##### Table of Contents





UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-Q







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

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2008



| ̈ | 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





APPLE REIT SIX, INC.

(Exact name of registrant as specified in its charter)







|                                                               |  |                                  
|-------------------------------------------------------------- |  | ---------------------------------
|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)





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 a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act:



|                        |  |   |  |                           |  |  
|----------------------- |  | - |  | ------------------------- |  | -
|Large accelerated filer |  |  ̈ |  | Accelerated filer         |  |  ̈
|                        |  |   | 
|Non-accelerated filer   |  | x |  | Smaller reporting company |  |  ̈

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

Number of registrants common shares outstanding as of August 1, 2008: 90,875,554









---

##### Table of Contents

APPLE REIT SIX, INC.

FORM 10-Q

INDEX



|                              |  |                                                                                       |  |           
|----------------------------- |  | ------------------------------------------------------------------------------------- |  | ----------
|                              |  |                                                                                       |  | PageNumber
|PART I. FINANCIAL INFORMATION |  |                                                                                      
|                              |  |                                                                                      
|Item 1.                       |  | Financial Statements (Unaudited)                                                      |  |           
|                              |  |                                                                                      
|                              |  | Consolidated Balance Sheets -                                                         |  | 3         
|                              |  | June 30, 2008 and December 31, 2007                                                   |  |           
|                              |  |                                                                                      
|                              |  | Consolidated Statements of Operations -                                               |  | 4         
|                              |  | Three and six months ended June 30, 2008 and                                          |  |           
|                              |  | Three and six months ended June 30, 2007                                              |  |           
|                              |  |                                                                                      
|                              |  | Consolidated Statements of Cash Flows -                                               |  | 5         
|                              |  | Six months ended June 30, 2008 and                                                    |  |           
|                              |  | Six months ended June 30, 2007                                                        |  |           
|                              |  |                                                                                      
|                              |  | Notes to Consolidated Financial Statements                                            |  | 6         
|                              |  |                                                                                      
|Item 2.                       |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 10        
|                              |  |                                                                                      
|Item 3.                       |  | Quantitative and Qualitative Disclosures About Market Risk                            |  | 16        
|                              |  |                                                                                      
|Item 4.                       |  | Controls and Procedures                                                               |  | 16        
|                              | 
|PART II. OTHER INFORMATION    |  |                                                                                      
|                              |  |                                                                                      
|Item 1.                       |  | Legal Proceedings (not applicable)                                                    |  |           
|                              |  |                                                                                      
|Item 1A.                      |  | Risk Factors (not applicable)                                                         |  |           
|                              |  |                                                                                      
|Item 2.                       |  | Unregistered Sales of Equity Securities and Use of Proceeds                           |  | 17        
|                              |  |                                                                                      
|Item 3.                       |  | Defaults Upon Senior Securities (not applicable)                                      |  |           
|                              |  |                                                                                      
|Item 4.                       |  | Submission of Matters to a Vote of Security Holders                                   |  | 17        
|                              |  |                                                                                      
|Item 5.                       |  | Other Information (not applicable)                                                    |  |           
|                              |  |                                                                                      
|Item 6.                       |  | Exhibits                                                                              |  | 18        
|                              | 
|Signatures                    |  | 19                                                                                   

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



2



---

##### Table of Contents

Apple REIT Six, Inc.

Consolidated Balance Sheets

(unaudited)

(in thousands, except share data)



|                                                                                                                                               |  |              |         |   |                  |   |         |  
|---------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ------- | - | ---------------- | - | ------- | -
|                                                                                                                                               |  | June 30,2008 |         |   | December 31,2007 |  
|ASSETS                                                                                                                                         |  |              |         |   |                  |   |         |  
|Investment in real estate, net of accumulated depreciation of $79,076 and $64,692, respectively                                                |  | $            | 831,013 |   |                  | $ | 820,468 |  
|Cash and cash equivalents                                                                                                                      |  |              |        |   |                  |   | 33,261  |  
|Restricted cash-furniture, fixtures and other escrows                                                                                          |  |              | 3,425   |   |                  |   | 3,928   |  
|Due from third party manager, net                                                                                                              |  |              | 14,723  |   |                  |   | 8,855   |  
|Other assets, net                                                                                                                              |  |              | 14,861  |   |                  |   | 16,145  |  
|                                                                                                                                               |  |              |         |   |                  |   |         |  
|TOTAL ASSETS                                                                                                                                   |  | $            | 864,022 |   |                  | $ | 882,657 |  
|                                                                                                                                               |  |              |         |   |                  |   |         |  
|LIABILITIES                                                                                                                                    |  |              |         |   |                  |   |         |  
|Notes payable                                                                                                                                  |  | $            | 36,960  |   |                  | $ | 51,679  |  
|Other liabilities                                                                                                                              |  |              | 12,260  |   |                  |   | 14,734  |  
|                                                                                                                                               |  |              |         |   |                  |   |         |  
|TOTAL LIABILITIES                                                                                                                              |  |              | 49,220  |   |                  |   | 66,413  |  
|                                                                                                                                               |  |             
|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 90,955,409 and 90,280,401 shares,
respectively   |  |              |        |   |                  |   |        |  
|Series B convertible preferred 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 90,955,409 and 90,280,401 shares,
respectively               |  |              | 896,379 |   |                  |   | 888,878 |  
|Distributions greater than net income                                                                                                          |  |              | (81,601 | ) |                  |   | (72,658 | )
|                                                                                                                                               |  |              |         |   |                  |   |         |  
|TOTAL SHAREHOLDERS EQUITY                                                                                                                     |  |              | 814,802 |   |                  |   | 816,244 |  
|                                                                                                                                               |  |              |         |   |                  |   |         |  
|TOTAL LIABILITIES AND SHAREHOLDERS EQUITY                                                                                                     |  | $            | 864,022 |   |                  | $ | 882,657 |  
|                                                                                                                                               |  |              |         |   |                  |   |         |  

See notes to consolidated financial statements.



3



---

##### Table of Contents

Apple REIT Six, Inc.

Consolidated Statements of Operations

(unaudited)

(in thousands, except per share data)



