<PAGE> 1                                          


                          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 quarterly period ended June 30, 1997

                                          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 1-12486


                        Associated Estates Realty Corporation
                (Exact name of registrant as specified in its charter) <PAGE>
 

<TABLE>


         <S>           <C>                 <C>                    <C>
         Ohio             34-1747603        5025 Swetland Court,  44143-1467
                                             Richmond Hts., Ohio  (Zip Code)
    (State or other    (I.R.S. Employer     (Address of principal 
    jurisdiction of    Identification         executive offices)
   incorporation or          Number)                             
     organization)
</TABLE>

          Registrant's telephone number, including area code (216) 261-5000

                       (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 [  ]


                        APPLICABLE ONLY TO CORPORATE ISSUERS:

          Indicate the number of shares outstanding of each of the issuer's
          classes of common as of the latest practicable date.

                 17,072,436 shares outstanding as of August 8, 1997.

                                                                          
          <page 2>
                        ASSOCIATED ESTATES REALTY CORPORATION



                                        INDEX
<TABLE>
<CAPTION>

   PART I  -  FINANCIAL INFORMATION                               Page

           Financial Statements

   <S>                                                            <C>
   ITEM 1


           Consolidated Balance Sheets as of June 30, 1997 
              and December 31, 1996                                 3



           Consolidated Statements of Operations for the six and 
              three month periods ended June 30, 1997 and 1996      4


           Consolidated Statements of Cash Flows for the six 
              month period ended June 30, 1997 and 1996             5



           Notes to Financial Statements                            6


           Management's Discussion and Analysis of Financial 
   ITEM 2     Condition and Results of Operations                  11



   PART II  -  OTHER INFORMATION


           Submission of Matters to a Vote of Security-Holders     23

   ITEM 4 


           Exhibits and Reports on Form 8-K                        23

   ITEM 6


   SIGNATURES                                                      24
</TABLE>


          <page 3>
                        ASSOCIATED ESTATES REALTY CORPORATION
                             CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                               June 30,      December 31,
                                                                 1997            1996     
                                                              (Unaudited)
                           ASSETS
   <S>                                                        <C>           <C>
   Real estate assets:
     Land                                                   $  51,386,948   $  44,241,900 
     Buildings and improvements                               485,745,568     430,920,893 
     Furniture and fixtures                                    22,779,442      20,286,700 
                                                              559,911,958     495,449,493 
       Less:  accumulated depreciation                       (120,632,856)   (112,102,829)
                                                              439,279,102     383,346,664 
       Construction in progress (including land)               23,234,257      18,516,982 
          Real estate, net                                    462,513,359     401,863,646 
   Cash and cash equivalents                                      235,399       1,286,959 
   Restricted cash and investments                              5,533,032       5,625,003 
   Accounts and notes receivable:
     Rents                                                      1,817,544       1,569,907 
     Affiliates                                                10,954,869       1,784,297 
   Deferred charges and prepaid expenses                        6,215,872       5,616,394 
                                                            $ 487,270,075   $ 417,746,206 

            LIABILITIES AND SHAREHOLDERS' EQUITY
   Secured debt                                            $   60,632,260   $  69,024,253 
   Unsecured debt                                             230,820,507     148,788,707 
       Total indebtedness                                     291,452,767     217,812,960 
   Accounts payable and accrued expenses                       14,038,011      14,361,609 
   Dividends payable                                            7,938,683       6,895,071 
   Resident security deposits                                   4,638,534       4,154,418 
   Funds held for non-owned properties                          1,628,100       1,571,219 
   Accrued interest                                             3,217,117       2,521,644 
   Accumulated losses and distributions of equity
     investees in excess of investment and advances            12,534,844      12,413,087 
       Total liabilities                                      335,448,056     259,730,008 
   Commitments and contingencies
   Shareholders' equity:
     Preferred shares, Class A cumulative, without par
       value; 3,000,000 shares authorized; 225,000 issued
       and outstanding                                         56,250,000      56,250,000  <PAGE>
 


     Common shares, without par value, $.10 stated value;
       50,000,000 shares authorized; 15,322,436 and
       15,322,381 issued and outstanding at June 30, 1997
       and December 31, 1996, respectively                      1,532,244       1,532,238 
     Paid-in capital                                          133,058,739     133,073,035 
     Accumulated dividends in excess of net income            (39,018,964)    (32,839,075)
       Total shareholders' equity                             151,822,019     158,016,198 

                                                            $ 487,270,075   $ 417,746,206  <PAGE>
 
</TABLE>

                     The accompanying notes are an integral part
                            of these financial statements

          <page 4>
                        ASSOCIATED ESTATES REALTY CORPORATION
                        CONSOLIDATED STATEMENTS OF OPERATIONS
                                     (UNAUDITED)
<TABLE>
<CAPTION>

                                                For the three months      For the six months
                                                   ended June 30             ended June 30,
                                                1997          1996         1997         1996    
   <S>                                       <C>         <C>          <C>           <C>  
   Revenues
     Rental                                  $24,943,653 $ 21,852,215  $48,103,594  $ 42,412,081
     Property management fees                     81,829      100,787      182,738       192,867
     Property management fees-affiliates         851,591      856,957    1,731,487     1,719,071
     Painting service                            140,206      128,372      262,638       202,148
     Painting service-affiliates                 207,204      410,585      593,216       618,087
     Other                                       599,216       77,371      748,365       206,364
                                              26,823,699   23,426,287   51,622,038    45,350,618
   Expenses
     Property operating and maintenance       10,480,847    8,916,564   19,670,888    17,431,273
     Depreciation and amortization             4,533,647    3,784,012    8,862,484     7,333,967
     Painting services                           293,207      473,710      703,678       732,090
     General and administrative                1,586,003    1,586,063    3,125,800     2,878,388
     Interest expense                          4,835,372    3,892,370    8,897,201     7,392,651
      Total expenses                          21,729,076   18,652,719   41,260,051    35,768,369
      Income before equity in net income of
        joint ventures and extraordinary
        item                                   5,094,623    4,773,568   10,361,987     9,582,249
     Equity in net income of joint ventures      262,319      150,638      220,482       133,134
     Income before extraordinary item          5,356,942    4,924,206   10,582,469     9,715,383
     Extraordinary item-gain on early
       extinguishment of debt                (1,043,446)        -       (1,043,446)        -    
     Net income                             $ 6,400,388  $  4,924,206  $11,625,915   $ 9,715,383

   Net income applicable to common shares   $ 5,029,284  $  3,553,101  $ 8,883,705  $  6,973,173

   Per common share:
     Net income before extraordinary item   $       .26  $        .26  $       .51  $        .50
     Net income                             $       .33  $        .26  $       .58  $        .50
     Dividends paid                         $      .465  $        .45  $       .93  $        .90
   Weighted average number of common
     shares outstanding                      15,322,415    13,872,381   15,322,401    13,872,381 <PAGE>
 
</TABLE>

                     The accompanying notes are an integral part
                            of these financial statements


          <PAGE> 5 
                        ASSOCIATED ESTATES REALTY CORPORATION
                        CONSOLIDATED STATEMENTS OF CASH FLOWS
                       FOR THE SIX MONTH PERIOD ENDED JUNE 30,
                                     (UNAUDITED)

<TABLE>
<CAPTION>
                                                                         1997           1996    
   <S>                                                             <C>              <C> 
   Cash flow from operating activities:                                                          
    Net income                                                      $  11,625,915   $  9,715,383 
    Adjustments to reconcile net income to
      net cash provided by operating
      activities:
      Depreciation and amortization                                     8,862,484      7,333,967 
      Gain on extinguishment of debt                                   (1,043,446)        -      
      Equity in net income of joint ventures                             (220,482)      (133,134)
      Earnings distributed from joint ventures                            262,840        181,239 
      Net change in  - Accounts and notes receivable                     (247,637)       268,921 
                     - Accounts and notes receivable-affiliates        (5,828,572)        55,164 
                     - Accounts payable and accrued expenses           (1,690,705)    (1,182,711)
                     - Other operating assets and liabilities           1,514,055        109,971 
                     - Restricted cash                                     91,971       (419,437)
                     - Funds held for non-owned properties                 56,881     (2,386,836)
         Total adjustments                                              1,757,389      3,827,144 
      Net cash flow provided by operating activities                   13,383,304     13,542,527 
   Cash flow from investing activities:
    Loans receivable - affiliate                                       (3,342,000)        -      
    Real estate acquired or developed (net of liabilities assumed)    (66,415,525)   (47,521,197)
    Fixed asset additions                                              (1,157,807)      (210,832)
    Distributions from joint ventures                                      79,399         27,116 
      Net cash flow used for investing activities                     (70,835,933)   (47,704,913)
   Cash flow from financing activities:
    Principal payments on mortgage notes                              (16,491,993)    (2,284,309)
    Proceeds from mortgage notes                                        8,100,000         -      
    Proceeds from senior and medium-term notes                         30,000,000      7,500,000 
    Line of Credit borrowings                                         181,400,000    106,300,000 
    Line of Credit repayments                                        (129,400,000)   (63,050,000)

    Deferred financing and offering costs                                (445,994)      (605,789)
    Common share dividends paid                                       (14,019,982)   (12,207,696)
    Preferred share dividends paid                                     (2,742,210)    (2,742,210)
    Exercise of stock options                                               1,248        -       
      Net cash flow provided by financing activities                   56,401,069     32,909,996 
      Decrease in cash and cash equivalents                            (1,051,560)    (1,252,390) <PAGE>
 
   Cash and cash equivalents, beginning of period                       1,286,959      2,848,285 
   Cash and cash equivalents, end of period                         $     235,399   $  1,595,895  <PAGE>
 
</TABLE>

                     The accompanying notes are an integral part
                            of these financial statements

          <PAGE> 6

                        ASSOCIATED ESTATES REALTY CORPORATION
                            NOTES TO FINANCIAL STATEMENTS


          1.   BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

          Business

               Associated Estates Realty Corporation (the "Company") is a
          self-administered and self-managed real estate investment trust
          ("REIT") which specializes in the acquisition, development,
          ownership and management of multifamily properties in the Great
          Lakes Region.  At June 30, 1997, the Company owned or was a joint
          venture partner in 85 multifamily properties containing 16,818
          suites.  Additionally, the Company managed 40 non-owned
          properties, 32 of which were multifamily properties containing
          7,052 suites and eight of which were commercial properties
          containing an aggregate of approximately 825,000 square feet of
          gross leasable area.  Through special purpose entities,
          collectively referred to as the "Service Companies", the Company
          provides to both owned and non-owned properties, management,
          painting and computer services as well as mortgage origination
          and servicing.

