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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, 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, 2010         
|  |                                                                                                                                                
|o | TRANSITION
 REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT
 OF 1934 FOR THE TRANSITION PERIOD FROM ________ TO ________

|                                                               |  |                                  
|-------------------------------------------------------------- |  | ---------------------------------
|Commission
 File Number 000-53175                             
|                                                               |  |                                  
|Apple
 REIT Eight, Inc.                                       
|(Exact
name of registrant as specified in its charter)        
|                                                               |  |                                  
|Virginia                                                       |  | 20- 8268625                      
|(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  o

Indicate by
check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was
required to submit and post such files).     Yes  o    No  o

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


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

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

Number of registrants
common shares outstanding as of August 1, 2010: 94,222,583

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Apple REIT Eight, Inc.
FORM 10-Q
INDEX

|           |          |                                                                                        |                                                                                                                     |    |             
|---------- | -------- | -------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------- | -- | ------------
|           |          |                                                                                        |                                                                                                                     |    | Page
 Number
|           |          |                                                                                        |                                                                                                                     |    |             
|PART I.    |          | FINANCIAL
 INFORMATION                                                                 |                                                                                                                     |   
|           |          |                                                                                        |                                                                                                                     |    |             
|           | Item 1.  | Financial
 Statements (Unaudited)                                                      |                                                                                                                     |   
|           |          |                                                                                        | Consolidated Balance Sheets June 30, 2010
 and December 31, 2009                                                   |    | 3           
|           |          |                                                                                        | Consolidated Statements of Operations and
 Comprehensive Income  Three and six months ended June 30, 2010 and 2009 |    | 4           
|           |          |                                                                                        | Consolidated Statements of Cash Flows  Six
 months ended June 30, 2010 and 2009                                    |    | 5           
|           |          |                                                                                        | Notes to Consolidated Financial Statements                                                                          |    | 6           
|           | Item
 2. | Managements Discussion and Analysis of Financial Condition and Results
 of Operations |                                                                                                                     | 11
|           | Item 3.  | Quantitative and Qualitative Disclosures About Market Risk                             |                                                                                                                     | 19
|           | Item
 4. | Controls and Procedures                                                                |                                                                                                                     | 19
|           |          |                                                                                        |                                                                                                                     |    |             
|PART II.   |          | OTHER INFORMATION                                                                      |                                                                                                                     |   
|           |          |                                                                                        |                                                                                                                     |    |             
|           | Item 1.  | Legal
 Proceedings (not applicable)                                                    |                                                                                                                     |   
|           | Item 1A. | Risk Factors
 (not applicable)                                                         |                                                                                                                     |   
|           | Item
 2. | Unregistered Sales of Equity Securities and Use of Proceeds                            |                                                                                                                     | 20
|           | Item 3.  | Defaults
 Upon Senior Securities (not applicable)                                      |                                                                                                                     |   
|           | Item 4.  | (Removed and
 Reserved)                                                                |                                                                                                                     |   
|           | Item 5.  | Other
 Information (not applicable)                                                    |                                                                                                                     |   
|           | Item
 6. | Exhibits                                                                               |                                                                                                                     | 21
|           |          |                                                                                        |                                                                                                                     |   
|Signatures |          | 22                                                                                    

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, Residence Inn® by Marriott, Courtyard® by Marriott,
Marriott®, and Renaissance® 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 Worldwide or one or more of its affiliates. For
convenience, the applicable trademark or service mark symbol has been omitted
but will be deemed to be included wherever the above referenced terms are used.

2

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Apple REIT Eight, Inc.Consolidated Balance Sheets
(Unaudited)
(In thousands, except share data)

|                                                                                                                                 |  |                |          |                    |   |          |  
|-------------------------------------------------------------------------------------------------------------------------------- |  | -------------- | -------- | ------------------ | - | -------- | -
|                                                                                                                                 |  | June 30,
 2010 |          | December 31,
 2009 |  
|                                                                                                                                 |  |                |          |                    |  
|                                                                                                                                 |  |                |          |                    |   |          |  
|ASSETS                                                                                                                           |  |                |          |                    |   |          |  
|Investment in hotels, net of accumulated
 depreciation of $72,681 and $55,282                                                    |  | $              | 961,857  |                    | $ | 974,773  |  
|Restricted cash-furniture, fixtures and
 other escrows                                                                           |  |                | 10,107   |                    |   | 12,268   |  
|Due from third party managers, net                                                                                               |  |                | 9,010    |                    |   | 3,919    |  
|Other assets, net                                                                                                                |  |                | 4,698    |                    |   | 7,891    |  
|                                                                                                                                 |  |                |          |                    |   |          |  
|TOTAL ASSETS                                                                                                                     |  | $              | 985,672  |                    | $ | 998,851  |  
|                                                                                                                                 |  |                |          |                    |   |          |  
|                                                                                                                                 |  |                |          |                    |   |          |  
|LIABILITIES                                                                                                                      |  |                |          |                    |   |          |  
|Accounts payable and accrued expenses                                                                                            |  | $              | 15,185   |                    | $ | 14,465   |  
|Intangible liabilities, net                                                                                                      |  |                | 11,032   |                    |   | 11,112   |  
|Notes payable                                                                                                                    |  |                | 195,373  |                    |   | 184,175  |  
|                                                                                                                                 |  |                |          |                    |   |          |  
|TOTAL LIABILITIES                                                                                                                |  |                | 221,590  |                    |   | 209,752  |  
|                                                                                                                                 |  |                |          |                    |   |          |  
|                                                                                                                                 |  |                |          |                    |   |          |  
|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 94,301,213 and
 93,643,430 shares |  |                |         |                    |   |         |  
|Series B convertible preferred stock, no
 par value, authorized 240,000 shares; issued and outstanding 240,000 shares            |  |                | 24       |                    |   | 24       |  
|Common stock, no par value, authorized
 200,000,000 shares; issued and outstanding 94,301,213 and 93,643,430 shares              |  |                | 934,990  |                    |   | 927,269  |  
|Distributions greater than net income                                                                                            |  |                | (170,932 | )                  |   | (140,598 | )
|Accumulated other comprehensive income                                                                                           |  |                |         |                    |   | 2,404    |  
|                                                                                                                                 |  |                |          |                    |   |          |  
|TOTAL SHAREHOLDERS EQUITY                                                                                                       |  |                | 764,082  |                    |   | 789,099  |  
|                                                                                                                                 |  |                |          |                    |   |          |  
|TOTAL LIABILITIES AND SHAREHOLDERS EQUITY                                                                                       |  | $              | 985,672  |                    | $ | 998,851  |  
|                                                                                                                                 |  |                |          |                    |   |          |  

See notes to
consolidated financial statements.

3

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Apple REIT Eight, Inc.Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
(In thousands, except per share data)