|                                                               |  |                                |        |   |                                |   |        |                              |  |   |                              |   |  |   |         |  
|-------------------------------------------------------------- |  | ------------------------------ | ------ | - | ------------------------------ | - | ------ | ---------------------------- |  | - | ---------------------------- | - |  | - | ------- | -
|                                                               |  | Three monthsendedJune 30, 2008 |        |   | Three monthsendedJune 30, 2007 |   |        | Six MonthsendedJune 30, 2008 |  |   | Six MonthsendedJune 30, 2007 |  
|                                                               |  |                                |       
|Revenues:                                                      |  |                                |        |   |                                |   |        |                              |  |   |                              |   |  |   |         |  
|Room revenue                                                   |  | $                              | 64,988 |   |                                | $ | 62,791 |                              |  | $ | 123,108                      |   |  | $ | 118,276 |  
|Other revenue                                                  |  |                                | 5,131  |   |                                |   | 5,168  |                              |  |   | 10,208                       |   |  |   | 9,862   |  
|Reimbursed expenses                                            |  |                                | 1,094  |   |                                |   |       |                              |  |   | 2,188                        |   |  |   |        |  
|                                                               |  |                                |        |   |                                |   |        |                              |  |   |                              |   |  |   |         |  
|Total revenue                                                  |  |                                | 71,213 |   |                                |   | 67,959 |                              |  |   | 135,504                      |   |  |   | 128,138 |  
|                                                               |  |                                |        |  
|Expenses:                                                      |  |                                |        |   |                                |   |        |                              |  |   |                              |   |  |   |         |  
|Operating expense                                              |  |                                | 16,903 |   |                                |   | 16,354 |                              |  |   | 33,131                       |   |  |   | 31,181  |  
|Hotel administrative expense                                   |  |                                | 5,511  |   |                                |   | 5,106  |                              |  |   | 10,885                       |   |  |   | 9,993   |  
|Sales and marketing                                            |  |                                | 5,172  |   |                                |   | 5,082  |                              |  |   | 9,952                        |   |  |   | 9,629   |  
|Utilities                                                      |  |                                | 2,550  |   |                                |   | 2,322  |                              |  |   | 5,040                        |   |  |   | 4,706   |  
|Repair and maintenance                                         |  |                                | 3,000  |   |                                |   | 2,799  |                              |  |   | 5,892                        |   |  |   | 5,430   |  
|Franchise fees                                                 |  |                                | 2,851  |   |                                |   | 2,698  |                              |  |   | 5,346                        |   |  |   | 5,095   |  
|Management fees                                                |  |                                | 2,765  |   |                                |   | 2,741  |                              |  |   | 5,523                        |   |  |   | 5,343   |  
|Taxes, insurance and other                                     |  |                                | 3,467  |   |                                |   | 3,722  |                              |  |   | 6,984                        |   |  |   | 7,055   |  
|Reimbursed expenses                                            |  |                                | 1,094  |   |                                |   |       |                              |  |   | 2,188                        |   |  |   |        |  
|General and administrative                                     |  |                                | 1,497  |   |                                |   | 1,371  |                              |  |   | 2,858                        |   |  |   | 2,751   |  
|Depreciation expense                                           |  |                                | 7,703  |   |                                |   | 6,862  |                              |  |   | 15,186                       |   |  |   | 13,624  |  
|                                                               |  |                                |        |   |                                |   |        |                              |  |   |                              |   |  |   |         |  
|Total expenses                                                 |  |                                | 52,513 |   |                                |   | 49,057 |                              |  |   | 102,985                      |   |  |   | 94,807  |  
|                                                               |  |                                |        |   |                                |   |        |                              |  |   |                              |   |  |   |         |  
|Operating income                                               |  |                                | 18,700 |   |                                |   | 18,902 |                              |  |   | 32,519                       |   |  |   | 33,331  |  
|                                                               |  |                                |        |  
|Interest expense, net                                          |  |                                | (551   | ) |                                |   | (584   | )                            |  |   | (840                         | ) |  |   | (1,232  | )
|                                                               |  |                                |        |   |                                |   |        |                              |  |   |                              |   |  |   |         |  
|Net income                                                     |  | $                              | 18,149 |   |                                | $ | 18,318 |                              |  | $ | 31,679                       |   |  | $ | 32,099  |  
|                                                               |  |                                |        |   |                                |   |        |                              |  |   |                              |   |  |   |         |  
|Basic and diluted net income per common share                  |  | $                              | 0.20   |   |                                | $ | 0.20   |                              |  | $ | 0.35                         |   |  | $ | 0.36    |  
|                                                               |  |                                |        |   |                                |   |        |                              |  |   |                              |   |  |   |         |  
|Weighted average common shares outstanding - basic and diluted |  |                                | 90,673 |   |                                |   | 89,516 |                              |  |   | 90,521                       |   |  |   | 89,433  |  
|                                                               |  |                                |        |  
|Distributions declared per common share                        |  | $                              | 0.23   |   |                                | $ | 0.22   |                              |  | $ | 0.45                         |   |  | $ | 0.44    |  
|                                                               |  |                                |        |   |                                |   |        |                              |  |   |                              |   |  |   |         |  

See notes to consolidated financial statements.



4



---

##### Table of Contents

Apple REIT Six, Inc.

Consolidated Statements of Cash Flows

(unaudited)

(in thousands)



|                                                                              |  |                               |         |   |                               |   |         |  
|----------------------------------------------------------------------------- |  | ----------------------------- | ------- | - | ----------------------------- | - | ------- | -
|                                                                              |  | Six months endedJune 30,
2008 |         |   | Six months endedJune 30,
2007 |  
|                                                                              | 
|Cash flow provided by operating activities:                                   |  |                               |         |   |                               |   |         |  
|Net income                                                                    |  | $                             | 31,679  |   |                               | $ | 32,099  |  
|Adjustments to reconcile net income to cash provided by operating activities: |  |                               |         |   |                               |   |         |  
|Depreciation                                                                  |  |                               | 15,186  |   |                               |   | 13,624  |  
|Amortization of deferred financing costs and fair value adjustments           |  |                               | (147    | ) |                               |   | (205    | )
|Stock option expense                                                          |  |                               | 57      |   |                               |   | 68      |  
|Changes in operating assets and liabilities, net of amounts acquired/assumed: |  |                               |         |   |                               |   |         |  
|Due from third party manager                                                  |  |                               | (5,868  | ) |                               |   | (5,877  | )
|Other assets                                                                  |  |                               | 135     |   |                               |   | (767    | )
|Other liabilities                                                             |  |                               | (503    | ) |                               |   | (1,021  | )
|                                                                              |  |                               |         |   |                               |   |         |  
|Net cash provided by operating activities                                     |  |                               | 40,539  |   |                               |   | 37,921  |  
|                                                                              |  |                              
|Cash flow used in investing activities:                                       |  |                               |         |   |                               |   |         |  
|Cash paid in acquisition of hotel                                             |  |                               | (18,159 | ) |                               |   |        |  
|Acquisition of other assets                                                   |  |                               | (325    | ) |                               |   | (147    | )
|Capital improvements                                                          |  |                               | (8,105  | ) |                               |   | (2,633  | )
|Net decrease (increase) in cash restricted for property improvements          |  |                               | 299     |   |                               |   | (500    | )
|Other investing activities, net                                               |  |                               | 389     |   |                               |   | 846     |  
|                                                                              |  |                               |         |   |                               |   |         |  
|Net cash used in investing activities                                         |  |                               | (25,901 | ) |                               |   | (2,434  | )
|                                                                              |  |                              
|Cash flow used in financing activities:                                       |  |                               |         |   |                               |   |         |  
|Net proceeds from line of credit                                              |  |                               | 2,550   |   |                               |   |        |  
|Payment of financing costs                                                    |  |                               | (225    | ) |                               |   |        |  
|Repayment of secured notes payable                                            |  |                               | (17,046 | ) |                               |   | (714    | )
|Net proceeds from issuance of common stock                                    |  |                               | 17,636  |   |                               |   | 16,430  |  
|Redemptions of common stock                                                   |  |                               | (10,192 | ) |                               |   | (16,077 | )
|Cash distributions paid to shareholders                                       |  |                               | (40,622 | ) |                               |   | (39,328 | )
|                                                                              |  |                               |         |   |                               |   |         |  
|Net cash used in financing activities                                         |  |                               | (47,899 | ) |                               |   | (39,689 | )
|                                                                              |  |                              
|Decrease in cash and cash equivalents                                         |  |                               | (33,261 | ) |                               |   | (4,202  | )
|                                                                              |  |                              
|Cash and cash equivalents, beginning of period                                |  |                               | 33,261  |   |                               |   | 26,160  |  
|                                                                              |  |                               |         |   |                               |   |         |  
|Cash and cash equivalents, end of period                                      |  | $                             |        |   |                               | $ | 21,958  |  
|                                                                              |  |                               |         |   |                               |   |         |  

See notes to consolidated financial statements.



