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CORNERSTONE REALTY FUND, LLC

SUPPLEMENT NO. 4
DATED MARCH 10, 2003
TO THE PROSPECTUS DATED MAY 7, 2002
OF CORNERSTONE REALTY FUND, LLC

        This Supplement No. 4 supplements, modifies or supersedes certain information contained in the prospectus of Cornerstone Realty Fund, LLC, dated May 7, 2002, and must be read in conjunction with our prospectus, and Supplement Nos. 2 and 3 dated December 13, 2002 and January 7, 2003 respectively.

        The purpose of this Supplement No. 4 is to:

•

update the status of the offering;



•

include audited and pro forma financial statements as described in the "Financial Statements" section of this Supplement.

STATUS OF THE OFFERING

        The offering of units in Cornerstone Realty Fund, LLC pursuant to the prospectus commenced in August 2001. As of December 5, 2001, the dealer manager sold the minimum number of securities offered (6,000 units). As of March 7, 2003, the fund has raised $9,713,000 in gross offering proceeds (19,426 units). The offering will end on August 6, 2003.

FINANCIAL STATEMENTS

The following financial statement relating to the Sky Harbor Business Park is included in this Supplement:

3170-3190 MacArthur Boulevard
	Report of Independent Auditors	F-1
	Statement of Revenue and Certain Expenses for the year ended December 31, 2002	F-2
	Notes to Statement of Revenue and Certain Expenses	F-3

The following unaudited pro forma financial statements relating to the Sky Harbor Business Park are included in this Supplement.

Cornerstone Realty Fund, LLC
	Summary of Pro Forma Financial Information	F-4
	Pro Forma Condensed Statement of Operations for the Year
	Ended December 31, 2001 (unaudited)	F-5
	Pro Forma Condensed Statement of Operations for the Nine Months
	Ended September 30, 2002 (unaudited)	F-6

Report of Independent Auditors

To the Members
Cornerstone Realty Fund, LLC

We have audited the accompanying statement of revenue and certain expenses of 3170-3190 MacArthur Boulevard for the year ended December 31, 2002. This statement of revenue and certain expenses is the responsibility of the management of Sky Harbor Business Park. Our responsibility is to express an opinion on the statement of revenue and certain expenses based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the statement of revenue and certain expenses is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

The accompanying statement of revenue and certain expenses was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission. Certain expenses (described in Note 1) that would not be comparable to those resulting from the proposed future operations of the property are excluded and the statement is not intended to be a complete presentation of the revenue and expenses of the property.

In our opinion, the statement of revenue and certain expenses of 3170-3190 MacArthur Boulevard presents fairly, in all material respects, the revenue and certain expenses, as defined above, of 3170-3190 MacArthur Boulevard for the year ended December 31, 2002, in conformity with accounting principles generally accepted in the United States.

	/s/  ERNST & YOUNG LLP
Irvine, California February 14, 2003

F-1

3170-3190 MACARTHUR BOULEVARD

STATEMENT OF REVENUE AND CERTAIN EXPENSES

For the Year Ended December 31, 2002

Revenue
	Rental revenue	$	282,233
	Tenant reimbursements		119,445
	Other		4,167
Total revenue			405,845
Certain Expenses
	Property operating and maintenance		50,391
	Property taxes		104,654
	Insurance		1,668
Total certain expenses			156,713
Excess of revenue over certain expenses		$	249,132

See accompanying notes to statement of revenue and certain expenses.

F-2

3170-3190 MACARTHUR BOULEVARD

NOTES TO STATEMENT OF REVENUE AND CERTAIN EXPENSES

DECEMBER 31, 2002

1. Organization and Summary of Significant Accounting Policies

Organization

        The accompanying statement of revenue and certain expenses includes the operations of 3170-3190 MacArthur Boulevard, otherwise known as Sky Harbor Business Park (the "Property") located in Northbrook, Illinois, which was acquired by Cornerstone Realty Fund, LLC (the "Fund"), from a nonaffiliated third party. The Property was acquired for $2,553,996 and has 41,422 leasable square feet.

Basis of Presentation

        The accompanying statement has been prepared to comply with rules and regulations of the Securities and Exchange Commission.

        The accompanying statement is not representative of the actual operations for the period presented, as certain expenses that may not be comparable to the expenses expected to be incurred by the Company in the future operations of the Property have been excluded. Excluded expenses consist of interest, depreciation and amortization not directly comparable to the future operation of the Property.

Revenue Recognition

        Rental revenue is recognized on a straight-line basis over the terms of the related leases.

Use of Estimates

        The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from the estimates in the near term.

2. Industrial Property

        The future minimum lease payments to be received under existing operating leases as of December 31, 2002, are as follows:

2003	$	256,713
2004		123,346
2005		46,692
2006		34,377
2007		8,730
	$	469,858

        The above future minimum lease payments do not include specified payments for tenant reimbursements of operating expenses.

        Industrial space in the Property is generally leased to tenants under lease terms which provide for the tenants to pay increases in operating expenses in excess of specified amounts.

F-3

CORNERSTONE REALTY FUND, LLC

UNAUDITED PRO FORMA FINANCIAL INFORMATION

        The following Pro Forma Condensed Statements of Operations of the Fund for the year ended December 31, 2001 and for the nine months ended September 30, 2002 have been prepared as if the acquisition of 3170 - 3190 MacArthur Boulevard ("Sky Harbor Business Park") had occurred as of January 1, 2001.

