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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended September 30, 2007

or



| ̈ | 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: 000-52585

APPLE REIT SEVEN, INC.

(Exact name of registrant as specified in its charter)



|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|VIRGINIA                                                       |  | 20-2879175                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)



|                                         |  |           
|---------------------------------------- |  | ----------
|814 EAST MAIN STREET, RICHMOND, VA       |  | 23219     
|(Address of principal executive offices) |  | (Zip Code)

(804) 344-8121

(Registrants telephone number, including area code)



---

(Former name, former address and
former fiscal year, if changed since last report)

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.    x  Yes ̈No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a
non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ̈Accelerated
filer ̈Non-accelerated filer  x

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

As of November 1, 2007 there were 91,325,116 outstanding shares of common stock, no par value, of the registrant.



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APPLE REIT SEVEN, INC.

FORM 10-Q

INDEX



|                              |  |                                                                                                        |  |           
|----------------------------- |  | ------------------------------------------------------------------------------------------------------ |  | ----------
|                              |  |                                                                                                        |  | PageNumber
|PART I. FINANCIAL INFORMATION |  |                                                                                                       
|                              |  |                                                                                                       
|Item 1.                       |  | Financial Statements (Unaudited)                                                                       |  |           
|                              |  |                                                                                                       
|                              |  | Consolidated Balance Sheets - September 30, 2007 and December 31, 2006                                 |  | 3         
|                              |  |                                                                                                       
|                              |  | Consolidated Statement of Operations - For the three and nine months ended September 30, 2007 and 2006 |  | 4         
|                              |  |                                                                                                       
|                              |  | Consolidated Statements of Cash Flows - For the nine months ended September 30, 2007 and 2006          |  | 5         
|                              |  |                                                                                                       
|                              |  | Notes to Consolidated Financial Statements                                                             |  | 6         
|                              |  |                                                                                                       
|Item 2.                       |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                  |  | 13        
|                              |  |                                                                                                       
|Item 3.                       |  | Quantitative and Qualitative Disclosures about Market Risk                                             |  | 21        
|                              |  |                                                                                                       
|Item 4.                       |  | Controls and Procedures                                                                                |  | 21        
|                              | 
|PART II. OTHER INFORMATION:   |  |                                                                                                       
|                              |  |                                                                                                       
|Item 1.                       |  | Legal Proceedings (not applicable)                                                                     |  |           
|Item 1a.                      |  | Risk Factors (not applicable)                                                                          |  |           
|Item 2.                       |  | Unregistered Sales of Equity Securities and Use of Proceeds                                            |  | 22        
|Item 3.                       |  | Defaults Upon Senior Securities (not applicable)                                                       |  |           
|Item 4.                       |  | Submission of Matters to a Vote of Security Holders (not applicable)                                   |  |           
|Item 5.                       |  | Other Information (not applicable)                                                                     |  |           
|Item 6.                       |  | Exhibits                                                                                               |  | 24        
|                              | 
|Signatures                    |  | 25                                                                                                    

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



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Apple REIT Seven, Inc.

Consolidated Balance Sheets

(Unaudited)

(In thousands, except
share data)



|                                                                                                                                              |  |                   |         |   |                  |   |         |  
|--------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ------- | - | ---------------- | - | ------- | -
|                                                                                                                                              |  | September 30,2007 |         |   | December 31,2006 |  
|ASSETS                                                                                                                                        |  |                   |         |   |                  |   |         |  
|Investment in real estate, net of accumulated depreciation of $14,480 and $3,073, respectively                                                |  | $                 | 735,480 |   |                  | $ | 347,092 |  
|Cash and cash equivalents                                                                                                                     |  |                   | 201,735 |   |                  |   | 44,604  |  
|Restricted cash-furniture, fixtures and other escrows                                                                                         |  |                   | 10,308  |   |                  |   | 2,809   |  
|Due from third party managers                                                                                                                 |  |                   | 8,137   |   |                  |   | 2,434   |  
|Other assets, net                                                                                                                             |  |                   | 10,937  |   |                  |   | 12,947  |  
|                                                                                                                                              |  |                   |         |   |                  |   |         |  
|TOTAL ASSETS                                                                                                                                  |  | $                 | 966,597 |   |                  | $ | 409,886 |  
|                                                                                                                                              |  |                   |         |   |                  |   |         |  
|LIABILITIES                                                                                                                                   |  |                   |         |   |                  |   |         |  
|Notes payable                                                                                                                                 |  | $                 | 85,197  |   |                  | $ | 49,292  |  
|Accounts payable and accrued expenses                                                                                                         |  |                   | 7,359   |   |                  |   | 6,472   |  
|                                                                                                                                              |  |                   |         |   |                  |   |         |  
|TOTAL LIABILITIES                                                                                                                             |  |                   | 92,556  |   |                  |   | 55,764  |  
|                                                                                                                                              |  |                   |         |   |                  |   |         |  
|SHAREHOLDERS EQUITY                                                                                                                          |  |                   |         |   |                  |   |         |  
|Preferred stock, authorized 15,000,000 shares; none issued and outstanding                                                                    |  |                   |        |   |                  |   |        |  
|Series A preferred shares, no par value, authorized 200,000,000 shares; issued and outstanding 91,222,181 and 37,045,297 shares,
respectively |  |                   |        |   |                  |   |        |  
|Series B convertible preferred stock, no par value, authorized 240,000 shares; issued and outstanding 240,000 shares                          |  |                   | 24      |   |                  |   | 24      |  
|Common stock, no par value, authorized 200,000,000 shares; issued and outstanding 91,222,181 and 37,045,297 shares,
respectively              |  |                   | 899,216 |   |                  |   | 363,239 |  
|Distributions greater than net income                                                                                                         |  |                   | (25,199 | ) |                  |   | (9,141  | )
|                                                                                                                                              |  |                   |         |   |                  |   |         |  
|TOTAL SHAREHOLDERS EQUITY                                                                                                                    |  |                   | 874,041 |   |                  |   | 354,122 |  
|                                                                                                                                              |  |                   |         |   |                  |   |         |  
|TOTAL LIABILITIES AND SHAREHOLDERS EQUITY                                                                                                    |  | $                 | 966,597 |   |                  | $ | 409,886 |  
|                                                                                                                                              |  |                   |         |   |                  |   |         |  

See notes to consolidated financial statements.

Note: The Company was initially capitalized on May 26, 2005 and commenced operations on April 27, 2006.



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Apple REIT Seven, Inc.

Consolidated Statements of Operations

(Unaudited)

(In thousands, except
share data)



