FORM 10-Q/A
                                  Amendment #1
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities  Exchange
Act of 1934 For quarterly period ended June 30, 1996

[ ] 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 0-10421

                           CORNERSTONE PROPERTIES INC.
             (Exact name of registrant as specified in its charter)

                     Nevada                                       74-2170858
          (State or other jurisdiction                           (IRS Employer
        of incorporation or organization)                    Identification No.)

                              126 East 56th Street
                            New York, New York 10022
                    (Address of principal executive offices)

                                    (212) 605-7100
                 (Registrant's telephone number, including area code)

      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 [ ]


Number of shares of Common Stock outstanding as of August 14, 1996: 20,309,165

The  registrant  hereby amends Item 1 and Item 2 of its Form 10-Q,  dated August
14, 1996, as set forth in the pages attached hereto.




<PAGE>



Item 1. Financial Statements (continued)

                     CORNERSTONE PROPERTIES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 1996


(1)   NATURE OF THE COMPANY'S BUSINESS
      --------------------------------
      AND SIGNIFICANT ACCOUNTING POLICIES
      -----------------------------------

   Interest  Rate Swap  Agreements:  The Company  accounts for its interest rate
swap agreements as hedges in accordance with SFAS No. 80 "Accounting for Futures
Contracts"  if the swap is  designated  as a hedge and  effectively  reduces the
exposure to the Company of market  interest rate changes.  Changes in the market
value of these  interest  rate swap  agreements  are deferred and  recognized in
income at the expiration or termination of the underlying debt. Forward interest
rate swap  agreements  that do not meet hedge  criteria are  accounted for using
mark-to-market  accounting,  recognizing  any  unrealized  gain  or  loss on the
instrument in the period in which it is outstanding. When swaps are extinguished
at the same time as the underlying debt  instrument,  the cost to extinguish the
swap is  treated as  extraordinary  gain or loss.  When a swap  remains in place
after the underlying instrument matures, it is accounted for on a mark-to-market
basis. The swap termination is accounted for as ordinary gain or loss when it is
extinguished with no underlying debt instrument in place.

Cornerstone  and/or its  subsidiaries  are parties to several interest rate swap
agreements used to hedge its interest rate exposure on floating rate debt (Notes
2 and 3). The  differential  to be paid or received is  recognized in the period
incurred  and  included  net  in  interest  expense.   Cornerstone   and/or  its
subsidiaries may be exposed to loss in the event of non-performance by the other
party to the  interest  rate  swap  agreements.  However,  Cornerstone  does not
anticipate non-performance by the counterparty.





















                                          5

<PAGE>

Item 2

       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
            OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1996


RESULTS OF OPERATIONS
---------------------

Interest Rate Swaps
During the period  analyzed the Company had the  following  interest  rate swaps
outstanding which it accounted for using the accrual method:

The $107 million  interest rate swap  agreement with a maturity date of July 30,
1998,  was  accounted  for on the accrual  method since it was  comprised of two
offsetting  swaps,  resulting  in  a  fixed  payment  from  Cornerstone  to  its
counterparties through the term of the swaps.

The $21  million  interest  rate  swap  agreement  was put in place to hedge the
interest rate risk on  Cornerstone's  $33 million  dollar  credit  facility with
Deutsche Bank. Since this was a floating rate facility, the Company used accrual
accounting  when  accounting for its swap payments.  Upon the refinancing of the
facility into a fixed rate facility in August 1995, this swap was terminated and
the loss recognized as an extraordinary loss.

The $120 million interest rate swap agreement maturing December 31, 2003 was put
in place to hedge the interest  rate risk on the $130  million  letter of credit
facility  with  Deutsche  Bank.  Since this was a floating  rate  facility,  the
Company used accrual accounting when accounting for its swap payments.  Upon the
refinancing of the facility into a fixed rate facility in September  1995,  this
swap was terminated and the loss recognized as an extraordinary loss.

The $110 million interest rate swap agreement maturing December 31, 2003 was put
in place to hedge the interest  rate risk on the $115  million  letter of credit
facility  with  Deutsche  Bank.  Since this was a floating  rate  facility,  the
Company used accrual accounting when accounting for its swap payments.  Upon the
refinancing of the facility into a fixed rate facility in April 1995,  this swap
was terminated and the loss recognized as an extraordinary loss.

For the six  month  periods  ended  June 30,  1996 and June 30,  1995,  interest
expense  of the  Company  included  approximately  $402,000  and  $1.7  million,
respectively, of expense related to interest rate swap agreements. Since the $98
million swap is a forward swap and accounted  for on a mark to market basis,  it
had no effect on the reported interest expense of the Company.












                                          8

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

Cash Flow

                            For  the  six   months For  the  six   months
Cash   flow   provided   by ended June 30, 1996    ended June 30, 1995
(used in):
--------------------------------------------------------------------------
Operating activities                        $5,748                 $9,277
Investing activities                       (3,101)                  (253)
Financing activities                        13,612                (7,982)
Earnings  to fixed  charges                   1.56                      *
ratio

*For  the  six  months  ended  June  30,  1995,  the  Company's   earnings  were
insufficient to cover its fixed charges by approximately $5.4 million.

Cash provided by operating  activities  increased  from $3.8 million for the six
months  ended June 30, 1995 to $14.6  million for the six months  ended June 30,
1996.  This increase was mainly due to the increase in net rental  revenues from
the  properties  of $5.7  million,  the increase in interest and other income of
$1.3 million and the decrease in the minority  interest  share of income of $1.1
million  due to the  Company's  purchase  of the 10%  minority  interest  in One
Norwest Center from Hines and the timing of interest payments during 1995 due to
the restructuring of the Norwest Center debt. The large amount of prepaid rental
income as of December 31, 1994, reduced operating cash flow during 1995.

