UNITED STATES 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): December 12, 2000


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

           VIRGINIA                        001-12875           54-1589139
   (State or other jurisdiction           (Commission       (I.R.S. Employer
         of incorporation)                File Number)    Identification Number)


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

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


ITEM 2.  Acquisition or Disposition of Assets

         Cornerstone  Realty Income Trust,  Inc.  (which is referred to below as
"we",  "us" or "our") is filing  this  report  pursuant to Item 2 of Form 8-K to
describe a financing  transaction in which certain assets were mortgaged.  These
mortgages  constitute a "disposition  of a significant  amount of assets" within
the meaning of the General  Instructions  to Form 8-K.  Certain  related matters
also are reported below.

SUMMARY OF FINANCING

         On December 12, 2000, we obtained financing, either directly or through
our subsidiaries, from First Union National Bank in the aggregate amount of $191
million.  The  financing  includes  long-term  secured  loans  to  three  of our
newly-formed  subsidiaries in the total amount of $141 million. The remainder of
the financing  consists of an unsecured  credit  facility in the total amount of
$50  million to us and one of our direct  subsidiaries.  The  proceeds  from the
financing were used to satisfy an existing unsecured credit facility established
with First Union National Bank in July 1999.

<PAGE>

NEW SUBSIDIARIES FOR LONG-TERM LOANS

         In connection with the long-term loans provided by First Union National
Bank, and at its request,  we formed a total of six new  subsidiaries  that will
operate as "special purpose  entities." To qualify as special purpose  entities,
the  new  subsidiaries  have   organizational   documents  that  impose  certain
requirements  on them  while the  loans  are  outstanding.  In  particular,  the
subsidiaries  must  maintain  separate  legal  identities  and must limit  their
activities to dealing with the apartment properties that secure the loans.

         Three of our new  subsidiaries  serve as  borrowers  for the  long-term
loans and have ownership of the apartment  properties that secure such loans. To
achieve this ownership,  we transferred (or caused our existing  subsidiaries to
transfer) a total of 15  apartment  properties  to our  borrowing  subsidiaries.
Because one of the borrowing  subsidiaries  is a limited  liability  company and
another is a limited partnership,  the lender requested that we form three other
special  purpose  entities  to serve as the sole  member,  general  partner  and
limited partner, respectively, of these particular borrowers.

OVERVIEW OF LONG-TERM LOANS

         The long-term  loans are  evidenced by a total of 15  promissory  notes
from three  borrowers.  The  principal  amount of each note is based on, and the
payment of each note is secured by, a separate  apartment  property owned by the
borrower who executed the note. The following  table provides an overview of the
long-term loans:


<PAGE>

<TABLE>
<CAPTION>


NAME OF                                  NAME OF APARTMENT                      LOCATION OF                            PRINCIPAL
BORROWER                                 PROPERTY OWNED                         PROPERTY                          AMOUNT OF NOTE
<S>                                      <C>                                    <C>                            <C>

CRIT-VA, Inc.                            Arbor Trace                            Virginia Beach VA                     $5,000,000
(a Virginia corporation)                 Ashley Park                            Richmond VA                            9,500,000
                                         Gables                                 Henrico County VA                      8,000,000
                                         Mayflower                              Virginia Beach VA                     10,500,000
                                         Trolley Square                         Richmond VA                            9,500,000
                                         Trophy Chase                           Albermarle County VA                  15,000,000
                                                                                                                      ----------

                                                                                      Subtotal for Borrower          $57,500,000

CRIT-NC II, LLC                          Heatherwood                            Charlotte NC                          16,250,000
(a Delaware LLC)                         Summerwalk                             Concord NC                             6,000,000
                                                                                                                       ---------

                                                                                      Subtotal for Borrower          $22,250,000

CAC Limited Partnership                  Brandywine Park (Cutter's Point)       Richardson TX                          6,250,000
(a Virginia limited partnership)         Eagle Crest                            Irving TX                             15,000,000
                                         Remington Hills                        Irving TX                             14,250,000
                                         Sierra Ridge                           San Antonio TX                         4,750,000
                                         The Arbors on Forest Ridge             Bedford TX                             6,250,000
                                         Timberglen                             Dallas TX                              9,500,000
                                         Toscana                                Dallas TX                              5,250,000
                                                                                                                       ---------

                                                                                      Subtotal for Borrower          $61,250,000

                                                                                                      TOTAL         $141,000,000
                                                                                                                    ============
</TABLE>