|                                                                |  |                                      |        |                                      |   |                                    |   |                                    |        |   |   |        |  
|--------------------------------------------------------------- |  | ------------------------------------ | ------ | ------------------------------------ | - | ---------------------------------- | - | ---------------------------------- | ------ | - | - | ------ | -
|                                                                |  | Three
 months
 ended
 June 30,
 2010 |        | Three
 months
 ended
 June 30,
 2009 |   | Six
 months
 ended
 June 30,
 2010 |   | Six
 months
 ended
 June 30,
 2009 |       
|                                                                |  |                                      |       
|Revenues:                                                       |  |                                      |        |                                      |   |                                    |   |                                    |        |   |   |        |  
|Room revenue                                                    |  | $                                    | 46,084 |                                      | $ | 42,340                             |   | $                                  | 82,639 |   | $ | 76,519 |  
|Other revenue                                                   |  |                                      | 3,190  |                                      |   | 3,196                              |   |                                    | 6,038  |   |   | 5,977  |  
|                                                                |  |                                      |        |                                      |   |                                    |   |                                    |        |   |   |        |  
|Total revenue                                                   |  |                                      | 49,274 |                                      |   | 45,536                             |   |                                    | 88,677 |   |   | 82,496 |  
|                                                                |  |                                      |        |                                      |   |                                    |   |                                    |        |   |   |        |  
|Expenses:                                                       |  |                                      |        |                                      |   |                                    |   |                                    |        |   |   |        |  
|Operating expense                                               |  |                                      | 12,328 |                                      |   | 11,752                             |   |                                    | 23,353 |   |   | 22,196 |  
|Hotel administrative expense                                    |  |                                      | 3,987  |                                      |   | 4,164                              |   |                                    | 7,723  |   |   | 8,146  |  
|Sales and marketing                                             |  |                                      | 3,737  |                                      |   | 3,306                              |   |                                    | 6,851  |   |   | 6,332  |  
|Utilities                                                       |  |                                      | 1,857  |                                      |   | 1,814                              |   |                                    | 3,787  |   |   | 3,784  |  
|Repair and maintenance                                          |  |                                      | 2,421  |                                      |   | 2,248                              |   |                                    | 4,606  |   |   | 4,367  |  
|Franchise fees                                                  |  |                                      | 1,965  |                                      |   | 1,873                              |   |                                    | 3,472  |   |   | 3,374  |  
|Management fees                                                 |  |                                      | 1,675  |                                      |   | 1,596                              |   |                                    | 3,054  |   |   | 2,923  |  
|Taxes, insurance and other                                      |  |                                      | 2,711  |                                      |   | 2,595                              |   |                                    | 5,286  |   |   | 5,019  |  
|Land lease expense                                              |  |                                      | 1,597  |                                      |   | 1,590                              |   |                                    | 3,194  |   |   | 3,181  |  
|General and administrative                                      |  |                                      | 1,539  |                                      |   | 1,298                              |   |                                    | 2,736  |   |   | 2,360  |  
|Depreciation expense                                            |  |                                      | 8,747  |                                      |   | 8,110                              |   |                                    | 17,399 |   |   | 15,975 |  
|                                                                |  |                                      |        |                                      |   |                                    |   |                                    |        |   |   |        |  
|Total expenses                                                  |  |                                      | 42,564 |                                      |   | 40,346                             |   |                                    | 81,461 |   |   | 77,657 |  
|                                                                |  |                                      |        |                                      |   |                                    |   |                                    |        |   |   |        |  
|Operating income                                                |  |                                      | 6,710  |                                      |   | 5,190                              |   |                                    | 7,216  |   |   | 4,839  |  
|                                                                |  |                                      |        |                                      |   |                                    |   |                                    |        |   |   |        |  
|Investment income, net                                          |  |                                      | 7      |                                      |   | 5                                  |   |                                    | 3,023  |   |   | 17     |  
|Interest expense                                                |  |                                      | (2,306 | )                                    |   | (1,867                             | ) |                                    | (4,439 | ) |   | (3,410 | )
|                                                                |  |                                      |        |                                      |   |                                    |   |                                    |        |   |   |        |  
|                                                                |  |                                      |        |                                      |   |                                    |   |                                    |        |   |   |        |  
|Net income                                                      |  | $                                    | 4,411  |                                      | $ | 3,328                              |   | $                                  | 5,800  |   | $ | 1,446  |  
|                                                                |  |                                      |        |                                      |   |                                    |   |                                    |        |   |   |        |  
|                                                                |  |                                      |        |                                      |   |                                    |   |                                    |        |   |   |        |  
|Unrealized gain on
 investments                                 |  |                                      |       |                                      |   | 1,206                              |   |                                    |       |   |   | 1,577  |  
|                                                                |  |                                      |        |                                      |   |                                    |   |                                    |        |   |   |        |  
|                                                                |  |                                      |        |                                      |   |                                    |   |                                    |        |   |   |        |  
|Comprehensive income                                            |  | $                                    | 4,411  |                                      | $ | 4,534                              |   | $                                  | 5,800  |   | $ | 3,023  |  
|                                                                |  |                                      |        |                                      |   |                                    |   |                                    |        |   |   |        |  
|                                                                |  |                                      |        |                                      |   |                                    |   |                                    |        |   |   |        |  
|Basic and diluted net
 income per common share                  |  | $                                    | 0.05   |                                      | $ | 0.04                               |   | $                                  | 0.06   |   | $ | 0.02   |  
|                                                                |  |                                      |        |                                      |   |                                    |   |                                    |        |   |   |        |  
|                                                                |  |                                      |        |                                      |   |                                    |   |                                    |        |   |   |        |  
|Weighted average common
 shares outstanding - basic and diluted |  |                                      | 94,069 |                                      |   | 92,825                             |   |                                    | 93,920 |   |   | 92,663 |  
|                                                                |  |                                      |        |                                      |   |                                    |   |                                    |        |   |   |        |  
|Distributions declared and
 paid per common share               |  | $                                    | 0.19   |                                      | $ | 0.20                               |   | $                                  | 0.39   |   | $ | 0.42   |  
|                                                                |  |                                      |        |                                      |   |                                    |   |                                    |        |   |   |        |  

See notes to consolidated financial statements.

4

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Apple REIT Eight, Inc.Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)

|                                                                                                   |  |                                  |         |                                  |   |         |  
|-------------------------------------------------------------------------------------------------- |  | -------------------------------- | ------- | -------------------------------- | - | ------- | -
|                                                                                                   |  | Six months
 ended
 June 30, 2010 |         | Six months
 ended
 June 30, 2009 |  
|                                                                                                   |  |                                 
|                                                                                                   |  |                                  |         |                                  |   |         |  
|Cash flow
 from operating activities:                                                              |  |                                  |         |                                  |   |         |  
|Net income                                                                                         |  | $                                | 5,800   |                                  | $ | 1,446   |  
|Adjustments to reconcile net income to cash provided by operating
 activities:                     |  |                                  |         |                                  |   |         |  
|Depreciation                                                                                       |  |                                  | 17,399  |                                  |   | 15,975  |  
|Amortization of deferred financing costs, fair value adjustments and
 other non-cash expenses, net |  |                                  | 316     |                                  |   | (199    | )
|Net realized gain on sale of investments                                                           |  |                                  | (3,011  | )                                |   |        |  
|Changes in operating assets and liabilities:                                                       |  |                                  |         |                                  |   |         |  
|(Increase)/decrease in other assets                                                                |  |                                  | (693    | )                                |   | 1,349   |  
|Increase in funds due from third party managers                                                    |  |                                  | (5,091  | )                                |   | (4,167  | )
|Increase in accounts payable and accrued expenses                                                  |  |                                  | 1,521   |                                  |   | 3,737   |  
|                                                                                                   |  |                                  |         |                                  |   |         |  
|Net cash provided by
 operating activities                                                         |  |                                  | 16,241  |                                  |   | 18,141  |  
|                                                                                                   |  |                                  |         |                                  |   |         |  
|Cash flow from
 investing activities:                                                              |  |                                  |         |                                  |   |         |  
|(Increase)/decrease in capital improvement reserves                                                |  |                                  | 2,467   |                                  |   | (1,112  | )
|Proceeds from sale of equity securities - available for sale                                       |  |                                  | 3,804   |                                  |   |        |  
|Investment in other assets                                                                         |  |                                  |        |                                  |   | (3,240  | )
|Capital improvements                                                                               |  |                                  | (5,284  | )                                |   | (15,274 | )
|                                                                                                   |  |                                  |         |                                  |   |         |  
|Net cash provided by (used
 in) investing activities                                               |  |                                  | 987     |                                  |   | (19,626 | )
|                                                                                                   |  |                                  |         |                                  |   |         |  
|Cash flow
 from financing activities:                                                              |  |                                  |         |                                  |   |         |  
|Net proceeds related to issuance of Units                                                          |  |                                  | 13,057  |                                  |   | 13,931  |  
|Redemptions of Units                                                                               |  |                                  | (5,455  | )                                |   | (7,149  | )
|Cash distributions paid to common shareholders                                                     |  |                                  | (36,134 | )                                |   | (39,044 | )
|Net proceeds from line of credit                                                                   |  |                                  | 12,405  |                                  |   | 34,780  |  
|Payments of notes payable                                                                          |  |                                  | (1,101  | )                                |   | (1,033  | )
|                                                                                                   |  |                                  |         |                                  |   |         |  
|Net cash (used in) provided
 by financing activities                                               |  |                                  | (17,228 | )                                |   | 1,485   |  
|                                                                                                   |  |                                  |         |                                  |   |         |  
|Net change in cash and cash
 equivalents                                                           |  |                                  |        |                                  |   |        |  
|                                                                                                   |  |                                  |         |                                  |   |         |  
|Cash and cash equivalents,
 beginning of period                                                    |  |                                  |        |                                  |   |        |  
|                                                                                                   |  |                                  |         |                                  |   |         |  
|                                                                                                   |  |                                  |         |                                  |   |         |  
|Cash and cash equivalents,
 end of period                                                          |  | $                                |        |                                  | $ |        |  
|                                                                                                   |  |                                  |         |                                  |   |         |  

See notes to
consolidated financial statements.

5

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APPLE REIT EIGHT, INC.

Notes
to Consolidated Financial Statements

1. General Information and Summary of
Significant Accounting Policies

Basis of Presentation

The
accompanying unaudited consolidated financial statements have been prepared in
accordance with the rules and regulations for reporting on Form 10-Q.
Accordingly, they do not include all of the information required by accounting
principles generally accepted in the United States for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. These unaudited financial statements should be read in conjunction
with the Companys audited financial statements included in its 2009 Annual
Report on Form 10-K. Operating results for the three and six months ended June
30, 2010 are not necessarily indicative of the results that may be expected for
the period ending December 31, 2010.