5



---

##### Table of Contents

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 2007 Annual Report on Form 10-K. Operating results for the period
ended June 30, 2008 are not necessarily indicative of the results that may be expected for the period ending December 31, 2008.

Note 2

General Information and Summary of Significant Accounting Policies

Organization

Apple REIT Six, Inc. (the Company) is a Virginia corporation formed to
invest in hotels and other selected real estate in select metropolitan areas in the United States. Initial capitalization occurred on January 20, 2004 and operations began on May 28, 2004 when the Company acquired its first hotel. On
March 3, 2006, the Company concluded its best-efforts offering of Units (each Unit consists of one common share and one Series A preferred share). The Company has no foreign operations or assets and its operating structure includes only one
segment. The consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions and balances have been eliminated upon consolidation.

Earnings per Common Share

Basic earnings per common
share are computed based upon the weighted average number of shares outstanding during the year. Diluted earnings per share are calculated after giving effect to all potential common shares that were dilutive and outstanding for the year. There were
no potential common shares with a dilutive effect during the three and six months ended June 30, 2008 or 2007. Series B convertible preferred shares are not included in earnings per common share calculations until such time as the Series B
convertible preferred shares are converted to common shares.

Use of Estimates

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

Recent Accounting Pronouncements

In September 2006, the Financial Accounting Standards Board (FASB) issued Statement
No. 157, Fair Value Measurements (SFAS 157). SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. The Statement applies under other accounting
pronouncements that require or permit fair value measurements. Accordingly, this Statement does not require any new fair value measurements. In February 2008, the FASB released FASB Staff Position (FSP) FAS 157-2  Effective Date of FASB
Statement No. 157, which defers the effective date of SFAS No. 157 to fiscal years beginning after November 15, 2008 for all nonfinancial assets and liabilities, except those items that are recognized or disclosed at fair value in the
financial statements on a recurring basis (at least annually). The effective date of the statement related to those items not covered by



6



---

##### Table of Contents

the deferral (all financial assets and liabilities or nonfinancial assets and liabilities recorded at fair value on a recurring basis) is for fiscal years
beginning after November 15, 2007. The adoption of this statement did not have and is not anticipated to have a material impact on the Companys results of operations or financial position.

In February 2007, FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities(SFAS 159). SFAS
159 permits entities to choose to measure many financial instruments and certain other items at fair value. The objective of the guidance is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported
earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. SFAS 159 is effective as of the beginning of the first fiscal year that begins after November 15, 2007. SFAS is
effective for the Company beginning January 1, 2008. The Company has elected not to use the fair value measurement provisions of SFAS 159 and therefore, adoption of this standard did not have an impact on the financial statements.

In March 2008, FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities, an Amendment of FASB Statement
No. 133 (SFAS 161). SFAS 161 is intended to improve transparency in financial reporting by requiring enhanced disclosures of an entitys derivative instruments and hedging activities and their effects on the entitys
financial position, financial performance, and cash flows. SFAS 161 applies to all derivative instruments within the scope of SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities (SFAS 133). It also
applies to non-derivative hedging instruments and all hedged items designated and qualifying as hedges under SFAS 133. SFAS 161 is effective prospectively for financial statements issued for fiscal years and interim periods beginning after
November 15, 2008, with early application encouraged. The Company does not currently have any instruments that qualify within the scope of SFAS 133, and therefore the adoption of this statement is not anticipated to have a material impact on
the Companys financial statements.

In May 2008, the FASB issued SFAS No. 162, The Hierarchy of Generally
Accepted Accounting Principles (SFAS 162). SFAS 162 identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental
entities that are presented in conformity with generally accepted accounting principles in the United States. SFAS 162 is effective 60 days following the Securities and Exchange Commissions (SEC) approval of the Public Company
Accounting Oversight Board amendments to AU Section 411, The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles. The Company is currently evaluating the potential impact, if any, of the adoption of SFAS 162 on
its financial statements.

Note 3

Property
Acquisition

In March 2008, the Company purchased a Hilton Garden Inn hotel in Roanoke Rapids, North Carolina for $15.4 million. In
conjunction with the purchase of the hotel the Company negotiated and completed a buyout of the ground lease associated with the hotel. The gross purchase price of the land was $2.4 million. As a result of the land purchase, the ground lease, with a
remaining term of 49 years and minimum lease payments of $8.4 million, was terminated. The hotel has 147 rooms and is managed by Western International under an agreement with terms and fees similar to the Companys existing management
agreements. The purchase price was funded with available cash. In conjunction with the acquisition, the Company paid a commission to Apple Six Realty Group, Inc. (ASRG) of 2% of the gross purchase price, or approximately $0.4 million.
ASRG is wholly-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 hotel. No goodwill or intangible assets were recorded in connection
with the acquisition.



7



---

##### Table of Contents

Note 4

Notes
Payable and Credit Agreements

In March 2008, the Company entered into a $20 million unsecured line of credit with a commercial bank.
The applicable interest rate is equal to LIBOR (the London Interbank Offered Rate) plus 2%. Interest payments are due monthly. The principal must be paid by the maturity date of March 2011, and may be prepaid without penalty. At June 30, 2008,
the credit line had an outstanding principal balance of approximately $2.6 million.

Note 5

Related Parties

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

The Company has a contract with ASRG, a related party, to provide brokerage services for the acquisition and disposition of the Companys real
estate assets. In accordance with the contract, ASRG is paid a fee of 2% of the gross purchase price of any acquisitions or gross sale price of any dispositions of real estate investments, subject to certain conditions. As of June 30, 2008,
payments to ASRG for services under the terms of this contract have totaled $16.9 million since inception, which were capitalized as a part of the purchase price of the hotels. The Company incurred fees totaling approximately $0.4 million during the
first six months of 2008 under this contract.

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, is payable for these
services. During the first six months of 2008, ASA utilized Apple Fund Management, LLC, a subsidiary of the Company, to provide these services. During the first six months of 2007, ASA utilized Apple Hospitality Two, Inc. and Apple Hospitality Five,
Inc. to provide these services. The advisory fees incurred under the agreement with ASA for the six months ended June 30, 2008 and 2007, totaled approximately $1.2 million for each period.