DESCRIPTION OF LONG-TERM NOTES

     The 15 long-term promissory notes are substantially  similar. Each of these
promissory notes provides for the following:

     o    an annual interest rate of 7.35%
     o    a maturity date of January 1, 2011
     o    payment of interest only in monthly installments until maturity
     o    payment of principal and all other amounts in full at maturity
     o    acceleration,  at the option of the  lender,  of all amounts due under
          the note if any required monthly payment is not made within seven days
          of its due date or if there is any other event of default
     o    a late charge of 5% on any payment  that is not made within seven days
          of its due date
     o    an increase of 4% in the applicable interest rate upon any default
     o    a restriction on voluntary prepayment,  which is not permitted without
          penalty until the final three months of the note

<PAGE>

         Additional  payments or penalties  would apply in other  circumstances,
such as acceleration of a long-term  promissory note during the first two years,
based upon an event of default.  The sum of the additional  payments would equal
at least 5% of the remaining debt if acceleration occurs in the first year.

         Futhermore,   each  long-term   promissory  note  contains  substantial
limitations on release and  substitution of collateral.  The apartment  property
that serves as collateral  under a long-term  promissory note cannot be released
from its  mortgage  during the first two years of the note.  After two years,  a
release is permitted,  but only if substitute collateral is provided in the form
of direct,  non-callable  obligations  of the United  States.  These  substitute
obligations must be structured to pay a series of amounts that match, as closely
as possible,  the remainder of the  installments  required  under the promissory
note involved.

CROSS-DEFAULT AMONG LONG-TERM NOTES

         The 15 apartment  properties that serve as collateral for the long-term
promissory notes are subject to cross-default  and  cross-collateral  provisions
under  separate and  corresponding  deeds of trust and security  documents.  The
apartment properties have been divided into two groups for this purpose.

         In general,  any default under one promissory  note would  constitute a
default under all other  promissory notes in the same group and would enable the
lender to exercise its rights against all of the apartment properties that serve
as collateral for that particular group. The two groups themselves, however, are
not connected by cross-default or cross-collateral  provisions.  The first group
consists of the eight apartment  properties  owned by CRIT-VA,  Inc. and CRIT-NC
II,  LLC,  respectively.  The  second  group  consists  of the  seven  apartment
properties owned by CAC Limited Partnership.

DEEDS OF TRUST AND SECURITY DOCUMENTS

         As  indicated  above,  the  long-term  promissory  notes are secured by
mortgages and other encumbrances on a total of 15 apartment  properties owned by
three  of our new  subsidiaries.  The  other  encumbrances  include  a  security
interest in the related  personal  property and various  assignments  of leases,
rents and contracts,  all in favor of the lender. These encumbrances are created
by multiple  agreements and instruments,  which will be referred to as "security
documents" for simplicity.

         The security  documents  impose a number of  requirements  on our three
borrowing  subsidiaries,  as the owners of the apartment  properties,  including
obligations to maintain adequate insurance.  The security documents prohibit any
further  encumbrances or any further assignments of leases or rents with respect
to the apartment properties.

         Upon any default  that  occurs  under a  long-term  promissory  note or
related  security  document,  various  remedies are available to the lender with
respect   to  the   apartment   properties   in  the  same   cross-default   and
cross-collateral  group (discussed above).  Those remedies include,  for example
(1) declaring the entire  principal  balance under the  promissory  notes in the
group,  together  with all  accrued and unpaid  interest,  to be due and payable
immediately;  (2) taking  possession  of the  secured  property,  including  the
apartment  properties in the group;  and (3) collecting rents from the apartment
properties in the group,  or foreclosing on such  properties,  to satisfy unpaid
amounts under the promissory  notes.  Our three borrowing  subsidiaries,  as the
makers of the  long-term  promissory  notes,  would be required to pay any costs
that may be incurred in exercising such remedies.

<PAGE>


INDEMNITY AND GUARANTY

         We are  required to indemnify  the lender  against  defaults  under the
long-term promissory notes from our three borrowing subsidiaries and to guaranty
the collection of all amounts due under these notes. These  requirements  appear
in separate  Indemnity  and Guaranty  Agreements  executed by us with respect to
each of the 15 apartment properties that secure the long-term loans.

