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| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|-----------------------------------------------------------------------------------------|

| £ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|--------|------------------------------------------------------------------------------------------|

| CALIFORNIA                                                     | 33-0827161                           |
|----------------------------------------------------------------|--------------------------------------|
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
|                                                           |                                 |
| 1920 MAIN STREET, SUITE 400, IRVINE, CA                        | 92614                                |
| (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                       | (ZIP CODE)                           |

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| PART I.      | FINANCIAL INFORMATION                                                                                                         |   |
|--------------|-------------------------------------------------------------------------------------------------------------------------------|--------|
|         |                                                                                                                          |   |
| Item 1.      | Financial Statements:                                                                                                         |   |
|         |                                                                                                                          |   |
|         | Condensed Balance Sheets as of June 30, 2009 (unaudited) and December 31, 2008                                                | 3      |
|         |                                                                                                                          |   |
|         | Condensed Statements of Operations for the Three and Six Months ended June 30, 2009 (unaudited) and June 30, 2008 (unaudited) | 4      |
|         |                                                                                                                          |   |
|         | Condensed Statement of Members’ Capital for the Six Months ended June 30, 2009 (unaudited)                              | 5      |
|         |                                                                                                                          |   |
|         | Condensed Statements of Cash Flows for the Six Months ended June 30, 2009 (unaudited) and June 30, 2008 (unaudited)           | 6      |
|         |                                                                                                                          |   |
|         | Notes to Condensed Financial Statements (unaudited)                                                                           | 7      |
|         |                                                                                                                          |   |
| Item 2.      | Management’s Discussion and Analysis of Financial Condition and Results of Operations                                   | 12     |
|         |                                                                                                                          |   |
| Item 3.      | Quantitative and Qualitative Disclosures About Market Risk                                                                    | 14     |
|         |                                                                                                                          |   |
| Item 4.      | Controls and Procedures                                                                                                       | 14     |
|         |                                                                                                                          |   |
| PART II.     | OTHER INFORMATION                                                                                                             |   |
|         |                                                                                                                          |   |
| Item 4.      | Submission of Matters to a Vote of Security Holders                                                                           | 15     |
|         |                                                                                                                          |   |
| Item 6.      | Exhibits                                                                                                                      | 15     |
|         |                                                                                                                          |   |
| SISIGNATURES | 16                                                                                                                            |

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CORNERSTONE REALTY FUND, LLC

