================================================================================
               UNITED STATES SECURITIES AND EXCHANGE COMMISSION

                            WASHINGTON, D.C. 20549

                                   FORM 10-K

                 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                    OF THE SECURITIES EXCHANGE ACT OF 1934

           For the fiscal year ended     Commission File Number
             December 31, 1997                      1-12875

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

                  VIRGINIA                           54-1589139
           (State or other jurisdiction of        (I.R.S. Employer
           incorporation or organization)      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)
              --------------------------------------------------
           Securities registered pursuant to Section 12(b) of the Act:

TITLE OF EACH CLASS               NAME OF EACH EXCHANGE ON WHICH REGISTERED:
-------------------               --------------------------------------
Common shares, no par value       New York Stock Exchange

           Securities registered pursuant to Section 12(g) of the Act:

                           Common shares, no par value

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 [ ]

Based on the closing sales price of March 1, 1998, the aggregate market value of
the voting common equity held by  non-affiliates  of the registrant on such date
was $429,495,753*.

On March 1, 1998, there were approximately 35,750,753 common shares outstanding.

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

----------
* In determining  this figure,  the Company has assumed that all of its officers
  and  directors,  and persons known to the Company to be  beneficial  owners of
  more than 5% of the Company's common shares, are affiliates.  Such assumptions
  should not be deemed conclusive for any other purpose.

================================================================================
<PAGE>

                      DOCUMENTS INCORPORATED BY REFERENCE

The portions of the  registrant's  current  report on Form 8-K dated October 31,
1996 referred to in Part I.

The portions of the registrant's current report on Form 8-K dated March 27, 1997
referred to in Part I.

The portions of the  registrant's  current report on Form 8-K dated May 14, 1997
referred to in Part I.

The  portions of the  registrant's  current  report on Form 8-K dated August 28,
1997 referred to in Part I.

The portions of the registrant's  current report on Form 8-K dated September 30,
1997 referred to in Part I.

The portions of the  registrant's  current  report on Form 8-K dated October 31,
1997 referred to in Part I.

The  portions of the  registrant's  annual  report to  security  holders for the
fiscal year ended December 31, 1997 referred to in Part II.

The registrant's Proxy Statement dated April 3, 1998, referred to in Part III.


INTRODUCTION

     This Annual Report contains  forward-looking  statements within the meaning
of Section 27A of the Securities Act of 1993, as amended, and Section 21E of the
Securities  Exchange Act of 1934, as amended.  Such  forward-looking  statements
include,  without limitation,  statements concerning  anticipated lower expenses
from the Company's conversion to self-administration,  anticipated  improvements
in financial  operations from completed and planned  property  renovations,  and
expected  benefits  from the Company's  ownership of stock in Apple  Residential
Income  Trust,  Inc.  ("Apple")  and  the  acquisition,  advisory  and  property
management services provided to Apple. Such statements involve known and unknown
risks,  uncertainties  and other  factors  which may cause the  actual  results,
performance or  achievement  of the Company to be materially  different from the
results of  operations  or plans  expressed  or implied by such  forward-looking
statements.  Such factors  include,  among other things,  unanticipated  adverse
business  developments  affecting the Company,  the properties or Apple,  as the
case may be,  adverse  changes in the real estate  markets and general and local
economies  and  business  conditions.  Although  the Company  believes  that the
assumptions  underlying  the  forward-looking  statements  contained  herein are
reasonable,  any of the assumptions could be inaccurate, and therefore there can
be no assurance that such  statements  included in this Annual Report will prove
to be  accurate.  In  light of the  significant  uncertainties  inherent  in the
forward-looking  statements  included herein,  the inclusion of such information
should not be regarded as a  representation  by the Company or any other  person
that the results or conditions  described in such  statements or the  objectives
and plans of the Company will be achieved. In addition,  the Company's continued
qualification  as  a  real  estate   investment  trust  ("REIT")   involves  the
application of highly  technical and complex  provisions of the Internal Revenue
Code. Readers should carefully review the Company's financial statements and the
notes thereto,  as well as the risk factors  described in the Company's  filings
with the Securities and Exchange Commission.

                                    PART I
                                    ------

ITEM 1. BUSINESS

     Cornerstone  Realty Income Trust, Inc.  (together with its subsidiary,  the
"Company"),  a Virginia  corporation,  was incorporated in August 1989.  Initial
capitalization  occurred  on August  18,  1992.  Operations  of rental  property
commenced on June 1, 1993. The business of the Company is to acquire and operate
existing  residential  apartment  complexes  located  in  the  mid-Atlantic  and
southeastern  United States. The Company owned fifty-one  properties  comprising
11,922 apartment units within that region as of December 31, 1997. The Company's
property  acquisitions  are described in Item 2 of this report,  which is hereby
incorporated  herein by reference.  Currently,  Cornerstone Realty Income Trust,
Inc. owns directly all of its properties other than those in North Carolina, and
those in North Carolina are owned by CRIT-NC,  LLC, a Virginia limited liability
company  organized in December 1997 that is wholly-owned  by Cornerstone  Realty
Income Trust, Inc.

                                       1

<PAGE>

     The Company, a self-administered and self-managed equity REIT headquartered
in Richmond,  Virginia,  is a fully  integrated  real estate  organization  with
expertise  in  the   management,   acquisition   and   renovation  of  apartment
communities.The  Company  maintains an intense  focus on the  operations  of its
properties to generate  consistent,  sustained  growth in net  operating  income
("NOI"),  which it  believes  is the key to growing  funds from  operations  per
common  share.  The Company  believes  that  successful  implementation  of this
strategy  will  allow it to  continue  to  increase  its NOI from its  apartment
portfolio.  Through renovation and enhanced property management of the apartment
communities, the Company strives to increase cash flows, thereby adding value to
the underlying real estate.

The Company's objective is to increase  distributable cash flow and common share
value by:

-    Increasing  rental rates,  maintaining  high economic  occupancy rates, and
     controlling costs at the properties; and

-    Acquiring  additional  properties  at  attractive  prices that  provide the
     opportunity to improve operating performance through the application of the
     Company's management, marketing and renovation programs.

     The Company has seven  regional  property  management  offices,  located in
Blacksburg and Virginia  Beach,  Virginia;  Raleigh,  Charlotte and  Wilmington,
North Carolina;  Columbia,  South Carolina;  and Atlanta,  Georgia.  The Company
currently has approximately 400 employees, including specialists in acquisition,
management, marketing, leasing, development, accounting and information systems.
The Company's  executive  officers have  substantial  experience  with apartment
properties,  having  been  responsible  for  the  management,   acquisition  and
renovation of more than 20,000  apartment units over the last 24 years using the
strategies and techniques  described  below.  The Company's top three  executive
officers  have an average  of  approximately  16 years  each in the  management,
acquisition and renovation of residential apartment communities.

GROWTH THROUGH MANAGEMENT AND LEASING

     The Company seeks to increase net operating  income through active property
management,  which  includes  keeping  rental rates at or above  market  levels,
maintaining  high  economic  occupancy  through  tenant  retention,  creating  a
property  identity and  effectively  marketing  each property,  and  controlling
operating expenses at the property level.

     Management develops the overall management and leasing strategy,  including
goals and  budgets,  for each  property.  In order to  achieve  each  property's
objectives,  management delegates significant decision-making  responsibility to
regional and on-site  employees,  thereby instilling in its employees a sense of
ownership  of their  property.  Management  believes  that this  strategy  is an
effective way to maximize each property's potential. In order to achieve desired
results,  the Company  emphasizes  training for its on-site employees as well as
raising  rents to be at or above  the  market  for  comparable  properties.  The
Company  also ties  on-site  employees'  bonuses  to both net  operating  income
targets  established for their respective  properties and the Company's  overall
financial performance.

     Management  believes that tenant  retention is critical to  generating  net
operating  income  growth.  Tenant  retention  maintains or  increases  economic
occupancy and minimizes the costs  associated with preparing  apartments for new
occupants.  The Company  employs one person at each  property  who has a primary
focus on tenant  retention.  The tenant retention  specialist's  objective is to
make tenants feel at home in the community  through  personal  attention,  which
includes  organizing  social  functions  and  activities  as well as  responding
promptly to any tenant problems that may arise in conjunction with the apartment
or community.  The Company's philosophy is to market its properties  continually
to  existing  tenants  in order to  achieve a low  turnover  rate.  The  Company
believes that the turnover rate of its properties is below the average  turnover
rate for comparable apartment communities.

     The  Company  seeks to  create  a unique  identity  for  each  property  by
emphasizing curb appeal, signage, and attractive common area facilities, such as
clubhouses and swimming pools. The Company has upgraded or renovated many of the
properties' common area facilities after acquisition.  Each property is marketed
as a "Cornerstone  Community" but typically has an individual property name tied
to a

                                       2

<PAGE>

local  theme.  Each  property  has a dedicated  on-site  marketing  person whose
responsibility is to position and market the property within the local community
through such activities as media  advertising,  on-site  promotional  events and
personal calls to local businesses.

     Operating  expenses are  controlled at each property by setting  budgets at
the corporate  level and requiring that any expense over budget at a property be
approved by  management.  Purchase  discounts  are sought at both the  corporate
level and locally in those areas where the Company has a  significant  presence.
All contracts for goods and services are re-bid  annually to ensure  competitive
pricing.  The Company has a  preventive  maintenance  program and the ability to
perform  work  using  in-house  personnel,  which  helps the  Company  to reduce
expenses  at the  properties.  For  example,  the  maintenance  manager  at each
property is qualified to perform HVAC and plumbing work which otherwise would be
contracted outside the Company.

GROWTH THROUGH ACQUISITIONS, RENOVATIONS AND EXPANSION

     The  Company  seeks to  generate  growth in net  operating  income  through
acquisitions by: (i) acquiring  under-performing assets at less than replacement
cost; (ii) correcting  operational problems;  (iii) making selected renovations;
(iv) increasing economic occupancy;  (v) raising rental rates; (vi) implementing
cost controls; and (vii) providing enhanced property and centralized management.
In markets that it targets for acquisition  opportunities,  the Company attempts
to gain a significant local presence in order to achieve operating efficiencies.
In analyzing acquisition  opportunities,  the Company considers  acquisitions of
property portfolios as well as individual properties.

