Filed Pursuant to Rule 424(b)(3)

Registration No. 333-112169

SUPPLEMENT NO. 16 DATED NOVEMBER 14, 2005

TO PROSPECTUS DATED APRIL 23, 2004

APPLE REIT SIX, INC.

The following information supplements the prospectus of Apple REIT Six, Inc. dated April 23, 2004 and is part of the prospectus. This Supplement updates the information presented in the prospectus and in prior Supplements. Prospective investors should carefully review the prospectus, Supplement No. 7 (which was cumulative and replaced all prior Supplements), Supplement No. 8, Supplement No. 14 (which was cumulative and replaced Supplements No. 9 through 13), Supplement No. 15 and this Supplement No. 16.

TABLE OF CONTENTS

Status of the Offering	S-  3
Recent Developments	S-  4
Acquisitions and Related Matters	S-  5
Summary of Contracts	S-  6
Our Properties	S-  7
Selected Financial Data	S-  9
Management’s Discussion and Analysis of Financial Condition and Results of Operations	S-10
Index to Financial Statements	F-  1

The prospectus, and each supplement, contains forward-looking statements. These forward-looking statements may involve our plans and objectives for future operations, including future growth and availability of funds. These forward-looking statements are based on current expectations, which are subject to numerous risks and uncertainties. Assumptions relating to these statements involve judgments with respect to, among other things, the continuation of our offering of units, future economic, competitive and market conditions and future business decisions, together with local, national and international events (including, without limitation, acts of terrorism or war, or catastrophic natural disasters, and their direct and indirect effects on travel and the economy). All of these matters are difficult or impossible to predict accurately and many of them are beyond our control. Although we believe the assumptions relating to the forward-looking statements, and the statements themselves, are reasonable, any of the assumptions could be inaccurate and, therefore, there can be no assurance that these forward-looking statements will prove to be accurate. In light of the significant uncertainties inherent in these forward-looking statements, the inclusion of this information should not be regarded as a representation by us or any other person that our objectives and plans, which we consider to be reasonable, will be achieved.

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“Courtyard by Marriot,” “Fairfield Inn,” “TownePlace Suites,” “Springhill Suites” and “Residence Inn” are each a registered trademark of Marriott International, Inc. or one of its affiliates. All references below to “Marriott” mean Marriott International, Inc. and all of its affiliates and subsidiaries, and their respective officers, directors, agents, employees, accountants and attorneys. Marriott is not responsible for the content of this prospectus supplement, whether relating to hotel information, operating information, financial information, Marriott’s relationship with Apple REIT Six, Inc., or otherwise. Marriott is not involved in any way, whether as an “issuer” or “underwriter” or otherwise, in the offering by Apple REIT Six, Inc. and receives no proceeds from the offering. Marriott has not expressed any approval or disapproval regarding this prospectus supplement or the offering related to this prospectus supplement, and the grant by Marriott of any franchise or other rights to Apple REIT Six, Inc. shall not be construed as any expression of approval or disapproval. Marriott has not assumed, and shall not have, any liability in connection with this prospectus supplement or the offering related to this prospectus supplement.

“Hampton Inn & Suites,” “Homewood Suites,” and “Hilton Garden Inn” are each a registered trademark of Hilton Hotels Corporation or one of its affiliates. All references below to “Hilton” mean Hilton Hotels Corporation and all of its affiliates and subsidiaries, and their respective officers, directors, agents, employees, accountants and attorneys. Hilton is not responsible for the content of this prospectus supplement, whether relating to hotel information, operating information, financial information, Hilton’s relationship with Apple REIT Six, Inc., or otherwise. Hilton is not involved in any way, whether as an “issuer” or “underwriter” or otherwise, in the offering by Apple REIT Six, Inc. and receives no proceeds from the offering. Hilton has not expressed any approval or disapproval regarding this prospectus supplement or the offering related to this prospectus supplement, and the grant by Hilton of any franchise or other rights to Apple REIT Six, Inc. shall not be construed as any expression of approval or disapproval. Hilton has not assumed, and shall not have, any liability in connection with this prospectus supplement or the offering related to this prospectus supplement.

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STATUS OF THE OFFERING

We completed the minimum offering of units (with each unit consisting of one Common Share and one Series A Preferred Share) at $10.50 per unit on April 29, 2004. We are continuing the offering at $11 per unit in accordance with the prospectus.

As of October 28, 2005, we had closed on the following sales of units in the offering:

Price Per Unit	Number of Units Sold	Gross Proceeds		Proceeds Net of Selling Commissions and Marketing Expense Allowance
$10.50	4,761,905	$	50,000,000	$	45,000,000
$11.00	68,727,095		755,998,051		680,398,257
Total	73,489,000	$	805,998,051	$	725,398,257

RECENT DEVELOPMENTS

On October 20, 2005, one of our wholly-owned subsidiaries closed on the purchase of a hotel in Farmington, Connecticut for a gross purchase price of $16,330,000.

Effective on November 8, 2005, one of our wholly-owned subsidiaries closed on the purchase of an entity that holds a hotel in Orange Park, Florida for a gross purchase price of $7,220,699. This transaction includes our assumption of the indemnitor’s obligation for the existing loan secured by the hotel.

The total gross purchase price for these two additional hotels was funded by our ongoing offering of units. We also used the proceeds of our ongoing offering to pay $471,014, representing 2% of the total gross purchase price for the recent purchases, as a commission to Apple Six Realty Group, Inc. This entity is owned by Glade M. Knight, who is one of our directors and our Chief Executive Officer.

On October 25, 2005, one of our wholly-owned subsidiaries entered into a single purchase contract for the potential purchase of five hotels. There can be no assurance that a purchase of any of these hotels will be completed. If all of the hotels are purchased, the aggregate gross purchase price for these five hotels will be $85,750,000.

On November 2, 2005, one of our wholly-owned subsidiaries entered into a single purchase contract for the potential purchase of six hotels. There can be no assurance that a purchase of any of these hotels will be completed. If all of the hotels are purchased, the aggregate gross purchase price for these six hotels will be $104,000,000.

S-3

As a result of our recent purchases, we currently own a total of 51 hotels, which are located in the states indicated in the map below:

ACQUISITIONS AND RELATED MATTERS

Overview of Recent Purchases

Our recent purchases, through our subsidiaries, have resulted in our indirect ownership of two additional hotels. Each hotel has been leased to another one of our wholly-owned subsidiaries, as the lessee, under a separate hotel lease agreement. For simplicity, the applicable lessee will be referred to below as the “lessee.”

Each hotel is managed under a separate management agreement between the lessee and the applicable manager. For simplicity, the manager will be referred to below as the “manager.”

