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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



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



FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2005



| ̈ | 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 000-51270



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APPLE REIT SIX, INC.

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                  
|-------------------------------------------------------------- |  | ---------------------------------
|VIRGINIA                                                       |  | 20-0620523                       
|(State or other jurisdiction of incorporation or organization) |  | (IRS Employer Identification No.)
|                                                               | 
|814 EAST MAIN STREET RICHMOND, VIRGINIA                        |  | 23219                            
|(Address of principal executive offices)                       |  | (Zip Code)                       



(804) 344-8121

(Registrants telephone number, including area code)



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



Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).    Yes  x    No ̈



Number of registrants common shares outstanding as of July 31, 2005: 61,836,924



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##### Table of Contents

APPLE REIT SIX, INC.

FORM 10-Q

INDEX



|                              |  |                                                                                                                                                                                                          |  |   
|----------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --
|                              |  | Page Number                                                                                                                                                                                             
|PART I. FINANCIAL INFORMATION |  |                                                                                                                                                                                                         
|                              |  |                                                                                                                                                                                                         
|Item 1.                       |  | Financial Statements (Unaudited)                                                                                                                                                                         |  |   
|                              |  |                                                                                                                                                                                                         
|                              |  | Consolidated Balance Sheets -June 30, 2005 and December 31, 2004                                                                                                                                         |  | 3 
|                              |  |                                                                                                                                                                                                         
|                              |  | Consolidated Statements of Operations -Three months and six months ended June 30, 2005 andThree months ended June 30, 2004 andThe period January 20, 2004 (initial capitalization) through June 30, 2004 |  | 4 
|                              |  |                                                                                                                                                                                                         
|                              |  | Consolidated Statements of Cash Flows -Six months ended June 30, 2005 andThe period January 20, 2004 (initial capitalization)through June 30, 2004                                                       |  | 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                                                                                                                                               |  | 19
|                              |  |                                                                                                                                                                                                         
|Item 4.                       |  | Controls and Procedures                                                                                                                                                                                  |  | 19
|                              | 
|PART II. OTHER INFORMATION    |  |                                                                                                                                                                                                         
|                              |  |                                                                                                                                                                                                         
|Item 1.                       |  | Legal Proceedings (not applicable)                                                                                                                                                                       |  |   
|                              |  |                                                                                                                                                                                                         
|Item 2.                       |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                                                                                              |  | 20
|                              |  |                                                                                                                                                                                                         
|Item 3.                       |  | Defaults Upon Senior Securities (not applicable)                                                                                                                                                         |  |   
|                              |  |                                                                                                                                                                                                         
|Item 4.                       |  | Submission of Matters to a Vote of Security Holders                                                                                                                                                      |  | 21
|                              |  |                                                                                                                                                                                                         
|Item 5.                       |  | Other Information (not applicable)                                                                                                                                                                       |  |   
|                              |  |                                                                                                                                                                                                         
|Item 6.                       |  | Exhibits                                                                                                                                                                                                 |  | 22
|                              |  |                                                                                                                                                                                                         
|Signatures                    |  |                                                                                                                                                                                                          |  | 23



This Form 10-Q
includes references to certain trademarks or servicemarks. SpringHill Suites®, Courtyard®, Residence Inn®, TownePlace Suites®, Fairfield Inn® and Marriott Suites® trademarks are the property of Marriott International, Inc. or
one of its affiliates. The Homewood Suites®, 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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##### Table of Contents

Apple REIT Six, Inc.

Consolidated Balance Sheets

(unaudited)

(in thousands, except share data)



|                                                                                                                                             |  |               |         |   |                  |   |         |  
|-------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ------- | - | ---------------- | - | ------- | -
|                                                                                                                                             |  | June 30, 2005 |         |   | December 31,2004 |  
|ASSETS                                                                                                                                       |  |               |         |   |                  |   |         |  
|Investment in real estate, net of accumulated depreciation of $5,226 and $1,881, respectively                                                |  | $             | 379,348 |   |                  | $ | 184,084 |  
|Cash and cash equivalents                                                                                                                    |  |               | 167,292 |   |                  |   | 142,790 |  
|Restricted cash-furniture, fixtures and other escrows                                                                                        |  |               | 3,107   |   |                  |   | 2,570   |  
|Due from third party manager, net                                                                                                            |  |               | 4,845   |   |                  |   | 1,103   |  
|Other assets, net                                                                                                                            |  |               | 8,936   |   |                  |   | 1,712   |  
|                                                                                                                                             |  |               |         |   |                  |   |         |  
|TOTAL ASSETS                                                                                                                                 |  | $             | 563,528 |   |                  | $ | 332,259 |  
|                                                                                                                                             |  |               |         |   |                  |   |         |  
|LIABILITIES                                                                                                                                  |  |               |         |   |                  |   |         |  
|Notes payable-secured                                                                                                                        |  | $             | 16,450  |   |                  | $ | 6,557   |  
|Accounts payable and accrued expenses                                                                                                        |  |               | 1,322   |   |                  |   | 603     |  
|                                                                                                                                             |  |               |         |   |                  |   |         |  
|TOTAL LIABILITIES                                                                                                                            |  |               | 17,772  |   |                  |   | 7,160   |  
|                                                                                                                                             |  |              
|SHAREHOLDERS EQUITY                                                                                                                         |  |               |         |   |                  |   |         |  
|Preferred stock, authorized 15,000,000 shares; none issued and outstanding                                                                   |  |               |        |   |                  |   |        |  
|Series A preferred stock, no par value, authorized 200,000,000 shares; issued and outstanding 57,359,143 and 34,019,692 shares,
respectively |  |               |        |   |                  |   |        |  
|Series B convertible stock, no par value, authorized 240,000 shares; issued and outstanding 240,000 and 240,000 shares,
respectively         |  |               | 24      |   |                  |   | 24      |  
|Common stock, no par value, authorized 200,000,000 shares; issued and outstanding 57,359,143 and 34,019,692 shares,
respectively             |  |               | 564,248 |   |                  |   | 333,295 |  
|Distributions greater than net income                                                                                                        |  |               | (18,516 | ) |                  |   | (8,220  | )
|                                                                                                                                             |  |               |         |   |                  |   |         |  
|TOTAL SHAREHOLDERS EQUITY                                                                                                                   |  |               | 545,756 |   |                  |   | 325,099 |  
|                                                                                                                                             |  |               |         |   |                  |   |         |  
|TOTAL LIABILITIES AND SHAREHOLDERS EQUITY                                                                                                   |  | $             | 563,528 |   |                  | $ | 332,259 |  
|                                                                                                                                             |  |               |         |   |                  |   |         |  



See notes to consolidated financial
statements.



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



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Apple REIT Six, Inc.