        Such Pro Forma Financial Information is based in part upon (i) the Financial Statements of the Fund for the year ended December 31, 2001 included in the Fund's Annual Report on Form 10-K for the year ended December 31, 2001; (ii) the Financial Statements of the Fund for the nine months ended September 30, 2002 included in the Fund's Quarterly Report on Form 10-Q for the quarter ended September 30, 2002; and (iii) the Historical Summary of 3170 - 3190 MacArthur Boulevard for the year ended December 31, 2002 filed with the Fund's Current Report on Form 8-K/A, dated March 7, 2003.

        The Pro Forma Financial Information is presented for information purposes only and is not necessarily indicative of the financial position or results of operations of the Fund that would have occurred if the acquisition of Sky Harbor Business Park had been completed on the date indicated, nor does it purport to be indicative of future financial position or results of operations. In the opinion of the Fund's managing member, all material adjustments necessary to reflect the effect of this transaction have been made.

F-4

CORNERSTONE REALTY FUND, LLC

PRO FORMA CONDENSED STATEMENT OF OPERATIONS

For the Year Ended December 31, 2001
(Unaudited)

		Cornerstone Realty Fund, LLC Historical (A)			Recent Transactions (B)		Cornerstone Realty Fund, LLC Pro Forma
Revenues
	Rental revenue	$	—		$	292,485	$	292,485
	Tenant reimbursements		—			73,032		73,032
	Interest, dividends and other		8,319			9,242		17,561
			8,319			374,759		383,078
Expenses
	Property operating and maintenance		—			52,001		52,001
	Property taxes		—			78,390		78,390
	General and administrative expenses		125,049			—		125,049
	Interest expense on advances payable to managing member		68,687			—		68,687
	Depreciation		663			54,747		55,410
			194,399			185,138		379,537
Net (loss) income		$	(186,080	)	$	189,621	$	3,541
Net (loss) income allocable to managing member		$	(18,608	)			$	354
Net (loss) income allocable to unitholders		$	(167,472	)			$	3,187
Per share amounts:
Basic and diluted (loss) income allocable to unitholders		$	(27.37	)			$	0.52
Basic and diluted weighted average units outstanding			6,119					6,119

(A)

Represents the historical results of operations of the Fund for the year ended December 31, 2001. Certain reclassifications have been made to the historical statement of operations of the Fund to conform to the pro forma financial information presentation.



(B)

Represents adjustment for the acquisition of the Sky Harbor Business Park, based on historical operating results. Depreciation is based on the allocation of the purchase price, with buildings depreciated using the straight-line method over a 39-year period.

F-5

CORNERSTONE REALTY FUND, LLC

PRO FORMA CONDENSED STATEMENT OF OPERATIONS

For the Nine Months Ended September 30, 2002
(Unaudited)

		Cornerstone Realty Fund, LLC Historical (A)			Recent Transactions (B)		Cornerstone Realty Fund, LLC Pro Forma
Revenues
	Rental revenue	$	4,353		$	208,807	$	213,160
	Tenant reimbursements		—			66,312		66,312
	Interest, dividends and other		45,022			3,028		48,050
			49,375			278,147		327,522
Expenses
	Property operating and maintenance		—			33,292		33,292
	Property taxes		391			78,490		78,881
	General and administrative expenses		132,454			—		132,454
	Interest expense on advances payable to managing member		32,192			—		32,192
	Depreciation		426			41,060		41,486
			165,463			152,842		318,305
Net (loss) income		$	(116,088	)	$	125,305	$	9,217
Net (loss) income allocable to managing member		$	(11,609	)			$	922
Net (loss) income allocable to unitholders		$	(104,479	)			$	8,295
Per share amounts:
Basic and diluted (loss) income allocable to unitholders		$	(10.32	)			$	0.82
Basic and diluted weighted average units outstanding			10,125					10,125

(A)

Represents the historical results of operations of the Fund for the nine months ended September 30, 2002. Certain reclassifications have been made to the historical statement of operations of the Fund to conform to the pro forma financial information presentation.

(B)

Represents adjustment for the acquisition of the Sky Harbor Business Park, based on historical operating results. Depreciation is based on the allocation of the purchase price, with buildings depreciated using the straight-line method over a 39-year period.

F-6

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STATUS OF THE OFFERING
FINANCIAL STATEMENTS
Report of Independent Auditors
3170-3190 MACARTHUR BOULEVARD STATEMENT OF REVENUE AND CERTAIN EXPENSES For the Year Ended December 31, 2002
3170-3190 MACARTHUR BOULEVARD NOTES TO STATEMENT OF REVENUE AND CERTAIN EXPENSES DECEMBER 31, 2002
CORNERSTONE REALTY FUND, LLC UNAUDITED PRO FORMA FINANCIAL INFORMATION
CORNERSTONE REALTY FUND, LLC PRO FORMA CONDENSED STATEMENT OF OPERATIONS For the Year Ended December 31, 2001 (Unaudited)
CORNERSTONE REALTY FUND, LLC PRO FORMA CONDENSED STATEMENT OF OPERATIONS For the Nine Months Ended September 30, 2002 (Unaudited)