Organization

Apple REIT
Eight, Inc., together with its wholly owned subsidiaries, (the Company) is a
Virginia corporation that has elected to be treated as a real estate investment
trust (REIT) for federal income tax purposes. The Company was formed to
invest in hotels, residential apartment communities and other income-producing
real estate assets in selected metropolitan areas in the United States. Initial
capitalization occurred on January 22, 2007, when 10 Units, each Unit
consisting of one common share and one Series A preferred share, were purchased
by Apple Eight Advisors, Inc. (A8A), owned by Glade M. Knight, the Companys
Chairman and Chief Executive Officer, and 240,000 Series B convertible shares
were also purchased individually by Glade M. Knight. The Company began
operations on November 9, 2007 when it acquired its first hotels. The Company
completed its best efforts offering of Units in April 2008. The Companys
fiscal year end is December 31. As of June 30, 2010, the Company owned 51
hotels. 45 of the hotels were acquired in 2008 and six in late 2007. The
Company has no foreign operations or assets and its operating structure
includes two segments. The consolidated financial statements include the
accounts of the Company and its subsidiaries. All intercompany accounts and
transactions have been eliminated.

Significant Accounting Policies

Use of Estimates

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

Earnings Per Common Share

Basic earnings
per common share is computed as net income divided by the weighted average
number of common shares outstanding during the period. Diluted earnings per
share is calculated after giving effect to all potential common shares that
were dilutive and outstanding for the period. There were no shares with a
dilutive effect for the three and six months ended June 30, 2010 or 2009. As a
result, basic and dilutive outstanding shares were the same. Series B
convertible preferred shares are not included in earnings per common share
calculations until such time the Series B convertible preferred shares are
converted to common shares.

Recent Accounting Pronouncements

In June 2009,
the Financial Accounting Standards Board (FASB) issued a pronouncement
(Accounting Standards Update No. 2009-17) which amends its guidance surrounding
a companys analysis to determine

6

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whether any of
its variable interests constitute controlling financial interests in a variable
interest entity. This analysis identifies the primary beneficiary of a variable
interest entity as the enterprise that has both of the following characteristics:
(a) the power to direct the activities of a variable interest entity that most
significantly impact the entitys economic performance, and (b) the obligation
to absorb losses of the entity that could potentially be significant to the variable
interest entity or the right to receive benefits from the entity that could
potentially be significant to the variable interest entity. Additionally, an
enterprise is required to assess whether it has an implicit financial
responsibility to ensure that a variable interest entity operates as designed
when determining whether it has the power to direct the activities of the
variable interest entity that most significantly impact the entitys economic
performance. The new pronouncement also requires ongoing assessments of whether
an enterprise is the primary beneficiary of a variable interest entity and
enhanced disclosure about an enterprises involvement with a variable interest
entity. This pronouncement was adopted by the Company in the first quarter of
2010. The adoption of this standard did not have a material impact on the
Companys consolidated financial statements.

2. Other Assets

Included in
other assets, net on the Companys consolidated balance sheet is a 24%
ownership interest in Apple Air Holding, LLC (Apple Air), purchased by the
Company for $3.2 million in cash in 2009. The other members of Apple Air are
Apple REIT Six, Inc., Apple REIT Seven, Inc. and Apple REIT Nine, Inc. The
interest was purchased to allow the Company access to two Lear jets for asset
management and renovation purposes. The Company has recorded its share of
income and losses of the entity under the equity method of accounting and
adjusted its investment in Apple Air accordingly. The Companys ownership
interest was $2.6 million at June 30, 2010 and $2.8 million at December 31,
2009 and is included in Other assets, net on the Companys consolidated balance
sheets. For the three months ended June 30, 2010 and 2009, the Company recorded
a loss of approximately $0.1 million in each period as its share of the net
loss of Apple Air. For the six months ended June 30, 2010 and 2009, the Company
recorded a loss of approximately $0.2 million in each period as its share of
the net loss of Apple Air. This loss primarily relates to depreciation of the
aircraft, and is included in General and Administrative expense on the
Companys consolidated statements of operations.

At December
31, 2009 the Company held equity securities classified as available-for-sale,
in accordance with the FASBs pronouncement for accounting for certain investments in debt and equity securities.
These securities were included in Other assets, net on the Companys
consolidated balance sheet at December 31, 2009 at fair value of $3.2 million.
Unrealized gains were reported as accumulated other comprehensive income, $2.4
million at December 31, 2009. In the first quarter of 2010, the Company sold
these equity securities, resulting in a realized gain of $3.0 million which is
recorded in Investment income, net on the Companys consolidated statement of
operations.

3. Notes Payable

In November
2008, the Company entered into a $75 million unsecured line of credit with a
commercial bank. The applicable interest rate is equal to LIBOR (the London
Interbank Offered Rate, 0.35% at June 30, 2010) plus 1.75% annually. Interest
payments are due monthly. The principal must be paid by the maturity date of
November 2010, and may be prepaid without penalty. At June 30, 2010, the credit
line had an outstanding principal balance of $70.8 million. At December 31,
2009, the credit line had an outstanding principal balance of $58.3 million.
The line of credit is unsecured, however does contain a negative pledge
agreement that requires approval from the lender to materially change the Companys
investment in 10 properties including using those 10 properties as security for
additional financing.

4. Fair Value of Financial Instruments

The Company
estimates the fair value of its fixed rate debt by discounting the future cash
flows of each instrument at estimated market rates consistent with the maturity
of the debt obligation with similar credit policies. Market rates take into
consideration general market conditions and maturity. As of June 30, 2010, the
carrying value and estimated fair value of the Companys debt was $195.4
million and $191.4 million. As of December 31, 2009, the carrying value and
estimated fair value of the Companys debt was $184.2

7

---



million and
$186.0 million. The carrying value of the Companys other financial instruments
approximates fair value due to the short-term nature of these financial
instruments.

5. Related Parties

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

The Company is
party to an advisory agreement with A8A, pursuant to which A8A provides
management services to the Company. An annual fee ranging from 0.1% to 0.25% of
total equity proceeds received by the Company, in addition to certain
reimbursable expenses, are payable for these services. A8A utilizes Apple REIT
Six, Inc. to provide these services. Total expenses related to this agreement
totaled $1.6 million for the first six months of 2010 and $1.4 million for the
same period in 2009. Of these total expenses, $0.5 million were fees paid to
A8A for each of the six months ended June 30, 2010 and 2009 and $1.1 million
and $0.9 million were expenses reimbursed by A8A to Apple REIT Six, Inc. for
the six months ended June 30, 2010 and 2009. These expenses are recorded in
General and Administrative expense.

A8A is 100%
owned by Glade M. Knight, Chairman and Chief Executive Officer of the Company.
Mr. Knight is also Chairman and Chief Executive Officer of Apple REIT Six,
Inc., Apple REIT Seven, Inc. and Apple REIT Nine, Inc. Members of the Companys
Board of Directors are also on the boards of Apple REIT Six, Inc., Apple REIT
Seven, Inc. and Apple REIT Nine, Inc.

6. Shareholders Equity

In the second
quarter of 2008, the Company instituted a Dividend Reinvestment Plan for its
shareholders. The plan provides a convenient and cost effective way to increase
shareholder investment in the Company by reinvesting dividends to purchase
additional Units of the Company. The uses of the proceeds from this plan may
include purchasing Units under the Companys Unit Redemption Program, enhancing
properties, satisfying financing obligations and other expenses, increasing
working capital, funding various corporate operations, and acquiring hotels.
The Company has registered 10 million Units for potential issuance under
the plan. During the first six months of 2010, approximately 1.2 million Units
were issued under the plan representing approximately $13.1 million. For the
six months ending June 30, 2009, approximately 1.3 million Units were issued
under the plan representing approximately $13.9 million. Since inception of the
plan through June 30, 2010, the Company has issued approximately 5.1 million
Units representing approximately $55.9 million.

The Company
has a Unit Redemption Program to provide limited interim liquidity to its
shareholders who have held their Units for at least one year. Shareholders may
request redemption of Units for a purchase price equal to 92% of the price paid
per Unit if the Units have been owned for less than three years, or 100% of the
price paid per Unit if the Units have been owned more than three years. The
maximum number of Units that may be redeemed in any 12-month period will be
three percent of the weighted average number of Units outstanding during the
12-month period immediately prior to the date of redemption. The Company
reserves the right to change the purchase price for redemptions, reject any request
for redemption, or otherwise amend the terms of, suspend, or terminate the Unit
Redemption Program. During the six months ended June 30, 2010, the Company
redeemed approximately 529 thousand Units in the amount of $5.5 million under
the program. For the first six months of 2009, the Company redeemed
approximately 696 thousand Units in the amount of $7.1 million. Since inception
of the program through June 30, 2010, the Company has redeemed approximately
1.9 million Units representing approximately $19.7 million.