MANAGEMENT OF APARTMENTS

         Our three borrowing subsidiaries have engaged us, or another one of our
subsidiaries,  to manage the 15 apartment  properties  that secure the long-term
loans.  Such  management  will occur under  separate and  substantially  similar
property  management  agreements  for each  borrower.  Each property  management
agreement provides for the following:

         o        an initial term of two years
         o        automatic  renewal  for  additional  terms of two years  each,
                  unless  written  notice of  termination is delivered by either
                  party at least 60 days before the end of any term
         o        collection of all rents by the manager
         o        a property  management  fee equal to 5% of the  monthly  gross
                  revenues from the apartment properties


SHORT-TERM CREDIT FACILITY

         In  addition  to the  long-term  financing  described  above,  we  have
obtained a short-term  credit  facility  from First Union  National  Bank in the
amount of $50 million.  The borrowers under the credit  facility  include us and
CRIT-NC, LLC, which is one of our direct wholly-owned subsidiaries.

         The credit  facility is  evidenced  by a  revolving  credit note and is
governed by a credit agreement. Under the credit agreement, the borrowed amounts
may be used for working capital and general  corporate  purposes,  including the
acquisition and improvement of apartment properties. The credit facility matures
in December 2002.

         At our election,  interest will be computed  using either a "base rate"
or a "LIBOR rate." The base rate will be the lender's prime rate (or, if higher,
the  federal  funds  rate plus  one-half  of one  percent).  The  LIBOR  rate is
determined by banks in the London interbank market and is subject to an increase
that ranges from 0.9% to 1.6%,  depending on the value of a particular financial
ratio  defined  in the  credit  agreement.  An  election  of the LIBOR rate also
requires us to elect an interest period of either one, two, three or six months.

         Periodic interest payments are required under the credit facility.  The
due dates for these payments depend on the method of computing interest.  With a
base rate,  interest  payments  are due on the first day of each  month.  With a
LIBOR rate,  interest  payments  are due at the end of the  applicable  interest
period (and, regardless of the period, at least every three months).

         The credit agreement  defines various events of default,  which include
any failure to make a required interest payment within five business days of its
due date.  During any period of  default,  the  applicable  interest  rate would
increase by 2%. Upon any  default,  the lender is  entitled  to  accelerate  the
indebtedness under the credit facility and to demand immediate payment in full.


ITEM 7.   Financial Statements and Exhibits

c.  Exhibits.


10.1              CRIT-VA, Inc. Articles of Incorporation.

10.2              CRIT-VA, Inc. Bylaws.

<PAGE>


10.3              Property  Management  Agreement  dated as of December 12, 2000
                  between CRIT-VA,  Inc. as Owner and Cornerstone  Realty Income
                  Trust, Inc. as Manager.

10.4              CRIT Special, Inc. Articles of Incorporation.

10.5              CRIT Special, Inc. Bylaws.

10.6              Operating Agreement of CRIT-NC II, LLC.

10.7              Property  Management  Agreement  dated as of December 12, 2000
                  between CRIT-NC II, LLC as Owner and Cornerstone Realty Income
                  Trust, Inc. as Manager.

10.8              CAC Special General, Inc. Articles of Incorporation.

10.9              CAC Special General, Inc. Bylaws.

10.10             CAC Special Limited, Inc. Articles of Incorporation.

10.11             CAC Special Limited, Inc. Bylaws.

10.12             Limited Partnership Agreement of CAC Limited Partnership.

10.13             Property  Management  Agreement  dated as of December 12, 2000
                  between CAC Limited  Partnership  as Owner and Apple  General,
                  Inc. as Manager.

10.14             Promissory  Note  dated  December  12,  2000 in the  principal
                  amount of $10,500,000  made payable by CRIT-VA,  Inc. to First
                  Union National Bank, with respect to the Mayflower  Apartments
                  in Virginia Beach, Virginia.

10.15             Indemnity and Guaranty Agreement dated as of December 12, 2000
                  by  Cornerstone  Realty  Income  Trust,  Inc. as Indemnitor in
                  favor of First Union  National  Bank as Lender,  in connection
                  with a  $10,500,000  loan to CRIT-VA,  Inc. as Borrower,  with
                  respect  to  the  Mayflower   Apartments  in  Virginia  Beach,
                  Virginia.

