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 period ended September 30, 2000

                                       OR

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
         SECURITIES EXCHANGE ACT OF 1934

           For the transition period from              to
                                          ----------    ----------

                         Commission File Number 1-12875

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

              VIRGINIA                              54-1589139
    (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  November  1, 2000,  there were  outstanding  34,893,025  shares of
common stock, no par value, of the registrant.

<PAGE>


                      CORNERSTONE REALTY INCOME TRUST, INC.
                                    FORM 10-Q

                                      INDEX
<TABLE>
<CAPTION>

                                                                                    Page Number
                                                                                    ------------
PART I.           FINANCIAL INFORMATION
<S>                                                                                       <C>
         Item 1.      Financial Statements (Unaudited)

                           Consolidated Balance Sheets - September 30, 2000               3
                           and December 31, 1999

                           Consolidated Statements of Operations -                        4
                           Three months ended September 30, 2000
                           and  September 30, 1999
                           Nine months ended September 30, 2000
                           and September 30, 1999

                           Consolidated Statement of Shareholders' Equity-                5
                           Nine months ended September 30, 2000

                           Consolidated Statements of Cash Flows -                        6
                           Nine months ended September 30, 2000
                           and September 30, 1999

                           Notes to Consolidated Financial Statements                     7

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

         Item 3.      Quantitative and Qualitative Disclosures about                      15
                      Market Risk

PART II.      OTHER INFORMATION:

         Item 1.      Legal Proceedings (not applicable).

         Item 2.      Changes in Securities (not applicable).

         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
                                                                                          16
</TABLE>


                                       2
<PAGE>

CORNERSTONE REALTY INCOME TRUST, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>


                                                                                      September 30,             December 31,
                                                                                           2000                     1999
                                                                                     -----------------        ------------------
<S>                                                                                <C>                       <C>
ASSETS

Investment in rental property:
Land                                                                                     $127,265,671             $ 136,326,140
Buildings and property improvements                                                       714,101,712               760,712,650
Furniture and fixtures                                                                     21,491,027                22,089,948
                                                                                     -----------------        ------------------
                                                                                          862,858,410               919,128,738
Less accumulated depreciation                                                             (82,367,947)              (77,538,085)
                                                                                     -----------------        ------------------
                                                                                          780,490,463               841,590,653

Cash and cash equivalents                                                                   1,666,061                16,268,336
Prepaid expenses                                                                            1,326,707                 2,803,488
Other assets                                                                               10,555,620                 8,602,399
                                                                                     -----------------        ------------------

                Total Assets                                                             $794,038,851              $869,264,876
                                                                                     =================        ==================


LIABILITIES and SHAREHOLDERS' EQUITY

Liabilities
Notes payable-unsecured                                                                  $131,997,000             $ 157,500,000
Notes payable-secured                                                                     104,591,109               105,045,682
Distributions payable                                                                       7,109,749                 6,779,012
Accounts payable                                                                            1,224,424                11,670,338
Accrued expenses                                                                            9,269,030                11,387,531
Rents received in advance                                                                     279,478                   613,214
Tenant security deposits                                                                    1,432,188                 1,903,857
                                                                                     -----------------        ------------------

                Total Liabilities                                                         255,902,978               294,899,634

Shareholders' equity
Preferred stock, no par value,  authorized  25,000,000  shares;  $25 liquidation
   preference, Series A Cumulative Convertible Redeemable;
   issued and outstanding 12,633,866 shares and12,650,047 shares, respectively            265,002,055               263,656,281
Common stock, no par value, authorized 100,000,000
   shares; issued and outstanding 35,516,525 shares
   and 38,712,037 shares, respectively                                                    348,970,276               383,969,899
Deferred compensation                                                                         (54,902)                  (72,976)
Distributions greater than net income                                                     (75,781,556)              (73,187,962)
                                                                                     -----------------        ------------------

                Total Shareholders' Equity                                                538,135,873               574,365,242
                                                                                     -----------------        ------------------

                Total Liabilities and Shareholders' Equity                               $794,038,851              $869,264,876
                                                                                     =================        ==================

</TABLE>

See accompanying notes to consolidated financial statements.