7. Segments

The Company
has two reportable segments (the New York hotel and all other hotels). The
Company does not allocate corporate-level accounts to its operating segments,
including corporate general and

8

---



administrative
expenses, non-operating interest income and interest expense. Dollar amounts
are in thousands.

|                                    |  |                                          |         |                   |   |           |   |              |        |   |   |           |  
|----------------------------------- |  | ---------------------------------------- | ------- | ----------------- | - | --------- | - | ------------ | ------ | - | - | --------- | -
|                                    |  | For the three months ended June 30, 2010 |        
|                                    |  |                                          |        
|                                    |  | New York,
 New York 
 Hotel              |         | All Other
 Hotels |   | Corporate |   | Consolidated |       
|                                    |  |                                          |         |                   |   |           |   |              |       
|Total
 revenue                      |  | $                                        | 4,860   |                   | $ | 44,414    |   | $            |       |   | $ | 49,274    |  
|Hotel
 operating expenses           |  |                                          | 4,408   |                   |   | 27,870    |   |              |       |   |   | 32,278    |  
|General and
 administrative expense |  |                                          |        |                   |   |          |   |              | 1,539  |   |   | 1,539     |  
|Depreciation
 expense               |  |                                          | 1,602   |                   |   | 7,145     |   |              |       |   |   | 8,747     |  
|                                    |  |                                          |         |                   |   |           |   |              |        |   |   |           |  
|Operating
 income/(loss)            |  |                                          | (1,150  | )                 |   | 9,399     |   |              | (1,539 | ) |   | 6,710     |  
|Investment
 income, net             |  |                                          |        |                   |   |          |   |              | 7      |   |   | 7         |  
|Interest
 expense                   |  |                                          |        |                   |   | (1,928    | ) |              | (378   | ) |   | (2,306    | )
|                                    |  |                                          |         |                   |   |           |   |              |        |   |   |           |  
|Net
 income/(loss)                  |  | $                                        | (1,150  | )                 | $ | 7,471     |   | $            | (1,910 | ) | $ | 4,411     |  
|                                    |  |                                          |         |                   |   |           |   |              |        |   |   |           |  
|                                    |  |                                          |         |                   |   |           |   |              |        |   |   |           |  
|Total assets                        |  | $                                        | 121,298 |                   | $ | 861,767   |   | $            | 2,607  |   | $ | 985,672   |  
|                                    |  |                                          |         |                   |   |           |   |              |        |   |   |           |  
|                                    |  | For the six months ended June 30, 2010   |        
|                                    |  |                                          |        
|                                    |  | New York,
 New York 
 Hotel              |         | All Other
 Hotels |   | Corporate |   | Consolidated |       
|                                    |  |                                          |         |                   |   |           |   |              |       
|Total
 revenue                      |  | $                                        | 8,808   |                   | $ | 79,869    |   | $            |       |   | $ | 88,677    |  
|Hotel
 operating expenses           |  |                                          | 8,482   |                   |   | 52,844    |   |              |       |   |   | 61,326    |  
|General and
 administrative expense |  |                                          |        |                   |   |          |   |              | 2,736  |   |   | 2,736     |  
|Depreciation
 expense               |  |                                          | 3,195   |                   |   | 14,204    |   |              |       |   |   | 17,399    |  
|                                    |  |                                          |         |                   |   |           |   |              |        |   |   |           |  
|Operating
 income/(loss)            |  |                                          | (2,869  | )                 |   | 12,821    |   |              | (2,736 | ) |   | 7,216     |  
|Investment
 income, net             |  |                                          |        |                   |   |          |   |              | 3,023  |   |   | 3,023     |  
|Interest
 expense                   |  |                                          |        |                   |   | (3,733    | ) |              | (706   | ) |   | (4,439    | )
|                                    |  |                                          |         |                   |   |           |   |              |        |   |   |           |  
|Net
 income/(loss)                  |  | $                                        | (2,869  | )                 | $ | 9,088     |   | $            | (419   | ) | $ | 5,800     |  
|                                    |  |                                          |         |                   |   |           |   |              |        |   |   |           |  
|                                    |  |                                          |         |                   |   |           |   |              |        |   |   |           |  
|Total assets                        |  | $                                        | 121,298 |                   | $ | 861,767   |   | $            | 2,607  |   | $ | 985,672   |  
|                                    |  |                                          |         |                   |   |           |   |              |        |   |   |           |  
|                                    |  | For the three months ended June 30, 2009 |        
|                                    |  |                                          |        
|                                    |  | New York,
 New York 
 Hotel              |         | All Other
 Hotels |   | Corporate |   | Consolidated |       
|                                    |  |                                          |         |                   |   |           |   |              |       
|Total
 revenue                      |  | $                                        | 3,149   |                   | $ | 42,387    |   | $            |       |   | $ | 45,536    |  
|Hotel
 operating expenses           |  |                                          | 3,768   |                   |   | 27,170    |   |              |       |   |   | 30,938    |  
|General and
 administrative expense |  |                                          |        |                   |   |          |   |              | 1,298  |   |   | 1,298     |  
|Depreciation
 expense               |  |                                          | 1,432   |                   |   | 6,678     |   |              |       |   |   | 8,110     |  
|                                    |  |                                          |         |                   |   |           |   |              |        |   |   |           |  
|Operating
 income/(loss)            |  |                                          | (2,051  | )                 |   | 8,539     |   |              | (1,298 | ) |   | 5,190     |  
|Investment
 income, net             |  |                                          |        |                   |   |          |   |              | 5      |   |   | 5         |  
|Interest
 (expense)/income          |  |                                          | 305     |                   |   | (1,944    | ) |              | (228   | ) |   | (1,867    | )
|                                    |  |                                          |         |                   |   |           |   |              |        |   |   |           |  
|Net
 income/(loss)                  |  | $                                        | (1,746  | )                 | $ | 6,595     |   | $            | (1,521 | ) | $ | 3,328     |  
|                                    |  |                                          |         |                   |   |           |   |              |        |   |   |           |  
|                                    |  |                                          |         |                   |   |           |   |              |        |   |   |           |  
|Total assets                        |  | $                                        | 122,412 |                   | $ | 880,358   |   | $            | 5,789  |   | $ | 1,008,559 |  
|                                    |  |                                          |         |                   |   |           |   |              |        |   |   |           |  
|                                    |  | For the six months ended June 30, 2009   |        
|                                    |  |                                          |        
|                                    |  | New York,
 New York 
 Hotel              |         | All Other
 Hotels |   | Corporate |   | Consolidated |       
|                                    |  |                                          |         |                   |   |           |   |              |       
|Total
 revenue                      |  | $                                        | 4,972   |                   | $ | 77,524    |   | $            |       |   | $ | 82,496    |  
|Hotel
 operating expenses           |  |                                          | 7,119   |                   |   | 52,203    |   |              |       |   |   | 59,322    |  
|General and
 administrative expense |  |                                          |        |                   |   |          |   |              | 2,360  |   |   | 2,360     |  
|Depreciation
 expense               |  |                                          | 2,743   |                   |   | 13,232    |   |              |       |   |   | 15,975    |  
|                                    |  |                                          |         |                   |   |           |   |              |        |   |   |           |  
|Operating
 income/(loss)            |  |                                          | (4,890  | )                 |   | 12,089    |   |              | (2,360 | ) |   | 4,839     |  
|Investment
 income, net             |  |                                          |        |                   |   |          |   |              | 17     |   |   | 17        |  
|Interest
 (expense)/income          |  |                                          | 641     |                   |   | (3,673    | ) |              | (378   | ) |   | (3,410    | )
|                                    |  |                                          |         |                   |   |           |   |              |        |   |   |           |  
|Net
 income/(loss)                  |  | $                                        | (4,249  | )                 | $ | 8,416     |   | $            | (2,721 | ) | $ | 1,446     |  
|                                    |  |                                          |         |                   |   |           |   |              |        |   |   |           |  
|                                    |  |                                          |         |                   |   |           |   |              |        |   |   |           |  
|Total assets                        |  | $                                        | 122,412 |                   | $ | 880,358   |   | $            | 5,789  |   | $ | 1,008,559 |  

9

---



8. Subsequent Events

In July 2010,
the Company declared and paid approximately $6.1 million in distributions to
its common shareholders, or $0.064167 per outstanding common share. Under the
Companys Dividend Reinvestment Plan, $2.2 million were reinvested, resulting
in the issuance of approximately 198,000 Units.

In July 2010,
the Company redeemed approximately 274,000 Units in the amount of $2.8 million
under its Unit Redemption Program.

10

---



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

This quarterly
report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Such
statements involve known and unknown risks, uncertainties, and other factors
which may cause the actual results, performance, or achievements of the Company
to be materially different from future results, performance or achievements
expressed or implied by such forward-looking statements. Such factors
include, but are not limited to, the ability of the Company to implement its
acquisition strategy and operating strategy; the Companys ability to manage planned
growth; changes in economic cycles, including the current economic recession
throughout the United States, 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. Any forward-looking statement that the Company makes
speaks only as of the date of this report. The Company undertakes no obligation
to publically update or revise any forward-looking statements or cautionary
factors, as a result of new information, future events, or otherwise, except as
required by law.