The hotel lease agreements and management agreements are among the contracts described in the next section. The table below specifies the franchises, hotel owners, lessees and managers for our recent purchases (with additional hotel information provided in a following section):

(Table Begins on Next Page)

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Hotel	Franchise (a)	Hotel Owner/Lessor	Lessee	Manager
Farmington, Connecticut	Courtyard by Marriott	Apple Six Hospitality Ownership, Inc.	Apple Six Hospitality Management, Inc.	White Lodging Services Corporation
Orange Park, Florida	Fairfield Inn	Sunbelt FOF, L.L.C.	Apple Six Hospitality Management, Inc.	LBAM-Investor Group, L.L.C. (b)

Notes for Table:

(a) All brand and trade names, logos or trademarks contained, or referred to, in this prospectus supplement are the properties of their respective owners. These references shall not in any way be construed as participation by, or endorsement of, our offering by any of our franchisors or managers.

(b) This hotel was purchased from an affiliate of the indicated manager.

We have no material relationship or affiliation with the sellers or the managers, except for the relationship resulting from our purchases, the management agreements, the pending purchase contracts and any related documents.

Loan Assumption

The entity that holds the hotel in Orange Park, Florida is secured by a non-recourse loan. As a result of this non-recourse structure, the lender generally must rely on the property, rather than the borrower, as the lender’s source of repayment in any collection action. There are exceptions to the non-recourse structure in certain situations, such as misappropriation of funds and environmental liabilities. In these situations, the lender is permitted to seek recourse for losses from the indemnitor of the loan. We have assumed the potential liability for these non-recourse exceptions as the new indemnitor for the loans.

The aggregate outstanding principal balance for this non-recourse loan as of November 1, 2005 was approximately $3,196,789. The monthly loan payment is $5,355, representing amortized principal and interest. The loan has an annual interest rate of 8.52% and has a maturity date of February 11, 2011.

Contract for Five Hotels

We entered into a contract that may result in our ownership of five hotels. The aggregate gross purchase price would be approximately $85,750,000. The sellers are affiliated with each other, but are not related to us.

The five hotels contain a total of 711 rooms/suites. Four of the hotels are in California and one is in Washington. We expect that all five of the hotels would have franchises with Hilton Hotels Corporation, or one of its affiliates, in each case as a Hilton Garden Inn.

Contract for Six Hotels

We entered into a contract that may result in our ownership of six hotels. The aggregate gross purchase price would be approximately $104,000,000. The sellers are affiliated with each other, but are not related to us.

The six hotels contain a total of 951 rooms/suites. Four of the hotels are in Oregon and two are in Washington. We expect that all six of the hotels would have franchises with Marriott International, Inc., or one of its affiliates. These expected franchises include Courtyard by Marriott, Residence Inn and TownePlace Suites.

The purchase contract also contemplates that we would assume an existing loan secured by one of the hotels. The aggregate original principal balance for this loan was $6,800,000 and the current principal balance is approximately $6,710,428. The loan has an annual interest rate of 6.4% and has a maturity date of December 11, 2014.

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SUMMARY OF CONTRACTS

Hotel Lease Agreements

Each of the two recently purchased hotels is covered by a separate hotel lease agreement between our wholly-owned purchasing subsidiary and the applicable lessee (another one of our wholly-owned subsidiaries, as specified in the previous section). Each lease provides for an initial term of 10 years. Each lessee has the option to extend its lease term for two additional five-year periods, provided it is not in default at the end of the prior term or at the time the option is exercised.

Each lease provides for annual base rent and percentage rent. The annual base rent is payable in advance in equal monthly installments and will be adjusted each year in proportion to the Consumer Price Index (based on the U.S. City Average). The annual base rents and lease commencement dates for the hotels are shown below:

Hotel	Franchise	Annual Base Rent		Date of Lease Commencement
Farmington, Connecticut	Courtyard by Marriott	$	1,329,733	October 20, 2005
Orange Park, Florida	Fairfield Inn	$	677,130	November 1, 2005

The annual percentage rent depends on a formula that compares fixed “suite revenue breakpoints” with a portion of “suite revenue,” which is equal to gross revenue from guest rentals less sales and room taxes and credit card fees. The suite revenue breakpoints will be adjusted each year in proportion to the Consumer Price Index (based on the U.S. City Average). Specifically, the annual percentage rent is equal to the sum of (a) 17% of all suite revenue for the year, up to the applicable suite revenue breakpoint; plus (b) 55% of the suite revenue for the year in excess of the applicable suite revenue breakpoint, as reduced by base rent paid for the year.

Management Agreements

Each of the recently purchased hotels is being managed by the manager under separate management agreements between the manager and the applicable lessee (which is one of our wholly-owned subsidiaries, as specified in the previous section). The manager is responsible for managing and supervising the daily operations of the hotels and for collecting revenues for the benefit of the applicable lessee. The fees and other terms of these agreements are the result of commercial negotiations between otherwise unrelated parties, and we believe that such fees and terms are appropriate for the hotels and the markets in which they operate.

Franchise Agreements

With respect to the two recently purchased hotels, there is a relicensing franchise agreement between our wholly-owned subsidiary that is serving as the lessee of the hotel and Marriott International, Inc., or one of its affiliates. In addition, we have caused our wholly-owned subsidiary, Apple Six Hospitality, Inc., to provide a separate guaranty of the payment and performance of the lessee under the relicensing franchise agreement.

Owner Agreements

With respect to the two recently purchased hotels, there is a separate owner agreement between the applicable franchisor, owner and lessee. The owner agreements generally provide that the owner (our wholly-owned subsidiary) will (a) be bound by certain restrictions in the related relicensing franchise agreement for the hotel; and (b) perform the obligations of the lessee (which is another one of our wholly-owned subsidiaries) in the event of its default under such agreement.

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OUR PROPERTIES

Our hotels, including our recently purchased hotels, offer guest rooms and suites, together with related amenities, that are consistent with their operation as extended-stay, select service or full service hotels. The hotels are located in developed or developing areas and in competitive markets. We believe the hotels are well-positioned to compete in their respective markets based on location, amenities, rate structure and franchise affiliation. In the opinion of management, the hotels are adequately covered by insurance. The following tables present further information about the recently purchased hotels.

Table 1. General Information

Hotel	Franchise	Number of Rooms/ Suites	Gross Purchase Price		Average Daily Rate (Price) per Room/ Suite (a)		Federal Income Tax Basis for Depreciable Real Property Component of Hotel (b)
Farmington, Connecticut	Courtyard by Marriott	119	$	16,330,000	(c	)	$	14,633,300
Orange Park, Florida	Fairfield Inn	83		7,220,699	79 - 89			6,649,227
	Total	202	$	23,550,699			$	21,282,527

Notes for Table 1:

(a) The amounts shown are subject to change, and exclude discounts that may be offered to corporate and frequent customers.

(b) The depreciable life is 39 years (or less, as may be permitted by federal tax laws) using the straight-line method. The modified accelerated cost recovery system will be used for the personal property component of each hotel.