Consolidated Statements of Operations

(unaudited)

(in thousands, except
per share data)



|                                                        |  |                                 |        |   |                                 |   |       |                               |  |   |                                                                            |   |  |   |       |  
|------------------------------------------------------- |  | ------------------------------- | ------ | - | ------------------------------- | - | ----- | ----------------------------- |  | - | -------------------------------------------------------------------------- | - |  | - | ----- | -
|                                                        |  | Three monthsended June 30, 2005 |        |   | Three monthsended June 30, 2004 |   |       | Six monthsended June 30, 2005 |  |   | For the periodJanuary 20, 2004(initialcapitalization)through June 30,
2004 |  
|Revenues:                                               |  |                                 |        |   |                                 |   |       |                               |  |   |                                                                            |   |  |   |       |  
|Room revenue                                            |  | $                               | 17,452 |   |                                 | $ | 406   |                               |  | $ | 27,674                                                                     |   |  | $ | 406   |  
|Other revenue                                           |  |                                 | 2,139  |   |                                 |   | 21    |                               |  |   | 3,824                                                                      |   |  |   | 21    |  
|                                                        |  |                                 |        |   |                                 |   |       |                               |  |   |                                                                            |   |  |   |       |  
|Total revenue                                           |  |                                 | 19,591 |   |                                 |   | 427   |                               |  |   | 31,498                                                                     |   |  |   | 427   |  
|                                                        |  |                                 |        |  
|Expenses:                                               |  |                                 |        |   |                                 |   |       |                               |  |   |                                                                            |   |  |   |       |  
|Operating expense                                       |  |                                 | 5,159  |   |                                 |   | 95    |                               |  |   | 8,479                                                                      |   |  |   | 95    |  
|Hotel administrative expense                            |  |                                 | 1,746  |   |                                 |   | 35    |                               |  |   | 2,903                                                                      |   |  |   | 35    |  
|Sales and marketing                                     |  |                                 | 1,474  |   |                                 |   | 30    |                               |  |   | 2,398                                                                      |   |  |   | 30    |  
|Utilities                                               |  |                                 | 627    |   |                                 |   | 16    |                               |  |   | 1,044                                                                      |   |  |   | 16    |  
|Repair and maintenance                                  |  |                                 | 612    |   |                                 |   | 17    |                               |  |   | 1,016                                                                      |   |  |   | 17    |  
|Franchise fees                                          |  |                                 | 558    |   |                                 |   |      |                               |  |   | 806                                                                        |   |  |   |      |  
|Management fees                                         |  |                                 | 647    |   |                                 |   | 27    |                               |  |   | 1,038                                                                      |   |  |   | 27    |  
|Taxes, insurance and other                              |  |                                 | 926    |   |                                 |   | 27    |                               |  |   | 1,523                                                                      |   |  |   | 27    |  
|General and administrative                              |  |                                 | 833    |   |                                 |   | 135   |                               |  |   | 1,356                                                                      |   |  |   | 138   |  
|Depreciation expense                                    |  |                                 | 2,046  |   |                                 |   | 83    |                               |  |   | 3,345                                                                      |   |  |   | 83    |  
|                                                        |  |                                 |        |   |                                 |   |       |                               |  |   |                                                                            |   |  |   |       |  
|Total expenses                                          |  |                                 | 14,628 |   |                                 |   | 465   |                               |  |   | 23,908                                                                     |   |  |   | 468   |  
|                                                        |  |                                 |        |   |                                 |   |       |                               |  |   |                                                                            |   |  |   |       |  
|Operating income (loss)                                 |  |                                 | 4,963  |   |                                 |   | (38   | )                             |  |   | 7,590                                                                      |   |  |   | (41   | )
|                                                        |  |                                 |        |  
|Interest income                                         |  |                                 | 1,142  |   |                                 |   | 77    |                               |  |   | 1,780                                                                      |   |  |   | 77    |  
|Interest expense                                        |  |                                 | (310   | ) |                                 |   | (2    | )                             |  |   | (464                                                                       | ) |  |   | (5    | )
|                                                        |  |                                 |        |   |                                 |   |       |                               |  |   |                                                                            |   |  |   |       |  
|Net income                                              |  | $                               | 5,795  |   |                                 | $ | 37    |                               |  | $ | 8,906                                                                      |   |  | $ | 31    |  
|                                                        |  |                                 |        |   |                                 |   |       |                               |  |   |                                                                            |   |  |   |       |  
|Basic and diluted income per common share               |  | $                               | 0.12   |   |                                 | $ | 0.01  |                               |  | $ | 0.20                                                                       |   |  | $ | 0.01  |  
|                                                        |  |                                 |        |   |                                 |   |       |                               |  |   |                                                                            |   |  |   |       |  
|Weighted average shares outstanding - basic and diluted |  |                                 | 50,206 |   |                                 |   | 5,779 |                               |  |   | 44,521                                                                     |   |  |   | 3,251 |  
|                                                        |  |                                 |        |  
|Distributions declared per common share                 |  | $                               | 0.22   |   |                                 | $ | 0.11  |                               |  | $ | 0.44                                                                       |   |  | $ | 0.11  |  
|                                                        |  |                                 |        |   |                                 |   |       |                               |  |   |                                                                            |   |  |   |       |  



See notes to consolidated financial
statements.



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



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Apple REIT Six, Inc.

Consolidated Statements of Cash Flows

(unaudited)

(in thousands)