Overview

Apple REIT
Eight, Inc. together with its wholly owned subsidiaries (the Company) is a
Virginia corporation that has elected to be treated as a real estate investment
trust (REIT) for federal income tax purposes. The Company, which owned 51
properties as of June 30, 2010 and has a limited operating history with its
first hotel acquired on November 9, 2007, was formed to invest in hotels,
residential apartment communities and other real estate in selected
metropolitan areas in the United States. Initial capitalization occurred on
January 22, 2007, when 10 Units, each Unit consisting of one share of
common stock and one share of Series A preferred stock were purchased by Apple
Eight Advisors, Inc. (A8A) and 240,000 shares of Series B Preferred shares
were purchased by Mr. Glade M. Knight, the Companys Chairman and
Chief Executive Officer. The Company completed its best-efforts offering of
Units in April 2008. The Companys fiscal year end is December 31. The
consolidated financial statements include the accounts of the Company and its
subsidiaries. All intercompany transactions and balances have been eliminated
upon consolidation.

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 as
compared to other hotels within their respective local market, in general, has
met the Companys expectations for the period owned. With the significant
decline in economic conditions throughout the United States, overall
performance of the Companys hotels have not met expectations. Although there
is no way to predict future general economic conditions, many industry analysts
believe that hotel industry revenues are improving and will see low single
digit increases in 2010 as compared to 2009.

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 (ADR), revenue per available room (RevPAR), and Market
Yield which compares an individual hotels results to other hotels in its local
market, and expenses, such as hotel operating expenses, general and
administrative and other expenses described below. Although it is not possible
to predict when general economic conditions will improve or their impact on the
hotel industry, with the significant number of renovations (15) of existing
properties by the Company in 2009, the number of hotels that were new (9) when
acquired by the Company, and the expected industry stabilization, the Company
anticipates moderate growth in

11

---



2010 as
compared to 2009 for the Companys hotels. Additionally, with the overall
economic declines, the Company continues to focus on improving market share.
The Companys properties overall are revenue leaders in their respective
markets with an Average RevPAR Index (a comparison of a propertys RevPAR to
the market average) of 132 for the first six months of 2010, a 4% increase from
the same period in 2009 for comparable hotels.

The following
is a summary of the Companys results (in thousands, except statistical data):

|                                         |  |                    |        |                     |     |         |   |                     |   |                 |   |         |   |                     |        |         |     |                     |   |                 |   |     |   |     |  
|---------------------------------------- |  | ------------------ | ------ | ------------------- | --- | ------- | - | ------------------- | - | --------------- | - | ------- | - | ------------------- | ------ | ------- | --- | ------------------- | - | --------------- | - | --- | - | --- | -
|                                         |  | Three months ended |        | Six months ended    |    
|                                         |  |                    |        |                     |    
|(in
 thousands, except statistical data) |  | 6/30/10            |        | Percent of
 Revenue |     | 6/30/09 |   | Percent of
 Revenue |   | Percent
 Change |   | 6/30/10 |   | Percent of
 Revenue |        | 6/30/09 |     | Percent of
 Revenue |   | Percent
 Change |  
|                                         |  |                    |        |                     |     |         |   |                     |   |                 |   |         |   |                     |        |         |     |                     |   |                 |  
|Total revenues                           |  | $                  | 49,274 |                     | 100 | %       | $ | 45,536              |   | 100             | % | 8       | % | $                   | 88,677 |         | 100 | %                   | $ | 82,496          |   | 100 | % | 7   | %
|Hotel direct expenses                    |  |                    | 27,970 |                     | 57  | %       |   | 26,753              |   | 59              | % | 5       | % |                     | 52,846 |         | 60  | %                   |   | 51,122          |   | 62  | % | 3   | %
|Taxes, insurance and other
 expense      |  |                    | 2,711  |                     | 6   | %       |   | 2,595               |   | 6               | % | 4       | % |                     | 5,286  |         | 6   | %                   |   | 5,019           |   | 6   | % | 5   | %
|Land lease expense                       |  |                    | 1,597  |                     | 3   | %       |   | 1,590               |   | 3               | % |        | % |                     | 3,194  |         | 4   | %                   |   | 3,181           |   | 4   | % |    | %
|General and administrative
 expense      |  |                    | 1,539  |                     | 3   | %       |   | 1,298               |   | 3               | % | 19      | % |                     | 2,736  |         | 3   | %                   |   | 2,360           |   | 3   | % | 16  | %
|Depreciation                             |  |                    | 8,747  |                     |     |         |   | 8,110               |   |                 |   | 8       | % |                     | 17,399 |         |     |                     |   | 15,975          |   |     |   | 9   | %
|Investment income, net                   |  |                    | 7      |                     |     |         |   | 5                   |   |                 |   | 40      | % |                     | 3,023  |         |     |                     |   | 17              |   |     |   | N/A |  
|Interest expense                         |  |                    | (2,306 | )                   |     |         |   | (1,867              | ) |                 |   | 24      | % |                     | (4,439 | )       |     |                     |   | (3,410          | ) |     |   | 30  | %
|                                         |  |                    |        |                     |     |         |   |                     |   |                 |   |         |   |                     |        |         |     |                     |   |                 |   |     |   |     |  
|Average RevPAR Index(1)                  |  |                    | 130    |                     |     |         |   | 129                 |   |                 |   | 1       | % |                     | 132    |         |     |                     |   | 127             |   |     |   | 4   | %
|Number of hotels                         |  |                    | 51     |                     |     |         |   | 51                  |   |                 |   |        | % |                     | 51     |         |     |                     |   | 51              |   |     |   |    | %
|Average Daily Rate (ADR)                 |  | $                  | 112    |                     |     |         | $ | 111                 |   |                 |   | 1       | % | $                   | 109    |         |     |                     | $ | 110             |   |     |   | -1  | %
|Occupancy                                |  |                    | 76     | %                   |     |         |   | 70                  | % |                 |   | 9       | % |                     | 70     | %       |     |                     |   | 65              | % |     |   | 8   | %
|RevPAR                                   |  | $                  | 85     |                     |     |         | $ | 78                  |   |                 |   | 9       | % | $                   | 77     |         |     |                     | $ | 71              |   |     |   | 8   | %
|                                         |  |                    |        |                     |     |         |   |                     |   |                 |   |         |   |                     |        |         |     |                     |   |                 |   |     |   |     |  

(1)Statistics calculated
    from data provided by Smith Travel Research, Inc.® and excludes new properties
    open less than 2 years or under renovation during the applicable period.

Hotels Owned

The following
table summarizes the location, brand, manager, date acquired, number of rooms
and gross purchase price for each of the 51 hotels the Company owned at June
30, 2010. All dollar amounts are in thousands.