|                                                                                                                                                                                                |   | June 30, 2009 |       |   | December 31, 2008 |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|------------|--------|------------------------|--------|
|                                                                                                                                                                                                |   | (unaudited)        |       |   | (a)                    |   |
| ASSETS                                                                                                                                                                                              |   |               |       |   |                   |   |
|                                                                                                                                                                                                |   |               |       |   |                   |   |
| Cash and cash equivalents                                                                                                                                                                           |   | $                  | 1,669,000  |   |                   | $      | 2,289,000 |   |
| Investments in real estate                                                                                                                                                                          |   |               |       |   |                   |   |   |   |
| Land                                                                                                                                                                                                |   |               | 11,474,000 |   |                   |   | 11,474,000 |   |
| Buildings and improvements, net                                                                                                                                                                     |   |               | 19,542,000 |   |                   |   | 19,885,000 |   |
| Intangible lease assets, net                                                                                                                                                                        |   |               | 189,000    |   |                   |   | 198,000 |   |
| Intangible in-place lease assets, net                                                                                                                                                               |   |               | 40,000     |   |                   |   | 84,000 |   |
|                                                                                                                                                                                                |   |               | 31,245,000 |   |                   |   | 31,641,000 |   |
|                                                                                                                                                                                                |   |               |       |   |                   |   |   |   |
| Tenant and other receivables, net                                                                                                                                                                   |   |               | 280,000    |   |                   |   | 274,000 |   |
| Prepaid expenses and other assets                                                                                                                                                                   |   |               | 31,000     |   |                   |   | 36,000 |   |
| Leasing commissions, less accumulated amortization of $443,000 as of June 30, 2009 and $391,000 as of December 31, 2008                                                                             |   |               | 199,000    |   |                   |   | 161,000 |   |
|                                                                                                                                                                                                |   |               |       |   |                   |   |   |   |
| Total assets                                                                                                                                                                                        |   | $                  | 33,424,000 |   |                   | $      | 34,401,000 |   |
|                                                                                                                                                                                                |   |               |       |   |                   |   |   |   |
| LIABILITIES AND MEMBERS’ CAPITAL                                                                                                                                                              |   |               |       |   |                   |   |   |   |
|                                                                                                                                                                                                |   |               |       |   |                   |   |   |   |
| Liabilities                                                                                                                                                                                         |   |               |       |   |                   |   |   |   |
| Accounts payable, accrued and other liabilities                                                                                                                                                     |   | $                  | 266,000    |   |                   | $      | 316,000 |   |
| Real estate taxes payable                                                                                                                                                                           |   |               | 219,000    |   |                   |   | 219,000 |   |
| Tenant security deposits                                                                                                                                                                            |   |               | 276,000    |   |                   |   | 295,000 |   |
| Intangible lease liability, net                                                                                                                                                                     |   |               | 17,000     |   |                   |   | 32,000 |   |
| Total liabilities                                                                                                                                                                                   |   |               | 778,000    |   |                   |   | 862,000 |   |
|                                                                                                                                                                                                |   |               |       |   |                   |   |   |   |
| Members’ capital (100,000 units authorized and issued as of June 30, 2009 and December 31, 2008; 99,161 and 99,350 units outstanding as of June 30, 2009 and December 31, 2008, respectively) |   |               | 32,646,000 |   |                   |   | 33,539,000 |   |
|                                                                                                                                                                                                |   |               |       |   |                   |   |   |   |
| Total liabilities and members’ capital                                                                                                                                                        |   | $                  | 33,424,000 |   |                   | $      | 34,401,000 |   |

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CORNERSTONE REALTY FUND, LLC

|                                                 |   | Three Months Ended June 30, |    |   | Six Months Ended June 30, |   |
|------------------------------------------------------|--------|----------------------------------|---------|--------|--------------------------------|--------|
|                                                 |   | 2009                             |    |   | 2008                           |   |   | 2009 |   |   | 2008 |   |
|                                                 |   |                             |    |   |                           |   |   |   |   |   |   |   |
| Revenues                                             |   |                             |    |   |                           |   |   |   |   |   |   |   |
| Rental revenues                                      |   | $                                | 765,000 |   |                           | $      | 855,000 |   |   | $ | 1,538,000 |   |   | $ | 1,704,000 |   |
| Tenant reimbursements and other income               |   |                             | 164,000 |   |                           |   | 169,000 |   |   |   | 314,000 |   |   |   | 350,000 |   |
|                                                 |   |                             | 929,000 |   |                           |   | 1,024,000 |   |   |   | 1,852,000 |   |   |   | 2,054,000 |   |
| Expenses                                             |   |                             |    |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Property operating and maintenance                   |   |                             | 187,000 |   |                           |   | 284,000 |   |   |   | 389,000 |   |   |   | 514,000 |   |
| Property taxes                                       |   |                             | 144,000 |   |                           |   | 144,000 |   |   |   | 287,000 |   |   |   | 289,000 |   |
| General and administrative                           |   |                             | 88,000  |   |                           |   | 85,000 |   |   |   | 167,000 |   |   |   | 153,000 |   |
| Depreciation and amortization                        |   |                             | 236,000 |   |                           |   | 266,000 |   |   |   | 474,000 |   |   |   | 530,000 |   |
|                                                 |   |                             | 655,000 |   |                           |   | 779,000 |   |   |   | 1,317,000 |   |   |   | 1,486,000 |   |
|                                                 |   |                             |    |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Interest income                                      |   |                             | -       |   |                           |   | 10,000 |   |   |   | 1,000 |   |   |   | 33,000 |   |
|                                                 |   |                             |    |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Net income                                           |   | $                                | 274,000 |   |                           | $      | 255,000 |   |   | $ | 536,000 |   |   | $ | 601,000 |   |
|                                                 |   |                             |    |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Net income allocable to managing member              |   | $                                | 27,000  |   |                           | $      | 26,000 |   |   | $ | 54,000 |   |   | $ | 60,000 |   |
|                                                 |   |                             |    |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Net income allocable to unit holders                 |   | $                                | 247,000 |   |                           | $      | 229,000 |   |   | $ | 482,000 |   |   | $ | 541,000 |   |
|                                                 |   |                             |    |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Per unit amounts                                     |   |                             |    |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Basic and diluted income allocable to unit holders   |   | $                                | 2.49    |   |                           | $      | 2.30 |   |   | $ | 4.85 |   |   | $ | 5.43 |   |
|                                                 |   |                             |    |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Basic and diluted weighted average units outstanding |   |                             | 99,231  |   |                           |   | 99,598 |   |   |   | 99,296 |   |   |   | 99,635 |   |