10.16             Deed of Trust and Security  Agreement dated as of December 12,
                  2000,  from  CRIT-VA,  Inc.,  as  Grantor,  to TRSTE,  Inc. as
                  Trustee for First Union National Bank,  the  Beneficiary  with
                  respect  to  the  Mayflower   Apartments  in  Virginia  Beach,
                  Virginia.

10.17             Assignment of Warranties and Other Contract Rights dated as of
                  December  12,  2000 from  CRIT-VA,  Inc.  as Borrower to First
                  Union  National  Bank as Lender with respect to the  Mayflower
                  Apartments in Virginia Beach, Virginia.

<PAGE>


10.18             Assignment  of Leases and Rents dated as of December  12, 2000
                  by CRIT-VA,  Inc. as Assignor in favor of First Union National
                  Bank as Assignee with respect to the  Mayflower  Apartments in
                  Virginia Beach, Virginia.

10.19             Consent and Agreement of Manager dated as of December 12, 2000
                  by CRIT-VA,  Inc. as Borrower in favor of First Union National
                  Bank as Lender with  respect to the  Mayflower  Apartments  in
                  Virginia Beach, Virginia.

10.20             Environmental  Indemnity  Agreement  dated as of December  12,
                  2000 by CRIT-VA,  Inc. and  Cornerstone  Realty  Income Trust,
                  Inc., as  Indemnitors,  in favor of First Union National Bank,
                  as  Lender,  with  respect  to  the  Mayflower  Apartments  in
                  Virginia Beach, Virginia.

10.21             Receipt and Closing  Certificate  dated  December  12, 2000 by
                  CRIT-VA, Inc. as Borrower and Cornerstone Realty Income Trust,
                  Inc. as Guarantor in favor of First Union  National  Bank,  as
                  Lender,  with respect to the Mayflower  Apartments in Virginia
                  Beach, Virginia.

10.22             Revolving Credit Note dated December 12, 2000 in the principal
                  amount of  $50,000,000  made  payable  by  Cornerstone  Realty
                  Income  Trust,  Inc.  and  CRIT-NC,  LLC to the order of First
                  Union National Bank.

10.23             Credit   Agreement   dated  as  of  December  12,  2000  among
                  Cornerstone  Realty  Income  Trust,  Inc. and CRIT-NC,  LLC as
                  Borrowers  and  First  Union   National  Bank  as  Lender  and
                  Administrative Agent for all lenders.

10.24             Schedule   setting  forth   information  on  14  substantially
                  identical  promissory  notes (with  respect to Exhibit  10.14)
                  dated  December  12, 2000 in various  principal  amounts  made
                  payable to the order of First Union National Bank.

10.25             Schedule   setting  forth   information  on  14  substantially
                  identical  Indemnity and Guaranty  Agreements (with respect to
                  Exhibit 10.15) dated as of December 12 by  Cornerstone  Realty
                  Income  Trust,  Inc.  as  Indemnitor  in favor of First  Union
                  National Bank as Lender.

10.26             Schedule   setting  forth   information  on  14  substantially
                  identical Deeds of Trust (with respect to Exhibit 10.16) dated
                  as of  December  12, 2000 with First  Union  National  Bank as
                  Beneficiary.

10.27             Schedule   setting  forth   information  on  14  substantially
                  identical  Assignments of Warranties and Other Contract Rights
                  (with respect to Exhibit  10.17) dated as of December 12, 2000
                  to First Union National Bank as Lender.

10.28             Schedule   setting  forth   information  on  14  substantially
                  identical  Assignments  of Leases and Rents  (with  respect to
                  Exhibit  10.18)  dated as of December  12, 2000 to First Union
                  National Bank as Assignee.

<PAGE>


10.29             Schedule   setting  forth   information  on  14  substantially
                  identical  Consents and Agreements of Manager (with respect to
                  Exhibit 10.19) dated as of December 12, 2000 in favor of First
                  Union National Bank.

10.30             Schedule   setting  forth   information  on  14  substantially
                  identical  Environmental Indemnity Agreements (with respect to
                  Exhibit 10.20) dated as of December 12, 2000 in favor of First
                  Union National Bank.

10.31             Schedule   setting  forth   information  on  14  substantially
                  identical  Receipt and Closing  Certificates  (with respect to
                  Exhibit 10.21) dated December 12, 2000 in favor of First Union
                  National Bank.


<PAGE>



                                   SIGNATURES

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  registrant  has duly  caused  this report to be signed on its behalf by the
undersigned hereunto duly authorized.