                                        3
<PAGE>

CORNERSTONE REALTY INCOME TRUST, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

<TABLE>
<CAPTION>

                                                                            Three Months Ended              Nine Months Ended
                                                                      September 30,   September 30,   September 30,    September 30,
                                                                          2000           1999             2000             1999
                                                                      ----------------------------    -----------------------------
<S>                                                                   <C>             <C>             <C>              <C>
REVENUE:

           Rental  and other property income                          $ 36,943,357    $ 34,887,760    $ 108,848,601    $ 82,309,910
           Other income                                                         --         212,837               --       3,954,604

EXPENSES:
           Property and maintenance                                      9,199,882       9,640,510       26,578,662      22,495,898
           Taxes and insurance                                           4,204,697       3,415,101       12,021,651       7,291,159
           Property management                                             666,850         627,444        2,120,561       1,722,673
           General and administrative                                      373,233         538,307        1,380,452       2,667,834
           Amortization expense                                                 --              --               --          55,657
           Other depreciation                                                5,741           5,740           17,223          17,228
           Depreciation of rental property                               9,143,730       8,141,281       26,463,500      19,851,494
           Other                                                            10,050         151,763           30,149         752,414
                                                                -------------------------------------------------------------------

                                   Total expenses                       23,604,183      22,520,146       68,612,198      54,854,357
                                                                -------------------------------------------------------------------

Income before interest and dividend income (expense)                    13,339,174      12,580,451       40,236,403      31,410,157

           Interest and dividend income                                     36,787         109,904          432,772         323,203
           Interest expense                                             (4,434,068)     (3,943,225)     (13,161,497)    (10,876,360)
                                                                -------------------------------------------------------------------

Income before gains (losses) on sales of investments and
   minority interest in operating partnership                            8,941,893       8,747,130       27,507,678      20,857,000

   Gains (losses) on sales of investments                                 (248,497)             --       23,157,736              --
                                                                -------------------------------------------------------------------

Income before minority interest in operating partnership                 8,693,396       8,747,130       50,665,414      20,857,000

  Minority Interest of unitholders in operating partnership                     --          15,008               --          73,907
                                                                -------------------------------------------------------------------

Net income                                                            $  8,693,396    $  8,732,122    $  50,665,414    $ 20,783,093

Distributions to preferred shareholders                                 (7,463,762)     (4,923,280)     (22,879,732)     (4,923,280)
                                                                -------------------------------------------------------------------

Net income available to common shareholders                           $  1,229,634    $  3,808,842    $  27,785,682    $ 15,859,813

Net income per share-basic and diluted                                $       0.03    $       0.10    $        0.76    $       0.40
                                                                ===================================================================

Distributions per common share                                        $       0.28    $       0.27    $        0.83    $       0.80
                                                                ===================================================================


</TABLE>
See accompanying notes to consolidated financial statements.

                                        4
<PAGE>
CORNERSTONE REALTY INCOME TRUST, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED)
<TABLE>
<CAPTION>


                                                                        Common Stock                 Preferred Stock
                                                                  Number                          Number of
                                                                 of Shares         Amount          Shares          Amount
                                                                 ------------------------------------------------------------

<S>                                                              <C>           <C>               <C>           <C>
Balance at December 31, 1999                                     38,712,037    $ 383,969,899     12,650,047    $ 263,656,281

Net income                                                               --               --             --               --
Cash distributions declared to shareholders ($.83  per share)            --               --             --               --
Distributions for Series A Convertible Preferred Stock                   --               --             --               --
Imputed distributions on Series A Convertible Preferred Stock            --               --             --        1,750,299
Exercise of stock options                                             2,400           25,625
Purchase of common stock                                         (3,716,280)     (40,175,963)            --               --
Preferred stock converted to common stock                            25,603          404,525        (16,181)        (404,525)
Amortization of deferred compensation                                    --               --             --               --
Shares issued through dividend reinvestment plan                    492,765        4,746,190             --               --
                                                                 ------------------------------------------------------------

