|                                  
|----------------------------------
|UNITED STATES                     
|SECURITIES AND EXCHANGE COMMISSION
|Washington,
D.C. 20549            
|                                  
|FORM
10-Q                         

|  |                                                                                                                                            
|- | -------------------------------------------------------------------------------------------------------------------------------------------
|x | QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2011      
|  |                                                                                                                                            
|o | TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE TRANSITION PERIOD FROM _______ TO _______

|                                                      
|------------------------------------------------------
|Commission
File Number 333-168971                     
|                                                      
|Apple
REIT Ten, Inc.                                  
|(Exact name of registrant as specified in its charter)

|                                         |                    
|---------------------------------------- | -------------------
|Virginia                                 | 27-3218228         
|(State or other jurisdiction             | (IRS Employer      
|of incorporation or organization)        | Identification No.)
|                                         |                    
|814 East Main Street                     |                    
|Richmond, Virginia                       | 23219              
|(Address of principal executive offices) | (Zip Code)         

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

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  Yes o
 No  x

Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the
preceding 12 months (or for such shorter period that the registrant was
required to submit and post such files). Yes o No o

Indicate by
check mark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer, or a smaller reporting company. See the
definitions of large accelerated filer, accelerated filer and smaller
reporting company in Rule 12b-2 of the Exchange Act.

|                            |                       |                                               |                              
|--------------------------- | --------------------- | --------------------------------------------- | -----------------------------
|Large accelerated filer   o | Accelerated filer   o | Non-accelerated filer   o                     | Smaller reporting company   x
|                            |                       | (Do not check if a smaller
reporting company) |                              

Indicate by check mark
whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).   Yes  o    No  x

Number of registrants
common shares outstanding as of May 1, 2011: 28,342,695

---



APPLE REIT TEN, INC.
FORM 10-QINDEX

|                              |         |    |                                                                                       |  |            
|----------------------------- | ------- | -- | ------------------------------------------------------------------------------------- |  | -----------
|                              |         |    |                                                                                       |  | Page
Number
|                              |         |    |                                                                                       |  |            
|PART I. FINANCIAL INFORMATION |         |   
|                              |         |    |                                                                                       |  |            
|                              | Item 1. |    | Financial Statements (Unaudited)                                                      |  |            
|                              |         |    |                                                                                       |  |            
|                              |         |    | Consolidated Balance Sheets  March 31, 2011 and December 31, 2010                    |  | 3          
|                              |         |    |                                                                                       |  |            
|                              |         |    | Consolidated Statement of Operations - Three months ended March 31,
2011              |  | 4          
|                              |         |    |                                                                                       |  |            
|                              |         |    | Consolidated Statement of Cash Flows  Three months ended March 31,
2011              |  | 5          
|                              |         |    |                                                                                       |  |            
|                              |         |    | Notes to Consolidated Financial Statements                                            |  | 6          
|                              |         |    |                                                                                       |  |            
|                              | Item 2. |    | Managements Discussion and Analysis of Financial Condition and
Results of Operations |  | 15         
|                              |         |    |                                                                                       |  |            
|                              | Item 3. |    | Quantitative and Qualitative Disclosures About Market Risk                            |  | 23         
|                              |         |    |                                                                                       |  |            
|                              | Item 4. |    | Controls and Procedures                                                               |  | 23         
|                              |         |    |                                                                                       |  |            
|PART II. OTHER INFORMATION    |         |   
|                              |         |    |                                                                                       |  |            
|                              | Item 2. |    | Unregistered Sales of Equity Securities and Use of Proceeds                           |  | 24         
|                              |         |    |                                                                                       |  |            
|                              | Item 6. |    | Exhibits                                                                              |  | 25         
|                              |         |    |                                                                                       |  |            
|Signatures                    |         | 28

This Form 10-Q includes references to certain trademarks or service
marks. The Hampton Inn and Suites®, Homewood Suites® by Hilton, Hilton Garden
Inn® and Home2 Suites® by Hilton trademarks are the property of Hilton
Worldwide or one or more of its affiliates. The Fairfield Inn and Suites® by
Marriott, TownePlace Suites® by Marriott and SpringHill Suites® by Marriott
trademarks are the property of Marriott International, Inc. or one of its
affiliates. For convenience, the applicable trademark or service mark symbol
has been omitted but will be deemed to be included wherever the above
referenced terms are used.

2

---



|                             
|-----------------------------
|PART
I. FINANCIAL INFORMATION
|ITEM
1. FINANCIAL STATEMENTS 

APPLE REIT TEN, INC.CONSOLIDATED BALANCE
SHEETS
(in thousands, except share data)

|                                                                                                                                     |  |                |         |                   |   |     |  
|------------------------------------------------------------------------------------------------------------------------------------ |  | -------------- | ------- | ----------------- | - | --- | -
|                                                                                                                                     |  | March 31,
2011 |         | December
31,
2010 |  
|                                                                                                                                     |  |                |         |                   |  
|                                                                                                                                     |  | (unaudited)    |         |                   |  
|ASSETS                                                                                                                               |  |                |         |                   |   |     |  
|Investment in real estate, net of accumulated depreciation of $214
and $-                                                            |  | $              | 89,983  |                   | $ |    |  
|Cash and cash equivalents                                                                                                            |  |                | 120,708 |                   |   | 124 |  
|Due from third party managers                                                                                                        |  |                | 561     |                   |   |    |  
|Other assets                                                                                                                         |  |                | 600     |                   |   | 868 |  
|                                                                                                                                     |  |                |         |                   |   |     |  
|Total
Assets                                                                                                                         |  | $              | 211,852 |                   | $ | 992 |  
|                                                                                                                                     |  |                |         |                   |   |     |  
|                                                                                                                                     |  |                |         |                   |   |     |  
|LIABILITIES
AND SHAREHOLDERS EQUITY                                                                                                 |  |                |         |                   |   |     |  
|Liabilities                                                                                                                          |  |                |         |                   |   |     |  
|Note payable                                                                                                                         |  | $              |        |                   | $ | 400 |  
|Accounts payable and accrued expenses                                                                                                |  |                | 438     |                   |   | 575 |  
|                                                                                                                                     |  |                |         |                   |   |     |  
|Total
Liabilities                                                                                                                    |  |                | 438     |                   |   | 975 |  
|                                                                                                                                     |  |                |         |                   |   |     |  
|Shareholders
Equity                                                                                                                 |  |                |         |                   |   |     |  
|Preferred stock, authorized 30,000,000 shares; none issued and
outstanding                                                           |  |                |        |                   |   |    |  
|Series A preferred stock, no par value, authorized 400,000,000
shares; issued and outstanding 22,337,579 and 10 shares, respectively |  |                |        |                   |   |    |  
|Series B convertible preferred stock, no par value, authorized
480,000 shares; issued and outstanding 480,000 shares, respectively   |  |                | 48      |                   |   | 48  |  
|Common stock, no par value, authorized 400,000,000 shares; issued and
outstanding 22,337,579 and 10 shares, respectively             |  |                | 215,642 |                   |   |    |  
|Accumulated deficit                                                                                                                  |  |                | (2,421  | )                 |   | (31 | )
|Cumulative distributions paid                                                                                                        |  |                | (1,855  | )                 |   |    |  
|                                                                                                                                     |  |                |         |                   |   |     |  
|Total
Shareholders Equity                                                                                                           |  |                | 211,414 |                   |   | 17  |  
|                                                                                                                                     |  |                |         |                   |   |     |  
|                                                                                                                                     |  |                |         |                   |   |     |  
|Total
Liabilities and Shareholders Equity                                                                                           |  | $              | 211,852 |                   | $ | 992 |  
|                                                                                                                                     |  |                |         |                   |   |     |  

See accompanying notes to consolidated financial statements.

The Company was initially capitalized on August 13, 2010 and commenced
operations on March 4, 2011.

3

---



APPLE REIT TEN, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
(in thousands, except per share data)

|                                                               |  |                                   |        |  
|-------------------------------------------------------------- |  | --------------------------------- | ------ | -
|                                                               |  | Three Months
Ended March 31,
2011 |       
|                                                               |  |                                   |       
|                                                               |  |                                   |        |  
|Revenues:                                                      |  |                                   |        |  
|Room revenue                                                   |  | $                                 | 749    |  
|Other revenue                                                  |  |                                   | 144    |  
|                                                               |  |                                   |        |  
|Total revenue                                                  |  |                                   | 893    |  
|                                                               |  |                                   |        |  
|Expenses:                                                      |  |                                   |        |  
|Operating expense                                              |  |                                   | 234    |  
|Hotel administrative expense                                   |  |                                   | 54     |  
|Sales and marketing                                            |  |                                   | 75     |  
|Utilities                                                      |  |                                   | 34     |  
|Repair and maintenance                                         |  |                                   | 22     |  
|Franchise fees                                                 |  |                                   | 38     |  
|Management fees                                                |  |                                   | 27     |  
|Taxes, insurance and other                                     |  |                                   | 64     |  
|General and administrative                                     |  |                                   | 597    |  
|Acquisition related costs                                      |  |                                   | 2,020  |  
|Depreciation expense                                           |  |                                   | 214    |  
|                                                               |  |                                   |        |  
|Total expenses                                                 |  |                                   | 3,379  |  
|                                                               |  |                                   |        |  
|Operating loss                                                 |  |                                   | (2,486 | )
|                                                               |  |                                   |        |  
|Interest income, net                                           |  |                                   | 96     |  
|                                                               |  |                                   |        |  
|                                                               |  |                                   |        |  
|Net loss                                                       |  | $                                 | (2,390 | )
|                                                               |  |                                   |        |  
|                                                               |  |                                   |        |  
|Basic and diluted net loss per common
share                    |  | $                                 | (0.23  | )
|                                                               |  |                                   |        |  
|Weighted average common shares outstanding
- basic and diluted |  |                                   | 10,380 |  

See accompanying notes to consolidated financial statements.

The Company was initially
capitalized on August 13, 2010 and commenced operations on March 4, 2011.

4

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APPLE REIT TEN, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
(in thousands)

|                                                                        |  |                                   |         |  
|----------------------------------------------------------------------- |  | --------------------------------- | ------- | -
|                                                                        |  | Three Months
Ended March 31,
2011 |        
|                                                                        |  |                                   |        
|                                                                        |  |                                   |         |  
|Cash flows from operating activities:                                   |  |                                   |         |  
|Net loss                                                                |  | $                                 | (2,390  | )
|Adjustments to reconcile net loss to cash
used in operating activities: |  |                                   |         |  
|Depreciation                                                            |  |                                   | 214     |  
|Stock option expense                                                    |  |                                   | 31      |  
|Changes in operating assets and
liabilities:                            |  |                                   |         |  
|Increase in funds due from third party managers                         |  |                                   | (478    | )
|Increase in other assets                                                |  |                                   | (100    | )
|Increase in accounts payable and accrued expenses                       |  |                                   | 235     |  
|                                                                        |  |                                   |         |  
|Net cash used in operating activities                                   |  |                                   | (2,488  | )
|                                                                        |  |                                   |         |  
|                                                                        |  |                                   |         |  
|Cash flows used in investing activities:                                |  |                                   |         |  
|Cash paid for the acquisition of hotel
properties                       |  |                                   | (90,186 | )
|Deposits and other disbursements for
potential acquisitions             |  |                                   | (500    | )
|                                                                        |  |                                   |         |  
|Net cash used in investing activities                                   |  |                                   | (90,686 | )
|                                                                        |  |                                   |         |  
|                                                                        |  |                                   |         |  
|Cash flows from financing activities:                                   |  |                                   |         |  
|Net proceeds related to issuance of Units                               |  |                                   | 216,013 |  
|Distributions paid to common shareholders                               |  |                                   | (1,855  | )
|Payments on note payable                                                |  |                                   | (400    | )
|                                                                        |  |                                   |         |  
|Net cash provided by financing activities                               |  |                                   | 213,758 |  
|                                                                        |  |                                   |         |  
|                                                                        |  |                                   |         |  
|Increase in cash and cash equivalents                                   |  |                                   | 120,584 |  
|                                                                        |  |                                   |         |  
|Cash and cash equivalents, beginning of period                          |  |                                   | 124     |  
|                                                                        |  |                                   |         |  
|                                                                        |  |                                   |         |  
|Cash and cash equivalents, end of period                                |  | $                                 | 120,708 |  
|                                                                        |  |                                   |         |  

See accompanying notes to consolidated financial statements.

