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 June 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 August 1, 2000, there were outstanding  35,737,982 shares of common
stock, no par value, of the registrant.


<PAGE>


                      CORNERSTONE REALTY INCOME TRUST, INC.
                                    FORM 10-Q

                                      INDEX

                                                                     Page Number
                                                                     -----------

PART I.   FINANCIAL INFORMATION

     Item 1.  Financial Statements (Unaudited)

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

                  Consolidated Statements of Operations -                 4
                  Three months ended June 30, 2000
                  and  June 30, 1999
                  Six months ended June 30, 2000
                  and June 30, 1999

                  Consolidated Statement of Shareholders' Equity-         5
                  Six months ended June 30, 2000

                  Consolidated Statements of Cash Flows -                 6
                  Six months ended June 30, 2000
                  and June 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             14
              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).                        15

     Item 5.  Other Information (not applicable)

     Item 6.  Exhibits and Reports on Form 8-K                          21

                                       2

<PAGE>

CORNERSTONE REALTY INCOME TRUST, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)

<TABLE>
<CAPTION>

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

Investment in rental property:
Land                                                                                $ 124,771,398        $ 136,326,140
Buildings and property improvements                                                   700,583,793          760,712,650
Furniture and fixtures                                                                 18,995,215           22,089,948
                                                                                    -------------        -------------
                                                                                      844,350,406          919,128,738
Less accumulated depreciation                                                         (73,224,217)         (77,538,085)
                                                                                    -------------        -------------
                                                                                      771,126,189          841,590,653

Cash and cash equivalents                                                               3,928,968           16,268,336
Prepaid expenses                                                                        1,147,590            2,803,488
Other assets                                                                            9,232,749            8,602,399
                                                                                    -------------        -------------

                             Total Assets                                           $ 785,435,496        $ 869,264,876
                                                                                    =============        =============

LIABILITIES and SHAREHOLDERS' EQUITY

Liabilities
Notes payable-unsecured                                                             $ 115,000,000        $ 157,500,000
Notes payable-secured                                                                 104,756,659          105,045,682
Distributions payable                                                                   6,720,337            6,779,012
Accounts payable                                                                        1,421,262           11,670,338
Accrued expenses                                                                        5,465,287           11,387,531
Rents received in advance                                                                 220,129              613,214
Tenant security deposits                                                                1,615,783            1,903,857
                                                                                    -------------        -------------

                             Total Liabilities                                        235,199,457          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 12,639,551 shares and 12,650,047 shares, respectively     $ 264,784,591          263,656,281
Common stock, no par value, authorized 100,000,000
   shares; issued and outstanding 35,855,390 shares
   and 38,712,037 shares, respectively                                                352,573,676          383,969,899
Deferred compensation                                                                     (60,927)             (72,976)
Distributions greater than net income                                                 (67,061,301)         (73,187,962)
                                                                                    -------------        -------------

                             Total Shareholders' Equity                               550,236,039          574,365,242
                                                                                    -------------        -------------

                             Total Liabilities and Shareholders' Equity             $ 785,435,496        $ 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               Six Months Ended
                                                                          June 30,       June 30,        June 30,        June 30,
                                                                           2000            1999            2000            1999
                                                                       ------------    ------------    ------------    ------------
<S>                                                                    <C>             <C>             <C>             <C>
REVENUE:

         Rental income                                                 $ 34,807,328    $ 23,955,059    $ 71,905,243    $ 47,422,150
         Other income                                                          --         2,680,480            --         3,741,767

EXPENSES:

                  Property and maintenance                                8,338,507       6,756,501      17,378,781      12,855,388
                  Taxes and insurance                                     3,788,958       1,813,692       7,816,954       3,876,058
                  Property management                                       761,229         545,861       1,453,711       1,095,229
                  General and administrative                                520,897       1,680,931       1,007,219       2,129,527
                  Amortization expense                                         --              --              --            55,657
                  Other depreciation                                          5,740           5,746          11,482          11,488
                  Depreciation of rental property                         8,254,160       5,907,842      17,319,770      11,710,213
                  Other                                                        --           302,945          20,099         600,651
                                                                       ------------    ------------    ------------    ------------

                                  Total expenses                         21,669,491      17,013,518      45,008,016      32,334,211
                                                                       ------------    ------------    ------------    ------------