Balance at September 30, 2000                                    35,516,525    $ 348,970,276     12,633,866    $ 265,002,055
                                                                 ============================================================


<CAPTION>

                                                                                Distributions
                                                                                    Greater         Total
                                                                     Deferred         than      Shareholders'
                                                                   Compensation    Net Income       Equity
                                                                  --------------------------------------------
<S>                                                              <C>           <C>               <C>
Balance at December 31, 1999                                         ($72,976)   ($73,187,962)   $ 574,365,242

Net income                                                                 --      50,665,415       50,665,415
Cash distributions declared to shareholders ($.83  per share)              --     (30,379,277)     (30,379,277)
Distributions for Series A Convertible Preferred Stock                     --     (21,129,433)     (21,129,433)
Imputed distributions on Series A Convertible Preferred Stock              --      (1,750,299)              --
Exercise of stock options                                                                               25,625
Purchase of common stock                                                   --              --      (40,175,963)
Preferred stock converted to common stock                                  --              --               --
Amortization of deferred compensation                                  18,074              --           18,074
Shares issued through dividend reinvestment plan                           --              --        4,746,190
                                                                  --------------------------------------------

Balance at September 30, 2000                                        ($54,902)   ($75,781,556)   $ 538,135,873
                                                                  ============================================
</TABLE>

See accompanying notes to consolidated financial statements.

                                        5
<PAGE>
<TABLE>
<CAPTION>

CORNERSTONE REALTY INCOME TRUST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

                                                                                                         Nine Months Ended
                                                                                                September 30,          September 30,
                                                                                                    2000                    1999
                                                                                                -------------           ------------
<S>                                                                                             <C>                  <C>
Cash flow from operating activities:

   Net income                                                                                    $  50,665,415        $  20,783,093
   Adjustments to reconcile net income to net cash
   provided by operating activities
     Gain on sale of rental property                                                               (23,157,736)                  --
     Depreciation and amortization                                                                  26,480,723           19,924,379
     Minority interest of unitholders in operating partnership                                              --               73,907
     Amortization of deferred compensation                                                              18,074               29,070
     Amortization of Apple Realty Group contract purchase                                                   --              241,438
     Amortization of deferred financing costs                                                          342,983              172,172
     Amortization of mortgage notes payable premium                                                   (156,690)             (34,820)
     Changes in operating assets and liabilities:
         Operating assets                                                                             (830,905)          (2,323,837)
         Operating liabilities                                                                     (13,369,820)            (889,372)
                                                                                                --------------       ---------------
                              Net cash provided by  operating activities                            39,992,044           37,976,030

Cash flow from investing activities:

   Acquistions of rental property                                                                  (45,073,106)            (868,173)
   Proceeds from the sale of land                                                                           --              764,668
   Net proceeds from the sale of rental property                                                   127,933,674                   --
   Capital improvements                                                                            (25,071,883)         (17,890,876)
                                                                                                --------------       ---------------
                              Net cash provided (used in) investing activities                      57,788,685          (17,994,381)

Cash flow from financing activities:

   Proceeds from short-term borrowings                                                             125,351,000           52,467,001
   Repayments of short-term borrowings                                                            (150,854,000)        (104,360,000)
   Proceeds from secured notes payable                                                                      --           73,500,000
   Repayment of mortgage notes                                                                        (297,883)             (70,610)
   Net proceeds from issuance of common shares                                                       4,771,815            7,098,444
   Purchase of common stock                                                                        (40,175,963)                  --
   Cash distributions to operating partnership unitholders                                             (50,190)            (148,710)
   Cash distributions paid to preferred shareholders                                               (20,748,506)                  --
   Cash distributions paid to commom shareholders                                                  (30,379,277)         (31,498,747)
                                                                                                --------------       ---------------
                              Net cash used in financing activities                               (112,383,004)          (3,012,622)

                              Increase (decrease) in cash and cash equivalents                     (14,602,275)          16,969,027