|                                                                              |  |                               |          |   |                                                                             |   |         |  
|----------------------------------------------------------------------------- |  | ----------------------------- | -------- | - | --------------------------------------------------------------------------- | - | ------- | -
|                                                                              |  | Six monthsended June 30, 2005 |          |   | For the periodJanuary 20, 2004(initial capitalization)through June 30,
2004 |  
|Cash flow from (used in) operating activities:                                |  |                               |          |   |                                                                             |   |         |  
|Net income                                                                    |  | $                             | 8,906    |   |                                                                             | $ | 31      |  
|Adjustments to reconcile to cash provided by operating activities:            |  |                               |          |   |                                                                             |   |         |  
|Depreciation                                                                  |  |                               | 3,345    |   |                                                                             |   | 83      |  
|Changes in operating assets and liabilities, net of amounts acquired/assumed: |  |                               |          |   |                                                                             |   |         |  
|Due from third party manager                                                  |  |                               | (3,325   | ) |                                                                             |   | (222    | )
|Other assets                                                                  |  |                               | (446     | ) |                                                                             |   | (377    | )
|Accrued expenses                                                              |  |                               | (820     | ) |                                                                             |   |        |  
|                                                                              |  |                               |          |   |                                                                             |   |         |  
|Net cash provided (used) by operating activities                              |  |                               | 7,660    |   |                                                                             |   | (485    | )
|                                                                              |  |                              
|Cash flow from investing activities:                                          |  |                               |          |   |                                                                             |   |         |  
|Cash paid in acquisition of hotels                                            |  |                               | (186,587 | ) |                                                                             |   | (24,086 | )
|Cash paid for potential acquisition of hotels                                 |  |                               | (5,796   | ) |                                                                             |   | (234    | )
|Acquisition of other assets                                                   |  |                               | (1,013   | ) |                                                                             |   |        |  
|Capital improvements                                                          |  |                               | (454     | ) |                                                                             |   |        |  
|Net increase in cash restricted for property improvements                     |  |                               | (734     | ) |                                                                             |   | (275    | )
|                                                                              |  |                               |          |   |                                                                             |   |         |  
|Net cash used in investing activities                                         |  |                               | (194,584 | ) |                                                                             |   | (24,595 | )
|                                                                              |  |                              
|Cash flow from financing activities:                                          |  |                               |          |   |                                                                             |   |         |  
|Payment of financing costs                                                    |  |                               | (184     | ) |                                                                             |   |        |  
|Repayment of secured notes payable                                            |  |                               | (141     | ) |                                                                             |   |        |  
|Borrowings under a line of credit                                             |  |                               |         |   |                                                                             |   |        |  
|Net proceeds from issuance of common stock                                    |  |                               | 230,954  |   |                                                                             |   | 115,609 |  
|Cash distributions paid to shareholders                                       |  |                               | (19,203  | ) |                                                                             |   | (867    | )
|                                                                              |  |                               |          |   |                                                                             |   |         |  
|Net cash provided by financing activities                                     |  |                               | 211,426  |   |                                                                             |   | 114,742 |  
|                                                                              |  |                              
|Increase in cash and cash equivalents                                         |  |                               | 24,502   |   |                                                                             |   | 89,662  |  
|                                                                              |  |                              
|Cash and cash equivalents, beginning of period                                |  |                               | 142,790  |   |                                                                             |   | 24      |  
|                                                                              |  |                               |          |   |                                                                             |   |         |  
|Cash and cash equivalents, end of period                                      |  | $                             | 167,292  |   |                                                                             | $ | 89,686  |  
|                                                                              |  |                               |          |   |                                                                             |   |         |  
|Non-cash transactions:                                                        |  |                               |          |   |                                                                             |   |         |  
|Notes payable-secured assumed in acquisitions                                 |  | $                             | 10,033   |   |                                                                             | $ |        |  



See notes to consolidated financial
statements.



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



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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 financials should be read in conjunction with the Companys audited financial statements
included in its 2004 Annual Report on Form 10-K. Operating results for the period ended June 30, 2005 are not necessarily indicative of the results that may be expected for the period ending December 31, 2005.



Note 2



General Information and Summary of Significant Accounting Policies



Organization



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



Offering Costs



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



From the Companys initial capitalization on January 20, 2004 through June 30, 2005, the Company incurred costs of approximately $64.3 million
related to its offering. These costs are reflected as a reduction to shareholders equity. As of June 30, 2005, the Company has closed on a total of 57,359,143 Units, representing net proceeds of approximately $564.2 million.



Earnings per Common Share



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



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Comprehensive Income



The Company recorded no comprehensive income during the periods reported.



Stock Incentive Plans



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



Use of Estimates



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



Recent Accounting Pronouncements



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



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Note 3



Property Acquisitions



The Company has purchased 19 hotels in 2005. The following table summarizes the location, brand, date acquired, number of rooms, gross purchase price and
debt assumed for each hotel acquired in 2005. All dollar amounts are in thousands.



|                   |  |                      |  |              |  |       |  |                    |         |             |   |       
|------------------ |  | -------------------- |  | ------------ |  | ----- |  | ------------------ | ------- | ----------- | - | ------
|Location           |  | Brand                |  | DateAcquired |  | Rooms |  | GrossPurchasePrice |         | DebtAssumed
|Anchorage, AK      |  | Hampton Inn          |  | 3/14/05      |  | 101   |  | $                  | 11,500  |             | $ | 5,531 
|Bakersfield, CA    |  | Hilton Garden Inn    |  | 3/18/05      |  | 120   |  |                    | 11,500  |             |   |      
|Tallahassee, FL    |  | Hilton Garden Inn    |  | 3/18/05      |  | 99    |  |                    | 10,850  |             |   |      
|Lake Mary, FL      |  | Courtyard            |  | 3/18/05      |  | 86    |  |                    | 6,000   |             |   |      
|Foothill Ranch, CA |  | Hampton Inn          |  | 4/21/05      |  | 84    |  |                    | 7,400   |             |   | 4,502 
|Ft. Worth, TX      |  | Residence Inn        |  | 5/6/05       |  | 150   |  |                    | 17,000  |             |   |      
|Boulder, CO        |  | Marriott             |  | 5/9/05       |  | 157   |  |                    | 30,000  |             |   |      
|Ft. Worth, TX      |  | Homewood Suites      |  | 5/24/05      |  | 137   |  |                    | 9,097   |             |   |      
|Nashville, TN      |  | Homewood Suites      |  | 5/24/05      |  | 121   |  |                    | 8,103   |             |   |      
|Albany, GA         |  | Courtyard            |  | 6/24/05      |  | 84    |  |                    | 8,597   |             |   |      
|Lakeland, FL       |  | Residence Inn        |  | 6/24/05      |  | 78    |  |                    | 9,886   |             |   |      
|Huntsville, AL     |  | Residence Inn        |  | 6/24/05      |  | 78    |  |                    | 8,288   |             |   |      
|Dothan, AL         |  | Hampton Inn & Suites |  | 6/24/05      |  | 85    |  |                    | 8,673   |             |   |      
|Columbus, GA       |  | Residence Inn        |  | 6/24/05      |  | 78    |  |                    | 7,888   |             |   |      
|Las Colinas, TX    |  | TownePlace Suites    |  | 6/30/05      |  | 136   |  |                    | 7,178   |             |   |      
|Arlington, TX      |  | TownePlace Suites    |  | 6/30/05      |  | 95    |  |                    | 7,148   |             |   |      
|Arlington, TX      |  | SpringHill Suites    |  | 6/30/05      |  | 122   |  |                    | 7,486   |             |   |      
|Tempe, AZ          |  | TownePlace Suites    |  | 6/30/05      |  | 119   |  |                    | 8,128   |             |   |      
|Tempe, AZ          |  | SpringHill Suites    |  | 6/30/05      |  | 121   |  |                    | 8,060   |             |   |      
|                   |  |                      |  |              |  |       |  |                    |         |             |   |       
|                   |  |                      |  | Total        |  | 2,051 |  | $                  | 192,782 |             | $ | 10,033
|                   |  |                      |  |              |  |       |  |                    |         |             |   |       



Substantially all of
the purchases were funded with proceeds of the Companys ongoing best-efforts offering of Units. The Company assumed approximately $10 million of secured debt associated with two of the properties acquired. The debt associated with the
Anchorage Hampton Inn is payable monthly, is due on 4/1/2009, and has an interest rate of 7.75%. The debt associated with the Foothill Ranch Hampton Inn is also payable monthly, is due on 8/1/2011, and has an interest rate of 8.06%. The Company
leased all of its hotels to wholly-owned taxable REIT subsidiaries under master hotel lease agreements. The Company also used the proceeds of its ongoing offering to pay 2% of the gross purchase price for these hotels, which equals $3,855,647, as a
commission to Apple Six Realty Group, Inc. (ASRG). ASRG is owned by the Companys Chairman, Chief Executive Officer and President, Glade M. Knight.



