SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 8-K

                                 CURRENT REPORT

         Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (date of earliest event reported):  September 29, 1999

                      CORNERSTONE REALTY INCOME TRUST, INC.
             (Exact name of registrant as specified in its charter)

 VIRGINIA                         1-12875                 54-1589139
(State of                       (Commission              (IRS Employer
incorporation)                  File Number)            Identification No.)

306 EAST MAIN STREET                                          23219
RICHMOND, VIRGINIA                                          (Zip Code)
(Address of principal
executive offices)

               Registrant's telephone number, including area code:
                                 (804) 643-1761


<PAGE>




                      CORNERSTONE REALTY INCOME TRUST, INC.

                                    FORM 8-K

                                      Index

Item 5.       Other Events

Item 7.       Financial Statements and Exhibits

              Financial Statements:

              None.

              Exhibits:

4.1           Promissory Note dated  September 27, 1999 in the principal  amount
              of $50,550,000  made payable by  Cornerstone  Realty Income Trust,
              Inc. to the order of The Prudential Insurance Company of America.

4.2           Promissory Note dated  September 27, 1999 in the principal  amount
              of  $22,950,000  made payable by CRIT-NC,  LLC to the order of The
              Prudential Insurance Company of America.

4.3           Mortgage and  Security  Agreement  dated as of September  27, 1999
              from Cornerstone  Realty Income Trust,  Inc., as borrower,  to The
              Prudential Insurance Company of America, as lender,  pertaining to
              the Hampton Pointe and Westchase properties.

4.4           Mortgage and  Security  Agreement  dated as of September  27, 1999
              from Cornerstone  Realty Income Trust,  Inc., as borrower,  to The
              Prudential Insurance Company of America, as lender,  pertaining to
              the Arbors at Windsor Lake property.

4.5           Deed of Trust and Security  Agreement  dated as of  September  27,
              1999 made by  CRIT-NC,  LLC, as  borrower,  for the benefit of The
              Prudential Insurance Company of America, as lender,  pertaining to
              the Charleston Place and Stone Point properties.


<PAGE>




4.6           Deed of Trust and Security  Agreement  dated as of  September  27,
              1999 made by  CRIT-NC,  LLC, as  borrower,  for the benefit of The
              Prudential Insurance Company of America, as lender,  pertaining to
              the St. Regis and Remington Place properties.

4.7           Deed To Secure Debt and Security  Agreement by Cornerstone  Realty
              Income  Trust,  Inc.,  as borrower,  to The  Prudential  Insurance
              Company of America, as lender, pertaining to the Ashley Run, Stone
              Brook and Spring Lake properties.

4.8           Assignment  of Leases and Rents dated as of September 27, 1999, by
              Cornerstone Realty Income Trust, Inc. to The Prudential  Insurance
              Company of America (Charleston County, South Carolina).

4.9           Assignment  of Leases and Rents dated as of September 27, 1999, by
              Cornerstone Realty Income Trust, Inc. to The Prudential  Insurance
              Company of America (Richland County, South Carolina).

4.10          Assignment  of Leases and Rents dated as of September 27, 1999, by
              CRIT-NC,  LLC to  The  Prudential  Insurance  Company  of  America
              (Mecklenburg County, North Carolina).

4.11          Assignment  of Leases and Rents dated as of September 27, 1999, by
              Cornerstone Realty Income Trust, Inc. to The Prudential  Insurance
              Company of America (Clayton County, Georgia).

4.12          Assignment  of Leases and Rents dated as of September 27, 1999, by
              Cornerstone Realty Income Trust, Inc. to The Prudential  Insurance
              Company of America (Gwinnett County, Georgia).

4.13          Assignment of Leases and Rents dated as of September 27, 1999,  by
              CRIT-NC, LLC to The Prudential Insurance Company of America  (Wake
              County, North Carolina).

10.1          Environmental  Indemnity  Agreement dated as of September 27, 1999
              by  Cornerstone   Realty  Income  Trust,  Inc.  in  favor  of  The
              Prudential   Insurance   Company  of  America   referring  to  the
              $50,550,000 Promissory Note.

10.2          Environmental  Indemnity  Agreement dated as of September 27, 1999
              by CRIT-NC, LLC and Cornerstone Realty IncomeTrust,  Inc. in favor
              of The Prudential  Insurance  Company of America  referring to the
              $22,950,000 Note.