     The Company has demonstrated an ability to grow through  acquisitions.  The
Company's  first two  properties  were acquired in June of 1993. At December 31,
1997, the Company owned and operated 51 apartment communities.

     The  Company  analyzes  specific  criteria  in  connection  with a proposed
acquisition.  These  criteria  include:  (i) the market in which a  property  is
located and whether it has a diversified  economy,  stable  employment  base and
increasing  average household income;  (ii) the property's current and projected
cash flow and the ability to increase net operating income;  (iii) the condition
and  design  of  the   property  and  whether  the  property  can  benefit  from
renovations;  (iv)  historical  and projected  occupancy  rates;  (v) geographic
location  in light of the  Company's  diversification  objectives;  and (vi) the
purchase price of the property as it relates to the cost of new construction.

     The Company believes it has been and will be able to purchase properties at
less than  replacement  cost  because of the  presence of deferred  maintenance,
management neglect, or prior owner's financial distress.  Upon acquisition,  the
Company seeks to improve both operating  results and property identity through a
24-month  renovation  policy that  includes  selective  renovations  such as new
roofs,  new  exterior  siding,  exterior  painting,   clubhouse  renovation  and
construction,   and  interior   refurbishment.   The  Company  has  invested  in
renovations to its properties  approximately $23 million in 1997,  approximately
$19.0 million in 1996,  approximately  $7.1 million in 1995,  and  approximately
$6.1  million in 1994.  To date,  these  actions have  permitted  the Company to
increase rental rates and improve economic occupancy rates at the properties.

     Because  the  Company  has  grown  and plans to  continue  to grow  through
property  acquisitions,  management has created a system establishing  "Takeover
Teams" to provide  immediate  transitional  management  and leasing  services to
newly-acquired  properties  and to implement  quickly the Company's  operational
programs and policies.  A Takeover Team consists of senior  property  management
personnel  as  well  as  marketing  and  maintenance   specialists   from  other
communities owned by the Company.  The Takeover Team remains at a property until
the Company's  management  and leasing  programs have been installed and the new
on-site team is fully  operational.  Typically,  this process  takes two to four
weeks to complete.

     The  Company  has  made,  and  may  in the  future  make,  acquisitions  of
established apartment communities involved in foreclosure  proceedings.  In this
situation,  the Company seeks  properties  that have below  market-rate  leases,
correctable  vacancy problems or inefficient  property  management.  The Company
also  may  make  acquisitions  of  properties  from  over-leveraged   owners  of
properties,  governmental regulatory authorities, lending institutions that have
taken  control  of  such  properties,  mortgagees-in-possession  and,  possibly,
through bankruptcy reorganization proceedings.

                                       3

<PAGE>

     If sufficient  tenant  demand  exists and suitable  land is available,  the
Company may  construct  additional  apartment  units on land adjacent to certain
properties. The Company believes that its successful experience with large-scale
property  renovation  will also permit  strategic  and  cost-effective  property
expansion. It is the Company's policy to acquire such additional apartment units
on a "turn-key"  basis from a third party  contractor,  thereby  minimizing  the
risks normally associated with development and lease-up.

     Currently,  the Company has planned  expansion  projects  for two  existing
properties:  Glen Eagles and The  Meadows.  Glen Eagles is a 166-unit  apartment
community  located in  Winston-Salem,  North Carolina.  The land adjacent to the
community will accommodate approximately 220 additional apartment units that can
be served by  existing  amenities.  At The  Meadows,  a  176-unit  community  in
Asheville,  North  Carolina,  there is  additional  land for  approximately  250
additional   apartment  units.  The  Company  has  acquired  these  parcels  and
transferred  them to a developer for construction and lease-up of the additional
apartment  units  with  the  agreement  that the  developer  will  transfer  the
completed  apartment  units  back to the  Company.  The  Company  does  not have
interests  in any land  adjacent to any other  properties  it now owns,  but may
acquire  land or  options  to  acquire  land  of this  type  adjacent  to  other
properties it may acquire in the future.

FINANCING POLICY

     The Company's objective is to seek capital as needed at the lowest possible
cost.  In addition to obtaining  capital from future sales of common  shares (or
preferred shares, if authorized in the future),  the Company may obtain lines of
credit or other  unsecured  borrowings.  The Company is also not precluded  from
engaging  in secured  borrowings,  although  its  current  policy is to hold its
properties  on an  unmortgaged  basis,  and as of  December  31 1997,  it had no
secured debt.  The Company may also seek  eventually  to issue  investment-grade
debt, although there is no assurance that this will occur.

     In April 1997,  the Company  issued  5,175,000  common shares at $10.50 per
common  share,  which  resulted in proceeds  to the Company  after  underwriting
discounts  and  other  offering  costs of $49.3  million,  which was used by the
Company to repay debt.  On April 18,  1997,  the  Company's  common  shares were
listed and began trading on the New York Stock Exchange.

     The  Company  uses an  unsecured  line of credit for interim  financing  to
assist in  property  acquisitions.  Historically,  the  Company has drawn on its
unsecured lines of credit to accomplish in a timely manner property acquisitions
deemed  desirable by management,  and has thereafter  curtailed the  outstanding
balances on the lines of credit with  proceeds  from the sale of common  shares.
The Company currently expects to continue to use this strategy.

     The Company's  current  unsecured  line of credit (the  "Unsecured  Line of
Credit")  is in a  principal  amount of up to $175  million.  The  lenders are a
syndicate of banks with First Union  National Bank as agent.  The Unsecured Line
of Credit  currently  bears  interest equal to one-month  LIBOR plus 1.20%.  The
interest  rate is adjusted  monthly and the  formula  for  determination  of the
interest rate can change based on changes in financial  condition and debt level
of the Company.

     The entire  balance of the  Unsecured  Line of Credit is due on October 30,
2000. On December 31, 1997,  the  outstanding  balance on the Unsecured  Line of
Credit was $144  million.  In  negotiating  and  closing the  Unsecured  Line of
Credit,  the Company was able to increase  the amount of and reduce the interest
rate on its prior unsecured borrowings.

     The Company has also obtained from First Union  National Bank of Virginia a
$5.0 million unsecured line of credit for general corporate purposes.  This line
of credit bears interest at LIBOR plus 1.60%,  adjusted  monthly,  and is due on
March 31, 1999. On December 31, 1997, the  outstanding  balance on this loan was
approximately $2.5 million.

     The  Company  intends to  maintain a debt  policy  (the "Debt  Limitation")
limiting the Company's  total combined  indebtedness  plus its pro rata share of
indebtedness of any unconsolidated  investments ("Joint Venture Debt") to 40% of
the Company's total equity market  capitalization plus its combined indebtedness
(including its pro rata share of Joint Venture Debt).

                                       4

<PAGE>

COMPANY HISTORY

     The Company  began  operations in 1993 to continue and expand the apartment
community acquisition,  renovation and management strategies of Glade M. Knight,
the  Company's  Chairman,  Chief  Executive  Officer and  President.  During his
career,  Mr. Knight has been  involved in the  ownership and  management of over
20,000 apartment units,  mainly located in the mid-Atlantic region of the United
States. Senior management of the Company, which consists of Mr. Knight, Debra A.
Jones,  Chief Operating  Officer,  and Stanley J. Olander,  Jr., Chief Financial
Officer, has worked together, in the same business as the Company, for more than
16  years.  Management  believes  that its  long-term  operating  experience  is
invaluable in enabling the Company to operate its properties  efficiently and to
identify and act upon acquisition opportunities.

APPLE RESIDENTIAL INCOME TRUST

     In August 1996, Mr. Knight organized Apple  Residential  Income Trust, Inc.
("Apple") for the purpose of acquiring apartment communities in Texas. Apple has
elected  to be taxed  as a REIT.  Mr.  Knight  is  Apple's  Chairman  and  Chief
Executive  Officer.  The Company will  participate in Apple's growth through its
direct or indirect receipt of acquisition,  disposition, management and advisory
fees, ownership of Apple common shares and possible future acquisition of Apple.
As of December 31, 1997,  Apple had raised gross proceeds of  $121,633,733 in an
ongoing  best-efforts  equity  offering  and had acquired 11  properties  in the
Dallas, Texas area.

     The  Company  has a  continuing  right to acquire and own up to 9.8% of the
common  shares of Apple.  The purchase  price under the option equals the public
offering  price for the  common  shares of Apple  (currently  $10.00  per common
share) less the related selling commissions  (currently $1.00 per common share).
On April 25, 1997, the Company  purchased  sufficient  common shares of Apple so
that it owned approximately 9.5% of the total common shares of Apple outstanding
as of March 1, 1997. As of December 31, 1997,  the Company owned 417,778  common
shares of Apple,  representing  approximately  3% of the total common  shares of
Apple outstanding as of that date.

     The Company also has a right of first  refusal to purchase  the  properties
and  business of Apple.  In addition to this right of first  refusal to purchase
the properties and business of Apple,  the Company intends from time to time, as
deemed prudent by Company  management,  to evaluate the possible  acquisition of
Apple.  Any  decision  to combine  the Company and Apple can be made only by the
respective  boards  of  directors,   and  depending  on  the  structure  of  the
transaction,  the  respective  shareholders,  of the  two  companies.  It is the
current  intent of Mr.  Knight and the board of directors of the Company to seek
to acquire Apple and expand the  geographic  diversity and size of the Company's
portfolio of properties if the board of directors of the Company determines that
such an acquisition is in the best interests of the Company.  Early in 1997, the
Company  stated its intention to evaluate the possible  acquisition  of Apple by
the end of 1997.  The  Company,  with the  assistance  of  certain  professional
advisors,  evaluated the  desirability to the Company and its  shareholders of a
proposal to acquire Apple in 1997. Based upon its analysis,  including  relevant
financial  evaluations,  the Company determined that it was not then in the best
interests of the Company and its shareholders to seek to acquire Apple. However,
the Company  expects to reevaluate the  desirability of seeking to acquire Apple
from time to time in the future.

