8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): June 6, 2011

Apple REIT Seven, Inc.

(Exact name of registrant as specified in its charter)

Virginia	000-52585	20-2879175
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification Number)

814 East Main Street, Richmond, Virginia	23219
(Address of principal executive offices)	(Zip Code)

(804) 344-8121
(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

          Apple REIT Seven, Inc. (which is referred to below as the “Company”) is filing this report in accordance with Item 2.02 and Item 9.01 of Form 8-K.

Item 2.02. Results of Operations and Financial Condition.

          On June 6, 2011, the Company issued its interim report to shareholders for the quarter ended March 31, 2011 (the “Shareholders’ Report”) to the shareholders of the Company as of that date.

          In accordance with General Instruction B.2 of Form 8-K, the information included or incorporated in this report (including Exhibit 99.1) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as shall be set forth by specific reference in such filing.

          The Shareholders’ Report is attached as Exhibit 99.1 to this Current Report on Form 8-K.

Item 9.01. Financial Statements and Exhibits

a. Financial statements of businesses acquired.

          None.

b. Pro forma financial information.

          None.

c. Shell company transaction.

          Not Applicable.

d. Exhibits.

          Exhibit 99.1     Interim Report to Shareholders for the Quarter Ended March 31, 2011.

SIGNATURES

          Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Apple REIT Seven, Inc.
By:	/s/ Glade M. Knight
	Glade M. Knight,
	Chief Executive Officer
	June 7, 2011

-2-

EX-99.1

Exhibit 99.1

DEAR SHAREHOLDER

GLADE M. KNIGHT

The Apple REIT Seven, Inc. portfolio consists of 51 Marriott^®- and Hilton^®-branded hotels with 6,426 guestrooms located in dynamic markets throughout 18 states. I am pleased to report that key performance indicators generally improved across our portfolio of hotels during the first three months of 2011 as compared to the same period last year. Economic conditions in the majority of our markets are showing evidence of recovery and I am optimistic that 2011 will be a year of steady progress for the Company.

For the three months ended March 31, 2011 and 2010, our hotels reported average occupancy of 70% and 69%, average daily rate (ADR) of $111 and $110, and revenue per available room (RevPAR) of $77 and $75 for each period, respectively. Increasing demand for travel and stabilization within the hotel industry are evident in the improvement in average occupancy, the modest increase in ADR and the three percent increase in RevPAR our hotels experienced during the first quarter of 2011 as compared to the first quarter of 2010. The Apple REIT Seven portfolio includes hotels in Alabama, near areas affected by the tornados that struck in late April. I am pleased to report that our hotels did not suffer any significant damage and are currently accommodating a variety of response workers and insurance teams.

Funds from operations (FFO) for Apple REIT Seven for the first quarter of this year totaled $13.6 million, or $0.15 per share, similar to results for the same period of last year. For the first three months of the year, the Company paid distributions of $0.19 per share. The current annualized distribution rate is seven percent, or $0.77 per share, based on an $11 share price. Our management team and Board of Directors will continue to prudently monitor hotel operations as compared to distributions. Our objective in setting an annualized distribution rate is to provide shareholders consistency over the life of our program, taking into account varying economic cycles and capital improvements as well as current and projected hotel performance. We believe our steady approach to hotel ownership and capital management is conservative and will allow us to meet our goals over the long term.

Each quarter, we redeem a limited number of shares through our Unit Redemption Program at the purchase price paid per Unit. This program is generally funded by our Dividend Reinvestment Program (DRIP); therefore the Company limits the number of Units that may be redeemed during any 12-month period to approximately three percent of the weighted average of outstanding Units during the preceding 12-month period. At times when requests for redemptions exceed this amount, the Company may make distributions on a pro-rata basis, subject to guidelines as outlined in the Offering Prospectus or as otherwise adopted by our Board of Directors. During the three months ended March 31, 2011, the Company redeemed Units in the amount of approximately $8.0 million. As contemplated in the program, the Company redeemed those Units on a pro-rata basis. This conservative approach allows us the ability to minimize debt by spreading the redemptions throughout the year and to maintain the long-term structure of the investment.

Our team is dedicated to protecting the integrity and growing the value of your investment. Through our conservative approach to the allocation of capital, we have maintained low levels of debt, currently at 16 percent of our total initial capitalization. Industry analysts anticipate the increase in demand together with limited new lodging supply will continue to drive improvements in RevPAR across the hotel industry throughout 2011 and 2012 and I believe we are well-poised to benefit as market conditions improve. Thank you for your investment.