                                           Cornerstone Realty Income Trust, Inc.


                                           By: /s/ Glade M. Knight
                                               ---------------------------------
                                               Glade M. Knight, President


                                           December 27, 2000
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UNITED STATES 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): December 12, 2000

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

           VIRGINIA                        001-12875           54-1589139
   (State or other jurisdiction           (Commission       (I.R.S. Employer
         of incorporation)                File Number)    Identification Number)

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

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

ITEM 2.  Acquisition or Disposition of Assets

         Cornerstone  Realty Income Trust,  Inc.  (which is referred to below as
"we",  "us" or "our") is filing  this  report  pursuant to Item 2 of Form 8-K to
describe a financing  transaction in which certain assets were mortgaged.  These
mortgages  constitute a "disposition  of a significant  amount of assets" within
the meaning of the General  Instructions  to Form 8-K.  Certain  related matters
also are reported below.

SUMMARY OF FINANCING

         On December 12, 2000, we obtained financing, either directly or through
our subsidiaries, from First Union National Bank in the aggregate amount of $191
million.  The  financing  includes  long-term  secured  loans  to  three  of our
newly-formed  subsidiaries in the total amount of $141 million. The remainder of
the financing  consists of an unsecured  credit  facility in the total amount of
$50  million to us and one of our direct  subsidiaries.  The  proceeds  from the
financing were used to satisfy an existing unsecured credit facility established
with First Union National Bank in July 1999.
NEW SUBSIDIARIES FOR LONG-TERM LOANS

         In connection with the long-term loans provided by First Union National
Bank, and at its request,  we formed a total of six new  subsidiaries  that will
operate as "special purpose  entities." To qualify as special purpose  entities,
the  new  subsidiaries  have   organizational   documents  that  impose  certain
requirements  on them  while the  loans  are  outstanding.  In  particular,  the
subsidiaries  must  maintain  separate  legal  identities  and must limit  their
activities to dealing with the apartment properties that secure the loans.

         Three of our new  subsidiaries  serve as  borrowers  for the  long-term
loans and have ownership of the apartment  properties that secure such loans. To
achieve this ownership,  we transferred (or caused our existing  subsidiaries to
transfer) a total of 15  apartment  properties  to our  borrowing  subsidiaries.
Because one of the borrowing  subsidiaries  is a limited  liability  company and
another is a limited partnership,  the lender requested that we form three other
special  purpose  entities  to serve as the sole  member,  general  partner  and
limited partner, respectively, of these particular borrowers.

OVERVIEW OF LONG-TERM LOANS

         The long-term  loans are  evidenced by a total of 15  promissory  notes
from three  borrowers.  The  principal  amount of each note is based on, and the
payment of each note is secured by, a separate  apartment  property owned by the
borrower who executed the note. The following  table provides an overview of the
long-term loans:
NAME OF                                  NAME OF APARTMENT                      LOCATION OF                            PRINCIPAL
BORROWER                                 PROPERTY OWNED                         PROPERTY                          AMOUNT OF NOTE
CRIT-VA, Inc.                            Arbor Trace                            Virginia Beach VA                     $5,000,000
(a Virginia corporation)                 Ashley Park                            Richmond VA                            9,500,000
                                         Gables                                 Henrico County VA                      8,000,000
                                         Mayflower                              Virginia Beach VA                     10,500,000
                                         Trolley Square                         Richmond VA                            9,500,000
                                         Trophy Chase                           Albermarle County VA                  15,000,000
                                                                                                                      ----------

                                                                                      Subtotal for Borrower          $57,500,000

CRIT-NC II, LLC                          Heatherwood                            Charlotte NC                          16,250,000
(a Delaware LLC)                         Summerwalk                             Concord NC                             6,000,000
                                                                                                                       ---------

                                                                                      Subtotal for Borrower          $22,250,000

CAC Limited Partnership                  Brandywine Park (Cutter's Point)       Richardson TX                          6,250,000
(a Virginia limited partnership)         Eagle Crest                            Irving TX                             15,000,000
                                         Remington Hills                        Irving TX                             14,250,000
                                         Sierra Ridge                           San Antonio TX                         4,750,000
                                         The Arbors on Forest Ridge             Bedford TX                             6,250,000
                                         Timberglen                             Dallas TX                              9,500,000
                                         Toscana                                Dallas TX                              5,250,000
                                                                                                                       ---------