Effective October 2007, through its wholly-owned subsidiary, Apple Fund Management, LLC, the Company provides support services to ASRG, ASA, Apple Seven
Advisors, Inc. (A7A), Apple Suites Realty Group, Inc. (Suites), Apple REIT Seven, Inc., Apple Eight Advisors, Inc. (A8A), Apple REIT Eight, Inc., Apple Nine Advisors, Inc. (A9A) and Apple REIT Nine,
Inc. A7A provides day to day advisory and administrative functions for Apple REIT Seven, Inc. A8A provides day to day advisory and administrative functions for Apple REIT Eight, Inc. A9A provides day to day advisory and administrative functions for
Apple REIT Nine, Inc. Suites provides real estate brokerage services to Apple REIT Seven, Inc., Apple REIT Eight, Inc. and Apple REIT Nine, Inc. Each of these companies has agreed to reimburse the Company for its costs in providing these services.
For the six months ended June 30, 2008, the Company received reimbursement of its costs totaling approximately $2.2 million. ASRG, ASA, A7A, Suites, A8A and A9A are 100% owned by Glade Knight, the Companys Chairman and Chief Executive
Officer.

Including ASRG, ASA, Suites, A7A, A8A and A9A discussed above, Mr. Knight is also Chairman and Chief Executive Officer of
Apple REIT Seven, Inc. (a diversified REIT), Apple REIT Eight, Inc. (a diversified REIT) and Apple REIT Nine, Inc. (a newly formed company that intends to qualify as a diversified REIT). Mr. Knight was also Chairman and Chief Executive Officer
of Apple Hospitality Two, Inc. (a hospitality REIT) until May 2007 and Apple Hospitality Five, Inc. (a hospitality REIT) until October 2007. Members of the Companys Board of Directors are also on the boards of Apple REIT Seven, Inc., Apple
REIT Eight, Inc. and Apple REIT Nine, Inc. Until May 2007, members of the Companys Board of Directors were also on the board of Apple Hospitality Two, Inc. and, until October 2007, were on the board of Apple Hospitality Five, Inc.



8



---

##### Table of Contents

Note 6

Shareholders Equity

In July 2005, the Company instituted a Unit Redemption Program to provide limited interim
liquidity to its shareholders who have held their Units for at least one year. Shareholders may request redemption of Units for a purchase price equal to 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 six
months ended June 30, 2008, the Company redeemed approximately 0.9 million Units in the amount of $10.2 million under the program.

In February 2006, the Company instituted a Dividend Reinvestment Plan for its shareholders. The plan provides a convenient and cost effective way to increase shareholder investment in the Company by reinvesting dividends to purchase
additional Units of the Company. The uses of the proceeds from this plan may include purchasing Units under the Companys Unit Redemption Program, enhancing properties, satisfying financing obligations and other expenses, increasing working
capital, funding various corporate operations, and acquiring hotels. During the six months ended June 30, 2008, approximately 1.6 million Units, representing $17.6 million in proceeds to the Company, were issued under the plan.

In January 2004, the Board of Directors approved a Non-Employee Directors Stock Option Plan whereby directors, who are not employees of the Company or
affiliates, automatically receive the option to purchase Units. During the second quarters of 2008 and 2007 the Company issued approximately 73,000 and 72,000 directors stock options, respectively, and share-based expense of approximately
$57,000 and $68,000, respectively, was recorded.

Note 7

Subsequent Events

In July 2008, the Company declared and paid approximately $6.8 million, or $.075 per share, in
distributions to its common shareholders of which $3.0 million or 271,917 Units were reinvested under the Companys Dividend Reinvestment Plan.

On July 21, 2008, the Company redeemed 351,772 Units in the amount of $3.9 million under its Unit Redemption Program.



9



---

##### 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, but are not limited to, the ability of the Company to implement its acquisition strategy and
operating strategy; the Companys ability to manage planned growth; changes in economic cycles and competition within the 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) was formed and initially capitalized on January 20, 2004, with its first investor closing on April 23, 2004. The Company owns 68 hotels within different markets in the United States. The
Company is treated as a Real Estate Investment Trust (REIT) for federal income tax purposes. The Companys first hotel was acquired on May 28, 2004. Although hotel performance can be influenced by many factors including local
competition, local and general economic conditions in the United States and the performance of individual managers assigned to each hotel, performance of the hotels, in general, has met the Companys expectations. In evaluating financial
condition and operating performance, the most important matters on which the Company focuses are revenue measurements, such as average occupancy, average daily rate and revenue per available room, and expenses, such as hotel operating expenses,
general and administrative and other expenses described below. The following is a summary of the Companys results:



|                                       |  |                            |        |   |                          |     |   |      |   |        |                  |  |     |               |  |    |      |  |   |                  |   |  |      |   |  |                  |         |   |               |     |   |  |     |  
|-------------------------------------- |  | -------------------------- | ------ | - | ------------------------ | --- | - | ---- | - | ------ | ---------------- |  | --- | ------------- |  | -- | ---- |  | - | ---------------- | - |  | ---- | - |  | ---------------- | ------- | - | ------------- | --- | - |  | --- | -
|                                       |  | Three months endedJune 30, |        |   | Six months endedJune 30, |    
|(in thousands,except statistical data) |  | 2008                       |        |   | PercentofRevenue         |     |   | 2007 |   |        | PercentofRevenue |  |     | Percentchange |  |    | 2008 |  |   | PercentofRevenue |   |  | 2007 |   |  | PercentofRevenue |         |   | Percentchange |    
|Total hotel revenue                    |  | $                          | 70,119 |   |                          | 100 | % |      | $ | 67,959 |                  |  | 100 | %             |  | 3  | %    |  | $ | 133,316          |   |  | 100  | % |  | $                | 128,138 |   |               | 100 | % |  | 4   | %
|Hotel operating expenses               |  |                            | 38,752 |   |                          | 55  | % |      |   | 37,102 |                  |  | 55  | %             |  | 4  | %    |  |   | 75,769           |   |  | 57   | % |  |                  | 71,377  |   |               | 56  | % |  | 6   | %
|Taxes, insurance and other expense     |  |                            | 3,467  |   |                          | 5   | % |      |   | 3,722  |                  |  | 5   | %             |  | -7 | %    |  |   | 6,984            |   |  | 5    | % |  |                  | 7,055   |   |               | 6   | % |  | -1  | %
|General and administrative expense     |  |                            | 1,497  |   |                          | 2   | % |      |   | 1,371  |                  |  | 2   | %             |  | 9  | %    |  |   | 2,858            |   |  | 2    | % |  |                  | 2,751   |   |               | 2   | % |  | 4   | %
|Depreciation                           |  |                            | 7,703  |   |                          |     |   |      |   | 6,862  |                  |  |     |               |  | 12 | %    |  |   | 15,186           |   |  |      |   |  |                  | 13,624  |   |               |     |   |  | 11  | %
|Interest expense, net                  |  |                            | 551    |   |                          |     |   |      |   | 584    |                  |  |     |               |  | -6 | %    |  |   | 840              |   |  |      |   |  |                  | 1,232   |   |               |     |   |  | -32 | %
|Number of hotels                       |  |                            | 68     |   |                          |     |   |      |   | 67     |                  |  |     |               |  | 1  | %    |  |   | 68               |   |  |      |   |  |                  | 67      |   |               |     |   |  | 1   | %
|ADR                                    |  | $                          | 118    |   |                          |     |   |      | $ | 114    |                  |  |     |               |  | 4  | %    |  | $ | 117              |   |  |      |   |  | $                | 112     |   |               |     |   |  | 4   | %
|Occupancy                              |  |                            | 76     | % |                          |     |   |      |   | 78     | %                |  |     |               |  | -3 | %    |  |   | 73               | % |  |      |   |  |                  | 75      | % |               |     |   |  | -3  | %
|RevPAR                                 |  | $                          | 90     |   |                          |     |   |      | $ | 89     |                  |  |     |               |  | 1  | %    |  | $ | 86               |   |  |      |   |  | $                | 84      |   |               |     |   |  | 2   | %

Hotels Owned

As of June 30, 2008, the Company owned 68 hotels, with a total of 7,897 rooms. The following table summarizes the location, brand, manager, date acquired, number of rooms and gross purchase price for each hotel.
All dollar amounts are in thousands.