Cash and cash equivalents, beginning of year                                                        16,268,336            2,590,364
                                                                                                --------------       ---------------
Cash and cash equivalents, end of period                                                         $   1,666,061        $  19,559,391
                                                                                                ==============       ===============
Supplemental information:

   Interest paid                                                                                 $  12,254,315        $  10,034,509
   Non-cash transactions associated with:
                Real estate assets acquired                                                                 --          302,204,687
                Issuance of preferred stock                                                                 --          263,038,214
                Assumption of mortgage notes                                                                --           31,847,092
                Company common stock held by Apple                                                          --            7,769,500
                Operating assets acquired                                                                   --              632,831
                Operating liabilities acquired                                                              --           10,912,991
                Other                                                                                       --            3,940,548
Accretion of preferred dividends                                                                     1,750,299              437,399
Preferred shares converted to common shares                                                            404,525                   --
</TABLE>

See accompanying notes to consolidated financial statements.

                                        6
<PAGE>


                           CORNERSTONE REALTY INCOME TRUST, INC
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                               SEPTEMBER 30, 2000


(1)  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 nine months ended  September 30, 2000 are not  necessarily
      indicative of the results that may be expected for the year ended December
      31, 2000.  These financial  statements  should be read in conjunction with
      the Company's December 31, 1999 Annual Report on Form 10-K.

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

(2)   INVESTMENT IN RENTAL PROPERTY

      Disposition of Investments
      On March 10, 2000, the Company closed the sale of 16 properties containing
      3,609  apartment for $136.5 million. The proceeds of the sale were used to
      pay down the Company's existing line of credit and fund $35 million of tax
      free exchanges.

      Acquisition
      On March 16,  2000,  the  Company  purchased  The  Enclave at the  Meadows
      Apartments, a 168- unit apartment community,  located in Asheville,  North
      Carolina for a purchase price of $8.8 million. On May 11, 2000 the Company
      purchased  Greystone Crossing  Apartments,  a 408-unit apartment community
      located in Charlotte,  North Carolina for $26.8 million.  These  purchases
      completed the tax free exchange  transaction  using proceeds from the sale
      described above.

      On September 11, 2000, the Company purchased Prestwick  Apartments at Glen
      Eagles, a 144-unit apartment  community,  located in Winston-Salem,  North
      Carolina  for a purchase  price of $9.6  million  of which $7 million  was
      financed on the unsecured line of credit.

(3)  NOTES PAYABLE

      Unsecured
      The  Company  has a  $185  million  unsecured  line  of  credit  with  the
      consortium of six banks for which the maturity  date is July 9, 2002.  The
      Company's  unsecured line of credit bears interest at one month LIBOR plus
      120 basis  points.  In  connection  with the sale of the 16  properties in
      March 2000, the Company repaid $90 million of the Company's unsecured line
      of credit. The Company had additional  borrowings under its unsecured line
      of credit of $70 million  during 2000. At September 30, 2000,  the Company
      had an unused  borrowing  capacity of $55 million under the unsecured line
      of credit. The Company is obligated to pay lenders a quarterly  commitment
      fee  equal to 0.20%  per  annum of the  unused  portion  of the  line.  At
      September 30, 2000,  total unsecured  borrowings under this line of credit
      were $130 million.

                                       7
<PAGE>

      The Company's $7.5 million general  corporate purpose line of credit bears
      interest at LIBOR plus 120 basis points. The maturity date was extended to
      January 31, 2001. At September 30, 2000, the outstanding  borrowings under
      this line of credit were $2 million.

(3)   RELATED PARTIES

      Mr. Glade M. Knight,  Chairman and Chief Executive Officer of the Company,
      also  served  as  the  Chairman  and  Chief  Executive  Officer  of  Apple
      Residential Income Trust, Inc. ("Apple").  Prior to the merger the Company
      provided advisory,  property management, and asset acquisition services to
      Apple.  The services of the Company  rendered to Apple terminated upon the
      consummation of the merger.