Income before interest and dividend income (expense)                     13,137,837       9,622,021      26,897,227      18,829,706

   Interest and dividend income                                             286,096         122,425         395,985         213,299
   Interest expsnse                                                      (4,075,743)     (3,517,687)     (8,727,429)     (6,933,135)
                                                                       ------------    ------------    ------------    ------------

Income before gains on sales of investments and
   minority interest in operating partnership                             9,348,190       6,226,759      18,565,783      12,109,870

   Gains on sales of investments                                               --              --        23,406,233            --
                                                                       ------------    ------------    ------------    ------------

Income before minority interest in operating partnership                  9,348,190       6,226,759     41,972,016      12,109,870

  Minority Interest of unitholders in operating partnership                    --             8,198            --            58,899
                                                                       ------------    ------------    ------------    ------------

Net income                                                             $  9,348,190       6,218,561    $ 41,972,016    $ 12,050,971

Distributions to preferred shareholders                                  (7,418,770)           --     (15,415,970)           --
                                                                       ------------    ------------    ------------    ------------

Net income available to common shareholders                            $  1,929,420       6,218,561    $ 26,556,046    $ 12,050,971

Net income per share-basic and diluted                                 $       0.05    $       0.16    $       0.72    $       0.31
                                                                       ============    ============    ============    ============

Distributions per common share                                         $       0.28    $       0.27    $       0.55    $       0.53
                                                                       ============    ============    ============    ============


</TABLE>

See accompanying notes to consolidated financial statements.

                                        4

<PAGE>

CORNERSTONE REALTY INCOME TRUST, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED)

<TABLE>
<CAPTION>

                                                                                                       Distributions
                                                               Preferred Stock                            Greater        Total
                                       Number                     Number of                Deferred        than       Shareholders'
                                     of Shares       Amount         Shares      Amount   Compensation   Net Income       Equity
                                     -----------------------------------------------------------------------------------------------
<S>                                  <C>          <C>            <C>         <C>           <C>        <C>              <C>

Balance at December 31, 1999         38,712,037   $383,969,899   12,650,047  $263,656,281  ($72,976)  ($73,187,962)    $574,365,242

Net income                                 --             --           --            --        --       41,972,016       41,972,016

Cash distributions declared
  to shareholders ($.55 per share)         --             --           --            --        --      (20,429,385)     (20,429,385)

Distributions for Series A
  Convertible Preferred Stock              --             --           --            --        --      (14,025,260)     (14,025,260)

Imputed distributions on Series A
  Convertible Preferred Stock              --             --           --       1,390,710      --       (1,390,710)            --

Purchase of common stock             (3,221,500)   (34,879,071)        --            --        --             --        (34,879,071)

Preferred stock converted to
  common stock                           16,602        262,400      (10,496)     (262,400)     --             --               --

Amortization of deferred
  compensation                             --             --           --            --      12,049           --             12,049

Shares issued through dividend
  reinvestment plan                     348,251      3,220,448         --            --        --             --          3,220,448
                                     -----------------------------------------------------------------------------------------------

Balance at June 30, 2000             35,855,390   $352,573,676   12,639,551  $264,784,591  ($60,927)  ($67,061,301)    $550,236,039
                                     ===============================================================================================

</TABLE>













See accompanying notes to consolidated financial statements.

                                        5
<PAGE>

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

<TABLE>
<CAPTION>

                                                                                                           Six Months Ended
                                                                                                    June 30,             June 30,
                                                                                                      2000                 1999
                                                                                                    --------             --------
<S>                                                                                              <C>                  <C>

Cash flow from operating activities:

   Net income                                                                                    $  41,972,016        $  12,050,971
   Adjustments to reconcile net income to net cash
   provided by operating activities
     Gain on sale of rental property                                                               (23,406,233)                --
     Depreciation and amortization                                                                  17,331,252           11,777,358
     Minority interest of unitholders in operating partnership                                            --                 58,899
     Amortization of deferred compensation                                                              12,049               23,047
     Amortization of Apple Realty Group contract purchase                                                 --                241,438
     Amortization of deferred financing costs                                                          224,654              113,664
     Changes in operating assets and liabilities:
         Operating assets                                                                              789,412             (554,002)
         Operating liabilities                                                                     (16,852,479)            (731,347)
                                                                                                 -------------        -------------

                              Net cash provided by  operating activities                            20,070,671           22,980,028

