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 March 31, 1999

                                       OR

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

          For the transition period from__________to________

                        Commission File Number 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 April 20, 1999,  there were  outstanding  39,626,858  shares of common
stock, no par value, of the registrant.


<PAGE>


                                     INDEX

<TABLE>
<CAPTION>


                                                                           Page Number
                                                                           ------------
<S>                                                                             <C>

PART I.           FINANCIAL INFORMATION

      Item 1.     Financial Statements (Unaudited)

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

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

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

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

                        Notes to Consolidated  Financial
                        Statements                                               7

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

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                              14



</TABLE>


<PAGE>



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


<TABLE>
<CAPTION>


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

Investment in Rental Property:
Land                                                           $ 86,336,129            $ 87,100,659
Buildings and property improvements                             489,860,640             487,972,647
Furniture and fixtures                                           13,001,249              12,365,052
                                                              --------------          --------------
                                                                589,198,018             587,438,358
Less accumulated depreciation                                   (54,030,131)            (48,227,760)
                                                              --------------          --------------
                                                                535,167,887             539,210,598

Cash and cash equivalents                                         6,965,795               2,590,364
Prepaid expenses                                                  1,213,358               1,372,498
Other assets                                                      9,771,057               9,174,148
                                                              --------------          --------------
             Total Assets                                      $553,118,097            $552,347,608
                                                              ==============          ==============


LIABILITIES and SHAREHOLDERS' EQUITY

Liabilities
Notes payable                                                 $ 205,503,092           $ 201,892,999
Accounts payable                                                    749,001               4,301,682
Accrued expenses                                                  5,714,954               2,730,418
Rents received in advance                                           164,752                 506,649
Tenant security deposits                                          1,591,572               1,729,671
                                                              --------------          --------------
             Total Liabilities                                  213,723,371             211,161,419

Minority interest of unitholders in operating partnership         2,017,064               2,014,693

Shareholders' equity
Preferred stock, no par value, authorized 25,000,000
  shares; issued and outstanding 0 shares                           -                       -
Common stock, no par value, authorized 100,000,000
   shares; issued and outstanding 39,370,146 shares
   and 39,113,916 shares, respectively                          390,663,581             388,131,512
Deferred compensation                                               (97,382)               (108,905)
Distributions greater than net income                           (53,188,537)            (48,851,111)
                                                              --------------          --------------
             Total Shareholders' Equity                         337,377,662             339,171,496
                                                              --------------          --------------
             Total Liabilities and Shareholders' Equity        $553,118,097            $552,347,608
                                                              ==============          ==============
</TABLE>




See accompanying notes to consolidated financial statements.


<PAGE>



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




<TABLE>
<CAPTION>
                                                                      Three Months Ended
                                                                 March 31,             March 31,
                                                                    1999                 1998
                                                               ----------------------------------
<S>                                                                 <C>                    <C>

REVENUE:
         Rental income                                           $ 23,467,091       $ 20,120,435
         Other income                                               1,061,287            842,034

EXPENSES:
                 Property and maintenance                           6,098,887          5,499,525
                 Taxes and insurance                                2,062,366          1,523,849
                 Property management                                  549,368            512,319
                 General and administrative                           448,596            356,339
                 Amortization expense and other depreciation           61,399             16,138
                 Depreciation of rental property                    5,802,371          4,683,384
                 Other                                                297,706            406,959
                                                               ----------------------------------
                             Total expenses                        15,320,693         12,998,513
                                                               ----------------------------------
Income before interest and dividend income (expense)                9,207,685          7,963,956

   Interest and dividend income                                        90,874             93,010
   Interest expense                                                (3,415,448)        (2,820,918)
                                                               ----------------------------------
Income before minority interest in operating partnership            5,883,111          5,236,048

  Minority Interest of unitholders in operating partnership            50,701                  -
                                                               ----------------------------------
Net income                                                        $ 5,832,410        $ 5,236,048
                                                               ==================================
Basic and diluted earnings per common share                       $      0.15        $      0.15
                                                               ==================================
Distributions per common share                                    $      0.26        $      0.26
                                                               ==================================
</TABLE>







See accompanying notes to consolidated financial statements.


<PAGE>

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



<TABLE>
<CAPTION>


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


Balance at December 31, 1998                                    39,113,916   $388,131,512    ($108,905) ($48,851,111)  $339,171,496

Net income                                                               -              -            -     5,832,410      5,832,410
Cash distributions declared to shareholders
     ($.26  per share)                                                   -              -            -   (10,169,836)   (10,169,836)
Exercise of stock options                                              539          5,390            -             -          5,390
Amortization of deferred compensation                                    -              -       11,523             -         11,523
Shares issued through dividend reinvestment plan                   255,691      2,526,679            -             -      2,526,679
                                                              ----------------------------------------------------------------------

Balance at March  31, 1999                                      39,370,146   $390,663,581     ($97,382) ($53,188,537)  $337,377,662
                                                              ======================================================================

</TABLE>




See accompanying notes to consolidated financial statements.