      The Company provided property management services and advisory services to
      Apple.  Property  management  fees were 5% of monthly gross  revenues plus
      certain  expense  reimbursements.  Advisory  fees were .1% to 25% of total
      capital raised by Apple,  depending on the financial performance of Apple.
      The amount of fees received by the Company  under the contracts  described
      above for the nine months ended September 30, 1999 was $1.9 million.

      Prior to the merger,  the Company  provided  real estate  acquisition  and
      disposal services for Apple. Under the terms of the contract,  the Company
      received a real estate commission equal to 2% of the purchase price of the
      properties  acquired.  The Company  amortized  the  purchase  price of the
      contract  through  the  date of the  merger.  For the  nine  months  ended
      September  30,  1999,  the  Company  received   $561,484  in  real  estate
      commissions  under this  contract and  amortized  $241,438 of the purchase
      price of this contract.

      The Company received  distributions on its investment in Apple through the
      date of the merger.  The Company  recognized  dividend income for the nine
      months ended September 30, 1999 of $194,580 on its investment in Apple.

      Mr.  Knight also serves as Chairman and Chief  Executive  Officer of Apple
      Suites,  Inc., a  hospitality  REIT formed during 1999.  During 2000,  the
      Company  provided  services and rented office space to Apple Suites,  Inc.
      and received payment of approximately $246,000.


                                       8
<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              Nine                                  Nine
                                     Months            Months         Three Months           Months
                                     Ended             Ended             Ended               Ended
                                    9/30/00           9/30/00           9/30/99             9/30/99
                                    -------           -------           -------             -------
<S>                                <C>               <C>               <C>                 <C>
Numerator:

  Net income available to          $1,229,634        $27,785,682       $3,808,842          $15,859,813
  common     shareholders
  Numerator for basic and
  diluted   earnings  per
  share-income  available
  to common  stockholders           1,229,634         27,785,682        3,808,842           15,859,813
  afterassumed conversion
Denominator:
  Denominator  for  basis
  earnings    per   share
  weighted-average shares          35,635,629         36,496,327        39,031,951          39,304,761
Effect of dilutive securities:
  Stock options  Series A
  Convertible   Preferred
  Stock*                               14,993             4,405                 --                  --
-------------------------------------------------------------------------------------------------------
Denominator  for  diluted
earnings pershare-adjusted
weighted-average shares
and assumed conversions            35,650,622        36,500,732        39,031,951           39,304,761
-------------------------------------------------------------------------------------------------------
Basic     and     diluted
earnings per common share         $       .03       $       .76       $       .10         $       0.40
-------------------------------------------------------------------------------------------------------
</TABLE>
*Series A Convertible Preferred Stock was not included in dilutive earnings per
          common share calculation since its effect was anti-dilutive.


(6)   SUBSEQUENT EVENTS

      On  October  18,  2000,  the  Company  entered  into a  forward  rate lock
      agreement with First Union National Bank fixing the interest rate at 7.35%
      on a $141 million  mortgage loan with regard to 15  properties  located at
      various  locations in Virginia,  North  Carolina and Texas.  The rate lock
      period ends on December 15, 2000. The Company deposited $1.41 million as a
      rate lock  deposit  with First  Union  National  Bank.  The  Company  made
      additional  deposits with First Union  National Bank amounting to $350,000
      to cover other fees and expenses  anticipated to be incurred in connection
      with the closing of the mortgage loan.

                                       9
<PAGE>

ITEM 2.       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,  and expected benefits from the Company's acquisition of Apple
     Residential  Income Trust  ("Apple").  Such  statements  involve  known and
     unknown risks, uncertainties,  and other factors which may cause the actual
     results,  performance,  or  achievement  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,  the
     possibility   that  the  merger  with  Apple  will  not  have  the  effects
     anticipated by the Company,  and adverse changes in the real estate markets
     and general and local  economies  and  business  conditions.  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.