(c) Hotel recently completed construction and final room rates are currently being determined.

Table 2. Operating Information (a)

PART A

		Avg. Daily Occupancy Rates (%)
Hotel	Franchise	2001			2002			2003			2004			2005
Farmington, Connecticut	Courtyard by Marriott		—			—			—			—			—
Orange Park, Florida	Fairfield Inn		85	%		83	%		82	%		83	%		90	%
PART B
		Revenue per Available Room/Suite ($)
Hotel	Franchise	2001			2002			2003			2004			2005
Farmington, Connecticut	Courtyard by Marriott		—			—			—			—			—
Orange Park, Florida	Fairfield Inn	$	54		$	56		$	56		$	60		$	70

Notes for Table 2:

(a) Operating information is presented for the last five years. Results of operations for those periods before the effective date of our ownership were provided by the applicable seller or manager for such periods. The hotel in Farmington, Connecticut is newly constructed.

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Table 3. Tax and Related Information

Hotel	Franchise	Tax Year (a)	Real Property Tax Rate (b)		Real Property Tax
Farmington, Connecticut	Courtyard by Marriott	2004	36.4300	%	86,116
Orange Park, Florida	Fairfield Inn	2004	22.7986	%	65,379

Notes for Table 3:

(a) Represents calendar year.

(b) Property tax rate is an aggregate figure for county, city and other local taxing authorities (to the extent applicable).

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Apple REIT Six, Inc.

SELECTED FINANCIAL DATA

(in thousands except per share and statistical data)	Nine Months Ended September 30, 2005			For the period January 20, 2004 (initial capitalization) through December 31, 2004
Revenues:
Room revenue	$	57,482		$	12,092
Other revenue		6,270			2,343
Total revenue		63,752			14,435
Expenses:
Hotel expenses		36,319			9,750
Taxes, insurance and other		3,283			663
General and administrative		2,308			1,210
Depreciation		6,659			1,881
Interest and other expenses, net		(2,098	)		(328	)
Total expenses		46,471			13,176
Net income	$	17,281		$	1,259
Per Share
Earnings per common share	$	0.34		$	0.10
Distributions paid to common shareholders	$	0.66		$	0.55
Weighted-average common shares outstanding—basic and diluted		50,446			12,300
Balance Sheet Data
Cash and cash equivalents	$	141,242		$	142,790
Investment in hotels, net	$	551,266		$	184,084
Total assets	$	709,955		$	332,259
Notes payable-secured	$	43,875		$	6,557
Shareholders’ equity	$	662,292		$	325,099
Other Data
Cash flow from:
Operating activities	$	18,524		$	2,904
Investing activities	$	(339,238	)	$	(183,840	)
Financing activities	$	319,166		$	323,702
Number of hotels owned at end of period		48			11
Funds From Operations Calculation
Net income	$	17,281		$	1,259
Depreciation		6,659			1,881
Funds from operations (a)	$	23,940		$	3,140
FFO per share	$	0.47		$	0.26

(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 and is not necessarily indicative of cash available to fund cash needs.

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MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(for the period ended September 30, 2005)

Overview

Apple REIT Six, Inc. (together with its wholly owned subsidiaries, the “Company”) is a Virginia corporation that is operated and has elected to be taxed as a real estate investment trust (“REIT”). The Company was formed to invest in hotels, residential apartment communities and other selected real estate in selected metropolitan areas in the United States. Initial capitalization occurred on January 20, 2004, and the first hotel was acquired on May 28, 2004. The consolidated financial statements include the accounts of the Company and its direct or indirect subsidiaries. All intercompany accounts and transactions have been eliminated. The performance of the Company’s hotels can be influenced by many factors, including local hotel competition, local and national economic conditions and the performance of the individual managers assigned to its hotels. In evaluating financial condition and operating performance, the most important items on which the Company focuses are revenue measurements, such as average occupancy, average daily rate and revenue per available room, and expenses, such as hotel operating expenses, general and administrative and other expenses described below.

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Hotels Owned

As of September 30, 2005, the Company owned a total of 48 hotels, with a total of 5,239 rooms. The following table summarizes the location, brand, manager, date acquired, gross purchase price and number of rooms for each hotel. All dollar amounts are in thousands.

Location	Brand	Manager	Date Acquired	Rooms	Gross Purchase Price
Ft. Worth, TX	Springhill Suites	Marriott	05/28/04	145	$	13,340
Myrtle Beach, SC	Courtyard	Marriott	06/08/04	135		9,200
Redmond, WA	Marriott	Marriott	07/07/04	262		64,000
Anchorage, AK	Hilton Garden Inn	Stonebridge	10/12/04	125		18,900
Anchorage, AK	Homewood Suites	Stonebridge	10/12/04	122		13,200
Arcadia, CA	Hilton Garden Inn	Stonebridge	10/12/04	124		12,000
Arcadia, CA	Springhill Suites	Stonebridge	10/12/04	86		8,100
Glendale, CO	Hampton Inn & Suites	Stonebridge	10/12/04	133		14,700
Lakewood, CO	Hampton Inn	Stonebridge	10/12/04	170		10,600
Lake Forest, CA	Hilton Garden Inn	Stonebridge	10/12/04	103		11,400
Phoenix, AZ	Hampton Inn	Stonebridge	10/12/04	99		6,700
Anchorage, AK	Hampton Inn	Stonebridge	03/14/05	101		11,500
Bakersfield, CA	Hilton Garden Inn	Hilton	03/18/05	120		11,500
Tallahassee, FL	Hilton Garden Inn	Hilton	03/18/05	99		10,850
Lake Mary, FL	Courtyard	Stonebridge	03/18/05	86		6,000
Foothill Ranch, CA	Hampton Inn	Stonebridge	04/21/05	84		7,400
Ft. Worth, TX	Residence Inn	Western	05/06/05	150		17,000
Boulder, CO	Marriott	WLS	05/09/05	157		30,000
Ft. Worth, TX	Homewood Suites	Hilton	05/24/05	137		9,097
Nashville, TN	Homewood Suites	Hilton	05/24/05	121		8,103
Albany, GA	Courtyard	LBA	06/24/05	84		8,597
Lakeland, FL	Residence Inn	LBA	06/24/05	78		9,886
Huntsville, AL	Residence Inn	LBA	06/24/05	78		8,288
Dothan, AL	Hampton Inn & Suites	LBA	06/24/05	85		8,673
Columbus, GA	Residence Inn	LBA	06/24/05	78		7,888
Las Colinas, TX	TownePlace Suites	Western	06/30/05	136		7,178
Arlington, TX	TownePlace Suites	Western	06/30/05	95		7,148
Arlington, TX	SpringHill Suites	Western	06/30/05	122		7,486
Tempe, AZ	TownePlace Suites	Western	06/30/05	119		8,128
Tempe, AZ	SpringHill Suites	Western	06/30/05	121		8,060
Wallingford, CT	Homewood Suites	WLS	07/08/05	104		12,780
McAllen, TX	Hilton Garden Inn	Western	07/19/05	104		9,000
Pensacola, FL	Hampton Inn & Suites	LBA	07/21/05	85		9,279
Rocky Hill, CT	Residence Inn	WLS	08/01/05	96		12,070
Dothan, AL	Courtyard	LBA	08/11/05	78		8,016
Somerset, NJ	Homewood Suites	WLS	08/17/05	123		17,750
Birmingham, AL	Fairfield Inn	LBA	08/25/05	63		2,176
Tuscaloosa, AL	Courtyard	LBA	08/25/05	78		7,551
Tuscaloosa, AL	Fairfield Inn	LBA	08/25/05	63		3,982
Pensacola, FL	Courtyard	LBA	08/25/05	90		11,369
Pensacola, FL	Fairfield Inn	LBA	08/25/05	63		4,858
Pittsburgh, PA	Residence Inn	WLS	09/02/05	156		11,000
Laredo, TX	Residence Inn	Western	09/12/05	109		11,445
Mt. Olive, NJ	Residence Inn	WLS	09/15/05	123		12,070
Saratoga Springs, NY	Hilton Garden Inn	WLS	09/29/05	112		17,750
Huntsville, AL	Fairfield Inn	LBA	09/30/05	79		4,954
Savannah, GA	SpringHill Suites	LBA	09/30/05	79		5,407
Montgomery, AL	SpringHill Suites	LBA	09/30/05	79		6,835
Total				5,239	$	543,214