|                                                       |  |                                     |        |   |                                     |   |                                     |  |   |                                     |   |  |   |        |  
|------------------------------------------------------ |  | ----------------------------------- | ------ | - | ----------------------------------- | - | ----------------------------------- |  | - | ----------------------------------- | - |  | - | ------ | -
|                                                       |  | Three monthsendedSeptember 30, 2007 |        |   | Three monthsendedSeptember 30, 2006 |   | Nine months endedSeptember 30, 2007 |  |   | Nine months endedSeptember 30, 2006 |  
|Revenues:                                              |  |                                     |        |   |                                     |   |                                     |  |   |                                     |   |  |   |        |  
|Room revenue                                           |  | $                                   | 40,235 |   |                                     | $ | 5,895                               |  | $ | 91,299                              |   |  | $ | 7,445  |  
|Other revenue                                          |  |                                     | 2,635  |   |                                     |   | 469                                 |  |   | 6,395                               |   |  |   | 591    |  
|                                                       |  |                                     |        |   |                                     |   |                                     |  |   |                                     |   |  |   |        |  
|Total revenue                                          |  |                                     | 42,870 |   |                                     |   | 6,364                               |  |   | 97,694                              |   |  |   | 8,036  |  
|                                                       |  |                                     |        |   |                                     |   |                                     |  |   |                                     |   |  |   |        |  
|Expenses:                                              |  |                                     |        |   |                                     |   |                                     |  |   |                                     |   |  |   |        |  
|Operating expense                                      |  |                                     | 10,368 |   |                                     |   | 1,590                               |  |   | 23,594                              |   |  |   | 2,021  |  
|Hotel administrative expense                           |  |                                     | 2,977  |   |                                     |   | 467                                 |  |   | 6,835                               |   |  |   | 617    |  
|Sales and marketing                                    |  |                                     | 3,231  |   |                                     |   | 532                                 |  |   | 7,602                               |   |  |   | 684    |  
|Utilities                                              |  |                                     | 1,857  |   |                                     |   | 368                                 |  |   | 4,094                               |   |  |   | 450    |  
|Repair and maintenance                                 |  |                                     | 1,777  |   |                                     |   | 231                                 |  |   | 4,025                               |   |  |   | 300    |  
|Franchise fees                                         |  |                                     | 1,602  |   |                                     |   | 281                                 |  |   | 3,711                               |   |  |   | 358    |  
|Management fees                                        |  |                                     | 1,546  |   |                                     |   | 180                                 |  |   | 3,373                               |   |  |   | 224    |  
|Taxes, insurance and other                             |  |                                     | 2,383  |   |                                     |   | 431                                 |  |   | 6,349                               |   |  |   | 554    |  
|General and administrative                             |  |                                     | 958    |   |                                     |   | 584                                 |  |   | 2,608                               |   |  |   | 1,329  |  
|Depreciation expense                                   |  |                                     | 4,919  |   |                                     |   | 881                                 |  |   | 11,407                              |   |  |   | 1,175  |  
|                                                       |  |                                     |        |   |                                     |   |                                     |  |   |                                     |   |  |   |        |  
|Total expenses                                         |  |                                     | 31,618 |   |                                     |   | 5,545                               |  |   | 73,598                              |   |  |   | 7,712  |  
|                                                       |  |                                     |        |   |                                     |   |                                     |  |   |                                     |   |  |   |        |  
|Operating income                                       |  |                                     | 11,252 |   |                                     |   | 819                                 |  |   | 24,096                              |   |  |   | 324    |  
|Interest income                                        |  |                                     | 3,475  |   |                                     |   | 871                                 |  |   | 5,231                               |   |  |   | 1,501  |  
|Debt extinguishment costs                              |  |                                     | (1,386 | ) |                                     |   |                                    |  |   | (1,386                              | ) |  |   |       |  
|Interest expense                                       |  |                                     | (1,812 | ) |                                     |   |                                    |  |   | (3,863                              | ) |  |   | (6     | )
|                                                       |  |                                     |        |   |                                     |   |                                     |  |   |                                     |   |  |   |        |  
|Net income                                             |  | $                                   | 11,529 |   |                                     | $ | 1,690                               |  | $ | 24,078                              |   |  | $ | 1,819  |  
|                                                       |  |                                     |        |   |                                     |   |                                     |  |   |                                     |   |  |   |        |  
|Basic and diluted earnings per common share            |  | $                                   | 0.13   |   |                                     | $ | 0.09                                |  | $ | 0.38                                |   |  | $ | 0.18   |  
|                                                       |  |                                     |        |   |                                     |   |                                     |  |   |                                     |   |  |   |        |  
|Weighted average shares outstanding; basic and diluted |  |                                     | 90,728 |   |                                     |   | 19,589                              |  |   | 63,793                              |   |  |   | 10,013 |  
|Distributions declared and paid per common share       |  | $                                   | 0.22   |   |                                     | $ | 0.22                                |  | $ | 0.66                                |   |  | $ | 0.44   |  
|                                                       |  |                                     |        |   |                                     |   |                                     |  |   |                                     |   |  |   |        |  

See notes to consolidated financial statements.

Note: The Company was initially capitalized on May 26, 2005 and commenced operations on April 27, 2006.



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Apple REIT Seven, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)



|                                                                              |  |                                     |          |   |                                     |   |          |  
|----------------------------------------------------------------------------- |  | ----------------------------------- | -------- | - | ----------------------------------- | - | -------- | -
|                                                                              |  | Nine months endedSeptember 30, 2007 |          |   | Nine months endedSeptember 30, 2006 |  
|Cash flow from operating activities:                                          |  |                                     |          |   |                                     |   |          |  
|Net income                                                                    |  | $                                   | 24,078   |   |                                     | $ | 1,819    |  
|Adjustments to reconcile net income to cash provided by operating activities: |  |                                     |          |   |                                     |   |          |  
|Depreciation of real estate owned and other non-cash expenses                 |  |                                     | 11,407   |   |                                     |   | 1,190    |  
|Amortization of deferred financing costs and fair value adjustments           |  |                                     | 538      |   |                                     |   |         |  
|Changes in operating assets and liabilities:                                  |  |                                     |          |   |                                     |   |          |  
|Increase in funds due from third party managers                               |  |                                     | (5,456   | ) |                                     |   | (1,944   | )
|Decrease in other operating assets                                            |  |                                     | 62       |   |                                     |   | 280      |  
|Increase in accrued operating expenses and accounts payable                   |  |                                     | 2,608    |   |                                     |   | 410      |  
|                                                                              |  |                                     |          |   |                                     |   |          |  
|Net cash provided by operating activities                                     |  |                                     | 33,237   |   |                                     |   | 1,755    |  
|Cash flow used in investing activities:                                       |  |                                     |          |   |                                     |   |          |  
|Cash paid for the acquistion of hotel properties                              |  |                                     | (324,307 | ) |                                     |   | (186,804 | )
|Deposits and other disbursements for potential acquistion of hotel properties |  |                                     | (1,853   | ) |                                     |   | (3,009   | )
|Capital improvements                                                          |  |                                     | (3,871   | ) |                                     |   | (8       | )
|Additions to other non-hotel assets                                           |  |                                     | (3,700   | ) |                                     |   |         |  
|Net decrease in cash restricted for property improvements                     |  |                                     | 468      |   |                                     |   |         |  
|                                                                              |  |                                     |          |   |                                     |   |          |  
|Net cash used in investing activities                                         |  |                                     | (333,263 | ) |                                     |   | (189,821 | )
|Cash flow from financing activities:                                          |  |                                     |          |   |                                     |   |          |  
|Net proceeds related to issuance of common and preferred stock                |  |                                     | 536,512  |   |                                     |   | 255,510  |  
|Redemptions of common stock                                                   |  |                                     | (640     | ) |                                     |   |         |  
|Cash distributions paid to shareholders                                       |  |                                     | (40,136  | ) |                                     |   | (6,039   | )
|Payment of financing costs related to loan assumptions                        |  |                                     | (1,091   | ) |                                     |   |         |  
|Payment of notes payable                                                      |  |                                     | (37,488  | ) |                                     |   | (400     | )
|                                                                              |  |                                     |          |   |                                     |   |          |  
|Net cash provided by financing activities                                     |  |                                     | 457,157  |   |                                     |   | 249,071  |  
|                                                                              |  |                                     |          |   |                                     |   |          |  
|Net increase in cash and cash equivalents                                     |  |                                     | 157,131  |   |                                     |   | 61,005   |  
|Cash and cash equivalents, beginning of period                                |  |                                     | 44,604   |   |                                     |   | 50       |  
|                                                                              |  |                                     |          |   |                                     |   |          |  
|Cash and cash equivalents, end of period                                      |  | $                                   | 201,735  |   |                                     | $ | 61,055   |  
|                                                                              |  |                                     |          |   |                                     |   |          |  
|Non-cash transactions: notes payable assumed in acquisitions                  |  | $                                   | 74,112   |   |                                     | $ |         |  

See notes to consolidated financial statements.

Note: The Company was initially capitalized on May 26, 2005 and commenced operations on April 27, 2006.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance
with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information required by accounting principles generally accepted in the United States. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These unaudited financial statements should be read in conjunction with the Companys audited financial statements included in its 2006
Annual Report on Form 10-K. Operating results for the three month and nine month periods ended September 30, 2007 are not necessarily indicative of the results that may be expected for the twelve month period ending December 31, 2007.