     The  Company  provides  advisory,   property  management  and  real  estate
brokerage  services  to Apple in exchange  for fees and  expense  reimbursements
under a contract with Apple and subcontracts  with Apple  Residential  Advisors,
Inc.  ("ARA")  and  Apple  Residential  Management  Group,  Inc.  ("ARMG"),  the
companies that originally  contracted with Apple for such services.  The Company
also owns all of the nonvoting  preferred  shares of ARA and ARMG, which entitle
it to 95% of the economic benefits of such corporations.

ENVIRONMENTAL MATTERS

     In connection with each of its property acquisitions, the Company obtains a
Phase I  Environment  Report,  and such  additional  environmental  reports  and
surveys as are necessitated by such preliminary  report.  Based on such reports,
the Company is not aware of any environmental  situations requiring  remediation
at its properties  which have not been or are not currently being  remediated as
necessary.

                                       5

<PAGE>

PROPERTY ACQUISITIONS IN 1997

     The  following  is a summary of the 13  property  acquisitions  made by the
Company during 1997.

     On January 14,  1997,  the  Company  purchased  The Arbors at Windsor  Lake
Apartments  in  Columbia,  South  Carolina.  Information  with  respect  to this
property is hereby  incorporated herein by reference from pages 19 through 22 of
the Company's Report on Form 8-K dated October 31, 1996.

     On January 15, 1997,  the Company  acquired  the  Westchase  Apartments  in
Charleston, South Carolina.  Information with respect to this property is hereby
incorporated  herein by  reference  from pages 22  through  27 of the  Company's
Report on Form 8-K dated October 31, 1996.

     On March 27,  1997,  the  Company  acquired  Paces  Arbor and Paces  Forest
Apartments  in  Raleigh,  North  Carolina.  Information  with  respect  to these
properties is hereby incorporated herein by reference from pages 5 through 10 of
the Company's Report on Form 8-K dated March 27, 1997.

     On April 30, 1997, the Company  acquired Carlyle Club Apartments and Ashley
Run Apartments in Atlanta, Georgia. Information with respect to these properties
is hereby  incorporated  herein by  reference  from  pages 10  through 18 of the
Company's Report on Form 8-K dated March 27, 1997.

     On May 14, 1997, the Company acquired Summit  Charleston  Apartments (which
was subsequently  renamed  "Charleston  Place"),  in Charlotte,  North Carolina.
Information  with  respect to this  property  is hereby  incorporated  herein by
reference  from pages 4 through 7 of the Company's  Report on Form 8-K dated May
14, 1997.

     On July 25, 1997,  the Company  acquired  Dunwoody  Springs  Apartments  in
Atlanta,   Georgia.   Information  with  respect  to  this  property  is  hereby
incorporated herein by reference from pages 8 through 12 of the Company's Report
on Form 8-K dated May 14, 1997.

     On August 28, 1997, the Company  acquired  Italian Village and Villa Marina
Apartments in Charlotte,  North Carolina.  These properties were integrated into
and are operated as part of the Company's  Heatherwood  Apartments.  Information
with respect to these properties is hereby incorporated herein by reference from
pages 4 through 10 of the Company's Report on Form 8-K dated August 28, 1997.

     On September 30, 1997, the Company acquired Clarion Crossing  Apartments in
Raleigh,  North  Carolina.  Information  with respect to this property is hereby
incorporated  herein by reference from pages 3 through 7 of the Company's Report
on Form 8-K dated September 30, 1997.

     On October 31, 1997, the Company acquired Barrington Parc Apartments (which
was subsequently  renamed "Stone  Brooke"),  in Atlanta,  Georgia,  and Sterling
Arbors  Apartments  (which was  subsequently  renamed "St.  Regis") and Sterling
Place Apartments (which was subsequently  renamed "Remington Place") in Raleigh,
North  Carolina.   Information  with  respect  to  these  properties  is  hereby
incorporated herein by reference from pages 4 through 15 of the Company's Report
on Form 8-K dated October 31, 1997

RECENT DEVELOPMENT

     On January 15, 1998, the Company purchased Sterling Point Apartments (which
was  renamed  "Stone  Point  Apartments"),   a  192-unit  apartment  complex  in
Charlotte, North Carolina for a purchase price of $9,700,000.

ITEM 2. PROPERTIES

     As of  December  31,  1997,  the  Company  owned 51  apartment  communities
comprising  11,922 apartment units. The properties are located in North Carolina
(28 communities),  Virginia (11 communities), South Carolina (6 communities) and
Georgia (6 communities).

                                       6

<PAGE>

The following table sets forth specific information regarding the properties:

<TABLE>
<CAPTION>
                                                                                INITIAL
                                                   YEAR         DATE OF       ACQUISITION
           PROPERTY                LOCATION     COMPLETED     ACQUISITION         COST
------------------------------ --------------- ----------- ----------------- -------------
<S>                            <C>             <C>         <C>               <C>
GEORGIA
Ashley Run ................... Atlanta         1987        April 1997         $18,000,000
Carlyle Club ................. Atlanta         1974        April 1997          11,580,000
Dunwoody Springs ............. Atlanta         1981        July 1997           15,200,000
Stone Brook .................. Atlanta         1986        October 1997         7,850,000
Savannah West ................ Augusta         1968        July 1996            9,843,620
West Eagle Greens ............ Augusta         1974        March 1996           4,020,000

NORTH CAROLINA

The Meadows .................. Asheville       1974        January 1996         6,200,000
Beacon Hill .................. Charlotte       1985        May 1996            13,579,203
Bridgetown Bay ............... Charlotte       1986        April 1996           5,025,000
Charleston Place ............. Charlotte       1986        May 1997             9,475,000
Hanover Landing .............. Charlotte       1972        August 1995          5,725,000
Heatherwood .................. Charlotte        (3)         (3)                17,630,457
Meadow Creek ................. Charlotte       1984        May 1996            11,100,000
Paces Glen ................... Charlotte       1986        July 1996            7,425,000
Sailboat Bay ................. Charlotte       1973        November 1995        9,100,000
Summerwalk ................... Concord         1983        May 1996             5,660,000
Deerfield .................... Durham          1985        November 1996       10,675,000
The Landing .................. Durham          1984        May 1996             8,345,000
Parkside at Woodlake ......... Durham          1996        September 1996      14,663,886
Wind Lake .................... Greensboro      1985        April 1995           8,760,000
Signature Place .............. Greenville      1981        August 1996          5,462,948
Clarion Crossing ............. Raleigh         1972        September 1997      10,600,000
Highland Hills ............... Raleigh         1987        September 1996      12,100,000
The Hollows .................. Raleigh         1974        June 1993            4,200,000
Paces Arbor .................. Raleigh         1986        March 1997           5,588,219
Paces Forest ................. Raleigh         1986        March 1997           6,473,481
Remington Place .............. Raleigh         1985        October 1997         7,900,000
St. Regis .................... Raleigh         1986        October 1997         9,800,000
The Trestles ................. Raleigh         1987        December 1994       10,350,000
Chase Mooring ................ Wilmington      1968        August 1994          3,594,000
Osprey Landing ............... Wilmington      1974        November 1995        4,375,000
Wimbledon Chase .............. Wilmington      1976        February 1994        3,300,000
Glen Eagles .................. Winston Salem   1986        October 1995         7,300,000
Mill Creek ................... Winston Salem   1984        September 1995       8,550,000

</TABLE>



<PAGE>
<TABLE>
<CAPTION>
                                                                                       DECEMBER
                                                                                       AVERAGE       YEAR-TO-DATE
                                                              TOTAL       AVERAGE      RENT PER        ECONOMIC
                                    TOTAL                   INVESTMENT   UNIT SIZE     MONTH(5)        OCCUPANCY
                                INVESTMENT AT    NUMBER    PER UNIT AT    (SQUARE  ---------------- ---------------
           PROPERTY              12-31-97(1)    OF UNITS     12-31-97      FEET)    1996(2)   1997   1996(2)   1997
------------------------------ --------------- ---------- ------------- ---------- --------- ------ --------- -----
<S>                            <C>             <C>        <C>           <C>        <C>       <C>    <C>       <C>
GEORGIA
Ashley Run ...................    18,684,443      348        53,691        1150        --     704      --      91%
Carlyle Club .................    12,237,864      243        50,362        1089        --     705      --      88%
Dunwoody Springs .............    16,594,594      350        47,413         948        --     643      --      91%
Stone Brook ..................     7,953,881      188        42,308         937        --     633      --      85%
Savannah West ................    12,501,309      456        27,415         877       420     470     85%      85%
West Eagle Greens ............     6,056,355      165        36,705         796       425     455     85%      85%

NORTH CAROLINA

The Meadows ..................     7,460,262      176        42,388        1068       587     601     91%      96%
Beacon Hill ..................    14,517,795      349        41,598         734       554     552     93%      92%
Bridgetown Bay ...............     5,763,770      120        48,031         867       579     602     94%      95%
Charleston Place .............    10,007,406      214        46,764         806        --     585      --      94%
Hanover Landing ..............     7,264,857      192        37,838         832       528     513     92%      93%
Heatherwood ..................    18,903,942      476        39,714        1186       307     578     94%      91%
Meadow Creek .................    12,295,434      250        49,182         860       591     476     95%      94%
Paces Glen ...................     8,027,477      172        46,671         907       617     626     95%      94%
Sailboat Bay .................    13,198,131      358        36,866         906       514     550     76%      87%
Summerwalk ...................     7,139,674      160        44,623         963       528     575     97%      96%
Deerfield ....................    11,095,295      204        54,389         888       739     751     89%      94%
The Landing ..................     9,827,290      200        49,136         960       578     748     96%      97%
Parkside at Woodlake .........    14,929,908      266        56,127         865       721     694     96%      90%
Wind Lake ....................     9,817,050      299        32,833         727       504     490     88%      89%
Signature Place ..............     6,727,435      171        39,342        1037       481     497     94%      94%
Clarion Crossing .............    10,812,429      228        47,423         769        --     603      --      93%
Highland Hills ...............    13,901,839      264        52,658        1000       683     718     97%      97%
The Hollows ..................     5,862,730      176        33,311         903       601     630     97%      94%
Paces Arbor ..................     5,836,534      101        57,787         899        --     658      --      94%
Paces Forest .................     6,793,400      117        58,063         883        --     656      --      94%
Remington Place ..............     7,982,291      136        58,693        1098        --     741      --      96%
St. Regis ....................     9,887,449      180        54,930         840        --     658      --      94%
The Trestles .................    11,345,191      280        40,518         776       562     582     93%      92%
Chase Mooring ................     5,174,122      224        23,099         867       513     547     86%      89%
Osprey Landing ...............     6,842,954      176        38,880         981       526     591     89%      92%
Wimbledon Chase ..............     5,461,662      192        28,446         818       532     561     93%      97%
Glen Eagles ..................     8,863,487      166        53,394         952       622     650     93%      95%
Mill Creek ...................     9,395,861      220        42,708         897       553     557     91%      91%
</TABLE>