The Company
was initially capitalized on August 13, 2010 and commenced operations on March
4, 2011.

5

---



APPLE REIT TEN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

The
accompanying unaudited consolidated financial statements have been prepared in
accordance with the rules and regulations for reporting on Form 10-Q. Accordingly,
they do not include all of the information required by accounting principles
generally accepted in the United States for complete financial statements. 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 consolidated financial statements included in its prospectus supplement
No. 3 pursuant to Rule 424(b)(3) and filed with the Securities and Exchange
Commission (File No. 333-168971) on March 17, 2011. Operating results for the
three months ended March 31, 2011 are not necessarily indicative of the results
that may be expected for the twelve month period ending December 31, 2011.

2. General Information and Summary of
Significant Accounting Policies

Organization

Apple
REIT Ten, Inc. together with its wholly owned subsidiaries (the Company) is a
Virginia corporation that intends to qualify as a real estate investment trust
(REIT) for federal income tax purposes. The Company was formed to invest in
hotels and other income-producing real estate assets in selected metropolitan
areas in the United States. Initial capitalization occurred on August 13, 2010,
when 10 Units, each Unit consisting of one common share and one Series A
preferred share, were purchased by Apple Ten Advisors, Inc. (A10A) and
480,000 Series B convertible preferred shares, were purchased by Glade M.
Knight, the Companys Chairman and Chief Executive Officer. The Company began
operations on March 4, 2011, when it purchased its first hotel. The Companys
fiscal year end is December 31. The consolidated financial statements include
the accounts of the Company and its subsidiaries. All intercompany accounts and
transactions have been eliminated.

Significant
Accounting Policies

Start Up Costs

Start
up costs are expensed as incurred.

Use of
Estimates

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

Offering Costs

The
Company is raising capital through an on-going best-efforts offering of Units
by David Lerner Associates, Inc., the managing underwriter, which receives a
selling commission and a marketing expense allowance based on proceeds of the
shares sold. Additionally, the Company has incurred other offering costs
including legal, accounting and reporting services. These offering costs are
recorded by the Company as a reduction of shareholders equity. Prior to the commencement
of the Companys offering, these costs were deferred and recorded as prepaid
expense. As of March 31, 2011, the Company had sold 22.3 million Units for
gross proceeds of $241.0 million and proceeds net of offering costs of $215.7
million.

6

---



Earnings Per
Common Share

Basic
earnings per common share is computed as net loss divided by the weighted
average number of common shares outstanding during the period. Diluted earnings
per share is calculated after giving effect to all potential common shares that
were dilutive and outstanding for the period. There were no shares with a
dilutive effect for the three months ended March 31, 2011. As a result, basic
and diluted outstanding shares were the same. Series B convertible preferred
shares are not included in earnings per common share calculations until such
time that such shares are eligible to be converted to common shares.

Cash and Cash
Equivalents

Cash
and cash equivalents consist of highly liquid investments with original
maturities of three months or less. The fair market value of cash and cash
equivalents approximates their carrying value. Cash balances may at times
exceed federal depository insurance limits.

Investments in
Real Estate and Related Depreciation

Real
estate is stated at cost, net of depreciation. Repair and maintenance costs are
expensed as incurred while significant improvements, renovations, and
replacements are capitalized. Depreciation is computed using the straight-line
method over estimated useful lives of the assets, which are 39 years for
buildings, ten years for major improvements and three to seven years for
furniture and equipment.

The
Company considers expenditures to be capital in nature based on the following
criteria: (1) for a single asset, the cost must be at least $500, including all
normal and necessary costs to place the asset in service, and the useful life
must be at least one year; (2) for group purchases of 10 or more identical
assets, the unit cost for each asset must be at least $50, including all normal
and necessary costs to place the asset in service, and the useful life must be
at least one year; (3) for major repairs to a single asset, the repair must be
at least $2,500 and the useful life of the asset must be substantially
extended.

Upon
acquisition of real estate properties, the Company estimates the fair value of
acquired tangible assets (consisting of land, land improvements, buildings and
improvements) and identified intangible assets and liabilities, in-place leases
and assumed debt based on evaluation of information and estimates available at
that date. Generally, the Company does not acquire hotel properties that have
significant in-place leases as lease terms for hotel properties are very short
term in nature. The Company has not assigned any value to intangible assets
such as management contracts and franchise agreements as such contracts are
generally at current market rates and any other value attributable to these
contracts is not considered material. The Company has expensed as incurred all
transaction costs associated with the acquisitions of existing businesses,
including title, legal, accounting and other related costs, as well as the
brokerage commission paid to Apple Suites Realty Group, Inc. (ASRG), a
related party 100% owned by Glade M. Knight, Chairman and Chief Executive
Officer of the Company.

The
Company records impairment losses on hotel properties used in operations if
indicators of impairment are present, and the sum of the undiscounted cash
flows estimated to be generated by the respective properties, based on
historical and industry information, is less than the properties carrying
amount. Indicators of impairment include a property with current or potential
losses from operations, when it becomes more likely than not that a property
will be sold before the end of its previously estimated useful life or when
events, trends, contingencies or changes in circumstances indicate that a
triggering event has occurred and an assets carrying value may not be
recoverable. Impairment losses are measured as the difference between the
assets fair value and its carrying value. No impairment losses have been
recorded to date.

Federal Income
Taxes

The
Company intends to elect to be taxed, and expects to qualify, as a REIT under
Sections 856 to 860 of the Internal Revenue Code. As a REIT, the Company will
be allowed a deduction for the amount of

7

---



dividends paid
to its shareholders, thereby subjecting the distributed net income of the
Company to taxation only at the shareholder level. The Companys continued
qualification as a REIT will depend on its compliance with numerous
requirements, including requirements as to the nature of its income and distribution
of dividends.

The
Company has established Apple Ten Hospitality Management, Inc. as a 100% owned
taxable REIT subsidiary (TRS). The TRS will lease all hotels from the Company
and be subject to income tax at regular corporate rates on any income that it
would earn.

Revenue
Recognition

Revenue
is recognized as earned, which is generally defined as the date upon which a
guest occupies a room or utilizes the hotels services.

Comprehensive
Income

The
Company recorded no comprehensive income other than net loss for the period
ended March 31, 2011.

Sales and
Marketing Costs

Sales
and marketing costs are expensed when incurred. These costs represent the
expense for franchise advertising and reservation systems under the terms of
the hotel management and franchise agreements and general and administrative
expenses that are directly attributable to advertising and promotion.

3. Real Estate Investments

The
Company acquired four hotels during the first three months of 2011. The
following table sets forth the location, brand, manager, gross purchase price,
number of hotel rooms and date of purchase by the Company for each hotel
acquired. All dollar amounts are in thousands.

|                  |  |       |                        |         |  |                       |  |       |        |                   |  |     |  |  |           | 
|----------------- |  | ----- | ---------------------- | ------- |  | --------------------- |  | ----- | ------ | ----------------- |  | --- |  |  | --------- | 
|Location          |  | Brand |                        | Manager |  | Gross Purchase
 Price |  | Rooms |        | Date of
 Purchase | 
|                  |  |       |                        |         |  |                       |  |       |        |                   | 
|Denver, CO        |  |       | Hilton Garden Inn      |         |  | Stonebridge           |  | $     | 58,500 |                   |  | 221 |  |  | 3/4/2011  | 
|Winston-Salem, NC |  |       | Hampton Inn & Suites   |         |  | McKibbon              |  |       | 11,000 |                   |  | 94  |  |  | 3/15/2011 | 
|Matthews, NC      |  |       | Fairfield Inn & Suites |         |  | Newport               |  |       | 10,000 |                   |  | 94  |  |  | 3/25/2011 | 
|Columbia, SC      |  |       | TownePlace Suites      |         |  | Newport               |  |       | 10,500 |                   |  | 91  |  |  | 3/25/2011 | 
|                  |  |       |                        |         |  |                       |  |       |        |                   |  |     |  |  |           | 
|Total             |  |       |                        |         |  |                       |  | $     | 90,000 |                   |  | 500 |  |  |           | 
|                  |  |       |                        |         |  |                       |  |       |        |                   |  |     |  |  |           | 

The
purchase price for the hotels was funded by the Companys on-going best-efforts
offering of Units. The Company also used proceeds from its on-going
best-efforts offering to pay approximately $2.0 million in acquisition related
costs, including $1.8 million, representing 2% of the gross purchase price for
these hotels, as a brokerage commission to ASRG, 100% owned by Glade M. Knight,
the Companys Chairman and Chief Executive Officer, and approximately $0.2
million in other acquisition related costs, including title, legal and other
related costs. These costs are included in acquisition related costs in the
Companys consolidated statement of operations for the three months ended March
31, 2011.

The
Company leases all of its hotels to its wholly-owned taxable REIT subsidiary
(or a subsidiary thereof) under master hotel lease agreements.

No
goodwill was recorded in connection with any of the acquisitions.

At
March 31, 2011, the Companys investment in real estate consisted of the
following (in thousands):

8

---



|                                  |  |   |        |  
|--------------------------------- |  | - | ------ | -
|Land                              |  | $ | 8,674  |  
|Building and Improvements         |  |   | 77,448 |  
|Furniture, Fixtures and Equipment |  |   | 4,075  |  
|                                  |  |   |        |  
|                                  |  |   | 90,197 |  
|Less Accumulated Depreciation     |  |   | (214   | )
|                                  |  |   |        |  
|Investment in real estate, net    |  | $ | 89,983 |  
|                                  |  |   |        |  

As
of March 31, 2011, the Company had outstanding contracts for the potential
purchase of three additional hotels for a total purchase price of $43.4
million. Of these three hotels, two are under construction and should be
completed within the next 12 months. Closing on these two hotels is expected
upon completion of construction. The existing hotel is expected to close within
the next nine months. Although the Company is working towards acquiring these
hotels, there are many conditions to closing that have not yet been satisfied
and there can be no assurance that closings will occur under the outstanding
purchase contracts. The following table summarizes the location, brand, number
of rooms, refundable (if the seller does not meet its obligations under the
contract) contract deposits paid, and gross purchase price for each of the
contracts. All dollar amounts are in thousands.

|                       |  |       |                        |       |  |                |  |                       |     |  |   |        | 
|---------------------- |  | ----- | ---------------------- | ----- |  | -------------- |  | --------------------- | --- |  | - | ------ | 
|Location               |  | Brand |                        | Rooms |  | Deposits
 Paid |  | Gross Purchase
 Price |    
|                       |  |       |                        |       |  |                |  |                       |    
|Operating (a)          |  |       |                        |       |  |                |  |                       |     |  |   |        | 
|South Bend, IN         |  |       | Fairfield Inn & Suites |       |  | 119            |  | $                     | 300 |  | $ | 17,500 | 
|                       |  |       |                        |       |  |                |  |                       |     |  |   |        | 
|Under Construction (b) |  |       |                        |       |  |                |  |                       |     |  |   |        | 
|Jacksonville, NC       |  |       | Home2 Suites           |       |  | 105            |  |                       | 100 |  |   | 12,000 | 
|Charleston, SC         |  |       | Home2 Suites           |       |  | 122            |  |                       | 100 |  |   | 13,908 | 
|                       |  |       |                        |       |  |                |  |                       |     |  |   |        | 
|                       |  |       |                        |       |  | 346            |  | $                     | 500 |  | $ | 43,408 | 
|                       |  |       |                        |       |  |                |  |                       |     |  |   |        | 

|    |                                                                                                                                                                                                                                                       | 
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|    |                                                                                                                                                                                                                                                      
|(a) | This hotel is currently
 operational and assuming all conditions to closing are met should close
 within nine months from March 31, 2011.                                                                                                            
|(b) | The hotels are currently
 under construction. The table shows the expected number of rooms upon hotel
 completion and the expected franchise. Assuming all conditions to closing are
 met should close within the next 12 months from March 31, 2011.