Stonebridge Realty Advisors, Inc. (Stonebridge), or one of its affiliates, will manage the Foothill Ranch
Hampton Inn. Hilton Hotels Corporation (Hilton), or one of its affiliates, will manage the Ft. Worth Homewood Suites and the Nashville Homewood Suites. White Lodging Services Corp. (WLS), or one of its affiliates, will manage
the Boulder Marriott. Larry Blumberg & Associates, Inc. (LBA), or one of its affiliates, will manage the Albany Courtyard, the Lakeland Residence Inn, the Huntsville Residence Inn, the Dothan Hampton Inn & Suites, and the
Columbus Residence Inn. Western International, Inc. (Western), or one of its affiliates, will manage the Ft. Worth Residence Inn, the Las Colinas TownePlace Suites, the Arlington TownePlace Suites and SpringHill Suites, and the Tempe
TownePlace Suites and SpringHill Suites. The terms and fees of the new management agreements are similar to the Companys existing management agreements.



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##### Table of Contents

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



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



|                                  |  |   |         |  
|--------------------------------- |  | - | ------- | -
|Land                              |  | $ | 55,189  |  
|Building and Improvements         |  |   | 313,070 |  
|Furniture, Fixtures and Equipment |  |   | 16,315  |  
|                                  |  |   |         |  
|                                  |  |   | 384,574 |  
|Less Accumulated Depreciation     |  |   | (5,226  | )
|                                  |  |   |         |  
|Investment in real estate, net    |  | $ | 379,348 |  
|                                  |  |   |         |  



The company has
entered into purchase contracts for 27 additional hotels. Five hotels are under construction and should be completed over the next nine months. The other 22 hotels are expected to close before the end of the year. Although the Company believes there
is a reasonable probability that it will acquire these hotels, there can be no assurance that all of the conditions to closing will be satisfied. The following table summarizes the location, brand, gross purchase price and number of rooms for each
hotel. All dollar amounts are in thousands.



|                     |  |                      |  |       |  |                      |        
|-------------------- |  | -------------------- |  | ----- |  | -------------------- | -------
|Location             |  | Brand                |  | Rooms |  | Gross Purchase Price
|Laredo, TX           |  | Residence Inn        |  | 109   |  | $                    | 11,445 
|Laredo, TX           |  | Homewood Suites      |  | 105   |  |                      | 10,500 
|Houston, TX          |  | Residence Inn        |  | 130   |  |                      | 13,600 
|Pittsburgh, PA       |  | Residence Inn        |  | 156   |  |                      | 11,000 
|Philadelphia, PA     |  | Hilton Garden Inn    |  | 145   |  |                      | 16,000 
|Saratoga Springs, NY |  | Hilton Garden Inn    |  | 112   |  |                      | 17,750 
|McAllen, TX          |  | Hilton Garden Inn    |  | 104   |  |                      | 9,000  
|Brownsville, TX      |  | Courtyard            |  | 90    |  |                      | 8,550  
|Dothan, AL           |  | Courtyard            |  | 78    |  |                      | 8,016  
|Panama City, FL      |  | Courtyard            |  | 84    |  |                      | 9,245  
|Pensacola, FL        |  | Courtyard            |  | 90    |  |                      | 11,369 
|Tuscaloosa, AL       |  | Courtyard            |  | 78    |  |                      | 7,551  
|Valdosta, GA         |  | Courtyard            |  | 84    |  |                      | 8,284  
|Birmingham, AL       |  | Fairfield Inn        |  | 63    |  |                      | 2,176  
|Huntsville, AL       |  | Fairfield Inn        |  | 79    |  |                      | 4,954  
|Orange Park, FL      |  | Fairfield Inn        |  | 83    |  |                      | 7,221  
|Pensacola, FL        |  | Fairfield Inn        |  | 63    |  |                      | 4,858  
|Tuscaloosa, AL       |  | Fairfield Inn        |  | 63    |  |                      | 3,982  
|Pensacola, FL        |  | Hampton Inn & Suites |  | 85    |  |                      | 9,279  
|Clearwater, FL       |  | SpringHill Suites    |  | 79    |  |                      | 6,923  
|Montgomery, AL       |  | SpringHill Suites    |  | 79    |  |                      | 6,835  
|Savannah, GA         |  | SpringHill Suites    |  | 79    |  |                      | 5,407  
|Wallingford, CT      |  | Homewood Suites      |  | 104   |  |                      | 12,780 
|Somerset, NJ         |  | Homewood Suites      |  | 123   |  |                      | 17,750 
|Mount Olive, NJ      |  | Residence Inn        |  | 123   |  |                      | 12,070 
|Rocky Hill, CT       |  | Residence Inn        |  | 96    |  |                      | 12,070 
|Farmington, CT       |  | Courtyard            |  | 119   |  |                      | 16,330 
|                     |  |                      |  |       |  |                      |        
|                     |  | Total                |  | 2,603 |  | $                    | 264,945
|                     |  |                      |  |       |  |                      |        



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##### Table of Contents

Note 4



Related Parties



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



The Company has a contract with ASRG, a related party, to provide brokerage services for the acquisition and disposition of the Companys real estate
assets. In accordance with the contract, ASRG is paid a fee of 2% of the gross purchase price of any acquisitions or gross sale price of any dispositions of real estate investments, subject to certain conditions. As of June 30, 2005, payments to
ASRG for services under the terms of this contract have totaled $7.5 million since inception, which were capitalized as a part of the purchase price of the hotels.



The Company is party to an advisory agreement with Apple Six Advisors, Inc. (ASA), pursuant to which ASA
provides management services to the Company. An annual fee ranging from .1% to .25% of total equity proceeds received by the Company, in addition to certain reimbursable expenses, are payable for these services. ASA utilizes Apple Hospitality Two,
Inc. to provide these services. Expenses related to the ASA agreement, for the period ended June 30, 2005 and 2004, totaled approximately $631,000 and $100,000, respectively.



