Item 2. Acquisition or Disposition of Assets

                           HAMPTON POINTE APARTMENTS
                          Charleston, South Carolina

     On March 31, 1998, Cornerstone Realty Income Trust, Inc. (together with its
subsidiary,   CRIT-NC,  LLC,  the  "Company")   purchased   the  Hampton  Pointe
Apartments,  a  304-unit  apartment  complex  having  an  address  of  1916  Sam
Rittenberg Boulevard, Charleston, South Carolina (the "Property").

     The seller, Hampton Pointe Properties, was affiliated with the Company. The
purchase  price was  $12,225,000.  At  closing,  the entire  purchase  price was
borrowed under the Company's unsecured line of credit. Title to the Property was
conveyed to the Company by limited warranty deed.

     LOCATION.  The  following  information  is based in part  upon  information
provided by the Charleston Chamber of Commerce.

     The  Charleston  Metropolitan  Statistical  Area  ("MSA") is  comprised  of
Charleston, Berkeley and Dorchester Counties.  The approximate population of the
MSA  is  570,000.   Charleston  County  has   approximately   330,000 residents,
approximately 85,000 of which are in the city limits.

     The  principal  economic  factors in the region are  distribution  and port
facilities,  tourism,  medical services and the military. 

     The Port of Charleston is the leading container cargo port in the southeast
and on the entire east coast ranks second only to the combined ports of New York
and New Jersey.  BMW and NUCOR are two recent examples of companies that rely on
the Port of Charleston.

     Tourism is a major  factor in the area,  with  approximately  five  million
visitors  annually.   Tourist  attractions  include  the  historic  district  of
Charleston,  beaches,  golf courses,  and restaurants.  It is estimated that the
total  economic  impact of the tourist  industry in the region is  approximately
$1.5  billion   annually,   accounting   for   approximately   34,000  jobs  and
approximately 14% of the total work force.

     Charleston is the home to the Medical  University of South Carolina,  which
accounts for approximately  7,500 jobs. A total of approximately  16,000 persons
are employed in the region's 10 hospitals and medical facilities.






<PAGE>

     The United States Navy employs  approximately 7,800 people in the region in
installations such as Charleston Naval Weapons Station, Naval Hospital and Naval
Command,  Control and Ocean  Surveillance  Center in Service  Engineering,  East
Coast  Division.  In addition,  the Charleston Air Force Base employs over 5,400
people. From 1989 to 1996, naval employment in the region dropped from 21% to 3%
of total jobs. However,  the region experienced a concurrent increase in jobs in
other sectors.

     The overall unemployment rate in the region is currently approximately 5%.

     The  Property  is  listed in the West  Ashley  region  of  Charleston.  The
immediate  area consists of other  multi-family  housing,  commercial and retail
development  and  single-family  housing.  The  Property  is located  near major
shopping centers,  schools and churches and is accessible from Interstate 26 and
Mark Clark Expressway.  Charleston's  largest mall, the Citadel Mall, is located
less  than one mile from the  Property  and has four  major  anchor  stores  and
approximately one million square feet of space. The Property is an approximately
15-minute drive from the College of Charleston, downtown Charleston, the airport
and the beach.

     DESCRIPTION  OF THE  PROPERTY.  The Property  consists of 304  garden-style
apartments located in 19 two-story  buildings on approximately 20 acres of land.
The Property was constructed in 1986.

     The Company  believes that the Property has generally been well  maintained
and  is  generally  in  good  condition.   However,  the  Company  has  budgeted
approximately   $912,000  for  repairs  and  improvements   including  clubhouse
renovation, re-siding of all building exteriors and window replacement.

     The Property offers four different unit types. The unit mix and rents being
charged new tenants as of June 1998 are as follows:

                                                APPROXIMATE
                                                 INTERIOR        MONTHLY
 QUANTITY                 TYPE                SQUARE FOOTAGE     RENTAL
----------   -----------------------------   ----------------   --------

64           One bedroom, one bathroom               750          $510
64           One bedroom, one bathroom               900           560





                                       2



<PAGE>
                                                APPROXIMATE
                                                 INTERIOR        MONTHLY
 QUANTITY                 TYPE                SQUARE FOOTAGE     RENTAL
----------   -----------------------------   ----------------   --------

88           Two bedrooms, two bathrooms           1,175           650
88           Two bedrooms, two bathrooms           1,200           675


     The  apartments  provide a combined total of  approximately  314,000 square
feet of net rentable area.