Cash flow from investing activities:

   Acquistions of rental property                                                                  (35,603,411)                --
   Proceeds from the sale of land                                                                         --                764,668
   Net proceeds from the sale of rental property                                                   128,182,171                 --
   Capital improvements                                                                            (16,027,833)          (7,962,778)
                                                                                                 -------------        -------------

                              Net cash used in investing activities                                 76,550,927           (7,198,110)

Cash flow from financing activities:

   Proceeds from short-term borrowings                                                              93,862,000           23,887,000
   Repayments of short-term borrowings                                                            (136,362,000)         (20,280,000)
   Repayment of mortgage notes                                                                        (289,023)
   Net proceeds from issuance of common shares                                                       3,220,448            4,949,795
   Purchase of common stock                                                                        (34,879,071)                --
   Cash distributions to operating partnership unitholders                                             (50,190)             (98,520)
   Cash distributions paid to preferred shareholders                                               (14,033,745)                --
   Cash distributions paid to commom shareholders                                                  (20,429,385)         (20,800,061)
                                                                                                 -------------        -------------

                              Net cash used in financing activities                               (108,960,966)         (12,341,786)

                              Increase (decrease) in cash and cash equivalents                     (12,339,368)           3,440,132

Cash and cash equivalents, beginning of year                                                        16,268,336            2,590,364
                                                                                                 -------------        -------------

Cash and cash equivalents, end of period                                                         $   3,928,968        $   6,030,496
                                                                                                 =============        =============

Supplemental information:

   Interest paid                                                                                 $   8,085,415        $   5,500,152
   Non-cash transactions associated with:

               Accretion of preferred dividends                                                  $   1,390,710                 --
               Preferred shares converted to common shares                                             262,400                 --


</TABLE>


See accompanying notes to consolidated financial statements.

                                        6

<PAGE>

                      CORNERSTONE REALTY INCOME TRUST, INC
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                                  JUNE 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 six  months  ended  June  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  units. 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.

(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 $55 million during 2000. At June 30, 2000, the Company had an
      unused  borrowing  capacity of $70  million  under the  unsecured  line of
      credit.  In addition,  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 June 30, 2000,  total  unsecured  borrowings  under this line of credit
      were $115 million.

      The Company's $7.5 million general  corporate purpose line of credit bears
      interest at LIBOR plus 120 basis points.  The maturity date is October 31,
      2000. At June 30, 2000,  there were no outstanding  borrowings  under this
      line of credit.

                                       7

<PAGE>


(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 six months ended June 30, 1999 was $1,680,282.

      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 six months ended June 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 six
      months ended June 30, 1999 of $170,030 on its investment in Apple.

                                       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              Six              Three                Six
                                             Months            Months            Months              Months
                                             Ended             Ended             Ended               Ended
                                            6/30/00           6/30/00           6/30/99             6/30/99
                                            -------           -------           -------             -------

      <S>                                 <C>                <C>               <C>                <C>
      Numerator:
           Net income available to        $ 1,929,420        $26,556,046       $6,218,561         $12,050,971
           common shareholders
           Numerator for basic
           and diluted earnings per
           share - income available
           to common stockholders           1,929,420         26,556,046        6,218,561          12,050,971
           afterassumed conversion
      Denominator:
           Denominator for basis
           earningspershare
           weighted-average shares         35,867,428         36,931,405       39,569,424          39,443,428

      Effect of dilutive securities:
           Stock options                           --                 --               --                  --
           Series A Convertible
           Preferred Stock*                        --                 --               --                  --

      -------------------------------------------------------------------------------------------------------
      Denominator for diluted
      earnings per share-adjusted
      weighted-averageshares and
      assumed conversions                  35,867,428         36,931,405       39,569,424          39,443,428
      -------------------------------------------------------------------------------------------------------
      Basic and diluted earnings
      per common share                    $       .05        $       .72      $       .16         $      0.31
      -------------------------------------------------------------------------------------------------------

</TABLE>


         *Series  A  Convertible  Preferred  Stock was not  included in dilutive
                  earnings  per common  share  calculation  since its effect was
                  anti-dilutive.