12

---



|                |  |       |  |                         |  |               |  |                |  |       |  |   |                        | 
|--------------- |  | ----- |  | ----------------------- |  | ------------- |  | -------------- |  | ----- |  | - | ---------------------- | 
|Location        |  | State |  | Brand                   |  | Manager       |  | Date
 Acquired |  | Rooms |  |   | Gross
 Purchase
 Price | 
|                |  |       |  |                         |  |               |  |                |  |       |  |   |                       
|Birmingham      |  | AL    |  | Homewood
 Suites        |  | McKibbon      |  | 5/23/2008      |  | 95    |  | $ | 16,500                 | 
|Rogers          |  | AR    |  | Fairfield
 Inn & Suites |  | Intermountain |  | 2/29/2008      |  | 99    |  |   | 8,000                  | 
|Rogers          |  | AR    |  | Residence
 Inn          |  | Intermountain |  | 2/29/2008      |  | 88    |  |   | 11,744                 | 
|Springdale      |  | AR    |  | Residence
 Inn          |  | Intermountain |  | 3/14/2008      |  | 72    |  |   | 5,606                  | 
|Sacramento      |  | CA    |  | Hilton
 Garden Inn      |  | Dimension     |  | 3/7/2008       |  | 154   |  |   | 27,630                 | 
|Cypress         |  | CA    |  | Courtyard               |  | Dimension     |  | 4/30/2008      |  | 180   |  |   | 31,164                 | 
|Burbank         |  | CA    |  | Residence
 Inn          |  | Marriott      |  | 5/13/2008      |  | 166   |  |   | 50,500                 | 
|Oceanside       |  | CA    |  | Residence Inn           |  | Marriott      |  | 5/13/2008      |  | 125   |  |   | 28,750                 | 
|Tulare          |  | CA    |  | Hampton Inn
 & Suites   |  | Inn Ventures  |  | 6/26/2008      |  | 86    |  |   | 10,331                 | 
|San Jose        |  | CA    |  | Homewood
 Suites        |  | Dimension     |  | 7/2/2008       |  | 140   |  |   | 21,862                 | 
|Tallahassee     |  | FL    |  | Hilton
 Garden Inn      |  | LBA           |  | 1/25/2008      |  | 85    |  |   | 13,200                 | 
|Sanford         |  | FL    |  | SpringHill
 Suites      |  | LBA           |  | 3/14/2008      |  | 105   |  |   | 11,150                 | 
|Jacksonville    |  | FL    |  | Homewood
 Suites        |  | McKibbon      |  | 6/17/2008      |  | 119   |  |   | 23,250                 | 
|Tampa           |  | FL    |  | TownePlace
 Suites      |  | McKibbon      |  | 6/17/2008      |  | 95    |  |   | 11,250                 | 
|Port
 Wentworth |  | GA    |  | Hampton Inn             |  | Newport       |  | 1/2/2008       |  | 106   |  |   | 10,780                 | 
|Savannah        |  | GA    |  | Hilton
 Garden Inn      |  | Newport       |  | 7/31/2008      |  | 105   |  |   | 12,500                 | 
|Overland
 Park  |  | KS    |  | SpringHill
 Suites      |  | True North    |  | 3/17/2008      |  | 102   |  |   | 8,850                  | 
|Overland
 Park  |  | KS    |  | Residence
 Inn          |  | True North    |  | 4/30/2008      |  | 120   |  |   | 15,850                 | 
|Wichita         |  | KS    |  | Courtyard               |  | Intermountain |  | 6/13/2008      |  | 90    |  |   | 8,874                  | 
|Overland
 Park  |  | KS    |  | Fairfield
 Inn & Suites |  | True North    |  | 8/20/2008      |  | 110   |  |   | 12,050                 | 
|Bowling
 Green  |  | KY    |  | Hampton Inn             |  | Newport       |  | 12/6/2007      |  | 130   |  |   | 18,832                 | 
|Marlborough     |  | MA    |  | Residence
 Inn          |  | True North    |  | 1/15/2008      |  | 112   |  |   | 20,200                 | 
|Westford        |  | MA    |  | Hampton Inn
 & Suites   |  | True North    |  | 3/6/2008       |  | 110   |  |   | 15,250                 | 
|Westford        |  | MA    |  | Residence
 Inn          |  | True North    |  | 4/30/2008      |  | 108   |  |   | 14,850                 | 
|Annapolis       |  | MD    |  | Hilton
 Garden Inn      |  | White         |  | 1/15/2008      |  | 126   |  |   | 25,000                 | 
|Kansas City     |  | MO    |  | Residence
 Inn          |  | True North    |  | 4/30/2008      |  | 106   |  |   | 17,350                 | 
|Greensboro      |  | NC    |  | SpringHill
 Suites      |  | Newport       |  | 11/9/2007      |  | 82    |  |   | 8,000                  | 
|Matthews        |  | NC    |  | Hampton Inn             |  | Newport       |  | 1/15/2008      |  | 92    |  |   | 11,300                 | 
|Dunn            |  | NC    |  | Hampton Inn             |  | McKibbon      |  | 1/24/2008      |  | 120   |  |   | 12,500                 | 
|Concord         |  | NC    |  | Hampton Inn             |  | Newport       |  | 3/7/2008       |  | 101   |  |   | 9,200                  | 
|Fayetteville    |  | NC    |  | Residence
 Inn          |  | Intermountain |  | 5/9/2008       |  | 92    |  |   | 12,201                 | 
|Winston-Salem   |  | NC    |  | Courtyard               |  | McKibbon      |  | 5/19/2008      |  | 122   |  |   | 13,500                 | 
|Carolina
 Beach |  | NC    |  | Courtyard               |  | Crestline     |  | 6/5/2008       |  | 144   |  |   | 24,214                 | 
|Wilmington      |  | NC    |  | Fairfield Inn
 & Suites |  | Crestline     |  | 12/11/2008     |  | 122   |  |   | 14,800                 | 
|Somerset        |  | NJ    |  | Courtyard               |  | Newport       |  | 11/9/2007      |  | 162   |  |   | 16,000                 | 
|New York        |  | NY    |  | Renaissance             |  | Marriott      |  | 1/4/2008       |  | 200   |  |   | 99,000                 | 
|Tulsa           |  | OK    |  | Hampton Inn
 & Suites   |  | Western       |  | 12/28/2007     |  | 102   |  |   | 10,200                 | 
|Greenville      |  | SC    |  | Residence
 Inn          |  | McKibbon      |  | 5/19/2008      |  | 78    |  |   | 8,700                  | 
|Hilton Head     |  | SC    |  | Hilton
 Garden Inn      |  | McKibbon      |  | 5/29/2008      |  | 104   |  |   | 13,500                 | 
|Columbia        |  | SC    |  | Hilton
 Garden Inn      |  | Newport       |  | 9/22/2008      |  | 143   |  |   | 21,200                 | 
|Chattanooga     |  | TN    |  | Homewood
 Suites        |  | LBA           |  | 12/14/2007     |  | 76    |  |   | 8,600                  | 
|Texarkana       |  | TX    |  | Courtyard               |  | Intermountain |  | 3/7/2008       |  | 90    |  |   | 12,924                 | 
|Texarkana       |  | TX    |  | TownePlace
 Suites      |  | Intermountain |  | 3/7/2008       |  | 85    |  |   | 9,057                  | 
|Harrisonburg    |  | VA    |  | Courtyard               |  | Newport       |  | 11/16/2007     |  | 125   |  |   | 23,219                 | 
|Charlottesville |  | VA    |  | Courtyard               |  | Crestline     |  | 6/5/2008       |  | 137   |  |   | 27,900                 | 
|Virginia
 Beach |  | VA    |  | Courtyard               |  | Crestline     |  | 6/5/2008       |  | 141   |  |   | 27,100                 | 
|Virginia
 Beach |  | VA    |  | Courtyard               |  | Crestline     |  | 6/5/2008       |  | 160   |  |   | 39,700                 | 
|Suffolk         |  | VA    |  | Courtyard               |  | Crestline     |  | 7/2/2008       |  | 92    |  |   | 12,500                 | 
|Suffolk         |  | VA    |  | TownePlace
 Suites      |  | Crestline     |  | 7/2/2008       |  | 72    |  |   | 10,000                 | 
|Chesapeake      |  | VA    |  | Marriott                |  | Crestline     |  | 10/21/2008     |  | 226   |  |   | 38,400                 | 
|Tukwila         |  | WA    |  | Homewood
 Suites        |  | Dimension     |  | 7/2/2008       |  | 106   |  |   | 15,707                 | 
|                |  |       |  |                         |  |               |  |                |  |       |  |   |                        | 
|                |  |       |  |                         |  |               |  |                |  | 5,908 |  | $ | 950,745                | 
|                |  |       |  |                         |  |               |  |                |  |       |  |   |                        | 

13

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With the exception of assumed mortgage loans in 2008
on 15 of its hotel properties, substantially all of the purchases were funded
with proceeds of the Companys best-efforts offering of Units, which was
completed in April 2008. The Company leases all of its hotels to its
wholly-owned taxable REIT subsidiaries under hotel lease agreements. The
Company also used the proceeds of its offering to pay $19.0 million,
representing 2% of the gross purchase price for these hotels, as a commission
to Apple Suites Realty Group, Inc. (ASRG), 100% owned by Glade M. Knight, the
Companys Chairman and Chief Executive Officer. No hotels have been purchased
since December 2008, and there are no outstanding purchase contracts for
additional hotels as of June 30, 2010.

Of the Companys 51 hotels owned at June 30, 2010, six
were purchased in 2007 and 45 were purchased in 2008.

Results
of Operations

As of June 30, 2010, the Company owned 51 hotels with
5,908 rooms. The Companys portfolio of hotels owned is unchanged since 2008.
Hotel performance is impacted by many factors, including economic conditions in
the United States, as well as each locality. During the past two years, the
overall weakness in the U.S. economy has had a considerable negative impact on
both consumer and business travel. As a result, lodging demand in most markets
in the United States has declined. Although economic conditions appear to be
stabilizing, and in some markets improving over 2009 results, the Company
expects demand for the industry as a whole to continue to be below
pre-recession levels until general economic conditions improve. The Company
does anticipate moderate revenue and income improvements as compared to 2009
due to the significant number of renovations (12) completed in 2009 and the significant
number of newly opened properties acquired by the Company in 2008 (9) which
were in a ramp up stage in 2009. The Companys hotels have shown results
consistent with industry and brand averages for the period of ownership.

RevenuesThe Companys principal source of revenue is hotel
room revenue and other related revenue. For the three months ended June 30,
2010 and 2009, the Company had total revenue of $49.3 million and $45.5
million. Revenue for the hotel located in New York, New York (the New York
hotel) was $4.9 million or 10% of total revenue for the second quarter of 2010
and $3.1 million or 7% of total revenue for the second quarter of 2009. For the
three months ended June 30, 2010, the hotels achieved combined average
occupancy of approximately 76%, ADR of $112 and RevPAR of $85. The New York
hotel had average occupancy of 91%, ADR of $262 and RevPAR of $238. For the
three months ended June 30, 2009, the hotels achieved combined average
occupancy of approximately 70%, ADR of $111 and RevPAR of $78. For the same
period, the New York hotel had average occupancy of 70%, ADR of $196 and RevPAR
of $137.

For the six months ended June 30, 2010 and 2009, the
Company had total revenue of $88.7 million and $82.5 million. Revenue for the
New York hotel was $8.8 million or 10% of total revenue for the six months of
2010 and $5.0 million or 6% of total revenue for the six months of 2009. For
the six months ended June 30, 2010, the hotels achieved combined average
occupancy of approximately 70%, ADR of $109 and RevPAR of $77. The New York
hotel had average occupancy of 86%, ADR of $238 and RevPAR of $205. For the six
months ended June 30, 2009, the hotels achieved combined average occupancy of
approximately 65%, ADR of $110 and RevPAR of $71. For the same period, the New
York hotel had average occupancy of 61%, ADR of $170 and RevPAR of $105.

