##### Table of Contents

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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 SEPTEMBER 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 ̈



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



Number of registrants common shares outstanding as of
October 31, 2005: 73,051,472



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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 -September 30, 2005 and December 31, 2004                                                                                                                                                   |  | 3          
|                              |  |                                                                                                                                                                                                                        
|                              |  | Consolidated Statements of Operations -Three months and nine months ended September 30, 2005 andThree months ended September 30, 2004 andThe period January 20, 2004 (initial capitalization)through September 30,
2004 |  | 4          
|                              |  | Consolidated Statements of Cash Flows -Nine months ended September 30, 2005 andThe period January 20, 2004 (initial capitalization)through September 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                                                                                                                                                              |  | 20         
|                              |  |                                                                                                                                                                                                                        
|Item 4.                       |  | Controls and Procedures                                                                                                                                                                                                 |  | 20         
|                              | 
|PART II.
OTHER INFORMATION    |  |                                                                                                                                                                                                                        
|                              |  |                                                                                                                                                                                                                        
|Item 1.                       |  | Legal Proceedings (not applicable)                                                                                                                                                                                      |  |            
|                              |  |                                                                                                                                                                                                                        
|Item 2.                       |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                                                                                                             |  | 21         
|                              |  |                                                                                                                                                                                                                        
|Item 3.                       |  | Defaults Upon Senior Securities (not applicable)                                                                                                                                                                        |  |            
|                              |  |                                                                                                                                                                                                                        
|Item 4.                       |  | Submission of Matters to a Vote of Security Holders (not applicable)                                                                                                                                                    |  |            
|                              |  |                                                                                                                                                                                                                        
|Item 5.                       |  | Other Information (not applicable)                                                                                                                                                                                      |  |            
|                              |  |                                                                                                                                                                                                                        
|Item 6.                       |  | Exhibits                                                                                                                                                                                                                |  | 23         
|                              | 
|Signatures                    |  | 24                                                                                                                                                                                                                     



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)



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



See notes to consolidated financial
statements.



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



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##### Table of Contents

Apple REIT Six, Inc.

Consolidated Statements of Operations

(unaudited)

(in thousands, except
per share data)



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



See notes to consolidated financial
statements.



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



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Apple REIT Six, Inc.

Consolidated Statements of Cash Flows

(unaudited)

(in thousands)



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



See notes to consolidated financial
statements.



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



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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 September 30, 2005 are not necessarily indicative of the results that may be expected for the period ending December 31, 2005.



Note 2



General Information and Summary of Significant Accounting Policies



Organization



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



Offering Costs



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



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



Earnings per Common Share



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



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Stock Incentive Plans



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



Use of Estimates



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



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



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



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



8



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##### Table of Contents

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



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



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



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



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



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



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



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##### Table of Contents

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

---

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

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



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



Note 4



Related Parties



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



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



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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 September 30, 2005 and 2004, totaled approximately $1,109,000 and $258,000, respectively.



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



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



Note 5



Shareholders Equity



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



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



Note 6



Pro Forma Information



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



11



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##### Table of Contents

|                                        |  |                                             |        |                                            |   |        
|--------------------------------------- |  | ------------------------------------------- | ------ | ------------------------------------------ | - | -------
|                                        |  | For the threemonths endedSeptember 30, 2005 |        | For the ninemonths endedSeptember 30, 2005
|Hotel revenues                          |  | $                                           | 36,787 |                                            | $ | 100,055
|Net income                              |  | $                                           | 9,181  |                                            | $ | 25,917 
|Net income per share- basic and diluted |  | $                                           | 0.15   |                                            | $ | 0.42   



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



Note 7



Subsequent Events



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



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



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



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



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



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



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##### Table of Contents

Hotels Owned



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



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



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##### Table of Contents

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



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



Results of Operations



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



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



Revenues



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



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



Expenses



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



15



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##### Table of Contents

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



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



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



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



Liquidity and Capital Resources



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



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



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



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



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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.



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



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

---

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

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



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



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Related Party Transactions



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



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



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



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



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



Impact of Inflation



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



Business Interruption



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



Seasonality



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



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##### Table of Contents

Subsequent Events



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



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



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



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



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



Recent Accounting Pronouncements



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



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##### Table of Contents

Item 3. Quantitative and Qualitative Disclosures About Market Risk



The Company does not engage in transactions in derivative financial instruments or derivative commodity instruments. As of September 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 September 30, 2005, or $141 million, a 100 basis point change in interest rates will impact the Companys net
income by $1.4 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