10



---

##### Table of Contents

|                 |  |                |  |                      |  |              |  |              |  |       |  |                    |        
|---------------- |  | -------------- |  | -------------------- |  | ------------ |  | ------------ |  | ----- |  | ------------------ | -------
|City             |  | State          |  | Brand                |  | Manager      |  | DateAcquired |  | Rooms |  | GrossPurchasePrice
|Birmingham       |  | Alabama        |  | Fairfield Inn        |  | LBA          |  | 8/25/05      |  | 63    |  | $                  | 2,176  
|Dothan           |  | Alabama        |  | Courtyard            |  | LBA          |  | 8/11/05      |  | 78    |  |                    | 8,016  
|Dothan           |  | Alabama        |  | Hampton Inn & Suites |  | LBA          |  | 6/24/05      |  | 85    |  |                    | 8,673  
|Huntsville       |  | Alabama        |  | Fairfield Inn        |  | LBA          |  | 9/30/05      |  | 79    |  |                    | 4,954  
|Huntsville       |  | Alabama        |  | Residence Inn        |  | LBA          |  | 6/24/05      |  | 78    |  |                    | 8,288  
|Montgomery       |  | Alabama        |  | SpringHill Suites    |  | LBA          |  | 9/30/05      |  | 79    |  |                    | 6,835  
|Tuscaloosa       |  | Alabama        |  | Courtyard            |  | LBA          |  | 8/25/05      |  | 78    |  |                    | 7,551  
|Tuscaloosa       |  | Alabama        |  | Fairfield Inn        |  | LBA          |  | 8/25/05      |  | 63    |  |                    | 3,982  
|Anchorage        |  | Alaska         |  | Hampton Inn          |  | Stonebridge  |  | 3/14/05      |  | 101   |  |                    | 11,500 
|Anchorage        |  | Alaska         |  | Hilton Garden Inn    |  | Stonebridge  |  | 10/12/04     |  | 125   |  |                    | 18,900 
|Anchorage        |  | Alaska         |  | Homewood Suites      |  | Stonebridge  |  | 10/12/04     |  | 122   |  |                    | 13,200 
|Phoenix          |  | Arizona        |  | Hampton Inn          |  | Stonebridge  |  | 10/12/04     |  | 99    |  |                    | 6,700  
|Tempe            |  | Arizona        |  | SpringHill Suites    |  | Western      |  | 6/30/05      |  | 121   |  |                    | 8,060  
|Tempe            |  | Arizona        |  | TownePlace Suites    |  | Western      |  | 6/30/05      |  | 119   |  |                    | 8,128  
|Arcadia          |  | California     |  | Hilton Garden Inn    |  | Stonebridge  |  | 10/12/04     |  | 124   |  |                    | 12,000 
|Arcadia          |  | California     |  | SpringHill Suites    |  | Stonebridge  |  | 10/12/04     |  | 86    |  |                    | 8,100  
|Bakersfield      |  | California     |  | Hilton Garden Inn    |  | Hilton       |  | 3/18/05      |  | 120   |  |                    | 11,500 
|Folsom           |  | California     |  | Hilton Garden Inn    |  | Inn Ventures |  | 11/30/05     |  | 100   |  |                    | 18,028 
|Foothill Ranch   |  | California     |  | Hampton Inn          |  | Stonebridge  |  | 4/21/05      |  | 84    |  |                    | 7,400  
|Lake Forest      |  | California     |  | Hilton Garden Inn    |  | Stonebridge  |  | 10/12/04     |  | 103   |  |                    | 11,400 
|Milpitas         |  | California     |  | Hilton Garden Inn    |  | Inn Ventures |  | 11/30/05     |  | 161   |  |                    | 18,600 
|Roseville        |  | California     |  | Hilton Garden Inn    |  | Inn Ventures |  | 11/30/05     |  | 131   |  |                    | 20,759 
|San Francisco    |  | California     |  | Hilton Garden Inn    |  | Inn Ventures |  | 1/30/06      |  | 169   |  |                    | 12,266 
|Boulder          |  | Colorado       |  | Marriott             |  | WLS          |  | 5/9/05       |  | 157   |  |                    | 30,000 
|Glendale         |  | Colorado       |  | Hampton Inn & Suites |  | Stonebridge  |  | 10/12/04     |  | 133   |  |                    | 14,700 
|Lakewood         |  | Colorado       |  | Hampton Inn          |  | Stonebridge  |  | 10/12/04     |  | 170   |  |                    | 10,600 
|Farmington       |  | Connecticut    |  | Courtyard            |  | WLS          |  | 10/20/05     |  | 119   |  |                    | 16,330 
|Rocky Hill       |  | Connecticut    |  | Residence Inn        |  | WLS          |  | 8/1/05       |  | 96    |  |                    | 12,070 
|Wallingford      |  | Connecticut    |  | Homewood Suites      |  | WLS          |  | 7/8/05       |  | 104   |  |                    | 12,780 
|Clearwater       |  | Florida        |  | SpringHill Suites    |  | LBA          |  | 2/17/06      |  | 79    |  |                    | 6,923  
|Lake Mary        |  | Florida        |  | Courtyard            |  | LBA          |  | 3/18/05      |  | 86    |  |                    | 6,000  
|Lakeland         |  | Florida        |  | Residence Inn        |  | LBA          |  | 6/24/05      |  | 78    |  |                    | 9,886  
|Orange Park      |  | Florida        |  | Fairfield Inn        |  | LBA          |  | 11/8/05      |  | 83    |  |                    | 7,221  
|Panama City      |  | Florida        |  | Courtyard            |  | LBA          |  | 4/26/06      |  | 84    |  |                    | 9,245  
|Pensacola        |  | Florida        |  | Courtyard            |  | LBA          |  | 8/25/05      |  | 90    |  |                    | 11,369 
|Pensacola        |  | Florida        |  | Fairfield Inn        |  | LBA          |  | 8/25/05      |  | 63    |  |                    | 4,858  
|Pensacola        |  | Florida        |  | Hampton Inn & Suites |  | LBA          |  | 7/21/05      |  | 85    |  |                    | 9,279  
|Tallahassee      |  | Florida        |  | Hilton Garden Inn    |  | Hilton       |  | 3/18/05      |  | 99    |  |                    | 10,850 
|Albany           |  | Georgia        |  | Courtyard            |  | LBA          |  | 6/24/05      |  | 84    |  |                    | 8,597  
|Columbus         |  | Georgia        |  | Residence Inn        |  | LBA          |  | 6/24/05      |  | 78    |  |                    | 7,888  
|Savannah         |  | Georgia        |  | SpringHill Suites    |  | LBA          |  | 9/30/05      |  | 79    |  |                    | 5,407  
|Valdosta         |  | Georgia        |  | Courtyard            |  | LBA          |  | 10/3/05      |  | 84    |  |                    | 8,284  
|Mt. Olive        |  | New Jersey     |  | Residence Inn        |  | WLS          |  | 9/15/05      |  | 123   |  |                    | 12,070 
|Somerset         |  | New Jersey     |  | Homewood Suites      |  | WLS          |  | 8/17/05      |  | 123   |  |                    | 17,750 
|Saratoga Springs |  | New York       |  | Hilton Garden Inn    |  | WLS          |  | 9/29/05      |  | 112   |  |                    | 17,750 
|Roanoke Rapids   |  | North Carolina |  | Hilton Garden Inn    |  | Western      |  | 3/10/08      |  | 147   |  |                    | 17,764 
|Hillsboro        |  | Oregon         |  | Courtyard            |  | Inn Ventures |  | 3/9/06       |  | 155   |  |                    | 11,000 
|Hillsboro        |  | Oregon         |  | Residence Inn        |  | Inn Ventures |  | 3/9/06       |  | 122   |  |                    | 15,500 
|Hillsboro        |  | Oregon         |  | TownePlace Suites    |  | Inn Ventures |  | 12/19/05     |  | 136   |  |                    | 11,500 
|Portland         |  | Oregon         |  | Residence Inn        |  | Inn Ventures |  | 12/19/05     |  | 258   |  |                    | 42,000 
|Pittsburgh       |  | Pennsylvania   |  | Residence Inn        |  | WLS          |  | 9/2/05       |  | 156   |  |                    | 11,000 
|Myrtle Beach     |  | South Carolina |  | Courtyard            |  | Marriott     |  | 6/8/04       |  | 135   |  |                    | 9,200  
|Nashville        |  | Tennessee      |  | Homewood Suites      |  | Hilton       |  | 5/24/05      |  | 121   |  |                    | 8,103  
|Arlington        |  | Texas          |  | SpringHill Suites    |  | Western      |  | 6/30/05      |  | 122   |  |                    | 7,486  
|Arlington        |  | Texas          |  | TownePlace Suites    |  | Western      |  | 6/30/05      |  | 95    |  |                    | 7,148  
|Dallas           |  | Texas          |  | SpringHill Suites    |  | Western      |  | 12/9/05      |  | 147   |  |                    | 19,500 
|Ft. Worth        |  | Texas          |  | Homewood Suites      |  | Hilton       |  | 5/24/05      |  | 137   |  |                    | 9,097  
|Ft. Worth        |  | Texas          |  | Residence Inn        |  | Western      |  | 5/6/05       |  | 149   |  |                    | 17,000 
|Ft. Worth        |  | Texas          |  | SpringHill Suites    |  | Marriott     |  | 5/28/04      |  | 145   |  |                    | 13,340 
|Laredo           |  | Texas          |  | Homewood Suites      |  | Western      |  | 11/30/05     |  | 106   |  |                    | 10,500 
|Laredo           |  | Texas          |  | Residence Inn        |  | Western      |  | 9/12/05      |  | 109   |  |                    | 11,445 
|Las Colinas      |  | Texas          |  | TownePlace Suites    |  | Western      |  | 6/30/05      |  | 136   |  |                    | 7,178  
|McAllen          |  | Texas          |  | Hilton Garden Inn    |  | Western      |  | 7/19/05      |  | 104   |  |                    | 9,000  
|Fredericksburg   |  | Virginia       |  | Hilton Garden Inn    |  | Hilton       |  | 12/20/05     |  | 148   |  |                    | 16,600 
|Kent             |  | Washington     |  | TownePlace Suites    |  | Inn Ventures |  | 12/19/05     |  | 152   |  |                    | 12,000 
|Mukilteo         |  | Washington     |  | TownePlace Suites    |  | Inn Ventures |  | 12/19/05     |  | 128   |  |                    | 12,000 
|Redmond          |  | Washington     |  | Marriott             |  | Marriott     |  | 7/7/04       |  | 262   |  |                    | 64,000 
|Renton           |  | Washington     |  | Hilton Garden Inn    |  | Inn Ventures |  | 11/30/05     |  | 150   |  |                    | 16,096 
|                 |  |                |  |                      |  |              |  |              |  |       |  |                    |        
|                 |  |                |  |                      |  |              |  | Total        |  | 7,897 |  | $                  | 845,330
|                 |  |                |  |                      |  |              |  |              |  |       |  |                    |        