As
there can be no assurance that all conditions to closing will be satisfied, the
Company includes deposits paid for hotels under contract in other assets, net
in the Companys consolidated balance sheets, and in deposits and other
disbursements for potential acquisitions in the Companys consolidated
statement of cash flows. It is anticipated that the purchase price for the
outstanding contracts will be funded from the proceeds of the Companys
on-going best-efforts offering of Units and cash on hand if a closing occurs.

On
February 4, 2011, the Company entered into a purchase contract for the
potential acquisition of a Fairfield Inn & Suites hotel in Wytheville,
Virginia. On February 25, 2011, this contract was terminated. The gross
purchase price for the 80 room hotel was $7.3 million. In connection with the
termination of this contract, the initial deposit of $100,000 was repaid to the
Company.

4. Related Parties

The
Company has, and is expected to continue to engage in, significant transactions
with related parties. These transactions cannot be construed to be at arms
length and the results of the Companys operations may be different than if
conducted with non-related parties. The Companys independent members of the
Board of Directors oversee and annually review the Companys related party
relationships (which include the relationships discussed in this section) and
are required to approve any significant modifications to the contracts, as well
as any new significant related party transactions. The Board of Directors is
not required to approve each individual transaction that falls under the
related party

9

---



relationships.
However, under the direction of the Board of Directors, at least one member of
the Companys senior management team approves each related party transaction.

The
Company has a contract with ASRG, to acquire and dispose of real estate assets
for the Company. A fee of 2% of the gross purchase price or gross sale price in
addition to certain reimbursable expenses is paid to ASRG for these services.
As of March 31, 2011, payments to ASRG for fees under the terms of this
contract have totaled approximately $1.8 million since inception. All of this
amount was incurred in the three months ended March 31, 2011, and is included
in acquisition related costs in the Companys consolidated statement of
operations.

The
Company is party to an advisory agreement with A10A, pursuant to which A10A
provides management services to the Company. An annual fee ranging from 0.1% to
0.25% of total equity proceeds received by the Company, in addition to certain
reimbursable expenses, are payable for these services. Total advisory fees
incurred by the Company under the advisory agreement are included in general
and administrative expenses and totaled approximately $28,000 for the three
months ended March 31, 2011.

In
addition to the fees payable to ASRG and A10A, the Company reimbursed A10A or
ASRG or paid directly to Apple REIT Six, Inc. (AR6) on behalf of A10A or ASRG
approximately $349,000 for the three months ended March 31, 2011. The expenses
reimbursed are approximately $149,000 for costs reimbursed under the contract
with ASRG and approximately $200,000 of costs reimbursed under the contract
with A10A. The costs are included in general and administrative expenses and
are for the Companys proportionate share of the staffing and related costs
provided by AR6. The costs are actual costs with no markup or profit to AR6.

The
advisors are staffed with personnel of AR6. AR6 provides similar staffing for
Apple Six Advisors, Inc. (A6A), Apple Seven Advisors, Inc. (A7A), Apple Eight
Advisors, Inc. (A8A) and Apple Nine Advisors, Inc. (A9A). A6A, A7A, A8A and
A9A provide management services to, respectively, AR6, Apple REIT Seven, Inc.,
Apple REIT Eight, Inc. and Apple REIT Nine, Inc. Although there is a potential
conflict on time allocation of employees due to the fact that a senior manager,
officer or staff member will provide services to more than one company, the
Company believes that the executives and staff compensation sharing arrangement
allows the companies to share costs yet attract and retain superior executives
and staff. The cost sharing structure also allows each entity to maintain a
much more cost effective structure than having separate staffing arrangements.
Amounts reimbursed to AR6 include both compensation for personnel and
overhead (office rent, utilities, benefits, office supplies, etc.) utilized
by the companies. The allocation of costs from AR6 is made by the management of
the several REITs and is reviewed at least annually by the Compensation
Committees of the several REITs. In making the allocation, management and the
Compensation Committee, consider all relevant facts related to the Companys
level of business activity and the extent to which the Company requires the
services of particular personnel of AR6. Such payments are based on the actual
costs of the services and are not based on formal record keeping regarding the
time these personnel devote to the Company, but are based on a good faith
estimate by the employee and/or his or her supervisor of the time devoted by
the employee to the Company. As part of this arrangement, the day to day
transactions may result in amounts due to or from the noted related parties. To
efficiently manage cash disbursements, the individual companies may make
payments for any or all of the related companies. The amounts due to or from
the related individual companies are reimbursed or collected and are not
significant in amount.

ASRG,
A6A, A7A, A8A, A9A and A10A are 100% owned by Glade M. Knight, Chairman and
Chief Executive Officer of the Company. Mr. Knight is also Chairman and Chief
Executive Officer of AR6, Apple REIT Seven, Inc., Apple REIT Eight, Inc. and
Apple REIT Nine, Inc. Members of the Companys Board of Directors are also on
the Board of Directors of Apple REIT Seven, Inc. and Apple REIT Eight, Inc.

During
the first quarter of 2011, the Company entered into an assignment of contract
with ASRG to become the purchaser of a Home2 Suites by Hilton (currently under
construction) located in Charleston, South Carolina for a total purchase price
of $13.9 million. ASRG entered into the assigned contract on November 5, 2010.
Under the terms and conditions of the contract, ASRG assigned to the Company
all of

10

---



its rights and
obligations under the purchase contract. There was no consideration paid to
ASRG for this assignment, other than the reimbursement of the deposit
previously made by ASRG totaling $100,000. There was no profit for ASRG in the
assignment.

5. Stock Incentive
Plan

During
January 2011, the Company adopted a non-employee directors stock option plan
(the Directors Plan) to provide incentives to attract and retain directors.
The Directors Plan provides for the grant of options to purchase a specified
number of Units (Options) to directors, who are not employees of the Company.
A Compensation Committee (Committee) was established to administer the
Directors Plan. The Committee is responsible for granting Options and for
establishing the exercise price of Options. During the three months ended March
31, 2011, the Company granted Options to purchase 22,000 Units under the
Directors Plan and recorded approximately $31,000 in compensation expense.

6. Shareholders
Equity

Best-efforts Offering

The
Company is currently conducting an on-going best-efforts offering. The Company
registered its Units on Registration Statement Form S-11 (File No. 333-168971) filed on August 20, 2010 and the Form S-11 was
declared effective by the SEC on January 19, 2011. Each Unit consists of one
common share and one Series A preferred share. The Company began its best-efforts offering of Units the
same day the registration statement was declared effective. The minimum
offering of 9,523,810 Units at $10.50 per Unit was sold as of January 27, 2011,
with proceeds, net of commissions and marketing expenses totaling $90 million.
The offering is continuing as of the date of these financial statements. The
managing underwriter is David Lerner Associates, Inc., and all of the
Units are being sold for the Companys account.

The
Series A preferred shares have no voting rights and no conversion rights. In
addition, the Series A preferred shares are not separately tradable from the
common shares to which they relate. The Series A preferred shares do not have
any distribution rights except a priority distribution upon the sale of the
Companys assets. The priority distribution (Priority Distribution) will be
equal to $11.00 per Series A preferred share, and will be paid before any
distribution will be made to the holders of any other shares. Upon the Priority
Distribution the Series A preferred shares will have no other distribution
rights.

Series B Convertible Preferred Stock

The
Company has authorized 480,000 shares of Series B convertible preferred stock.
The Company has issued 480,000 Series B convertible preferred shares to Glade
M. Knight, Chairman and Chief Executive Officer of the Company, in exchange for
the payment by him of $0.10 per Series B convertible preferred share, or an
aggregate of $48,000. The Series B convertible preferred shares are convertible
into common shares pursuant to the formula and on the terms and conditions set
forth below.

There
are no dividends payable on the Series B convertible preferred shares. Holders
of more than two-thirds of the Series B convertible preferred shares must
approve any proposed amendment to the articles of incorporation that would
adversely affect the Series B convertible preferred shares.

Upon
the Companys liquidation, the holder of the Series B convertible preferred
shares is entitled to a priority liquidation payment before any distribution of
liquidation proceeds to the holders of the common shares. However, the priority
liquidation payment of the holder of the Series B convertible preferred shares
is junior to the holders of the Series A preferred shares distribution rights.
The holder of a Series B convertible preferred share is entitled to a
liquidation payment of $11 per number of common shares each Series B
convertible preferred share would be convertible into according to the formula
described below. In the event that the liquidation of the Companys assets
results in proceeds that exceed the distribution rights of the Series A
preferred shares and the Series B convertible preferred shares, the remaining
proceeds will be distributed between the common shares and the Series B
convertible preferred shares, on an as converted basis.

11

---



Each
holder of outstanding Series B convertible preferred shares shall have the
right to convert any of such shares into common shares of the Company upon and
for 180 days following the occurrence of any of the following events:

| |                                                                                                                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1)
 substantially all of the Companys assets, stock or business is sold or
 transferred through exchange, merger, consolidation, lease, share exchange,
 sale or otherwise, other than a sale of assets in liquidation, dissolution or
 winding up of the Company;
| |                                                                                                                                                                                                                                                                     
| | (2)
 the termination or expiration without renewal of the advisory agreement, or
 if the Company ceases to use ASRG to provide property acquisition and
 disposition services; or                                                                                   
| |                                                                                                                                                                                                                                                                     
| | (3)
 the Companys common shares are listed on any securities exchange or
 quotation system or in any established market.                                                                                                                                           

Upon
the occurrence of any conversion event, each Series B convertible preferred
share may be converted into a number of common shares based upon the gross
proceeds raised through the date of conversion in the Companys $2 billion
offering according to the following table:

|                                                                      |   |                                                                                            |  |  |          |  | 
|--------------------------------------------------------------------- | - | ------------------------------------------------------------------------------------------ |  |  | -------- |  | 
|Gross Proceeds Raised from Sales of
 Units through Date of Conversion |   | Number of Common Shares
 through Conversion of
 One Series B Convertible Preferred 
 Share | 
|                                                                      |   |                                                                                            | 
|                                                                      | $ | 200 million                                                                                |  |  | 1.83239  |  | 
|                                                                      | $ | 300 million                                                                                |  |  | 3.19885  |  | 
|                                                                      | $ | 400 million                                                                                |  |  | 4.83721  |  | 
|                                                                      | $ | 500 million                                                                                |  |  | 6.11068  |  | 
|                                                                      | $ | 600 million                                                                                |  |  | 7.29150  |  | 
|                                                                      | $ | 700 million                                                                                |  |  | 8.49719  |  | 
|                                                                      | $ | 800 million                                                                                |  |  | 9.70287  |  | 
|                                                                      | $ | 900 million                                                                                |  |  | 10.90855 |  | 
|                                                                      | $ | 1 billion                                                                                  |  |  | 12.11423 |  | 
|                                                                      | $ | 1.1 billion                                                                                |  |  | 13.31991 |  | 
|                                                                      | $ | 1.2 billion                                                                                |  |  | 14.52559 |  | 
|                                                                      | $ | 1.3 billion                                                                                |  |  | 15.73128 |  | 
|                                                                      | $ | 1.4 billion                                                                                |  |  | 16.93696 |  | 
|                                                                      | $ | 1.5 billion                                                                                |  |  | 18.14264 |  | 
|                                                                      | $ | 1.6 billion                                                                                |  |  | 19.34832 |  | 
|                                                                      | $ | 1.7 billion                                                                                |  |  | 20.55400 |  | 
|                                                                      | $ | 1.8 billion                                                                                |  |  | 21.75968 |  | 
|                                                                      | $ | 1.9 billion                                                                                |  |  | 22.96537 |  | 
|                                                                      | $ | 2 billion                                                                                  |  |  | 24.17104 |  | 

In
the event that after raising gross proceeds of $2 billion, the Company raises
additional gross proceeds in a subsequent public offering, each Series B
convertible preferred share may be converted into an additional number of
common shares based on the additional gross proceeds raised through the date of
conversion in a subsequent public offering according to the following formula:
(X/100 million) x 1.20568, where X is the additional gross proceeds rounded
down to the nearest 100 million.