General Information and Summary of Significant Accounting Policies

Organization

Apple REIT Seven, Inc. together with its wholly owned subsidiaries (Apple REIT Seven or the
Company) is a Virginia corporation that has elected to be treated as a real estate investment trust (REIT) for federal income tax purposes. The Company was formed to invest in hotels, residential apartment communities and
other selected real estate. The Companys initial investment in and purchase of commercial real estate property occurred on April 27, 2006. The Companys initial capitalization occurred on May 26, 2005, when 10 Units (each Unit
consisting of one common stock and one Series A preferred share) were purchased by Apple Seven Advisors, Inc. and 240,000 Series B convertible preferred shares were purchased by Mr. Glade M. Knight, Chairman, Chief Executive Officer and
President of the Company. 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 upon
consolidation.

Earnings per Common Share

Basic
earnings per common share is computed based upon the weighted average number of 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 potential common shares with a dilutive effect during the nine months ended September 30, 2007 and 2006. Series B convertible preferred shares are not included in earnings per common share until such time the Series B
convertible preferred shares are converted to common shares.

Use of Estimates

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

Offering Costs

In July 2007, the Company completed its best-efforts offering of Units by David Lerner Associates, Inc., which received a selling commission and a marketing
expense allowance based on proceeds of the Units sold. Additionally, the Company incurred other offering costs including costs for legal, accounting and reporting services. These offering costs are recorded by the Company as a reduction of
shareholders equity. From the Companys initial capitalization on May 26, 2005 through September 30, 2007, the Company sold 91.2 million Units for gross proceeds of $1.0 billion and proceeds net of offering costs of $898
million.



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Recently Adopted Accounting Pronouncements

Effective January 1, 2007, the Company adopted Financial Accounting Standards Board (FASB) Interpretation (FIN) No. 48, Accounting for Uncertainty in Income Taxes  an interpretation of FASB
Statement No. 109. This interpretation requires that income tax positions recognized in an entitys tax returns have a more-likely-than-not chance of being sustained prior to recording the related tax benefit in the financial statements.
Tax benefits would be derecognized if information became available which indicated that it was more-likely-than-not that the position would not be sustained. The adoption of this interpretation did not have a material impact on the Companys
results of operations or financial position.

Note 2

Investments in Real Estate

During the nine months ended September 30, 2007, the Company completed the purchase of 23 hotels. 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 during this period. All dollar amounts are in thousands.



|                    |  |                   |  |              |  |                    |         |       |       |                 |          
|------------------- |  | ----------------- |  | ------------ |  | ------------------ | ------- | ----- | ----- | --------------- | ---------
|Location            |  | Brand             |  | Manager      |  | GrossPurchasePrice |         | Rooms |       | Date ofPurchase
|Tupelo, MS          |  | Hampton Inn       |  | LBA          |  | $                  | 5,245   |       | 96    |                 | 1/23/2007
|Miami, FL           |  | Homewood Suites   |  | Dimension    |  |                    | 24,300  |       | 159   |                 | 2/21/2007
|Highlands Ranch, CO |  | Residence Inn     |  | Dimension    |  |                    | 19,000  |       | 117   |                 | 2/22/2007
|Cranford, NJ        |  | Homewood Suites   |  | Dimension    |  |                    | 13,500  |       | 108   |                 | 3/7/2007 
|Mahwah, NJ          |  | Homewood Suites   |  | Dimension    |  |                    | 19,500  |       | 110   |                 | 3/7/2007 
|Highlands Ranch, CO |  | Hilton Garden Inn |  | Dimension    |  |                    | 20,500  |       | 128   |                 | 3/9/2007 
|Columbus, GA        |  | Fairfield Inn     |  | LBA          |  |                    | 7,333   |       | 79    |                 | 4/24/2007
|Tallahassee, FL     |  | Fairfield Inn     |  | LBA          |  |                    | 6,647   |       | 79    |                 | 4/24/2007
|Lakeland, FL        |  | Courtyard         |  | LBA          |  |                    | 9,805   |       | 78    |                 | 4/24/2007
|Prattville, AL      |  | Courtyard         |  | LBA          |  |                    | 9,304   |       | 84    |                 | 4/24/2007
|Agoura Hills, CA    |  | Homewood Suites   |  | Dimension    |  |                    | 25,250  |       | 125   |                 | 5/8/2007 
|Memphis, TN         |  | Homewood Suites   |  | Hilton       |  |                    | 11,100  |       | 140   |                 | 5/15/2007
|Dothan, AL          |  | Fairfield Inn     |  | LBA          |  |                    | 4,584   |       | 63    |                 | 5/16/2007
|Vancouver, WA       |  | SpringHill Suites |  | Inn Ventures |  |                    | 15,988  |       | 119   |                 | 6/1/2007 
|San Diego, CA       |  | Residence Inn     |  | Dimension    |  |                    | 32,500  |       | 121   |                 | 6/13/2007
|Provo, UT           |  | Residence Inn     |  | Dimension    |  |                    | 11,250  |       | 114   |                 | 6/13/2007
|Macon, GA           |  | Hilton Garden Inn |  | LBA          |  |                    | 10,660  |       | 101   |                 | 6/28/2007
|San Antonio, TX     |  | TownePlace Suites |  | Western      |  |                    | 11,925  |       | 106   |                 | 6/29/2007
|Alexandria, VA      |  | Courtyard         |  | Marriott     |  |                    | 36,997  |       | 176   |                 | 7/13/2007
|San Diego, CA       |  | Hampton Inn       |  | Dimension    |  |                    | 42,000  |       | 177   |                 | 7/19/2007
|Addison, TX         |  | SpringHill Suites |  | Marriott     |  |                    | 12,500  |       | 159   |                 | 8/10/2007
|Boise, ID           |  | SpringHill Suites |  | Inn Ventures |  |                    | 21,000  |       | 230   |                 | 9/14/2007
|San Antonio, TX     |  | TownePlace Suites |  | Western      |  |                    | 13,838  |       | 123   |                 | 9/27/2007
|                    |  |                   |  |              |  |                    |         |       |       |                 |          
|                    |  |                   |  |              |  | $                  | 384,726 |       | 2,792 |                 |          
|                    |  |                   |  |              |  |                    |         |       |       |                 |          



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The Company assumed approximately $72.3 million of mortgage indebtedness during the first nine months of 2007, associated
with nine of its hotel acquisitions. The following table summarizes the interest rate, maturity date and principal amount assumed associated with each mortgage. All dollar amounts are in thousands.



|                    |  |                 |  |              |   |  |              |  |                  |       
|------------------- |  | --------------- |  | ------------ | - |  | ------------ |  | ---------------- | ------
|Location            |  | Brand           |  | InterestRate |   |  | MaturityDate |  | PrincipalAssumed
|Tupelo, MS          |  | Hampton Inn     |  | 5.90         | % |  | 3/1/2016     |  | $                | 4,110 
|Miami, FL           |  | Homewood Suites |  | 6.50         | % |  | 7/1/2013     |  |                  | 9,820 
|Highlands Ranch, CO |  | Residence Inn   |  | 5.94         | % |  | 6/1/2016     |  |                  | 11,550
|Tallahassee, FL     |  | Fairfield Inn   |  | 6.80         | % |  | 1/11/2013    |  |                  | 3,494 
|Lakeland, FL        |  | Courtyard       |  | 6.80         | % |  | 1/11/2013    |  |                  | 4,210 
|Dothan, AL          |  | Fairfield Inn   |  | 7.35         | % |  | 3/1/2008     |  |                  | 1,653 
|San Diego, CA       |  | Residence Inn   |  | 6.55         | % |  | 4/1/2013     |  |                  | 15,804
|Provo, UT           |  | Residence Inn   |  | 6.55         | % |  | 4/1/2013     |  |                  | 5,553 
|San Diego, CA       |  | Hampton Inn     |  | 6.74         | % |  | 3/11/2014    |  |                  | 16,082
|                    |  |                 |  |              |   |  |              |  |                  |       
|                    |  |                 |  |              |   |  |              |  | $                | 72,276
|                    |  |                 |  |              |   |  |              |  |                  |       

During the third quarter of 2007, the Company paid and extinguished the San Diego Hampton Inn loan and recognized
approximately $1.4 million in debt extinguishment costs, which included a credit of $0.6 million related to the debts outstanding fair value adjustment. Additionally, during the third quarter, the Company paid and extinguished the Dothan
Fairfield Inn note with no debt extinguishment costs.