11



---

##### Table of Contents

The Company leased all of its hotels to wholly-owned taxable REIT subsidiaries (collectively, the
lessee) under hotel lease agreements. The Company also used the proceeds from its best-efforts offering to pay 2% of the gross purchase price for these hotels, which equals approximately $16.9 million, as a commission to
Apple Six Realty Group, Inc. (ASRG). ASRG is wholly-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

In general, performance at the Companys hotels has 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. Hotel operations are for the 68 hotels acquired through June 30, 2008 for their respective periods owned. For the three months ended June 30, 2008 and 2007, the
Company had total hotel revenue of $70.1 and $68.0 million, respectively, with average occupancy of 76% and 78%, average daily rate (ADR) of $118 and $114 and revenue per available room (RevPAR) of $90 and $89. For the six
months ended June 30, 2008 and 2007, the Company had total hotel revenue of $133.3 and $128.1 million, respectively, with average occupancy of 73% and 75%, ADR of $117 and $112, and RevPAR of $86 and $84. ADR is calculated as room revenue
divided by the number of rooms sold, and RevPAR is calculated as occupancy multiplied by ADR. These rates are consistent with industry and brand averages. The industry and the Company have seen RevPAR increases due to increases in demand in the
markets where the Companys hotels are located. Additionally, the Company continually works with the hotel managers to maximize rates. As supply of hotel rooms in markets that the Company serves has begun to meet demand and general economic
conditions have deteriorated, the Companys revenue growth has been less than previous quarters. The Company anticipates this trend to continue for the remainder of 2008. As a result, the Company anticipates no improvement to modest improvement
for the next several quarters as compared to comparable quarters in the previous year.

Expenses

For the three months ended June 30, 2008 and 2007, hotel operating expenses totaled $38.8 and $37.1 million, respectively, or 55% of total hotel
revenue for each period. For the six months ended June 30, 2008 and 2007, hotel operating expenses totaled $75.8 and $71.4 million, or 57% and 56% of total hotel revenue. The increase in expenses as a percent of revenue results from several
factors, including: spending to upgrade amenities such as food and beverage offerings and linens on certain brands, increases in labor costs and the opening of one new hotel. In addition, during the first half of 2008 the Company was in the process
of renovating seven of its hotels, resulting in approximately 12,000 room-nights out of service, thus increasing operating costs as a percent of hotel revenue.

Taxes, insurance, and other expenses for the three months ended June 30, 2008 and 2007 were $3.5 and $3.7 million or 5% of total hotel revenue for both periods. For the six months ended June 30, 2008 and
2007, taxes, insurance, and other expenses were $7.0 and $7.1 million, or 5% and 6% of total hotel revenue. The decrease in expense resulted primarily from lower insurance rates.