     Leases at the  Property are for terms of one year or less.  Average  rental
rates for the past five years have generally remained constant or increased.  As
an example, a two-bedroom, two-bathroom apartment (1,175 square feet) rented for
$585 in 1993,  $585 in 1994,  $585 in 1995,  $600 in 1996, and $650 in 1997. The
average  effective annual rental per square foot at the Property for 1993, 1994,
1995, 1996 and 1997 was $6.39, $6.39, $6.39, $6.55, and $7.10, respectively.

     The buildings are wood frame  construction on concrete slabs. The buildings
have pitched roofs with asphalt shingles. Exteriors are cedar lap siding.


     The Property has two outdoor swimming pools, a Jacuzzi,  two lighted tennis
courts,  a sand  volleyball  court, a fitness  center,  a putting green,  picnic
areas, a car wash area with vacuum,  and a laundry  facility.  The Property also
has a large  clubhouse  with an  entertainment  area,  kitchenette  and  leasing
office. There is ample paved parking.


     Apartments units have wall-to-wall  carpeting in the living areas and vinyl
floors in the  kitchen  and  baths,  as well as cable  television  hook-ups  and
individually  controlled  heating  and air  conditioning  units.  Each  unit has
miniblinds, walk-in closets, full-sized washer/dryer connections, a wood-burning
fireplace   and  a  sun  room  or  patio.   Each  kitchen  is  equipped  with  a
refrigerator/freezer,  electric range and oven, dishwasher and garbage disposal.
The owner of the Property supplies cold water,  sewer service and trash removal.
The tenants pay for their  electricity  usage,  which includes air conditioning,
cooking and lights, and for gas usage, which includes heat and hot water.


     There are at least six  apartment  properties in the area that compete with
the  Property.  All offer similar  amenities  and generally  have rents that are
comparable to those of the 


                                       3


<PAGE>

Property.  Based  on a recent  telephone  survey,  the  Company  estimates  that
occupancy in nearby competing  projects  averaged  approximately  96% at May 31,
1998. One of the competing properties,  Westchase  Apartments,  is also owned by
the Company.

     According to information provided by the seller,  physical occupancy at the
Property  averaged  approximately  72% in 1993, 73% in 1994, 85% in 1995, 95% in
1996 and 98% in 1997.  On May 31,  1998,  the  Property  was 98%  occupied.  The
tenants are a mix of white-collar and blue-collar workers,  students and retired
persons.

     The 1997 real estate taxes  applicable to the Property  were  calculated as
assessed  value  times  6%  times  $0.3181,  plus a solid  waste  tax of $63 per
apartment  unit. The real estate taxes for 1997 were  calculated to be $158,576.
The assessed value was $8,699,800. The basis of the depreciable residential real
property portion of the Property (currently estimated at about $10,973,281) will
be  depreciated  over 27.5  years on a  straight  line  basis.  The basis of the
personal  property  portion will be depreciated in accordance  with the modified
accelerated cost recovery system of the Code.

     The  Company  believes  that  the  Property  is  and  will  continue  to be
adequately covered by property and liability insurance.

     MATERIAL  FACTORS  CONSIDERED  IN  ASSESSING  THE  PROPERTY.   The  factors
considered  by the  Company  to be  relevant  in  evaluating  the  Property  for
acquisition by the Company included the following:

     1. The Company  believes  that the  Charleston,  South  Carolina  area will
experience continued strong economic development and steady population increase,
owing to a strong,  diversified  economy  characterized  by at least  four major
employment  factors  (port  facilities,  tourism,  medical  facilities  and  the
military),  and that such development and increase will support stable occupancy
rates and reasonable increases in rents at the Property.

     2.  Based upon an engineering  report and its own inspections,  the Company
believes that the Property is in good condition.