                                       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 six months ended June 30, 2000
     include  the  results  of  operations,  for the full two  quarters  from 71
     properties  acquired before 2000 and from the 2 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 six months
     ended June 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 six months ended June 30, 2000
     increased  to $71.9  million  in 2000 from $47.4  million in 1999.  For the
     second  quarter  of  2000,  the  Company's  rental  income  of $35  million
     reflected an increase of $10.9 million, or 45%, 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
     91% for the six months ended June 30, 2000 and 1999, respectively.  For the
     second quarter of 2000 and 1999,  economic  occupancy averaged 93%. Overall
     average  rental rates for the portfolio  increased 6% from $614 at June 30,
     1999,  to $650 at June 30,  2000.  For the second  quarter of 1999 and 2000
     average  rental rates  increased 6% from $618 to $657,  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 $61.7 million and $40 million, respectively during the six months
     ended June 30,  2000 and $57.9  million and $37 million for the same period
     in 1999.  This  represents an increase in rental and operating  income from
     the six months  ended June 30, 1999  compared to the six months  ended June
     30, 2000 of 6.6% and 8%,  respectively.  During the second  quarter of 2000
     and 1999,  these same community  operations  provided  rental and operating
     income  of $31.6  million  and $20.5  million  and  $29.7  million  and $19
     million, respectively.  This represents an increase in rental and operating
     income from the second  quarter of 1999  compared to the second  quarter of
     2000 of 6.3% and 7.6%, respectively.

     EXPENSES
     Total  expenses  for the first six months  increased  39% to $45 million in
     2000 from $32  million  in 1999.  For the  second  quarter  of 2000,  total
     expenses increased to $21.7 million from $17 million for the same period in
     1999.  The  increase is due largely to full two 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% for the
     three and six  months  ended June 30,  2000 and 38% for the same  period in
     1999.

     Depreciation  expense for the first six months has increased to $17 million
     in 2000 from $11.7 million in 1999. For the second quarter of 2000 and 1999
     depreciation  expense  was $8 million  and $6  million,  respectively.  The
     increase  is  directly  attributable  to the  addition  of  the  properties
     acquired through the Apple merger.

     General and administrative  expenses totaled $1 million,  or 1.4% of rental
     income for the six months ended June 30, 2000 and $2.1  million,  or 4% for
     the same period in 1999. For the second  quarter of 2000 and 1999,  general
     and administrative  expenses totaled 1.5% and 7%,  respectively,  of rental
     income. These expenses represent the administrative expenses of the Company
     as  distinguished  from the  operations  of the Company's  properties.  The
     Company continues to expand its internal  administrative  infrastructure to
     keep pace with its growth.

     INTEREST AND INVESTMENT INCOME AND EXPENSE

     The  Company's  interest  income  increased  to $395,985 for the six months
     ended June 30, 2000 from $43,268 for the six months ended June 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

                                       11

<PAGE>

     May 2000. For the second quarter of 2000,  interest income was $286,096 and
     $35,944 for the same period in 1999. The Company incurred  interest expense
     of $8.7  million and $6.9  million  during the first six months of 2000 and
     1999. For the second quarter of 2000, interest expense was $4.1 million and
     $3.5  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  $1,680,282 for the six
     months ended June 30, 1999, for advisory and property  management  services
     rendered to Apple.  For the second  quarter of 1999,  the Company  received
     $932,480  for the same  services.  The Company  received  $561,485  for the
     quarter  ended June 30,  1999 in real  estate  commissions  under  separate
     contract and amortized  $241,438 as of June 30, 1999 of the purchase  price
     of this contract.  During the second quarter of 1999, the Company  received
     $248,000 in real estate  commissions and amortized $106,640 of the purchase
     price of the contract.

     The Company  received  distributions on its investment in Apple through the
     date of the merger.  The Company  recognized  dividend income for the three
     and six months ended June 30, 1999 of $86,480 and  $170,030,  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 June 30, 2000, the Company had $3.9 million in
     cash and cash  equivalents  and $70 million  available under this unsecured
     line of credit.

     In September  1999, the Board of Directors  authorized the repurchase of up
     to $50 million of the  Company's  common  shares.  For the six months ended
     June 30, 2000,  the Company  repurchased  3.2 million  common  shares at an
     average price of $10.83 per share for $34.9 million.

     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 August 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

                                       12

<PAGE>


     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  $16  million  of  improvements  to  its  various
     properties during the first six months of 2000. It is anticipated that some
     $25 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 2000 common
     stock divided distributions, or $3.2 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  analyses  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.  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.