                                                                                      Subtotal for Borrower          $61,250,000

                                                                                                      TOTAL         $141,000,000
                                                                                                                    ============
DESCRIPTION OF LONG-TERM NOTES

     The 15 long-term promissory notes are substantially  similar. Each of these
promissory notes provides for the following:

     o    an annual interest rate of 7.35%
     o    a maturity date of January 1, 2011
     o    payment of interest only in monthly installments until maturity
     o    payment of principal and all other amounts in full at maturity
     o    acceleration,  at the option of the  lender,  of all amounts due under
          the note if any required monthly payment is not made within seven days
          of its due date or if there is any other event of default
     o    a late charge of 5% on any payment  that is not made within seven days
          of its due date
     o    an increase of 4% in the applicable interest rate upon any default
     o    a restriction on voluntary prepayment,  which is not permitted without
          penalty until the final three months of the note
Additional  payments or penalties  would apply in other  circumstances,
such as acceleration of a long-term  promissory note during the first two years,
based upon an event of default.  The sum of the additional  payments would equal
at least 5% of the remaining debt if acceleration occurs in the first year.

         Futhermore,   each  long-term   promissory  note  contains  substantial
limitations on release and  substitution of collateral.  The apartment  property
that serves as collateral  under a long-term  promissory note cannot be released
from its  mortgage  during the first two years of the note.  After two years,  a
release is permitted,  but only if substitute collateral is provided in the form
of direct,  non-callable  obligations  of the United  States.  These  substitute
obligations must be structured to pay a series of amounts that match, as closely
as possible,  the remainder of the  installments  required  under the promissory
note involved.

CROSS-DEFAULT AMONG LONG-TERM NOTES

         The 15 apartment  properties that serve as collateral for the long-term
promissory notes are subject to cross-default  and  cross-collateral  provisions
under  separate and  corresponding  deeds of trust and security  documents.  The
apartment properties have been divided into two groups for this purpose.

         In general,  any default under one promissory  note would  constitute a
default under all other  promissory notes in the same group and would enable the
lender to exercise its rights against all of the apartment properties that serve
as collateral for that particular group. The two groups themselves, however, are
not connected by cross-default or cross-collateral  provisions.  The first group
consists of the eight apartment  properties  owned by CRIT-VA,  Inc. and CRIT-NC
II,  LLC,  respectively.  The  second  group  consists  of the  seven  apartment
properties owned by CAC Limited Partnership.

DEEDS OF TRUST AND SECURITY DOCUMENTS

         As  indicated  above,  the  long-term  promissory  notes are secured by
mortgages and other encumbrances on a total of 15 apartment  properties owned by
three  of our new  subsidiaries.  The  other  encumbrances  include  a  security
interest in the related  personal  property and various  assignments  of leases,
rents and contracts,  all in favor of the lender. These encumbrances are created
by multiple  agreements and instruments,  which will be referred to as "security
documents" for simplicity.

         The security  documents  impose a number of  requirements  on our three
borrowing  subsidiaries,  as the owners of the apartment  properties,  including
obligations to maintain adequate insurance.  The security documents prohibit any
further  encumbrances or any further assignments of leases or rents with respect
to the apartment properties.

         Upon any default  that  occurs  under a  long-term  promissory  note or
related  security  document,  various  remedies are available to the lender with
respect   to  the   apartment   properties   in  the  same   cross-default   and
cross-collateral  group (discussed above).  Those remedies include,  for example
(1) declaring the entire  principal  balance under the  promissory  notes in the
group,  together  with all  accrued and unpaid  interest,  to be due and payable
immediately;  (2) taking  possession  of the  secured  property,  including  the
apartment  properties in the group;  and (3) collecting rents from the apartment
properties in the group,  or foreclosing on such  properties,  to satisfy unpaid
amounts under the promissory  notes.  Our three borrowing  subsidiaries,  as the
makers of the  long-term  promissory  notes,  would be required to pay any costs
that may be incurred in exercising such remedies.
INDEMNITY AND GUARANTY

         We are  required to indemnify  the lender  against  defaults  under the
long-term promissory notes from our three borrowing subsidiaries and to guaranty
the collection of all amounts due under these notes. These  requirements  appear
in separate  Indemnity  and Guaranty  Agreements  executed by us with respect to
each of the 15 apartment properties that secure the long-term loans.