     3.  The Property is  conveniently  located and proximate to area  employers
and shopping.

     4.  The Company is familiar with the Charleston, South Carolina market.



                                       4



<PAGE>

         The Company is not aware of any material  adverse  factors  relating to
the  Property  not set forth in this  report  that  would  cause  the  financial
information contained in this report not to be necessarily  indicative of future
operating results.


              PINNACLE RIDGE (formerly Edgewood Knoll) APARTMENTS
                           Asheville, North Carolina

         On March 31, 1998, the Company purchased the Edgewood Knoll Apartments,
a  168-unit  apartment  complex  having  an  address  of  600  Merrimon  Avenue,
Asheville,  North Carolina (the "Property").  The Company purchased the Property
from a seller (R.B.R.  & S.T., a North Carolina limited  partnership)  which was
unaffiliated with the Company.  The purchase price was $5,750,000,  all of which
was borrowed on an interim basis under the Company's  unsecured  line of credit.
Title to the Property was conveyed to the Company by limited  warranty deed. The
Company has changed the name of the Property to "Pinnacle Ridge Apartments."

         LOCATION.  The following  information is based in part upon information
provided by the Asheville Chamber of Commerce.

         The Property is located in North Carolina, in the City of Asheville and
Buncombe County, which collectively have a population of approximately  250,000.
Asheville is located approximately 115 miles from Charlotte, North Carolina, and
65 miles from Greenville, South Carolina.

         The City of Asheville and Buncombe  County are  represented by a number
of  nationally  recognized  companies  and  organizations  in the  health  care,
education and  manufacturing  sectors.  Some of the major  employers in the area
include  Champion  International  (a manufacturer of paper and  paperboard),  GE
Lighting  Systems,  Westinghouse  Electric  and  ITT  Automotive.  In  addition,
Memorial Mission Hospital and St. Joseph Hospital are major area employers.

     The major  highways  serving the area are  Interstates  40, 26 and 240. The
Asheville Regional Airport is centrally located within the metropolitan area and
is  approximately  20 miles from the  Property.  Also,  Asheville is home to the
University of North Carolina at Asheville,  with an enrollment of  approximately
3,200 students.

         The  property is located on Merrimon  Avenue,  in the north  section of
Asheville, within the city limits. The area


                                       5


<PAGE>

surrounding the Property is well-developed,  with various retail centers as well
as single-family  residences.  The Property is located  approximately  two miles
from the city's  central  business  district,  and is  convenient  to employment
centers,  shops and  restaurants  located  there.  The Property is also near two
major shopping centers, Asheville Mall and Biltmore Square Mall.

         DESCRIPTION OF THE PROPERTY.  The Property consists of 168 garden-style
and townhouse-style apartments in 25 two-story buildings and one two-story house
located on approximately 17 acres of land. The Property was constructed in 1951.

     The Company  believes  that the Property is  generally  in good  condition.
However, approximately $336,000 has been budgeted by the Company for repairs and
improvements,  including construction of an outdoor swimming pool, conversion of
the two-story  Victorian house on site (which  currently  contains two apartment
units) into a clubhouse,  exterior painting and siding replacement,  landscaping
and interior upgrades.

         The Property  offers six unit types.  The unit mix and rents  currently
being charged new tenants as of June 1998 are as follows:


<TABLE>
<CAPTION>
                                                     APPROXIMATE INTERIOR     MONTHLY
 QUANTITY*                    TYPE                      SQUARE FOOTAGE        RENTAL
-----------   -----------------------------------   ----------------------   --------
<S>           <C>                                   <C>                      <C>
      8       One bedroom, one bathroom                        760             $500
      4       One bedroom, one bathroom (TH)                   760              515
     62       Two bedrooms, one bathroom                       816              540
     74       Two bedrooms, one bathroom (TH)                  912              550
     12       Three bedrooms, one bathroom (TH)              1,038              615
      6       Three bedrooms, two bathrooms                  1,200              630

</TABLE>

*        At the  time of  purchase  by the  Company,  the  Property  included  a
         two-story  house with two  apartment  units.  As indicated  above,  the
         Company  expects to convert the two-story  house into a clubhouse,  and
         these two apartment units will cease to exist.