                                        7

<PAGE>


<TABLE>
<CAPTION>

                                                                                             INITIAL
                                                            YEAR            DATE OF        ACQUISITION
              PROPERTY                    LOCATION     COMPLETED          ACQUISITION          COST
------------------------------------ ----------------- -------------- ------------------ ---------------
<S>                                  <C>               <C>            <C>                <C>
SOUTH CAROLINA
Westchase .......................... Charleston        1985           January 1997        $ 11,000,000
The Arbors at Windsor Lake ......... Columbia          1991           January 1997          10,875,000
Stone Ridge ........................ Columbia          1975           December 1993          3,325,000
Breckinridge ....................... Greenville        1973           June 1995              5,600,000
Magnolia Run ....................... Greenville        1972           June 1995              5,500,000
Polo Club .......................... Greenville        1972           June 1993              4,300,000

VIRGINIA

Trophy Chase ....................... Charlottesville   1970           April 1996             3,710,000
Greenbrier ......................... Fredericksburg    1970/1990      October 1996          11,099,525
Tradewinds ......................... Hampton           1988           November 1995         10,200,000
County Green ....................... Lynchburg         1976           December 1993          3,800,000
Ashley Park ........................ Richmond          1988           March 1996            12,205,000
Hampton Glen ....................... Richmond          1986           August 1996           11,599,931
Trolley Square ..................... Richmond          (4)               (4)                10,242,575
Arbor Trace ........................ Virginia Beach    1985           March 1996             5,000,000
Bay Watch Pointe ................... Virginia Beach    1972           July 1995              3,372,525
Harbour Club ....................... Virginia Beach    1988           May 1994               5,250,000
Mayflower Seaside .................. Virginia Beach    1950           October 1993           7,634,144
                                                                                          ------------
TOTAL/AVERAGE                                                                             $424,164,514
                                                                                          ============

<CAPTION>
                                                                                             DECEMBER
                                                                                             AVERAGE
                                                                    TOTAL       AVERAGE      RENT PER        YEAR-TO-DATE
                                          TOTAL                   INVESTMENT   UNIT SIZE     MONTH(5)     ECONOMIC OCCUPANCY
                                      INVESTMENT AT    NUMBER    PER UNIT AT    (SQUARE  ---------------- ------------------
              PROPERTY                 12-31-97(1)    OF UNITS     12-31-97      FEET)    1996(2)   1997   1996(2)    1997
------------------------------------ --------------- ---------- ------------- ---------- --------- ------ --------- --------
<S>                                  <C>             <C>        <C>           <C>        <C>       <C>    <C>       <C>
SOUTH CAROLINA

Westchase ..........................    12,199,764        352       34,658        706         --     521      --        95%
The Arbors at Windsor Lake .........    11,339,651        228       49,735        966         --     626      --        92%
Stone Ridge ........................     5,612,592        191       29,385       1047        508     506      90%       92%
Breckinridge .......................     6,896,124        236       29,221        726        415     436      87%       91%
Magnolia Run .......................     6,750,125        212       31,840        993        506     527      96%       94%
Polo Club ..........................     6,904,635        365       18,917        807        397     406      92%       88%

VIRGINIA

Trophy Chase .......................     6,481,964        185       35,038        803        481     511      83%       90%
Greenbrier .........................    11,813,814        258       45,790        851        590     611      95%       95%
Tradewinds .........................    10,889,492        284       38,343        930        560     590      90%       91%
County Green .......................     5,203,820        180       28,910       1000        491     512      91%       96%
Ashley Park ........................    12,942,802        272       47,584        765        562     583      96%       95%
Hampton Glen .......................    12,457,501        232       53,696        788        644     669      96%       96%
Trolley Square .....................    12,547,009        325       38,606        589        300     526      94%       96%
Arbor Trace ........................     5,867,816        148       39,647        850        526     563      96%       96%
Bay Watch Pointe ...................     4,881,908        160       30,512        911        574     590      88%       93%
Harbour Club .......................     6,104,145        214       28,524        813        522     565      87%       91%
Mayflower Seaside ..................     9,517,913        263       36,190        698        664     681      94%       95%
                                        ----------        ---       ------       ----        ---     ---      --        --
TOTAL/AVERAGE                         $487,575,196     11,922      $40,897        889       $549    $582      91%       92%
                                      ============     ======      =======       ====       ====    ====      ==        ==
</TABLE>

<PAGE>

------
Notes to Table of Properties:

(1)  "Total  Investment"  includes the purchase  price of the property plus real
     estate  commissions,  closing costs and improvements  capitalized since the
     date of acquisition.

(2)  An open item denotes  that the Company did not own the property  during the
     period indicated.

(3)  Heatherwood  Apartments is comprised of Heatherwood (completed in 1980) and
     Italian Village and Villa Marina Apartments  (completed in 1980),  acquired
     in September 1996 and August 1997,  respectively,  at a cost of $10,205,457
     and  $7,425,000.  They are  adjoining  properties  and are  operated as one
     apartment community.

(4)  Trolley Square  Apartments is comprised of Trolley  Square East  Apartments
     (completed in 1964) and Trolley Square West Apartments  (completed in 1965)
     acquired  in  June  1996  and  December  1996,  respectively,  at a cost of
     $6,000,000 and $4,242,575. They are adjacent properties and are operated as
     one apartment community.

(5)  Average rent per month  reflects  December's  monthly gross  potential rent
     less concessions divided by the property's number of units.



                                       8
<PAGE>



ITEM 3. LEGAL PROCEEDINGS

     Neither  the  Company  nor any of its  apartment  properties  is  presently
subject to any  material  litigation  nor, to the  Company's  knowledge,  is any
litigation  threatened against the Company or any of the properties,  other than
routine actions  arising in the ordinary  course of business,  some of which are
expected to be covered by liability  insurance and all of which collectively are
not  expected to have a material  adverse  effect on the  business or  financial
condition or results of operations of the Company.

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

     None.

                                    PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     The  Company's  common  shares are  traded on the New York  Stock  Exchange
("NYSE").  The common  shares were listed on the NYSE under the symbol  "TCR" on
April 18, 1997.  Before that date,  there was no active  trading  market for the
common  shares.  The following  table sets forth the high and low sale prices on
the  NYSE  for the  common  shares  (as  reported  by the  NYSE)  and  the  cash
distributions declared and paid for each quarterly period indicated. On March 1,
1998, the last reported sale price on the NYSE was $12.69 per common share.


<TABLE>
<CAPTION>


                                                        CASH DISTRIBUTION
1996                           HIGH          LOW        PER COMMON SHARE
----                           ----          ---        ----------------
<S>                        <C>           <C>           <C>
First Quarter ..........          --             --         $  0.2475
Second Quarter .........          --             --            0.2480
Third Quarter ..........          --             --            0.2485
Fourth Quarter .........                                       0.2490

1997
----
First Quarter ..........          --             --         $  0.2500
Second Quarter .........    $  11.25       $  10.25            0.2500
Third Quarter ..........       12.50         10.625            0.2500
Fourth Quarter .........     12.4375         10.125            0.2500
</TABLE>

     Distributions  of $31,324,870 and $15,934,901 were made to the shareholders
during 1997 and 1996, respectively.

     The timing and  amounts of  distributions  to  shareholders  are within the
discretion of the Company's board of directors. Future distributions will depend
on the Company's  results of  operations,  cash flow from  operations,  economic
conditions and other factors, such as working capital, cash requirements to fund
investing and financing activities, capital expenditure requirements,  including
improvements  to and expansions of properties and the  acquisition of additional
properties,  as well as the distribution  requirements  under federal income tax
provisions for qualification as a REIT.

     For federal income tax purposes,  distributions  paid to  shareholders  may
consist of ordinary income,  capital gains distributions,  non-taxable return of
capital, or a combination thereof.  Distributions  constitute ordinary income to
the extent of the  Company's  current  and  accumulated  earnings  and  profits.
Distributions  which exceed the Company's  current and accumulated  earnings and
profits constitute a return of capital rather than a dividend to the extent of a
shareholder's  basis in his common shares and reduce the shareholder's  basis in
the common shares. To the extent that a distribution  exceeds both the Company's
current and accumulated  earnings and profits and the shareholder's basis in his
common shares, it is generally treated as gain from the sale or exchange of that
shareholder's  common shares. The Company notifies  shareholders  annually as to
the  taxability  of  distributions  paid  during the  preceding  year.  In 1997,
approximately  23% of  distributions  represented  a return of capital,  and the
balance represented ordinary income.

                                       9

<PAGE>

     The Company has adopted a Dividend  Reinvestment  and Share  Purchase  Plan
under which any record holder of common  shares may reinvest cash  dividends and
may invest  additional  cash  payments  of up to $15,000  per  quarter in common
shares.

     The agreement pertaining to the Company's Unsecured Line of Credit contains
certain  covenants  that,  among other things,  require  maintenance  of certain
financial  ratios,  and include  restrictions  on the Company's  ability to make
distributions to its shareholders over certain amounts.

     On March 1, 1998, there were 19,683 shareholders of record of the Company's
common shares.

     As of March 1, 1997, the Company acquired all of the assets of Apple Realty
Group, Inc. (consisting of a property acquisition and disposition agreement with
Apple Residential  Income Trust,  Inc.) for $350,000 in cash plus 150,000 common
shares  (valued  at  $11.00  per  common  share,  for  total   consideration  of
$2,000,000).  The common shares were  distributed to Glade M. Knight as the sole
shareholder  of Apple  Realty  Group,  Inc.  The common  shares so issued by the
Company were issued in a transaction  not involving a public offering within the
meaning of Section 4(2) of the Securities Act of 1933.