<PAGE>



10.3          Unconditional and Irrevocable  Guaranty of Payment and Performance
              (Recourse  Carveouts)  dated  as of  September  27,  1999  made by
              Cornerstone  Realty Income Trust,  Inc. in favor of The Prudential
              Insurance  Company  of  America   pertaining  to  the  $22,950,000
              Promissory Note.

10.4          Unconditional and Irrevocable  Guaranty of Payment and Performance
              (Cross-Collateralization)  dated as of September  27, 1999 made by
              Cornerstone  Realty Income Trust,  Inc. in favor of The Prudential
              Insurance  Company  of  America   pertaining  to  the  $22,950,000
              Promissory Note.

10.5          Unconditional and Irrevocable  Guaranty of Payment and Performance
              (Cross-Collateralization)  dated as of September  27, 1999 made by
              CRIT-NC,  LLC in  favor of The  Prudential  Insurance  Company  of
              America pertaining to the $50,550,000 Promissory Note.




<PAGE>



Item 5.       Other Events

         As stated in a press release dated October 4, 1999,  Cornerstone Realty
Income Trust,  Inc.  ("Cornerstone")  borrowed  $50,550,000  from The Prudential
Insurance  Company of America  ("Lender")  on September  29, 1999  ("Cornerstone
Loan") and evidenced the Cornerstone Loan by executing a promissory note in that
amount  ("Cornerstone  Note"). Our subsidiary,  CRIT-NC,  LLC (our "Subsidiary")
also borrowed  $22,950,000 from the Lender at the same time ("Subsidiary  Loan")
and evidenced the Subsidiary  Loan by executing a promissory note in that amount
("Subsidiary Note" and, together with the Cornerstone Note, the "Notes").

         The Notes are each payable interest only at the rate of 7.29% per annum
("Note Rate") maturing on October 15, 2006 ("Maturity").  However,  in the event
that  either  the debt  service  coverage  ratio for the  entire  Portfolio  (as
hereinafter defined) is less than 1.30 to 1.0, or we and our Subsidiary have not
spent at least  $2,400,000,  in the  aggregate,  in the manner  required  by the
Lender  for  the  entire  Portfolio  for  repairs,   capital   improvements  and
replacements  before  January 1, 2001 ("Repair  Amount"),  then effective on the
first monthly payment which is due following  either of such events,  we will be
obligated to make monthly  payments on the Notes equal to their then outstanding
principal balances  multiplied by 8.705% based on a 25 year amortization  (which
shall continue until such time as the debt service coverage ratio for the entire
Portfolio is equal to or greater than 1.80 to 1.0 or the Lender  determines that
we and our Subsidiary have spent the Repair Amount).

         The Notes each incur a 10% per annum daily charge ("Daily  Charge") for
late  payments  and, if not fully paid by the 14th day following its due date, a
4% late charge assessment  ("Late Charge").  The Late Charge shall be payable in
lieu of any Daily  Charge  that may have  accrued.  Upon an Event of Default (as
hereinafter defined) or at Maturity, the Notes shall bear interest at the lesser
of (i) the maximum  rate allowed by law or (ii) the greater of (a) the Note Rate
plus  five  percent  (5%) or (b)  five  percent  (5%)  plus the  prime  rate for
corporate loans at large United States Money Center Commercial Banks.

         The Notes may be prepaid  after  thirty  (30) days  written  notice and
payment of a prepayment premium  ("Prepayment  Premium") equal to the greater of
(a) one percent (1%) of the  principal  amount being  prepaid  multiplied by the
quotient of the number of full months  remaining  until Maturity  divided by the
number of full  months  comprising  the term of the  Notes,  or (b) based on the
present  value of the Notes  which are  determined  by  discounting  at a stated
treasury rate all scheduled payments  remaining to Maturity  attributable to the
amount  being  prepaid.  No  Prepayment  Premium  shall be due if the  Notes are
prepaid  during the last  fourteen  (14) days prior to  Maturity.  However,  any
prepayment on either of the Notes will require a proportionate prepayment of the
other Note; that is, if 5% of either the Cornerstone Note or the Subsidiary Note
is prepaid, 5% of the other note must also be prepaid.