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



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



Note 5



Shareholders Equity



Compensation expense related to issuance of 240,000 Series B convertible preferred shares to Mr. Knight will be recognized at such time when the number of common shares to be issued for conversion of the Series B shares can be reasonably
estimated and the event triggering the conversion of the Series B shares to common shares is probable. The expense will be measured as the difference between the fair value of the common stock for which the Series B shares can be converted and the
amounts paid for the Series B shares. Although the fair market value cannot be determined at this time, compensation expense if the maximum offering is achieved could range from $0 to in excess of $63 million (assumes $11 per unit fair market
value). Based on equity raised through June 30, 2005, if a triggering event had been probable, compensation expense would have ranged from $0 to $38.3 million, which represents approximately 3.5 million shares of common stock.



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##### Table of Contents

Note 6



Pro Forma Information



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



|                                         |  |                                        |        |                                       |   |       
|---------------------------------------- |  | -------------------------------------- | ------ | ------------------------------------- | - | ------
|                                         |  | For the threemonths endedJune 30, 2005 |        | For the sixmonths ended June 30, 2005
|Hotel revenues                           |  | $                                      | 26,852 |                                       | $ | 50,344
|Net income                               |  | $                                      | 7,595  |                                       | $ | 12,914
|Net income per share - basic and diluted |  | $                                      | 0.14   |                                       | $ | 0.27  



The pro forma
information reflects adjustments for actual revenues and expenses of the 19 hotels acquired in 2005, for the respective period in 2005 prior to acquisition by the Company. Net income has been adjusted as follows: (1) interest income has been
adjusted to reflect the reduction in cash and cash equivalents required to fund the acquisitions; (2) depreciation has been adjusted based on the Companys basis in the hotels; (3) interest expense has been adjusted to reflect the assumption of
debt associated with acquisition of the Hampton Inn hotel in Anchorage, Alaska and the Hampton Inn hotel in Foothill Ranch, California.



Note 7



Subsequent Events



On
July 15, 2005, the Company declared and paid $4.2 million or $.073 per share, in a distribution to its common shareholders.



In July 2005, the Company closed on an additional 4,681,906 Units, representing gross proceeds of $51.5 million and proceeds net of selling and marketing
costs of $46.4 million.



In July 2005, the Company instituted a
Unit Redemption Program to provide limited interim liquidity to its shareholders. Redemption of Units, when requested, is made quarterly on a first-come, first-served basis. Shareholders may request redemption of Units for a purchase price equal to
the lesser of: (1) the purchase price per unit that the shareholder actually paid for the unit; or (2) $11.00 per unit. The Company reserves the right to change the purchase price of redemptions, reject any request for redemption, or otherwise amend
the terms of, suspend, or terminate the Unit Redemption Program. On July 20, 2005, the Company redeemed 204,125 Units in the amount of $2,213,655 under the plan.



On July 8, 2005, the Company closed on the purchase of a Homewood Suites hotel in Wallingford, Connecticut, which contains
104 rooms. The hotel began operations in July 2005. The gross purchase price of the hotel was $12.8 million.



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##### Table of Contents

On July 19, 2005, the Company closed on the purchase of a Hilton Garden Inn hotel in McAllen, Texas,
which contains 104 rooms and was in operation when acquired. The gross purchase price of the hotel was $9 million.



On July 21, 2005, the Company closed on the purchase of a Hampton Inn & Suites hotel in Pensacola, Florida, which contains 85 rooms and was in
operation when acquired. The gross purchase price of the hotel was $9.3 million.



On August 1, 2005, the Company closed on the purchase of a Residence Inn in Rocky Hill, Connecticut, which contains 96 rooms and was in operation when acquired. The gross purchase price of the hotel was $12.1 million.



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##### Table of Contents

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



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##### Table of Contents

Hotels Owned



As of June 30, 2005, the Company owned a total of 30 hotels, with a total of 3,555 rooms. The following table summarizes the location, brand, manager,
date acquired, gross purchase price and number of rooms for each hotel. All dollar amounts are in thousands.



|                   |  |                      |  |             |  |               |  |                      |         |       |      
|------------------ |  | -------------------- |  | ----------- |  | ------------- |  | -------------------- | ------- | ----- | -----
|Location           |  | Brand                |  | Manager     |  | Date Acquired |  | Gross Purchase Price |         | Rooms
|Ft. Worth, TX      |  | Springhill Suites    |  | Marriott    |  | 05/28/04      |  | $                    | 13,340  |       | 145  
|Myrtle Beach, SC   |  | Courtyard            |  | Marriott    |  | 06/08/04      |  |                      | 9,200   |       | 135  
|Redmond, WA        |  | Marriott             |  | Marriott    |  | 07/07/04      |  |                      | 64,000  |       | 262  
|Anchorage, AK      |  | Hilton Garden Inn    |  | Stonebridge |  | 10/12/04      |  |                      | 18,900  |       | 125  
|Anchorage, AK      |  | Homewood Suites      |  | Stonebridge |  | 10/12/04      |  |                      | 13,200  |       | 122  
|Arcadia, CA        |  | Hilton Garden Inn    |  | Stonebridge |  | 10/12/04      |  |                      | 12,000  |       | 124  
|Arcadia, CA        |  | Springhill Suites    |  | Stonebridge |  | 10/12/04      |  |                      | 8,100   |       | 86   
|Glendale, CO       |  | Hampton Inn & Suites |  | Stonebridge |  | 10/12/04      |  |                      | 14,700  |       | 133  
|Lakewood, CO       |  | Hampton Inn          |  | Stonebridge |  | 10/12/04      |  |                      | 10,600  |       | 170  
|Lake Forest, CA    |  | Hilton Garden Inn    |  | Stonebridge |  | 10/12/04      |  |                      | 11,400  |       | 103  
|Phoenix, AZ        |  | Hampton Inn          |  | Stonebridge |  | 10/12/04      |  |                      | 6,700   |       | 99   
|Anchorage, AK      |  | Hampton Inn          |  | Stonebridge |  | 03/14/05      |  |                      | 11,500  |       | 101  
|Bakersfield, CA    |  | Hilton Garden Inn    |  | Hilton      |  | 03/18/05      |  |                      | 11,500  |       | 120  
|Tallahassee, FL    |  | Hilton Garden Inn    |  | Hilton      |  | 03/18/05      |  |                      | 10,850  |       | 99   
|Lake Mary, FL      |  | Courtyard            |  | Stonebridge |  | 03/18/05      |  |                      | 6,000   |       | 86   
|Foothill Ranch, CA |  | Hampton Inn          |  | Stonebridge |  | 04/21/05      |  |                      | 7,400   |       | 84   
|Ft. Worth, TX      |  | Residence Inn        |  | Western     |  | 05/06/05      |  |                      | 17,000  |       | 150  
|Boulder, CO        |  | Marriott             |  | WLS         |  | 05/09/05      |  |                      | 30,000  |       | 157  
|Ft. Worth, TX      |  | Homewood Suites      |  | Hilton      |  | 05/24/05      |  |                      | 9,097   |       | 137  
|Nashville, TN      |  | Homewood Suites      |  | Hilton      |  | 05/24/05      |  |                      | 8,103   |       | 121  
|Albany, GA         |  | Courtyard            |  | LBA         |  | 06/24/05      |  |                      | 8,597   |       | 84   
|Lakeland, FL       |  | Residence Inn        |  | LBA         |  | 06/24/05      |  |                      | 9,886   |       | 78   
|Huntsville, AL     |  | Residence Inn        |  | LBA         |  | 06/24/05      |  |                      | 8,288   |       | 78   
|Dothan, AL         |  | Hampton Inn & Suites |  | LBA         |  | 06/24/05      |  |                      | 8,673   |       | 85   
|Columbus, GA       |  | Residence Inn        |  | LBA         |  | 06/24/05      |  |                      | 7,888   |       | 78   
|Las Colinas, TX    |  | TownePlace Suites    |  | Western     |  | 06/30/05      |  |                      | 7,178   |       | 136  
|Arlington, TX      |  | TownePlace Suites    |  | Western     |  | 06/30/05      |  |                      | 7,148   |       | 95   
|Arlington, TX      |  | SpringHill Suites    |  | Western     |  | 06/30/05      |  |                      | 7,486   |       | 122  
|Tempe, AZ          |  | TownePlace Suites    |  | Western     |  | 06/30/05      |  |                      | 8,128   |       | 119  
|Tempe, AZ          |  | SpringHill Suites    |  | Western     |  | 06/30/05      |  |                      | 8,060   |       | 121  
|                   |  |                      |  |             |  |               |  |                      |         |       |      
|                   |  |                      |  |             |  | Total         |  | $                    | 374,922 |       | 3,555
|                   |  |                      |  |             |  |               |  |                      |         |       |      