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CORNERSTONE REALTY FUND, LLC

| Balance, December 31, 2008            |   | $      | 33,539,000 |   |
|---------------------------------------|--------|--------|------------|--------|
|                                  |   |   |       |   |
| Cash distributions to unit holders    |   |   | (1,238,000 | )      |
| Cash distributions to managing member |   |   | (125,000   | )      |
| Units repurchased and retired         |   |   | (66,000    | )      |
| Net income                            |   |   | 536,000    |   |
|                                  |   |   |       |   |
| Balance, June 30, 2009                |   | $      | 32,646,000 |   |

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CORNERSTONE REALTY FUND, LLC

|                                                                              |   | Six Months Ended June 30, |       |
|-----------------------------------------------------------------------------------|--------|--------------------------------|------------|
|                                                                              |   | 2009                           |       |   | 2008 |   |
| OPERATING ACTIVITIES                                                              |   |                           |       |   |   |   |
| Net income                                                                        |   | $                              | 536,000    |   |   | $ | 601,000 |   |
| Adjustments to reconcile net income to net cash provided by operating activities: |   |                           |       |   |   |   |   |   |
| Provision for bad debt                                                            |   |                           | 9,000      |   |   |   | 32,000 |   |
| Depreciation and amortization                                                     |   |                           | 474,000    |   |   |   | 530,000 |   |
| Changes in operating assets and liabilities                                       |   |                           |       |   |   |   |   |   |
| Other assets                                                                      |   |                           | (100,000   | ) |   |   | (96,000 | ) |
| Accounts payable, accrued and other liabilities                                   |   |                           | (84,000    | ) |   |   | (89,000 | ) |
|                                                                              |   |                           |       |   |   |   |   |   |
| Net cash provided by operating activities                                         |   |                           | 835,000    |   |   |   | 978,000 |   |
|                                                                              |   |                           |       |   |   |   |   |   |
| INVESTING ACTIVITIES                                                              |   |                           |       |   |   |   |   |   |
| Investments in real estate                                                        |   |                           | (26,000    | ) |   |   | (159,000 | ) |
|                                                                              |   |                           |       |   |   |   |   |   |
| Net cash used in investing activities                                             |   |                           | (26,000    | ) |   |   | (159,000 | ) |
|                                                                              |   |                           |       |   |   |   |   |   |
| FINANCING ACTIVITIES                                                              |   |                           |       |   |   |   |   |   |
| Cash distributions to unit holders                                                |   |                           | (1,238,000 | ) |   |   | (2,246,000 | ) |
| Cash distributions to managing member                                             |   |                           | (125,000   | ) |   |   | (104,000 | ) |
| Units repurchased and retired                                                     |   |                           | (66,000    | ) |   |   | (74,000 | ) |
|                                                                              |   |                           |       |   |   |   |   |   |
| Net cash used in financing activities                                             |   |                           | (1,429,000 | ) |   |   | (2,424,000 | ) |
|                                                                              |   |                           |       |   |   |   |   |   |
| Net decrease in cash                                                              |   |                           | (620,000   | ) |   |   | (1,605,000 | ) |
|                                                                              |   |                           |       |   |   |   |   |   |
| Cash and cash equivalents at beginning of period                                  |   |                           | 2,289,000  |   |   |   | 4,201,000 |   |
|                                                                              |   |                           |       |   |   |   |   |   |
| Cash and cash equivalents at end of period                                        |   | $                              | 1,669,000  |   |   | $ | 2,596,000 |   |