General and administrative expenses for the three months ended June 30, 2008 and 2007 were $1.5 and $1.4 million, or 2% of total hotel revenue for
each period. For the six months ended June 30, 2008 and 2007, general and administrative expenses were $2.9 and $2.8 million, or 2% of total hotel revenue. The principal components of general and administrative expense are advisory fees,
accounting fees and reporting expense.



12



---

##### Table of Contents

Depreciation expense for the three months ended June 30, 2008 and 2007 was $7.7 and $6.9 million.
Depreciation expense for the six months ended June 30, 2008 and 2007 was $15.2 and $13.6 million. Depreciation expense represents expense of the Companys 68 hotels and related personal property for their respective periods owned. The
increase in depreciation is primarily due to renovations completed in the fourth quarter of 2007 and first quarter of 2008, as well as the addition of the Roanoke Rapids Hilton Garden Inn in March 2008.

Interest expense, net was $0.6 million for both the three months ended June 30, 2008 and the three months ended 2007. Interest expense, net for the
six months ended June 30, 2008 and 2007 was $0.8 and $1.2 million, respectively. Interest expense relates to debt assumed with 14 of the properties acquired as well as a line of credit entered into in March 2008. Total debt assumed was
approximately $54.1 million. Interest expense decreased for the six months ended June 30, 2008 as $0.4 million of interest costs were capitalized in conjunction with the renovation of seven of the Companys hotels. Additionally during the
second quarter of 2008, the Company extinguished $16 million of outstanding debt with the maturity of six notes payable.

Liquidity and Capital
Resources

Operating cash flow from the properties owned and a $20 million line of credit are the Companys principal source of
liquidity. In addition, the Company may borrow additional funds, subject to limitations set forth in its bylaws. The Company anticipates that cash flow and the credit line will be adequate to cover substantially all of its operating expenses and to
permit the Company to meet substantially all of its anticipated liquidity requirements, including distributions, capital expenditures and debt service.

The Company has on-going capital commitments to fund its capital improvements. The Company is required, under all of the hotel management agreements, to make available, for the repair, replacement, refurbishing of
furniture, fixtures, and equipment, an amount of 3% to 5% of gross revenues provided that such amount may be used for the Companys capital expenditures with respect to the hotels. The Company expects that this amount will be adequate to fund
required repair, replacement, and refurbishments and to maintain the Companys hotels in a competitive condition. As of June 30, 2008, the Company had made approximately $8 million of capital expenditures during 2008. The Company completed
seven significant renovations in the first half of 2008. The Company has plans for eleven additional renovations throughout the remainder of 2008 and into the first quarter of 2009. Total 2008 capital expenditures are anticipated to be approximately
$20 million.

To maintain its REIT status the Company is required to distribute at least 90% of its ordinary income. Distributions in the
first six months of 2008 totaled $40.6 million. For the same period the Companys cash generated from operations was $40.5 million. The shortfall was funded by cash on hand. As the hotel industry is seasonal, the Company anticipates that cash
generated from operations for the full year will exceed distributions. Any interim shortfalls will be funded from cash on hand or borrowings on the credit line. Beginning in February 2008, the monthly dividend rate was raised from $0.073 per common
share to $0.075 per common share. The Company intends to continue paying dividends on a monthly basis at an annual rate of 8.2%. Since there can be no assurance of the ability of the Companys properties to provide income at this level,
there can be no assurance as to the classification or duration of distributions at the current rate.

In February 2006, the Company
instituted a Dividend Reinvestment Plan for its shareholders. The plan provides a convenient and cost effective way to increase shareholder investment in the Company by reinvesting dividends to purchase additional Units of the Company. The uses of
the proceeds from this plan may include purchasing Units under the Companys Unit Redemption Program, enhancing properties, satisfying financing obligations and other expenses, increasing working capital, funding various corporate operations,
and acquiring hotels. During the six months ended June 30, 2008, approximately 1.6 million Units, representing $17.6 million in proceeds to the Company, were issued under the plan.

In July 2005, the Company instituted a Unit Redemption Program to provide limited interim liquidity to its shareholders who have held their Units for at
least one year. Shareholders may request redemption of



13



---

##### Table of Contents

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 six months ended June 30,
2008, the Company redeemed approximately 0.9 million Units in the amount of $10.2 million under the program.

Related Party Transactions

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

The Company has a
contract with ASRG, a related party, to provide brokerage services for the acquisition and disposition of the Companys real estate assets. In accordance with the contract, ASRG is paid a fee of 2% of the gross purchase price of any
acquisitions or gross sale price of any dispositions of real estate investments, subject to certain conditions. As of June 30, 2008, payments to ASRG for services under the terms of this contract have totaled $16.9 million since inception,
which were capitalized as a part of the purchase price of the hotels. The Company incurred fees totaling approximately $0.4 million during the first six months of 2008 under this contract.

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, is payable for these services. During the first six months of 2008, ASA utilized Apple Fund Management,
LLC, a subsidiary of the Company, to provide these services. During the first six months of 2007, ASA utilized Apple Hospitality Two, Inc. and Apple Hospitality Five, Inc. to provide these services. The advisory fees incurred under the agreement
with ASA for the six months ended June 30, 2008 and 2007, totaled approximately $1.2 million for each period.

Effective October 2007,
through its wholly-owned subsidiary, Apple Fund Management, LLC, the Company provides support services to ASRG, ASA, Apple Seven Advisors, Inc. (A7A), Apple Suites Realty Group, Inc. (Suites), Apple REIT Seven, Inc., Apple
Eight Advisors, Inc. (A8A), Apple REIT Eight, Inc., Apple Nine Advisors, Inc. (A9A) and Apple REIT Nine, Inc. A7A provides day to day advisory and administrative functions for Apple REIT Seven, Inc. A8A provides day to day
advisory and administrative functions for Apple REIT Eight, Inc. A9A provides day to day advisory and administrative functions for Apple REIT Nine, Inc. Suites provides real estate brokerage services to Apple REIT Seven, Inc., Apple REIT Eight, Inc.
and Apple REIT Nine, Inc. Each of these companies has agreed to reimburse the Company for its costs in providing these services. For the six months ended June 30, 2008, the Company received reimbursement of its costs totaling approximately $2.2
million. ASRG, ASA, A7A, Suites, A8A and A9A are 100% owned by Glade Knight, the Companys Chairman and Chief Executive Officer.

Including ASRG, ASA, Suites, A7A, A8A and A9A discussed above, Mr. Knight is also Chairman and Chief Executive Officer of Apple REIT Seven, Inc. (a diversified REIT), Apple REIT Eight, Inc. (a diversified REIT) and Apple REIT Nine,
Inc. (a newly formed company that intends to qualify as a diversified REIT). Mr. Knight was also Chairman and Chief Executive Officer of Apple Hospitality Two, Inc. (a hospitality REIT) until May 2007 and Apple Hospitality Five, Inc. (a
hospitality REIT) until October 2007. Members of the Companys Board of Directors are also on the boards of Apple REIT Seven, Inc., Apple REIT Eight, Inc. and Apple REIT Nine, Inc. Until May 2007, members of the Companys Board of
Directors were also on the board of Apple Hospitality Two, Inc. and, until October 2007, were on the board of Apple Hospitality Five, Inc.



14



---

##### Table of Contents

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.

Seasonality

The hotel industry historically has been
seasonal in nature. Seasonal variations in occupancy at the Companys 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.