Substantially all of
the purchases were funded with proceeds of the Companys ongoing best-efforts offering of Units. The Company leased all of its hotels to wholly-owned taxable REIT subsidiaries (collectively, the lessee) under master hotel lease
agreements. The Company also used the proceeds of its ongoing offering to pay 2% of the gross purchase price for these hotels, which equals approximately $7.5 million, as a commission to Apple Six Realty Group, Inc. (ASRG). ASRG is owned
by the Companys Chairman, Chief Executive Officer and president, Glade M. Knight.



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



14



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##### Table of Contents

Results of Operations



During the period from January 20, 2004 to May 27, 2004, the Company owned no properties, had no revenue and was engaged in initial capital-raising
activities. Operations commenced on May 28, 2004, when the company purchased its first hotel in Ft. Worth, Texas. Due to the fact the Company only owned a total of 3 hotels as of June 30, 2004, a comparison to the second quarter of 2004 would not be
meaningful.



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



Revenues



The Companys principal source
of revenue is hotel room revenue and other related revenue. For the three and six months ended June 30, 2005, the Company had total revenues of $19.6 and $31.5 million, respectively. For these periods, the hotels achieved average occupancy of 75.5%
and 72.5%, an average daily rate (ADR) of $107 and $106 and revenue per available room (RevPAR) of $81 and $77, respectively. ADR is calculated as room revenue divided by the number of rooms sold, and RevPAR is calculated as
occupancy multiplied by ADR. RevPAR is expected to increase as newly opened properties gain market share.



For the three and six months ended June 30, 2005, the Company had interest income of $1.1 and $1.8 million, respectively. Interest income represents
earnings on excess cash invested in short term money market instruments.



Expenses



For the three
and six months ended June 30, 2005, hotel operating expenses totaled $10.8 and $17.7 million or 55% and 56% of total revenue, respectively. This percentage is expected to decrease as revenues for newly opened properties increase.



Taxes, insurance, and other expenses for the three and six months ended June
30, 2005, were $0.9 and $1.5 million or 5% and 5% of total revenue, respectively.



General and administrative expense for the three and six months ended June 30, 2005, was $0.8 and $1.4 million or 4% and 4% of total revenue, respectively. The Company anticipates this percentage to decrease as the
Companys asset base grows. The principal components of general and administrative expense are advisory fees, legal fees, accounting fees and reporting expense.



Depreciation expense for the three and six months ended June 30, 2005, was $2.0 and $3.3 million, respectively. Depreciation
expense represents expense of the Companys 30 hotels and related personal property for their respective periods owned.



Interest expense for the three and six months ended June 30, 2005, was $0.3 and $0.5 million, respectively. Interest expense arose from debt assumed with
the acquisitions of the Hampton Inn & Suites in Glendale, Colorado, the Hampton Inn in Anchorage, Alaska, and the Hampton Inn in Foothill Ranch, California.



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##### Table of Contents

Liquidity and Capital Resources



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



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



From the Companys initial capitalization on January 20, 2004 through June 30, 2005, the Company incurred costs of
approximately $64.3 million related to its offering. These costs are reflected as a reduction to shareholders equity. As of June 30, 2005, the Company has closed on a total of 57,359,143 Units, representing gross proceeds and proceeds net of
selling, marketing fees, and other costs of approximately $628.5 million and $564.2 million, respectively.



From May 2004 through June 30, 2005, the Company has paid distributions totaling approximately $28.7 million which were paid monthly at a rate of $0.073
per share. The Company had its first investor closing on April 23, 2004 and acquired its first hotel on May 28, 2004. Due to this inherent delay between raising capital and investing that same capital in income producing real estate, the Company had
significant amounts of cash earning interest at short term money market rates. As a result, a significant portion of the distributions have been a return of capital. The Company intends to continue paying dividends on a monthly basis at an annual
rate of 8%. However, since there can be no assurance of the Companys ability to acquire properties that provide income at this level, there can be no assurance as to the classification or duration of the distributions at this rate.



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.