No
additional consideration is due upon the conversion of the Series B convertible
preferred shares. The conversion into common shares of the Series B convertible
preferred shares will result in dilution of the shareholders interests.

Expense
related to the issuance of 480,000 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

12

---



shares can be reasonably estimated and
the event triggering the conversion of the Series B shares to common shares
occurs. 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, expense if the maximum offering is achieved could
range from $0 to in excess of $127 million (assumes $11 per unit fair market
value). Based on equity raised through March 31, 2011, if a triggering event
had occurred, expense would have ranged from $0 to $9.7 million (assumes $11
per unit fair market value) and approximately 880,000 common shares would have
been issued.

Distributions

The
Companys annual distribution rate as of March 31, 2011 was $0.825 per common
share. For the three months ended March 31, 2011, the Company made
distributions of $0.1375 per common share for a total of $1.9 million.

7. Note Payable

Prior
to the commencement of the Companys best-efforts offering, the Company
obtained an unsecured note payable in a principal amount of $400,000 to fund
certain start-up costs and offering expenses. The lender was Bank of America.
The note payable bore interest at a variable rate based on the London Interbank
Borrowing Rate (LIBOR). The note was fully paid in January 2011 with net
proceeds from the Companys on-going best-efforts offering.

8. Management and Franchise Agreements

Each
of the Companys four hotels are operated and managed, under separate
management agreements by affiliates of one of the following companies: MHH
Management, LLC (McKibbon), Newport Hospitality Group, Inc. (Newport) or
Stonebridge Realty Advisors, Inc. (Stonebridge). The agreements provide for
initial terms of 5-10 years. Fees associated with the agreements generally
include the payment of base management fees, incentive management fees,
accounting fees, and other fees for centralized services which are allocated
among all of the hotels that receive the benefit of such services. Base
management fees are calculated as a percentage of gross revenues. Incentive
management fees are calculated as a percentage of operating profit in excess of
a priority return to the Company, as defined in the management agreements. The
Company has the option to terminate the management agreements if specified
performance thresholds are not satisfied. For the three months ended March 31,
2011 the Company incurred approximately $27,000 in management fee expense.

McKibbon,
Newport and Stonebridge are not affiliated with either Marriott or Hilton, and
as a result, the hotels they manage were required to obtain separate franchise
agreements with each respective franchisor. The Hilton franchise agreements
generally provide for a term of 15 to 18 years. Fees associated with the
agreements generally include the payment of royalty fees and program fees. The
Marriott franchise agreements provide for an initial term of 18 to 20 years.
Fees associated with the agreement includes the payment of royalty fees,
marketing fees, reservation fees and a communications support fee based on room
revenues. For the three months ended March 31, 2011 the Company incurred
approximately $38,000 in franchise fees.

9. Pro Forma Information (Unaudited)

The
following unaudited pro forma information for the three months ended March 31,
2011, is presented as if the acquisitions of the Companys four hotels acquired
after December 31, 2010 had occurred on the latter of January 1, 2011 or the
opening date of the hotel. 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 these applicable dates, nor does it
purport to represent the results of operations for future periods. Amounts are
in thousands, except per share data.

13

---



|                                        |  |   |        |  
|--------------------------------------- |  | - | ------ | -
|Total revenues                          |  | $ | 3,628  |  
|Net loss                                |  |   | (1,935 | )
|Net loss per share - basic
 and diluted |  | $ | (0.14  | )

The
pro forma information reflects adjustments for actual revenues and expenses of
the four hotels acquired during the three months ended March 31, 2011 for the
respective period owned prior to acquisition by the Company. Net income has
been adjusted as follows: (1) interest income and expense has been adjusted to reflect
the reduction in cash and cash equivalents required to fund the acquisitions;
(2) interest expense related to prior owners debt which was not assumed has
been eliminated; (3) depreciation has been adjusted based on the Companys
basis in the hotels; and (4) transaction costs have been adjusted for the
acquisition of existing businesses.

10. Subsequent Events

In
April 2011, the Company declared and paid approximately $1.5 million in
dividend distributions to its common shareholders, or $0.06875 per outstanding
common share.

During
April 2011, the Company closed on the issuance of 6.0 million Units through its
on-going best-efforts offering, representing gross proceeds to the Company of
$66.1 million and proceeds net of selling and marketing costs of $59.5 million.

Subsequent
to March 31, 2011, the Company entered into a series of contracts for the
potential purchase of 14 hotels. The following table summarizes the hotel and
contract information. All dollar amounts are in thousands.

|                    |  |       |                      |                             |  |           |  |                        |       |                              |   |         |  |   |       |    
|------------------- |  | ----- | -------------------- | --------------------------- |  | --------- |  | ---------------------- | ----- | ---------------------------- | - | ------- |  | - | ----- | ---
|Location            |  | Brand |                      | Date of
 Purchase
 Contract |  | Rooms     |  | Gross
 Purchase
 Price |       | Initial
 Refundable
 Deposit |  
|                    |  |       |                      |                             |  |           |  |                        |       |                              |  
|Davenport, IA       |  |       | Hampton Inn & Suites |                             |  | 4/4/2011  |  |                        | 103   |                              | $ | 13,000  |  | $ | 100   |    
|Cedar Rapids, IA    |  |       | Homewood Suites      |                             |  | 4/4/2011  |  |                        | 95    |                              |   | 13,000  |  |   | 100   |    
|Cedar Rapids, IA    |  |       | Hampton Inn & Suites |                             |  | 4/4/2011  |  |                        | 103   |                              |   | 13,000  |  |   | 100   |    
|Hoffman Estates, IL |  |       | Hilton Garden Inn    |                             |  | 4/4/2011  |  |                        | 184   |                              |   | 10,000  |  |   | 100   |    
|Knoxville, TN       |  |       | TownePlace Suites    |                             |  | 4/12/2011 |  |                        | 98    |                              |   | 9,000   |  |   | 100   | (a)
|Knoxville, TN       |  |       | SpringHill Suites    |                             |  | 4/12/2011 |  |                        | 103   |                              |   | 14,500  |  |   | 100   |    
|Knoxville, TN       |  |       | Homewood Suites      |                             |  | 4/12/2011 |  |                        | 103   |                              |   | 15,000  |  |   | 100   | (a)
|Gainesville, FL     |  |       | Hilton Garden Inn    |                             |  | 4/12/2011 |  |                        | 104   |                              |   | 12,500  |  |   | 100   |    
|Fort Myers, FL      |  |       | SpringHill Suites    |                             |  | 4/12/2011 |  |                        | 106   |                              |   | 9,000   |  |   | 100   | (b)
|Richmond, VA        |  |       | SpringHill Suites    |                             |  | 4/12/2011 |  |                        | 103   |                              |   | 11,000  |  |   | 100   |    
|Pensacola, FL       |  |       | TownePlace Suites    |                             |  | 4/12/2011 |  |                        | 98    |                              |   | 11,500  |  |   | 100   |    
|Montgomery, AL      |  |       | TownePlace Suites    |                             |  | 4/12/2011 |  |                        | 95    |                              |   | 7,500   |  |   | 100   | (b)
|Mobile, AL          |  |       | Hampton Inn & Suites |                             |  | 4/12/2011 |  |                        | 101   |                              |   | 13,000  |  |   | 100   |    
|Gainesville, FL     |  |       | Homewood Suites      |                             |  | 5/4/2011  |  |                        | 103   |                              |   | 14,550  |  |   | 100   | (a)
|                    |  |       |                      |                             |  |           |  |                        |       |                              |   |         |  |   |       |    
|                    |  |       |                      |                             |  |           |  |                        | 1,499 |                              | $ | 166,550 |  | $ | 1,400 |    
|                    |  |       |                      |                             |  |           |  |                        |       |                              |   |         |  |   |       |    

|    |                                                                                                                                                                                                                                                                                                                                                                                                  | 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | 
|    |                                                                                                                                                                                                                                                                                                                                                                                                 
|(a) | Purchase contracts for these
 hotels require the Company to assume approximately $32.0 million in mortgage
 debt. Each of these loans provide for monthly payments of principal and
 interest on an amortized basis.                                                                                                                                                                            
|(b) | The purchase contracts for
 the Fort Myers, FL SpringHill Suites and Montgomery, AL TownePlace Suites
 hotels were terminated on April 29, 2011. The Montgomery, AL TownePlace
 Suites contract would have required the Company to assume approximately $4.1
 million in mortgage debt. In connection with the termination of these contracts,
 the initial deposits were repaid to the Company.

14

---



Item 2.
Managements Discussion and Analysis of Financial Condition and Results of
Operations

This
quarterly report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. 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 future results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, but are not limited to, the
ability of the Company to implement its acquisition strategy and operating
strategy; the Companys ability to manage planned growth; changes in economic
cycles and competition within the real estate industry. Although the Company
believes that the assumptions underlying the forward-looking statements
contained herein are reasonable, any of the assumptions could be inaccurate,
and therefore there can be no assurance that such statements included in the
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. In
addition, the Companys qualification as a real estate investment trust
involves the application of highly technical and complex provisions of the
Internal Revenue Code. Readers should carefully review the Companys financial
statements and the notes thereto, as well as the risk factors described in the
Companys filings with the Securities and Exchange Commission. Any
forward-looking statement that the Company makes speaks only as of the date of
this report. The Company undertakes no obligation to publicly update or revise
any forward-looking statements or cautionary factors as a result of new
information, future events or otherwise, except as required by law.

Overview

The
Company is a Virginia corporation that intends to qualify as a REIT for federal
income tax purposes. The Company, which owned four properties as of March 31,
2011 and has a limited operating history, was formed to invest in hotels and
other income-producing real estate in selected metropolitan areas in the United
States. Initial capitalization occurred on August 13, 2010, when 10 Units, each
Unit consisting of one common share and one Series A preferred share, were
purchased by Apple Ten Advisors, Inc. (A10A) and 480,000 Series B convertible
preferred shares were purchased by Glade M. Knight, the Companys Chairman and
Chief Executive Officer. The Companys fiscal year end is December 31.