Recent Accounting Pronouncements

In September 2006, the Financial Accounting Standards Board (FASB) issued Statement No. 157, Fair Value Measurements (SFAS 157).
SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. The Statement applies under other accounting pronouncements that require or permit fair value measurements.
Accordingly, this Statement does not require any new fair value measurements. In February 2008, the FASB released FASB Staff Position (FSP) FAS 157-2  Effective Date of FASB Statement No. 157, which defers the effective date of SFAS
No. 157 to fiscal years beginning after November 15, 2008 for all nonfinancial assets and liabilities, except those items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually).
The effective date of the statement related to those items not covered by the deferral (all financial assets and liabilities or nonfinancial assets and liabilities recorded at fair value on a recurring basis) is for fiscal years beginning after
November 15, 2007. The adoption of this statement did not have and is not anticipated to have a material impact on the Companys results of operations or financial position.

In February 2007, FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities(SFAS 159). SFAS
159 permits entities to choose to measure many financial instruments and certain other items at fair value. The objective of the guidance is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported
earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. SFAS 159 is effective as of the beginning of the first fiscal year that begins after November 15, 2007. SFAS is
effective for the Company beginning January 1, 2008. The Company has elected not to use the fair value measurement provisions of SFAS 159 and therefore, adoption of this standard did not have an impact on the financial statements.

In March 2008, FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities, an Amendment of FASB Statement
No. 133 (SFAS 161). SFAS 161 is intended to improve transparency in financial reporting by requiring enhanced disclosures of an entitys derivative instruments and hedging activities and their effects on the entitys
financial position, financial performance, and cash flows. SFAS 161 applies to all derivative instruments within the scope of SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities (SFAS 133). It also
applies to non-derivative hedging instruments and all hedged items designated and qualifying as hedges under SFAS 133. SFAS 161 is effective prospectively for financial statements issued for fiscal years and interim periods beginning after



15



---

##### Table of Contents

November 15, 2008, with early application encouraged. The Company does not currently have any instruments that qualify within the scope of SFAS 133, and
therefore the adoption of this statement is not anticipated to have a material impact on the Companys financial statements.

In May
2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles (SFAS 162). SFAS 162 identifies the sources of accounting principles and the framework for selecting the principles to be used in
the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles in the United States. SFAS 162 is effective 60 days following the Securities and Exchange
Commissions (SEC) approval of the Public Company Accounting Oversight Board amendments to AU Section 411, The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles. The Company is currently
evaluating the potential impact, if any, of the adoption of SFAS 162 on its financial statements.

Subsequent Events

In July 2008, the Company declared and paid approximately $6.8 million, or $.075 per share, in distributions to its common shareholders of which $3.0
million or 271,917 Units were reinvested under the Companys Dividend Reinvestment Plan.

On July 21, 2008, the Company redeemed
351,772 Units in the amount of $3.9 million under its Unit Redemption Program.



|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 June 30, 2008, 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 is exposed to changes in short term interest rates paid on its line of credit. Based on the balance of the Companys
line of credit at June 30, 2008, of $2.6 million, every 100 basis points change in interest rates will impact the Companys annual net income by $26,000, all other factors remaining the same.



|Item 4. | Controls and Procedures
|------- | -----------------------

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



16



---

##### Table of Contents

PART II. OTHER INFORMATION



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

Unit Redemption Program

In July 2005, the Company instituted a share redemption program to provide
its shareholders who have held their Units for at least one year with the benefit of limited interim liquidity, by presenting for redemption all or any portion of their Units at any time and in accordance with certain procedures. Once this time
limitation has been met, the Company may, subject to certain conditions and limitations, redeem the Units presented for redemption for cash, to the extent that the Company has sufficient funds available to fund the redemption. If Units are held for
the required one-year period, the Units may be redeemed for a purchase price equal to 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 Unit redemption
program. The following is a summary of redemptions during the second quarter of 2008:

Issuer Purchases of Equity Securities



|           |  |                                |  |                            |       |                                                                             |           |                                                                           |    |  
|---------- |  | ------------------------------ |  | -------------------------- | ----- | --------------------------------------------------------------------------- | --------- | ------------------------------------------------------------------------- | -- | -
|           |  | (a)                            |  | (b)                        |       | (c)                                                                         |           | (d)                                                                       |   
|Period     |  | Total Numberof Units Purchased |  | Average Price Paidper Unit |       | Total Number ofUnits Purchased asPart of PubliclyAnnounced Plansor Programs |           | Maximum Numberof Units that MayYet Be PurchasedUnder the Plans orPrograms |   
|April 2008 |  | 533,501                        |  | $                          | 10.98 |                                                                             | 6,802,483 |                                                                           | (1 | )



|(1) | The maximum number of Units that may be redeemed in any 12 month period is limited to five percent (5.0%) of the
weighted average number of Units outstanding from the beginning of the 12 month period.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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

On May 8, 2008, the Company held an Annual Meeting of Shareholders for the purpose of electing two directors to the Companys Board of Directors. The nominees to the Companys Board of Directors were
Bruce H. Matson and Robert M. Wily, who were current directors of the Company. Mr. Matson and Mr. Wily were nominated for additional three-year terms on the Board of Directors. The election was uncontested, and the nominees were elected.

The total number of votes represented at the Annual Meeting of Shareholders was 90,618,112. The voting results were as follows:



|                |  |            |  |                       
|--------------- |  | ---------- |  | ----------------------
|Nominee         |  | Votes For  |  | Votes Withheld/against
|Bruce H. Matson |  | 90,255,881 |  | 362,231               
|Robert M. Wily  |  | 90,260,373 |  | 357,739               

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



17



---

##### Table of Contents

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



|               |  |                                                                                                                                                                                                             
|-------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |  | Description                                                                                                                                                                                                 
|3.1            |  | Articles of Incorporation of the Company. (Incorporated by reference to Exhibit 3.1 to the Companys registration statement on Form S-11 (SEC File No. 333-112169) effective April 23, 2004).               
|               | 
|3.2            |  | Bylaws of the Company. (Incorporated by reference to Exhibit 3.2 to the Companys Post-Effective Amendment No. 4 to Form S-11 (SEC File No. 333-112169) effective June 14,
2005).                           
|               | 
|31.1           |  | Certification of the Companys Chief Executive Officer pursuant to 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).



18



---

##### Table of Contents

SIGNATURES

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



|                     |  |                                                                                             |  |  |  |                     
|-------------------- |  | ------------------------------------------------------------------------------------------- |  |  |  | --------------------
|APPLE REIT SIX, INC. |  |                                                                                             |  | 
|                     |  |                                                                                             | 
|By:                  |  | /s/ GLADE M. KNIGHT                                                                         |  |  |  | Date: August 4, 2008
|                     |  | Glade M. Knight,                                                                            |  |  |  |                     
|                     |  | Chairman of the Board, Chief Executive Officer, and President (Principal Executive Officer) |  |  |  |                     
|                     |  |                                                                                             | 
|By:                  |  | /s/ BRYAN PEERY                                                                             |  |  |  | Date: August 4, 2008
|                     |  | Bryan Peery,                                                                                |  |  |  |                     
|                     |  | Chief Financial Officer (Principal Financial and Principal Accounting Officer)              |  |  |  |                     



19