     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 June 30,
     2000,  borrowings under the unsecured line of credit were $115 million.  At
     June 30, 2000, the Company had an unused borrowing  capacity of $70 million
     under the unsecured line of credit.

     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 is October 31, 2000.  At June
     30, 2000,  the Company's had no outstanding  borrowings  under this line of
     credit.


                                       13


<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.








                                       14

<PAGE>


Part II.

Item 4.  Submission of Matters to a Vote of Security Holders.


On May 25, 2000,  the Company  held an Annual  Meeting of  Shareholders  for the
purpose of submitting  four matters to a vote of common  shareholders.  The four
matters,  which are described  more fully below,  related to the election of two
directors to the  Company's  Board of Directors and the  consideration  of three
proposals.  The proposals  were as follows:  (i) proposal to amend the Company's
1992  Non-Employee  Directors  Stock Option Plan,  (ii)  proposal to approve the
Company's Share Purchase Loan Program, and (iii) proposal to amend the Company's
Bylaws.

ELECTION OF DIRECTORS.

The two nominees to the  Company's  Board of Directors  were Stanley J. Olander,
Jr. and Martin  Zuckerbrod.  Each nominee was a current  director of the Company
and was nominated for an additional  three-year  term on the Board of Directors.
The election of directors was  uncontested  and both nominees were elected.  The
voting results are summarized at the end of this item.

PROPOSAL TO AMEND THE COMPANY'S 1992 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN.

Under the  Company's  1992  Non-Employee  Directors  Stock Option Plan as it now
exists, each non-employee  director is entitled to receive an automatic grant of
stock  options on June 1 of each year through 1999.  This proposal  would extend
the grant period through 2001, so that each non-employee  director would receive
an additional automatic grant, pursuant to the same formula, on June 1, 2000 and
June 1, 2001. Specifically,  this proposal would amend section 7(a) (iii) of the
Company's 1992 Non-Employee  Directors Stock Option Plan (the "Directors' Plan")
to read as follows:

                  (iii) As of each June 1 during  the years  1994  through  2001
                  (inclusive),   each  Eligible  Director  shall   automatically
                  receive  an Option to  purchase  0.02% of the total  number of
                  shares of Common Stock issued and outstanding on that date.

This  proposal  was  approved by the  shareholders,  and the voting  results are
summarized at the end of this item.

PROPOSAL TO APPROVE THE COMPANY'S SHARE PURCHASE LOAN PROGRAM.

As of April 1, 2000, the Board of Directors adopted the Share Purchase Loan Plan
(the "Plan")  subject to shareholder  approval.  The Plan is intended to attract
and retain directors and key officers through the availability of loans from the
Company to acquire its common shares.  Common shares will be purchased under the
Plan in the open market. The maximum aggregate principal amount of new loans may
not exceed $2,000,000 in any one fiscal year.

The Plan will be administered by the Compensation Committee or another committee
of at least two persons  appointed by the Board of Directors (the  "Committee").
The  Committee  has the complete  discretion  to determine  which  directors and
officers will receive loans,  when a loan will

                                       15

<PAGE>

be made and, subject to the terms of the Plan, the terms, conditions, nature and
amount of a loan. The Committee will have the authority to impose any limitation
or condition  upon a loan that the Committee  deems  appropriate  to achieve the
objectives of the Plan. The Committee may,  subject to such conditions as it may
determine,  extend the time for  repayment or  otherwise  modify the terms of an
outstanding  loan  but  any  such   modification  may  not  adversely  affect  a
participant's rights thereunder without his or her consent.

Loans may be made under the Plan to present and future directors and officers of
the Company (or any parent or subsidiary of the Company, whether now existing or
hereafter  created or acquired).  The Plan provides for individual limits on the
maximum  aggregate  principal  amount  of loans  outstanding  under  the Plan to
individual participants. Those limits are as follows: $50,000 for each director,
200% of annual salary for officers  determined by the Committee to be "executive
officers"  for purposes of the Plan  (currently  three  persons),  75% of annual
salary for officers  determined  by the  Committee to be "senior  officers"  for
purposes of the Plan  (currently six persons),  and 25% of annual salary for all
other eligible officers (approximately 23 persons).