Cash used in investing  activities  increased to $3.1 million for the six months
ended June 30, 1996 from $0.3 million for the six months ended June 30, 1995 due
to the acquisition of Tower 56.

Cash  provided by financing  activities  increased to $13.6  million for the six
months  ended  June 30,  1996 from a use of cash of $7.9  million as of June 30,
1995. The increase was mainly due to the financing of Tower 56 for $18.0 million
during 1996.  The deficit in 1995 was due to the repayment of the Norwest Center
loan and associated  interest rate swap agreement  termination,  and shareholder
and minority interest partner distributions in 1995.

Earnings  to fixed  charges  increased  to 1.56 times at June 30, 1996 from 0.65
times at June 30, 1995 due to the increased equity  investment in the Company of
over $140 million  during the third quarter of 1995 which allowed the Company to
purchase  assets at a lower  level of  leverage  than had  occurred in the past.
Also, the  refinancing of the $32.5 million term loan and the refinancing of the
mortgage debt on Washington  Mutual Tower has reduced the Company's overall cost
of debt.













                                       8-a

<PAGE>

Funds From Operations
The Company  calculates Funds from Operations (FFO) based upon guidance from the
National  Association of Real Estate Investment Trusts (NAREIT).  FFO is defined
as net income,  excluding gains or losses from debt  restructuring  and sales of
property,  plus  depreciation  and  amortization,   and  after  adjustments  for
unconsolidated joint ventures. The Company has adjusted FFO by the realized gain
on interest rate swap previously discussed in accordance with its mark-to-market
accounting policy.

Industry  analysts  generally  consider  FFO  to be an  appropriate  measure  of
performance  of  an  equity  Real  Estate   Investment   Trust  (REIT)  such  as
Cornerstone.  FFO does not represent cash generated from operating activities in
accordance with generally accepted accounting principles and, therefore,  should
not be considered a substitute for net income as a measure of performance or for
cash flow from  operations  as a measure of liquidity  calculated  in accordance
with generally accepted accounting principles.

The  Company  believes  that FFO is  helpful  to  investors  as a measure of the
performance  of an equity  REIT  because,  along with cash flows from  operating
activities, financing activities and investing activities, it provides investors
an  understanding of the ability of the Company to incur and service debt and to
make  capital  expenditures.  For  cash  flows  from  operating,  financing  and
investing activities,  see the Consolidated Statements of Cash Flows included in
the Consolidated Financial Statements which are part of this report.

For  comparability  purposes,  the amounts  reported in FFO for 1995 differ from
those  previously  reported  to adjust for the  changes  to the FFO  calculation
recently released by the Board of Governors of NAREIT. Additionally, the Company
no longer  reports free and deferred rents as an adjustment to FFO since this is
not part of the industry standard. Therefore, included in FFO for the six months
ended  June  30,  1996  and  1995,  is  approximately   $666,000  and  $609,000,
respectively, of free and deferred rents.


























                                          9
<PAGE>

The table  below  sets forth the  adjustments  which were made to the net income
(loss) of the Company in the  calculation  of FFO for the six months  ended June
30, 1996 and 1995, respectively (in thousands):

                                              Funds From Operations (A)
                                              ---------------------

                                                  Six Months      Six Months
                                                     Ended         Ended
                                                    June 30,       June 30,
                                                     1996           1995
                                                     ----           ----

       Net income (loss) ........................   $  8,857    ($ 5,438)

       NAREIT Adjustments:
          Depreciation and amortization (B) .....     11,801     10,686
          Net gain on swap termination ..........     (5,465)        --
          Minority adjustments ..................     (1,021)       (704)
          Extraordinary loss ....................       --         3,881

       Other Adjustments:
          Amortization on rent notes ............        502         453
          Real estate tax adjustment ............      1,412        --
                                                    --------    --------
       Funds From Operations ....................     16,086       8,878
                                                    --------    --------

       Accrued Preferred Dividend ...............     (1,750)       --
                                                    --------    --------

       Funds From Operations
       Available For Common Shares ..............   $ 14,336    $  8,878
                                                    ========    ========

              (A)  Although the Company  believes  that this table is a full and
              fair presentation of the Company's FFO, similarly  captioned items
              may be defined  differently  by other REITs,  in which case direct
              comparisons may not be possible.

              (B) The depreciation and amortization  adjustment does not include
              amortization  of  deferred  financing  costs and  depreciation  of
              non-real estate assets in accordance with guidance from NAREIT.

The increase in FFO is primarily  attributable  to net earnings  after  interest
expense on the  associated  debt from 125 Summer  Street of  approximately  $3.9
million and net earnings  after  interest  expense on the  associated  debt from
Tower 56 of  approximately  $1.5  million,  both of which were  acquired  in the
fourth  quarter of 1995;  an  increased  share of net  earnings  after  interest
expense  on the  associated  debt  from One  Norwest  Center  in the  amount  of
approximately  $424,000 due to the 10 percent  partnership  interest purchase on
January 1, 1996, and debt refinancing at Washington Mutual Tower which served to
reduce interest expense by approximately $1.4 million.

The Company will seek to continue  increasing  FFO and the value of its property
portfolio by acquiring  additional  properties  that the Company  believes  will
produce  favorable  returns.  As  part  of its  ongoing  business,  the  Company
periodically engages in discussions with public and private real estate entities
regarding possible portfolio or asset acquisitions or business combinations.

                                       9-a


<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 PROPERTIES INC.
                                          (Registrant)


                         By: /s/ John S. Moody
                                 John S. Moody, President and CEO

                                          Date:  February 21, 1997


                         By: /s/ Thomas P. Loftus
                                 Thomas P. Loftus, Vice President and Controller
                                   (Principal Financial Officer)

                                          Date:  February 21, 1997