Hotels Owned

The
Company commenced operations in March 2011 upon the purchase of its first hotel
property. The following table summarizes the location, brand, manager, gross
purchase price, number of hotel rooms and date of purchase for each of the four
hotels the Company owned as of March 31, 2011. All dollar amounts are in
thousands.

|                  |  |       |                         |         |  |                       |  |       |        |                   |  |     |  |  |           | 
|----------------- |  | ----- | ----------------------- | ------- |  | --------------------- |  | ----- | ------ | ----------------- |  | --- |  |  | --------- | 
|Location          |  | Brand |                         | Manager |  | Gross Purchase
 Price |  | Rooms |        | Date of
 Purchase | 
|                  |  |       |                         |         |  |                       |  |       |        |                   | 
|Denver, CO        |  |       | Hilton
 Garden Inn      |         |  | Stonebridge           |  | $     | 58,500 |                   |  | 221 |  |  | 3/4/2011  | 
|Winston-Salem, NC |  |       | Hampton
 Inn & Suites   |         |  | McKibbon              |  |       | 11,000 |                   |  | 94  |  |  | 3/15/2011 | 
|Matthews, NC      |  |       | Fairfield
 Inn & Suites |         |  | Newport               |  |       | 10,000 |                   |  | 94  |  |  | 3/25/2011 | 
|Columbia, SC      |  |       | TownePlace
 Suites      |         |  | Newport               |  |       | 10,500 |                   |  | 91  |  |  | 3/25/2011 | 
|                  |  |       |                         |         |  |                       |  |       |        |                   |  |     |  |  |           | 
|Total             |  |       |                         |         |  |                       |  | $     | 90,000 |                   |  | 500 |  |  |           | 
|                  |  |       |                         |         |  |                       |  |       |        |                   |  |     |  |  |           | 

The
purchase price for the hotels acquired was funded by the Companys on-going
best-efforts offering of Units. The Company leases all of its hotels to its
wholly-owned taxable REIT subsidiary (or a subsidiary thereof) under hotel
lease agreements. The Company also used the proceeds of its on-going
best-efforts offering to pay approximately $1.8 million, representing 2% of the
gross purchase price for these

15

---



hotels, as a commission to Apple Suites Realty Group, Inc.
(ASRG), 100% owned by Glade M. Knight, the Companys Chairman and Chief Executive
Officer.

No
goodwill was recorded in connection with any of the acquisitions.

Management and
Franchise Agreements

Each
of the Companys four hotels are operated and managed, under separate
management agreements by affiliates of one of the following companies: MHH
Management, LLC (McKibbon), Newport Hospitality Group, Inc. (Newport) or
Stonebridge Realty Advisors, Inc. (Stonebridge). The agreements provide for
initial terms of 5-10 years. Fees associated with the agreements generally
include the payment of base management fees, incentive management fees,
accounting fees, and other fees for centralized services which are allocated
among all of the hotels that receive the benefit of such services. Base
management fees are calculated as a percentage of gross revenues. Incentive
management fees are calculated as a percentage of operating profit in excess of
a priority return to the Company, as defined in the management agreements. The
Company has the option to terminate the management agreements if specified
performance thresholds are not satisfied. For the three months ended March 31,
2011 the Company incurred approximately $27,000 in management fee expense.

McKibbon,
Newport and Stonebridge are not affiliated with either Marriott or Hilton, and
as a result, the hotels they manage were required to obtain separate franchise
agreements with each respective franchisor. The Hilton franchise agreements
generally provide for a term of 15 to 18 years. Fees associated with the
agreements generally include the payment of royalty fees and program fees. The
Marriott franchise agreements provide for an initial term of 18 to 20 years.
Fees associated with the agreement includes the payment of royalty fees,
marketing fees, reservation fees and a communications support fee based on room
revenues. For the three months ended March 31, 2011 the Company incurred
approximately $38,000 in franchise fees.

Results of
Operations

During
the period from the Companys initial formation on August 13, 2010 to March 3,
2011, the Company owned no properties, had no revenue, exclusive of interest
income and was primarily engaged in capital formation activities. The Company
began operations on March 4, 2011 when it purchased its first hotel. During the
remainder of the quarter, the Company purchased an additional three hotel
properties. As a result, a comparison of 2011 operating results to prior year
results is not meaningful. Hotel performance is impacted by many factors
including local competition, and local and general economic conditions in the
United States.

Revenues

The
Companys principal source of revenue is hotel revenue, consisting of room and
other related revenue. Hotel operations included in the consolidated statement
of operations are for the four hotels acquired through March 31, 2011 for their
respective periods of ownership by the Company. For the three month period
ended March 31, 2011, the Company had total revenue of approximately $893,000.

For
the period acquired through March 31, 2011, the hotels achieved combined
average occupancy of approximately 66%, average daily rate (ADR) of $126 and
revenue per available room (RevPAR) of $82. ADR is calculated as room revenue
divided by the number of rooms sold, and RevPAR is calculated as occupancy
multiplied by ADR. These rates are consistent with industry and brand averages.

Expenses

For
the three month period ended March 31, 2011, hotel operating expenses totaled
approximately $484,000 or 54% of total revenue. Hotel operating expenses
consist of direct room expenses, hotel administrative expense, sales and
marketing expense, utilities expense, repair and maintenance expense, franchise
fees and management fees.

16

---



Taxes,
insurance, and other expense for the three months ended March 31, 2011 totaled
approximately $64,000 or 7% of total revenue.

General
and administrative expense for the three months ended March 31, 2011 totaled
approximately $597,000. The principal components of general and administrative
expense are advisory fees and reimbursable expenses, legal fees, accounting
fees and reporting expense.

Acquisition
related costs for the three months ended March 31, 2011 were $2.0 million. In
accordance with the Accounting Standards Codification on business combinations,
the Company has expensed as incurred all transaction costs associated with the
acquisitions of existing businesses, including title, legal, accounting and
other related costs, as well as the brokerage commission paid to ASRG.

Depreciation
expense for the three months ended March 31, 2011 totaled approximately
$214,000. Depreciation expense represents depreciation expense of the Companys
hotel buildings and related improvements, and associated furniture, fixtures
and equipment, for the respective periods owned.

For
the three month period ended March 31, 2011, the Company recognized interest
income of approximately $97,000. Interest income represents earnings on excess
cash invested in short term money market instruments. Interest expense during
the three month period ended March 31, 2011 totaled approximately $1,100 and
primarily represents interest expense incurred on the Companys short-term financing
under a note payable which was outstanding from August 20, 2010 to January 27,
2011.

Related Party
Transactions

The
Company has, and is expected to continue to engage in, significant transactions
with related parties. These transactions cannot be construed to be at arms
length and the results of the Companys operations may be different than if
conducted with non-related parties. The Companys independent members of the
Board of Directors oversee and annually review the Companys related party
relationships (which include the relationships discussed in this section) and
are required to approve any significant modifications to the contracts, as well
as any new significant related party transactions. The Board of Directors is
not required to approve each individual transaction that falls under the
related party relationships. However, under the direction of the Board of
Directors, at least one member of the Companys senior management team approves
each related party transaction.

The
Company has a contract with ASRG, to acquire and dispose of real estate assets
for the Company. A fee of 2% of the gross purchase price or gross sale price in
addition to certain reimbursable expenses is paid to ASRG for these services.
As of March 31, 2011, payments to ASRG for fees under the terms of this
contract have totaled approximately $1.8 million since inception. All of this
amount was incurred in the three months ended March 31, 2011, and is included
in acquisition related costs in the Companys consolidated statement of
operations.

The
Company is party to an advisory agreement with A10A, pursuant to which A10A
provides management services to the Company. An annual fee ranging from 0.1% to
0.25% of total equity proceeds received by the Company, in addition to certain
reimbursable expenses, are payable for these services. Total advisory fees
incurred by the Company under the advisory agreement are included in general
and administrative expenses and totaled approximately $28,000 for the three
months ended March 31, 2011.

In
addition to the fees payable to ASRG and A10A, the Company reimbursed A10A or
ASRG or paid directly to Apple REIT Six, Inc. (AR6) on behalf of A10A or ASRG
approximately $349,000 for the three months ended March 31, 2011. The expenses
reimbursed are approximately $149,000 for costs reimbursed under the contract
with ASRG and approximately $200,000 of costs reimbursed under the contract
with A10A. The costs are included in general and administrative expenses and
are for the Companys proportionate share of the staffing and related costs
provided by AR6. The costs are actual costs with no markup or profit to AR6.

17

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The
advisors are staffed with personnel of AR6. AR6 provides similar staffing for
Apple Six Advisors, Inc. (A6A), Apple Seven Advisors, Inc. (A7A), Apple
Eight Advisors, Inc. (A8A) and Apple Nine Advisors, Inc. (A9A). A6A, A7A,
A8A and A9A provide management services to, respectively, AR6, Apple REIT
Seven, Inc., Apple REIT Eight, Inc. and Apple REIT Nine, Inc. Although there is
a potential conflict on time allocation of employees due to the fact that a
senior manager, officer or staff member will provide services to more than one
company, the Company believes that the executives and staff compensation
sharing arrangement allows the companies to share costs yet attract and retain
superior executives and staff. The cost sharing structure also allows each
entity to maintain a much more cost effective structure than having separate staffing
arrangements. Amounts reimbursed to AR6 include both compensation for personnel
and overhead (office rent, utilities, benefits, office supplies, etc.)
utilized by the companies. The allocation of costs from AR6 is made by the
management of the several REITs and is reviewed at least annually by the
Compensation Committees of the several REITs. In making the allocation,
management and the Compensation Committee, consider all relevant facts related
to the Companys level of business activity and the extent to which the Company
requires the services of particular personnel of AR6. Such payments are based
on the actual costs of the services and are not based on formal record keeping
regarding the time these personnel devote to the Company, but are based on a
good faith estimate by the employee and/or his or her supervisor of the time
devoted by the employee to the Company. As part of this arrangement, the day to
day transactions may result in amounts due to or from the noted related
parties. To efficiently manage cash disbursements, the individual companies may
make payments for any or all of the related companies. The amounts due to or
from the related individual companies are reimbursed or collected and are not
significant in amount.

ASRG,
A6A, A7A, A8A, A9A and A10A are 100% owned by Glade M. Knight, Chairman and
Chief Executive Officer of the Company. Mr. Knight is also Chairman and Chief
Executive Officer of AR6, Apple REIT Seven, Inc., Apple REIT Eight, Inc. and
Apple REIT Nine, Inc. Members of the Companys Board of Directors are also on
the Board of Directors of Apple REIT Seven, Inc. and Apple REIT Eight, Inc.

During
the first quarter of 2011, the Company entered into an assignment of contract
with ASRG to become the purchaser of a Home2 Suites by Hilton (currently under
construction) located in Charleston, South Carolina for a total purchase price
of $13.9 million. ASRG entered into the assigned contract on November 5, 2010.
Under the terms and conditions of the contract, ASRG assigned to the Company
all of its rights and obligations under the purchase contract. There was no
consideration paid to ASRG for this assignment, other than the reimbursement of
the deposit previously made by ASRG totaling $100,000. There was no profit for
ASRG in the assignment.

Series B Convertible
Preferred Stock

The
Company has authorized 480,000 shares of Series B convertible preferred stock.
The Company has issued 480,000 Series B convertible preferred shares to Glade
M. Knight, Chairman and Chief Executive Officer of the Company, in exchange for
the payment by him of $0.10 per Series B convertible preferred share, or an
aggregate of $48,000. The Series B convertible preferred shares are convertible
into common shares pursuant to the formula and on the terms and conditions set
forth below.