ITEM 6. SELECTED FINANCIAL DATA

     For the information called for by this item, see the information in Exhibit
13, 1997 Annual Report,  under the caption "Selected  Financial Data" on page 21
thereof, which information is hereby incorporated by reference herein.

     The  selected  financial  data  should  be read  in  conjunction  with  the
financial  statements and related notes of the Company  included under Item 8 of
this Report.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

     For the information called for by this item, see the information in Exhibit
13, 1997 Annual Report, under the caption "Management's  Discussion and Analysis
of  Financial  Condition  and  Results  of  Operations"  on pages 22  through 26
thereof, which information is hereby incorporated herein by reference.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The financial  statements of the Company and report of independent auditors
required to be included in this item are set forth in Item 14 of this report and
are hereby incorporated herein by reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

     None.

                                       10

<PAGE>

                                   PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     For  information  with  respect to the  Company's  directors  and  director
nominees  see  the  information  under  "Ownership  of  Equity  Securities"  and
"Election of Directors" in the Company's  Proxy  Statement  dated April 3, 1998,
which information is hereby  incorporated  herein by reference.  For information
with respect to the Company's executive officers see "Executive Officers" in the
Company's  Proxy  Statement  dated April 3, 1998,  which  information  is hereby
incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION

     For information  with respect to  compensation  of the Company's  executive
officers and directors,  see the information  under  "Compensation  of Executive
Officers" and "Compensation of Directors" in the Company's Proxy Statement dated
April 3, 1998, which information is hereby incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     See the information under "Ownership of Equity Securities" in the Company's
Proxy Statement dated April 3, 1998,  which  information is hereby  incorporated
herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     For information on certain relationships and related transactions,  see the
information under "Certain  Relationships and Agreements" in the Company's Proxy
Statement dated April 3, 1998, which information is hereby  incorporated  herein
by reference.

                                       11

<PAGE>

                                    PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

     (a) Documents filed as part of the report

     1. Financial Statements

     The  following  consolidated  financial  statements of the  registrant  are
included in Item 8 and  incorporated  by  reference  from pages 27 through 38 of
Exhibit 13, 1997 Annual Report.

       Independent Auditors' Report -- Ernst & Young LLP

       Consolidated Balance Sheets -- December 31, 1997 and 1996

       Consolidated  Statements of Operations -- Years Ended  December 31, 1997,
1996 and 1995

       Consolidated  Statements of Shareholders'  Equity -- Years ended December
31, 1997, 1996 and 1995

       Consolidated  Statements of Cash Flows -- Years ended  December 31, 1997,
1996 and 1995

       Notes to Consolidated Financial Statements

     2. Financial Statement Schedule

       Schedule  III -- Real Estate and  Accumulated  Depreciation  (Included on
pages 14 through 17 of this Form 10-K Report)

     All other financial  statement schedules have been omitted because they are
not  applicable or not required or because the required  information is included
elsewhere in the financial statements or notes thereto.

     3. Exhibits

     Incorporated  herein by reference are the exhibits  listed under  "Exhibits
Index" on pages 19 through 22 of this Form 10-K Report.

     (b) Reports on Form 8-K

     During the last quarter of 1997,  the Company filed the  following  Current
Reports on Form 8-K:

     On October 6, 1997, the Company filed a Report on Form 8-K/A to a Report on
Form 8-K  dated  May 14,  1997.  The  item  reported  was Item 7. The  financial
statement  filed  was a  Statement  of  Income  and  Direct  Operating  Expenses
(exclusive  of certain  items) for Dunwoody  Springs  Apartments  for the twelve
months  ended  June 30,  1997.  Also  included  were a Pro  Forma  Statement  of
Operations  for the six months ended June 30, 1997, a Pro Forma Balance Sheet as
of June 30, 1997,  and a Pro Forma  Statement of  Operations  for the year ended
December 31, 1996.

     On October  15,  1997,  the  Company  filed a Report on Form 8-K.  The item
reported was Item 2 (the acquisition of the Clarion Crossing Apartments).

     On November 10, 1997,  the Company filed a Report on Form 8-K/A to a Report
on Form 8-K dated August 28, 1997.  The item  reported was Item 7. The financial
statement  filed was a  compiled  (unaudited)  Statement  of Income  and  Direct
Operating Expenses  (exclusive of certain items) for Italian Village Apartments,
trading as Italian  Village and Villa Marina  Apartments,  for the twelve months
ended July 31, 1997.

     On November  17,  1997,  the Company  filed a Report on Form 8-K.  The item
reported was Item 2 (the  acquisition  of the Stone Brook  (formerly  Barrington
Parc),  St.  Regis  (formerly  Sterling  Arbor) and  Remington  Place  (formerly
Sterling Place) Apartments.


                                       12

<PAGE>


     On December 12, 1997,  the Company filed a Report on Form 8-K/A to a Report
on Form  8-K  dated  September  30,  1997.  The  item  reported  was Item 7. The
financial  statement  filed was a  Statement  of  Income  and  Direct  Operating
Expenses (exclusive of certain items) for Clarion Crossing for the twelve months
ended August 31, 1997.  Also included  were a Pro Forma  Statement of Operations
for the nine  months  ended  September  30,  1997,  and Pro Forma  Statement  of
Operations for the year ended December 31, 1996.



                                       13

<PAGE>

                                 SCHEDULE III
       REAL ESTATE AND ACCUMULATED DEPRECIATION (AS OF DECEMBER 31, 1997)

<TABLE>
<CAPTION>
                                   INITIAL COST    SUBSEQUENTLY CAPITALIZED        GROSS AMOUNT CARRIED
                                  -------------- ----------------------------- -----------------------------
                         ENCUM-
DESCRIPTION              BRANCES       LAND       BLDG. & IMPR.      IMPR.          LAND      BLDG. & IMPR.
----------------------- --------- -------------- --------------- ------------- ------------- ---------------
<S>                     <C>       <C>            <C>             <C>           <C>           <C>
1) Polo Club                $0      $  264,698      $4,035,302    $2,604,635    $  264,698      $6,639,937
* Greenville, SC
* Multi-family housing

2) The Hollows              $0      $1,374,840      $2,825,160    $1,662,730    $1,390,646      $4,472,084
* Raleigh, NC
* Multi-family housing

3) Mayflower Seaside        $0      $2,258,169      $5,375,975    $1,883,769    $2,258,248      $7,259,665
* Virginia Beach, VA
* Multi-family housing
* Retail shops

4) Stone Ridge              $0      $  374,271      $2,950,729    $2,287,592    $  374,292      $5,238,300
* Columbia, SC
* Multi-family housing

5) County Green             $0      $  319,250      $3,480,750    $1,403,820    $  327,484      $4,876,336
* Lynchburg, VA
* Multi-family housing

6) Wimbledon Chase          $0      $  304,590      $2,995,410    $2,161,662    $  304,815      $5,156,847
* Wilmington, NC
* Multi-family housing

7) Harbour Club             $0      $1,019,895      $4,230,105    $  854,145    $1,020,274      $5,083,871
* Virginia Beach, VA
* Multi-family housing

8) Chase Mooring            $0      $  258,126      $3,335,874    $1,580,122    $  258,210      $4,915,912
* Wilmington, NC
* Multi-family housing

9) The Trestles             $0      $2,650,884      $7,699,116    $  995,191    $2,686,006      $8,659,185
* Raleigh, NC
* Multi-family housing

10) Wind Lake               $0      $1,051,200      $7,708,800    $1,057,050    $1,088,780      $8,728,270
* Greensboro, NC
* Multi-family housing

11) Magnolia Run            $0      $  495,000      $5,005,000    $1,250,125    $  509,001      $6,241,124
* Greenville, SC
* Multi-family housing

12) Breckinridge            $0      $1,512,000      $4,088,000    $1,296,124    $1,558,060      $5,338,064
* Greenville, SC
* Multi-family housing

13) Bay Watch Pointe        $0      $  775,680      $2,596,845    $1,509,383    $  813,935      $4,067,973
* Virginia Beach, VA
* Multi-family housing

<CAPTION>

<PAGE>


                                                     DATE OF        DATE
DESCRIPTION                 TOTAL       ACC. DEP.     CONST.      ACQUIRED     DEP. LIFE
----------------------- ------------- ------------- --------- --------------- ----------
<S>                     <C>           <C>           <C>       <C>             <C>
1) Polo Club             $ 6,904,635   $1,348,765     1972    June 3, 1993    27.5 yrs.
* Greenville, SC
* Multi-family housing

2) The Hollows           $ 5,862,730   $  803,937     1974    June 1, 1993    27.5 yrs.
* Raleigh, NC
* Multi-family housing

3) Mayflower Seaside     $ 9,517,913   $1,103,186     1950    Oct. 26, 1993   27.5 yrs.
* Virginia Beach, VA
* Multi-family housing
* Retail shops

4) Stone Ridge           $ 5,612,592   $  910,979     1975    Dec. 8, 1993    27.5 yrs.
* Columbia, SC
* Multi-family housing

5) County Green          $ 5,203,820   $  777,966     1976    Dec. 1, 1993    27.5 yrs.
* Lynchburg, VA
* Multi-family housing

6) Wimbledon Chase       $ 5,461,662   $  767,403     1976    Feb. 1, 1994    27.5 yrs.
* Wilmington, NC
* Multi-family housing

7) Harbour Club          $ 6,104,145   $  682,749     1988    May 1, 1994     27.5 yrs.
* Virginia Beach, VA
* Multi-family housing

8) Chase Mooring         $ 5,174,122   $  617,969     1968    Aug. 1, 1994    27.5 yrs.
* Wilmington, NC
* Multi-family housing

9) The Trestles          $11,345,191   $1,109,837     1987    Dec. 30, 1994   27.5 yrs.
* Raleigh, NC
* Multi-family housing

10) Wind Lake            $ 9,817,050   $  899,238     1985    April 1, 1995   27.5 yrs.
* Greensboro, NC
* Multi-family housing

11) Magnolia Run         $ 6,750,125   $  633,948     1972    June 1, 1995    27.5 yrs.
* Greenville, SC
* Multi-family housing

12) Breckinridge         $ 6,896,124   $  517,880     1973    June 21, 1995   27.5 yrs.
* Greenville, SC
* Multi-family housing