The Committee will  establish as to each loan a minimum  principal  amount,  the
interest  rate,  the  terms of  repayment  and any other  terms  and  conditions
consistent  with the Plan.  Each loan will be a full recourse  obligation of the
participant  and will be secured by those common  shares  acquired with the loan
proceeds (the  "Shares").  At the time a loan is made,  the Committee may impose
restrictions on the participant's ability to sell, encumber or otherwise dispose
of the Shares.  The interest rate on a loan may not be less than the  Applicable
Federal  Rate in  effect  at the  time  the  loan is made  or,  in the case of a
variable  rate,  at the time the interest  rate is adjusted.  Loans will have an
initial term of not more than ten years and unless  otherwise  determined by the
Committee  at the time the loan is made,  will  become  due and  payable 90 days
following  termination of the participant's status as a director (in the case of
a   director-participant)    or   as   an   officer   (in   the   case   of   an
officer-participant). A loan may provide for mandatory payments of principal and
interest at times and in amounts  determined by reference to bonus and incentive
payments made by the Company to the participant.

As determined by the Committee, a loan may provide for forgiveness of (i) all or
a portion of the interest based upon Company  performance  and/or (ii) up to 25%
of the  principal  amount  thereof  based upon  Company  performance,  continued
service as director or officer by the participant and/or retention of the Shares
by the participant. A loan may also provide for such forgiveness of interest and
up to 25% of the principal upon a termination of the  participant's  status as a
director or officer due to death,  disability  or normal  retirement,  or upon a
termination by the Company  without cause (or a resignation  by the  participant
with good reason) following a change of control.

If the Committee  determines that a loan will include  provision for forgiveness
of interest or principal,  based upon the Company's  achievement  of performance
goals,  such goals will be established  by the Committee  prior to or during the
term of the loan  utilizing one or more of the following  criteria:  "funds from
operations," expenses on either an individual property or Company-wide basis, or
Company total assets or total shareholders' equity. The performance goals may be
based on Company  performance  over  individual  fiscal  years or over  multiple
fiscal years (any such period,  a  "Performance  Period") and will  generally be
established  within 90 days after the start of each Performance  Period.  At the
time the performance  goals are established,  the Committee will determine their
relative  weight  (if more than one  criterion  is used) and the

                                       16

<PAGE>


portion  of the  interest  which has  accrued  during  such  period  and/or  the
principal  which will be forgiven  based on the extent to which the  performance
goals  are  achieved.  Except  as  otherwise  provided  by the  Plan or the loan
documents, a participant must be a director or officer of the Company at the end
of  the   Performance   Period  to  be  eligible  for  such   forgiveness.   All
determinations  regarding  the extent to which any  performance  goals have been
achieved  will be made by the  Committee  and  certified in writing prior to the
forgiveness of any interest or principal based on such performance.

As previously  discussed,  a loan may provide for forgiveness of interest and/or
up to 25% of principal upon termination of a participant's  status as a director
or officer following a change of control.  A "change of control" occurs when (i)
there is a change in the  composition  of a majority  of the Board of  Directors
when  compared  with those who are  currently  serving and any new members whose
nomination  or election is approved by a majority of the current  members of the
Board of Directors  (including  members of the Board of Directors  previously so
approved),   (ii)  the  shareholders   approve  a   reorganization,   merger  or
consolidation which results in the shareholders of the Company immediately prior
to such transaction  owning less than a majority of the outstanding common stock
or voting power of the corporation  resulting from such  transaction,  (iii) the
shareholders  approve the liquidation or dissolution of the Company or a sale or
other disposition of all or substantially all of the Company's assets, or (iv) a
person  or  group of  persons  acting  in  concert  acquires  20% or more of the
outstanding common shares or the combined voting power of Company's  outstanding
voting securities (but excluding for this purpose an acquisition by the Company,
a subsidiary or employee  benefit plan of the Company,  or any corporation  with
respect to which,  immediately  following  such  acquisition,  a majority of the
outstanding  common  shares and a majority of the  combined  voting power of the
outstanding voting securities are owned, directly or indirectly,  by the persons
who were  formerly  the  shareholders  of the Company and such persons hold such
common  stock and voting  power in  substantially  the same  proportion  as they
previously held the Company's common shares.