          Principles of Consolidation

               The accompanying consolidated financial statements include
          the accounts of the Company, its wholly owned subsidiaries, which
          own certain of the real estate properties, and the Service
          Companies.  The Company holds a preferred share interest in the
          Service Companies which entitles it to receive 95% of the
          economic benefits from operations and which is convertible into a
          majority interest in the voting common shares.  The outstanding
          voting common shares of these Service Companies are held by an
          executive officer of the Company.  The Service Companies are
          consolidated because, from a financial reporting perspective, the
          Company is entitled to virtually all economic benefits and has
          operating control.

               One property included in the consolidated financial
          statements is 33-1/3% owned by third party investors.  As this
          property has an accumulated deficit, no recognition of the third
          party interest is reflected in the financial statements since it
          is the Company's policy to recognize minority interest only to
          the extent that the third party's investment and accumulated
          share of income exceeds distributions and its share of
          accumulated losses.  Investments in joint ventures, which are 50%
          or less owned by the Company, are presented using the equity
          method of accounting.  Since the Company intends to fulfill its
          obligations as a partner in the joint ventures, the Company has
          recognized its share of losses and distributions in excess of its
          investment. 

               All significant intercompany balances and transactions have
          been eliminated in consolidation.

          Use of Estimates

               The preparation of financial statements in accordance with
          generally accepted accounting principles requires management to
          make estimates and assumptions that affect the reported amounts
          of assets and liabilities and disclosure of contingent assets and
          liabilities at the date of the financial statements and reported
          amounts of revenues and expenses during the reporting period. 
          Actual results could differ from these estimates.

          Reclassifications

               Certain reclassifications have been made to the 1996
          financial statements to conform to the 1997 presentation.


          <PAGE> 7
          2.   DEVELOPMENT AND ACQUISITION OF MULTIFAMILY PROPERTIES

               Construction in progress, including the cost of land, for
          the development of multifamily properties was $23,234,257 and
          $18,516,982 at June 30, 1997 and December 31, 1996, respectively. 
          The Company capitalizes interest costs on funds used in
          construction, real estate taxes and insurance from the
          commencement of development activity through the time the
          property is ready for leasing.  Interest, real estate taxes and
          insurance aggregating approximately $913,000 and $1,394,800 were
          capitalized at June 30, 1997 and December 31, 1996, respectively. 
          The following schedule details construction in progress at June
          30, 1997: 


<TABLE>
<CAPTION>
                                               Construction in   Placed in   Construction
         (dollars in thousands)      Number       Progress        Service        Costs
                                       of      Land   Building    through      Incurred    Scheduled
                Property             Suites    Cost      Cost     6/30/97       to Date    Completion 

   <S>                               <C>       <C>    <C>         <C>        <C>           <C>
   AURORA, OHIO
     The Residence at 
       Barrington-Phase I               168  $ 1,179  $   8,220 $  3,043     $     12,442 Late 1997
     The Residence at 
       Barrington-Phase II              120      982         -     -                  982 Winter 1998
                                        288    2,161      8,220    3,043           13,424 
   ANN ARBOR, MICHIGAN
     Arbor Landings Apartments II       160*     650        232    -                  882 Summer 1998

   COLUMBUS, OHIO
     Bradford at Easton                 324      967      6,059    9,593           16,619 Fall 1997

   FENTON, MICHIGAN
     Georgetown Park Apartments III     120*     350        102    -                  452 1998*

   GRAND RAPIDS, MICHIGAN
     Aspen Lakes II                     114*     402         35    -                  437 1998*

   STREETSBORO, OHIO
     The Village of Western Reserve     108      691      1,778    -                2,469 Late 1997

   WESTLAKE, OHIO
     Westlake                           300*     523         66    -                  589 1999*

   Other                                271      408        590    -                  998 Various
                                      1,685   $6,152  $  17,082 $12,636 (1)  $     35,870 
<FN>
               *Estimated

          (1)  Including land of $2,244 
</FN>
</TABLE>

               During the period January 1, 1997 through June 30, 1997, the
          Company acquired, in separate purchase transactions, five
          multifamily properties containing an aggregate of 980 suites and
          one parcel of land consisting of 10 acres (together the "Acquired
          Properties") for an aggregate purchase price of $53.5 million, of
          which $2.6 million represented liabilities assumed.  The Acquired
          Properties are located in Indianapolis, Indiana; and Cincinnati,
          Columbus and Toledo, Ohio.  The purchase price of the Acquired
          Properties has been financed primarily with cash on hand made
          available through the line of credit.

          <PAGE> 8
          3.   SHAREHOLDERS' EQUITY

               The following table summarizes the changes in shareholders'
          equity since December 31, 1996:
<TABLE>
<CAPTION>

                             Class A                                Accumulated
                            Cumulative      Common                   Dividends
                            Preferred       Shares      Paid-In     In Excess Of
                              Shares       (at $.10     Capital      Net Income       Total
                                             stated
                                             value)     

   <S>                     <C>           <C>         <C>           <C>            <C> 
   Balance, Dec. 31, 1996  $ 56,250,000  $1,532,238  $133,073,035  $(32,839,075)  $158,016,198 
      Net income             -            -            -             11,625,915     11,625,915 
      Exercise of stock
        options              -                    6        1,242      -                  1,248 
      Additional costs re-                          
        lating to common
        stock offering       -            -              (15,538)     -                (15,538)
      Common share
        dividends declared   -            -            -            (15,063,594)   (15,063,594)
      Preferred share
        dividends declared   -            -             -            (2,742,210)    (2,742,210)
   Balance, June 30, 1997  $56,250,000   $1,532,244  $133,058,739  $(39,018,964)  $151,822,019 
</TABLE>

          4.   SECURED DEBT

          Conventional Mortgage Debt

               Conventional mortgages payable include nonrecourse, fixed
          and variable rate, project specific loans to the Company which
          are collateralized by the associated real estate and resident
          leases.  Mortgages payable are generally due in monthly
          installments of principal and/or interest and mature at various
          dates through August 1, 2018.  The balance of the conventional
          mortgages was $29.6 million and $37.7 million at  June 30, 1997
          and December 31, 1996, respectively.  Three of the four
          conventional mortgages have a fixed rate and the remaining
          mortgage has a variable rate.

          Federally Insured Mortgage Debt

               Federally insured mortgage debt is insured by HUD pursuant
          to one of the mortgage insurance programs administered under the
          National Housing Act of 1934 (one property is funded through
          Industrial Development Bonds).  These government-insured loans
          are nonrecourse to the Company.  Payments of principal, interest
          and HUD mortgage insurance premiums are made in equal monthly
          installments and mature at various dates through August 1, 2028. 
          The balance of the federally insured mortgages was $31.0 million
          and $31.3 million at June 30, 1997 and December 31, 1996,
          respectively.  Seven of the eight federally insured mortgages
          have a fixed rate and the remaining mortgage has a variable rate.

               Under certain of the mortgage agreements, the Company is
          required to make escrow deposits for taxes, insurance and
          replacement of project assets.

          5.   UNSECURED DEBT

          Senior Notes

               Senior Notes with a principal balance of $75 million accrue
          interest at 8.38% and mature in 2000.  Issued at an effective
          interest rate of 8.48%, the balance of the $75 million senior
          notes, net of unamortized discounts, was $74.8 million at June
          30, 1997 and December 31, 1996.  Senior Notes with a principal
          balance of $10 million accrue interest at 7.10% and mature in
          2002.


          <PAGE> 9
          Medium-Term Notes Program

               The Company has issued nine Medium-Term Notes (the "MTN's")
          in the aggregate amount of $72.5 million and $42.5 million at
          June 30, 1997 and December 31, 1996, respectively under a $75
          million MTN Program.  The principal amounts of these MTN's range
          from $2.5 million to $15.0 million and bear interest ranging from
          6.60% to 7.82% over terms ranging from five to 30 years.  The
          holders of two MTN's with stated terms of 30 years each may
          request repayment five and seven years from the issue date of the
          respective MTN.  The weighted average interest rate of the nine
          MTN's is 7.19%.  Six of the MTN's in the aggregate amount of
          $42.5 million were issued in 1996.  Three MTN's in the aggregate
          amount of $30 million were issued in 1997.

               The Company has replaced the $75 million MTN Program with a
          MTN Program that provides for the issuance from time to time of
          up to $102.5 million of MTN's due nine months or more from the
          date of issue.  These MTN's may be subject to redemption at the
          option of the Company or repayment at the option of the holder
          prior to the stated maturity date of the MTN.  These MTN's can
          bear interest at fixed rates or at floating rates and can be
          issued in minimum denominations of $1,000.  At June 30, 1997,
          there were no MTN's issued under the $102.5 million MTN Program.