13) Bay Watch Pointe     $ 4,881,908   $  408,201     1972    July 18, 1995   27.5 yrs.
* Virginia Beach, VA
* Multi-family housing

</TABLE>

                                       14

<PAGE>

<TABLE>
<CAPTION>

                                  INITIAL COST     SUBSEQUENTLY CAPITALIZED        GROSS AMOUNT CARRIED
                                  -------------- ----------------------------- -----------------------------
                          ENCUM-
DESCRIPTION              BRANCES       LAND      BLDG. & IMPR.       IMPR.          LAND     BLDG. & IMPR.
----------------------- --------- -------------- --------------- ------------- ------------- ---------------
<S>                     <C>       <C>            <C>             <C>           <C>           <C>
14) Hanover Landing         $0      $  801,500     $ 4,923,500    $1,539,857    $  822,286     $ 6,442,571
* Charlotte, NC
* Multi-family housing

15) Mill Creek              $0      $1,368,000     $ 7,182,000    $  845,861    $1,417,614     $ 7,978,247
* Winston-Salem, NC
* Multi-family housing

16) Glen Eagles             $0      $1,095,000     $ 6,205,000    $1,563,487    $1,595,456     $ 7,268,031
* Winston-Salem, NC
* Multi-family housing

17) Sailboat Bay            $0      $2,002,000     $ 7,098,000    $4,098,131    $2,153,610     $11,044,521
* Charlotte, NC
* Multi-family housing

18) Tradewinds              $0      $1,428,000     $ 8,772,000    $  689,492    $1,436,890     $ 9,452,602
* Hampton, VA
* Multi-family housing

19) Osprey Landing          $0      $  393,750     $ 3,981,250    $2,467,954    $  403,842     $ 6,439,112
* Wilmington, NC
* Multi-family housing

20) The Meadows             $0      $  186,000     $ 6,014,000    $1,260,262    $  384,556     $ 7,075,706
* Asheville, NC
* Multi-family housing

21) West Eagle Green        $0      $  326,400     $ 3,693,600    $2,036,355    $  316,095     $ 5,740,260
* Augusta, GA
* Multi-family housing

22) Ashley Park             $0      $1,586,650     $10,618,350    $  737,802    $1,589,262     $11,353,540
* Richmond, vA
* Multi-family housing

23) Arbor Trace             $0      $1,100,000     $ 3,900,000    $  867,816    $1,130,750     $ 4,737,066
* Virginia Beach, VA
* Multi-family housing

24) Bridgetown Bay          $0      $  603,000     $ 4,422,000    $  738,770    $  624,169     $ 5,139,601
* Charlotte, NC
* Multi-family housing

25) Trophy Chase            $0      $  853,300     $ 2,856,700    $2,771,964    $  880,843     $ 5,601,121
* Charlottesville, VA
* Multi-family housing

26) Beacon Hill             $0      $3,121,587     $10,457,616    $  938,592    $3,075,705     $11,442,090
* Charlotte, NC
* Multi-family housing

27) Summerwalk              $0      $1,528,200     $ 4,131,800    $1,479,674    $1,565,050     $ 5,574,624
* Concord, NC
* Multi-family housing

<CAPTION>

<PAGE>


                                                     DATE OF        DATE
DESCRIPTION                 TOTAL       ACC. DEP.     CONST.      ACQUIRED    DEP. LIFE
----------------------- ------------- ------------- --------- --------------- ----------
<S>                     <C>           <C>           <C>       <C>             <C>
14) Hanover Landing      $ 7,264,857   $  550,759     1972    Aug. 22, 1995   27.5 yrs.
* Charlotte, NC
* Multi-family housing

15) Mill Creek           $ 9,395,861   $  677,900     1984    Sept. 1, 1995   27.5 yrs.
* Winston-Salem, NC
* Multi-family housing

16) Glen Eagles          $ 8,863,487   $  627,144     1990    Oct. 1, 1995    27.5 yrs.
* Winston-Salem, NC
* Multi-family housing

17) Sailboat Bay         $13,198,131   $1,132,932     1972    Nov. 1, 1995    27.5 yrs.
* Charlotte, NC
* Multi-family housing

18) Tradewinds           $10,889,492   $  811,294     1988    Nov. 1, 1995    27.5 yrs.
* Hampton, VA
* Multi-family housing

19) Osprey Landing       $ 6,842,954   $  510,604     1973    Nov. 1, 1995    27.5 yrs.
* Wilmington, NC
* Multi-family housing

20) The Meadows          $ 7,460,262   $  536,888     1974    Jan. 31, 1996   27.5 yrs.
* Asheville, NC
* Multi-family housing

21) West Eagle Green     $ 6,056,355   $  394,366     1974    March 1, 1996   27.5 yrs.
* Augusta, GA
* Multi-family housing

22) Ashley Park          $12,942,802   $  823,302     1988    March 1, 1996   27.5 yrs.
* Richmond, vA
* Multi-family housing

23) Arbor Trace          $ 5,867,816   $  336,766     1985    March 1, 1996   27.5 yrs.
* Virginia Beach, VA
* Multi-family housing

24) Bridgetown Bay       $ 5,763,770   $  340,018     1986    April 1, 1996   27.5 yrs.
* Charlotte, NC
* Multi-family housing

25) Trophy Chase         $ 6,481,964   $  367,546     1970    April 1, 1996   27.5 yrs.
* Charlottesville, VA
* Multi-family housing

26) Beacon Hill          $14,517,795   $  705,777     1985    May 1, 1996     27.5 yrs.
* Charlotte, NC
* Multi-family housing

27) Summerwalk           $ 7,139,674   $  338,188     1983    May 1, 1996     27.5 yrs.
* Concord, NC
* Multi-family housing
</TABLE>

                                       15

<PAGE>

<TABLE>
<CAPTION>

                                           INITIAL COST     SUBSEQUENTLY CAPITALIZED        GROSS AMOUNT CARRIED
                                           -------------- ----------------------------- -----------------------------
                                   ENCUM-
DESCRIPTION                       BRANCES       LAND      BLDG. & IMPR.       IMPR.          LAND     BLDG. & IMPR.
-------------------------------- --------- -------------- --------------- ------------- ------------- ---------------
<S>                              <C>       <C>            <C>             <C>           <C>           <C>
28) The Landing                      $0      $1,001,400     $ 7,343,600    $1,482,290    $1,023,951     $ 8,803,339
* Raleigh, NC
* Multi-family housing

29) Meadowcreek                      $0      $1,110,000     $ 9,990,000    $1,195,434    $1,134,435     $11,160,999
* Pineville, NC
* Multi-family housing

30) Trolley Square East              $0      $1,620,000     $ 4,380,000    $2,304,434    $2,817,604     $ 9,729,405
Trolley Square West                          $1,145,495     $ 3,097,080
* Richmond, VA
* Multi-family housing

31) Savannah West                    $0      $  627,860     $ 9,215,760    $2,657,689    $1,161,211     $11,340,098
* Augusta, GA
* Multi-family housing

32) Paces Glen                       $0      $2,153,250     $ 5,271,750    $  602,477    $2,226,400     $ 5,801,077
* Charlotte, NC
* Multi-family housing

33) Signature Place                  $0      $  491,665     $ 4,971,283    $1,264,487    $  502,648     $ 6,224,787
* Greenville, NC
* Multi-family housing

34) Hampton Glen                     $0      $1,391,992     $10,207,939    $  857,570    $1,414,093     $11,043,408
* Richmond, VA
* Multi-family housing

35) Heatherwood                      $0      $2,449,310     $ 7,756,147    $1,273,485    $4,184,116     $14,719,826
Italian Village/Villa Marina                 $1,707,750     $ 5,717,250
* Charlotte, NC
* Multi-family housing

36) Highland Hills                   $0      $1,210,000     $10,890,000    $1,801,839    $1,198,724     $12,703,115
* Carrboro, NC
* Multi-family housing

37) Parkside at Woodlake             $0      $2,932,778     $11,731,108    $  266,022    $2,884,355     $12,045,553
* Durham, NC
* Multi-family housing

38) Greenbrier                       $0      $  998,957     $10,100,568    $  714,289    $1,009,699     $10,804,115
* Fredericksburg, VA
* Multi-family housing

39) Deerfield                        $0      $  427,000     $10,248,000    $  420,295    $  430,416     $10,664,879
* Durham, NC
* Multi-family housing

40) The Arbors at Windsor Lake       $0      $  978,750     $ 9,896,250    $  464,651    $  994,336     $10,345,315
* Columbia, SC
* Multi-family housing

41) Westchase                        $0      $1,980,000     $ 9,020,000    $1,199,764    $2,012,148     $10,187,616
* Charleston, SC
* Multi-family housing

<CAPTION>
<PAGE>



                                                            DATE OF        DATE
DESCRIPTION                          TOTAL      ACC. DEP.    CONST.      ACQUIRED     DEP. LIFE

-------------------------------- ------------- ----------- --------- ---------------- ----------
<S>                              <C>           <C>         <C>       <C>              <C>
28) The Landing                   $ 9,827,290   $532,052     1984    May 1, 1996      27.5 yrs.
* Raleigh, NC
* Multi-family housing

29) Meadowcreek                   $12,295,434   $692,927     1984    May 31, 1996     27.5 yrs.
* Pineville, NC
* Multi-family housing

30) Trolley Square East           $12,547,009   $523,667     1968    June 25, 1996    27.5 yrs.
Trolley Square West                                          1964    Dec. 31, 1996    27.5 yrs.
* Richmond, VA
* Multi-family housing

31) Savannah West                 $12,501,309   $626,284     1976    July 1, 1996     27.5 yrs.
* Augusta, GA
* Multi-family housing

32) Paces Glen                    $ 8,027,477   $317,033     1986    July 19, 1996    27.5 yrs.
* Charlotte, NC
* Multi-family housing

33) Signature Place               $ 6,727,435   $340,582     1981    August 1, 1996   27.5 yrs.
* Greenville, NC
* Multi-family housing

34) Hampton Glen                  $12,457,501   $591,866     1986    August 1, 1996   27.5 yrs.
* Richmond, VA
* Multi-family housing