There
are no distributions payable on the Series B convertible preferred shares.
Holders of more than two-thirds of the Series B convertible preferred shares
must approve any proposed amendment to the articles of incorporation that would
adversely affect the Series B convertible preferred shares.

Upon
the Companys liquidation, the holder of the Series B convertible preferred
shares is entitled to a priority liquidation payment before any distribution of
liquidation proceeds to the holders of the common shares. However, the priority
liquidation payment of the holder of the Series B convertible preferred shares
is junior to the holders of the Series A preferred shares distribution rights.
The holder of a Series B convertible preferred share is entitled to a
liquidation payment of $11 per number of common shares each Series B
convertible preferred share would be convertible into according to the formula
described below. In the event that the liquidation of the Companys assets
results in proceeds that exceed the distribution rights of the Series A
preferred shares and the Series B convertible preferred shares, the remaining
proceeds will

18

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be distributed
between the common shares and the Series B convertible preferred shares, on an
as converted basis.

Each
holder of outstanding Series B convertible preferred shares shall have the
right to convert any of such shares into common shares of the Company upon and
for 180 days following the occurrence of any of the following events:

| |                                                                                                                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1)
 substantially all of the Companys assets, stock or business is sold or
 transferred through exchange, merger, consolidation, lease, share exchange,
 sale or otherwise, other than a sale of assets in liquidation, dissolution or
 winding up of the Company;
| |                                                                                                                                                                                                                                                                     
| | (2)
 the termination or expiration without renewal of the advisory agreement, or
 if the Company ceases to use ASRG to provide property acquisition and
 disposition services; or                                                                                   
| |                                                                                                                                                                                                                                                                     
| | (3)
 the Companys common shares are listed on any securities exchange or
 quotation system or in any established market.                                                                                                                                           

Upon
the occurrence of any conversion event, each Series B convertible preferred
share may be converted into a number of common shares based upon the gross
proceeds raised through the date of conversion in the Companys $2 billion
offering according to the following table:

|                                                                      |   |                                                                                            |  |  |          |  | 
|--------------------------------------------------------------------- | - | ------------------------------------------------------------------------------------------ |  |  | -------- |  | 
|Gross Proceeds Raised from Sales of
 Units through Date of Conversion |   | Number of Common Shares
 through Conversion of
 One Series B Convertible Preferred 
 Share | 
|                                                                      |   |                                                                                            | 
|                                                                      | $ | 200 million                                                                                |  |  | 1.83239  |  | 
|                                                                      | $ | 300 million                                                                                |  |  | 3.19885  |  | 
|                                                                      | $ | 400 million                                                                                |  |  | 4.83721  |  | 
|                                                                      | $ | 500 million                                                                                |  |  | 6.11068  |  | 
|                                                                      | $ | 600 million                                                                                |  |  | 7.29150  |  | 
|                                                                      | $ | 700 million                                                                                |  |  | 8.49719  |  | 
|                                                                      | $ | 800 million                                                                                |  |  | 9.70287  |  | 
|                                                                      | $ | 900 million                                                                                |  |  | 10.90855 |  | 
|                                                                      | $ | 1 billion                                                                                  |  |  | 12.11423 |  | 
|                                                                      | $ | 1.1 billion                                                                                |  |  | 13.31991 |  | 
|                                                                      | $ | 1.2 billion                                                                                |  |  | 14.52559 |  | 
|                                                                      | $ | 1.3 billion                                                                                |  |  | 15.73128 |  | 
|                                                                      | $ | 1.4 billion                                                                                |  |  | 16.93696 |  | 
|                                                                      | $ | 1.5 billion                                                                                |  |  | 18.14264 |  | 
|                                                                      | $ | 1.6 billion                                                                                |  |  | 19.34832 |  | 
|                                                                      | $ | 1.7 billion                                                                                |  |  | 20.55400 |  | 
|                                                                      | $ | 1.8 billion                                                                                |  |  | 21.75968 |  | 
|                                                                      | $ | 1.9 billion                                                                                |  |  | 22.96537 |  | 
|                                                                      | $ | 2 billion                                                                                  |  |  | 24.17104 |  | 

In
the event that after raising gross proceeds of $2 billion, the Company raises
additional gross proceeds in a subsequent public offering, each Series B
convertible preferred share may be converted into an additional number of
common shares based on the additional gross proceeds raised through the date of
conversion in a subsequent public offering according to the following formula:
(X/100 million) x 1.20568, where X is the additional gross proceeds rounded
down to the nearest 100 million.

No
additional consideration is due upon the conversion of the Series B convertible
preferred shares. The conversion into common shares of the Series B convertible
preferred shares will result in dilution of the shareholders interests.

Expense
related to the issuance of 480,000 Series B convertible preferred shares to Mr.
Knight will

19

---



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 occurs. 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,
expense if the maximum offering is achieved could range from $0 to in excess of
$127 million (assumes $11 per unit fair market value). Based on equity raised
through March 31, 2011, if a triggering event had occurred, expense would have
ranged from $0 to $9.7 million (assumes $11 per unit fair market value) and
approximately 880,000 common shares would have been issued.

Liquidity and
Capital Resources

The
Company was initially capitalized on August 13, 2010, with its first investor
closing on January 27, 2011. The Companys principal source of liquidity is
cash on hand, the proceeds of its on-going best-efforts offering and the cash
flow generated from properties the Company has or will acquire and any short
term investments. In addition, the Company may borrow funds, subject to the
approval of the Companys Board of Directors.

The
Company anticipates that cash flow, and cash on hand, will be adequate to cover
its operating expenses and to permit the Company to meet its anticipated
liquidity requirements, including capital improvements and anticipated
distributions to shareholders. The Company intends to use the proceeds from the
Companys on-going best-efforts offering, and cash on hand, to purchase income
producing real estate.

To
maintain its REIT status the Company is required to distribute at least 90% of
its ordinary income. Distributions during the first three months of 2011
totaled approximately $1.9 million and were paid at a monthly rate of $0.06875
per common share beginning in February 2011. For the same period, the Companys
cash used in operations was approximately $2.5 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, distributions paid
through March 31, 2011 have been funded from proceeds from the on-going
best-efforts offering of Units, and are expected to be treated as a return of
capital for federal income tax purposes. In February 2011, the Companys Board
of Directors established a policy for an annualized distribution rate of $0.825
per common share, payable in monthly distributions. The Company intends to
continue paying distributions on a monthly basis, consistent with the
annualized distribution rate established by its Board of Directors. The
Companys Board of Directors, upon the recommendation of the Audit Committee,
may amend or establish a new annualized distribution rate and may change the
timing of when distributions are paid. The Companys objective in setting a
distribution rate is to project a rate that will provide consistency over the
life of the Company taking into account acquisitions and capital improvements,
ramp up of new properties and varying economic cycles. To meet this objective,
the Company may require the use of debt or offering proceeds in addition to
cash from operations. Since distributions to date have been funded with
proceeds from the offering of Units, the Companys ability to maintain its
current intended rate of distribution will be based on its ability to fully
invest its offering proceeds and thereby increase its cash generated from
operations. As there can be no assurance of the Companys ability to acquire
properties that provide income at this level, or that the properties already
acquired will 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 is raising capital through a best-efforts offering of Units (each Unit
consists of one common share and one Series A preferred share) by David Lerner
Associates, Inc., the managing dealer, which receives selling commissions and a
marketing expense allowance based on proceeds of the Units sold. The minimum
offering of 9,523,810 Units at $10.50 per Unit was sold as of January 27, 2011,
with proceeds net of commissions and marketing expenses totaling $90 million.
Subsequent to the minimum offering and through March 31, 2011, an additional
12.8 million Units, at $11 per Unit, were sold, with the Company receiving
proceeds, net of commissions, marketing expenses and other offering costs of
approximately $125.7 million. The Company is continuing its offering at $11.00
per Unit. The Company

20

---



will offer
Units until January 19, 2013, unless the offer is extended, or terminated if
all of the Units are sold before then. As of March 31, 2011, 159,913,513 Units
remained unsold.

Prior
to the commencement of the Companys on-going best-efforts offering, the
Company obtained an unsecured note payable in a principal amount of $400,000 to
fund certain start-up costs and offering expenses. The note was fully paid
during January 2011 with net proceeds from the Companys on-going best-efforts
offering.

The
Company has on-going capital commitments to fund its capital improvements. The
Company is required, under all of the hotel management agreements, to make
available, for the repair, replacement, refurbishing of furniture, fixtures,
and equipment, a percentage of gross revenues provided that such amount may be
used for the Companys capital expenditures with respect to the hotels. The
Company expects that this amount will be adequate to fund required repair,
replacement, and refurbishments and to maintain the Companys hotels in a
competitive condition.

As
of March 31, 2011, the Company had cash and cash equivalents totaling $120.7
million, primarily resulting from the sale of Units through that date. The
Company intends to use funds generated from its on-going best-efforts offering
to invest in hotels and other income-producing real estate. As of March 31,
2011, the Company had outstanding contracts for the potential purchase of three
additional hotels for a total purchase price of $43.4 million. Of these three
hotels, two are under construction and should be completed within the next 12
months. Closing on these two hotels is expected upon completion of
construction. The existing hotel is expected to close within the next nine
months. Although the Company is working towards acquiring these hotels, there
are many conditions to closing that have not yet been satisfied and there can
be no assurance that closings will occur under the outstanding purchase
contracts. The following table summarizes the location, brand, number of rooms,
refundable (if the seller does not meet its obligations under the contract)
contract deposits paid, and gross purchase price for each of the contracts. All
dollar amounts are in thousands.

|                       |  |                        |  |       |     |                |   |                       |  |   |        | 
|---------------------- |  | ---------------------- |  | ----- | --- | -------------- | - | --------------------- |  | - | ------ | 
|Location               |  | Brand                  |  | Rooms |     | Deposits
 Paid |   | Gross Purchase
 Price | 
|                       |  |                        |  |       |     |                |   |                       | 
|Operating (a)          |  |                        |  |       |     |                |   |                       | 
|South Bend, IN         |  | Fairfield Inn & Suites |  |       | 119 |                | $ | 300                   |  | $ | 17,500 | 
|                       |  |                        |  |       |     |                |   |                       |  |   |        | 
|Under Construction (b) |  |                        |  |       |     |                |   |                       |  |   |        | 
|Jacksonville, NC       |  | Home2 Suites           |  |       | 105 |                |   | 100                   |  |   | 12,000 | 
|Charleston, SC         |  | Home2 Suites           |  |       | 122 |                |   | 100                   |  |   | 13,908 | 
|                       |  |                        |  |       |     |                |   |                       |  |   |        | 
|                       |  |                        |  |       | 346 |                | $ | 500                   |  | $ | 43,408 | 
|                       |  |                        |  |       |     |                |   |                       |  |   |        | 

|    |                                                                                                                                                                                                                                                       | 
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|    |                                                                                                                                                                                                                                                      
|(a) | This hotel is currently
 operational and assuming all conditions to closing are met should close
 within nine months from March 31, 2011.                                                                                                            
|(b) | The hotels are currently
 under construction. The table shows the expected number of rooms upon hotel
 completion and the expected franchise. Assuming all conditions to closing are
 met should close within the next 12 months from March 31, 2011.

It
is anticipated that the purchase price for the outstanding contracts will be
funded from the proceeds of the Companys on-going best-efforts offering of
Units and cash on hand if a closing occurs.

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.