If not sooner  terminated by the Board of Directors,  the Plan will terminate on
April 1,  2010,  which  means that no loans may be made under the Plan after its
termination.  The Board of Directors  may amend the Plan in such  respects as it
deems  advisable,  provided that, if and to the extent required by Rule 16b-3 of
the Securities Exchange Act of 1934, the shareholders must approve any amendment
to the Plan which (i)  materially  increases the total amount of loans which may
be made  under  the  Plan,  (ii)  materially  modifies  the  requirements  as to
eligibility  to  participate  in the Plan,  or (iii)  materially  increases  the
benefits accruing to participants under the Plan.

This  proposal  was  approved by the  shareholders,  and the voting  results are
summarized at the end of this item.

PROPOSAL TO AMEND THE COMPANY'S BYLAWS.

The Company's  Bylaws (in the current  form,  as amended  through July 15, 1999)
were originally adopted at a time when the Company had essentially no assets and
was proposing to commence an initial best-efforts offering of its common shares.
As   originally   structured,   the   Company  was   "externally-advised,"   and
"externally-managed," rather than self-administered and self-managed. This meant
that  administration  and  management  were  provided to the Company by external


                                       17

<PAGE>

advisory and management  companies.  Further, at Company inception,  the Company
adopted  numerous  Bylaw  provisions  that were  required  or  recommended  as a
condition to the  registered  sale in various  states of its Common  Shares.  In
addition,  it was  originally  proposed that the Company's  common shares not be
traded in any active market.

Since  inception,  the  Company  has  undergone  numerous  significant  changes,
rendering  various  provisions  in  the  Bylaws  irrelevant,   inappropriate  or
unnecessary.   In  1996,  the  Company  converted  from  externally-advised  and
externally-managed status to self-administered and self-managed status. In 1997,
the Company completed its first firm-commitment  underwritten sale of its common
shares and simultaneously  such common shares were listed for trading on the New
York  Stock  Exchange.  As a  result  of  these  various  changes,  and  related
developments,  the Board of Directors  believes it is  appropriate  to grant the
Board of  Directors  authority to amend the Bylaws so as to reflect the numerous
changes in the nature, structure and status of the Company.

Generally,  the Bylaws are  subject to  amendment  only with the  consent of the
shareholders.  After the action described  below, the shareholders  would retain
the right to amend the Bylaws,  but the Board of Directors would have additional
rights to amend the Bylaws.  Specifically,  this  proposal  would  result in the
following:

A.  Add new Sections 11.11(c), (d) and (e) to the Bylaws to read as follows:

            (c) The Board of  Directors  shall have full power and  authority to
            amend and revise  these  Bylaws or any portion  hereof,  which shall
            expressly  include the  revision  or  amendment  of  existing  Bylaw
            provisions,  the  elimination  of  provisions  of the Bylaws and the
            addition  of new Bylaw  provisions,  in each case to the full extent
            that the Directors deem it necessary, advisable or convenient (i) to
            reflect  or  implement  the  fact  that  the  Company  is no  longer
            externally-advised  and  externally-managed but is self-administered
            and  self-managed,  and that provisions  pertaining to the "Advisor"
            and its  "Affiliates"  and provisions  assuming the existence of the
            Advisor  or  Affiliates  or  dependent  for  their  meaning  on  the
            existence of an Advisor or Affiliates are obsolete; without limiting
            the generality of the foregoing,  it is acknowledged and agreed that
            the Board of  Directors  may amend  the  Bylaws so as to delete  the
            following:  the definitions of "Acquisition  Expenses," "Acquisition
            Fees,"  "Advisor,"  "Average  Invested  Assets,"  "Competitive  Real
            Estate  Commission,"  "Contract Price," "Net Income,"  "Offering and
            Organization  Expenses,"  "Operating  Expenses,"  and "Sponsor," all
            portions  of the  first  paragraph  of  Section  5.1  of the  Bylaws
            following the first  sentence,  Section  5.15(a),  Section  5.15(d),
            Sections 8.1 through 8.7,  Section 10.1, and all sections related to
            or  dependent  upon  any of the  foregoing  sections,  and  (ii)  to
            eliminate or revise those portions of the Bylaws which the Directors
            determine,  upon advise of counsel to the Company,  were  originally
            included  in the  Bylaws  because of a state  securities  regulation
            applicable in connection with the Company's initial  registration of
            its Shares for sale to the public  (including  any NASAA  Guidelines
            pertaining to Real Estate  Investment  Trusts),  or which  otherwise
            reflected  the  start-up  nature of the  Company,  the fact that its
            Shares were initially not proposed to be traded in any active market
            or the fact,  generally,  that the Company  had minimal  assets upon
            formation and no properties  identified for acquisition,  including,
            without  limitation  the  deletion of the  following