         Although the Notes have limited recourse liability for certain matters,
we and our Subsidiary do have liability for other matters (such as, for example,
accrued  or  payable  taxes and  assessments,  security  deposits  due  tenants,
insurance  proceeds or  condemnation  awards not turned over to the Lender,  and
waste of the property comprising the Portfolio),  and we and our Subsidiary also
have full liability for indemnifications or in the event there is any breach or


<PAGE>



violation of the sale or encumbrance  prohibitions (the so-called due-on-sale or
encumbrance  provisions) of the Security  Instruments (as hereinafter  defined),
fraud, material misrepresentation, or bankruptcy.

         Each of the apartment  communities  financed from the Cornerstone Loan,
comprising  three in Georgia (Ashley Run, Spring Lake and Stone Brook) and three
in South Carolina (The Arbors at Windsor Lake,  Hampton  Pointe and  Westchase),
and  the  four  apartment  communities  in  North  Carolina  (Charleston  Place,
Remington  Place,  Stone Point and St. Regis)  financed from the Subsidiary Loan
(collectively, the "Portfolio"), are encumbered by either a Deed to Secure Debt,
Mortgage or Deed of Trust  (collectively,  the "Security  Instruments")  and the
Security  Instruments  secure the Notes.  We and our  Subsidiary  are subject to
various  requirements  under each Security  Instrument.  For  instance,  we must
maintain  adequate  insurance on the  Portfolio,  there must be  maintenance  of
certain  records and reports,  and there must be maintenance of the Portfolio in
good order, repair and operating condition.

         In addition, each Security Instrument defines certain events of default
("Events of Default").  For each Security Instrument,  Events of Default include
any  default  under  either  of  the  Notes,  any  default  under  any  Security
Instrument,   any  default  under  any  other  loan  documents   (including  the
Environmental  Indemnity  Agreements,  as  hereinafter  defined),  any breach or
default of certain  representations,  warranties and covenants,  and any sale or
encumbrance of the Portfolio or further  assignment of leases and rents therein,
without  the prior  consent  of the  Lender.  In  addition,  we have  guaranteed
("Guaranty") the Subsidiary's  recourse obligations under the Subsidiary Note. A
default under such Guaranty is likewise a default  under the  Cornerstone  Note.
The Notes and the  Security  Instruments  are  cross-collateralized  and  cross-
defaulted.

         Upon any  Event of  Default,  various  remedies  are  available  to the
Lender.  Those remedies include,  for example (1) declaring the entire principal
balance  under the Notes,  and all  accrued and unpaid  interest,  to be due and
payable immediately along with the Prepayment Premium;  (2) taking possession of
the  Portfolio;   and  (3)  collecting   rental  payments  from  tenants  and/or
foreclosing  the lien of the Security  Instruments  and selling the Portfolio to
satisfy unpaid amounts due under either of the Notes, the Security  Instruments,
the Environmental  Indemnity  Agreements or other loan documents.  Each Security
Instrument  requires payment of any costs that may be incurred by the Lender and
the trustee, if applicable,  in exercising such remedies. There are also certain
indemnifications   (including  the  Environmental  Indemnity  Agreements)  which
survive the payoff of the Cornerstone Loan and the Subsidiary Loan.

         Both the Cornerstone Portfolio and the Subsidiary Portfolio are subject
to separate Environmental Indemnity Agreements (collectively, the "Environmental
Indemnity  Agreements").  The indemnities protect the Lender for losses (broadly
defined) in the event that any Hazardous Materials (also broadly defined), which
includes, for example, asbestos, lead based paint and other toxic materials, are
found in, on, or under any of the properties within the Portfolio.


<PAGE>



                                    SIGNATURE

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 hereunto duly authorized.

                                         Cornerstone Realty Income Trust, Inc.

Date:  November 2, 1999                  By: /s/  Stanley J. Olander, Jr.
                                             ------------------------------
                                                  Stanley J. Olander, Jr.,
                                                  Chief Financial Officer
                                                  Cornerstone Realty Income
                                                   Trust, Inc.





<PAGE>



                                Index to Exhibits

Exhibit No.    Exhibit
-----------    --------
   4.1         Promissory Note dated September 27, 1999 in the principal  amount
               of $50,550,000  made payable by Cornerstone  Realty Income Trust,
               Inc. to the order of The Prudential Insurance Company of America.

   4.2         Promissory Note dated September 27, 1999 in the principal  amount
               of $22,950,000  made payable by CRIT-NC,  LLC to the order of The
               Prudential Insurance Company of America.

