Cornerstone Realty Acquires Seven North Carolina Apartment Communities For $125.8 Million.

Business Editors/Real Estate Writers

RICHMOND, Va.--(BUSINESS WIRE)--Oct. 3, 2001

Cornerstone Realty Income Trust, Inc. (NYSE:TCR) announced today that it has acquired from State Street Companies, Inc. and affiliates seven North Carolina apartment communities with 1,686 units for $125.8 million.

The transaction consists of the acquisition of 1,398 units in five existing communities in Charlotte (2), Raleigh, Greensboro and Wilmington, and the acquisition of 288 units in two communities currently under construction in Raleigh and Wilmington. The properties under construction are second phases of two of the five existing properties being acquired.

Total consideration includes the assumption of $93.6 million in secured financing and the issuance of $32.2 million of Operating Partnership (OP) Units. The OP Units have been priced at $11.95 and are exchangeable for shares of Cornerstone common stock on a one-for-one basis.

The debt portion of the transaction includes $46.4 million in fixed-rate (6.75%) financing secured by three of the five properties and maturing in 2011, $15.2 million in variable-rate financing (LIBOR plus 120 basis points) secured by one property, and $16 million in variable-rate financing (LIBOR plus 150 basis points) secured by one property. Upon completion of the development properties, the company will also be responsible for $16 million in variable-rate financing (LIBOR plus 135 basis points) secured by those properties.

Commenting on the transaction, Cornerstone Chairman and Chief Executive Officer Glade M. Knight said: "This is a very important acquisition for us as it increases our portfolio by nearly 9%, involves high-quality and new assets, and substantially enhances our presence in North Carolina, one of our major markets. We believe in the long-term growth potential for this market. In addition, we have raised a significant amount of equity capital from an astute, accredited investor at a price more in line with the true value of our common stock as opposed to its current trading price. We welcome State Street Companies as a valued shareholder."

The communities include:

Autumn Park Apartments --- Greensboro, N.C.

Completed in 2001, Autumn Park Apartments is a garden-style community consisting of 13 three-story buildings with 264 units on 22 acres. The average unit size is 983 square feet. The community is located northwest of downtown Greensboro in the most affluent submarket of that city. One-, two- and three-bedroom floor plans are available and units include a spacious main living area, fully equipped kitchens, wall-to-wall carpeting, walk-in closets, patio or balcony, washer/dryer connections and fireplaces in select units. The property's amenities include a large lodge-style clubhouse, outdoor swimming pool with cabana and barbecue area, covered pavilion, putting green, 21-seat movie theater, billiards room, fitness center, business center, 1,500-square-foot children's play area, laundry facility, multi-sport court, and 36 detached garages for lease by residents.

Legacy Park Apartments --- Charlotte, N.C.

Located north of downtown Charlotte near the intersection of W.T. Harris Boulevard and Mallard Creek Road, Legacy Park Apartments is a 288-unit, garden-style community completed in September of 2001. The community consists of 14 three-story buildings on 22 acres. The average unit size is 1,004 square feet. One-, two- and three-bedroom floor plans are available and units include a spacious main living area, fully equipped kitchens, wall-to-wall carpeting, walk-in closets, patio or balcony, washer/dryer connections and fireplaces in select units. The property's amenities include a large lodge-style clubhouse, outdoor swimming pool with cabana and barbecue area, covered pavilion, 27-seat movie theater, billiards room, fitness center, business center, 1,500-square-foot children's play area, laundry facility, multi-sport court, and 30 detached garages for resident lease.

Timber Crest Apartments --- Charlotte, N.C.

Built in 2000, Timber Crest Apartments is a 14-building, garden-style community with 282 units on 17 acres. The average unit size in the three-story buildings is 983 square feet. The community is located southeast of downtown Charlotte on Monroe Road and is adjacent to McAlpine Greenway Park. The property has one-, two- and three-bedroom floor plans, and units include fully equipped kitchens, wall-to-wall carpeting, walk-in closets, washer-dryer connections, and fireplaces in select units. Amenities in the community include a large clubhouse, outdoor swimming pool, pool cabana, fitness center, laundry facility, sauna and steam room, volleyball court, children's playground, barbecue area and nine-hole putting green.

Trinity Commons Apartments --- Raleigh, N.C.

Located five miles west of downtown Raleigh and within one mile of both I-40 and the I-440 beltway, the garden-style Trinity Commons Apartments contain 288 units in 14 three-story buildings on 17 acres. The average unit size is 962 square feet. The community, completed in 2000, features one-, two- and three-bedroom floor plans, and units include fully equipped kitchens, wall-to-wall carpeting, washer-dryer connections, patio or balcony, walk-in closets and fireplaces in select units. The property's amenities include spacious clubhouse, outdoor swimming pool with cabana, covered pavilion and barbecue area, lighted tennis courts, putting green, fitness center with separate activity room, laundry facility, sauna and steam room, and a children's playground. The second phase, currently under construction, will contain 174 units, a new clubhouse/leasing center and swimming pool. It is scheduled for completion in November of 2002.

St. Andrews Apartments --- Wilmington, N.C.

Located four miles south of downtown Wilmington and three miles from the Atlantic Ocean, St. Andrews Place Apartments is a garden-style community consisting of 13 three-story buildings with 276 units on 20 acres of land. The community was built in 1998, and the average unit size is 900 square feet. One-, two- and three-bedroom floor plans are available and units include a spacious main living area, fully equipped kitchens, wall-to-wall carpeting, walk-in closets, patio or balcony, washer/dryer connections and fireplaces in select units. The property's amenities include a spacious clubhouse, outdoor swimming pool with cabana, covered pavilion and barbecue area, putting green, fitness center with separate activity room, laundry facility, sauna and steam room, and a children's playground. The second phase, currently under construction, will contain 114 units and a new cabana and pool, and is scheduled for completion in April of 2002.

Certain statements contained herein constitute "forward-looking statements" within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the future results, performance or achievements of the company to be materially different from any forward-looking statements. Such factors include, among others, risks associated with future economic and rental conditions in specific markets, general competitive factors and the future market valuation of the company.

Cornerstone Realty Income Trust, Inc. (NYSE:TCR) is a fully integrated, self-managed and self-advised real estate company that has operated as a real estate investment trust (REIT) since 1993. The company focuses on the ownership and management of multifamily communities in select markets in Virginia, North Carolina, South Carolina, Georgia and Texas. Currently Cornerstone owns 80 apartment communities with 20,374 units. An additional 288 units are under construction. Cornerstone is headquartered in Richmond, Va. and its common stock trades on the New York Stock Exchange under the symbol TCR. For more information about Cornerstone, visit the company's web site at www.cornerstonereit.com.