The purchase price net of debt assumed was funded by the Companys cash on hand. Additionally,
the Company used cash on hand to pay 2% of the aggregate gross purchase price for the 23 hotels purchased in the nine month period ended September 30, 2007, totaling $7.7 million, as a brokerage commission to Apple Suites Realty Group, Inc.
(ASRG). This entity is owned by Glade M. Knight, who is one of the Companys directors and its Chief Executive Officer. These costs have been capitalized to investment in real estate properties.

At September 30, 2007, the Companys investment in real estate consisted of the following (in thousands):



|                                  |  |   |         |  
|--------------------------------- |  | - | ------- | -
|Land                              |  | $ | 81,106  |  
|Building and Improvements         |  |   | 640,656 |  
|Furniture, Fixtures and Equipment |  |   | 28,198  |  
|                                  |  |   |         |  
|                                  |  |   | 749,960 |  
|Less Accumulated Depreciation     |  |   | (14,480 | )
|                                  |  |   |         |  
|Investment in Real Estate, net    |  | $ | 735,480 |  
|                                  |  |   |         |  

As of September 30, 2007, the Company had entered into purchase contracts for ten additional hotels. Eight of
the hotels were under construction as of September 30, 2007, with completion expected within the next nine months. Although the Company believes there is a reasonable probability that it will acquire these hotels, there can be no assurance that
all of the conditions to closing will be satisfied. Contract deposits for these hotels are included in other assets in the Companys consolidated balance sheet as of September 30, 2007, and in deposits and other disbursements for potential
acquisition of hotel properties in the consolidated statement of cash flows. The following table summarizes the location, brand, gross purchase price, refundable contract deposits, and number of rooms for each hotel. All dollar amounts are in
thousands.



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|               |  |                   |  |                    |         |              |   |               |  |      
|-------------- |  | ----------------- |  | ------------------ | ------- | ------------ | - | ------------- |  | -----
|Location       |  | Franchise/Brand   |  | GrossPurchasePrice |         | DepositsPaid |   | NumberofRooms
|Trussville, AL |  | Courtyard         |  | $                  | 9,510   |              | $ | 250           |  | 84   
|Miami, FL      |  | Courtyard         |  |                    | 15,000  |              |   | 300           |  | 118  
|Tucson, AZ     |  | Residence Inn     |  |                    | 16,640  |              |   | 832           |  | 124  
|El Paso, TX    |  | Homewood Suites   |  |                    | 15,390  |              |   | 770           |  | 114  
|Columbus, GA   |  | SpringHill Suites |  |                    | 9,675   |              |   | 100           |  | 85   
|Columbus, GA   |  | TownePlace Suites |  |                    | 8,428   |              |   | 100           |  | 86   
|Dothan, AL     |  | Residence Inn     |  |                    | 9,669   |              |   | 100           |  | 84   
|Huntsville, AL |  | TownePlace Suites |  |                    | 8,927   |              |   | 100           |  | 86   
|Kirkland, WA   |  | Courtyard         |  |                    | 31,000  |              |   | 500           |  | 150  
|Richmond, VA   |  | Marriott          |  |                    | 53,300  |              |   | 500           |  | 400  
|               |  |                   |  |                    |         |              |   |               |  |      
|Total          |  |                   |  | $                  | 177,539 |              | $ | 3,552         |  | 1,331
|               |  |                   |  |                    |         |              |   |               |  |      

Note 3

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 arms length, and the results of the Companys operations may be different than if conducted with non-related parties.

The Company has entered into a Property Acquisition and Disposition Agreement 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 payable for these services. From the Companys inception through September 30, 2007, the Company has incurred fees to ASRG totaling $14.5 million. This amount represents fees associated with
the Companys 41 hotel purchases through that date. Fees paid to ASRG for property acquisitions are capitalized as part of the purchase price of the properties. Additionally, the Company has entered into an advisory agreement with Apple Seven
Advisors, Inc. (ASA), to provide management of the Company and its assets. An annual fee ranging from .1% to .25% of total gross equity proceeds received by the Company, in addition to certain reimbursable expenses, is payable for these
services. From May 2007 until October 2007, ASA utilized Apple Hospitality Five, Inc. to provide these services. Prior to May 2007, ASA used Apple Hospitality Two, Inc. to provide these services. Beginning in October 2007, ASA utilizes Apple REIT
Six, Inc. to provide these services. Advisory fees and other reimbursable expenses incurred by the Company under the ASA advisory agreement during the nine month periods ended September 30, 2007 and 2006 were $1.5 million and $518 thousand,
respectively, and are included in general and administrative expenses in the Companys consolidated statements of operations. ASRG and ASA are owned by Glade M. Knight, Chairman, Chief Executive Officer and President of the Company.
Mr. Knight also serves as the Chairman and Chief Executive Officer of Apple REIT Six, Inc. (a hospitality REIT) and Apple REIT Eight, Inc. (a newly formed company that intends to qualify as a REIT). Members of the Companys Board of
Directors are also on the Board of Directors of Apple REIT Six, Inc. and Apple REIT Eight, Inc. and until October and May 2007, were on the boards of Apple Hospitality Five, Inc. and Apple Hospitality Two, Inc.

Note 4

Line of Credit

In the third quarter of 2007, the Company discharged its $150 million unsecured line of credit facility. The Company had entered into this credit facility for working
capital and short-term acquisition funding in December 2006. There was no outstanding balance on the line of credit at the time it was discharged.



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Note 5

Shareholders Equity

In the third quarter of 2007, the Company instituted a Dividend Reinvestment Plan for its shareholders. The plan
provides a convenient and cost effective way to increase shareholder investment in the Company by reinvesting dividends to purchase additional Units of the Company. The uses of the proceeds from this plan may include purchasing Units under the
Companys Unit Redemption Program, enhancing properties, satisfying financing obligations and other expenses, increasing working capital, funding various corporate operations, and acquiring hotels. The Company has registered 10 million
Units for potential issuance under the plan. Since inception through September 30, 2007, 160,618 Units were issued under the plan representing approximately $1.8 million.

In 2007, the Company instituted a Unit Redemption Program to provide limited interim liquidity to its shareholders who have held their Units for at least one year. Shareholders may request redemption of Units for a
purchase price equal to 92% of the price paid per Unit if the Units have been owned for less than three years, or 100% of the price paid per Unit if the Units have been owned more than three years. The maximum number of Units that may be redeemed in
any 12-month period will be three percent of the weighted average number of Units outstanding during the 12-month period. The Company reserves the right to change the purchase price for redemptions, reject any request for redemption, or otherwise
amend the terms of, suspend, or terminate the Unit Redemption Program. The initial redemption under the program occurred in April 2007 and total redemptions through September 30, 2007 were approximately 64,000 Units for approximately $640,000.

Note 6

Series B Convertible Preferred Stock

The Company has issued 240,000 Series B convertible preferred shares to Glade M. Knight, Chairman, Chief Executive Officer and President of the Company, in
exchange for the payment by him of $0.10 per Series B convertible preferred share, or an aggregate of $24,000. 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.



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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 $1 billion offering. With the completion of the Companys $1 billion offering in July 2007, each Series B
convertible preferred share may be converted into 24.17104 common shares upon the occurrence of any conversion event.

In the event that 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/50 million) x 1.20568, where X is the additional gross proceeds rounded down to the nearest 50 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.

Compensation expense related to issuance of 240,000 Series B convertible preferred shares to Mr. Knight will be
recognized at such time when the number of common shares to be issued for conversion of the Series B shares can be reasonably estimated and the event triggering the conversion of the Series B shares to common shares 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 amount paid for the Series B shares. Although the fair market value cannot be determined at this time, compensation expense
could range from $0 to in excess of $63 million (assumes $11 per unit fair market value) which represents approximately 5.8 million shares of common stock.

Note 7

Other Assets

In July 2007, the
Company purchased a 50% ownership interest in Apple Air Holding, LLC (Apple Air), a subsidiary of Apple REIT Six, Inc. for $3.7 million in cash. The Company has recorded its share of income and losses of the entity under the equity
method of accounting and adjusted its investment in Apple Air accordingly. The interest was purchased to allow the Company access to a Lear 40XR jet for asset management and renovation purposes. The investment is included in Other assets, net on the
Companys consolidated balance sheet.