Share Redemption Program



With its initial offering the Company has instituted a share redemption program to provide its shareholders who have held their Units for at least one year with the benefit of limited interim liquidity, by presenting for redemption all or
any portion of their Units at any time and in accordance with certain procedures. Once this time limitation has been met, the Company may, subject to certain conditions and limitations, redeem the Units presented for redemption for cash, to the
extent that the Company has sufficient funds available to fund the redemption. If Units are held for the required one-year period, the Units may be redeemed for a purchase price equal to the lesser of: (1) $11.00 per unit; or (2) the
purchase price per Unit that was actually paid for the Units. The board of directors reserves the right, in its sole discretion, at any time and from time to time, to waive the one-year holding period, reject any request for redemption, change the
purchase price for redemptions or otherwise amend the terms of, suspend, or terminate the share redemption program. Redemption of units, when requested, will be made quarterly on a first-come, first-served basis. The Companys board of
directors, in its sole discretion, may choose to suspend or terminate the share redemption program or reduce the number of Units purchased under the share redemption program if it determines the funds otherwise available to fund the share redemption
program are needed for other purposes. The following is a summary of redemptions during the third quarter of 2005:



|                                      |  |                                   |  |                               |       |                                                                                 |         |                                                                                |    |  
|------------------------------------- |  | --------------------------------- |  | ----------------------------- | ----- | ------------------------------------------------------------------------------- | ------- | ------------------------------------------------------------------------------ | -- | -
|Issuer Purchases of Equity Securities | 
|                                      |  |                                   |  |                              
|Period                                |  | (a) Total Numberof UnitsPurchased |  | (b)Average Price Paidper Unit |       | (c) Total Number ofUnits Purchased asPart of PubliclyAnnounced Plansor Programs |         | (d) Maximum Numberof Units that May Yet Be PurchasedUnder the Plans orPrograms |   
|July 2005                             |  | 204,125                           |  | $                             | 10.84 |                                                                                 | 204,125 |                                                                                | (1 | )

---

|(1) | The maximum number of Units that may be redeemed in the current calendar year is three percent (3.0%) of the weighted average number of Units outstanding at the
end of the previous calendar year.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

Use of Proceeds



The following tables set forth information concerning the Offering and the use of proceeds from the Offering as of September 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   
|65,133,288 Units $11.00 per Unit                                                                                                                              |  |   | 716,466,168  
|                                                                                                                                                              |  |   |              
|Totals: 69,895,193 Units                                                                                                                                      |  | $ | 766,466,168  
|                                                                                                                                                              | 
|Expenses of Issuance and Distribution of Units                                                                                                                |  |   |              
|                                                                                                                                                              | 
|1.      Underwriting discounts and commission                                                                                                                 |  |   | 76,646,606   
|2.      Expenses of underwriters                                                                                                                              |  |   | 96,145       
|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                                                                                                                    |  |   | 1,547,987    
|                                                                                                                                                              |  |   |              
|Total Expenses of Issuance and Distribution of Common Shares                                                                                                  |  |   | 78,290,738   
|                                                                                                                                                              |  |   |              
|Net Proceeds to the Company                                                                                                                                   |  | $ | 688,175,430  
|                                                                                                                                                              |  |   |              
|1.      Purchase of real estate (including repayment of indebtedness incurred to purchase real
estate)                                                        |  | $ | 503,537,687  
|2.      Interest on indebtedness                                                                                                                              |  |   |             
|3.      Working capital                                                                                                                                       |  |   | 171,559,795  
|4.      Fees to the following (all affiliates of officers of the Company):                                                                                    |  |   |              
|a.      Apple Six Realty Group, Inc.                                                                                                                          |  |   | 10,864,293   
|                                                                                                                                                              | 
|5.      Fees and expenses of third parties:                                                                                                                   |  |   |              
|a.      Legal                                                                                                                                                 |  |   |             
|b.      Accounting                                                                                                                                            |  |   |             
|6.      Other (Unit Redemptions)                                                                                                                              |  |   | 2,213,655    
|                                                                                                                                                              |  |   |              
|Total of Application of Net Proceeds to the Company                                                                                                           |  | $ | 688,175,430  
|                                                                                                                                                              |  |   |              



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##### Table of Contents

Item 6. Exhibits



|               |  |                                                                                                                                                                                                                                                                                                                
|-------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |  | Description                                                                                                                                                                                                                                                                                                    
|2.1            |  | Purchase and Sale Agreement among Folsom Garden Hotel Company, LLC, Milpitas Garden Hotel Company, LLC, Roseville Garden Hotel Company, LLC, South San Francisco Garden Hotel Company, LLC,
Renton Garden Hotel Company, LLC and Apple Six Hospitality Ownership, Inc. dated October 25, 2005 (FILED HEREWITH).
|               | 
|3.1            |  | Articles of Incorporation of the Company. (Incorporated by reference to Exhibit 3.1 to the registrant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 Rule 13a  14(a) and Rule 15d  14(a) of the Securities Exchange Act, as amended (FILED
HEREWITH).                                                                                                                                          
|               | 
|31.2           |  | Certification of the Companys Chief Financial Officer pursuant to Rule 13a  14(a) and Rule 15d  14(a) of the Securities Exchange Act, as amended (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: November 3, 2005Glade M. Knight,Chairman of the Board,Chief Executive Officer,and President(Principal Executive Officer)By:

/s/ Bryan Peery

Date: November 3, 2005Bryan Peery,Chief Financial Officer(Principal Financial Officer)




24