     RESULTS OF OPERATIONS

     INCOME AND OCCUPANCY
     The Company's  property  operations for the nine months ended September 30,
     2000 include the results of operations, for the full three quarters from 71
     properties  acquired before 2000 and from the 3 properties acquired in 2000
     from  their  respective   acquisition  dates.  The  operations  of  the  16
     properties sold on March 10, 2000 are reflected  through the sale date. The
     increased  rental  income  and  operating  expenses  for the three and nine
     months ended  September  30, 2000 over the same period in 1999 is primarily
     due to the effect of the  properties  acquired  through the Apple merger in
     July 1999 offset in part by dispositions in 2000.

     Substantially  all of the Company's  income is from the rental operation of
     apartment  communities.  Rental income for the nine months ended  September
     30, 2000  increased to $108.8  million in 2000 from $82.3  million in 1999.
     For the third quarter of 2000, the Company's rental income of $36.9 million
     reflected an increase of $2 million,  or 6%, compared to the same period in
     1999.  Rental income is expected to continue to increase from the impact of
     planned  improvements,  which are being  made in an effort to  improve  the
     properties' marketability, economic occupancies, and rental rates.

                                       10
<PAGE>

     Overall economic  occupancy for the Company's  properties  averaged 93% and
     92% for the nine months ended  September  30, 2000 and 1999,  respectively.
     For the third quarter of 2000 and 1999,  economic  occupancy  averaged 93%.
     Overall  average  rental rates for the portfolio  increased 5% from $619 at
     September 30, 1999, to $650 at September 30, 2000. For the third quarter of
     1999  and  2000  average  rental  rates  increased  7% from  $624 to  $670,
     respectively.  This  increase is due to a combination  of increased  rental
     rates from new leases,  property renovation,  lower average rental rates on
     properties  disposed  of in year  2000 as  well as the  acquisition  of the
     properties  of  Apple  which  had  higher  average  rental  rates  than the
     Company's portfolio.

     COMPARABLE PROPERTY OPERATIONS
     The  Company's   "same-property"   portfolio  consists  of  65  properties,
     including 27 Apple  properties,  acquired prior to 1999,  containing 16,207
     apartment units owned by the Company or Apple since January 1, 1999. The 16
     properties sold in March 2000 have been eliminated. On a comparative basis,
     the 65  properties  acquired  prior to 1999  provided  rental and operating
     income of $93.5  million  and $58  million,  respectively  during  the nine
     months ended September 30, 2000 and $87.9 million and $53.8 million for the
     same period in 1999.  This  represents  an increase in rental and operating
     income from the nine months ended  September  30, 1999 compared to the nine
     months  ended  September  30, 2000 of 6% and 8%,  respectively.  During the
     third quarter of 2000 and 1999,  these same community  operations  provided
     rental and  operating  income of $31.8  million  and $18  million and $30.1
     million and $16.8  million,  respectively.  This  represents an increase in
     rental and operating  income from the third quarter of 1999 compared to the
     third quarter of 2000 of 6% and 7%, respectively.

     EXPENSES
     Total expenses for the first nine months  increased 25% to $68.6 million in
     2000 from $54.9  million  in 1999.  For the third  quarter  of 2000,  total
     expenses  increased to $23.6 million from $22.5 million for the same period
     in 1999.  The increase is due largely to full three quarters of expenses of
     the properties  acquired  through the acquisition of Apple on July 23, 1999
     and offset slightly by year 2000 dispositions.  The operating expense ratio
     (the ratio of operating  expenses,  excluding  depreciation,  amortization,
     general and administrative,  and other expenses,  to rental income) was 37%
     and 38% for the nine months ended September 30, 2000 and 1999, respectively
     and 38% and 39% for the three  months  ended  September  30, 2000 and 1999,
     respectively.

     Depreciation  expense  for the first  nine  months has  increased  to $26.5
     million in 2000 from $19.9  million in 1999.  For the third quarter of 2000
     and 1999 depreciation expense was $9 million and $8 million,  respectively.
     The increase is directly  attributable  to the  addition of the  properties
     acquired through the Apple merger.