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Substantially all of the purchases were funded with proceeds of the Company’s ongoing best-efforts offering of Units. The Company leased all of its hotels to wholly-owned taxable REIT subsidiaries (collectively, the “lessee”) under master hotel lease agreements. The Company also used the proceeds of its ongoing offering to pay 2% of the gross purchase price for these hotels, which equals approximately $10.9 million, as a commission to Apple Six Realty Group, Inc. (“ASRG”). ASRG is owned by the Company’s Chairman, Chief Executive Officer and president, Glade M. Knight.

No goodwill or intangible assets were recorded in connection with any of the acquisitions.

Results of Operations

During the period from January 20, 2004 to May 27, 2004, the Company owned no properties, had no revenue and was engaged in initial capital-raising activities. Operations commenced on May 28, 2004, when the company purchased its first hotel in Ft. Worth, Texas. Due to the fact the Company only owned a total of three hotels as of September 30, 2004, a comparison to the third quarter of 2004 would not be meaningful.

In general, performance at the Company’s hotels have met expected financial results. Hotel performance is impacted by many factors including the economic conditions in the United States, as well as each locality. As a result, there can be no assurance that the Company’s operating performance will continue to meet expectations in the future.

Revenues

The Company’s principal source of revenue is hotel room revenue and other related revenue. For the three and nine months ended September 30, 2005, the Company had total revenues of $32.3 and $63.8 million, respectively. For these periods, the hotels achieved average occupancy of 76.0% and 74.3%, an average daily rate (“ADR”) of $102 and $104 and revenue per available room (“RevPAR”) of $78 and $78, respectively. ADR is calculated as room revenue divided by the number of rooms sold, and RevPAR is calculated as occupancy multiplied by ADR. RevPAR is expected to increase as newly opened properties gain market share.

For the three and nine months ended September 30, 2005, the Company had interest income of $1.3 and $3.0 million, respectively. Interest income represents earnings on excess cash invested in short term money market instruments.

Expenses

For the three and nine months ended September 30, 2005, hotel operating expenses totaled $18.6 and $36.3 million or 58% and 57% of total revenue, respectively. This percentage is expected to decrease as revenues for newly opened properties increase.

Taxes, insurance, and other expenses for the three and nine months ended September 30, 2005, were $1.8 and $3.3 million or 5% and 5% of total revenue, respectively.

General and administrative expense for the three and nine months ended September 30, 2005, was $1.0 and $2.3 million or 3% and 4% of total revenue, respectively. The Company anticipates this percentage to decrease as the Company’s asset base grows. The principal components of general and administrative expense are advisory fees, legal fees, accounting fees and reporting expense.

Depreciation expense for the three and nine months ended September 30, 2005, was $3.3 and $6.7 million, respectively. Depreciation expense represents expense of the Company’s 48 hotels and related personal property for their respective periods owned.

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Interest expense for the three and nine months ended September 30, 2005, was $0.5 and $0.9 million, respectively. Interest expense arose from debt assumed with 12 of the properties acquired. Total debt assumed was approximately $44.2 million.

Liquidity and Capital Resources

The Company is raising capital through a “best-efforts” offering of Units by David Lerner Associates, Inc., which receives selling commissions and a marketing expense allowance based on proceeds of the shares sold.

Each Unit consists of one common share and one Series A preferred share. The Series A preferred shares have no voting rights, no conversion rights and no distribution rights. The only right associated with the Series A preferred shares is a priority distribution upon the sale of the Company’s assets. The priority would be equal to $11.00 per Series A preferred share, and no more, before any distributions are made to the holders of any other shares. The Series A preferred shares are not separately tradable from the common shares to which they relate.

From the Company’s initial capitalization on January 20, 2004 through September 30, 2005, the Company incurred costs of approximately $78.3 million related to its offering. These costs are reflected as a reduction to shareholders’ equity. As of September 30, 2005, the Company has closed on a total of 69,895,193 Units, representing gross proceeds and proceeds net of selling, marketing fees, and other costs of approximately $766.5 million and $688.2 million, respectively.

From January 2005 through September of 2005 the Company has paid distributions totaling approximately $32.8 million, which were paid at a monthly rate of $.073 per share. For the same period the Company’s cash generated from operations was $18.5 million. Due to the inherent delay between raising capital and investing that same capital in income producing real estate, the Company has had significant amounts of cash earning interest at short term money market rates. As a result, the difference between distributions paid and cash generated from operations has been funded from proceeds from our offering of Units, and this portion of distributions is expected to be treated as a return of capital for federal income tax purposes. The Company intends to continue paying dividends on a monthly basis at an annual rate of 8%. Since a portion of our distributions has to date been funded with proceeds from our offering of Units, our ability to maintain our current intended rate of distribution will be based on our ability to fully invest our offering proceeds and thereby increase our cash generated from operations. Since there can be no assurance of the Company’s ability to acquire properties that provide income at this level, there can be no assurance as to the classification or duration of distributions at the current rate. Proceeds of the offering which are distributed are not available for investment in properties.

The Company intends to acquire real estate properties with its available cash. Although the Company is currently performing due diligence on several possible acquisitions, the timing of finding suitable properties is dependant upon many external factors and there can be no assurances as to the length of time to utilize all proceeds of its best-efforts offering for investment in real estate. The Company’s proceeds raised and not invested in real estate are held as cash or cash equivalents.

