Apple Hospitality Two 8-K Results of Operations and Financial Condition

Exhibit 99.1

STATEMENTS OF OPERATIONS(Unaudited)

(In thousands except statistical data)	For the three months ended June 30, 2006			For the three months ended June 30, 2005			For the six months ended June 30, 2006			For the six months ended June 30, 2005
REVENUES
SUITEREVENUE	$	60,044		$	56,253		$	117,098		$	108,204
OTHERREVENUE		1,606			1,260			2,900			2,542
REIMBURSEDEXPENSES		627			419			1,255			837
TOTALREVENUES	$	62,277		$	57,932		$	121,253		$	111,583
EXPENSES
DIRECTOPERATINGEXPENSE	$	14,535		$	14,421		$	28,653		$	28,252
OTHERHOTELOPERATINGEXPENSES		23,895			22,144			47,747			44,234
GENERALANDADMINISTRATIVE		554			738			1,197			1,176
REIMBURSEDEXPENSES		627			419			1,255			837
TRANSACTIONADVISORYFEES		92			—			112			—
DEPRECIATIONOFREALESTATEOWNED		6,928			6,399			13,717			12,726
INTEREST,NET		6,588			6,822			13,206			13,640
TOTALEXPENSES	$	53,219		$	50,943		$	105,887		$	100,865
NET INCOME
INCOMEFROMCONTINUINGOPERATIONS	$	9,058		$	6,989		$	15,366		$	10,718
DISCONTINUEDOPERATIONS		—			83			3			16
NETINCOME	$	9,058		$	7,072		$	15,369		$	10,734
NETINCOMEPERSHARE	$	0.22		$	0.17		$	0.37		$	0.26
MODIFIED FUNDS FROM OPERATIONS (A)
NETINCOME	$	9,058		$	7,072		$	15,369		$	10,734
DEPRECIATIONOFREALESTATEOWNED		6,928			6,399			13,717			12,726
TRANSACTIONADVISORYFEES		92			—			112			—
DISCONTINUEDOPERATIONS		—			(83	)		(3	)		(16	)
MODIFIEDFUNDSFROMOPERATIONS	$	16,078		$	13,388		$	29,195		$	23,444
MODIFIED FFOPERSHARE	$	0.39		$	0.32		$	0.70		$	0.56
WEIGHTED-AVERAGE SHARES OUTSTANDING		41,731			41,712			41,718			41,713
OPERATING STATISTICS
OCCUPANCY		80	%		78	%		78	%		77	%
AVERAGEDAILYRATE	$	108		$	102		$	107		$	101
REVPAR	$	86		$	80		$	83		$	77
DIVIDENDSPERSHARE	$	0.20		$	0.20		$	0.40		$	0.40

BALANCE SHEET HIGHLIGHTS(Unaudited)

(In thousands)	June 30, 2006		December 31, 2005
ASSETS
INVESTMENTINREALESTATE –NET	$	604,998	$	609,822
HOTELSHELDFORSALE		—		5,572
CASHANDCASHEQUIVALENTS		60		415
OTHERASSETS		23,785		22,367
TOTALASSETS	$	628,843	$	638,176
LIABILITIES AND SHAREHOLDERS’ EQUITY
NOTESPAYABLE–SECURED	$	351,916	$	359,752
OTHERLIABILITIES		16,700		17,067
TOTALLIABILITIES		368,616		376,819
TOTALSHAREHOLDERS’EQUITY		260,227		261,357
TOTALLIABILITIES &SHAREHOLDERS’EQUITY	$	628,843	$	638,176

(a) Modified funds from operations (FFO) is defined as net income (computed in accordance with generally accepted accounting principles – GAAP) excluding gains and losses from sales of depreciable property, plus depreciation and amortization plus transaction advisory fees. The company considers modified FFO in evaluating property acquisitions and its operating performance and believes that modified FFO should be considered along with, but not as an alternative to, net income and cash flows as a measure of the company’s activities in accordance with GAAP. Modified FFO is not necessarily indicative of cash available to fund cash needs.

The financial information furnished reflects all adjustments necessary for a fair presentation of financial position at June 30, 2006 and the results of operations for the interim period ended June 30, 2006. Such interim results are not necessarily indicative of the results that can be expected for the full year. The accompanying financial statements should be read in conjunction with the audited financial statements and related notes appearing in the Apple Hospitality Two, Inc. 2005 Annual Report.