     General and administrative expenses totaled $1.4 million, or 1.3% of rental
     income for the nine months ended  September 30, 2000 and $2.7  million,  or
     3.2% for the same period in 1999.  For the third  quarter of 2000 and 1999,
     general and administrative expenses totaled 1% and 1.5%,  respectively,  of
     rental income. These expenses represent the administrative  expenses of the
     Company as distinguished  from the operations of the Company's  properties.
     The decrease in percentage of rental income is attributable to economies of
     scale  realized  from the Apple  merger as the  Company  provided  advisory
     services to Apple prior to the merger.

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<PAGE>


     INTEREST AND INVESTMENT INCOME AND EXPENSE
     The  Company's  interest  income  increased to $432,772 for the nine months
     ended  September  30, 2000 from $323,203 for the nine months ended nine 30,
     1999 due to the investment of its cash and cash reserves  received from the
     sale of properties  pending tax free  exchanges  which was completed in May
     2000.  For the third  quarter  of 2000,  interest  income was  $36,787  and
     $109,904 for the same period in 1999. The Company incurred interest expense
     of $13.2 million and $10.9 million during the first nine months of 2000 and
     1999. For the third quarter of 2000,  interest expense was $4.4 million and
     $3.9  million,  respectively.  The  increase is due to debt  assumed in the
     Apple merger  coupled with the increase in interest  rates on the Company's
     unsecured line of credit.

     INCOME AND EXPENSE FROM RELATIONSHIP WITH APPLE RESIDENTIAL INCOME TRUST
     Prior  to  the  merger,   the  Company  or  affiliates   provided  property
     management,  advisory,  and real estate  brokerage  services for Apple. The
     fees received by the Company from service  contracts with Apple  terminated
     upon consummation of the merger.

     Property  management  fees  charged  to Apple  were 5% of  gross  revenues.
     Advisory fees charged to Apple were .1% to .25% of total capital  raised by
     Apple.  Real estate  commissions were generally 2% of the purchase price of
     each property  Apple  acquired.  The Company  received $1.9 million for the
     nine months ended September 30, 1999, for advisory and property  management
     services  rendered  to Apple.  For the third  quarter of 1999,  the Company
     received $212,838 for the same services.  The Company received $561,485 for
     the quarter  ended  September  30, 1999 in real  estate  commissions  under
     separate  contract and  amortized  $241,438 as of September 30, 1999 of the
     purchase  price of this  contract.  During the third  quarter of 1999,  the
     Company received no real estate commissions.

      The Company received  distributions on its investment in Apple through the
      date of the merger. The Company  recognized  dividend income for the three
      and  nine  months  ended  September  30,  1999 of  $24,550  and  $194,580,
      respectively, on its investment in Apple.

     LIQUIDITY AND CAPITAL RESOURCES

      The Company's  primary  sources of liquidity  are rental income  generated
      from the  properties,  proceeds  from  lines of  credit,  reinvestment  of
      distributions, and proceeds from secured debt.

     The Company  believes  rental  income  generated  from the  properties  and
     borrowings on its line of credit will be sufficient to meet normal property
     operating expenses,  payment of distributions,  capital  improvements,  and
     payment of mortgage  debt.  At  September  30,  2000,  the Company had $1.7
     million in cash and cash  equivalents and $55 million  available under this
     unsecured line of credit.

     During the third  quarter of 2000,  the Company  completed  the  previously
     authorized $50 million share repurchase  program and the Board of Directors
     authorized  the  repurchase of an  additional  $50 million of the Company's
     common  shares.  For the nine months ended  September 30, 2000, the Company
     repurchased  3.7 million  common  shares at an average  price of $10.81 per
     share for $40.2 million.

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<PAGE>


     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 2000. However, no material commitments existed
     on November 1, 2000 for the purchase of additional properties. The expected
     source to fund the  improvements  and  acquisitions  is from a  variety  of
     sources including equity,  excess flow from operations over  distributions,
     and debt,  provided  by its line of credit.  The Company may seek to obtain
     additional  debt  financing  to meet its  objectives.  Given the  Company's
     current debt level, the Company is confident that it will be able to obtain
     debt financing from a variety of sources, both secured and unsecured.

