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                                               Filed Pursuant to Rule 424(b)(7)
                                               Registration No. 33-80169

PRICING SUPPLEMENT NO. 3, dated September 13, 1996 
(To Prospectus dated December 27, 1995 and 
Prospectus Supplement dated January 3, 1996)

                                   $75,000,000
                      Associated Estates Realty Corporation
                           Medium-Term Notes Series II
                                Fixed Rate Notes
                  Due from 9 Months or More From Date of Issue

Principal Amount:                   $10,000,000

Issue Price:                        100%

Original Issue Date:                September 18, 1996

Maturity Date:                      September 18, 2001

Interest Rate:                      7.33%

Agent's Commission:                 .50%

Agent's Capacity:                   Principal

Net Proceeds to Company:            $9,950,000

Agent:                              Morgan Stanley & Co. Incorporated

This Pricing Supplement supplements the Prospectus and Prospectus Supplement
with respect to both (1) the initial offering of Medium-Term Notes Series III
and (2) market-making transactions in Medium-Term Notes Series III by Morgan
Stanley & Co. Incorporated.



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