MANAGEMENT OF APARTMENTS

         Our three borrowing subsidiaries have engaged us, or another one of our
subsidiaries,  to manage the 15 apartment  properties  that secure the long-term
loans.  Such  management  will occur under  separate and  substantially  similar
property  management  agreements  for each  borrower.  Each property  management
agreement provides for the following:

         o        an initial term of two years
         o        automatic  renewal  for  additional  terms of two years  each,
                  unless  written  notice of  termination is delivered by either
                  party at least 60 days before the end of any term
         o        collection of all rents by the manager
         o        a property  management  fee equal to 5% of the  monthly  gross
                  revenues from the apartment properties

SHORT-TERM CREDIT FACILITY

         In  addition  to the  long-term  financing  described  above,  we  have
obtained a short-term  credit  facility  from First Union  National  Bank in the
amount of $50 million.  The borrowers under the credit  facility  include us and
CRIT-NC, LLC, which is one of our direct wholly-owned subsidiaries.

         The credit  facility is  evidenced  by a  revolving  credit note and is
governed by a credit agreement. Under the credit agreement, the borrowed amounts
may be used for working capital and general  corporate  purposes,  including the
acquisition and improvement of apartment properties. The credit facility matures
in December 2002.

         At our election,  interest will be computed  using either a "base rate"
or a "LIBOR rate." The base rate will be the lender's prime rate (or, if higher,
the  federal  funds  rate plus  one-half  of one  percent).  The  LIBOR  rate is
determined by banks in the London interbank market and is subject to an increase
that ranges from 0.9% to 1.6%,  depending on the value of a particular financial
ratio  defined  in the  credit  agreement.  An  election  of the LIBOR rate also
requires us to elect an interest period of either one, two, three or six months.

         Periodic interest payments are required under the credit facility.  The
due dates for these payments depend on the method of computing interest.  With a
base rate,  interest  payments  are due on the first day of each  month.  With a
LIBOR rate,  interest  payments  are due at the end of the  applicable  interest
period (and, regardless of the period, at least every three months).

         The credit agreement  defines various events of default,  which include
any failure to make a required interest payment within five business days of its
due date.  During any period of  default,  the  applicable  interest  rate would
increase by 2%. Upon any  default,  the lender is  entitled  to  accelerate  the
indebtedness under the credit facility and to demand immediate payment in full.

ITEM 7.   Financial Statements and Exhibits

c.  Exhibits.

10.1              CRIT-VA, Inc. Articles of Incorporation.

10.2              CRIT-VA, Inc. Bylaws.
10.3              Property  Management  Agreement  dated as of December 12, 2000
                  between CRIT-VA,  Inc. as Owner and Cornerstone  Realty Income
                  Trust, Inc. as Manager.

10.4              CRIT Special, Inc. Articles of Incorporation.

10.5              CRIT Special, Inc. Bylaws.

10.6              Operating Agreement of CRIT-NC II, LLC.

10.7              Property  Management  Agreement  dated as of December 12, 2000
                  between CRIT-NC II, LLC as Owner and Cornerstone Realty Income
                  Trust, Inc. as Manager.

10.8              CAC Special General, Inc. Articles of Incorporation.

10.9              CAC Special General, Inc. Bylaws.

10.10             CAC Special Limited, Inc. Articles of Incorporation.

10.11             CAC Special Limited, Inc. Bylaws.

10.12             Limited Partnership Agreement of CAC Limited Partnership.

10.13             Property  Management  Agreement  dated as of December 12, 2000
                  between CAC Limited  Partnership  as Owner and Apple  General,
                  Inc. as Manager.

10.14             Promissory  Note  dated  December  12,  2000 in the  principal
                  amount of $10,500,000  made payable by CRIT-VA,  Inc. to First
                  Union National Bank, with respect to the Mayflower  Apartments
                  in Virginia Beach, Virginia.

10.15             Indemnity and Guaranty Agreement dated as of December 12, 2000
                  by  Cornerstone  Realty  Income  Trust,  Inc. as Indemnitor in
                  favor of First Union  National  Bank as Lender,  in connection
                  with a  $10,500,000  loan to CRIT-VA,  Inc. as Borrower,  with
                  respect  to  the  Mayflower   Apartments  in  Virginia  Beach,
                  Virginia.

10.16             Deed of Trust and Security  Agreement dated as of December 12,
                  2000,  from  CRIT-VA,  Inc.,  as  Grantor,  to TRSTE,  Inc. as
                  Trustee for First Union National Bank,  the  Beneficiary  with
                  respect  to  the  Mayflower   Apartments  in  Virginia  Beach,
                  Virginia.