<PAGE>


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


<TABLE>
<CAPTION>

                                                                                                Three Months Ended
                                                                                       March 31,                March 31,
                                                                                        1999                       1998
                                                                                  -----------------------------------------
<S>                                                                                  <C>                          <C>

Cash flow from operating activities:

   Net income                                                                        $  5,832,410             $  5,236,048
   Adjustments to reconcile net income to net cash
   provided by operating activities
     Depreciation and amortization                                                      5,863,770                4,699,522
     Minority interest of unitholders in operating partnership                             50,701
     Amortization of deferred compensation                                                 11,523                    5,499
     Amortization of Apple Realty Group contract purchase                                 134,798                   50,001
     Amortization of deferred financing costs                                              56,625                  259,965
     Changes in operating assets and liabilities:
       Prepaid expenses                                                                   159,140                   24,375
       Other assets                                                                      (849,730)                (542,383)
       Accounts payable                                                                (3,552,681)              (1,631,639)
       Accrued expenses                                                                 2,984,536                1,934,780
       Rent received in advance                                                          (341,897)                (243,077)
       Tenant security deposits                                                          (138,099)                  32,905
                                                                                     ------------             ------------
                         Net cash provided by  operating activities                    10,211,096                9,825,996

Cash flow from investing activities:

   Sale of land                                                                           764,668              (27,906,914)
   Capital improvements                                                                (2,524,328)              (5,072,554)
                                                                                     ------------             ------------
                         Net cash used in investing activities                         (1,759,660)             (32,979,468)

Cash flow from financing activities:

   Proceeds from short-term borrowings                                                  9,231,093               41,295,000
   Repayments of short-term borrowings                                                 (5,621,000)             (12,748,000)
   Net proceeds from issuance of shares                                                 2,532,068                2,733,284
   Cash distributions to operating partnership unitholders                                (48,330)
   Cash distributions paid to shareholders                                            (10,169,836)              (8,879,092)
                                                                                     ------------             ------------
                         Net cash provided by (used in) financing activities           (4,076,005)              22,401,192

                         Increase (decrease) in cash and cash equivalents               4,375,431                 (752,280)

Cash and cash equivalents, beginning of year                                            2,590,364                4,513,986
                                                                                     -------------            ------------
Cash and cash equivalents, end of period                                             $  6,965,795             $  3,761,706
                                                                                     =============            ============
</TABLE>






See accompanying notes to consolidated financial statements.

<PAGE>

                     CORNERSTONE REALTY INCOME TRUST, INC.
             Notes to Consolidated Financial Statements (Unaudited)
                                 March 31, 1999



(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 three  months  ended  March 31,  1999 are not  necessarily
      indicative of the results that may be expected for the year ended December
      31, 1999.  These financial  statements  should be read in conjunction with
      the Company's December 31, 1998 Annual Report on Form 10-K.

      In April 1998,  the American  Institute of  Certified  Public  Accountants
      issued Statement of Position (SOP) 98-5,  "Reporting the Costs of Start-up
      Activities".  The SOP is  effective  beginning  on January  1,  1999,  and
      requires  that  start-up  costs  capitalized  prior to  January 1, 1999 be
      written off and any future start-up costs to be expensed as incurred.  The
      unamortized  balance of organization costs of $55,657 was written off as a
      cumulative  effect of an  accounting  change as of  January 1, 1999 and is
      included  in other  amortizaton  expense.

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

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

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


(2)  Notes Payable

      During  October,  1998, the Company closed a $25 million  extension on the
      $175  million  unsecured  line of credit with a  consortium  of six banks,
      bringing  the maximum  permitted  borrowing to $200  million.  The line of
      credit  bears  interest  at one  month  LIBOR  plus 135 basis  points.  In
      addition,  the Company is obligated to pay lenders a quarterly  commitment
      fee equal to .20% per annum of the  unused  portion  of the line.  The due
      date of the $25  million  extension  was  extended  from April 15, 1999 to
      August 15, 1999 and the  remaining  balance is due on October 30, 2000. At
      March 31, 1999, borrowings under the agreement were $200 million.

<PAGE>


      The  Company  has  available  a $5  million  unsecured  line of credit for
      general  corporate  purposes.  This line of credit bears interest at LIBOR
      plus 160 basis  points and the due date was  extended to October 31, 1999.
      At March 31, 1999, borrowings under the agreement were $3,000.