   4.3         Mortgage and Security  Agreement  dated as of September  27, 1999
               from Cornerstone Realty Income Trust,  Inc., as borrower,  to The
               Prudential Insurance Company of America, as lender, pertaining to
               the Hampton Pointe and Westchase properties.

   4.4         Mortgage and Security  Agreement  dated as of September  27, 1999
               from Cornerstone Realty Income Trust,  Inc., as borrower,  to The
               Prudential Insurance Company of America, as lender, pertaining to
               the Arbors at Windsor Lake property.

   4.5         Deed of Trust and Security  Agreement  dated as of September  27,
               1999 made by CRIT-NC,  LLC, as  borrower,  for the benefit of The
               Prudential Insurance Company of America, as lender, pertaining to
               the Charleston Place and Stone Point properties.

   4.6         Deed of Trust and Security  Agreement  dated as of September  27,
               1999 made by CRIT-NC,  LLC, as  borrower,  for the benefit of The
               Prudential Insurance Company of America, as lender, pertaining to
               the St. Regis and Remington Place properties.

   4.7         Deed To Secure Debt and Security  Agreement by Cornerstone Realty
               Income Trust,  Inc.,  as borrower,  to The  Prudential  Insurance
               Company of  America,  as lender,  pertaining  to the Ashley  Run,
               Stone Brook and Spring Lake properties.

   4.8         Assignment of Leases and Rents dated as of September 27, 1999, by
               Cornerstone Realty Income Trust, Inc. to The Prudential Insurance
               Company of America (Charleston County, South Carolina).

   4.9         Assignment of Leases and Rents dated as of September 27, 1999, by
               Cornerstone Realty Income Trust, Inc. to The Prudential Insurance
               Company of America (Richland County, South Carolina).
<PAGE>


   4.10        Assignment of Leases and Rents dated as of September 27, 1999, by
               CRIT-NC,  LLC to The  Prudential  Insurance  Company  of  America
               (Mecklenburg County, North Carolina).

   4.11        Assignment of Leases and Rents dated as of September 27, 1999, by
               Cornerstone Realty Income Trust, Inc. to The Prudential Insurance
               Company of America (Clayton County, Georgia).

   4.12        Assignment of Leases and Rents dated as of September 27, 1999, by
               Cornerstone Realty Income Trust, Inc. to The Prudential Insurance
               Company of America (Gwinnett County, Georgia).

   4.13        Assignment of Leases and Rents dated as of September 27, 1999, by
               CRIT-NC, LLC to The Prudential Insurance Company of America (Wake
               County, North Carolina).

   10.1        Environmental  Indemnity Agreement dated as of September 27, 1999
               by  Cornerstone  Realty  Income  Trust,  Inc.  in  favor  of  The
               Prudential   Insurance   Company  of  America  referring  to  the
               $50,550,000 Promissory Note.

   10.2        Environmental  Indemnity Agreement dated as of September 27, 1999
               by CRIT-NC,  LLC and  Cornerstone  Realty Income  Trust,  Inc. in
               favor of The Prudential Insurance Company of America referring to
               the $22,950,000 Note.

   10.3        Unconditional and Irrevocable Guaranty of Payment and Performance
               (Recourse  Carveouts)  dated as of  September  27,  1999  made by
               Cornerstone  Realty Income Trust, Inc. in favor of The Prudential
               Insurance  Company  of  America  pertaining  to  the  $22,950,000
               Promissory Note.

   10.4        Unconditional and Irrevocable Guaranty of Payment and Performance
               (Cross-Collateralization)  dated as of September 27, 1999 made by
               Cornerstone  Realty Income Trust, Inc. in favor of The Prudential
               Insurance  Company  of  America  pertaining  to  the  $22,950,000
               Promissory Note.