21

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Business
Interruption

Being
in the real estate industry, the Company is exposed to natural disasters on
both a local and national scale. 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.

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
April 2011, the Company declared and paid approximately $1.5 million in
dividend distributions to its common shareholders, or $0.06875 per outstanding
common share.

During
April 2011, the Company closed on the issuance of 6.0 million Units through its
on-going best-efforts offering, representing gross proceeds to the Company of
$66.1 million and proceeds net of selling and marketing costs of $59.5 million.

Subsequent
to March 31, 2011, the Company entered into a series of contracts for the
potential purchase of 14 hotels. The following table summarizes the hotel and
contract information. All dollar amounts are in thousands.

|                    |  |                      |  |                           |  |       |  |                      |         |                            |   |       |    
|------------------- |  | -------------------- |  | ------------------------- |  | ----- |  | -------------------- | ------- | -------------------------- | - | ----- | ---
|Location            |  | Brand                |  | Date of
Purchase
Contract |  | Rooms |  | Gross
Purchase
Price |         | Initial
Refundable
Deposit |  
|                    |  |                      |  |                           |  |       |  |                      |         |                            |  
|Davenport, IA       |  | Hampton Inn & Suites |  | 4/4/2011                  |  | 103   |  | $                    | 13,000  |                            | $ | 100   |    
|Cedar Rapids, IA    |  | Homewood Suites      |  | 4/4/2011                  |  | 95    |  |                      | 13,000  |                            |   | 100   |    
|Cedar Rapids, IA    |  | Hampton Inn & Suites |  | 4/4/2011                  |  | 103   |  |                      | 13,000  |                            |   | 100   |    
|Hoffman Estates, IL |  | Hilton Garden Inn    |  | 4/4/2011                  |  | 184   |  |                      | 10,000  |                            |   | 100   |    
|Knoxville, TN       |  | TownePlace Suites    |  | 4/12/2011                 |  | 98    |  |                      | 9,000   |                            |   | 100   | (a)
|Knoxville, TN       |  | SpringHill Suites    |  | 4/12/2011                 |  | 103   |  |                      | 14,500  |                            |   | 100   |    
|Knoxville, TN       |  | Homewood Suites      |  | 4/12/2011                 |  | 103   |  |                      | 15,000  |                            |   | 100   | (a)
|Gainesville, FL     |  | Hilton Garden Inn    |  | 4/12/2011                 |  | 104   |  |                      | 12,500  |                            |   | 100   |    
|Fort Myers, FL      |  | SpringHill Suites    |  | 4/12/2011                 |  | 106   |  |                      | 9,000   |                            |   | 100   | (b)
|Richmond, VA        |  | SpringHill Suites    |  | 4/12/2011                 |  | 103   |  |                      | 11,000  |                            |   | 100   |    
|Pensacola, FL       |  | TownePlace Suites    |  | 4/12/2011                 |  | 98    |  |                      | 11,500  |                            |   | 100   |    
|Montgomery, AL      |  | TownePlace Suites    |  | 4/12/2011                 |  | 95    |  |                      | 7,500   |                            |   | 100   | (b)
|Mobile, AL          |  | Hampton Inn & Suites |  | 4/12/2011                 |  | 101   |  |                      | 13,000  |                            |   | 100   |    
|Gainesville, FL     |  | Homewood Suites      |  | 5/4/2011                  |  | 103   |  |                      | 14,550  |                            |   | 100   | (a)
|                    |  |                      |  |                           |  |       |  |                      |         |                            |   |       |    
|                    |  |                      |  |                           |  | 1,499 |  | $                    | 166,550 |                            | $ | 1,400 |    
|                    |  |                      |  |                           |  |       |  |                      |         |                            |   |       |    

|    |                                                                                                                                                                                                                                                                                                                                                                                             | 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|    |                                                                                                                                                                                                                                                                                                                                                                                            
|(a) | Purchase contracts for these
hotels require the Company to assume approximately $32.0 million in mortgage
debt. Each of these loans provide for monthly payments of principal and
interest on an amortized basis.                                                                                                                                                                          
|(b) | The purchase contracts for
the Fort Myers, FL SpringHill Suites and Montgomery, AL TownePlace Suites
hotels were terminated on April 29, 2011. The Montgomery, AL TownePlace
Suites contract would have required the Company to assume approximately $4.1
million in mortgage debt. In connection with the termination of these
contracts, the initial deposits were repaid to the Company.

22

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Item 3. Quantitative and
Qualitative Disclosures About Market Risk

The
Company does not engage in transactions in derivative financial instruments or
derivative commodity instruments. As of March 31, 2011, the Companys financial
instruments were not exposed to significant market risk due to interest rate
risk, foreign currency exchange risk, commodity price risk or equity price
risk. The Company will be exposed to changes in short term money market rates
as it invests the proceeds from the sale of Units pending use in acquisitions
and renovations. Based on the Companys cash invested at March 31, 2011, of
$120.7 million, every 100 basis points change in interest rates will impact the
Companys annual net income by approximately $1.2 million, all other factors
remaining the same.

Item 4. Controls and Procedures

Senior
management, including the Chief Executive Officer and Chief Financial Officer,
evaluated the effectiveness of the Companys disclosure controls and procedures
as of the end of the period covered by this report. Based on this evaluation
process, the Chief Executive Officer and Chief Financial Officer have concluded
that the Companys disclosure controls and procedures are effective and that
there have been no changes in the Companys internal control over financial
reporting that occurred during the last fiscal quarter that have materially
affected, or are reasonably likely to materially affect, the Companys internal
control over financial reporting. Since that evaluation process was completed,
there have been no significant changes in internal controls or in other factors
that could significantly affect these controls.

23

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PART II. OTHER INFORMATION

ITEM 2. UNREGISTERED SALES OF
EQUITY SECURITIES AND USE OF PROCEEDS

The
Company has registered, effective January 19, 2011, 182,251,082 Units (each
Unit consisting of one common share and one Series A preferred share). The
managing underwriter is David Lerner and Associates, Inc. The following tables
set forth information concerning the on-going best-efforts offering and the use
of proceeds from the offering as of March 31, 2011. All amounts in thousands,
except per Unit data:

|                                                             |  |                                                                                                                                                       |                                 |       |         |                 |  |   |           |  |  |  | 
|------------------------------------------------------------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------- | ----- | ------- | --------------- |  | - | --------- |  |  |  | 
|Units Registered:                                            |  |                                                                                                                                                       |                                 |       |         |                 |  |   |           | 
|                                                             |  |                                                                                                                                                       |                                 |       |         |                 |  |   |           | 
|                                                             |  | 9,524                                                                                                                                                 |                                 | Units |         | $10.50 per Unit |  | $ | 100,000   | 
|                                                             |  | 172,727                                                                                                                                               |                                 | Units |         | $11 per Unit    |  |   | 1,900,000 | 
|                                                             |  |                                                                                                                                                       |                                 |       |         |                 |  |   |           | 
|Totals:                                                      |  | 182,251                                                                                                                                               |                                 | Units |         |                 |  | $ | 2,000,000 | 
|                                                             |  |                                                                                                                                                       |                                 |       |         |                 |  |   |           | 
|Units Sold:                                                  |  |                                                                                                                                                       |                                 |       |         |                 |  |   |           | 
|                                                             |  | 9,524                                                                                                                                                 |                                 | Units |         | $10.50 per Unit |  | $ | 100,000   | 
|                                                             |  | 12,814                                                                                                                                                |                                 | Units |         | $11 per Unit    |  |   | 140,951   | 
|                                                             |  |                                                                                                                                                       |                                 |       |         |                 |  |   |           | 
|Totals:                                                      |  | 22,338                                                                                                                                                |                                 | Units |         |                 |  |   | 240,951   | 
|                                                             |  |                                                                                                                                                       |                                 |       |         |                 | 
|Expenses of Issuance and
Distribution of Units               |  |                                                                                                                                                       |                                 |      
|                                                             |  |                                                                                                                                                       |                                 |       |         |                
|1.                                                           |  | Underwriting discounts and commission                                                                                                                 |                                 |       | 24,095  |                
|2.                                                           |  | Expenses of underwriters                                                                                                                              |                                 |       |        |                
|3.                                                           |  | Direct or indirect payments to directors or officers of the Company or
their associates, to ten percent shareholders, or to affiliates of the
Company |                                 |       |        |                
|4.                                                           |  | Fees and expenses of third parties                                                                                                                    |                                 |       | 1,161   |                
|                                                             |  |                                                                                                                                                       |                                 |       |         |                
|Total Expenses of Issuance and Distribution of Common Shares |  |                                                                                                                                                       | 25,256                          |      
|                                                             |  |                                                                                                                                                       |                                 |       |         |                
|Net Proceeds to the Company                                  |  | $                                                                                                                                                     | 215,695                         |      
|                                                             |  |                                                                                                                                                       |                                 |       |         |                
|                                                             |  |                                                                                                                                                       |                                 |       |         |                
|1.                                                           |  | Purchase of real estate (net of debt proceeds and repayment)                                                                                          |                                 | $     | 90,186  |                
|2.                                                           |  | Deposits and other costs associated with potential real estate
acquisitions                                                                           |                                 |       | 500     |                
|3.                                                           |  | Repayment of other indebtedness, including interest expense paid                                                                                      |                                 |       | 404     |                
|4.                                                           |  | Investment and working capital                                                                                                                        |                                 |       | 122,403 |                
|5.                                                           |  | Fees to the following (all affiliates of officers of the Company):                                                                                    |                                 |       |         |                
|                                                             |  | a.                                                                                                                                                    | Apple Ten Advisors, Inc.        |       |         | 402             | 
|                                                             |  | b.                                                                                                                                                    | Apple Suites Realty Group, Inc. |       |         | 1,800           | 
|6.                                                           |  | Fees and expenses of third parties                                                                                                                    |                                 |       |        |                
|7.                                                           |  | Other                                                                                                                                                 |                                 |       |        |                
|                                                             |  |                                                                                                                                                       |                                 |       |         |                
|Total of Application of Net Proceeds to the Company          |  | $                                                                                                                                                     | 215,695                         |      
|                                                             |  |                                                                                                                                                       |                                 |       |         |                