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CORNERSTONE REALTY FUND, LLC

| 1. | Organization and Business |
|----|---------------------------|

|   | — | CIP generally has complete and exclusive discretion in the management and control of our operations; however, unit holders holding the majority of all outstanding and issued units have certain specified voting rights which include the removal and replacement of the Managing Member.                                                                                                                                                                                                                      |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | — | Net Cash Flow from Operations, as defined, will be distributed 90% to the unit holders and 10% to the Managing Member until the unit holders have received either an 8% or 12% cumulative, non-compounded annual return on their Invested Capital Contributions, as defined.  The 12% return applies to specified early investors for the twelve-monthperiod subsequent to the date of their Invested Capital Contributions and is in lieu of the 8% return during that period.                       |
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | — | Net Sales Proceeds, as defined, will be distributed first, 100% to the unit holders in an amount equal to their Invested Capital Contributions; then, 90% to the unit holders and 10% to the Managing Member until the unit holders have received an amount equal to the unpaid balance of their aggregate cumulative, non-compounded annual return ontheir Invested Capital Contributions; and thereafter, 50% to the unit holders and 50% to the Managing Member.                                             |
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | — | Net Income, as defined, is allocated first, 10% to the Managing Member and 90% to the unit holders until Net Income allocated equals cumulative Net Losses, as defined, previously allocated in such proportions; second, in proportion to and to the extent of Net Cash Flow from Operations and Net Sales Proceeds previously distributed to the members,exclusive of distributions representing a return of Invested Capital Contributions; and then 50% to the Managing Member and 50% to the unit holders. |
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | — | Net Loss is allocated first, 50% to the Managing Member and 50% to the unit holders, until Net Loss allocated equals cumulative Net Income previously allocated in such proportions; then remaining Net Loss is allocated 10% to the Managing Member and 90% to the unit holders.                                                                                                                                                                                                                               |

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|   | — | All allocations and distributions to the unit holders are to be pro rata in proportion to their ownership shares.                                                  |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                                               |
|   | — | Effective February 22, 2007, our Operating Agreement was amended to permit repurchase of units on such terms and conditions as the managing member may determine.  |
|   |    |                                                                                                                                                               |
|   | — | Effective June 2, 2009, our Operating Agreement was amended and the dissolution date in Section 11.1 (a) was extended from December 31, 2010 to December 31, 2012. |

| 2. | Summary of Significant Accounting Policies |
|----|--------------------------------------------|

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|                              |   | Lease Intangibles |    |
|-----------------------------------|--------|-------------------|---------|
| July 1, 2009 to December 31, 2009 |   | $                 | 29,000  |   |
| 2010                              |   |              | 22,000  |   |
| 2011                              |   |              | 18,000  |   |
| 2012                              |   |              | 18,000  |   |
| 2013                              |   |              | 13,000  |   |
| Thereafter                        |   |              | 112,000 |   |
| Total                             |   | $                 | 212,000 |   |

