GLADE M. KNIGHT   DEAR SHAREHOLDER   Springtime greetings from Apple Hospitality Five, Inc. I am delighted to share with you the operational performance that the Company’s 28 hotels reported for the first quarter of this year. Our upscale, extended-stay and select-service Marriott^®- and Hilton^®-branded hotels, with 3,717 guestrooms spread across 15 states, exceeded our expectations and we anticipate continued success throughout the year.   For the three-month period ending March 31, 2007, our hotels achieved an average daily rate (ADR) of $125, a seven percent increase over last year’s rate for the same period and the highest the Company has ever reported. This amount paired with stable occupancy levels year over year, drove our revenue per available room up to $93, a seven percent increase over the RevPAR for the same period last year. According to Smith Travel Research, the U.S. hotel industry as a whole experienced a slight decrease in occupancy levels during the first quarter due to an increase in the number of rooms available. However, according to the research company, overall demand for rooms was up during the first quarter and is expected to continue to strengthen throughout the year.

During the first quarter of 2007, we paid shareholders dividends of $0.23 per share, representing an 8.3 percent annual return on an $11 share price. Funds from operations (FFO) reached $13.3 million or $0.29 per share, a notable 12 percent increase over the same period last year.

We continue to increase the value of your investment through the diligent and cost effective asset management of our properties. As such, we plan to implement several Marriott and Hilton brand initiatives at our hotels this year that will reflect the latest in industry trends from the installation of flat-panel, high-definition televisions in our guestrooms to the implementation of new, upgraded hot breakfasts. Our property improvement projects are ongoing and reflect our commitment to customer satisfaction, which ultimately translates into our commitment to increasing the value of your investment.

Industry analysts agree that the outlook for 2007 is positive, marked by continued strong demand and increasing ADR. I look forward to sharing our continued progress with you. Thank you for investing with us!

Sincerely,

Glade M. Knight

Chairman and Chief Executive Officer

This quarterly report contains forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. Such statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance, or achievements of the company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include: the availability and terms of financing; changes in national, regional and local economies and business conditions; competitors within the hotel industry; and the ability of the company to implement its acquisition strategy and operating strategy and to manage planned growth.

In addition, the timing and amounts of distributions to common shareholders are within the discretion of the company’s board of directors. Although the company believes that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate; therefore, there can be no assurance that such statements included in this quarterly 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.

STATEMENTS OF OPERATIONS (Unaudited)

(In thousands except statistical data)	Three months ended March 31, 2007			Three months ended March 31, 2006
REVENUES
SUITE REVENUE	$	31,482		$	29,665
OTHER REVENUE		2,230			1,972
TOTAL REVENUES	$	33,712		$	31,637
EXPENSES
DIRECT OPERATING EXPENSE	$	7,439		$	7,246
OTHER HOTEL OPERATING EXPENSES		12,107			11,604
GENERAL AND ADMINISTRATIVE		795			657
DEPRECIATION		3,391			3,112
INTEREST, NET		97			170
TOTAL EXPENSES	$	23,829		$	22,789
NET INCOME	$	9,883		$	8,848
NET INCOME PER SHARE	$	0.22		$	0.20
FUNDS FROM OPERATIONS (A)
NET INCOME	$	9,883		$	8,848
DEPRECIATION OF REAL ESTATE OWNED		3,391			3,053
FUNDS FROM OPERATIONS	$	13,274		$	11,901
FFO PER SHARE	$	0.29		$	0.26
WEIGHTED-AVERAGE SHARES OUTSTANDING		45,120			45,097
OPERATING STATISTICS
OCCUPANCY		74	%		75	%
AVERAGE DAILY RATE	$	125		$	117
REVPAR	$	93		$	87
DIVIDENDS PER SHARE	$	0.23		$	0.22

BALANCE SHEET HIGHLIGHTS (Unaudited)

(In thousands )	March 31, 2007		December 31, 2006
ASSETS
INVESTMENT IN REAL ESTATE-NET	$	396,126	$	398,461
CASH AND CASH EQUIVALENTS		99		747
OTHER ASSETS		12,590		8,600
TOTAL ASSETS	$	408,815	$	407,808
LIABILITIES AND SHAREHOLDERS’ EQUITY
NOTES PAYABLE	$	7,866	$	4,497
OTHER LIABILITIES		1,277		3,295
TOTAL LIABILITIES		9,143		7,792
TOTAL SHAREHOLDERS’ EQUITY		399,672		400,016
TOTAL LIABILITIES & SHAREHOLDERS’ EQUITY	$	408,815	$	407,808

(a) Funds from operations (FFO) is defined as net income (computed in accordance with generally accepted accounting principles - GAAP) excluding gains and losses from sales of depreciable property, plus depreciation and amortization. The company considers FFO in evaluating property acquisitions and its operating performance and believes that FFO should be considered along with, but not as an alternative to, net income and cash flows as a measure of the company’s activities in accordance with GAAP. FFO is not necessarily indicative of cash available to fund cash needs.

The financial information furnished reflects all adjustments necessary for a fair presentation of financial position at March 31, 2007 and the results of operations for the interim period ended March 31, 2007. Such interim results are not necessarily indicative of the results that can be expected for the full year. The accompanying financial statements should be read in conjunction with the audited financial statements and related notes appearing in the Apple Hospitality Five, Inc. 2006 Annual Report.

APPLE HOSPITALITY FIVE

Portfolio of hotels

STATE / CITY	PROPERTY	UNITS
ARIZONA
Tucson	Courtyard	153
Tucson	Residence Inn	120
CALIFORNIA
Cypress	Residence Inn	155
COLORADO
Colorado Springs	Homewood Suites	127
CONNECTICUT
Danbury	SpringHill suites	106
FLORIDA
Tampa	Hilton Garden Inn	95
LOUISIANA
Baton Rouge	Homewood Suites	115
NEVADA
Las Vegas	Marriott Suites	278
NEW JERSEY
Cranbury	Residence Inn	108
Somerset	Residence Inn	108
Lebanon	Courtyard	125
NEW MEXICO
Albuquerque	Homewood Suites	151
NEW YORK
Hauppauge	Residence Inn	100
Westbury	Hilton Garden Inn	140
OHIO
Solon	Homewood Suites	86
TENNESSEE
Nashville	Residence Inn	168
TEXAS
Addison	Courtyard	176
Brownsville	Residence Inn	102
Irving	Residence Inn	100
Dallas	Residence Inn	139
Fort Worth	Courtyard	92
Harlingen	Courtyard	114
Houston	Courtyard	153
Houston	Residence Inn	120
Houston	Courtyard	100
Houston	Residence Inn	120
VIRGINIA
Vienna	Courtyard	206
WASHINGTON
South Federal Way	Courtyard	160