35) Heatherwood                   $18,903,942   $507,135     1980    Sept. 1, 1996    27.5 yrs.
Italian Village/Villa Marina                                 1980    Aug. 29, 1997
* Charlotte, NC
* Multi-family housing

36) Highland Hills                $13,901,839   $656,581     1987    Sept. 27, 1996   27.5 yrs.
* Carrboro, NC
* Multi-family housing

37) Parkside at Woodlake          $14,929,908   $619,610     1996    Aug. 31, 1996    27.5 yrs.
* Durham, NC
* Multi-family housing

38) Greenbrier                    $11,813,814   $506,348     1980    Oct. 1, 1996     27.5 yrs.
* Fredericksburg, VA
* Multi-family housing

39) Deerfield                     $11,095,295   $456,364     1985    Nov. 1, 1996     27.5 yrs.
* Durham, NC
* Multi-family housing

40) The Arbors at Windsor Lake    $11,339,651   $388,602     1991    Jan. 1, 1997     27.5 yrs.
* Columbia, SC
* Multi-family housing

41) Westchase                     $12,199,764   $371,620     1985    Jan. 15, 1997    27.5 yrs.
* Charleston, SC
* Multi-family housing

</TABLE>

                                       16

<PAGE>

<TABLE>
<CAPTION>

                                  INITIAL COST     SUBSEQUENTLY CAPITALIZED        GROSS AMOUNT CARRIED
                                  -------------- ----------------------------- -----------------------------
                          ENCUM-
DESCRIPTION              BRANCES       LAND      BLDG. & IMPR.       IMPR.          LAND     BLDG. & IMPR.
----------------------- --------- -------------- --------------- ------------- ------------- ---------------
<S>                     <C>       <C>            <C>             <C>           <C>           <C>
42) Paces Arbor         $0         $ 1,173,526    $  4,414,693    $   248,315   $ 1,180,955   $  4,655,579
* Raleigh, NC
* Multi-family housing

43) Paces Forest        $0         $ 1,359,431    $  5,114,050    $   319,919   $ 1,370,380   $  5,423,020
* Raleigh, NC
* Multi-family housing

44) Carlyle Club        $0         $ 3,589,800    $  7,990,200    $   657,864   $ 3,606,716   $  8,631,148
* Lawrenceville, GA
* Multi-family housing

45) Ashley Run          $0         $ 3,780,000    $ 14,220,000    $   684,443   $ 3,793,411   $ 14,891,032
* Norcross, GA
* Multi-family housing

46) Charleston Place    $0         $ 1,516,000    $  7,959,000    $   532,406   $ 1,534,433   $  8,472,973
* Charlotte, NC
* Multi-family housing

47) Dunwoody Springs    $0         $ 3,648,000    $ 11,552,000    $ 1,394,594   $ 3,665,666   $ 12,928,928
* Dunwoody, GA
* Multi-family housing

48) Clarion Crossing    $0         $ 3,180,000    $  7,420,000    $   212,429   $ 3,233,066   $  7,579,363
* Raleigh, NC
* Multi-family housing

49) Stone Brook         $0         $ 1,570,000    $  6,280,000    $   103,881   $ 1,581,203   $  6,372,678
* Norcross, GA
* Multi-family housing

50) St. Regis           $0         $ 2,156,000    $  7,644,000    $    87,449   $ 2,169,166   $  7,718,283
* Raleigh, NC
* Multi-family housing

51) Remington Place     $0         $ 1,422,000    $  6,478,000    $    82,291   $ 1,433,244   $  6,549,047
* Raleigh, NC
* Multi-family housing
                                   $74,672,954    $349,491,560    $63,410,682   $76,812,953   $410,762,243
                                   ===========    ============    ===========   ===========   ============

<CAPTION>

<PAGE>


                                                              DATE OF        DATE
DESCRIPTION                      TOTAL             ACC. DEP.     CONST.      ACQUIRED     DEP. LIFE
----------------------- ----------------------- -------------- --------- ---------------- ----------
<S>                     <C>                     <C>            <C>       <C>              <C>
42) Paces Arbor             $    5,836,534       $   142,901     1986    March 1, 1997    27.5 yrs.
* Raleigh, NC
* Multi-family housing

43) Paces Forest            $    6,793,400       $   167,343     1986    March 1, 1997    27.5 yrs.
* Raleigh, NC
* Multi-family housing

44) Carlyle Club            $   12,237,864       $   242,599     1974    Apr. 30, 1997    27.5 yrs.
* Lawrenceville, GA
* Multi-family housing

45) Ashley Run              $   18,684,443       $   410,263     1987    Apr. 30, 1997    27.5 yrs.
* Norcross, GA
* Multi-family housing

46) Charleston Place        $   10,007,406       $   211,614     1986    May 13, 1997     27.5 yrs.
* Charlotte, NC
* Multi-family housing

47) Dunwoody Springs        $   16,594,594       $   227,872     1981    July 25, 1997    27.5 yrs.
* Dunwoody, GA
* Multi-family housing

48) Clarion Crossing        $   10,812,429       $    92,074     1972    Sept. 30, 1997   27.5 yrs.
* Raleigh, NC
* Multi-family housing

49) Stone Brook             $    7,953,881       $    38,965     1986    Oct. 31, 1997    27.5 yrs.
* Norcross, GA
* Multi-family housing

50) St. Regis               $    9,887,449       $    46,995     1986    Oct. 31, 1997    27.5 yrs.
* Raleigh, NC
* Multi-family housing

51) Remington Place         $    7,982,291       $    39,791     1985    Oct. 31, 1997    27.5 yrs.
* Raleigh, NC
* Multi-family housing
                            $  487,575,196 (1)   $27,486,630
                            ==============       ===========
</TABLE>

------
(1) Represents the aggregate cost for Federal Income tax purposes.

                                       17

<PAGE>

                                  SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) 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,  this 30th day of
March, 1998.

                                   CORNERSTONE REALTY INCOME TRUST, INC.


                                   By: /s/ Glade M. Knight
                                       ----------------------------------------
                                         Glade M. Knight,
                                         Chairman of the Board, Chief Executive
                                           Officer and President

     Pursuant to the  requirements  of the  Securities  Exchange Act 1934,  this
Report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
           SIGNATURE                            CAPACITY                      DATE
-------------------------------   -----------------------------------   ---------------
<S>                               <C>                                   <C>
       /s/ GLADE M. KNIGHT        Director, Chief Executive             March 30, 1998
---------------------------       Officer and President
           Glade M. Knight


  /s/ STANLEY J. OLANDER, JR.     Director, Chief Financial Officer     March 30, 1998
---------------------------       and Principal Accounting Officer
      Stanley J. Olander, Jr.


      /s/ MARTIN ZUCKERBROD       Director                              March 30, 1998
---------------------------
          Martin Zuckerbrod

    /s/ HARRY S. TAUBENFELD       Director                              March 30, 1998
---------------------------
        Harry S. Taubenfeld

      /s/ LESLIE A. GRANDIS       Director                              March 30, 1998
---------------------------
          Leslie A. Grandis

   /s/ GLENN W. BUNTING, JR.      Director                              March 30, 1998
---------------------------
       Glenn W. Bunting, Jr.

       /s/ PENELOPE W. KYLE       Director                              March 30, 1998
---------------------------
           Penelope W. Kyle

</TABLE>


                                       18

<PAGE>

                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
 EXHIBIT
  NUMBER                               DESCRIPTION
  ------                               -----------
<S>         <C>

3.1         Amended and Restated Articles of Incorporation of Cornerstone Realty
            Income Trust, Inc., as amended (Incorporated by reference to Exhibit
            3.1  included in the  Company's  Report on Form 10-Q for the Quarter
            ended June 30, 1995; File No. 0-23954).

3.2         Bylaws of Cornerstone  Realty Income Trust,  Inc.  (Amended  Through
            March 31, 1997)  (Incorporated  by reference to Exhibit 4.2 included
            in the  Company's  Registration  Statement  on Form  S-3;  File  No.
            333-23693).

4.1         Credit  Agreement  dated  as of  October  30,  1997,  by  and  among
            Cornerstone Realty Income Trust, Inc., and any Additional  Borrowers
            party thereto,  as Borrowers,  the Lenders referred to therein,  and
            First Union  National Bank, as Agent  (Incorporated  by reference to
            Exhibit 4.1  included in the  Registrant's  Report on Form 8-K dated
            December 30, 1997; File No. 0-23954).

4.2         Joinder  Agreement  dated  as of  December  31,  1997 to the  Credit
            Agreement  dated as of October 30,  1997,  by and Among  Cornerstone
            Realty Income Trust,  Inc., each Additional  Borrower party thereto,
            CRIT-NC,  LLC, the lenders party  thereto,  and First Union National
            Bank, as Agent (Incorporated by reference to Exhibit 4.2 included in
            the  Registrant's  Report on Form 8-K dated December 30, 1997;  File
            No. 0-23954).

4.3         (1) Amended and Restated  Revolving  Credit Note dated  December 31,
            1997 in the principal  amount of up to  $65,000,000  made payable by
            Cornerstone Realty Income Trust, Inc. and CRIT-NC,  LLC to the order
            of First Union National Bank, and (2) Amended and Restated Revolving
            Credit Note dated December 31, 1997 in the principal amount of up to
            $35,000,000  made payable by Cornerstone  Realty Income Trust,  Inc.
            and CRIT-NC,  LLC to the order of AmSouth Bank,  and (3) Amended and
            Restated  Revolving  Credit  Note  dated  December  31,  1997 in the
            principal  amount of up to  $25,000,000  made payable by Cornerstone
            Realty Income Trust,  Inc. and CRIT-NC,  LLC to the order of Crestar
            Bank,  and (4)  Amended  and  Restated  Revolving  Credit Note dated
            December 31, 1997 in the principal  amount of up to $20,000,000 made
            payable by Cornerstone Realty Income Trust, Inc. and CRIT-NC, LLC to
            the order of Fleet  National  Bank,  and (5)  Amended  and  Restated
            Revolving  Credit  Note dated  December  31,  1997 in the  principal
            amount of up to  $30,000,000  made  payable  by  Cornerstone  Realty
            Income Trust, Inc. and CRIT-NC, LLC to the order of Guaranty Federal
            Bank,  F.S.B.  (Incorporated by reference to Exhibit 4.3 included in
            the  Registrant's  Report on Form 8-K dated December 30, 1997;  File
            No. 0-23954).