Note 8

Pro Forma Information

The following unaudited pro forma information for the three month and nine month periods ended September 30,
2007, is presented as if the acquisitions of the hotels acquired during the nine months ended September 30, 2007 had occurred on the latter of January 1, 2007 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.



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|                                         |  |                                     |        |                                     |   |        
|---------------------------------------- |  | ----------------------------------- | ------ | ----------------------------------- | - | -------
|(in thousands, except per share data)    |  | Three monthsendedSeptember 30, 2007 |        | Nine months endedSeptember 30, 2007
|Hotel revenues                           |  | $                                   | 45,090 |                                     | $ | 124,206
|Net income                               |  | $                                   | 11,199 |                                     | $ | 25,803 
|Net income per share - basic and diluted |  | $                                   | 0.12   |                                     | $ | 0.38   

The pro forma information reflects adjustments for actual revenues and expenses of the hotels acquired as of
September 30, 2007 for the respective period in operation during the three month and nine month period ended September 30, 2007 prior to acquisition by the Company. Net income has been adjusted as follows: (1) depreciation has been
adjusted based on the Companys basis in the hotels; (2) interest expense has been adjusted to reflect additional borrowings under its line of credit to fund acquisitions, as needed, in addition to eliminating prior owners debt not
assumed by the Company, and (3) interest income has been reduced to reflect the use of cash balances to fund property purchases.

Note 9

Subsequent Events

On October 4, 2007, the
Company completed the purchase of a Courtyard hotel in Trussville, Alabama. The gross purchase price was $9.5 million for this 84 room hotel.

On
October 23, 2007, the Company completed the purchase of a Courtyard hotel in Kirkland, Washington. The gross purchase price was $31.0 million for this 150 room hotel.

On October 15, 2007, the Company paid $.073334 per outstanding common share, totaling $6.7 million, in a dividend distribution to its common shareholders, of which 177,219 Units were reinvested under the
Companys Dividend Reinvestment Plan.

In October 2007, the Company redeemed 74,284 Units representing approximately $748,000, under the
Companys Unit Redemption Program.



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|Item 2. | Managements Discussion And Analysis Of Financial Condition And Results Of Operation
|------- | ------------------------------------------------------------------------------------

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 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 hotel 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.

Overview

Apple REIT Seven, Inc. together with its wholly owned subsidiaries (the Company) is a Virginia corporation that has elected to be treated as a real estate
investment trust (REIT) for federal income tax purposes. The Company, which owned 41 hotel properties as of September 30, 2007 and has a limited operating history, was formed to invest in hotels, residential apartment communities
and other selected real estate. Initial capitalization occurred on May 26, 2005, when 10 Units (each Unit consisting of one common share and one Series A preferred share) were purchased by Apple Seven Advisors, Inc. and 240,000 shares of Series
B convertible preferred shares were purchased by Mr. Glade M. Knight, the Companys Chairman, Chief Executive Officer and President. The Companys first property acquisition was completed in April 2006. The consolidated financial
statements include the accounts of the Company and its subsidiaries. All intercompany accounts and transactions have been eliminated.

Although hotel
performance can be influenced by many factors including local competition, local and general economic conditions in the United States and the performance of individual managers assigned to each hotel, performance of the hotels, in general, has met
the Companys expectations for the period owned. In evaluating financial condition and operating performance, the most important matters on which the Company focuses are revenue measurements, such as average occupancy, average daily rate and
revenue per available room, and expenses, such as hotel operating expenses, general and administrative and other expenses described below. The following is a summary of results for the three and nine months ended September 30, 2007.



|                                        |  |                                     |        |   |                  |     |   |                                     |   |        |                  |  |     |  
|--------------------------------------- |  | ----------------------------------- | ------ | - | ---------------- | --- | - | ----------------------------------- | - | ------ | ---------------- |  | --- | -
|(in thousands, except statistical data) |  | Three monthsendedSeptember 30, 2007 |        |   | PercentofRevenue |     |   | Nine months endedSeptember 30, 2007 |   |        | PercentofRevenue | 
|Total revenues                          |  | $                                   | 42,870 |   |                  | 100 | % |                                     | $ | 97,694 |                  |  | 100 | %
|Hotel direct expenses                   |  |                                     | 23,358 |   |                  | 54  | % |                                     |   | 53,234 |                  |  | 54  | %
|Taxes, insurance and other expense      |  |                                     | 2,383  |   |                  | 6   | % |                                     |   | 6,349  |                  |  | 6   | %
|General and administrative expense      |  |                                     | 958    |   |                  | 2   | % |                                     |   | 2,608  |                  |  | 3   | %
|Depreciation expense                    |  |                                     | 4,919  |   |                  |     |   |                                     |   | 11,407 |                  |  |     |  
|Interest income                         |  |                                     | 3,475  |   |                  |     |   |                                     |   | 5,231  |                  |  |     |  
|Interest expense                        |  |                                     | 1,812  |   |                  |     |   |                                     |   | 3,863  |                  |  |     |  
|Average Daily Rate (ADR)                |  | $                                   | 121    |   |                  |     |   |                                     | $ | 121    |                  |  |     |  
|Occupancy                               |  |                                     | 78     | % |                  |     |   |                                     |   | 77     | %                |  |     |  
|RevPAR                                  |  | $                                   | 94     |   |                  |     |   |                                     | $ | 93     |                  |  |     |  



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Hotels Owned

The
following table summarizes the location, brand, manager, date acquired, number of rooms and gross purchase price for each of the 41 hotels the Company owned at September 30, 2007:



|                    |  |                   |  |              |  |                            |         |       |       |                 |           
|------------------- |  | ----------------- |  | ------------ |  | -------------------------- | ------- | ----- | ----- | --------------- | ----------
|Location            |  | Brand             |  | Manager      |  | GrossPurchasePrice (000s) |         | Rooms |       | Date ofPurchase
|Houston, TX         |  | Residence Inn     |  | Western      |  | $                          | 13,600  |       | 129   |                 | 4/27/2006 
|San Diego, CA       |  | Hilton Garden Inn |  | Inn Ventures |  |                            | 34,500  |       | 200   |                 | 5/9/2006  
|Brownsville, TX     |  | Courtyard         |  | Western      |  |                            | 8,550   |       | 90    |                 | 6/19/2006 
|Stafford, TX        |  | Homewood Suites   |  | Western      |  |                            | 7,800   |       | 78    |                 | 8/15/2006 
|Montgomery, AL      |  | Homewood Suites   |  | LBA          |  |                            | 10,660  |       | 91    |                 | 8/17/2006 
|Montgomery, AL      |  | Hilton Garden Inn |  | LBA          |  |                            | 10,385  |       | 97    |                 | 8/17/2006 
|Troy, AL            |  | Hampton Inn       |  | LBA          |  |                            | 6,130   |       | 82    |                 | 8/17/2006 
|Auburn, AL          |  | Hilton Garden Inn |  | LBA          |  |                            | 10,185  |       | 101   |                 | 8/17/2006 
|Huntsville, AL      |  | Hilton Garden Inn |  | LBA          |  |                            | 10,285  |       | 101   |                 | 8/17/2006 
|Seattle, WA         |  | Residence Inn     |  | Inn Ventures |  |                            | 56,173  |       | 234   |                 | 9/1/2006  
|Sarasota, FL        |  | Homewood Suites   |  | Hilton       |  |                            | 13,800  |       | 100   |                 | 9/15/2006 
|Hattiesburg, MS     |  | Courtyard         |  | LBA          |  |                            | 9,455   |       | 84    |                 | 10/5/2006 
|Huntsville, AL      |  | Homewood Suites   |  | LBA          |  |                            | 11,606  |       | 107   |                 | 10/27/2006
|Omaha, NE           |  | Courtyard         |  | Marriott     |  |                            | 23,100  |       | 181   |                 | 11/4/2006 
|Cincinnati, OH      |  | Homewood Suites   |  | White        |  |                            | 7,100   |       | 76    |                 | 12/1/2006 
|Rancho Bernardo, CA |  | Courtyard         |  | Dimension    |  |                            | 36,000  |       | 210   |                 | 12/12/2006
|New Orleans, LA     |  | Homewood Suites   |  | Dimension    |  |                            | 43,000  |       | 166   |                 | 12/15/2006
|Ronkonkoma, NY      |  | Hilton Garden Inn |  | White        |  |                            | 27,000  |       | 164   |                 | 12/15/2006
|Tupelo, MS          |  | Hampton Inn       |  | LBA          |  |                            | 5,245   |       | 96    |                 | 1/23/2007 
|Miami, FL           |  | Homewood Suites   |  | Dimension    |  |                            | 24,300  |       | 159   |                 | 2/21/2007 
|Highlands Ranch, CO |  | Residence Inn     |  | Dimension    |  |                            | 19,000  |       | 117   |                 | 2/22/2007 
|Cranford, NJ        |  | Homewood Suites   |  | Dimension    |  |                            | 13,500  |       | 108   |                 | 3/7/2007  
|Mahwah, NJ          |  | Homewood Suites   |  | Dimension    |  |                            | 19,500  |       | 110   |                 | 3/7/2007  
|Highlands Ranch, CO |  | Hilton Garden Inn |  | Dimension    |  |                            | 20,500  |       | 128   |                 | 3/9/2007  
|Columbus, GA        |  | Fairfield Inn     |  | LBA          |  |                            | 7,333   |       | 79    |                 | 4/24/2007 
|Tallahassee, FL     |  | Fairfield Inn     |  | LBA          |  |                            | 6,647   |       | 79    |                 | 4/24/2007 
|Lakeland, FL        |  | Courtyard         |  | LBA          |  |                            | 9,805   |       | 78    |                 | 4/24/2007 
|Prattville, AL      |  | Courtyard         |  | LBA          |  |                            | 9,304   |       | 84    |                 | 4/24/2007 
|Agoura Hills, CA    |  | Homewood Suites   |  | Dimension    |  |                            | 25,250  |       | 125   |                 | 5/8/2007  
|Memphis, TN         |  | Homewood Suites   |  | Hilton       |  |                            | 11,100  |       | 140   |                 | 5/15/2007 
|Dothan, AL          |  | Fairfield Inn     |  | LBA          |  |                            | 4,584   |       | 63    |                 | 5/16/2007 
|Vancouver, WA       |  | SpringHill Suites |  | Inn Ventures |  |                            | 15,988  |       | 119   |                 | 6/1/2007  
|San Diego, CA       |  | Residence Inn     |  | Dimension    |  |                            | 32,500  |       | 121   |                 | 6/13/2007 
|Provo, UT           |  | Residence Inn     |  | Dimension    |  |                            | 11,250  |       | 114   |                 | 6/13/2007 
|Macon, GA           |  | Hilton Garden Inn |  | LBA          |  |                            | 10,660  |       | 101   |                 | 6/28/2007 
|San Antonio, TX     |  | TownePlace Suites |  | Western      |  |                            | 11,925  |       | 106   |                 | 6/29/2007 
|Alexandria, VA      |  | Courtyard         |  | Marriott     |  |                            | 36,997  |       | 176   |                 | 7/13/2007 
|San Diego, CA       |  | Hampton Inn       |  | Dimension    |  |                            | 42,000  |       | 177   |                 | 7/19/2007 
|Addison, TX         |  | SpringHill Suites |  | Marriott     |  |                            | 12,500  |       | 159   |                 | 8/10/2007 
|Boise, ID           |  | SpringHill Suites |  | Inn Ventures |  |                            | 21,000  |       | 230   |                 | 9/14/2007 
|San Antonio, TX     |  | TownePlace Suites |  | Western      |  |                            | 13,838  |       | 123   |                 | 9/27/2007 
|                    |  |                   |  |              |  |                            |         |       |       |                 |           
|                    |  |                   |  |              |  | $                          | 724,055 |       | 5,083 |                 |           
|                    |  |                   |  |              |  |                            |         |       |       |                 |           

The total gross purchase price for all 41 hotels of $724.1 million was funded primarily by the Companys best
efforts offering of Units. The Company also assumed existing mortgage loans on eleven of the hotel



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properties purchased. 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 offering to pay $14.5 million, representing 2% of the gross purchase price for these 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.

Results of Operations

During the period from the Companys initial formation on May 26, 2005 to April 26, 2006, the company owned no properties, had no revenue exclusive of interest income, and was primarily engaged in
capital formation activities. Operations commenced on April 27, 2006 with the Companys first property acquisition. At September 30, 2006, the Company owned 11 hotels, compared to the 41 hotels owned at September 30, 2007. A
comparison of operations for the three and nine month periods ended September 30, 2007 to prior year results is therefore not meaningful. In general, the performance of the Companys hotels during their initial period of ownership has met
expectations. Hotel performance is impacted by many factors including local hotel competition, and local and national economic conditions in the United States. As a result of these factors, there can be no assurance that the Companys operating
performance will continue to meet expectations.

Revenues

The Companys principal source of revenue is hotel room revenue and related other revenue related to hotel operations. Hotel operations included in the consolidated statement of operations are for the Companys 41 hotels acquired
through September 30, 2007, for the respective period of ownership for each property. For the three month and nine month periods ended September 30, 2007, the Company had total revenue of $42.9 million and $97.7 million respectively. For
the three month period ended September 30, 2007, the hotels achieved combined average occupancy of approximately 78%, average daily rate (ADR) of $121 and revenue per available room (RevPAR) of $94. For the nine month
period ended September 30, 2007, the hotels achieved combined average occupancy of approximately 77%, ADR of $121, and RevPAR of $93. These rates are comparable with industry and brand averages in the markets where the Companys hotels are
located. ADR, or average daily rate, is calculated as room revenue divided by the number of rooms sold, and RevPAR, or revenue per available room, is calculated as ADR multiplied by the occupancy percentage.

Expenses

For the three month and nine month periods ended
September 30, 2007, hotel direct expenses of the Companys hotels totaled $23.4 million and $53.2 million, respectively. As a percentage of total revenue, hotel direct expenses were 54% of total revenue for both the three month and nine
month periods ended September 30, 2007. Hotel direct expenses consist of operating expense, hotel administrative expense, sales and marketing expense, utilities expense, repair and maintenance expense, franchise fees and management fees.

Taxes, insurance, and other expense for the three month and nine month periods ended September 30, 2007 totaled $2.4 million and $6.3 million,
representing 6% of total revenue for each period. General and administrative expense for the three month and nine month period ended September 30, 2007 totaled $958 thousand and $2.6 million, respectively.

Depreciation expense was $4.9 million for the third quarter of 2007, and totaled $11.4 million for the nine month period ended September 30, 2007. This amount
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 and nine month periods ended September 30, 2007, the Company recognized interest income of $3.5 million and $5.2 million, respectively. Interest income represents earnings on excess cash
invested in short term money market instruments. Interest expense during the three month and nine month



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period ended September 30, 2007 totaled $1.8 million and $3.9 million, respectively. These costs primarily represent interest expense incurred on
mortgage loans assumed on eleven of the Companys 41 hotel properties owned as of September 30, 2007. Additionally, in the third quarter, the Company extinguished debt related to two of its properties and incurred debt extinguishment costs
of $1.4 million.

Liquidity and Capital Resources

The
Company raised capital through a best-efforts offering of Units by David Lerner Associates, Inc. (the Managing Dealer), which received selling commissions and a marketing expense allowance based on proceeds of the Units sold.
Each Unit consists of one common share and one Series A preferred share. The Series A preferred shares have no voting rights, no conversion rights and no distribution rights. The only right associated with the Series A preferred shares will be a
priority distribution upon the sale of the Companys assets. The priority would be equal to $11.00 per Series A preferred share, and no more, before any distributions are made to the holders of any other shares. The Series A preferred shares
will not be separately tradable from the common shares to which they relate.

In July 2007, the Company concluded its best-efforts offering of Units. From
the Companys initial capitalization on May 26, 2005 through July 2007, the Company closed on a total of 91.1 million Units representing gross proceeds of $1 billion. The Company incurred costs of approximately $102 million related to
its offering. These costs are reflected as a reduction to shareholders equity.