          Line of Credit

               The Company utilizes a $75 million unsecured credit facility
          (the "Line of Credit").  The Line of Credit includes certain
          restrictive covenants which, among others, requires the Company
          to (i) maintain a minimum level of net worth, (ii) limit
          dividends to 90% of Distributable Cash Flow, as defined in the
          agreement, (iii) restrict the use of its borrowings, and (iv)
          maintain certain debt coverage ratios.  The Line of Credit
          provides for a scaled reduction in the LIBOR, prime rate and
          commitment fee margins based on the Company's credit ratings. 
          During the quarter ending June 30, 1997, the Company negotiated a
          reduction in pricing on its Line of Credit.  For the six months
          ended June 30, 1997, based on the Company's present credit
          ratings, the LIBOR margin was 125 basis points, fixed in
          increments of 30, 60, 90, 120 or 180 days or, alternatively,
          borrowings are at prime rate.  An annual commitment fee of 15 to
          25 basis points on the average daily unused amount of the
          facility was paid quarterly in arrears.  The Line of Credit
          expires in September 1997 and the Company has the option to
          extend the facility for an additional one year period.  At June
          30, 1997, $73.5 million was drawn on the Line of Credit.

          6.   RELATED PARTY TRANSACTIONS

               At June 30, 1997, the Company had two notes receivable of
          equal amounts from the Chairman, President and Chief Executive
          Officer aggregating $3,342,000 included in accounts and notes
          receivables - affiliates.  The notes were entered into on May 23,
          1997 and bear interest, payable quarterly, at the LIBOR rate for
          a one month interest period with principal due May 1, 2002.  One
          of the notes is collateralized by 150,000 of the Company's common
          shares.

          7.   PREFERRED AND COMMON SHARES

               On December 11, 1996, the Company completed an offering of
          1,300,000 common shares at $22.375 per share.  On December 17,
          1996, the underwriters exercised an option to purchase an
          additional 150,000 shares at $22.375 per share.  The net proceeds
          of approximately $30.7 million were applied to reduce debt.

               As of December 31, 1996, 2,250,000 Depositary Shares, each
          representing 1/10 of a share of the Company's 9.75% Class A
          Cumulative Redeemable Preferred Shares (the "Perpetual Preferred
          Shares"), were issued and outstanding.  Each Depositary Share has
          a $25 liquidation preference ($56.3 million in the aggregate). 
          Dividends on the Perpetual Preferred Shares are cumulative from
          the date of issue and are payable quarterly.  Except in certain
          circumstances relating to the preservation of the Company's
          status as a REIT, the Perpetual Preferred Shares are not
          redeemable prior to July 25, 2000.  On and after July 25, 2000,
          the Perpetual Preferred Shares will be redeemable for cash at the
          option of the Company.

          <PAGE> 10
               The Company is authorized to issue 3,000,000 Class B
          Cumulative Preferred Shares, without par value, and 3,000,000
          Noncumulative Preferred Shares, without par value.

          8.   EARNINGS PER SHARE

               Net income per share has been computed by dividing common
          share dividends paid or declared for the period by the weighted
          average number of common shares outstanding plus the
          undistributed net income applicable to common shareholders as
          appropriate, divided by the weighted average number of common
          shares outstanding.  Common share equivalents were excluded from
          the earnings per share calculation as they were not dilutive.

               The Company is required to adopt Statement of Financial
          Accounting Standard No. 128 ("SFAS 128"), Earnings Per Share as
          of December 31, 1997; earlier application is not permitted.  SFAS
          128 specifies the computation, presentation, and disclosure
          requirements for earnings per share.  The Company does not
          believe that the adoption of SFAS 128 will have a material effect
          on the Company's method of calculation or presentation of
          earnings per share amounts.

          9.   PRO FORMA CONDENSED FINANCIAL INFORMATION (UNAUDITED)

               The following unaudited supplemental pro forma operating
          data for 1997 is presented to reflect, as of January 1, 1997, the
          effects of four property acquisitions completed in 1997.  The
          following unaudited supplemental pro forma operating data for
          1996 is presented to reflect, as of January 1, 1996, the effects
          of: (i)  the six property acquisitions completed in 1996, (ii) 
          the offering of 1,450,000 of common shares, and (iii) the four
          property acquisitions completed in 1997. 

<TABLE>
<CAPTION>

                                                   For the six months
                                                     ended June 30,
   (In thousands, except per share amounts)         1997       1996  

   <S>                                              <C>       <C>
   Revenues                                         $ 53,357  $ 51,295
   *Net income                                        10,527    10,384
   *Net income applicable to common shares             7,784     7,642
   *Net income per common share                     $    .51  $    .50
     Weighted average common shares outstanding       15,322    15,322

   *Before extraordinary item
</TABLE>

               The 1997 and 1996 pro forma financial information does not
          include the revenue and expenses for Oak Bend Apartments, a
          property acquired in 1997, for the period January 1, 1997 through
          the date the property was acquired by the Company or for the
          period January 1, 1996 through December 31, 1996, respectively. 
          The revenue and expenses of Oak Bend Apartments were excluded
          from the pro forma financial information for the periods
          mentioned as the property was under construction for
          substantially all of the periods prior to its acquisition.

               The unaudited pro forma condensed statement of operations is
          not necessarily indicative of what the actual results of
          operations of the Company would have been assuming the
          transactions had been completed as set forth, nor does it purport
          to represent the results of operations of future periods of the
          Company.

          10.  SUBSEQUENT EVENTS

               On July 2, 1997, the Company completed a public offering of
          1,750,000 common shares at a price of $23.50 per share.  The net
          proceeds of approximately $38.9 million were applied to reduce
          debt.

          <PAGE> 11
                        ASSOCIATED ESTATES REALTY CORPORATION
                  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                         CONDITION AND RESULTS OF OPERATIONS

          Overview
               Associated Estates Realty Corporation (the "Company") is a
          Real Estate Investment Trust ("REIT") that currently owns, or is
          a joint venture partner in, 85 multifamily properties containing
          16,818 suites located in Ohio, Michigan, Indiana and Western
          Pennsylvania.

               The following discussion should be read in conjunction with
          the financial statements and notes thereto appearing elsewhere in
          this report.  Historical results and percentage relationships
          contained in the financial statements, including trends which
          might appear, should not be taken as indicative of future
          operations.

          Liquidity and Capital Resources
               The Company has elected to be taxed as a REIT under Sections
          856 through 860 of the Internal Revenue Code of 1986, as amended. 
          REIT's are subject to a number of organization and operational
          requirements including a requirement that 95% of the income that
          would otherwise be considered as taxable income be distributed to
          its shareholders.  Providing the Company continues to qualify as
          a REIT, it will generally not be subject to a Federal income tax
          on net income.

               The Company expects to meet its short-term liquidity
          requirements generally through its net cash provided by
          operations.  The Company believes that its net cash provided by
          operations will be sufficient to meet both operating requirements
          and the payment of dividends in accordance with REIT requirements
          in both the short and long term.

          Financing:
               The Company utilizes borrowing under a $75 million unsecured
          revolving credit facility (the "Line of Credit") for the
          acquisition and development of multifamily properties and working
          capital purposes.  The Line of Credit includes certain
          restrictive covenants which, among others, requires the Company
          to maintain a minimum level of net worth, to limit dividends to
          90% of Distributable Cash Flow, to restrict the use of its
          borrowing and to maintain certain debt coverage ratios.  The Line
          of Credit provides for a scaled reduction in the LIBOR or prime
          rate margins and commitment fees based on the Company's credit
          ratings.  Based on the Company's present credit ratings, the
          LIBOR margin is 125 basis points fixed in increments of 30, 60,
          90, 120 or 180 days and Prime Rate borrowings are at the Prime
          Rate with no margin.  An annual commitment fee of between 15
          basis points and 25 basis points on the average daily unused
          amount of the facility is paid quarterly in arrears.  The Line of
          Credit expires in September 1997 and the Company has the option
          to extend the facility for an additional one year period.  At
          June 30, 1997, $73.5 million was drawn on the Line of Credit with
          a weighted average interest rate of 7.1%.

               Sixty-seven of the Company's 78 wholly owned properties were
          unencumbered at June 30, 1997 with annualized earnings before
          interest, depreciation and amortization of over $46.3 million and
          a historical cost basis of over $409.6 million.  During the
          quarter ended June 30, 1997, the Company repaid mortgaged debt in
          the aggregate amount of $14.7 million, with a stated weighted average
          interest rate of 10%, that was secured by three of the Company's
          wholly owned properties. The Company utilized borrowings under the
          Line of Credit to repay these mortgages. Unsecured debt, which
          totaled $230.8 million at June 30, 1997, consisted of $72.5
          million in Medium-Term Notes, Senior Notes of $84.8 million and
          amounts drawn on the Line of Credit of $73.5 million.  

               The remaining 11 of the Company's wholly owned properties,
          having a historical cost basis of $95.6 million, were encumbered
          by secured property specific debt of $60.5 million at June 30,
          1997.  The Company's proportionate share of the mortgage debt
          relating to the seven joint venture properties was $17.9 million
          at June 30, 1997.  The weighted average interest rate on the
          secured, unsecured and the Company's proportionate share of the
          joint venture debt was 7.65% at June 30, 1997.

          <PAGE> 12
               During the quarter ending June 30, 1997, the Company issued
          a $15 million Medium-Term Note (or "MTN") under its $75 million
          MTN Program.  The MTN bears interest at 7.82% over a 10-year
          term.  The net proceeds to the Company of $14.9 million were
          applied to amounts outstanding under the Line of Credit. 

