
                                                                        ------------
            Total of Application of Net Proceeds to the
            Company                                                     $267,523,390

</TABLE>

<PAGE>

                Part II, Item 6.  Exhibits and Reports on Form 8-K

  (a) Exhibits - Exhibit 27- Financial Data Schedule

  (b) Reports on Form 8-K

      The  following  table  lists the  reports on Form 8-K filed by the Company
  during the quarter ended March 31, 1999,  the items reported and the financial
  statements included in such filings.


Type and Date of Reports        Items Reported        Financial Statements Filed
------------------------        --------------         -------------------------

Form 8-K dated                       2                          None
January 20, 1999

Form 8-K dated                       2                          None
February 6, 1999


Form 8-K/A (date of                  7                 Historical  Statement  of
                                                       Income     and     Direct
Original Report:                                       Operating   Expenses   of
October 28, 1998)                                      Burney  Oaks   Apartments
                                                       and    Cutter's     Point
                                                       (formerly      Brandywine
                                                       Park)  for   the   twelve
                                                       months  ended   September
                                                       30, 1998

Form 8-K/A (date of                  7                 Historical  Statement  of
Original Report:                                       Income     and     Direct
January 5, 1999)                                       Operating   Expenses   of
                                                       Sierra  Ridge  Apartments
                                                       for  the  twelve   months
                                                       ended     December    15,
                                                       1998

<PAGE>

                                   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.

                      Apple Residential Income Trust, Inc.
                      ------------------------------------
                                  (Registrant)



DATE:   5-7-98                            BY: /s/ Glade M. Knight
                                              ----------------------------------
                                              Glade M. Knight
                                              President

                                          BY: /s/ Stanley J. Olander
                                              ----------------------------------
                                              Stanley J. Olander
                                              Treasurer