As reflected in the Companys occupancy increase (the
Company has seen year over year occupancy improvement every month since
November 2009), the industry is beginning to realize an increase in demand as
compared to 2009. The increase is a result of reduced room rates and the sense
that the overall economy is stabilizing, generating more business and leisure
travelers. While ADR still trails pre-recession levels, it has stabilized as
compared to 2009. As a result, the Companys RevPAR has increased 8% year to
date as compared to the same period in 2009. The Company anticipates similar
continued RevPAR improvement throughout the remainder of 2010.

14

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While the revenue rates earned by the Company are
consistent with industry and brand averages, the Company continues to focus on
improving market share. The Companys properties overall lead their respective
markets with an Average RevPAR Index (a comparison of a propertys RevPAR to
the market average) of 132 year-to-date, a 4% increase from 2009 for comparable
properties.

During the first half of 2009, the Company was in the
process of completing its conversion of the New York hotel from an unbranded
hotel to a Renaissance hotel. Consequently, the hotel had an average of 32
rooms out of service each night for the first half of 2009 and experienced
other disruptions to its common areas. As a result of the conversion effort and
declines in economic conditions, revenue at the hotel was unusually low for the
first half of 2009. The Company completed the conversion to a Renaissance in
late April 2009. The RevPAR Index for the New York hotel was 115 for the six
months ending June 30, 2010, an increase of 75% from 66 for the first six
months of 2009. Although the hotels revenue has increased 77% in the first 6
months of 2010 as compared to the same period in 2009, the Company believes
there continues to be opportunity for market penetration and continues to work
with Marriott management to increase the RevPAR Index for the New York hotel.

ExpensesFor the three months ended June 30, 2010, hotel direct
expenses of the Companys hotels totaled $28.0 million or 57% of total revenue
(the New York hotel had direct expenses of $2.7 million or 56% of its total
revenue for the quarter) and for the three months ended June 30, 2009 direct
expenses were $26.8 million or 59% of total revenue (the New York hotel had
direct expenses of $2.3 million or 72% of its total revenue for the quarter). For
the six months ended June 30, 2010 and 2009, hotel direct expenses of the
Companys hotels totaled $52.8 million or 60% of total revenue (the New York
hotel had direct expenses of $5.2 million or 59% of its total revenue for the
quarter) and $51.1 million or 62% of total revenue (the New York hotel had
direct expenses of $4.0 million or 80% of its total revenue for the quarter).
Hotel direct expenses consist of operating expense, hotel administrative
expense, sales and marketing expense, utilities expense, repair and maintenance
expense, franchise fees and management fees. Operating expenses in 2009 were
negatively impacted due to the significant number of renovations and the ramp
up of newly opened hotels in late 2008.

The Company continues its efforts to control costs,
however, certain operating costs such as management costs, certain utility
costs and minimum supply and maintenance costs are relatively fixed in nature,
and cannot be curtailed or eliminated. The Company has been successful in
reducing certain labor costs, food and supply costs and utility costs by
continually monitoring and sharing utilization data across its hotels and
management companies.

Taxes, insurance, and other expense for the three
months ended June 30, 2010 and 2009 totaled $2.7 million and $2.6 million, or
6% of total revenues (of which approximately $208 thousand and $77 thousand
related to the New York hotel). For the six months ended June 30, 2010 and
2009, taxes, insurance, and other expenses were $5.3 million and $5.0 million,
or 6% of total revenues (of which approximately $345 thousand and $210 thousand
related to the New York hotel).

Land lease expense was $1.6 million for both the three
months ended June 30, 2010 and June 30, 2009 and was $3.2 million for the six
month periods ended June 30, 2010 and 2009. This expense represents the expense
incurred by the Company to lease land for five hotel properties. Land lease
expense for the New York hotel was $1.5 million for each second quarter of 2010
and 2009 and was $2.9 million for the six months ended June 30, 2010 and 2009.

General and administrative expense for the three
months ended June 30, 2010 and 2009 was $1.5 million and $1.3 million. For the
six months ended June 30, 2010 and 2009, general and administrative expense was
$2.7 million and $2.4 million. The principal components of general and
administrative expense are advisory fees, legal fees, accounting fees,
reporting expense, and the Companys share of loss from its investment in Apple
Air Holding LLC.

Depreciation expense was $8.7 million for the second
quarter of 2010 and $8.1 million for the second quarter of 2009. For the six
months ended June 30, 2010 and 2009, depreciation expense was $17.4 million and
$16.0 million. These expenses include $1.6 million and $1.4 million for the New
York hotel

15

---



for the quarterly periods and $3.2 million and $2.7
million for the six month periods ended June 30, 2010 and 2009. Depreciation
expense represents depreciation expense of the Companys hotel buildings and
related improvements, and associated furniture, fixtures and equipment, for the
respective periods owned. The increase is a result of capital improvements made
by the Company in 2009 of approximately $25 million to complete 12 renovations.

In the first quarter of 2010, the Company sold its
equity securities in a publicly traded real estate investment trust, resulting
in realized gains and other investment income of $3.0 million. For the same
period in 2009, the Company had investment income of $12 thousand.

Interest expense for the second quarter and six months
ended June 30, 2010 was $2.3 million and $4.4 million. Interest expense for
both periods includes interest expense on 15 mortgages assumed in 2008 and the
Companys line of credit offset by capitalized interest of $101 thousand in the
first quarter of 2010 related to the renovation of 2 hotels. Interest expense
for the same periods in 2009 was $1.9 million and $3.4 million, offset by
capitalized interest of $376 thousand for the three months of 2009 related to
three hotels under renovation and $947 thousand for the six month period in
2009, related to the renovation of eight hotel properties.

Liquidity
and Capital Resources

In November 2008, the Company entered into a $75.0
million revolving line of credit which expires in November 2010. The line of
credit was obtained to meet short-term cash needs as the Company planned on
completing a significant number of hotel renovations, and newly opened
properties have a period of ramp up to normal operating status. Through June
30, 2010, substantially all of the planned renovation work was completed. With
the availability of this line of credit, the Company maintains little cash on
hand, accessing the line as necessary. As a result, cash on hand was $0 at June
30, 2010. The outstanding balance on the line of credit was $70.8 million at
June 30, 2010 and its interest rate was 2.1%. The Company anticipates that cash
flow from operations and the revolving line of credit will be adequate to meet
its liquidity requirements, including required distributions to shareholders,
capital expenditures and debt service. The Company is pursuing extending its
existing debt that is due in 2010 and additional financing in 2010 so that it
can make distributions in excess of required amounts to maintain its REIT
status. The Company intends to maintain a relatively stable dividend rate
instead of raising and lowering the distribution rate with varying economic
cycles. With the depressed financial results of the Company and the lodging
industry, the Company will attempt to utilize additional financing to achieve
this objective. Although the Company has relatively low levels of debt, there
can be no assurances it will be successful with this strategy and may need to
reduce its distributions to required levels.

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 2010 totaled $36.1 million and were paid monthly at a rate of
$0.064167 per common share. For the same six month period, the Companys cash
generated from operations was approximately $16.2 million. This shortfall
includes a return of capital and was funded primarily by additional borrowings
under the Companys line of credit facility. The Company intends to continue
paying distributions on a monthly basis. However, 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 monthly rate. In consideration of the weakness in
economic conditions throughout the United States, the Board of Directors
monitors the Companys distribution rate relative to the performance of the
hotels on an ongoing basis and may make adjustments to the distribution rate as
determined to be prudent in relation to other cash requirements of the Company.
In April 2009, the Board of Directors approved a reduction in the Companys
annual distribution rate from $0.88 to $0.77 per common share. The reduction of
the dividend was effective beginning with the May 15, 2009 distribution.

The Company has on-going capital commitments to fund
its capital improvements. The Company is required, under all of the hotel
management agreements, to make available, for the repair, replacement,
refurbishing of furniture, fixtures, and equipment, a percentage of gross
revenues provided that such amount may be used for the Companys capital
expenditures with respect to the hotels. As of June 30,

16

---



2010, the Company held $8.8 million in reserve for
capital expenditures. Total capital expenditures in the first six months of
2010 were $4.5 million. Total capital expenditures for 2010 are anticipated to
be approximately $10-11 million. The Company completed 12 renovations
throughout 2009. In 2010 the Company anticipates the completion of three
renovations, thus substantially reducing capital expenditures as compared to
2009.