Sincerely,

Glade M. Knight

Chairman and Chief Executive Officer

STATEMENTS OF OPERATIONS (Unaudited)

(In thousands except statistical data)	Three months ended March 31, 2011			Three months ended March 31, 2010
REVENUES
Room revenue	$	44,705		$	43,548
Other revenue		4,738			4,688
Total revenue	$	49,443		$	48,236
EXPENSES
Direct operating expense	$	13,635		$	12,767
Other hotel operating expenses		18,853			18,570
General and administrative		1,119			1,206
Depreciation		8,366			8,275
Interest expense, net		2,281			1,804
Total expenses	$	44,254		$	42,622
NET INCOME
Net income	$	5,189		$	5,614
Net income per share	$	0.06		$	0.06
FUNDS FROM OPERATIONS (A)
Net income	$	5,189		$	5,614
Depreciation of real estate owned		8,366			8,275
Funds from operations	$	13,555		$	13,889
FFO per share	$	0.15		$	0.15
WEIGHTED-AVERAGE SHARES OUTSTANDING		91,764			93,198
OPERATING STATISTICS
Occupancy		70	%		69	%
Average daily rate	$	111		$	110
RevPAR	$	77		$	75
Number of hotels		51			51
Dividends per share	$	0.19		$	0.19

BALANCE SHEET HIGHLIGHTS (Unaudited)

(In thousands)	March 31, 2011		December 31, 2010
ASSETS
Investment in real estate, net	$	865,455	$	872,169
Other assets		24,487		19,798
Total assets	$	889,942	$	891,967
LIABILITIES AND SHAREHOLDERS’ EQUITY
Notes payable	$	160,384	$	148,017
Other liabilities		10,566		10,650
Total liabilities		170,950		158,667
Total shareholders’ equity		718,992		733,300
Total liabilities & shareholders’ equity	$	889,942	$	891,967

(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, 2011 and the results of operations for the interim periods ended March 31, 2011. 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 REIT Seven, Inc. 2010 Annual Report.

MARKET DIVERSITY
Portfolio of hotels

STATE / CITY

ALABAMA

Auburn, Birmingham, Dothan (2), Huntsville (3),
Montgomery (2), Montgomery/Prattville, Troy

ARIZONA

Tucson

CALIFORNIA

Agoura Hills, San Diego (2), San Diego/Rancho
Bernardo (2)

COLORADO

Denver/Highlands Ranch (2)

FLORIDA

Lakeland, Miami (2), Sarasota, Tallahassee

GEORGIA

Columbus (3), Macon

IDAHO

Boise

LOUISIANA

New Orleans

MISSISSIPPI

Hattiesburg, Tupelo

NEBRASKA

Omaha

NEW JERSEY

Cranford, Mahwah

NEW YORK

Islip/Ronkonkoma

OHIO

Cincinnati/Milford

TENNESSEE

Memphis

TEXAS

Addison, Brownsville, El Paso, Houston,
San Antonio (2), Stafford

UTAH

Provo

VIRGINIA

Alexandria, Richmond

WASHINGTON

Seattle/Kirkland, Seattle/Lake Union, Vancouver

CORPORATE HEADQUARTERS

814 East Main Street

Richmond, Virginia 23219

(804) 344-8121

(804) 344-8129 FAX

www.applereitseven.com

INVESTOR INFORMATION

For additional information about the

company, please contact: Kelly Clarke,

Director of Investor Services

804-727-6321 or
kclarke@applereit.com

CORPORATE PROFILE

Apple REIT Seven, Inc. is a real estate investment trust (REIT) focused on the ownership of hotels that generate attractive returns for our shareholders. Our hotels operate under the Courtyard^® by Marriott^®, Fairfield Inn^® by Marriott^®, Fairfield Inn & Suites^® by Marriott^®, Residence Inn^® by Marriott^®, SpringHill Suites^® by Marriott^®, TownePlace Suites^® by Marriott^®, Marriott^® Hotels & Resorts, Homewood Suites by Hilton^®, Hilton Garden Inn^® and Hampton Inn^® brands. Our portfolio consists of 51 hotels with 6,426 guestrooms in 18 states.

MISSION

Apple REIT Seven is a premier real estate investment company committed to providing maximum value for our shareholders.

COVER: COURTYARD, KIRKLAND, WA

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 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.

“Marriott^®,” “Courtyard^® by Marriott^®,” “SpringHill Suites^® by Marriott^®,” “Fairfield Inn^® by Marriott^®,” “Fairfield Inn & Suites^® by Marriott^®,” “TownePlace Suites^® by Marriott^®” and “Residence Inn^® by Marriott^®” are each a registered trademark of Marriott International, Inc. or one of its affiliates. All references 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 report, whether relating to the hotel information, operating information, financial information, Marriott’s relationship with Apple REIT Seven or otherwise. Marriott was not involved in any way whether as an “issuer” or “underwriter” or otherwise in the Apple REIT Seven offering and received no proceeds from the offering. Marriott has not expressed any approval or disapproval regarding this report, and the grant by Marriott of any franchise or other rights to Apple REIT Seven 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 report.

“Hampton Inn^®,” “Hilton Garden Inn^®” and “Homewood Suites by Hilton^®” are each a registered trademark of Hilton Worldwide or one of its affiliates. All references to “Hilton” mean Hilton Worldwide 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 report, whether relating to hotel information, operating information, financial information, Hilton’s relationship with Apple REIT Seven, or otherwise. Hilton was not involved in any way, whether as an “issuer” or “underwriter” or otherwise, in the Apple REIT Seven offering and received no proceeds from the offering. Hilton has not expressed any approval or disapproval regarding this report, and the grant by Hilton of any franchise or other rights to Apple REIT Seven 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 report.