To maintain its REIT status the Company is required to distribute at
least 90% of its ordinary income. Distributions through the first nine months of 2007 totaled $40.1 million and were paid monthly at a rate of $0.073334 per common share, and included a return of capital. For the same period the Companys cash
generated from operations was approximately $33.2 million. Due to the inherent delay between raising capital and investing that same capital in income producing real estate, the Company has had significant amounts of cash earning interest at short
term money market rates. As a result, the difference between distributions paid and cash generated from operations has been funded from proceeds from our offering of Units, and this portion of distributions is expected to be treated as a return of
capital for federal income tax purposes. The Company intends to continue paying dividends on a monthly basis, at an annualized dividend rate of $0.88 per common share. Since a portion of distributions has to date 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. Since 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 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 or refurbishing of furniture, fixtures, and equipment, an amount between 2% to
5% of gross revenues of the applicable hotel, provided that such amount may be used for the Companys capital expenditures with respect to the applicable hotel. 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 with the exception of major renovations. As of September 30, 2007, the Company also held $9.1 million in restricted cash accounts for capital
improvement purposes required by certain loan or management agreements. As of September 30, 2007, the Company had made approximately $3.9 million of capital expenditures, exclusive of hotel acquisitions, in 2007. Starting in the fourth quarter
of 2007, the Company will begin major renovations for six of its hotels. The costs of the renovations will be approximately $10 million in excess of restricted cash held for these properties.

In 2007, the Company instituted a Unit Redemption Program to provide limited interim liquidity to its shareholders who have held their Units for at least one year.
Shareholders may request redemption of Units for a purchase price equal to 92% of the price paid per Unit if the Units have been owned for less than three years, or 100% of the price paid per Unit if the Units have been owned more than three years.
The maximum number of Units that may be redeemed in any 12-month period will be three percent of the



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weighted average number of Units outstanding during the 12-month period. The Company reserves the right to change the purchase price for redemptions, reject
any request for redemption, or otherwise amend the terms of, suspend, or terminate the Unit Redemption Program. The initial redemption under the program occurred in April 2007 and total redemptions through September 30, 2007 were approximately
64,000 Units for approximately $640,000.

The Company instituted a Dividend Reinvestment Plan for its shareholders in July 2007. The plan provides a
convenient and cost effective way to increase shareholder investment in the Company by reinvesting dividends to purchase additional Units of the Company. The uses of the proceeds from this plan may include purchasing Units under the Companys
Unit Redemption Program, enhancing properties, satisfying financing obligations and other expenses, increasing working capital, acquiring hotel properties, and funding various corporate operations. The Company has registered 10 million Units
for potential issuance under the plan. Since inception through September 30, 2007, 160,618 Units were issued under the plan representing approximately $1.8 million.

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

As of September 30, 2007, the Company had entered into purchase contracts for ten additional hotels.
Eight of these hotels were under construction as of September 30, 2007, with completion expected within the next nine months. Although the Company believes there is a reasonable probability that it will acquire these hotels, there can be no
assurance that all of the conditions to closing will be satisfied. Contract deposits for these hotels are included in other assets in the Companys consolidated balance sheet as of September 30, 2007. The following table summarizes the
location, brand, gross purchase price, refundable contract deposits, and number of rooms for each hotel. All dollar amounts are in thousands.



|               |  |                   |  |                    |         |              |   |               |  |      
|-------------- |  | ----------------- |  | ------------------ | ------- | ------------ | - | ------------- |  | -----
|Location       |  | Franchise/Brand   |  | GrossPurchasePrice |         | DepositsPaid |   | NumberofRooms
|Trussville, AL |  | Courtyard         |  | $                  | 9,510   |              | $ | 250           |  | 84   
|Miami, FL      |  | Courtyard         |  |                    | 15,000  |              |   | 300           |  | 118  
|Tucson, AZ     |  | Residence Inn     |  |                    | 16,640  |              |   | 832           |  | 124  
|El Paso, TX    |  | Homewood Suites   |  |                    | 15,390  |              |   | 770           |  | 114  
|Columbus, GA   |  | SpringHill Suites |  |                    | 9,675   |              |   | 100           |  | 85   
|Columbus, GA   |  | TownePlace Suites |  |                    | 8,428   |              |   | 100           |  | 86   
|Dothan, AL     |  | Residence Inn     |  |                    | 9,669   |              |   | 100           |  | 84   
|Huntsville, AL |  | TownePlace Suites |  |                    | 8,927   |              |   | 100           |  | 86   
|Kirkland, WA   |  | Courtyard         |  |                    | 31,000  |              |   | 500           |  | 150  
|Richmond, VA   |  | Marriott          |  |                    | 53,300  |              |   | 500           |  | 400  
|               |  |                   |  |                    |         |              |   |               |  |      
|Total          |  |                   |  | $                  | 177,539 |              | $ | 3,552         |  | 1,331
|               |  |                   |  |                    |         |              |   |               |  |      

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 arms length, and the results of the Companys operations
may be different than if conducted with non-related parties.

The Company has entered into a Property Acquisition and Disposition Agreement 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 payable for these services. From its inception through September 30, 2007,
the Company has paid ASRG $14.5 million, representing fees incurred on 41



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hotel purchases. Fees paid to ASRG for property acquisitions are capitalized as part of the purchase price of the properties. Additionally, the Company has
entered into an advisory agreement with Apple Seven Advisors, Inc. (ASA), to provide management of the Company and its assets. An annual fee ranging from .1% to .25% of total gross equity proceeds received by the Company, in addition to
certain reimbursable expenses, is payable for these services. Effective May 2007, ASA utilizes Apple Hospitality Five, Inc. to provide these services. From May 2007 until October 2007, ASA utilized Apple Hospitality Five, Inc. to provide these
services. Prior to May 2007, ASA used Apple Hospitality Two, Inc. to provide these services. Beginning in October 2007, ASA utilizes Apple REIT Six, Inc. to provide these services. Advisory fees and other reimbursable expenses incurred by the
Company under the ASA advisory agreement during the nine month periods ended September 30, 2007 and 2006 were $1.5 million and $518 thousand, respectively, and are included in general and administrative expenses in the Companys
consolidated statements of operations. ASRG and ASA are owned by Glade M. Knight, Chairman, Chief Executive Officer and President of the Company. Mr. Knight also serves as the Chairman and Chief Executive Officer of Apple REIT Six, Inc. (a
hospitality REIT) and Apple REIT Eight, Inc. (a newly formed company that intends to qualify as a REIT). Members of the Companys Board of Directors are also on the Board of Directors of Apple REIT Six, Inc. and Apple REIT Eight, Inc. and
until October and May 2007, were on the boards of Apple Hospitality Five, Inc. and Apple Hospitality Two, Inc.

Series B Convertible Preferred Stock

The Company has authorized 240,000 shares of Series B convertible preferred stock. The Company has issued 240,000 Series B convertible preferred shares
to Glade M. Knight, Chairman, Chief Executive Officer and President of the Company, in exchange for the payment by him of $0.10 per Series B convertible preferred share, or an aggregate of $24,000. 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.

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



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$1 billion offering. With the completion of the Companys $1 billion offering in July 2007, each Series B convertible preferred share may be converted
into 24.1714 common shares upon the occurrence of any conversion event.

In the event that 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/50 million) x 1.20568, where X is the additional gross proceeds rounded down to the nearest 50 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.

Compensation expense related to issuance of 240,000 Series B convertible preferred shares to Mr. Knight will be recognized at such time when the number of common
shares to be issued for conversion of the Series B shares can be reasonably estimated and the event triggering the conversion of the Series B shares to common shares 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, compensation expense could range from $0 to in excess of $63 million
(assumes $11 per unit fair market value) which represents approximately 5.8 million shares of common stock.

Subsequent Events

On October 4, 2007, the Company completed the purchase of a Courtyard hotel in Trussville, Alabama. The gross purchase price was $9.5 million for this 84 room hotel.

On October 23, 2007, the Company completed the purchase of a Courtyard hotel in Kirkland, Washington. The gross purchase price was $31.0 million for
this 150 room hotel.