   10.5        Unconditional and Irrevocable Guaranty of Payment and Performance
               (Cross-Collateralization)  dated as of September 27, 1999 made by
               CRIT-NC,  LLC in favor of The  Prudential  Insurance  Company  of
               America pertaining to the $50,550,000 Promissory Note.
[{"type": "8-K", "sequence": "1", "description": "FORM 8-K", "secsgml_size_bytes": 19281}]
{"company-data": {"conformed-name": "CORNERSTONE REALTY INCOME TRUST INC", "cik": "0000854875", "assigned-sic": "6798", "irs-number": "541589139", "state-of-incorporation": "VA", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "001-12875", "film-number": "99740059"}, "business-address": {"street1": "306 E MAIN ST", "city": "RICHMOND", "state": "VA", "zip": "23219", "phone": "8046431761"}, "mail-address": {"street1": "306 E MAIN ST", "city": "RICHMOND", "state": "VA", "zip": "23219"}}
SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 8-K

                                 CURRENT REPORT

         Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (date of earliest event reported):  September 29, 1999

                      CORNERSTONE REALTY INCOME TRUST, INC.
             (Exact name of registrant as specified in its charter)

 VIRGINIA                         1-12875                 54-1589139
(State of                       (Commission              (IRS Employer
incorporation)                  File Number)            Identification No.)

306 EAST MAIN STREET                                          23219
RICHMOND, VIRGINIA                                          (Zip Code)
(Address of principal
executive offices)

               Registrant's telephone number, including area code:
                                 (804) 643-1761
CORNERSTONE REALTY INCOME TRUST, INC.

                                    FORM 8-K

                                      Index

Item 5.       Other Events

Item 7.       Financial Statements and Exhibits

              Financial Statements:

              None.

              Exhibits:

4.1           Promissory Note dated  September 27, 1999 in the principal  amount
              of $50,550,000  made payable by  Cornerstone  Realty Income Trust,
              Inc. to the order of The Prudential Insurance Company of America.

4.2           Promissory Note dated  September 27, 1999 in the principal  amount
              of  $22,950,000  made payable by CRIT-NC,  LLC to the order of The
              Prudential Insurance Company of America.

4.3           Mortgage and  Security  Agreement  dated as of September  27, 1999
              from Cornerstone  Realty Income Trust,  Inc., as borrower,  to The
              Prudential Insurance Company of America, as lender,  pertaining to
              the Hampton Pointe and Westchase properties.

4.4           Mortgage and  Security  Agreement  dated as of September  27, 1999
              from Cornerstone  Realty Income Trust,  Inc., as borrower,  to The
              Prudential Insurance Company of America, as lender,  pertaining to
              the Arbors at Windsor Lake property.

4.5           Deed of Trust and Security  Agreement  dated as of  September  27,
              1999 made by  CRIT-NC,  LLC, as  borrower,  for the benefit of The
              Prudential Insurance Company of America, as lender,  pertaining to
              the Charleston Place and Stone Point properties.
4.6           Deed of Trust and Security  Agreement  dated as of  September  27,
              1999 made by  CRIT-NC,  LLC, as  borrower,  for the benefit of The
              Prudential Insurance Company of America, as lender,  pertaining to
              the St. Regis and Remington Place properties.

4.7           Deed To Secure Debt and Security  Agreement by Cornerstone  Realty
              Income  Trust,  Inc.,  as borrower,  to The  Prudential  Insurance
              Company of America, as lender, pertaining to the Ashley Run, Stone
              Brook and Spring Lake properties.

4.8           Assignment  of Leases and Rents dated as of September 27, 1999, by
              Cornerstone Realty Income Trust, Inc. to The Prudential  Insurance
              Company of America (Charleston County, South Carolina).

4.9           Assignment  of Leases and Rents dated as of September 27, 1999, by
              Cornerstone Realty Income Trust, Inc. to The Prudential  Insurance
              Company of America (Richland County, South Carolina).

4.10          Assignment  of Leases and Rents dated as of September 27, 1999, by
              CRIT-NC,  LLC to  The  Prudential  Insurance  Company  of  America
              (Mecklenburg County, North Carolina).

4.11          Assignment  of Leases and Rents dated as of September 27, 1999, by
              Cornerstone Realty Income Trust, Inc. to The Prudential  Insurance
              Company of America (Clayton County, Georgia).

4.12          Assignment  of Leases and Rents dated as of September 27, 1999, by
              Cornerstone Realty Income Trust, Inc. to The Prudential  Insurance
              Company of America (Gwinnett County, Georgia).

4.13          Assignment of Leases and Rents dated as of September 27, 1999,  by
              CRIT-NC, LLC to The Prudential Insurance Company of America  (Wake
              County, North Carolina).

10.1          Environmental  Indemnity  Agreement dated as of September 27, 1999
              by  Cornerstone   Realty  Income  Trust,  Inc.  in  favor  of  The
              Prudential   Insurance   Company  of  America   referring  to  the
              $50,550,000 Promissory Note.