</TABLE>

     The  Company  agrees to  furnish  the  Commission  on request a copy of any
instrument with respect to long-term debt of the Company or its subsidiaries the
total  amount of  securities  authorized  under which does not exceed 10% of the
total assets of the Company and its subsidiaries on a consolidated basis.

                                       19

<PAGE>

<TABLE>
<CAPTION>

 EXHIBIT

 NUMBER                                DESCRIPTION
 ------                                -----------
<S>        <C>

10.1       Amendment and  Restatement of Cornerstone  Realty Income Trust,  Inc.
           1992 Incentive Plan. (Exhibit 10.14)(1) This is a management contract
           or  compensatory  plan or  arrangement  required  to be  filed  as an
           exhibit pursuant to Item 14(c) of Form 10-K.

10.2       Amendment and  Restatement of Cornerstone  Realty Income Trust,  Inc.
           1992  Non-Employee  Directors Stock Option Plan.  (Exhibit  10.15)(1)
           This is a management  contract or  compensatory  plan or  arrangement
           required  to be filed as an exhibit  pursuant  to Item 14 (c) of Form
           10-K.

10.3       Agreement for Appointment of Transfer Agent and Registrar between the
           Company and First Union National Bank of North Carolina (Incorporated
           by reference to Exhibit  10.19 to the  Company's  Report on Form 10-K
           for the Year Ended December 31, 1994; File No. 0-23954).

10.4       Agreement and Bill of Transfer and  Assignment  dated October 1, 1996
           between  Cornerstone  Management Group,  Inc. and Cornerstone  Realty
           Income Trust, Inc.(2)

10.5       Agreement and Bill of Transfer and  Assignment  dated October 1, 1996
           between  Cornerstone  Advisors,  Inc. and  Cornerstone  Realty Income
           Trust, Inc.(2)

10.6       Agreement and Bill of Transfer and  Assignment  dated October 1, 1996
           between  Cornerstone Realty Group, Inc. and Cornerstone Realty Income
           Trust, Inc. (Acquisition/Disposition Agreement).(2)

10.7       Agreement and Bill of Transfer and  Assignment  dated October 1, 1996
           between  Cornerstone Realty Group, Inc. and Cornerstone Realty Income
           Trust, Inc. (Personal Property). (2)

10.8       Employment  Agreement  dated  September 1, 1996  between  Cornerstone
           Realty Income Trust,  Inc. and Glade M. Knight.  This is a management
           contract or compensatory plan or arrangement  required to be filed as
           an exhibit pursuant to Item 14 (c) of Form 10-K. FILED HEREWITH.

10.9       Employment  Agreement  dated  September 1, 1996  between  Cornerstone
           Realty  Income Trust,  Inc. and Debra A. Jones.  This is a management
           contract or compensatory plan or arrangement  required to be filed as
           an exhibit pursuant to Item 14 (c) of Form 10-K. (2)

10.10      Employment  Agreement  dated  September 1, 1996  between  Cornerstone
           Realty  Income  Trust,  Inc. and Stanley J.  Olander,  Jr . This is a
           management  contract or compensatory plan or arrangement  required to
           be filed as an exhibit pursuant to Item 14 (c) of Form 10-K. (2)

10.11      Advisory  Agreement between Apple Residential  Income Trust, Inc. and
           Apple Residential Advisors, Inc. (Incorporated herein by reference to
           Exhibit  10.1 of  Amendment  No. 2 to Form S-11 of Apple  Residential
           Income Trust, Inc. (File No. 333-10635) filed on November 14, 1996).

10.12      Form of  Property  Management  Agreement  between  Apple  Residential
           Income  Trust,  Inc. and Apple  Residential  Management  Group,  Inc.
           (Incorporated  herein by  reference  to Exhibit  10.2 of Form S-11 of
           Apple  Residential  Income Trust,  Inc. (File No. 333-10635) filed on
           August 22, 1996).

10.13      Property Acquisition/Disposition  Agreement between Apple Residential
           Income Trust, Inc. and Apple Realty Group, Inc.  (Incorporated herein
           by reference to Exhibit 10.3 of Amendment No. 2 to Form S-11 of Apple
           Residential Income Trust, Inc. (File No. 333-10635) filed on November
           14, 1996).

</TABLE>

                                       20

<PAGE>


<TABLE>
<CAPTION>

EXHIBIT
NUMBER                                 DESCRIPTION
------                                 -----------
<S>          <C>

10.14      Advisory Agreement  Subcontract among Apple Residential Income Trust,
           Inc., Apple Residential Advisors,  Inc. and Cornerstone Realty Income
           Trust, Inc. FILED HEREWITH.

10.15      Property  Management  Agreement  Subcontract  among Apple Residential
           Income Trust,  Inc., Apple Residential  Management  Group,  Inc., and
           Cornerstone Realty Income Trust, Inc. FILED HEREWITH.

10.16      Agreement and Bill of Transfer and Assignment among Apple Residential
           In- come Trust, Inc., Apple Realty Group, Inc. and Cornerstone Realty
           Income Trust, Inc. FILED HEREWITH.

10.17      Right of First Refusal  Agreement  between Apple  Residential  Income
           Trust, Inc. and Cornerstone  Realty Income Trust, Inc.  (Incorporated
           herein by reference  to Exhibit 10.7 of Amendment  No. 2 to Form S-11
           of Apple Residential Income Trust, Inc. (File No. 333-10635) filed on
           November 14, 1996).

10.18      Common Share  Purchase  Option  Agreement  between Apple  Residential
           Income Trust,  Inc. and Cornerstone  Realty Income Trust,  Inc. FILED
           HEREWITH.

10.19      Assignment  Relating to Property  Management  Agreements  among Apple
           Resi- dential Income Trust, Inc., Apple Residential Management Group,
           Inc.,  Apple REIT Limited  Partnership and Cornerstone  Realty Income
           Trust, Inc. FILED HEREWITH.

10.20      Underwriting  Agreement dated April 18, 1997 among Cornerstone Realty
           Income Trust, Inc. and the several Underwriters named therein.  FILED
           HEREWITH.

10.21      Articles of Organization of CRIT-NC,  LLC  (Incorporated by reference
           to Exhibit 10.1 included in the Company's  Current Report on Form 8-K
           dated December 30, 1997; File No. 0-23954).

10.22      Operating  Agreement  of  CRIT-NC,  LLC dated as of  December 9, 1997
           (Incorporated  by reference to Exhibit 10.2 included in the Company's
           Current  Report  on Form  8-K  dated  December  30,  1997;  File  No.
           0-23954).

10.23      Form of Property  Management  Agreement  between  Apple REIT  Limited
           Part-  nership  and  Apple  Residential   Income  Trust,  Inc.  FILED
           HEREWITH.

10.24      First  Amendment to the  Cornerstone  Realty Income Trust,  Inc. 1992
           Incentive Plan. This is a management contract or compensatory plan or
           arrangement re- quired to be filed as an exhibit  pursuant to Item 14
           (c) of Form 10-K. FILED HEREWITH.

10.25      First Amendment to the 1992 Incentive Plan Nonstatutory  Stock Option
           Agree- ment between  Cornerstone Realty Income Trust, Inc. and Martin
           Zuckerbrod.  This is a management  contract or  compensatory  plan or
           arrangement  required  to be filed as an exhibit  pursuant to Item 14
           (c) of Form 10-K. FILED HEREWITH.

10.26      First Amendment to the 1992 Incentive Plan Nonstatutory  Stock Option
           Agree- ment between  Cornerstone  Realty Income Trust, Inc. and Harry
           S. Taubenfeld.  This is a management contract or compensatory plan or
           arrangement  required  to be filed as an exhibit  pursuant to Item 14
           (c) of Form 10-K. FILED HEREWITH.

  12       Statement  regarding  computation  of  Ratio  of  Earnings  to  Fixed
           Charges. FILED HEREWITH.

  13       1997  Annual   Report  (with  the   exception   of  the   information
           incorporated  by  reference  in Items 6, 7, and 14 of this  Form 10-K
           Report, no other  information  appearing in the 1997 Annual Report is
           to be  deemed  filed  as a part  of this  Form  10-K  Report).  FILED
           HEREWITH.

</TABLE>

                                       21

<PAGE>


<TABLE>
<CAPTION>

EXHIBIT
NUMBER                                 DESCRIPTION
------                                 -----------
<S>        <C>

 21        Subsidiaries of Cornerstone Realty Income Trust, Inc. FILED HEREWITH.

 23        Consent of Independent Auditors. FILED HEREWITH.

 27        Financial Data Schedule. FILED HEREWITH.

99.1       Pages 19 through 27 of the Current  Report on Form 8-K of Cornerstone
           Realty Income Trust, Inc.dated October 31, 1996. FILED HEREWITH.

99.2       Pages 5 through 18 of the Current  Report on Form 8-K of  Cornerstone
           Realty Income Trust, Inc. dated March 27, 1997. FILED HEREWITH.

99.3       Pages 4 through 12 of the Current  Report on Form 8-K of  Cornerstone
           Realty Income Trust, Inc. dated May 14 , 1997. FILED HEREWITH.

99.4       Pages 4 through 10 of the Current  Report on Form 8-K of  Cornerstone
           Realty Income Trust, Inc. dated August 28, 1997. FILED HEREWITH.

99.5       Pages 3 through 7 of the  Current  Report on Form 8-K of  Cornerstone
           Realty Income Trust, Inc. dated September 30, 1997. FILED HEREWITH.

99.6       Pages 4 through 15 of the Current  Report on Form 8-K of  Cornerstone
           Realty Income Trust, Inc. dated October 31, 1997. FILED HEREWITH.

</TABLE>


----------
(1) Incorporated  herein by reference to the Exhibit  referred to in parentheses
    which was filed as an Exhibit to the Company's  Post-Effective Amendment No.
    5 to its Registration  Statement on Form S-11 (File No. 33-51296),  as filed
    with the Securities and Exchange Commission on April 28, 1994.

(2) Incorporated  herein by reference to the Exhibit of the same number filed as
    an Exhibit to the  Company's  Report on Form 8-K dated  September  26,  1996
    (File No. 0-23954).

                                       22