     The  Company  capitalized  $25  million  of  improvements  to  its  various
     properties  during the first nine months of 2000.  It is  anticipated  that
     some $20  million in  additional  capital  improvements  will be  completed
     during the next twelve months on the current portfolio.

     Capital  resources  are expected to grow with the future sale of its shares
     and from cash flow from operations. Approximately 16% of the Company's 2000
     common stock dividend distributions,  or $4.7 million,  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
     2000.

    DISPOSITION  OF  INVESTMENTS  As part of its  strategic  repositioning,  the
    Company  has  undertaken   proactive  portfolio  review  analysis  with  the
    objective  of  identifying  properties  that no  longer  meet the  Company's
    long-term investment objectives due to location,  age and other factors. The
    disposition  program  allows the  Company to reduce the age of its  existing
    portfolio and increase  shareholder  value by capturing the hidden equity in
    the  Company's  mature assets and will allow the Company to reinvest the net
    proceeds in assets with higher  growth  potential.  On March 10,  2000,  the
    Company closed the sale of 16 properties  containing  3,609  apartment units
    for $136.5 million.  The proceeds from the sale paid down $90 million of the
    Company's  existing  line  of  credit  and  repurchased  common  stock.  The
    remaining amount of the proceeds from the sale was used to complete tax free
    exchanges.

    ACQUISITION
    On March  16,  2000,  the  Company  purchased  The  Enclave  at the  Meadows
    Apartments,  a 168-unit  apartment  community,  located in Asheville,  North
    Carolina for a purchase price of $8.8 million.  On May 11, 2000, the Company
    purchased  Greystone Crossing  Apartments,  a 408-unit  apartment  community
    located in Charlotte,  North  Carolina for $26.8  million.  These  purchases
    completed the previously funded tax free exchange transaction using proceeds
    from the sale described above.

    On September 11, 2000, the Company  purchased  Prestwick  Apartments at Glen
    Eagles, a 144-unit  apartment  community,  located in  Winston-Salem,  North
    Carolina  for a  purchase  price of $9.6  million  of which $7  million  was
    financed by the unsecured line of credit.

    NOTES PAYABLE
    The Company has a $185 million  unsecured line of credit with the consortium
    of six banks for which the maturity date is July 9, 2002. The line of credit
    bears  interest at one month LIBOR plus 120 basis  points.  At September 30,
    2000,  borrowings  under the unsecured line of credit were $130 million.  At
    September  30,  2000,  the Company had an unused  borrowing  capacity of $55
    million under the unsecured line of credit.

                                       13
<PAGE>

    The  Company  has  available  a $7.5  million  unsecured  line of credit for
    general corporate purposes. This line of credit bears interest at LIBOR plus
    120 basis points and the maturity  date was extended to January 31, 2001. At
    September 30, 2000,  the  outstanding  borrowings  under this line of credit
    were $2 million.

    On October 18, 2000, the Company  entered into a forward rate lock agreement
    with First Union  National  Bank fixing the interest rate at 7.35% on a $141
    million  mortgage  loan with  regard to 15  properties  located  at  various
    locations in Virginia,  North Carolina and Texas.  The rate lock period ends
    on December 15, 2000.  The Company  deposited  $1.41  million as a rate lock
    deposit with First Union National Bank. The Company made additional deposits
    with First Union National Bank amounting to $350,000 to cover other fees and
    expenses  anticipated  to be incurred in connection  with the closing of the
    mortgage loan.


                                       14
<PAGE>

    ITEM 3.       QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes since December 31, 1999. See the information
provided in the Company's  Annual Report on Form 10-K under Item  7-Management's
Discussion and Analysis of Financial Condition and Results of Operations.




                                       15
<PAGE>


 ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         None



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<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.

                      Cornerstone Realty Income Trust, Inc.
                      -------------------------------------
                                  (Registrant)



DATE:    11-14-00                     BY:   /s/ Stanley J. Olander
     --------------------------             -----------------------------------
                                      Stanley J. Olander
                                      Vice President and Chief Financial Officer



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