10.2          Environmental  Indemnity  Agreement dated as of September 27, 1999
              by CRIT-NC, LLC and Cornerstone Realty IncomeTrust,  Inc. in favor
              of The Prudential  Insurance  Company of America  referring to the
              $22,950,000 Note.
10.3          Unconditional and Irrevocable  Guaranty of Payment and Performance
              (Recourse  Carveouts)  dated  as of  September  27,  1999  made by
              Cornerstone  Realty Income Trust,  Inc. in favor of The Prudential
              Insurance  Company  of  America   pertaining  to  the  $22,950,000
              Promissory Note.

10.4          Unconditional and Irrevocable  Guaranty of Payment and Performance
              (Cross-Collateralization)  dated as of September  27, 1999 made by
              Cornerstone  Realty Income Trust,  Inc. in favor of The Prudential
              Insurance  Company  of  America   pertaining  to  the  $22,950,000
              Promissory Note.

10.5          Unconditional and Irrevocable  Guaranty of Payment and Performance
              (Cross-Collateralization)  dated as of September  27, 1999 made by
              CRIT-NC,  LLC in  favor of The  Prudential  Insurance  Company  of
              America pertaining to the $50,550,000 Promissory Note.
Item 5.       Other Events

         As stated in a press release dated October 4, 1999,  Cornerstone Realty
Income Trust,  Inc.  ("Cornerstone")  borrowed  $50,550,000  from The Prudential
Insurance  Company of America  ("Lender")  on September  29, 1999  ("Cornerstone
Loan") and evidenced the Cornerstone Loan by executing a promissory note in that
amount  ("Cornerstone  Note"). Our subsidiary,  CRIT-NC,  LLC (our "Subsidiary")
also borrowed  $22,950,000 from the Lender at the same time ("Subsidiary  Loan")
and evidenced the Subsidiary  Loan by executing a promissory note in that amount
("Subsidiary Note" and, together with the Cornerstone Note, the "Notes").

         The Notes are each payable interest only at the rate of 7.29% per annum
("Note Rate") maturing on October 15, 2006 ("Maturity").  However,  in the event
that  either  the debt  service  coverage  ratio for the  entire  Portfolio  (as
hereinafter defined) is less than 1.30 to 1.0, or we and our Subsidiary have not
spent at least  $2,400,000,  in the  aggregate,  in the manner  required  by the
Lender  for  the  entire  Portfolio  for  repairs,   capital   improvements  and
replacements  before  January 1, 2001 ("Repair  Amount"),  then effective on the
first monthly payment which is due following  either of such events,  we will be
obligated to make monthly  payments on the Notes equal to their then outstanding
principal balances  multiplied by 8.705% based on a 25 year amortization  (which
shall continue until such time as the debt service coverage ratio for the entire
Portfolio is equal to or greater than 1.80 to 1.0 or the Lender  determines that
we and our Subsidiary have spent the Repair Amount).

         The Notes each incur a 10% per annum daily charge ("Daily  Charge") for
late  payments  and, if not fully paid by the 14th day following its due date, a
4% late charge assessment  ("Late Charge").  The Late Charge shall be payable in
lieu of any Daily  Charge  that may have  accrued.  Upon an Event of Default (as
hereinafter defined) or at Maturity, the Notes shall bear interest at the lesser
of (i) the maximum  rate allowed by law or (ii) the greater of (a) the Note Rate
plus  five  percent  (5%) or (b)  five  percent  (5%)  plus the  prime  rate for
corporate loans at large United States Money Center Commercial Banks.

         The Notes may be prepaid  after  thirty  (30) days  written  notice and
payment of a prepayment premium  ("Prepayment  Premium") equal to the greater of
(a) one percent (1%) of the  principal  amount being  prepaid  multiplied by the
quotient of the number of full months  remaining  until Maturity  divided by the
number of full  months  comprising  the term of the  Notes,  or (b) based on the
present  value of the Notes  which are  determined  by  discounting  at a stated
treasury rate all scheduled payments  remaining to Maturity  attributable to the
amount  being  prepaid.  No  Prepayment  Premium  shall be due if the  Notes are
prepaid  during the last  fourteen  (14) days prior to  Maturity.  However,  any
prepayment on either of the Notes will require a proportionate prepayment of the
other Note; that is, if 5% of either the Cornerstone Note or the Subsidiary Note
is prepaid, 5% of the other note must also be prepaid.