|                                                         |   | Land   |       |   | Buildings and Improvements |   |       | Intangible Lease Assets |   |   | In-Place Lease Assets |   |   | Intangible Lease Liability |     |
|--------------------------------------------------------------|--------|--------|------------|--------|----------------------------|--------|------------|-------------------------|--------|--------|-----------------------|--------|--------|----------------------------|----------|
| Investments in real estate and related lease intangibles     |   | $      | 11,474,000 |   |                       | $      | 22,537,000 |                    |   | $      | 365,000               |   |   | $                          | 894,000  |   |   | $ | (154,000 | ) |
|                                                         |   |   |       |   |                       |   |       |                    |   |   |                  |   |   |                       |     |   |   |   |   |   |
| Less: accumulated depreciation and amortization              |   |   | —    |   |                       |   | (2,995,000 | )                       |   |   | (176,000              | )      |   |                       | (854,000 | ) |   |   | 137,000 |   |
| Net investments in real estate and related lease intangibles |   | $      | 11,474,000 |   |                       | $      | 19,542,000 |                    |   | $      | 189,000               |   |   | $                          | 40,000   |   |   | $ | (17,000 | ) |

|                                                         |   | Land   |       |   | Buildings and Improvements |   |       | Intangible Lease Assets |   |   | In-Place Lease Assets |    |   | Intangible Lease Liability |     |
|--------------------------------------------------------------|--------|--------|------------|--------|----------------------------|--------|------------|-------------------------|--------|--------|-----------------------|---------|--------|----------------------------|----------|
| Investments in real estate and related lease intangibles     |   | $      | 11,779,000 |   |                       | $      | 23,829,000 |                    |   | $      | 550,000               |    |   | $                          | 894,000  |   |   | $ | (155,000 | ) |
| Less: impairment charge                                      |   |   | (305,000   | )      |                       |   | (1,318,000 | )                       |   |   | (185,000              |  ) |   |                       |     |   |   |   |   |   |
| Investment in real estate values                             |   |   | 11,474,000 |   |                       |   | 22,511,000 |                    |   |   | 365,000               |    |   |                       | 894,000  |   |   |   | (155,000 | ) |
| Less: accumulated depreciation and amortization              |   |   | —    |   |                       |   | (2,626,000 | )                       |   |   | (167,000              | )       |   |                       | (810,000 | ) |   |   | 123,000 |   |
| Net investments in real estate and related lease intangibles |   | $      | 11,474,000 |   |                       | $      | 19,885,000 |                    |   | $      | 198,000               |    |   | $                          | 84,000   |   |   | $ | (32,000 | ) |

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| 3. | Subsequent Event |
|----|------------------|

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

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Item 3.  Quantitative and Qualitative Disclosures About Market Risk

Item 4.  Controls and Procedures

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

Item 6.  Exhibits

|   | 3.1 | Amended and Restated Operating Agreement of Cornerstone Realty Fund, LLC dated as of June 30, 2003 (as amended on February 22, 2007 and June 2, 2009). |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|--------|------|-----------------------------------------------------------------------------------------------------|

|   | 31.2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|--------|------|-----------------------------------------------------------------------------------------------------|

|   | 32 | Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. §1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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SIGNATURES

|   | CORNERSTONE REALTY FUND, LLC |
|--------|------------------------------|
|   |                         |   |
|   | By:                          | CORNERSTONE INDUSTRIAL PROPERTIES, LLC |
|   |                         | its Managing Member |
|   |                         |   |
|   |                         | By: | CORNERSTONE VENTURES, INC. |
|   |                         |   | its Manager |
|   |                         |   |   |   |
|   |                         |   | By: | /s/ TERRY G. ROUSSEL |   |
|   |                         |   |   | Terry G. Roussel, President |
|   |                         |   |   | (Principal Executive Officer) |
|   |                         |   |   |   |
|   |                         |   | By: | /s/ SHARON C. KAISER |   |
|   |                         |   |   | Sharon C. Kaiser, |
|   |                         |   |   | Chief Financial Officer |
|   |                         |   |   | (Principal Financial Officer and |
|   |                         |   |   | Principal Accounting Officer) |

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