S-13

The company has entered into purchase contracts for 21 additional hotels. Six hotels are under construction and should be completed over the next nine months. The acquisitions of the other 15 hotels are expected to close before the end of the first quarter, 2006. Although the Company believes there is a reasonable probability that it will acquire these hotels, there can be no assurance that all of the conditions to closing will be satisfied. The following table summarizes the location, brand, gross purchase price and number of rooms for each hotel. All dollar amounts are in thousands.

Location	Brand	Rooms	Gross Purchase Price
Laredo, TX	Homewood Suites	105	$	10,500
Houston, TX	Residence Inn	130		13,600
Brownsville, TX	Courtyard	90		8,550
Valdosta, GA	Courtyard	84		8,284
Panama City, FL	Courtyard	84		9,245
Orange Park, FL	Fairfield Inn	83		7,221
Clearwater, FL	SpringHill Suites	79		6,923
Farmington, CT	Courtyard	119		16,330
Dallas, TX	SpringHill Suites	148		19,500
Stafford, TX	Homewood Suites	78		7,800
Hillsboro, OR	TownePlace Suites	136		(a	)
Hillsboro, OR	Residence Inn	122		(a	)
Hillsboro, OR	Courtyard	155		(a	)
Seattle, WA	TownePlace Suites	152		(a	)
Seattle, WA	TownePlace Suites	128		(a	)
Portland, OR	Residence Inn	258		(a	)
Folsom, CA	Hilton Garden Inn	100		(b	)
Milpitas, CA	Hilton Garden Inn	161		(b	)
Renton, WA	Hilton Garden Inn	150		(b	)
Roseville, CA	Hilton Garden Inn	131		(b	)
San Francisco, CA	Hilton Garden Inn	169		(b	)
Total		2,662	$	297,703

(a) These hotels are being purchased under a master purchase contract for a total of $104,000,000. The allocation of the purchase price to each hotel has not yet been determined.

(b) These hotels are being purchased under a master purchase contract for a total of $85,750,000. The allocation of the purchase price to each hotel has not yet been determined.

Substantially all of these purchases will be funded with proceeds of the Company’s ongoing best-efforts offering of Units and cash on hand.

Related Party Transactions

The Company has significant transactions with related parties. These transactions cannot be construed to be arms length, and the results of the Company’s operations may be different if these transactions were conducted with non-related parties.

The Company has a contract with ASRG, a related party, to provide brokerage services for the acquisition and disposition of the Company’s real estate assets. In accordance with the contract, ASRG is paid a fee of 2% of the gross purchase price of any acquisitions or gross sale price of any dispositions of real estate investments, subject to certain conditions. As of September 30, 2005, payments to ASRG for services under the terms of this contract have totaled $10.9 million since inception, which were capitalized as a part of the purchase price of the hotels.

The Company is party to an advisory agreement with Apple Six Advisors, Inc. (“ASA”), pursuant to which ASA provides management services to the Company. An annual fee ranging from .1% to .25% of total equity proceeds received by the Company, in addition to certain reimbursable expenses, are payable for these services.

S-14

ASA utilizes Apple Hospitality Two, Inc. to provide these services. Expenses related to the ASA agreement, for the period ended September 30, 2005 and 2004, totaled approximately $1,109,000 and $258,000, respectively.

During the second quarter of 2005 the Company assumed the purchase contract, and all associated costs incurred, for the Residence Inn acquired in Ft. Worth, Texas from Apple Hospitality Five, Inc. (“AH5”).

Mr. Knight is also Chairman and CEO of Apple Hospitality Two, Inc. (a hospitality REIT), Apple Hospitality Five, Inc. (a hospitality REIT), ASRG and ASA. The Company’s Board of Directors is substantially the same as Apple Hospitality Two, Inc. and Apple Hospitality Five, Inc.

Impact of Inflation

Operators of hotels, in general, possess the ability to adjust room rates daily to reflect the effects of inflation. Competitive pressures may, however, limit the operators’ ability to raise room rates. Currently the Company is not experiencing any material impact from inflation.

Business Interruption

Being in the real estate industry, the Company is exposed to natural disasters both locally and nationally, and although management believes there is adequate insurance to cover this exposure, there can be no assurance that such events will not have a material adverse effect on the Company’s financial position or results of operations. During the third quarter, the United States experienced several significant, destructive weather events. The Company’s assets, however, experienced minimal disruption and damage.

Seasonality

The hotel industry historically has been seasonal in nature. Seasonal variations in occupancy at its hotels may cause quarterly fluctuations in its revenues. To the extent that cash flow from operations is insufficient during any quarter, due to temporary or seasonal fluctuations in revenue, the Company expects to utilize cash on hand to make distributions.

Subsequent Events

In October 2005, the Company closed on an additional 3,593,808 Units, representing gross proceeds of $39.5 million and proceeds net of selling and marketing costs of $35.6 million.

On October 3, 2005, the Company closed on the purchase of a Courtyard hotel in Valdosta, Georgia, which contains 84 rooms and was in operation when acquired. The gross purchase price of the hotel was $8.3 million.

On October 17, 2005, the Company declared and paid $5.1 million or $.073 per share, in a distribution to its common shareholders.

On October 19, 2005, the Company redeemed 233,404 Units in the amount of $2,547,258 under its Unit Redemption Program.

On October 20, 2005, the Company closed on the purchase of a Courtyard hotel in Farmington, Connecticut, which contains 119 rooms. The hotel began operations in October, 2005. The gross purchase price of the hotel was $16.3 million.

Recent Accounting Pronouncements

On December 16, 2004, the Financial Accounting Standards Board (FASB) issued FASB Statement No. 123 (revised 2004), Share-Based Payment, which is a revision of FASB Statement No. 123, Accounting for Stock-Based Compensation. Statement 123 (R) supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and amends FASB Statement No. 95, Statement of Cash Flows. Generally, the approach in Statement 123 (R) is similar to the approach described in Statement 123. However, Statement 123 (R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. Pro forma disclosure is no longer an alternative. Statement 123 (R) must be adopted no later than January 1, 2006 by the Company. As Statement 123 (R) applies to all awards granted after the required effective date, the adoption of this statement is not anticipated to have a material impact on the Company’s results of operations or financial position.

S-15

INDEX TO FINANCIAL STATEMENTS

Consolidated Balance Sheets—September 30, 2005 and December 31, 2004 (unaudited)	F-2
Consolidated Statements of Operations—Three months and nine months ended September 30, 2005 and three months ended September 30, 2004 and the period January 20, 2004 through September 30, 2004 (unaudited)	F-3
Consolidated Statements of Cash Flows—Nine months ended September 30, 2005 and For the period January 20, 2004 through September 30, 2004 (unaudited)	F-4
Notes to Consolidated Financial Statements (unaudited)	F-5

F-1

Apple REIT Six, Inc.