10.17             Assignment of Warranties and Other Contract Rights dated as of
                  December  12,  2000 from  CRIT-VA,  Inc.  as Borrower to First
                  Union  National  Bank as Lender with respect to the  Mayflower
                  Apartments in Virginia Beach, Virginia.
10.18             Assignment  of Leases and Rents dated as of December  12, 2000
                  by CRIT-VA,  Inc. as Assignor in favor of First Union National
                  Bank as Assignee with respect to the  Mayflower  Apartments in
                  Virginia Beach, Virginia.

10.19             Consent and Agreement of Manager dated as of December 12, 2000
                  by CRIT-VA,  Inc. as Borrower in favor of First Union National
                  Bank as Lender with  respect to the  Mayflower  Apartments  in
                  Virginia Beach, Virginia.

10.20             Environmental  Indemnity  Agreement  dated as of December  12,
                  2000 by CRIT-VA,  Inc. and  Cornerstone  Realty  Income Trust,
                  Inc., as  Indemnitors,  in favor of First Union National Bank,
                  as  Lender,  with  respect  to  the  Mayflower  Apartments  in
                  Virginia Beach, Virginia.

10.21             Receipt and Closing  Certificate  dated  December  12, 2000 by
                  CRIT-VA, Inc. as Borrower and Cornerstone Realty Income Trust,
                  Inc. as Guarantor in favor of First Union  National  Bank,  as
                  Lender,  with respect to the Mayflower  Apartments in Virginia
                  Beach, Virginia.

10.22             Revolving Credit Note dated December 12, 2000 in the principal
                  amount of  $50,000,000  made  payable  by  Cornerstone  Realty
                  Income  Trust,  Inc.  and  CRIT-NC,  LLC to the order of First
                  Union National Bank.

10.23             Credit   Agreement   dated  as  of  December  12,  2000  among
                  Cornerstone  Realty  Income  Trust,  Inc. and CRIT-NC,  LLC as
                  Borrowers  and  First  Union   National  Bank  as  Lender  and
                  Administrative Agent for all lenders.

10.24             Schedule   setting  forth   information  on  14  substantially
                  identical  promissory  notes (with  respect to Exhibit  10.14)
                  dated  December  12, 2000 in various  principal  amounts  made
                  payable to the order of First Union National Bank.

10.25             Schedule   setting  forth   information  on  14  substantially
                  identical  Indemnity and Guaranty  Agreements (with respect to
                  Exhibit 10.15) dated as of December 12 by  Cornerstone  Realty
                  Income  Trust,  Inc.  as  Indemnitor  in favor of First  Union
                  National Bank as Lender.

10.26             Schedule   setting  forth   information  on  14  substantially
                  identical Deeds of Trust (with respect to Exhibit 10.16) dated
                  as of  December  12, 2000 with First  Union  National  Bank as
                  Beneficiary.

10.27             Schedule   setting  forth   information  on  14  substantially
                  identical  Assignments of Warranties and Other Contract Rights
                  (with respect to Exhibit  10.17) dated as of December 12, 2000
                  to First Union National Bank as Lender.

10.28             Schedule   setting  forth   information  on  14  substantially
                  identical  Assignments  of Leases and Rents  (with  respect to
                  Exhibit  10.18)  dated as of December  12, 2000 to First Union
                  National Bank as Assignee.
10.29             Schedule   setting  forth   information  on  14  substantially
                  identical  Consents and Agreements of Manager (with respect to
                  Exhibit 10.19) dated as of December 12, 2000 in favor of First
                  Union National Bank.

10.30             Schedule   setting  forth   information  on  14  substantially
                  identical  Environmental Indemnity Agreements (with respect to
                  Exhibit 10.20) dated as of December 12, 2000 in favor of First
                  Union National Bank.

10.31             Schedule   setting  forth   information  on  14  substantially
                  identical  Receipt and Closing  Certificates  (with respect to
                  Exhibit 10.21) dated December 12, 2000 in favor of First Union
                  National Bank.
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 hereunto duly authorized.

                                           Cornerstone Realty Income Trust, Inc.

                                           By: /s/ Glade M. Knight
                                               ---------------------------------
                                               Glade M. Knight, President

                                           December 27, 2000