                                       6


<PAGE>
         The apartments provide a combined total of approximately 147,000 square
feet of net rentable area

         Currently,  the Property does not have standard common-area  amenities,
although,  as noted above, the Company plans to construct a swimming pool at the
Property and to convert an existing two-story house into a clubhouse and amenity
center.

         Leases  at the  Property  generally  are for terms of one year or less.
Average  rental rates for the past five years have  generally  been  constant or
increasing.  As an example,  a  two-bedroom,  one-bathroom  apartment  unit (816
square feet) rented for $350 in 1993,  $375 in 1994, $375 in 1995, $375 in 1996,
and $480 in 1997.  The average  effective  annual  rental per square foot at the
Property for 1993, 1994, 1995, 1996, and 1997 was $4.84,  $5.18,  $5.18,  $5.18,
and $6.63, respectively.

         The buildings are wood frame construction over crawl spaces.  Exteriors
have brick veneer and a combination  of painted  hardboard  lap siding,  painted
cementitious-type siding and painted T-111 siding. There are sloped gabled roofs
covered with asphalt shingles.

         All apartment units have hardwood floors in the living areas,  and tile
floors in the  kitchen and baths.  Each  apartment  unit has a cable  television
hook-up and an individually  controlled  heating and air conditioning unit. Each
apartment unit also has miniblinds and full-sized washer/dryer connections. Each
kitchen  is  equipped  with a  refrigerator/freezer,  electric  range  and oven,
dishwasher and garbage disposal.  The owner of the Property supplies cold water,
sewer  service and trash  removal.  The  tenants pay for their gas usage,  which
includes  heat (in all  units)  and hot  water in  garden  units,  and for their
electricity  usage,  which includes  air-conditioning,  cooking,  lights and hot
water in townhouse units.

          There are at least three apartment properties in the area that compete
with the Property. All offer similar amenities and have rents that are generally
comparable to those of the Property.  Based on a recent  telephone  survey,  the
Company   estimates  that  occupancy  in  nearby  competing   projects  averaged
approximately 91% at May 31, 1998.

          According to information provided by the seller, physical occupancy at
the Property  averaged  approximately 90% in 1993, 90% in 1994, 75% in 1995, 70%
in 1996,  and 80% in 1997. On May 31, 1998,  the Property was 90% occupied.  The
current  residents at the Property are employed in a variety of white-collar and
blue-


                                       7


<PAGE>

collar jobs, and there are also student residents and retired persons.

     The 1997 real estate tax rate applicable to the Property was $1.51 per $100
of assessed  value,  and the real estate  taxes for 1997 were  calculated  to be
$44,208.  The  assessed  value  was  $2,927,700.  The  basis of the  depreciable
residential real property portion of the Property (currently  estimated at about
$4,187,566)  will be depreciated  over 27.5 years on a straight-line  basis. The
basis of the personal  property  portion will be depreciated in accordance  with
the modified  accelerated cost recovery system of the Code.  Amounts to be spent
by the Company on repairs and  improvements  will be treated for tax purposes as
permitted by the Code based on the nature of the expenditures.

     The  Company  believes  that  the  Property  is  and  will  continue  to be
adequately covered by property and liability insurance.

     MATERIAL  FACTORS  CONSIDERED  IN  ASSESSING  THE  PROPERTY.   The  factors
considered  by the  Company  to be  relevant  in  evaluating  the  Property  for
acquisition by the Company included the following:

             1. The Company  believes  that the  Asheville,  North Carolina area
will enjoy continued economic  development and steady population  increase,  and
that such  development  and increase  will support  stable  occupancy  rates and
reasonable increases in rents at the Property.

             2.    Based upon an engineering report and its own inspections, the
Company believes that the Property is generally in sound condition.

             3.    The Property is  conveniently  located and proximate to major
employers and shopping.

             4.    The Company is familiar with the  Asheville,  North  Carolina
rental market.

     The Company is not aware of any material  adverse  factors  relating to the
Property not set forth in this report that would cause the financial information
contained in this report not to be  necessarily  indicative of future  operating
results.


                                       8