Consolidated Balance Sheets

(unaudited)

(in thousands, except share data)

	September 30, 2005			December 31, 2004
ASSETS
Investment in real estate, net of accumulated depreciation of $8,540 and $1,881, respectively	$	551,266		$	184,084
Cash and cash equivalents		141,242			142,790
Restricted cash-furniture, fixtures and other escrows		4,417			2,570
Due from third party manager, net		7,756			1,103
Other assets, net		5,274			1,712
TOTAL ASSETS	$	709,955		$	332,259
LIABILITIES
Notes payable-secured	$	43,875		$	6,557
Accounts payable and accrued expenses		3,788			603
TOTAL LIABILITIES		47,663			7,160
SHAREHOLDERS’ EQUITY
Preferred stock, authorized 15,000,000 shares; none issued and outstanding		—			—
Series A preferred stock, no par value, authorized 200,000,000 shares; issued and outstanding 69,691,068 and 34,019,692 shares, respectively		—			—
Series B convertible stock, no par value, authorized 240,000 shares; issued and outstanding 240,000 and 240,000 shares, respectively		24			24
Common stock, no par value, authorized 200,000,000 shares; issued and outstanding 69,691,068 and 34,019,692 shares, respectively		685,962			333,295
Distributions greater than net income		(23,694	)		(8,220	)
TOTAL SHAREHOLDERS’ EQUITY		662,292			325,099
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	709,955		$	332,259

See notes to consolidated financial statements.

Note: The company was formed on January 20, 2004 and commenced operations on May 28, 2004.

F-2

Apple REIT Six, Inc.

Consolidated Statements of Operations

(unaudited)

(in thousands, except per share data)

	Three months ended September 30, 2005			Three months ended September 30, 2004			Nine months ended September 30, 2005			For the period January 20, 2004 (initial capitalization) through September 30, 2004
Revenues:
Room revenue	$	29,808		$	4,431		$	57,482		$	4,837
Other revenue		2,446			697			6,270			718
Total revenue		32,254			5,128			63,752			5,555
Expenses:
Operating expense		8,378			2,104			16,857			2,199
Hotel administrative expense		2,892			590			5,795			625
Sales and marketing		2,159			398			4,557			428
Utilities		1,402			197			2,446			213
Repair and maintenance		1,205			209			2,221			226
Franchise fees		1,414			—			2,220			—
Management fees		1,185			189			2,223			216
Taxes, insurance and other		1,760			184			3,283			211
General and administrative		952			257			2,308			395
Depreciation expense		3,314			592			6,659			675
Total expenses		24,661			4,720			48,569			5,188
Operating income		7,593			408			15,183			367
Interest income		1,265			166			3,045			243
Interest expense		(483	)		(100	)		(947	)		(105	)
Net income	$	8,375		$	474		$	17,281		$	505
Basic and diluted income per common share	$	0.13		$	0.03		$	0.34		$	0.07
Weighted average shares outstanding—basic and diluted		62,296			15,528			50,446			7,633
Distributions declared per common share	$	0.22		$	0.22		$	0.66		$	0.33

See notes to consolidated financial statements.

Note: The company was formed on January 20, 2004 and commenced operations on May 28, 2004.

F-3

Apple REIT Six, Inc.

Consolidated Statements of Cash Flows

(unaudited)

(in thousands)

	Nine months ended September 30, 2005			For the period January 20, 2004 (initial capitalization) through September 30, 2004
Cash flow from (used in) operating activities:
Net income	$	17,281		$	505
Adjustments to reconcile to cash provided by operating activities:
Depreciation		6,659			675
Changes in operating assets and liabilities, net of amounts acquired/assumed:
Due from third party manager		(6,019	)		(344	)
Other assets		(450	)		(39	)
Accrued expenses		1,053			—
Net cash provided by operating activities		18,524			797
Cash flow from investing activities:
Cash paid in acquisition of hotels		(332,944	)		(89,381	)
Cash paid for potential acquisition of hotels		(1,908	)		(3,231	)
Acquisition of other assets		(1,514	)		(1,104	)
Capital improvements		(1,620	)		—
Net increase in cash restricted for property improvements		(1,252	)		(95	)
Net cash used in investing activities		(339,238	)		(93,811	)
Cash flow from financing activities:
Payment of financing costs		(452	)		—
Repayment of secured notes payable		(293	)		—
Net proceeds from issuance of common stock		352,667			199,699
Cash distributions paid to shareholders		(32,756	)		(4,144	)
Net cash provided by financing activities		319,166			195,555
Increase (decrease) in cash and cash equivalents		(1,548	)		102,541
Cash and cash equivalents, beginning of period		142,790			24
Cash and cash equivalents, end of period	$	141,242		$	102,565
Non-cash transactions:
Notes payable-secured assumed in acquisitions	$	37,611		$	—

See notes to consolidated financial statements.

Note: The company was formed on January 20, 2004 and commenced operations on May 28, 2004.

F-4

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information required by accounting principles generally accepted in the United States. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These unaudited financials should be read in conjunction with the Company’s audited financial statements included in its 2004 Annual Report on Form 10-K. Operating results for the period ended September 30, 2005 are not necessarily indicative of the results that may be expected for the period ending December 31, 2005.

Note 2

General Information and Summary of Significant Accounting Policies

Organization

Apple REIT Six, Inc. (together with its wholly owned subsidiaries the “Company”) is a Virginia corporation that is operated and has elected to be taxed as a real estate investment trust (“REIT”). The Company, which began operations and acquired its first hotel on May 28, 2004, was formed to invest in hotels, residential apartment communities and other selected real estate in selected metropolitan areas in the United States. The consolidated financial statements include the accounts of the Company and its direct or indirect subsidiaries. All intercompany accounts and transactions have been eliminated.

Offering Costs

The Company is raising capital through a “best-efforts” offering of Units by David Lerner Associates, Inc., which receives selling commissions and a marketing expense allowance based on proceeds of the shares sold.

From the Company’s initial capitalization on January 20, 2004 through September 30, 2005, the Company incurred costs of approximately $78.3 million related to its offering. These costs are reflected as a reduction to shareholders’ equity. As of September 30, 2005, the Company has closed on a total of 69,895,193 Units, representing net proceeds of approximately $688.2 million.

Earnings per Common Share

Basic earnings per common share is computed based upon the weighted average number of shares outstanding during the year. Diluted earnings per share is calculated after giving effect to all potential common shares that were dilutive and outstanding for the year. Series B convertible shares are not convertible based on market conditions, therefore, they are not included in earnings per common share until such time it becomes probable that such shares can be converted to common shares.

Stock Incentive Plans

As the exercise price of the Company’s stock options equals the market price of the underlying stock, the Company has not recognized any stock compensation expenses associated with its stock options during the period ended September 30, 2005 and 2004.