          Registration statements filed in connection with financing:
               The Company has filed a shelf registration statement with
          the Securities and Exchange Commission relating to the proposed
          offering of up to $368.8 million of debt securities, preferred
          shares, depositary shares, common shares and common share
          warrants.  The total amount of the shelf filing includes a $102.5
          million MTN Program which replaced the $75 million MTN Program. 
          The securities may be offered from time to time at prices and
          upon terms to be determined at the time of sale.

               On July 9, 1997, the Company completed a public offering of
          1,750,000 common shares at a price of $23.50 per share.  The net
          proceeds of this offering of $38.9 million, after underwriting
          discounts and commissions and other offering expenses, were used
          to repay indebtedness outstanding under the Company's Line of
          Credit.

          Acquisitions, development and dispositions: 
               The Company intends to continue to finance its multifamily
          property acquisitions and development with the most appropriate
          sources of capital, which may include undistributed Funds From
          Operations, the issuance of equity securities, bank and other
          institutional borrowings, the issuance of debt securities, the
          assumption of mortgage indebtedness or through the exchange of
          properties. The Company may also determine to raise additional
          working capital through one or more of these sources.

               During the period January 1, 1997 through June 30, 1997, the
          Company acquired, in separate purchase transactions, five
          multifamily properties containing an aggregate of 992 suites and
          one parcel of land consisting of 10 acres for an aggregate
          purchase price of $53.5 million, of which $2.6 million
          represented liabilities assumed.  The multifamily properties are
          located in Indianapolis, Indiana; and Cincinnati, Columbus and
          Toledo, Ohio.  The purchase price of the acquired properties has
          been financed primarily with cash on hand made available through
          the Line of Credit.  On August 6, 1997, the Company acquired a 4.5
          acre parcel of land adjacent to The Landings at the Preserve, a
          multifamily property owned by the Company located in Battle Creek
          Michigan.

               The remainder of the acquisitions, development and
          dispositions section contains forward-looking statements and
          certain risks, trends and uncertainties that could cause actual
          results to vary from those contained in the forward-looking
          statements.  Readers are cautioned not to place undue reliance on
          forward-looking statements, which are based only on current
          judgements and current knowledge of management. These forward-
          looking statements are intended to be covered by the safe harbor
          provisions of the Private Securities Litigation Reform Act of
          1995.  Factors which could cause actual results to differ
          materially from those projected include the general economic
          climate; the supply and demand for multifamily properties in the
          Great Lakes Region; interest rate levels; the availability of
          financing and other risks associated with the acquisition,
          development and disposition of properties, including risks that
          development or lease-up may not be completed on schedule. 
          Furthermore, there can be no assurances that the Company will be
          successful in acquiring the multifamily properties and the land
          parcels under contract as described below.

               The Company is currently under contract to purchase two
          multifamily properties containing an aggregate of 546 suites and
          two parcels of undeveloped land containing an aggregate 61
          acres for a purchase price of $39.5 million.  The two multifamily
          properties are located in Indianapolis, Indiana and Clinton
          Township, Michigan, respectively, while the land parcels are
          located in Ohio and Pennsylvania.  

               The Company has two newly constructed multifamily properties
          in lease-up.  Bradford at Easton, a 324 suite property located in
          Columbus, Ohio had 212 suites completed of which 195 were leased
          at June 30, 1997 and the 168 suite first phase of The Residence
          at Barrington, a 288 suite property located in Aurora, Ohio (a
          city located Southeast of Cleveland), had 76 suites completed of 
          which 74 were leased at June 30, 1997.  The Company has also
          commenced construction at The Village of Western Reserve,

          <PAGE> 13
          a 108 suite property in Streetsboro, Ohio (also located
          Southeast of Cleveland) and a 120 suite expansion to Georgetown
          Park Apartments, a multifamily property owned by the Company in
          Fenton, Michigan.  The Bradford at Easton, Barrington Phase I and
          Western Reserve properties (collectively the "New Construction
          Properties") are scheduled for completion in the fourth quarter
          of 1997 and the Georgetown addition in the third quarter of 1998.

               The Company is anticipating the construction of an
          additional 514 suites (collectively the "Suite Additions") during
          1998 on land adjacent to multifamily properties currently owned
          by the Company as follows: 

<TABLE>
<CAPTION>
                  Property                      Location         Suites
   <S>                                   <C>                       <C>
   Arbor Landings Apartments II          Ann Arbor, Michigan       160  
   The Residence at Barrington, Phase II Aurora, Ohio              120  
   Georgetown Park Apartments III        Fenton, Michigan          120  
   Aspen Lakes II                        Grand Rapids, Michigan    114  
                                                   Total Suites    514  
</TABLE>

               The Company estimates the total cost of the New Construction
          Properties and the Suite Additions (a total of 1,114 suites) will
          be approximately  $73.2 million, of which $34.3 million has been
          incurred through June 30, 1997, including land costs of $7.5
          million.

               The Company also owns approximately 63.5 acres of land,
          adjacent to multifamily properties currently owned by the
          Company, on which approximately 640 suites are planned for
          development.  Through June 30, 1997, the Company has incurred
          approximately $1.8 million in preliminary development and land
          costs for these and other planned development projects.

               The Company is exploring opportunities to dispose of several
          of its multifamily properties and has received an expression of
          interest from various prospective buyers.  In addition, the
          Company has determined that a 90 acre parcel of land, which was
          one of the assets acquired by the Company at the time of the
          Company's initial public offering of common shares (the "IPO")
          that is presently zoned for office and industrial use, will not
          be rezoned for multifamily use.  The Company intends to sell the
          property.

          Dividends
               On June 6, 1997, the Company declared a dividend of $0.465
          per common share for the quarter ending June 30, 1997, which was
          paid on August 1, 1997 to shareholders of record on July 15,
          1997.  On May 8, 1997, the Company declared a dividend of
          $0.60938 per depositary share on its Class A Cumulative Preferred
          Shares (the "Perpetual Preferred Shares"), which was paid on June
          16, 1997 to shareholders of record on June 2, 1997.

          Cash flow sources and applications:
               Net cash provided by operating activities decreased $0.2
          million to $13.3 million from $13.5 million for the six-months
          ended June 30, 1997 when compared with the six-months ended June
          30, 1996. This decrease was primarily the result of the
          application of cash flow from operating activities to the
          reduction of accounts payable and accrued expenses, and an 
          increase in accounts receivable from affiliates.

               Net cash flows used for investing activities of $70.8
          million for the six-months ended June 30, 1997 were primarily
          used for the acquisition of multifamily real estate, properties
          and undeveloped land parcels.

               Net cash flows provided by financing activities of $56.4
          million for the six-months ended June 30, 1997 were primarily
          comprised of borrowings on the Line of Credit and the issuance of
          MTN's.  Funds were also used to pay dividends on the Company's
          common and Perpetual Preferred Shares. 

          <PAGE> 14
          RESULTS OF OPERATIONS
          Comparison of the three-months ended June 30, 1997 to the three-
          months ended June 30, 1996

               Overall, total revenue increased $3,397,400 or 14.5% and
          total expenses before the extraordinary item and the net income
          of the joint ventures increased $3,076,400 or 16.5% for the
          quarter.  Net income applicable to common shares before the
          extraordinary item increased $432,700 or 12.2%, after dividends
          on the Company's Perpetual Preferred Shares.

               In the following discussion of the comparison of the three-
          months ended June 30, 1997 to the three-months ended June 30,
          1996, the term Core Portfolio Properties refers to the 35 wholly
          owned multifamily properties acquired by the Company at the time
          of the IPO, the 35 properties acquired prior to April 1, 1996
          and the acquisition of the remaining 50% interest in a property
          in which the company was a joint venture partner at the time of
          the IPO.  Acquired Properties refers to the eight properties
          acquired between April 1, 1996 and June 30, 1997.

               During the three-months ended June 30, 1997, the Acquired
          Properties generated total revenues of $2,643,500 while incurring
          property, operating and maintenance expenses of $902,970.

          Rental Revenues:
               Rental revenues increased $3,091,400 or 14.2% for the
          quarter.  The majority of this increase is attributable to an
          increase in rental revenues from the Acquired Properties of
          $2,609,000 for the same period.  Increases in occupancy and suite
          rents at the Core Portfolio Market-rate and Government-Assisted
          Properties resulted in a $482,400 or 2.2% increase in rental
          revenue from these properties.  Retroactive revenue increases
          related to budget based Government-Assisted Properties are
          recognized based on the applications submitted to the U.S.
          Department of Housing and Urban Development.

          Other Revenues:
               Painting service revenue and painting service revenue -
          affiliates decreased $191,500 or 35.5%  for the quarter and
          reflects a decrease in revenue generated from suite painting and
          major renovation projects when compared to the previous quarter. 
          The decrease in painting service and painting service revenue -
          affiliates was partially offset by a decrease in painting service
          expenses as discussed elsewhere herein.

               Other revenues increased $521,800 primarily due to (i)
          refunds of prior years real estate taxes of $308,400 resulting
          from successful challenges to the property values used to assess
          real estate taxes at six multifamily properties and (ii) interest
          income of $102,000 on amounts advanced to entities managed by the
          Company.  The balance of the increase relates to interest income 
          earned on the Company's investments and late charges assessed to
          residents.