                                       18

<PAGE>

            Sections:  the definition of "Dividend  Reinvestment Plan," "Initial
            Investment"  and  "Liquidity  Matching  Program,"  Section  2.1, the
            second  to the last  paragraph  within  Section  5.2  (dealing  with
            experience  of  Directors),  the  third  sentence  of  Section  5.15
            (dealing with experience of Directors), Section 7.5(h), Section 7.8,
            and Section 11.15.

            (d) The Board of Directors is  specifically  authorize and empowered
            to delete the definition of  "Independent  Director" as it exists in
            the Bylaws amended through July 15, 1999, insofar as it is dependent
            upon the  concept of an  external  "Advisor,"  and to  replace  such
            definition with one or more  successive  definitions of "Independent
            Director"  (which  shall be  deemed to  include  any  similar  term)
            promulgated  or suggested for use by the New York Stock  Exchange or
            the  rules  of  such  other  self-regulatory   organization  as  are
            applicable to the Company.

            (e) The  provisions  of this Section 11.11  permitting  the Board of
            Directors  to make  amendments  to the Bylaws  shall be  interpreted
            liberally  so as to give full  effect to their  purpose  and intent.
            Such  amendments  may be effective at any time and from time to time
            by action of the Board,  and any such  action  taken in actual  good
            faith of the  Board of  Directors  shall be  deemed  duly  taken and
            adopted and a proper and binding amendment to these Bylaws.

B.  Delete the last  paragraph  in  Section  9.1  of the Bylaws, which currently
follows the paragraph lettered "(o)", and replace it with the following:

            Notwithstanding  anything to the  contrary in this Article 9, any of
            the  investments  or actions  referred  to in this  Article 9 may be
            approved,  made or taken by the Company acting pursuant to its Board
            of Directors if such investment or action is found by the Company to
            be in the best  interests  of the Company or in  furtherance  of the
            plans and objectives of the Company,  if, in any event,  such action
            is not  expressly  prohibited  by law and any  Shareholder  approval
            required by law is obtained;  provided, however, that if any portion
            of any  provision  in  such  Article  would  require  notice  to the
            Shareholders, such notice shall be given, but may be given either in
            the  indicated  report  to  Shareholders  or by a press  release  or
            similar publication.

                                       19

<PAGE>


This  proposal  was  approved by the  shareholders,  and the voting  results are
summarized at the end of this item.

RESULTS OF VOTING.

The total number of votes  represented at the Annual Meeting of Shareholders was
36,106,699.



1. Election of Directors:

Stanley J. Olander, Jr.    Votes For:  32,470,316     Votes Withheld:  819,516
                                       ----------                      -------

Martin Zuckerbrod          Votes For:  32,355,581     Votes Withheld:  934,251
                                       ----------                      -------

2. Proposal to amend the Company's 1992 Non-Employee Directors Stock Option Plan

Approval 29,795,137        Disapproval  2,964,684     Abstain  530,010
         ----------                     ---------              -------

3. Proposal to approve the Company's Share Purchase Loan Program

Approval 14,497,429        Disapproval  3,290,316     Abstain  470,296
         ----------                     ---------              -------

4. Proposal to amend the Company's Bylaws

Approval 29,878,129        Disapproval  2,885,847     Abstain  525,856
         ----------                     ---------              -------







                                       20

<PAGE>


          Item 6.  Exhibits and Reports on Form 8-K


(a)   Exhibits - Exhibit 27 - Financial  Data  Schedule and Exhibit 99.1 - Share
      Purchase Loan Program

(b)   The  following  table  lists  the reports on Form 8-K filed by the Company
      during  the  quarter  ended  June 30,  2000,  the items  reported  and the
      financial statements included in such filings.

      Type and Date
      of Reports                  Items Reported     Financials Statements Filed

      Form 8-K dated               5,7               None
      March 16, 2000 and filed
      May 24, 2000



                                       21

<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:  8-11-00                        BY: /s/ Stanley J. Olander
     ------------------                   ----------------------
                                      Stanley J. Olander
                                      Vice President and Chief Financial Officer










                                       22