24

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ITEM 6. EXHIBITS

|               |  |                                                                                                                                                                                                                                                                                                                                                       
|-------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit
Number |  | Description of Documents                                                                                                                                                                                                                                                                                                                              
|               |  |                                                                                                                                                                                                                                                                                                                                                       
|               |  |                                                                                                                                                                                                                                                                                                                                                       
|1.1            |  | Agency Agreement between
the Registrant and David Lerner Associates, Inc. with form of selected Dealer
Agreement attached as Exhibit A thereto. (Incorporated by reference to
Exhibit 1.1 to amendment no. 3 to the registrants registration statement on
Form S-11 (SEC File No. 333-168971) filed December 20, 2010 and effective
January 19, 2011)
|               |  |                                                                                                                                                                                                                                                                                                                                                       
|1.2            |  | Escrow Agreement.
(Incorporated by reference to Exhibit 1.2 to amendment no. 3 to the
registrants registration statement on Form S-11 (SEC File No. 333-168971)
filed December 20, 2010 and effective January 19, 2011)                                                                                                                              
|               |  |                                                                                                                                                                                                                                                                                                                                                       
|3.1            |  | Articles of Incorporation
of the Registrant, as amended. (Incorporated by reference to Exhibit 3.1 to
amendment no. 4 to the registrants registration statement on Form S-11 (SEC
File No. 333-168971) filed January 7, 2011 and effective January 19, 2011)                                                                                         
|               |  |                                                                                                                                                                                                                                                                                                                                                       
|3.2            |  | Bylaws of the Registrant,
as amended. (Incorporated by reference to Exhibit 3.2 to amendment no. 3 to
the registrants registration statement on Form S-11 (SEC File No.
333-168971) filed December 20, 2010 and effective January 19, 2011)                                                                                                          
|               |  |                                                                                                                                                                                                                                                                                                                                                       
|10.1           |  | Advisory Agreement between
the Registrant and Apple Ten Advisors, Inc., as amended. (FILED HEREWITH)                                                                                                                                                                                                                                                  
|               |  |                                                                                                                                                                                                                                                                                                                                                       
|10.2           |  | Property
Acquisition/Disposition Agreement between the Registrant and Apple Suites
Realty Group, Inc. (Incorporated by reference to Exhibit 10.2 to amendment
no. 3 to the registrants registration statement on Form S-11 (SEC File No.
333-168971) filed December 20, 2010 and effective January 19, 2011)                                         
|               |  |                                                                                                                                                                                                                                                                                                                                                       
|10.3           |  | Apple REIT Ten, Inc. 2010
Non-Employee Directors Stock Option Plan. (FILED
HEREWITH)                                                                                                                                                                                                                                                                  
|               |  |                                                                                                                                                                                                                                                                                                                                                       
|10.4           |  | Purchase Contract dated as
of February 1, 2011 between 5280 Lodging, LLC and Apple Ten Hospitality
Ownership, Inc. (FILED HEREWITH)                                                                                                                                                                                                                   
|               |  |                                                                                                                                                                                                                                                                                                                                                       
|10.5           |  | Management Agreement dated
as of March 4, 2011 between Stonebridge Realty Advisors, Inc. and Apple Ten
Hospitality Management, Inc. (FILED
HEREWITH)                                                                                                                                                                                                  
|               |  |                                                                                                                                                                                                                                                                                                                                                       
|10.6           |  | Franchise License Agreement
dated as of March 4, 2011 between Hilton Garden Inns Franchise LLC and Apple
Ten Hospitality Management, Inc. (FILED
HEREWITH)                                                                                                                                                                                            
|               |  |                                                                                                                                                                                                                                                                                                                                                       
|10.7           |  | Hotel Lease Agreement
effective as of March 4, 2011 between Apple Ten Hospitality Ownership, Inc.
and Apple Ten Hospitality Management, Inc. (FILED
HEREWITH)                                                                                                                                                                                         
|               |  |                                                                                                                                                                                                                                                                                                                                                       
|10.8           |  | Purchase Contract dated as
of February 4, 2011 between Yogi Hotel, Inc. and Apple Ten Hospitality
Ownership, Inc. (FILED HEREWITH)                                                                                                                                                                                                                    
|               |  |                                                                                                                                                                                                                                                                                                                                                       
|10.9           |  | Management Agreement dated
as of March 15, 2011 between MHH Management, LLC and Apple Ten Hospitality
Management, Inc. (FILED HEREWITH)                                                                                                                                                                                                               
|               |  |                                                                                                                                                                                                                                                                                                                                                       
|10.10          |  | Franchise License Agreement
dated as of March 15, 2011 between Hampton Inns Franchise LLC and Apple Ten
Hospitality Management, Inc. (FILED
HEREWITH)                                                                                                                                                                                                 

25

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|      |  |                                                                                                                                                                                     
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.11 |  | Hotel Lease Agreement
effective as of March 15, 2011 between Apple Ten North Carolina, L.P. and
Apple Ten Hospitality Management, Inc. (FILED
HEREWITH)                             
|      |  |                                                                                                                                                                                     
|10.12 |  | Purchase Contract dated as
of February 25, 2011 between Independence Hospitality, Inc. and Apple Ten
Hospitality Ownership, Inc. (FILED HEREWITH)                                   
|      |  |                                                                                                                                                                                     
|10.13 |  | Management Agreement dated
as of March 25, 2011 between Newport Charlotte Management, LLC and Apple Ten
Hospitality Management, Inc. (FILED
HEREWITH)                               
|      |  |                                                                                                                                                                                     
|10.14 |  | Relicensing Franchise Agreement
dated as of March 25, 2011 between Marriott International, Inc. and Apple Ten
Hospitality Management, Inc. (FILED
HEREWITH)                         
|      |  |                                                                                                                                                                                     
|10.15 |  | Hotel Lease Agreement
effective as of March 25, 2011 between Apple Ten North Carolina, L.P. and
Apple Ten Hospitality Management, Inc. (FILED
HEREWITH)                             
|      |  |                                                                                                                                                                                     
|10.16 |  | Purchase Contract dated as
of February 4, 2011 between Columbia East Hospitality, Inc. and Apple Ten
Hospitality Ownership, Inc. (FILED HEREWITH)                                   
|      |  |                                                                                                                                                                                     
|10.17 |  | Management Agreement dated
as of March 25, 2011 between Newport Columbia Management, LLC and Apple Ten
Hospitality Management, Inc. (FILED
HEREWITH)                                
|      |  |                                                                                                                                                                                     
|10.18 |  | Relicensing Franchise
Agreement dated as of March 25, 2011 between Marriott International, Inc. and
Apple Ten Hospitality Management, Inc. (FILED
HEREWITH)                         
|      |  |                                                                                                                                                                                     
|10.19 |  | Hotel Lease Agreement
effective as of March 25, 2011 between Apple Ten Business Trust and Apple Ten
Hospitality Management, Inc. (FILED
HEREWITH)                                   
|      |  |                                                                                                                                                                                     
|10.20 |  | Purchase Contract dated as
of February 4, 2011 between Onslow Hospitality, Inc. and Apple Ten
Hospitality Ownership, Inc. (FILED HEREWITH)                                          
|      |  |                                                                                                                                                                                     
|10.21 |  | Purchase Contract dated as
of February 4, 2011 between Krishna Hotel, Inc. and Apple Ten Hospitality
Ownership, Inc. (FILED HEREWITH)                                               
|      |  |                                                                                                                                                                                     
|10.22 |  | Purchase Contract dated as
of November 5, 2010 between The Generation Companies, LLC and Apple Suites
Realty Group, Inc. (FILED HEREWITH)                                           
|      |  |                                                                                                                                                                                     
|10.23 |  | Assignment of Contract
dated as of February 8, 2011 between Apple Suites Realty Group, Inc. and
Apple Ten Hospitality Ownership, Inc. (FILED
HEREWITH)                              
|      |  |                                                                                                                                                                                     
|10.24 |  | Purchase Contract dated as
of March 1, 2011 between KRG/White LS Hotel, LLC and Kite Realty/White Hotel
LS Operators, LLC and Apple Ten Hospitality Ownership, Inc. (FILED HEREWITH)
|      |  |                                                                                                                                                                                     
|10.25 |  | Purchase Contract dated as
of April 4, 2011 between Collins Hospitality, Inc. and Apple Ten Hospitality
Ownership, Inc. (FILED HEREWITH)                                            
|      |  |                                                                                                                                                                                     
|10.26 |  | Purchase Contract dated as
of April 4, 2011 between Five Seasons Hospitality, Inc. and Apple Ten
Hospitality Ownership, Inc. (FILED HEREWITH)                                       
|      |  |                                                                                                                                                                                     
|10.27 |  | Purchase Contract dated as
of April 4, 2011 between Sajni, Inc. and Apple Ten Hospitality Ownership,
Inc. (FILED HEREWITH)                                                          
|      |  |                                                                                                                                                                                     
|10.28 |  | Purchase Contract dated as
of April 4, 2011 between Windy City Lodging, Inc. and Apple Ten Hospitality
Ownership, Inc. (FILED HEREWITH)                                             

26

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|      |  |                                                                                                                                                                                                               
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.29 |  | Purchase Contract dated as
of April 12, 2011 between McKibbon Hotel Group of Knoxville, Tennessee #3,
L.P. and Apple Ten Hospitality Ownership, Inc. (FILED HEREWITH)                                         
|      |  |                                                                                                                                                                                                               
|10.30 |  | Purchase Contract dated as
of April 12, 2011 between MHG-TC, #2, LLC and Apple Ten Hospitality
Ownership, Inc. (FILED HEREWITH)                                                                               
|      |  |                                                                                                                                                                                                               
|10.31 |  | Purchase Contract dated as
of April 12, 2011 between MHG-TC, LLC and Apple Ten Hospitality Ownership,
Inc. (FILED HEREWITH)                                                                                   
|      |  |                                                                                                                                                                                                               
|10.32 |  | Purchase Contract dated as
of April 12, 2011 between MHG of Gainesville, Florida #3, LLC and Apple Ten
Hospitality Ownership, Inc. (FILED HEREWITH)                                                           
|      |  |                                                                                                                                                                                                               
|10.33 |  | Purchase Contract dated as
of April 12, 2011 between McKibbon Hotel Group of Fort Myers, Florida #2,
L.P. and Apple Ten Hospitality Ownership, Inc. (FILED HEREWITH)                                          
|      |  |                                                                                                                                                                                                               
|10.34 |  | Purchase Contract dated as
of April 12, 2011 between MHG of Richmond, Virginia, LLC and Apple Ten
Hospitality Ownership, Inc. (FILED HEREWITH)                                                                
|      |  |                                                                                                                                                                                                               
|10.35 |  | Purchase Contract dated as
of April 12, 2011 between MHG of Pensacola, Florida, LLC and Apple Ten
Hospitality Ownership, Inc. (FILED HEREWITH)                                                                
|      |  |                                                                                                                                                                                                               
|10.36 |  | Purchase Contract dated as
of April 12, 2011 between McKibbon Hotel Group of Montgomery, Alabama, L.P.
and Apple Ten Hospitality Ownership, Inc. (FILED
HEREWITH)                                             
|      |  |                                                                                                                                                                                                               
|10.37 |  | Purchase Contract dated as
of April 12, 2011 between MHG of Mobile, Alabama #5, LLC and Apple Ten
Hospitality Ownership, Inc. (FILED HEREWITH)                                                                
|      |  |                                                                                                                                                                                                               
|10.38 |  | Purchase Contract dated as
of May 4, 2011 between McKibbon Hotel Group of Gainesville, Florida #2, LP
and Apple Ten Hospitality Ownership, Inc. (FILED
HEREWITH)                                              
|      |  |                                                                                                                                                                                                               
|31.1  |  | Certification of the
Companys Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 (FILED HEREWITH)                                                                             
|      |  |                                                                                                                                                                                                               
|31.2  |  | Certification of the
Companys Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 (FILED HEREWITH)                                                                             
|      |  |                                                                                                                                                                                                               
|32.1  |  | Certification of the
registrants Chief Executive Officer and Chief Financial Officer pursuant to
18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 (FILED HEREWITH)

27

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SIGNATURES

Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.

|                     |                                                        |  |                  
|-------------------- | ------------------------------------------------------ |  | -----------------
|Apple REIT Ten, Inc.
|                     |                                                        |  |                  
|By:                  | /s/    GLADE M. KNIGHT                                 |  | Date: May 6, 2011
|                     |                                                        |  |                  
|                     | Glade M. Knight,                                       |  |                  
|                     | Chairman of the Board and Chief Executive Officer      |  |                  
|                     | (Principal Executive Officer)                          |  |                  
|                     |                                                        |  |                  
|                     |                                                        |  |                  
|By:                  | /s/    BRYAN PEERY                                     |  | Date: May 6, 2011
|                     |                                                        |  |                  
|                     | Bryan Peery,                                           |  |                  
|                     | Chief Financial Officer                                |  |                  
|                     | (Principal Financial and Principal Accounting Officer) |  |                  

28

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