          Property operating and maintenance expenses:
               Property operating and maintenance expenses increased
          $1,564,300 or 17.5% for the quarter.  Operating and maintenance
          expenses at the Acquired Properties increased $899,500 for the
          quarter due primarily to the operating and maintenance expenses
          incurred at the eight properties acquired between April 1, 1996
          and June 30, 1997.  Property operating and maintenance expenses
          at the Core Portfolio Properties increased $664,800, or 7.5% when
          compared to the prior three month period primarily due to
          increases in payroll, utilities, building and grounds repairs and
          maintenance and other operating expenses.  The increase in
          utility expenses was primarily the result of a 30% rate increase
          in the cost of natural gas.  Payroll expense increased due to (i)
          overtime and temporary labor costs incurred in preparing suites
          for market, (ii) annual wage increases, and (iii) staff
          additions.  Building and grounds repairs and maintenance expenses
          increased primarily as a result of an increase in suite make
          ready costs such as cleaning, painting, carpet cleaning and
          replacement and appliance replacements.  Total expenditures for
          building renovations and suite and common area refurbishment in
          the Core Portfolio Properties that were not considered to be
          capital in nature averaged $128 per suite for the three-months
          ended June 30, 1997 as compared to $110 per suite for the three-
          months ended June 30, 1996.

          <PAGE> 15
          Other expenses:
               Depreciation and amortization increased $749,600 or 19.8%
          for the quarter primarily due to the increased depreciation and
          amortization expense recognized on the Acquired Properties.

               Painting service expenses decreased $180,500 or 38.1% for
          the quarter.  This decrease was primarily the result of a decline
          in payroll related expenses attributable to the decreased sales
          activity of the painting company.

               Interest expense increased $943,000 or 24.2% for the quarter
          primarily due to the interest incurred with respect to the
          additional borrowings under the Line of Credit and MTN's that
          were used for the acquisition of properties.

          Net income applicable to common shares:
               Net income applicable to common shares is reduced by
          dividends on the Perpetual Preferred Shares of $1,371,100.

          RESULTS OF OPERATIONS
          Comparison of the six-months ended June 30, 1997 to the six-
          months ended June 30, 1996

               Overall, total revenue increased $6,271,400 or 13.8% and
          total expenses before the extraordinary item and net income off 
          the joint ventures increased $5,491,700 or 15.4% for the six
          month period.  Net income applicable to common shares before the
          extraordinary item increased $867,100 or 12.4%, after dividends
          on the Company's Perpetual Preferred Shares.

               In the following discussion of the comparison of the six-
          months ended June 30, 1997 to the six-months ended June 30, 1996,
          the term Core Portfolio Properties refers to the 35 wholly owned
          multifamily properties acquired by the Company at the time of the
          IPO, the 32 properties acquired prior to January 1, 1996 and
          the acquisition of the remaining 50% interest in a property in
          which the Company was a joint venture partner at the time of the
          IPO.  Acquired Properties refers to the 11 properties acquired
          between January 1, 1996 and June 30, 1997.

               During the six-months ended June 30, 1997, the Acquired
          Properties generated total revenues of $6,907,300 while incurring
          property, operating and maintenance expenses of $2,583,600.

          Rental Revenues:
               Rental revenues increased $5,691,500 or 13.4% for the six
          month period.  The majority of this increase is attributable to
          an increase in rental revenues from the Acquired Properties of
          $5,123,700 for the same period.  Increases in occupancy and suite
          rents at the Core Portfolio Market-rate and Government-Assisted
          Properties resulted in a $567,800 or 1.4% increase in rental
          revenue from these properties.  Retroactive revenue increases
          related to budget based Government-Assisted Properties are
          recognized based on the applications submitted to the U.S.
          Department of Housing and Urban Development.

          Other Revenues:
               Other revenues increased $542,000 primarily due to (i)
          refunds of prior years real estate taxes of $308,400 resulting
          from successful challenges to the property values used to assess
          real estate taxes at six multifamily properties and (ii) interest
          income of $102,000 on amounts advanced for major renovation
          programs to entities managed by the Company.  The balance of the
          increase relates to interest income earned on the Company's
          investments and late charges assessed to residents.

          Property operating and maintenance expenses:
               Property operating and maintenance expenses increased
          $1,564,300 or 17.5% for the six month period.  Operating and
          maintenance expenses at the Acquired Properties increased
          $1,950,200 for the six month period due primarily to the
          operating and maintenance expenses incurred at the 11 properties
          acquired between January 1, 1996 and June 30, 1997.  Property
          operating and maintenance expenses at the Core Portfolio 

          <PAGE> 16
          Properties increased $289,400 or 1.7% when compared to the prior
          six month period primarily due to increases in payroll and
          utilities which were offset by decreases in real estate taxes,
          insurance, advertising and other operating expenses.  Total
          expenditures for building renovations and suite and common area
          refurbishment in the Core Portfolio Properties that were not
          considered to be capital in nature averaged $186 per suite for
          the six-months ended June 30, 1997 as compared to $180 per suite
          for the six-months ended June 30, 1996. 

          Other expenses:
               Depreciation and amortization increased $1,528,500 or 20.8%
          for the six month period primarily due to the increased
          depreciation and amortization expense recognized on the Acquired
          Properties.
               
               General and administrative expenses increased $247,400 or
          8.6% for the six month period.  This increase is primarily
          attributable to payroll and payroll related expenses as the
          Company continues to develop a team of professionals to provide
          hands-on attention to the Company's expanding portfolio of
          assets.

               Interest expense increased $1,504,600 or 20.4% for the half
          primarily due to the interest incurred with respect to the
          additional borrowings under the Line of Credit and MTN's that
          were used for the acquisition of properties.

          Extraordinary item:
               The extraordinary item of $1,043,446 recognized during 1997
          relates to the write-off of a portion of the liabilities assumed
          with respect to certain multifamily properties acquired by the
          Company which related to the difference between the stated
          interest rate and the effective interest rate on mortgage
          indebtedness assumed.  The mortgage indebtedness assumed upon the
          acquisition of these properties was repaid in 1997.

          Net income applicable to common shares:
               Net income applicable to common shares is reduced by
          dividends on the Perpetual Preferred Shares of $2,742,200.

          Equity in net income of joint ventures:
               The combined equity in net income of joint ventures
          increased $111,680 or 74.1% and $87,350 or 65.6% for the three-
          and six-months ended June 30, 1997 and 1996, respectively.  These
          increases are primarily attributable to an increase in net
          collected rents as occupancies increased at the joint venture
          properties and a reduction in property operating and maintenance 
          expenses.

               The following table presents the historical statements of
          operations of the Company's beneficial interest in the operations
          of the joint ventures for the three- and six-months ended June
          30, 1997 and 1996. 
<TABLE>
<CAPTION>



                                          For the three-months       For the six-months 
                                              ended June 30,            ended June 30,
                                             1997        1996          1997        1996    

   <S>                                  <C>          <C>          <C>          <C>
   Beneficial interests in joint
     venture operations
       Rental revenue                    $1,684,070  $1,662,690    $3,308,630  $3,305,290 
       Cost of operations                   852,880     937,270     1,949,220   2,020,310 
                                            831,190     725,420     1,359,410   1,284,980 
       Interest income                        6,080       5,540        12,520       9,230 
       Interest expense                    (441,650)   (446,610)     (884,870)   (894,370)
       Depreciation                        (120,900)   (120,660)     (241,760)   (241,890)
       Amortization                         (12,400)    (13,050)      (24,820)    (24,820)
       Net income                        $  262,320  $  150,640    $  220,480  $  133,130
</TABLE>

          <PAGE> 17
          Outlook
               
               The following three paragraphs contain forward-looking
          statements and certain risks, trends and uncertainties could
          cause actual results to vary from those contained in the forward-
          looking statements.  Readers are cautioned not to place undue
          reliance on forward-looking statements, which are based only on
          current judgments and current knowledge of management.  These
          forward-looking statements are intended to be covered by the safe
          harbor provisions of the Private Securities Litigation Reform Act
          of 1995.  Investors are cautioned that the Company's forward-
          looking statements involve risks and uncertainty, including
          without limitation risks of a lessening of demand for the
          apartments owned by the Company, changes in government
          regulations affecting the Government-Assisted Properties, and
          expenditures that cannot be anticipated such as utility rate and
          usage increases, unanticipated repairs, additional staffing,
          insurance increases and real estate tax valuation reassessments.

               Approximately 54% of the Company's multifamily properties
          are located in the greater Cleveland/Akron, Ohio area which is
          the fourteenth largest consumer market in the United States
          containing over four million people within a fifty mile radius of
          Akron.  In Central Ohio, which accounts for 26% of the Company's
          multifamily properties, Columbus is the 30th largest metropolitan
          area in the U.S. based on population.  Population in the Central
          Ohio region grew 7.6% from 1990 to 1996, ranking it 25th among
          the top 50 fastest growing metropolitan areas in the U.S.,
          according to Census Bureau data.  Columbus, Ohio was selected by
          the E & Y Kenneth Leventhal Real Estate Group as one of the 12
          best apartment investment markets in the country because of its
          well-diversified economic base, strong rental growth and lower
          vacancy rates.  The Company's Michigan portfolio, which comprises
          11% of the Company's multifamily properties, is located in eight
          separate markets each having a stable population and employment
          outlook. 

               Permitting activity in Indianapolis has been increasing but
          at a slower pace in the past two months. Thus far, the
          competition in this market has not had any real effect on the
          Company's multifamily property located in Indianapolis.  Though
          there are signs of excess multifamily apartment capacity in the
          Columbus, Ohio market attributable to a number of newly
          constructed properties that are at or near completion, supply of
          multifamily apartments has remained fairly consistent with
          demand.  While an excess capacity of multifamily apartments may
          have a short-run impact on the Company's multifamily properties
          located in the Columbus, Ohio vicinity, including the impact of
          the successful lease-up at Bradford at Easton on the rest of the
          northeast Columbus, Ohio market, the estimated demand for
          multifamily apartments currently exceeds the annualized permit
          issuance.  There does not appear to be any significant permitting
          activity in the Northeast Ohio, Toledo or Michigan markets in
          which the Company is operating multifamily apartment properties.