(3)   Related Parties

      In August 1996, Glade M. Knight,  Chairman and Chief Executive  Officer of
      the  Company,  established  Apple for the purpose of  acquiring  apartment
      communities in Texas.  Companies  owned by Mr. Knight  provided  advisory,
      property  management,  and asset  acquisition  services to Apple. In March
      1997, the Company entered into subcontract arrangements with the companies
      owned by Mr. Knight to provide property  management  services and advisory
      services  to  Apple.  Property  management  fees are 5% of  monthly  gross
      revenues plus certain expense reimbursements. Advisory fees are .1% to 25%
      of total  capital  raised by Apple based on the financial  performance  of
      Apple as defined in the  agreement.  The  amount of fees  received  by the
      Company  under the contracts for the three months ended March 31, 1999 and
      1998 were $747,803 and $351,534, respectively.

      During  March 1997,  the Company  acquired  all the assets of Apple Realty
      Group,  Inc.,  which  provided  the real estate  acquisition  and disposal
      services  for Apple.  The sole asset of Apple Realty  Group,  Inc. was the
      acquisition/disposition  contract with Apple, which expires on October 31,
      2001. The Company paid $350,000 cash and issued stock valued at $1,650,000
      for this  contract.  Under the terms of the  contract,  Apple  pays a real
      estate  commission  equal to 2% of the  purchase  price of the  properties
      acquired. The Company is amortizing its purchase of this contract over the
      anticipated  total  acquisitions by Apple during the contract period.  For
      the three  months  ended  March 31, 1999 and 1998,  the  Company  received
      $313,484 and $490,500, respectively, in real estate commissions under this
      contract  and  amortized  $134,798  and  $259,965,  respectively,  of  the
      purchase price of this contract.

      Apple  granted  the Company a  continuing  right to own 9.8% of the common
      shares of Apple at its selling price, net of selling commissions. In April
      1997,  the Company  purchased  417,778  shares of Apple for $3.76 million.
      This  represents   approximately  1.4%  of  the  common  shares  of  Apple
      outstanding as of March 31, 1999. The Company  recognized  dividend income
      for  the  three   months  ended  March  31,  1999  and  1998  of  $83,550,
      respectively, on its investment in Apple.



<PAGE>



(4) Earnings Per Share

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

                                     Three Months      Three Months
                                           Ended             Ended
                                         3/31/99           3/31/98
                                         -------           -------
Numerator:
      Net income                      $ 5,832,410        $ 5,236,048
      Numerator for basic and
      diluted earnings                  5,832,410          5,236,048
Denominator:
      Denominator for basic
      earnings per share-weighted-
      average shares                   39,315,952         35,752,760
Effect of dilutive securities:
      Stock options                            -               5,651
---------------------------------------------------------------------
Denominator for diluted earnings
      per share-adjusted weighted-
      average shares and assumed
     conversions                       39,315,952         35,758,411
--------------------------------------------------------------------
Basic and diluted earnings per
     common share                     $      0.15        $      0.15
--------------------------------------------------------------------
(5) Subsequent Events

       In April 1999, the Company distributed to its shareholders  approximately
      $10,630,226  (26 cents per share) of which  approximately  $2,540,138  was
      reinvested in the purchase of additional shares of the Company.


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



<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  ownership of stock
      in Apple and the acquisition,  advisory and property  management  services
      provided  to 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
      properties  or  Apple,  as the case may be,  adverse  changes  in the real
      estate markets and general and local economies and business conditions and
      year 2000  compliance  issues.  Although  the  Company  believes  that the
      assumptions underlying the forward-looking statements contained herein are
      reasonable,  any of the  assumptions  could be  inaccurate,  and therefore
      there can be no assurance that such statements  included in this quarterly
      report  will  prove  to  be   accurate.   In  light  of  the   significant
      uncertainties inherent in the forward-looking  statements included herein,
      the   inclusion  of  such   information   should  not  be  regarded  as  a
      representation  by the  Company or any other  person  that the  results or
      conditions described in such statements or the objectives and plans of the
      Company will be achieved.

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


Results of Operations

      Income and occupancy
      The  Company's  property  operations  for the three months ended March 31,
      1999 include the results of operations from the 58 properties  acquired to
      date.  The increased  rental  income and operating  expenses for the first
      quarter  1999  over the  first  quarter  1998 is  primarily  due to a full
      quarter of operation of the 7 properties acquired in 1998.

      Substantially  all of the Company's income is from the rental operation of
      apartment communities.  Rental income for the first three months increased
      to $23,467,091 in 1999 from  $20,120,435 in 1998 due to the factors above.
      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. The
      Company's other sources of income are fees for certain  services  provided
      to Apple and returns on the investment of its cash and cash reserves.