         Although the Notes have limited recourse liability for certain matters,
we and our Subsidiary do have liability for other matters (such as, for example,
accrued  or  payable  taxes and  assessments,  security  deposits  due  tenants,
insurance  proceeds or  condemnation  awards not turned over to the Lender,  and
waste of the property comprising the Portfolio),  and we and our Subsidiary also
have full liability for indemnifications or in the event there is any breach or
violation of the sale or encumbrance  prohibitions (the so-called due-on-sale or
encumbrance  provisions) of the Security  Instruments (as hereinafter  defined),
fraud, material misrepresentation, or bankruptcy.

         Each of the apartment  communities  financed from the Cornerstone Loan,
comprising  three in Georgia (Ashley Run, Spring Lake and Stone Brook) and three
in South Carolina (The Arbors at Windsor Lake,  Hampton  Pointe and  Westchase),
and  the  four  apartment  communities  in  North  Carolina  (Charleston  Place,
Remington  Place,  Stone Point and St. Regis)  financed from the Subsidiary Loan
(collectively, the "Portfolio"), are encumbered by either a Deed to Secure Debt,
Mortgage or Deed of Trust  (collectively,  the "Security  Instruments")  and the
Security  Instruments  secure the Notes.  We and our  Subsidiary  are subject to
various  requirements  under each Security  Instrument.  For  instance,  we must
maintain  adequate  insurance on the  Portfolio,  there must be  maintenance  of
certain  records and reports,  and there must be maintenance of the Portfolio in
good order, repair and operating condition.

         In addition, each Security Instrument defines certain events of default
("Events of Default").  For each Security Instrument,  Events of Default include
any  default  under  either  of  the  Notes,  any  default  under  any  Security
Instrument,   any  default  under  any  other  loan  documents   (including  the
Environmental  Indemnity  Agreements,  as  hereinafter  defined),  any breach or
default of certain  representations,  warranties and covenants,  and any sale or
encumbrance of the Portfolio or further  assignment of leases and rents therein,
without  the prior  consent  of the  Lender.  In  addition,  we have  guaranteed
("Guaranty") the Subsidiary's  recourse obligations under the Subsidiary Note. A
default under such Guaranty is likewise a default  under the  Cornerstone  Note.
The Notes and the  Security  Instruments  are  cross-collateralized  and  cross-
defaulted.

         Upon any  Event of  Default,  various  remedies  are  available  to the
Lender.  Those remedies include,  for example (1) declaring the entire principal
balance  under the Notes,  and all  accrued and unpaid  interest,  to be due and
payable immediately along with the Prepayment Premium;  (2) taking possession of
the  Portfolio;   and  (3)  collecting   rental  payments  from  tenants  and/or
foreclosing  the lien of the Security  Instruments  and selling the Portfolio to
satisfy unpaid amounts due under either of the Notes, the Security  Instruments,
the Environmental  Indemnity  Agreements or other loan documents.  Each Security
Instrument  requires payment of any costs that may be incurred by the Lender and
the trustee, if applicable,  in exercising such remedies. There are also certain
indemnifications   (including  the  Environmental  Indemnity  Agreements)  which
survive the payoff of the Cornerstone Loan and the Subsidiary Loan.

         Both the Cornerstone Portfolio and the Subsidiary Portfolio are subject
to separate Environmental Indemnity Agreements (collectively, the "Environmental
Indemnity  Agreements").  The indemnities protect the Lender for losses (broadly
defined) in the event that any Hazardous Materials (also broadly defined), which
includes, for example, asbestos, lead based paint and other toxic materials, are
found in, on, or under any of the properties within the Portfolio.
SIGNATURE

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 hereunto duly authorized.

                                         Cornerstone Realty Income Trust, Inc.

Date:  November 2, 1999                  By: /s/  Stanley J. Olander, Jr.
                                             ------------------------------
                                                  Stanley J. Olander, Jr.,
                                                  Chief Financial Officer
                                                  Cornerstone Realty Income
                                                   Trust, Inc.
Index to Exhibits

Exhibit No.    Exhibit
-----------    --------
   4.1         Promissory Note dated September 27, 1999 in the principal  amount
               of $50,550,000  made payable by Cornerstone  Realty Income Trust,
               Inc. to the order of The Prudential Insurance Company of America.