               With an average economic occupancy for the Core Portfolio
          market-rate properties over 94.6%, and favorable market
          conditions, it would appear that opportunities exist for
          continued rental growth at the Company's market-rate properties. 
          The Company expects that building and grounds repair and
          maintenance expenditures for the Core Portfolio properties will
          increase as the Company continues to maintain its properties to
          maximize their earnings potential.  Utility expenditures will
          vary over prior periods as the effect of weather related usage
          variances and rate variances are factored into the level of
          utility expense.

          Inflation
               Substantially all of the residential leases at the
          properties allow, at the time of renewal, for adjustments in the
          rent payable thereunder, and thus may enable the Company to seek
          increases in rents. The substantial majority of these leases are
          for one year or less and the remaining leases are for terms up to
          two years.  The short-term nature of these leases generally
          serves to reduce the risk to the Company of the adverse effect of
          inflation.

          Contingencies
               There are no recorded amounts resulting from environmental
          liabilities as there are no known contingencies with respect
          thereto.  Future claims for environmental liabilities are not
          measurable given the uncertainties surrounding whether there
          exists a basis for any such claims to be asserted and, if so,
          whether any claims will, in fact, be asserted.  Furthermore, no 

          <PAGE> 18
          condition is known to exist that would give rise to a liability
          for site restoration, post closure and monitoring commitments, or
          other costs that may be incurred with respect to the sale or
          disposal of a property.  Phase I environmental audits have been
          completed on all of the Company's wholly owned and joint venture
          properties.  The Company has obtained environmental insurance
          covering (i) pre-existing contamination, (ii) on-going third
          party contamination, (iii) third party bodily injury, and (iv)
          remediation.  The policy is for a five year term and carries a
          limit of liability of $2 million per environmental contamination
          discovery (with a $50,000 deductible) and has a $10 million
          policy term aggregate. Management has no plans to abandon any of
          the properties and is unaware of any other material loss
          contingencies. 



  <PAGE> 19
  The following tables present information concerning the Multifamily 
  Properties owned by Associated Estates Realty Corporation.

<TABLE>
<CAPTION>
                                                                                      Year    Average
                                    Date                        Type of      Total  Built or Unit Size
     The Multifamily Properties   Acquired     Location       Construction  Suites   Rehab.   Sq. Ft. 

   <S>                            <C>          <C>          <C>             <C>      <C>      <C>      
   MARKET RATE
   Acquired Properties
   Central Ohio
   Perimeter Lakes                09/20/96 Dublin           Gdn/Tnhms           189   1992         999
   Oak Bend Commons (a)           05/30/97 Columbus         Garden               90   1997       1,110
   Saw Mill Village               04/22/97 Columbus         Garden              340   1987       1,161
                                                                                619              1,104
   Cincinnati, Ohio
   Remington Place Apartments     03/31/97 Cincinnati       Garden              234  1988-90       830

   Indiana
   The Gables at White River      02/06/97 Indianapolis     Garden              228   1991         974

   Michigan
   Aspen Lakes                    09/04/96 Grand Rapids     Garden              144   1992         789
   Spring Brook Apartments        06/20/96 Holland          Gdn/Tnhms           168   1986         818
                                                                                312                805
   Toledo, Ohio
   Hawthorne Hills Apartments     05/14/97 Toledo           Garden               88   1973       1,145
                                                                              1,481                980
   CORE PORTFOLIO PROPERTIES
   Market rate
   Central Ohio
   Arrowhead Station              02/28/95 Columbus         Townhomes           102   1987       1,344
   Bedford Commons                12/30/94 Columbus         Townhomes           112   1987       1,157
   Bolton Estates                 07/27/94 Columbus         Garden              196   1992         687
   Colony Bay East                02/21/95 Columbus         Garden              156   1994         903
   Heathermoor                    08/18/94 Worthington      Gdn/Tnhms           280   1989         829
   Kensington Grove               07/17/95 Westerville      Gdn/Tnhms/Ranch      76   1995       1,109
   Lake Forest                    07/28/94 Columbus         Garden              192   1994         788
   Muirwood Vllg. at Bennell      03/07/94 Columbus         Ranch               164   1990         769
   Muirwood Vllg. at London       03/03/94 London           Ranch               112   1989         769
   Muirwood Vllg. at Mt. Sterling 03/03/94 Mt. Sterling     Ranch                48   1990         769
   Muirwood Vllg. at Zanesville   03/07/94 Zanesville       Ranch               196  1991-95       769
   Pendleton Lakes East           08/25/94 Columbus         Garden              256  1990-93       899
   Residence at Christopher Wren  03/14/94 Gahanna          Gdn/Tnhms           264   1993       1,062 <PAGE>
 
   Residence at Turnberry         03/16/94 Pickerington     Gdn/Tnhms           216   1991       1,182
   Sheffield at Sylvan            03/03/94 Circleville      Ranch               136   1989         791
   Sterling Park                  08/25/94 Grove City       Garden              128   1994         763
   The Residence at Newark        03/03/94 Newark           Ranch               112  1993-94       868
   The Residence at Washington    02/01/96 Wash. Ct. House  Ranch                72   1995         862
   Wyndemere                      09/21/94 Franklin         Ranch               128  1991-95       768
                                                                              2,946                897
   Northeastern Ohio
   Bay Club                       IPO      Willowick        Garden               96   1990         925
   Colonnade West                 IPO      Cleveland        Townhomes           216   1964         502
   Cultural Gardens               IPO      Euclid           Mid Rise            186   1966         688
   Edgewater Landing              04/20/94 Cleveland        High Rise           241  1988 r        585
   Gates Mills III                IPO      Mayfield Hts.    High Rise           320   1978         874
   Holly Park                     IPO      Kent             Garden              192   1990         875
   Huntington Hills               IPO      Stow             Townhomes            85   1982         976
   Mallard's Crossing             02/16/95 Medina           Garden              192   1990         998
   Memphis Manor                  IPO      Cleveland        Garden              120   1966         554
   Park Place                     IPO      Parma Hts.       Mid Rise            164   1966         760
   Pinecrest                      IPO      Broadview Hts.   Garden               96  1965 r        598
   Portage Towers                 IPO      Cuyahoga Falls   High Rise           376   1973         869
   Somerset West (b)              IPO      North Royalton   Gdn/Tnhms           197   1982       1,038
   The Triangle (c)               IPO      Cleveland        High Rise           273   1989         616
   Timbers                        IPO      Broadview Hts.   Garden               96  1987-89       930
   Villa Moderne                  IPO      North Olmsted    Garden              135   1963         504
   Washington Manor               07/01/94 Elyria           Garden              120  1963-64       541
   West Park Plaza                IPO      Cleveland        Garden              118   1964         520
   Westchester Townhouses         IPO      Westlake         Townhomes           136   1989       1,000 <PAGE>
 


<CAPTION>
                                      For the three months ending        For the three months ending    
                                             June 30, 1997                      June 30, 1996           
                                   Average             Average Rent   Average              Average Rent
                                   Economic  Physical      Per        Economic  Physical       Per
     The Multifamily Properties   Occupancy Occupancy Suite  Sq. Ft. Occupancy Occupancy  Suite Sq. Ft.

   <S>                              <C>      <C>      <C>    <C>      <C>       <C>        <C>   <C>  
   MARKET RATE
   Acquired Properties
   Central Ohio
   Perimeter Lakes                  93.4%    96.8%    $ 716   $ 0.72      N/A       N/A     N/A    N/A 
   Oak Bend Commons (a)              N/A      N/A       N/A      N/A      N/A       N/A     N/A    N/A 
   Saw Mill Village                  N/A     94.1       N/A      N/A      N/A       N/A     N/A    N/A 
                                    93.4%    95.8%      N/A      N/A      N/A       N/A     N/A    N/A 
   Cincinnati, Ohio
   Remington Place Apartments       84.8%    89.7%    $ 640   $ 0.77      N/A       N/A     N/A    N/A 

   Indiana
   The Gables at White River        87.5%    91.2%    $ 719   $ 0.74      N/A       N/A     N/A    N/A 

   Michigan
   Aspen Lakes                      90.7%    91.7%    $ 553   $ 0.70      N/A       N/A     N/A    N/A 
   Spring Brook Apartments          99.9     98.8       472     0.58      N/A       N/A     N/A    N/A 
                                    95.3%    95.5%    $ 510   $ 0.63      N/A       N/A     N/A    N/A 
   Toledo, Ohio
   Hawthorne Hills Apartments        N/A     85.2%    $ 454   $ 0.40      N/A       N/A     N/A    N/A 
                                    90.1%    93.5%    $ 639   $ 0.72      N/A       N/A     N/A    N/A 
   CORE PORTFOLIO PROPERTIES
   Market rate
   Central Ohio
   Arrowhead Station                90.2%    86.3%    $ 684   $ 0.51    100.0%    97.1%   $ 654  $ 0.49
   Bedford Commons                  95.5     97.3       753     0.65    100.0     99.1      713    0.62
   Bolton Estates                   95.5     92.3       462     0.67     94.7     96.4      456    0.66
   Colony Bay East                  93.4     98.7       515     0.57     97.2    100.0      485    0.54
   Heathermoor                      98.1     98.6       543     0.66     99.4     98.6      526    0.63
   Kensington Grove                 93.6     97.4       776     0.70     96.5     98.7      751    0.68
   Lake Forest                      94.8     94.8       550     0.70     94.7     96.4      532    0.68
   Muirwood Vllg. at Bennell        94.5     93.9       492     0.64     98.2     97.0      477    0.62
   Muirwood Vllg. at London         96.5     99.1       502     0.65     99.4     93.8      490    0.64
   Muirwood Vllg. at Mt. Sterling   99.6     97.9       499     0.65     95.4     91.7      483    0.63
   Muirwood Vllg. at Zanesville     95.8     92.3       524     0.68    100.0     98.0      507    0.66
   Pendleton Lakes East             92.7     96.5       514     0.57     98.2     99.6      499    0.56
   Residence at Christopher Wren    93.5     97.0       729     0.69     96.6     97.7      704    0.66
   Residence at Turnberry           93.4     94.9       741     0.63     93.6     92.1      719    0.61 
   Sheffield at Sylvan              97.4     97.8       503     0.64     97.3     96.3      499    0.63 <PAGE>
 