      Overall economic occupancy for the Company's  properties  averaged 90% and
      91% for the three  months  ended  March 31,  1999 and 1998,  respectively.
      Overall average rental rates for the portfolio increased 4.4% from $586 at
      March 31, 1998, to $612 at March 31, 1999.

      Comparable property operations
      On a comparative basis, the 51 properties  acquired prior to 1998 provided
      rental and operating income of $20,738,490 and  $13,581,933,  respectively
      during the quarter ended March 31, 1999 and  $19,820,432  and  $12,883,959
      for the same period in 1998.  This represents an increase from the quarter
      ended March 31,  1998 to the  quarter  ended March 31, 1999 of 5% for both
      rental and operating income.

<PAGE>


      Expenses
      Total expenses for the first three months  increased 18% to $15,320,693 in
      1999 from $12,998,513 in 1998. The increase is due largely to full quarter
      of expenses of the 1998  acquisitions.  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 months ended March 31, 1999 and 1998.

      Depreciation   expense  for  the  first  three  months  has  increased  to
      $5,802,371  in 1999 from  $4,683,384  in 1998.  The  increase  is directly
      attributable to the full quarter of depreciation of the 1998 acquisitions.

      General and administrative  expenses totaled 1.9% of rental income for the
      three  months  ended  March  31,1999 and 1.8% for the same period in 1998.
      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  earned  interest  income of $7,324 in 1999 and $9,460 in 1998
      from the  investment of its cash and cash reserves.  Dividend  income from
      the  Company's  investment in Apple was $83,550 for the three months ended
      March  31,1999  and  1998.  The  Company  incurred   interest  expense  of
      $3,415,448 and $2,820,918  during the first three months of 1999 and 1998,
      respectively, associated with borrowings under its line of credit. This is
      a result of the increased use of its line of credit to fund acquisitions.

      Income and expense from relationship  with Apple Residential  Income Trust
      The Company  received  $747,803 and $351,534 for the quarters  ended March
      31,1999 and 1998,  respectively,  for  advisory  and  property  management
      services rendered to Apple. The Company received $313,484 and $490,500 for
      the quarters  ended March 31,1999 and 1998,  respectively,  in real estate
      commissions  under  separate  contract and amortized  $134,798 as of March
      31,1999 and  $259,965 as of March  31,1998 of the  purchase  price of this
      contract.


<PAGE>



Liquidity and Capital Resources

      Capital  Requirements
      The  Company has an ongoing  capital  expenditure  commitment  to fund its
      renovation  program for recently  acquired  properties.  In addition,  the
      Company is always assessing potential  acquisitions and intends to acquire
      additional  properties  during  1999.  However,  no  material  commitments
      existed on April 20, 1999 for the purchase of additional  properties.  The
      expected  source  to fund  the  improvements  and  acquisitions  is from a
      variety of sources including  additional equity, cash reserves,  and debt,
      provided by its line of credit (including possible increases  thereunder).
      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  $2.5  million of  improvements  to its  various
      properties  during the first quarter of 1999. It is anticipated  that some
      $14 million in additional  capital  improvements  will be completed during
      the next year on the current portfolio.

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

      Capital  resources are expected to grow with the future sale of its shares
      and from cash flow from operations. Approximately 25% of all first quarter
      1999  distributions,  totaling  $2,526,679,  were reinvested in additional
      common shares. In general,  the Company's  liquidity and capital resources
      are expected to be adequate to meet its cash requirements in 1999.

      Investment  in Apple  Residential  Income Trust
      As of March 31, 1999,  the Company  owned  417,778  common shares of Apple
      representing  approximately  1.4% of common shares of Apple outstanding at
      March 31,1999. The Company has a continuing right to own up to 9.8% of the
      common shares of Apple at the market price, net of selling commissions.


      Notes payable
      As of March 31, 1999, the Company's outstanding balance of $200 million on
      the  acquisition  line which is the maximum  permitted  on the line. A $25
      million extension included in the $200 million line of credit was extended
      from April 15, 1999 to August 15, 1999.  The Company  continued to finance
      improvements  during the quarter using its  unsecured  line of credit with
      the  consortium  of  banks.  As  of  March  31,1999  the  Company  had  an
      outstanding  balance of $3,000 on its general corporate line of credit. In
      addition, the Company had outstanding a $5.5 million unsecured note.


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

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

      Management believes it is devoting the resources necessary to achieve year
      2000 readiness in a timely manner.


<PAGE>



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

  (a) Exhibits - Exhibit 27-Financial Data Schedule

  (b) Reports on Form 8-K

            None




<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:  5/7/99                      BY: /s/ Stanley J. Olander
                                       -----------------------------
                                   Stanley J. Olander
                                   Vice President and Chief Financial Officer