Use of Estimates

The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

F-5

Recent Accounting Pronouncements

On December 16, 2004, the Financial Accounting Standards Board (FASB) issued FASB Statement No. 123 (revised 2004), Share-Based Payment, which is a revision of FASB Statement No. 123, Accounting for Stock-Based Compensation. Statement 123 (R) supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and amends FASB Statement No. 95, Statement of Cash Flows. Generally, the approach in Statement 123 (R) is similar to the approach described in Statement 123. However, Statement 123 (R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. Pro forma disclosure is no longer an alternative. Statement 123 (R) must be adopted no later than January 1, 2006 by the Company. As Statement 123 (R) applies to all awards granted after the required effective date, the adoption of this statement is not anticipated to have a material impact on the Company’s results of operations or financial position.

F-6

Note 3

Property Acquisitions

The Company has purchased 37 hotels in 2005. The following table summarizes the location, brand, date acquired, number of rooms, gross purchase price and property manager for each hotel acquired in 2005. All dollar amounts are in thousands.

Location	Brand	Manager	Date Acquired	Rooms	Gross Purchase Price
Anchorage, AK	Hampton Inn	Stonebridge	3/14/05	101	$	11,500
Bakersfield, CA	Hilton Garden Inn	Hilton	3/18/05	120		11,500
Tallahassee, FL	Hilton Garden Inn	Hilton	3/18/05	99		10,850
Lake Mary, FL	Courtyard	Stonebridge	3/18/05	86		6,000
Foothill Ranch, CA	Hampton Inn	Stonebridge	4/21/05	84		7,400
Ft. Worth, TX	Residence Inn	Western	5/6/05	150		17,000
Boulder, CO	Marriott	WLS	5/9/05	157		30,000
Ft. Worth, TX	Homewood Suites	Hilton	5/24/05	137		9,097
Nashville, TN	Homewood Suites	Hilton	5/24/05	121		8,103
Albany, GA	Courtyard	LBA	6/24/05	84		8,597
Lakeland, FL	Residence Inn	LBA	6/24/05	78		9,886
Huntsville, AL	Residence Inn	LBA	6/24/05	78		8,288
Dothan, AL	Hampton Inn & Suites	LBA	6/24/05	85		8,673
Columbus, GA	Residence Inn	LBA	6/24/05	78		7,888
Las Colinas, TX	TownePlace Suites	Western	6/30/05	136		7,178
Arlington, TX	TownePlace Suites	Western	6/30/05	95		7,148
Arlington, TX	SpringHill Suites	Western	6/30/05	122		7,486
Tempe, AZ	TownePlace Suites	Western	6/30/05	119		8,128
Tempe, AZ	SpringHill Suites	Western	6/30/05	121		8,060
Wallingford, CT	Homewood Suites	WLS	7/8/05	104		12,780
McAllen, TX	Hilton Garden Inn	Western	7/19/05	104		9,000
Pensacola, FL	Hampton Inn & Suites	LBA	7/21/05	85		9,279
Rocky Hill, CT	Residence Inn	WLS	8/1/05	96		12,070
Dothan, AL	Courtyard	LBA	8/11/05	78		8,016
Somerset, NJ	Homewood Suites	WLS	8/17/05	123		17,750
Birmingham, AL	Fairfield Inn	LBA	8/25/05	63		2,176
Tuscaloosa, AL	Courtyard	LBA	8/25/05	78		7,551
Tuscaloosa, AL	Fairfield Inn	LBA	8/25/05	63		3,982
Pensacola, FL	Courtyard	LBA	8/25/05	90		11,369
Pensacola, FL	Fairfield Inn	LBA	8/25/05	63		4,858
Pittsburgh, PA	Residence Inn	WLS	9/2/05	156		11,000
Laredo, TX	Residence Inn	Western	9/12/05	109		11,445
Mt. Olive, NJ	Residence Inn	WLS	9/15/05	123		12,070
Saratoga Springs, NY	Hilton Garden Inn	WLS	9/29/05	112		17,750
Huntsville, AL	Fairfield Inn	LBA	9/30/05	79		4,954
Savannah, GA	SpringHill Suites	LBA	9/30/05	79		5,407
Montgomery, AL	SpringHill Suites	LBA	9/30/05	79		6,835
Total				3,735	$	361,074

F-7

Substantially all of the purchases were funded with proceeds of the Company’s ongoing best-efforts offering of Units. Stonebridge Realty Advisors, Inc. (“Stonebridge”), Hilton Hotels Corporation (“Hilton”), White Lodging Services Corp. (“WLS”), Larry Blumberg & Associates, Inc. (“LBA”), or Western International, Inc. (“Western”), or one of their affiliates, manage the respective properties listed above. The terms and fees of the new management agreements are similar to the Company’s existing management agreements.

The Company leased all of its hotels to wholly-owned taxable REIT subsidiaries under master hotel lease agreements. The Company also used the proceeds of its ongoing offering to pay 2% of the gross purchase price for these hotels, which equals $7,221,493, as a commission to Apple Six Realty Group, Inc. (“ASRG”). ASRG is owned by the Company’s Chairman, Chief Executive Officer and President, Glade M. Knight. This commission was capitalized as part of the purchase price of the hotels.

The Company assumed approximately $37.6 million of secured debt in 2005 associated with 11 of the properties. The following table summarizes the interest rate, maturity date and the principal amount assumed associated with each mortgage. All dollar amounts are in thousands.

Location	Brand	Interest Rate		Maturity Date	Principal Assumed
Anchorage, AK	Hampton Inn	7.75	%	4/01/09	$	5,531
Foothill Ranch, CA	Hampton Inn	8.06	%	8/01/11		4,502
Dothan, AL	Courtyard	7.35	%	4/01/08		3,244
Birmingham, AL	Fairfield Inn	7.35	%	5/01/08		2,086
Tuscaloosa, AL	Courtyard	7.30	%	5/01/08		3,388
Tuscaloosa, AL	Fairfield Inn	7.30	%	5/01/08		1,690
Pensacola, FL	Courtyard	7.35	%	5/01/08		4,557
Pensacola, FL	Fairfield Inn	7.35	%	5/01/08		2,734
Huntsville, AL	Fairfield Inn	6.80	%	1/11/13		3,028
Savannah, GA	SpringHill Suites	6.80	%	1/11/13		3,066
Montgomery, AL	SpringHill Suites	6.80	%	1/11/13		3,785
Total					$	37,611

No goodwill or intangible assets were recorded in connection with any of the acquisitions.

As of September 30, 2005, investment in real estate consisted of the following (in thousands):

Land	$	73,408
Building and Improvements		463,552
Furniture, Fixtures and Equipment		22,846
		559,806
Less Accumulated Depreciation		(8,540	)
Investment in real estate, net	$	551,266

F-8

The company has entered into purchase contracts for 21 additional hotels. Six hotels are under construction and should be completed over the next nine months. The acquisitions of the other 15 hotels are expected to close before the end of the first quarter, 2006. Although the Company believes there is a reasonable probability that it will acquire these hotels, there can be no assurance that all of the conditions to closing will be satisfied. The following table summarizes the location, brand, gross purchase price and number of rooms for each hotel. All dollar amounts are in thousands.