   Sterling Park                    97.9     96.1       547     0.72     97.7     95.3      528    0.69
   The Residence at Newark          94.7     93.8       556     0.64     99.1     95.5      534    0.62
   The Residence at Washington      97.0     94.4       539     0.63     99.4     95.8      512    0.59
   Wyndemere                        97.2     91.4       531     0.69     99.9     97.7      520    0.68
                                    95.0%    95.4%    $ 576   $ 0.64     97.7%    97.0%   $ 557  $ 0.62
   Northeastern Ohio
   Bay Club                        100.0%   100.0%    $ 623   $ 0.67     98.8%    97.9%   $ 612  $ 0.66
   Colonnade West                   93.4     94.9       403     0.80     96.7     95.8      392    0.78
   Cultural Gardens                 94.6     96.8       502     0.73     96.0     96.2      487    0.71
   Edgewater Landing                95.8     95.0       415     0.71     98.2     97.5      409    0.70
   Gates Mills III                  95.2     97.8       711     0.81     96.8     96.9      653    0.75
   Holly Park                       97.0     95.8       654     0.75     94.6     97.4      695    0.79
   Huntington Hills                 98.2     98.8       649     0.66     95.3     94.1      637    0.65
   Mallard's Crossing               98.2     96.4       689     0.69     99.8     95.8      664    0.67
   Memphis Manor                    91.1     93.3       442     0.80     97.8     96.7      435    0.79
   Park Place                       96.3     94.5       534     0.70     96.7     98.2      520    0.68
   Pinecrest                        93.4     95.8       460     0.77     95.8     94.8      452    0.76
   Portage Towers                   86.7     93.6       570     0.66     96.5     92.6      549    0.63
   Somerset West (b)                93.7     95.9       687     0.66     92.1     94.4      685    0.66
   The Triangle (c)                 97.8     97.8       899     1.46     98.4     98.9      848    1.38
   Timbers                          95.0     96.9       699     0.75     94.5     94.8      671    0.72
   Villa Moderne                    95.1     97.8       439     0.87     95.0     94.1      422    0.84
   Washington Manor                 97.5     96.7       383     0.71     97.4     94.2      370    0.68
   West Park Plaza                  96.4     95.8       427     0.82     99.2     94.9      416    0.80
   Westchester Townhouses           93.9    100.0       750     0.75     93.0     90.4      759    0.7 <PAGE>
 
</TABLE>


  <PAGE> 20
<TABLE>
<CAPTION>
                                                                                     Year    Average
                                     Date                        Type of    Total  Built or Unit Size
      The Multifamily Properties   Acquired     Location      Construction Suites   Rehab.   Sq. Ft. 

   <S>                             <C>      <C>               <C>          <C>      <C>      <C>
   Westlake Townhomes              IPO      Westlake          Townhomes          7   1985       1,000
   Williamsburg at Greenwood Vllg. 02/18/94 Sagamore Hills    Townhomes        260   1990         938
   Winchester Hills I  (d)         IPO      Willoughby Hills  High Rise        362   1972         822
   Winchester Hills II             IPO      Willoughby Hills  High Rise        362   1979         822
                                                                             4,350                782
   Michigan
   Arbor Landings Apartments       01/20/95 Ann Arbor         Garden           168   1990       1,116
   Central Park Place              12/29/94 Grand Rapids      Garden           216   1988         850
   Country Place Apartments        06/19/95 Mt. Pleasant      Garden           144   1988         859
   Georgetown Park Apartments      12/28/94 Fenton            Garden           360  1987-96     1,005
   The Landings at the Preserve    09/21/95 Battle Creek      Garden           190  1990-91       952
   The Oaks and Woods at Hampton   08/08/95 Rochester Hills   Gdn/Tnhms        544  1986-88     1,050
   Summer Ridge Apartments         04/01/96 Kalamazoo         Garden           248  1989-91       960
                                                                             1,870                988
   Toledo, Ohio
   Cloisters                       09/14/95 Toledo            Townhomes        188   1990       1,037
   Kensington Vllg.                09/14/95 Toledo            Gdn/Tnhms        190  1985-90       920
   Treetops                        09/14/95 Toledo            Townhomes        128  1988-89     1,350
   Vantage Villa                   10/30/95 Toledo            Garden           150   1974         935
                                                                               656              1,041
   Pennsylvania
   Chestnut Ridge                  03/01/96 Pittsburgh        Garden           468   1986         769
                                                                            10,290                868
   GOVERNMENT ASST.-ELDERLY
   Ellet Development               IPO      Akron             High Rise        100   1978         589
   Hillwood I                      IPO      Akron             High Rise        100   1976         570
   Puritas Place (e)               IPO      Cleveland         High Rise        100   1981         518
   Riverview                       IPO      Massillon         High Rise         98   1979         553
   State Road Apartments           IPO      Cuyahoga Falls    Garden            72  1977 r        750
   Statesman II                    IPO      Shaker Heights    Garden            47  1987 r        796
   Sutliff Apartments II           IPO      Cuyahoga Falls    High Rise        185   1979         577
   Tallmadge Acres                 IPO      Tallmadge         Mid Rise         125   1981         641
   Twinsburg Apartments            IPO      Twinsburg         Garden           100   1979         554
   Village Towers                  IPO      Jackson Twp.      High Rise        100   1979         557
   West High Apartments            IPO      Akron             Mid Rise          68  1981 r        702
                                                                             1,095                602
   GOVERNMENT ASST.-FAMILY

   Jennings Commons                IPO      Cleveland         Garden            50   1981         823
   Rainbow Terrace                 IPO      Cleveland         Garden           484  1982 r        768
   Shaker Park Gardens II          IPO      Warrensville      Garden           151   1964         753
                                                                               685                769
                                                                             1,780                666
   CONGREGATE CARE
   Gates Mills Club                IPO      Mayfield Heights  High Rise        120   1980         721
   The Oaks                        IPO      Westlake          Garden            50   1985         672
                                                                               170                707
      Wholly owned core portfolio                                           12,240                837

   Joint Venture Properties
   Northeastern Ohio
   Market rate
   Americana                       IPO      Euclid            High Rise        738   1968         803
   College Towers                  IPO      Kent              Mid Rise         380   1969         662
   Euclid House                    IPO      Euclid            Mid Rise         126   1969         654
   Gates Mills Towers              IPO      Mayfield Hts.     High Rise        760   1969         856
   Highland House                  IPO      Painesville       Garden            36   1964         539
   Watergate                       IPO      Euclid            High Rise        949   1971         831
                                                                             2,989                789
   Government Asst.-Family
   Lakeshore Vllg.                 IPO      Cleveland         Garden           108   1982         786
                                                                             3,097                789
        Core                                                                15,337                833
        Portfolio average                                                   16,818                847 <PAGE>
 

<CAPTION>

                                       For the three months ending         For the three months ending    
                                              June 30, 1997                       June 30, 1996           
                                    Average             Average Rent    Average              Average Rent
                                    Economic  Physical       Per        Economic  Physical       Per
      The Multifamily Properties   Occupancy Occupancy  Suite  Sq. Ft. Occupancy Occupancy  Suite Sq. Ft.