On October 15, 2007, the Company paid $.073334 per outstanding common share, totaling $6.7 million, in a dividend distribution
to its common shareholders, of which 177,219 Units were reinvested under the Companys Dividend Reinvestment Plan.

In October 2007, the Company
redeemed 74,284 Units representing approximately $748,000, under the Companys Unit Redemption Program.

Impact of Inflation

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

Business Interruption

Being in the real estate industry, the Company is exposed to natural disasters 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.



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Recently Adopted Accounting Pronouncements

Effective January 1, 2007, the Company adopted Financial Accounting Standards Board (FASB) Interpretation (FIN) No. 48, Accounting for Uncertainty in Income Taxes  an interpretation of FASB
Statement No. 109. This interpretation requires that income tax positions recognized in an entitys tax returns have a more-likely-than-not chance of being sustained prior to recording the related tax benefit in the financial statements.
Tax benefits would be derecognized if information became available which indicated that it was more-likely-than-not that the position would not be sustained. The adoption of this interpretation did not have a material impact on the Companys
results of operations or financial position.



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##### Table of Contents

|Item 3. | Quantitative and Qualitative Disclosure About Market Risk
|------- | ---------------------------------------------------------

The
Company does not engage in transactions in derivative financial instruments or derivative commodity instruments. As of September 30, 2007, 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 its sale of Units pending use in acquisitions. Based on the
Companys cash and cash equivalent balances at September 30, 2007 of $201.7 million, every 100 basis points change in interest rates will impact the Companys annual net income by approximately $2.0 million, all other factors
remaining the same. Cash invested pending acquisitions will vary substantially during the current year based on the timing and purchase price, net of any debt assumed, of property acquisitions.



|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.



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PART II. OTHER INFORMATION



|Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds
|------- | -----------------------------------------------------------

The
following tables set forth information concerning the Offering and the use of proceeds from the Offering as of September 30, 2007:

Units
Registered:



|        |  |            |  |       |  |   |                |  |   |              
|------- |  | ---------- |  | ----- |  | - | -------------- |  | - | -------------
|        |  | 4,761,905  |  | Units |  | $ | 10.50 per Unit |  | $ | 50,000,000   
|        |  | 86,363,636 |  | Units |  | $ | 11 per Unit    |  |   | 950,000,000  
|        |  |            |  |       |  |   |                |  |   |              
|Totals: |  | 91,125,541 |  | Units |  |   |                |  | $ | 1,000,000,000

Units Sold:



|        |  |            |  |       |  |   |                |  |   |              
|------- |  | ---------- |  | ----- |  | - | -------------- |  | - | -------------
|        |  | 4,761,905  |  | Units |  | $ | 10.50 per Unit |  | $ | 50,000,000   
|        |  | 86,363,636 |  | Units |  | $ | 11 per Unit    |  |   | 950,000,000  
|        |  |            |  |       |  |   |                |  |   |              
|Totals: |  | 91,125,541 |  | Units |  |   |                |  | $ | 1,000,000,000

Expenses of Issuance and Distribution of Units



|                                                                                                                                                         |  |   |            
|-------------------------------------------------------------------------------------------------------------------------------------------------------- |  | - | -----------
|1. Underwriting discounts and commission                                                                                                                 |  | $ | 100,000,000
|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                                                                                                                    |  |   | 1,963,526  
|                                                                                                                                                         |  |   |            
|Total Expenses of Issuance and Distribution of Common Shares                                                                                             |  |   | 101,963,526
|                                                                                                                                                         |  |   |            
|Net Proceeds to the Company                                                                                                                              |  | $ | 898,036,474
|                                                                                                                                                         |  |   |            
|1. Purchase of real estate (including repayment of indebtedness incurred to purchase real estate)                                                        |  | $ | 655,178,635
|2. Repayment of other indebtedness, including interest expense paid                                                                                      |  |   | 4,192,021  
|3. Working capital                                                                                                                                       |  |   | 223,294,550
|4. Fees to the following (all affiliates of officers of the Company):                                                                                    |  |   |            
|a. Apple Seven Advisors, Inc.                                                                                                                            |  |   | 890,205    
|a. Apple Suites Realty Group, Inc.                                                                                                                       |  |   | 14,481,063 
|5. Fees and expenses of third parties                                                                                                                    |  |   |           
|6. Other                                                                                                                                                 |  |   |           
|                                                                                                                                                         |  |   |            
|Total of Application of Net Proceeds to the Company                                                                                                      |  | $ | 898,036,474
|                                                                                                                                                         |  |   |            



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PART II. OTHER INFORMATION

Unit Redemption Program

In April 2007, the Company instituted a share redemption program to provide its shareholders who
have held their Units for at least one year with the benefit of limited interim liquidity, by presenting for redemption all or any portion of their Units at any time and in accordance with certain procedures. Once this time limitation has been met,
the Company may, subject to certain conditions and limitations, redeem the Units presented for redemption for cash, to the extent that the Company has sufficient funds available to fund the redemption. If Units are held for the required one-year
period, the Units may be redeemed for a purchase price equal to 92% of the price paid per Unit if the Units have been owned less than three years, or 100% of the price paid per Unit if the Units have been owned for three years or more. The board of
directors reserves the right, in its sole discretion, at any time and from time to time, to waive the one-year holding period, reject any request for redemption, change the purchase price for redemptions or otherwise amend the terms of, suspend, or
terminate the Unit redemption program. The following is a summary of redemptions during the third quarter of 2007:

Issuer Purchases of
Equity Securities



|          |  |                               |  |                            |       |                                                                             |        |                                                                           |  |    
|--------- |  | ----------------------------- |  | -------------------------- | ----- | --------------------------------------------------------------------------- | ------ | ------------------------------------------------------------------------- |  | ---
|          |  | (a)                           |  | (b)                        |       | (c)                                                                         |        | (d)                                                                       | 
|Period    |  | Total Numberof UnitsPurchased |  | Average Price Paidper Unit |       | Total Number ofUnits Purchased asPart of PubliclyAnnounced Plansor Programs |        | Maximum Numberof Units that MayYet Be PurchasedUnder the Plans orPrograms | 
|July 2007 |  | 42,299                        |  | $                          | 10.06 |                                                                             | 63,988 |                                                                           |  | (1)



|(1) | The maximum number of Units that may be redeemed in any 12 month period is limited
to three percent (3.0%) of the weighted average number of Units outstanding from the beginning of the 12 month period.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|Item 6. | Exhibits
|------- | --------

EXHIBIT INDEX



|              |  |                                                                                                                                                                                                                                          
|------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description of Documents                                                                                                                                                                                                                 
|3.1           |  | Amended and Restated Articles of Incorporation of the Registrant. (Incorporated by reference to Exhibit 3.3 to amendment no. 3 to the registrants registration statement on Form S-11 (SEC
File No. 333-125546) effective March 3, 2006)
|              | 
|3.2           |  | Bylaws of the Registrant. (Incorporated by reference to Exhibit 3.2 to the registrants registration statement on Form S-11 (SEC File No. 333-125546) effective March 3,
2006)                                                           
|              | 
|10.59         |  | Purchase Contract dated September 24, 2007 by and between PRVA II, L.P. and Apple Seven Hospitality Ownership, Inc. (FILED HEREWITH)                                                                                                     
|              | 
|31.1          |  | Certification of the registrants Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (FILED HEREWITH)                                                                                                     
|              | 
|31.2          |  | Certification of the registrant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)                           



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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 Seven, Inc. |  |                                                                                                              |  | 
|                       |  |                                                                                                              | 
|By:                    |  | /s/ Glade M. Knight                                                                                          |  |  |  | Date: November 2, 2007
|                       |  | Glade M. Knight, Chairman of the Board, Chief Executive Officer, and President (Principal Executive Officer) |  |  |  |                        |  | 
|                       |  |                                                                                                              |  | 
|                       |  |                                                                                                              | 
|By:                    |  | /s/ Bryan Peery                                                                                              |  |  |  | Date: November 2, 2007
|                       |  | Bryan Peery, Chief Financial Officer (Principal Financial and Principal Accounting
Officer)                  |  |  |  |                        |  | 



25