Location	Brand	Rooms	Gross Purchase Price
Laredo, TX	Homewood Suites	105	$	10,500
Houston, TX	Residence Inn	130		13,600
Brownsville, TX	Courtyard	90		8,550
Valdosta, GA	Courtyard	84		8,284
Panama City, FL	Courtyard	84		9,245
Orange Park, FL	Fairfield Inn	83		7,221
Clearwater, FL	SpringHill Suites	79		6,923
Farmington, CT	Courtyard	119		16,330
Dallas, TX	SpringHill Suites	148		19,500
Stafford, TX	Homewood Suites	78		7,800
Hillsboro, OR	TownePlace Suites	136		(a	)
Hillsboro, OR	Residence Inn	122		(a	)
Hillsboro, OR	Courtyard	155		(a	)
Seattle, WA	TownePlace Suites	152		(a	)
Seattle, WA	TownePlace Suites	128		(a	)
Portland, OR	Residence Inn	258		(a	)
Folsom, CA	Hilton Garden Inn	100		(b	)
Milpitas, CA	Hilton Garden Inn	161		(b	)
Renton, WA	Hilton Garden Inn	150		(b	)
Roseville, CA	Hilton Garden Inn	131		(b	)
San Francisco, CA	Hilton Garden Inn	169		(b	)
Total		2,662	$	297,703

(a) These hotels are being purchased under a master purchase contract for a total of $104,000,000. The allocation of the purchase price to each hotel has not yet been determined.

(b) These hotels are being purchased under a master purchase contract for a total of $85,750,000. The allocation of the purchase price to each hotel has not yet been determined.

Substantially all of these purchases will be funded with proceeds of the Company’s ongoing best-efforts offering of Units and cash on hand.

Note 4

Related Parties

The Company has significant transactions with related parties. These transactions cannot be construed to be arms length, and the results of the Company’s operations may be different if these transactions were conducted with non-related parties.

The Company has a contract with ASRG, a related party, to provide brokerage services for the acquisition and disposition of the Company’s real estate assets. In accordance with the contract, ASRG is paid a fee of 2% of the gross purchase price of any acquisitions or gross sale price of any dispositions of real estate investments, subject to

F-9

certain conditions. As of September 30, 2005, payments to ASRG for services under the terms of this contract have totaled $10.9 million since inception, which were capitalized as a part of the purchase price of the hotels.

The Company is party to an advisory agreement with Apple Six Advisors, Inc. (“ASA”), pursuant to which ASA provides management services to the Company. An annual fee ranging from .1% to .25% of total equity proceeds received by the Company, in addition to certain reimbursable expenses, are payable for these services. ASA utilizes Apple Hospitality Two, Inc. to provide these services. Expenses related to the ASA agreement, for the period ended September 30, 2005 and 2004, totaled approximately $1,109,000 and $258,000, respectively.

During the second quarter of 2005 the Company assumed the purchase contract, and all associated costs incurred, for the Residence Inn acquired in Ft. Worth, Texas from Apple Hospitality Five, Inc. (“AH5”).

Mr. Knight is also Chairman and CEO of Apple Hospitality Two, Inc. (a hospitality REIT), Apple Hospitality Five, Inc. (a hospitality REIT), ASRG and ASA. The Company’s Board of Directors is substantially the same as Apple Hospitality Two, Inc. and Apple Hospitality Five, Inc.

Note 5

Shareholders’ Equity

Compensation expense related to issuance of 240,000 Series B convertible preferred shares to Mr. Knight will be recognized at such time when the number of common shares to be issued for conversion of the Series B shares can be reasonably estimated and the event triggering the conversion of the Series B shares to common shares is probable. The expense will be measured as the difference between the fair value of the common stock for which the Series B shares can be converted and the amounts paid for the Series B shares. Although the fair market value cannot be determined at this time, compensation expense if the maximum offering is achieved could range from $0 to in excess of $63 million (assumes $11 per unit fair market value). Based on equity raised through September 30, 2005, if a triggering event had been probable, compensation expense would have ranged from $0 to $47.9 million, which represents approximately 4.4 million shares of common stock.

In July 2005, the Company instituted a Unit Redemption Program to provide limited interim liquidity to its shareholders. Redemption of Units, when requested, is made quarterly on a first-come, first-served basis. Shareholders may request redemption of Units for a purchase price equal to the lesser of: (1) the purchase price per unit that the shareholder actually paid for the unit; or (2) $11.00 per unit. The Company reserves the right to change the purchase price of redemptions, reject any request for redemption, or otherwise amend the terms of, suspend, or terminate the Unit Redemption Program. During the nine months ended September 30, 2005, the Company redeemed 204,125 Units in the amount of $2,213,655 under the program.

Note 6

Pro Forma Information

The following unaudited pro forma information for the three and nine months ended September 30, 2005, is presented as if the acquisitions of the Company’s 37 new hotels occurred on January 1, 2005. The pro forma information does not purport to represent what the Company’s results of operations would actually have been if such transactions, in fact, had occurred on January 1, 2005, nor does it purport to represent the results of operations for future periods. All amounts are in thousands except per share data.

	For the three months ended September 30, 2005		For the nine months ended September 30, 2005
Hotel revenues	$	36,787	$	100,055
Net income	$	9,181	$	25,917
Net income per share- basic and diluted	$	0.15	$	0.42

F-10

The pro forma information reflects adjustments for actual revenues and expenses of the 37 hotels acquired in 2005, for the respective period in 2005 prior to acquisition by the Company. Net income has been adjusted as follows: (1) interest income has been adjusted to reflect the reduction in cash and cash equivalents required to fund the acquisitions; (2) depreciation has been adjusted based on the Company’s basis in the hotels; (3) interest expense has been adjusted to reflect the assumption of debt.

Note 7

Subsequent Events

In October 2005, the Company closed on an additional 3,593,808 Units, representing gross proceeds of $39.5 million and proceeds net of selling and marketing costs of $35.6 million.

On October 3, 2005, the Company closed on the purchase of a Courtyard hotel in Valdosta, Georgia, which contains 84 rooms and was in operation when acquired. The gross purchase price of the hotel was $8.3 million.

On October 17, 2005, the Company declared and paid $5.1 million or $.073 per share, in a distribution to its common shareholders.

On October 19, 2005, the Company redeemed 233,404 Units in the amount of $2,547,258 under its Unit Redemption Program.

On October 20, 2005, the Company closed on the purchase of a Courtyard hotel in Farmington, Connecticut, which contains 119 rooms. The hotel began operations in October, 2005. The gross purchase price of the hotel was $16.3 million.

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