16



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##### Table of Contents

The company has entered into purchase contracts for 27 additional hotels. Five hotels are under
construction and should be completed over the next nine months. The other 22 hotels are expected to close before the end of the year. Although the Company believes there is a reasonable probability that it will acquire these hotels, there can be no
assurance that all of the conditions to closing will be satisfied. The following table summarizes the location, brand, gross purchase price and number of rooms for each hotel. All dollar amounts are in thousands.



|                     |  |                      |  |       |  |                      |        
|-------------------- |  | -------------------- |  | ----- |  | -------------------- | -------
|Location             |  | Brand                |  | Rooms |  | Gross Purchase Price
|Laredo, TX           |  | Residence Inn        |  | 109   |  | $                    | 11,445 
|Laredo, TX           |  | Homewood Suites      |  | 105   |  |                      | 10,500 
|Houston, TX          |  | Residence Inn        |  | 130   |  |                      | 13,600 
|Pittsburgh, PA       |  | Residence Inn        |  | 156   |  |                      | 11,000 
|Philadelphia, PA     |  | Hilton Garden Inn    |  | 145   |  |                      | 16,000 
|Saratoga Springs, NY |  | Hilton Garden Inn    |  | 112   |  |                      | 17,750 
|McAllen, TX          |  | Hilton Garden Inn    |  | 104   |  |                      | 9,000  
|Brownsville, TX      |  | Courtyard            |  | 90    |  |                      | 8,550  
|Dothan, AL           |  | Courtyard            |  | 78    |  |                      | 8,016  
|Panama City, FL      |  | Courtyard            |  | 84    |  |                      | 9,245  
|Pensacola, FL        |  | Courtyard            |  | 90    |  |                      | 11,369 
|Tuscaloosa, AL       |  | Courtyard            |  | 78    |  |                      | 7,551  
|Valdosta, GA         |  | Courtyard            |  | 84    |  |                      | 8,284  
|Birmingham, AL       |  | Fairfield Inn        |  | 63    |  |                      | 2,176  
|Huntsville, AL       |  | Fairfield Inn        |  | 79    |  |                      | 4,954  
|Orange Park, FL      |  | Fairfield Inn        |  | 83    |  |                      | 7,221  
|Pensacola, FL        |  | Fairfield Inn        |  | 63    |  |                      | 4,858  
|Tuscaloosa, AL       |  | Fairfield Inn        |  | 63    |  |                      | 3,982  
|Pensacola, FL        |  | Hampton Inn & Suites |  | 85    |  |                      | 9,279  
|Clearwater, FL       |  | SpringHill Suites    |  | 79    |  |                      | 6,923  
|Montgomery, AL       |  | SpringHill Suites    |  | 79    |  |                      | 6,835  
|Savannah, GA         |  | SpringHill Suites    |  | 79    |  |                      | 5,407  
|Wallingford, CT      |  | Homewood Suites      |  | 104   |  |                      | 12,780 
|Somerset, NJ         |  | Homewood Suites      |  | 123   |  |                      | 17,750 
|Mount Olive, NJ      |  | Residence Inn        |  | 123   |  |                      | 12,070 
|Rocky Hill, CT       |  | Residence Inn        |  | 96    |  |                      | 12,070 
|Farmington, CT       |  | Courtyard            |  | 119   |  |                      | 16,330 
|                     |  |                      |  |       |  |                      |        
|                     |  | Total                |  | 2,603 |  | $                    | 264,945
|                     |  |                      |  |       |  |                      |        



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



Related Party Transactions



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



The Company has a contract with ASRG, a related party, to provide brokerage services for the acquisition and disposition of the Companys real estate
assets. In accordance with the contract, ASRG is paid a fee of 2% of the gross purchase price of any acquisitions or gross sale price of any dispositions of real estate investments, subject to certain conditions. As of June 30, 2005, payments to
ASRG for services under the terms of this contract have totaled $7.5 million since inception, which were capitalized as a part of the purchase price of the hotels.



17



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##### Table of Contents

The Company is party to an advisory agreement with Apple Six Advisors, Inc. (ASA), pursuant
to which ASA provides management services to the Company. An annual fee ranging from .1% to .25% of total equity proceeds received by the Company, in addition to certain reimbursable expenses, are payable for these services. ASA utilizes Apple
Hospitality Two, Inc. to provide these services. Expenses related to the ASA agreement, for the period ended June 30, 2005 and 2004, totaled approximately $631,000 and $100,000, respectively.



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



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



Impact of Inflation



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



Seasonality



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



Subsequent Events



On July 15, 2005, the Company declared and paid $4.2 million or $.073 per share, in a distribution to its common
shareholders.



In July 2005, the Company closed on an
additional 4,681,906 Units, representing gross proceeds of $51.5 million and proceeds net of selling and marketing costs of $46.4 million.



In July 2005, the Company instituted a Unit Redemption Program to provide limited interim liquidity to its shareholders. Redemption of Units, when
requested, is made quarterly on a first-come, first-served basis. Shareholders may request redemption of Units for a purchase price equal to the lesser of: (1) the purchase price per unit that the shareholder actually paid for the unit; or (2)
$11.00 per unit. The Company reserves the right to change the purchase price of redemptions, reject any request for redemption, or otherwise amend the terms of, suspend, or terminate the Unit Redemption Program. On July 20, 2005, the Company
redeemed 204,125 Units in the amount of $2,213,655 under the plan.



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On July 8, 2005, the Company closed on the purchase of a Homewood Suites hotel in Wallingford,
Connecticut, which contains 104 rooms. The hotel began operations in July 2005. The gross purchase price of the hotel was $12.8 million.



On July 19, 2005, the Company closed on the purchase of a Hilton Garden Inn hotel in McAllen, Texas, which contains 104 rooms and was in operation when
acquired. The gross purchase price of the hotel was $9 million.



On July 21, 2005, the Company closed on the purchase of a Hampton Inn & Suites hotel in Pensacola, Florida, which contains 85 rooms and was in operation when acquired. The gross purchase price of the hotel was $9.3 million.



On August 1, 2005, the Company closed on the purchase of a Residence Inn
in Rocky Hill, Connecticut, which contains 96 rooms and was in operation when acquired. The gross purchase price of the hotel was $12.1 million.