   <S>                               <C>     <C>          <C>     <C>     <C>      <C>        <C>    <C>
   Westlake Townhomes                95.1    100.0        791     0.79    100.0    100.0      761    0.76
   Williamsburg at Greenwood Vllg.   91.7     93.8        859     0.92     97.2     95.8      795    0.85
   Winchester Hills I  (d)           90.4     95.0        573     0.70     93.6     92.0      557    0.68
   Winchester Hills II               86.6     92.5        609     0.74     92.7     93.6      592    0.72
                                     93.6%    95.7%     $ 607   $ 0.78     96.0%    95.2%   $ 588  $ 0.75
   Michigan
   Arbor Landings Apartments         97.3%    97.0%     $ 841   $ 0.75     98.1%    97.6%   $ 816  $ 0.73
   Central Park Place                96.0     96.8        605     0.71     96.0     89.8      610    0.72
   Country Place Apartments          94.8     95.1        520     0.61    100.0     99.3      494    0.58
   Georgetown Park Apartments        94.6     93.9        673     0.67     95.7     96.8      660    0.66
   The Landings at the Preserve      94.0     94.7        675     0.71     96.3     95.8      648    0.68
   The Oaks and Woods at Hampton     95.4     95.4        801     0.76    100.0     98.0      758    0.72
   Summer Ridge Apartments           95.8     98.4        674     0.70     96.1     92.7      664    0.69
                                     95.4%    95.7%     $ 706   $ 0.71     98.1%    95.9%   $ 684  $ 0.69
   Toledo, Ohio
   Cloisters                         97.1%    95.2%     $ 529   $ 0.51     91.7%    95.2%   $ 504  $ 0.49
   Kensington Vllg.                  96.7     97.4        451     0.49     94.1     95.8      434    0.47
   Treetops                          97.8     96.9        735     0.54     97.0     95.3      716    0.53
   Vantage Villa                     95.2     93.3        599     0.64     93.8     94.0      573    0.61
                                     96.8%    95.7%     $ 563   $ 0.54     94.1%    95.1%   $ 541  $ 0.52
   Pennsylvania
   Chestnut Ridge                    98.3%    97.2%     $ 702   $ 0.91     86.2%    91.0%   $ 676  $ 0.88 
                                     94.7%    95.7%     $ 618   $ 0.71     96.3%    95.7%   $ 597  $ 0.69
   GOVERNMENT ASST.-ELDERLY
   Ellet Development                100.0%   100.0%     $ 587    $1.00    100.0%   100.0%   $ 585   $ .99
   Hillwood I                       100.0    100.0        596     1.05    100.0    100.0      596    1.05
   Puritas Place (e)                 99.6    100.0        782     1.51     99.9     97.0      782    1.51
   Riverview                        100.0    100.0        591     1.07    100.0    100.0      591    1.07
   State Road Apartments             99.6    100.0        596     0.79    100.0    100.0      599    0.80
   Statesman II                      98.8     97.9        651     0.82    100.0    100.0      650    0.82
   Sutliff Apartments II            100.0    100.0        586     1.02    100.0    100.0      586    1.02
   Tallmadge Acres                  100.0    100.0        658     1.03    100.0    100.0      658    1.03
   Twinsburg Apartments             100.0    100.0        603     1.09    100.0    100.0      606    1.09
   Village Towers                   100.0    100.0        579     1.04     99.5    100.0      579    1.04
   West High Apartments             100.0    100.0        790     1.13    100.0    100.0      786    1.12
                                    100.0%    99.9%     $ 631   $ 1.05    100.0%    99.7%   $ 631  $ 1.05
   GOVERNMENT ASST.-FAMILY
   Jennings Commons                 100.0%   100.0%     $ 674   $ 0.82    100.0%   100.0%   $ 674  $ 0.82 <PAGE>
 
   Rainbow Terrace                   99.2     98.1        773     1.01     98.4     97.3      708    0.92
   Shaker Park Gardens II           100.0    100.0        531     0.71     99.8     98.7      531    0.71
                                     99.4     98.7        713     0.93     98.8     97.8      667    0.87
                                     99.8%    99.4%     $ 662   $ 0.99     99.6%    99.0%   $ 645  $ 0.97
   CONGREGATE CARE
   Gates Mills Club                  97.9%    99.2%     $ 813   $ 1.13     96.3%    97.5%   $ 758  $ 1.05
   The Oaks                          97.0    100.0        981     1.46     96.5     90.0      956    1.42
                                     97.6     99.4        862     1.22     96.3     95.3      817    1.16
      Wholly owned core portfolio    95.6%    96.3%     $ 628   $ 0.75     96.8%    96.1%   $ 607  $ 0.73

   Joint Venture Properties
   Northeastern Ohio
   Market rate
   Americana                         87.0%    93.4%     $ 480   $ 0.60     89.6%    89.8%   $ 485  $ 0.60
   College Towers                    91.9     93.2        399     0.60     91.9     91.3      404    0.61
   Euclid House                      90.4     92.9        432     0.66     94.5     96.0      431    0.66
   Gates Mills Towers                93.8     98.4        698     0.82     96.8     98.2      654    0.76
   Highland House                    99.7     97.2        406     0.75     98.6     94.4      392    0.73
   Watergate                         92.8     96.1        541     0.65     91.0     92.2      531    0.64
                                     91.8%    95.5%     $ 533   $ 0.68     92.8%    93.2%   $ 521  $ 0.66
   Government Asst.-Family
   Lakeshore Vllg.                  100.0%   100.0%     $ 669   $ 0.85     99.4%    98.1%   $ 669  $ 0.85
                                     92.3     95.7        539     0.68     93.2     93.4      528    0.67
        Core                         95.3%    96.2%     $ 620   $ 0.74     96.5%    95.6%   $ 600  $ 0.72
        Portfolio average            95.0%    95.9%     $ 619   $ 0.73     96.5%    95.6%   $ 523  $ 0.62 <PAGE>
 



       <FN>
       ______________
       (a)  The recently constructed 90 suites have not yet reached stabilized
            occupancy.  The Company has entered into a contract to acquire 12 additional
            suites presently under construction; however, there can be no assurances
            that the suites will be acquired.
       (b)  Somerset West has 77 Contract Suites and 120 Market-rate suites.
       (c)  The Triangle also contains 63,321 square feet of office/retail space.
       (d)  The Company acquired a noteholder interest entitling the Company to
            substantially all cash flows from operations.  The Company has certain
            rights under a security agreement to foreclose on the property to the extent
            that the unpaid principal and interest on the underlying notes exceed seven
            years equivalent principal and interest payments.
       (e)  The property was developed in 1981 subject to a warranty deed provision
            which states that the assignment of fee simple title of the property to the
            Company shall expire in 2037.
       r =  Rehabilitated
       </FN>
</TABLE>




          <PAGE> 22
             HISTORICAL FUNDS FROM OPERATIONS AND DISTRIBUTABLE CASH FLOW

               Industry analysts generally consider Funds From Operations
          ("FFO") to be an appropriate measure of the performance of an
          equity REIT.  FFO is defined as net income (computed in
          accordance with generally accepted accounting principles),
          excluding gains (or losses) from sales of property, non-recurring
          and extraordinary items, plus depreciation on real estate assets
          and after adjustments for unconsolidated joint ventures. 
          Adjustments for joint ventures are calculated to reflect FFO on
          the same basis.  FFO does not represent cash generated from
          operating activities in accordance with generally accepted
          accounting principles and is not necessarily indicative of cash
          available to fund cash needs and should not be considered an
          alternative to net income as an indicator of the Company's
          operating performance or as an alternative to cash flow as a
          measure of liquidity.  Distributable Cash Flow is defined as FFO
          less capital expenditures funded by operations and loan
          amortization payments.  The Company believes that in order to
          facilitate a clear understanding of the consolidated historical
          operating results of the Company, FFO and Distributable Cash Flow
          should be presented in conjunction with net income as presented
          in the consolidated financial statements and data included
          elsewhere in this report.

               FFO and Funds Available for Distribution ("Distributable
          Cash Flow") for the six month period ended June 30, 1997 and 1996
          are summarized in the following table: 

<TABLE>
<CAPTION>
                                             For the three months    For the six months
                                                ended June 30,         ended June 30,
   (In thousands)                               1997       1996       1997       1996   

   <S>                                      <C>          <C>       <C>        <C>    
   Net income applicable to common shares   $     5,029  $ 3,553   $    8,884 $   6,973 

   Depreciation on real estate assets
     Wholly owned properties                      4,212    3,557        8,283     6,886 
     Joint venture properties                       121      121          242       242 
   Extraordinary item-gain on early
    extinguishment of debt                       (1,043)     -         (1,043)      -   
   Funds From Operations                          8,319    7,231       16,366    14,101 
                                                           
   Depreciation - other assets                      152       77          247       146 
   Amortization of deferred financing fees          182      164          358       327 
   Fixed asset additions                           (117)     (64)        (231)     (179)
   Distributable Cash Flow                  $     8,536  $ 7,408   $   16,740 $  14,395 

   Weighted average shares outstanding           15,322   13,872       15,322    13,872  <PAGE>
   
</TABLE>


          <PAGE> 23
                                       PART II

                                  OTHER INFORMATION

                Except to the extent noted below, the items required in
          Part II are inapplicable or, if applicable, would be answered in
          the negative and have been omitted.

          ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS

                On May 8, 1997, the Company held its Annual Meeting of
          Shareholders.  The only matter presented to the shareholders for
          a vote was the election of directors, each to serve a term of one
          year.  The following sets forth the nominees for director and the
          results of voting: 


<TABLE>
<CAPTION>


                         Votes "For"   Votes "Abstained"

   <S>                 <C>                  <C>
   Jeffrey I. Friedman 13,715,094.394       54,620
   Mark L. Milstein    13,715,094.394       54,620
   Jerome Spevack      13,714,392.342       55,322.052
   Albert T. Adams     13,709,444.394       60,270
   Gerald C. McDonough 13,714,184.394       55,530
   Frank E. Mosier     13,715,192.342       54,522.052
   Richard T. Schwarz  13,715,294.394       54,420 
</TABLE>

          ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

                (a)      Exhibits


<TABLE>
<CAPTION>

                                                               Filed herewith or
                                                                 incorporated
                                                                   herein by
    Number                        Title                            reference     

   <S>       <C>                                              <C>
   27        Financial Data Schedule                          Exhibit 27 filed
                                                                herewith.

   10.1      Pledge Agreement dated May 23, 1997 between      Exhibit 10.1 filed
               Jeffrey I. Friedman and the Company.              herewith

   10.2      Secured Promissory Note dated May 23, 1997 in    Exhibit 10.2 filed
               the amount of $1,671,000.00 executed by           herewith
               Jeffrey I. Friedman in favor of the Company.

   10.3      Unsecured Promissory Note dated May 23, 1997 in  Exhibit 10.3 filed
               the amount of $1,671,000.00 executed by           herewith
               Jeffrey I. Friedman in favor of the Company. 
</TABLE>


                (b)      Reports on Form 8-K

                         None 


          <PAGE> 24
          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.



                                   ASSOCIATED ESTATES REALTY CORPORATION



          August 8, 1997           /s/ Dennis W.  Bikun                    
          (Date)                   Dennis W. Bikun, Chief Financial Officer
                                     and Treasurer