APPLE HOSPITALITY TWO

Portfolio of hotels

ALABAMA	Birmingham, Montgomery
CALIFORNIA	Arcadia, Bakersfield,
	Concord, Costa Mesa, Irvine,
	La Jolla, Long Beach,
	Placentia, San Ramon
COLORADO	Boulder (2)
CONNECTICUT	Meriden
FLORIDA	Boca Raton, Clearwater (2),
	Jacksonville, Pensacola
GEORGIA	Atlanta (7)
ILLINOIS	Chicago (2)
LOUISIANA	Shreveport-Bossier City
MARYLAND	Baltimore
MASSACHUSETTS	Boston (2)
MICHIGAN	Detroit, Kalamazoo,
	Southfield
MISSISSIPPI	Jackson (2)
MISSOURI	St. Louis (3)
NEVADA	Las Vegas
NEW MEXICO	Santa Fe
NORTH CAROLINA	Greensboro
OHIO	Akron, Cincinnati (2),
	Columbus, Dayton (2)
OREGON	Portland
PENNSYLVANIA	Philadelphia (2)
SOUTH CAROLINA	Columbia
TENNESSEE	Memphis
TEXAS	Dallas (4), Houston,
	Lubbock
UTAH	Salt Lake City
VIRGINIA	Herndon (Washington, D.C.),
	Richmond
WASHINGTON	Redmond

DEAR SHAREHOLDER

The second quarter of 2006 proved to be another strong period of operations for Apple Hospitality Two, Inc. Our hotels averaged daily rates (ADR) of $108, a six percent increase over the same period last year, and occupancy rates averaged 80%. The resulting revenue per available room (RevPAR) for the second quarter of this year was $86, an eight percent jump from the second quarter of 2005 RevPAR. Our funds from operations (FFO) during the second quarter of 2006 totaled more than $16 million which was equal to $0.39 per share.

According to Smith Travel Research’s 2005 Host Study, the supply of hotel rooms increased by only 0.3 percent in 2005, the lowest growth rate that the industry has experienced in ten years. Furthermore, the demand for hotel rooms during 2005 increased by more than three percent, setting the stage for higher RevPAR levels in 2006. Smith Travel Research’s findings have proven true for Apple Hospitality Two, as we have enjoyed a strong year so far. For the six-month period ending June 30, 2006, RevPAR was $83, nearly eight percent ahead of RevPAR for the same period last year.

Our brand partners and hotel industry icons, Marriott^® and Hilton^®, continue to lead the way in innovative hotel programs. Marriott International recently rolled out an initiative to make all of its hotels, including the Company’s Residence Inn^® by Marriott^® properties, completely smoke-free by September of this year. This new policy was created as a direct response to modern-day travelers’ requests and an overall decline in the number of smoking-room nights sold.

The Company and our Board of Directors continue to closely evaluate our strategic alternatives for providing you with the option of liquidity. We anticipate that we will share our progress with you in the near future.

It is a pleasure to write to you at such an exciting time in the hotel industry and for our Company. Favorable industry trends, our strong brand power, the performance of our markets and the continued success of our properties have set the foundation for a great year for Apple Hospitality Two. Thank you for investing with us and I look forward to sharing our progress with you in future shareholder reports.

Sincerely,

Glade M. Knight

Chairman and Chief Executive Officer

This quarterly report contains forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. 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 any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include: the availability and terms of financing; changes in national, regional and local economies and business conditions; competitors within the extended-stay hotel industry; and the ability of the company to implement its acquisition strategy and operating strategy and to manage planned growth.

In addition, the timing and amounts of distributions to common shareholders are within the discretion of the company’s board of directors. Although the company believes that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate; therefore, there can be no assurance that such statements included in this 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.

CORPORATE PROFILE

Apple Hospitality Two, Inc. is a real estate investment trust (REIT) focused on the upscale, extended-stay suite segment of the hotel industry. Apple Hospitality Two’s hotels operate under the Residence Inn^® by Marriott^® and Homewood Suites by Hilton^® brands, two of the nation’s leading chains of upscale extended-stay hotels. Our focus is on the ownership of high-quality hotels that generate attractive returns for our shareholders. Our portfolio consists of 64 hotels, containing a total of 7,690 suites, diversified among 25 states.

CORPORATE HEADQUARTERS

814 East Main Street

Richmond, VA 23219

(804) 344-8121

(804) 344-8129 FAX

www.applehospitality.com

INVESTOR INFORMATION

For additional information, please contact:

Kelly Clarke,Director of Corporate Communications

804-727-6321 or KClarke@applereit.com

COVER PHOTO: Homewood Suites, Baltimore, MD

The trademarks contained herein are registered trademarks. Residence Inn^® by Marriott^® is a registered trademark of Marriott International, Inc.

Homewood Suites by Hilton^® is a registered trademark of Hilton Hotels Corporation.