In the second quarter of 2008, the Company instituted
a Dividend Reinvestment Plan for its shareholders. The plan provides a
convenient and cost effective way to increase shareholder investment in the
Company by reinvesting dividends to purchase additional Units of the Company.
The uses of the proceeds from this plan may include purchasing Units under the
Companys Unit Redemption Program, enhancing properties, satisfying financing
obligations and other expenses, increasing working capital, funding various
corporate operations, and acquiring hotels. The Company has registered
10 million Units for potential issuance under the plan. During the first
six months of 2010, approximately 1.2 million Units were issued under the plan
representing approximately $13.1 million. For the six months ended June 30,
2009, approximately 1.3 million Units were issued under the plan representing
approximately $13.9 million. Since inception of the plan through June 30, 2010,
the Company has issued approximately 5.1 million Units representing
approximately $55.9 million.

The Company has a Unit Redemption Program to provide
limited interim liquidity to its shareholders who have held their Units for at
least one year. Shareholders may request redemption of Units for a purchase
price equal to 92% of the price paid per Unit if the Units have been owned for
less than three years, or 100% of the price paid per Unit if the Units have
been owned more than three years. The maximum number of Units that may be
redeemed in any 12-month period will be three percent of the weighted average
number of Units outstanding during the 12-month period immediately prior to the
date of redemption. The Company reserves the right to change the purchase price
for redemptions, reject any request for redemption, or otherwise amend the
terms of, suspend, or terminate the Unit Redemption Program. During the six
months ended June 30, 2010, the Company redeemed approximately 529 thousand
Units in the amount of $5.5 million under the program. For the first six months
of 2009, the Company redeemed approximately 696 thousand Units in the amount of
$7.1 million. Since inception of the program through June 30, 2010, the Company
has redeemed approximately 1.9 million Units representing approximately $19.7
million.

Related
Party Transactions

The Company has significant transactions with related
parties. These transactions cannot be construed to be arms 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 Apple Suites Realty
Group (ASRG), 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, 2010 payments to ASRG for
services under the terms of this contract have totaled $19.0 million since
inception, which were capitalized as a part of the purchase price of the
hotels. No brokerage services were provided by ASRG in the first six months of
2010 or in 2009.

The Company is party to an advisory agreement with
A8A, pursuant to which A8A provides management services to the Company. An
annual fee ranging from 0.1% to 0.25% of total equity proceeds received by the
Company, in addition to certain reimbursable expenses, are payable for these
services. A8A utilizes Apple REIT Six, Inc. to provide these services. Total
expenses related to this agreement totaled $1.6 million in the first six months
of 2010 and $1.4 million for the same period in 2009. Of these total expenses,
$0.5 million were fees paid to A8A for each of the six months ended June 30,
2010 and 2009 and $1.1 million and $0.9 million were expenses reimbursed by A8A
to Apple REIT Six, Inc. for the six months ended June 30, 2010 and 2009. These
expenses are recorded in General and Administrative expense.

17

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

Subsequent
Events

In July 2010, the Company declared and paid
approximately $6.1 million in distributions to its common shareholders, or
$0.064167 per outstanding common share. Under the Companys Dividend
Reinvestment Plan, $2.2 million were reinvested, resulting in the issuance of
approximately 198,000 Units.

In July 2010, the Company redeemed approximately
274,000 Units in the amount of $2.8 million under its Unit Redemption Program.

Impact
of Inflation

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

Business
Interruption

Being in the real estate industry, the Company is
exposed to natural disasters on both a local and national scale. Although
management believes there is adequate insurance to cover this exposure, there
can be no assurance that such events will not have a material adverse effect on
the Companys financial position or results of operations.

Seasonality

The hotel industry historically has been seasonal in
nature. Generally, occupancy rates and hotel revenues are greater in the second
and third quarters than in the first and fourth quarters. As a result, there
may be quarterly fluctuations in results of operations. 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
or available credit to make distributions.

Recent
Accounting Pronouncements

In June 2009, the Financial Accounting Standards Board
issued a pronouncement (Accounting Standards Update No. 2009-17) which amends
its guidance surrounding a companys analysis to determine whether any of its
variable interests constitute controlling financial interests in a variable
interest entity. This analysis identifies the primary beneficiary of a variable
interest entity as the enterprise that has both of the following
characteristics: (a) the power to direct the activities of a variable interest
entity that most significantly impact the entitys economic performance, and
(b) the obligation to absorb losses of the entity that could potentially be
significant to the variable interest entity or the right to receive benefits
from the entity that could potentially be significant to the variable interest
entity. Additionally, an enterprise is required to assess whether it has an
implicit financial responsibility to ensure that a variable interest entity
operates as designed when determining whether it has the power to direct the
activities of the variable interest entity that most significantly impact the
entitys economic performance. The new pronouncement also requires ongoing
assessments of whether an enterprise is the primary beneficiary of a variable
interest entity and enhanced disclosure about an enterprises involvement with
a variable interest entity. This pronouncement was adopted by the Company in
the first quarter of 2010. The adoption of this standard did not have a
material impact on the Companys consolidated financial statements.

18

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

The Company does not engage in transactions in
derivative financial instruments or derivative commodity instruments. As of
June 30, 2010, the Companys financial instruments were not exposed to
significant market risk due to foreign currency exchange risk or commodity
price risk. The Company will be exposed to interest rate risk due to possible
changes in short term interest rates as it invests its cash or borrows on its
line of credit and due to its variable interest rate mortgage on its Columbia,
South Carolina hotel. The Company had an outstanding balance of $70.8 million
on its $75 million line of credit at June 30, 2010, and to the extent it
utilizes the line of credit, the Company will be exposed to changes in
short-term interest rates. The outstanding balance of the Companys variable
rate mortgage was $11.0 million at June 30, 2010. Based on these outstanding
balances at June 30, 2010, every 100 basis point change in interest rates will
impact the Companys annual net income by $0.8 million, all other factors
remaining the same. The Companys cash balance at June 30, 2010 was $0.

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

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

19

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PART II. OTHER INFORMATION

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

Unit Redemption Program

The
Company has a Unit Redemption Program to provide limited interim liquidity to
its shareholders who have held their Units for at least one year. Shareholders
may request redemption of Units for a purchase price equal to 92% of the price paid
per Unit if the Units have been owned for less than three years, or 100% of the
price paid per Unit if the Units have been owned more than three years. The
maximum number of Units that may be redeemed in any 12-month period will be
three percent of the weighted average number of Units outstanding during the
12-month period immediately prior to the date of redemption. The Company
reserves the right to change the purchase price for redemptions, reject any
request for redemption, or otherwise amend the terms of, suspend, or terminate
the Unit Redemption Program. The following is a summary of redemptions during
the second quarter of 2010 (no redemption occurred in May and June 2010).

|                                       |  |                                     |  |                               |  |                                                                                     |  |                                                                                      
|-------------------------------------- |  | ----------------------------------- |  | ----------------------------- |  | ----------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------
|Issuer
 Purchases of Equity Securities
|                                      
|                                       |  | (a)                                 |  | (b)                           |  | (c)                                                                                 |  | (d)                                                                                  
|Period                                 |  | Total Number 
 of Units 
 Purchased |  | Average Price Paid 
 per Unit |  | Total Number of 
 Units Purchased as
 Part of PubliclyAnnounced Plans

 or Programs |  | Maximum Number 
 of Units that May 
 Yet Be Purchased 
 Under the Plans or 
 Programs
|                                       |  |                                     |  |                               |  |                                                                                     |  |                                                                                      
|April 2010                             |  | 312,864                             |  | $10.25                        |  | 1,905,043                                                                           |  | (1)                                                                                  

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

20

---



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

|                 |  |                                                                                                                                                                                                                
|---------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit 
 Number |  | Description of Documents                                                                                                                                                                                       
|                 |  |                                                                                                                                                                                                                
|                
|3.1              |  | Articles of Incorporation of the Registrant.
 (Incorporated by reference to Exhibit 3.1 to the registrants registration
 statement on Form S-11 (SEC File No. 333-140548)
 effective July 19, 2007)           
|                 |  |                                                                                                                                                                                                                
|3.2              |  | Bylaws of the Registrant, as amended. (Incorporated
 by reference to Exhibit 3.2 to amendment no. 1 to the registrants
 registration statement on Form S-11 (SEC File No. 333-140548) effective July 19, 2007)
|                 |  |                                                                                                                                                                                                                
|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). 

21

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SIGNATURES

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

|                       |                                                        |  |                     
|---------------------- | ------------------------------------------------------ |  | --------------------
|Apple REIT Eight, Inc. |                                                        | 
|                       |                                                        |  |                     
|By:                    | /s/ GLADE M. KNIGHT                                    |  | Date: August 3, 2010
|                       |                                                        |  |                     
|                       | Glade M. Knight,                                       |  |                     
|                       | Chairman of the Board, and                             |  |                     
|                       | Chief Executive Officer                                |  |                     
|                       | (Principal Executive Officer)                          |  |                     
|                       |                                                        |  |                     
|By:                    | /s/ BRYAN PEERY                                        |  | Date: August 3, 2010
|                       |                                                        |  |                     
|                       | Bryan Peery,                                           |  |                     
|                       | Chief Financial Officer                                |  |                     
|                       | (Principal Financial and Principal Accounting Officer) |  |                     

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