   4.2         Promissory Note dated September 27, 1999 in the principal  amount
               of $22,950,000  made payable by CRIT-NC,  LLC to the order of The
               Prudential Insurance Company of America.

   4.3         Mortgage and Security  Agreement  dated as of September  27, 1999
               from Cornerstone Realty Income Trust,  Inc., as borrower,  to The
               Prudential Insurance Company of America, as lender, pertaining to
               the Hampton Pointe and Westchase properties.

   4.4         Mortgage and Security  Agreement  dated as of September  27, 1999
               from Cornerstone Realty Income Trust,  Inc., as borrower,  to The
               Prudential Insurance Company of America, as lender, pertaining to
               the Arbors at Windsor Lake property.

   4.5         Deed of Trust and Security  Agreement  dated as of September  27,
               1999 made by CRIT-NC,  LLC, as  borrower,  for the benefit of The
               Prudential Insurance Company of America, as lender, pertaining to
               the Charleston Place and Stone Point properties.

   4.6         Deed of Trust and Security  Agreement  dated as of September  27,
               1999 made by CRIT-NC,  LLC, as  borrower,  for the benefit of The
               Prudential Insurance Company of America, as lender, pertaining to
               the St. Regis and Remington Place properties.

   4.7         Deed To Secure Debt and Security  Agreement by Cornerstone Realty
               Income Trust,  Inc.,  as borrower,  to The  Prudential  Insurance
               Company of  America,  as lender,  pertaining  to the Ashley  Run,
               Stone Brook and Spring Lake properties.

   4.8         Assignment of Leases and Rents dated as of September 27, 1999, by
               Cornerstone Realty Income Trust, Inc. to The Prudential Insurance
               Company of America (Charleston County, South Carolina).

   4.9         Assignment of Leases and Rents dated as of September 27, 1999, by
               Cornerstone Realty Income Trust, Inc. to The Prudential Insurance
               Company of America (Richland County, South Carolina).
4.10        Assignment of Leases and Rents dated as of September 27, 1999, by
               CRIT-NC,  LLC to The  Prudential  Insurance  Company  of  America
               (Mecklenburg County, North Carolina).

   4.11        Assignment of Leases and Rents dated as of September 27, 1999, by
               Cornerstone Realty Income Trust, Inc. to The Prudential Insurance
               Company of America (Clayton County, Georgia).

   4.12        Assignment of Leases and Rents dated as of September 27, 1999, by
               Cornerstone Realty Income Trust, Inc. to The Prudential Insurance
               Company of America (Gwinnett County, Georgia).

   4.13        Assignment of Leases and Rents dated as of September 27, 1999, by
               CRIT-NC, LLC to The Prudential Insurance Company of America (Wake
               County, North Carolina).

   10.1        Environmental  Indemnity Agreement dated as of September 27, 1999
               by  Cornerstone  Realty  Income  Trust,  Inc.  in  favor  of  The
               Prudential   Insurance   Company  of  America  referring  to  the
               $50,550,000 Promissory Note.

   10.2        Environmental  Indemnity Agreement dated as of September 27, 1999
               by CRIT-NC,  LLC and  Cornerstone  Realty Income  Trust,  Inc. in
               favor of The Prudential Insurance Company of America referring to
               the $22,950,000 Note.

   10.3        Unconditional and Irrevocable Guaranty of Payment and Performance
               (Recourse  Carveouts)  dated as of  September  27,  1999  made by
               Cornerstone  Realty Income Trust, Inc. in favor of The Prudential
               Insurance  Company  of  America  pertaining  to  the  $22,950,000
               Promissory Note.

   10.4        Unconditional and Irrevocable Guaranty of Payment and Performance
               (Cross-Collateralization)  dated as of September 27, 1999 made by
               Cornerstone  Realty Income Trust, Inc. in favor of The Prudential
               Insurance  Company  of  America  pertaining  to  the  $22,950,000
               Promissory Note.

   10.5        Unconditional and Irrevocable Guaranty of Payment and Performance
               (Cross-Collateralization)  dated as of September 27, 1999 made by
               CRIT-NC,  LLC in favor of The  Prudential  Insurance  Company  of
               America pertaining to the $50,550,000 Promissory Note.