Recent Accounting Pronouncements



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



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 June 30, 2005, the Companys financial instruments were not exposed to significant market
risk due to interest rate risk, foreign currency exchange risk, commodity price risk or equity price risk. The Company will be exposed to changes in short term money market rates as it invests the proceeds from the sale of Units pending use in
acquisitions. Based on the Companys cash invested at June 30, 2005, or $167 million, a 100 basis point change in interest rates will impact the Companys net income by $1.7 million on an annual basis, all other factors remaining the same.
Cash invested pending acquisitions will vary substantially during the coming year based on the amount of proceeds raised and the timing of 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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##### Table of Contents

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 June 30, 2005:



|                                               |  |            |  |       |  |   |                |  |   |              
|---------------------------------------------- |  | ---------- |  | ----- |  | - | -------------- |  | - | -------------
|Units Registered:                              |  |            |  |       |  |  
|                                               |  |            |  |      
|                                               |  | 4,761,905  |  | Units |  | $ | 10.50 per Unit |  | $ | 50,000,000   
|                                               |  | 86,363,636 |  | Units |  | $ | 11.00 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   
|                                               |  | 52,597,238 |  | Units |  | $ | 11.00 per Unit |  |   | 578,569,618  
|                                               |  |            |  |       |  |   |                |  |   |              
|Totals:                                        |  | 57,359,143 |  | Units |  |   |                |  | $ | 628,569,618  
|                                               |  |            | 
|Expenses of Issuance and Distribution of Units |  |            |  |       |  |   |                | 



|                                                                                                                                                         |  |   |            
|-------------------------------------------------------------------------------------------------------------------------------------------------------- |  | - | -----------
|1. Underwriting discounts and commission                                                                                                                 |  |   | 62,856,951 
|2. Expenses of underwriters                                                                                                                              |  |   | 83,995     
|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                                                                                                                    |  |   | 1,380,480  
|                                                                                                                                                         |  |   |            
|Total Expenses of Issuance and Distribution of Common Shares                                                                                             |  |   | 64,321,426 
|                                                                                                                                                         |  |   |            
|Net Proceeds to the Company                                                                                                                              |  | $ | 564,248,192
|                                                                                                                                                         |  |   |            
|1. Purchase of real estate (including repayment of indebtedness incurred to purchase real estate)                                                        |  | $ | 359,824,792
|2. Interest on indebtedness                                                                                                                              |  |   |           
|3. Working capital                                                                                                                                       |  |   | 196,924,953
|4. Fees to the following (all affiliates of officers of the Company):                                                                                    |  |   |            
|a. Apple Six Realty Group, Inc.                                                                                                                          |  |   | 7,498,447  
|                                                                                                                                                         | 
|5. Fees and expenses of third parties:                                                                                                                   |  |   |            
|a. Legal                                                                                                                                                 |  |   |           
|b. Accounting                                                                                                                                            |  |   |           
|6. Other                                                                                                                                                 |  |   |           
|                                                                                                                                                         |  |   |            
|Total of Application of Net Proceeds to the Company                                                                                                      |  | $ | 564,248,192
|                                                                                                                                                         |  |   |            



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##### Table of Contents

Item 4. Submission of Matters to a Vote of Security Holders



On May 12, 2005, the Company held an Annual Meeting of Shareholders for the purpose of electing two directors to the Companys Board of Directors. The nominees to the Companys Board of Directors were Bruce
H. Matson and Robert M. Wily, both of whom were current directors of the Company. Mr. Matson and Mr. Wily were both nominated for an additional three-year term on the Board of Directors. The election was uncontested, and the nominees were elected.



The total number of votes represented at the Annual Meeting of Shareholders
was 45,197,680. The voting results were as follows:



|                |  |                |  |               
|--------------- |  | -------------- |  | --------------
|Nominee         |  | Votes Received |  | Votes Withheld
|Bruce H. Matson |  | 44,993,195     |  | 204,485       
|Robert M. Wily  |  | 44,999,187     |  | 198,493       



The names of the other directors whose
terms of office as directors continued after the Annual Meeting of Shareholders are Glade M. Knight, Lisa B. Kern, and Michael S. Waters.



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##### Table of Contents

Item 6. Exhibits



|               |  |                                                                                                                                                                                                             
|-------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |  | Description                                                                                                                                                                                                 
|2.1            |  | Master Purchase Agreement between Apple Six Hospitality Ownership, Inc. and the parties named therein dated June 14, 2005 (FILED HEREWITH).                                                                 
|               | 
|2.2            |  | Purchase Contract between Sunbelt HotelsFlorida II, L.L.C. and Apple Six Hospitality Ownership, Inc. dated June 14, 2005 (FILED HEREWITH).                                                                 
|               | 
|2.3            |  | Purchase Contract between Sunbelt Hotel Enterprises, Inc. and Apple Six Hospitality Ownership, Inc. dated June 14, 2005 (FILED HEREWITH).                                                                   
|               | 
|2.4            |  | Schedule of information for two additional and substantially identical purchase contracts dated June 14, 2005 (substantially identical to Exhibit 2.2 above) (FILED
HEREWITH).                              
|               | 
|2.5            |  | Schedule of information for twelve additional and substantially identical purchase contracts dated June 14, 2005 (substantially identical to Exhibit 2.3 above) (FILED
HEREWITH).                           
|               | 
|2.6            |  | Purchase Contract between McHot Property, L.P. and Apple Six Hospitality Texas, L.P. dated June 21, 2005 (FILED HEREWITH).                                                                                  
|               | 
|2.7            |  | Purchase Contract between BMC Hotel Property, Ltd. and Apple Six Hospitality Texas, L.P. dated June 21, 2005 (FILED HEREWITH).                                                                              
|               | 
|2.8            |  | Purchase Contract between Temfield Hotel Property, L.P. and Apple Six Hospitality Ownership, Inc. dated June 21, 2005 (FILED HEREWITH).                                                                     
|               | 
|2.9            |  | Schedule of information for four additional and substantially identical purchase contracts dated June 21, 2005 (substantially identical to Exhibit 2.8 above) (FILED
HEREWITH).                             
|               | 
|3.1            |  | Articles of Incorporation of the Company. (Incorporated by reference to Exhibit 3.1 to the Companys registration statement on Form S-11 (SEC File No. 333-112169) effective April 23,
2004).               
|               | 
|3.2            |  | Bylaws of the Company. (Incorporated by reference to Exhibit 3.2 to the Companys Post-Effective Amendment No. 4 to Form S-11 (SEC File No. 333-112169) effective June 14,
2005).                           
|               | 
|31.1           |  | Certification of the Companys Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (FILED HEREWITH).                                                                          
|               | 
|31.2           |  | Certification of the Companys Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (FILED HEREWITH).                                                                          
|               | 
|32.1           |  | Certification of the Company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 Six, Inc. |  |                               
| |  |                      | 
| |  | By:                  |  | /s/ Glade M. Knight            |  | Date: August 4, 2005
| |  |                      |  | Glade M. Knight,               |  |                     
| |  |                      |  | Chairman of the Board,         |  |                     
| |  |                      |  | Chief Executive Officer,       |  |                     
| |  |                      |  | and President                  |  |                     
| |  |                      |  | (Principal Executive Officer)  |  |                     
| |  |                      | 
| |  | By:                  |  | /s/ Bryan Peery                |  | Date: August 4, 2005
| |  |                      |  | Bryan Peery,                   |  |                     
| |  |                      |  | Chief Financial Officer        |  |                     
| |  |                      |  | (Principal Accounting Officer) |  |                     



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