Apple REIT Eight 8-K/A Financial Statements and Exhibits

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

AMENDMENT NO. 1 TO

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Original Report (earliest event reported): May 19, 2008

APPLE REIT EIGHT, INC.

(Exact name of registrant as specified in its charter)

Virginia	000-53175	20-8268625
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification Number)

814 East Main Street, Richmond, Virginia	23219
(Address of principal executive offices)	(Zip Code)

(804) 344-8121

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Apple REIT Eight, Inc. hereby amends Item 9.01 of its Current Report on Form 8-K dated May 19, 2008 and filed (by the required date) on May 21, 2008 for the purpose of filing certain financial statements and information. In accordance with Rule 12b-15 under the Securities Exchange Act of 1934, as amended, this Amendment No. 1 sets forth the complete text of the item as amended.

Item 9.01 Financial Statements and Exhibits.

(a) Financial statements of business acquired.

Homecourt Portfolio

(Audited)
Independent Certified Public Accountant’s Reports	3
Combined Balance Sheets – December 31, 2007 and 2006	5
Combined Statements of Operations – For the Periods Ended December 31, 2007 and January  18, 2007 and the Year Ended December 31, 2006	6
Combined Statements of Owners’ Equity – For the Periods Ended December 31, 2007 and January  18, 2007 and the Year Ended December 31, 2006	7
Combined Statements of Cash Flows – For the Periods Ended December 31, 2007 and January  18, 2007 and the Year Ended December 31, 2006	8
Notes to Combined Financial Statements	9
(Unaudited)
Combined Balance Sheets – March 31, 2008 and December 31, 2007	16
Combined Statements of Operations – Three Months Ended March 31, 2008 and 2007	17
Combined Statements of Cash Flows – Three Months Ended March 31, 2008 and 2007	18

Winston-Salem, North Carolina Hotel

(Audited)
Independent Certified Public Accountant’s Reports	19
Balance Sheets – December 31, 2007 and 2006	21
Statements of Operations – For the Year Ended December 31, 2007 and the Periods Ended December  31, 2006 and November 9, 2006	22
Statements of Owners’ Equity – For the Year Ended December 31, 2007 and the Periods Ended December  31, 2006 and November 9, 2006	23
Statements of Cash Flows – For the Year Ended December 31, 2007 and the Periods Ended December  31, 2006 and November 9, 2006	24
Notes to Financial Statements	25
(Unaudited)
Balance Sheets – March 31, 2008 and December 31, 2007	33
Statements of Operations – Three Months Ended March 31, 2008 and 2007	34
Statements of Cash Flows – Three Months Ended March 31, 2008 and 2007	35

(b) Pro forma financial information.

The below pro forma financial information pertains to the hotels referred to in the financial statements (see (a) above) and to a separate group of recently purchased hotels.

Apple REIT Eight, Inc.(Unaudited)

Pro Forma Condensed Consolidated Balance Sheet as of March 31, 2008	36
Notes to Pro Forma Condensed Consolidated Balance Sheet	38
Pro Forma Condensed Consolidated Statements of Operations for the Year Ended December 31, 2007 and Three Months Ended March 31, 2008	39
Notes to Pro Forma Condensed Consolidated Statements of Operations	45

(c) Shell company transactions.

Not Applicable.

(d) Exhibits.

None.

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REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Members of

Homecourt Hospitality Group:

We have audited the accompanying combined balance sheet ofHomecourt Hospitality Group (the Group), as of December 31, 2007 and the related combined statements of operations, owners’ equity, and cash flows for the period from January 19, 2007 through December 31, 2007. These financial statements are the responsibility of the Group’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America as established by the American Institute of Certified Public Accountants. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the combined financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the combined financial statements referred to above present fairly, in all material respects, the financial position of Homecourt Hospitality Group as of December 31, 2007, and the results of their operations and their cash flows for the period from January 19, 2007 through December 31, 2007, in conformity with accounting principles generally accepted in the United States of America.

/s/     Grant Thornton LLP

Orlando, Florida

March 14, 2008

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REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Members of

McKibbon Hotel Group:

We have audited the accompanying combined balance sheet of McKibbon Hotel Group (the Predecessor), as of December 31, 2006, and the related combined statements of operations, owners’ equity, and cash flows for the period from January 1, 2007 through January 18, 2007 and for the year ended December 31, 2006. These financial statements are the responsibility of the Predecessor’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America as established by the American Institute of Certified Public Accountants. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the combined financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the combined financial statements referred to above present fairly, in all material respects, the financial position of McKibbon Hotel Group as of December 31, 2006, and for the results of their operations and their cash flows for the period from January 1, 2007 through January 18, 2007 and for the year ended December 31, 2006, in conformity with accounting principles generally accepted in the United States of America.

/s/     Grant Thornton LLP

Orlando, Florida

March 14, 2008

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Homecourt Hospitality Group

Combined Balance Sheets

December 31, 2007 and 2006

	2007		Predecessor 2006
Assets
Property and equipment, net	$	52,539,200	$	25,280,470
Cash and cash equivalents		295,969		1,498,121
Restricted cash		1,122,453		108,822
Trade accounts receivable		426,925		352,284
Prepaid expenses and other assets		22,661		348,901
Intangible assets, net		880,322		257,867
Total assets	$	55,287,530	$	27,846,465
Liabilities and Owners’ Equity
Notes payable	$	43,906,000	$	24,577,436
Accounts payable and accrued expenses		807,630		771,026
Total liabilities		44,713,630		25,348,462
Commitments and Contingencies (Note F)
Total owners’ equity		10,573,900		2,498,003
Total liabilities and owners’ equity	$	55,287,530	$	27,846,465

The accompanying notes are an integral part of these combined financial statements.

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Homecourt Hospitality Group

Combined Statements of Operations

For the Periods Ended December 31, 2007, January 18, 2007 and the

Year Ended December 31, 2006

	January 19, 2007 through December 31, 2007			Predecessor
				January 1, 2007 through January 18, 2007			Year Ended December 31, 2006
Operating Revenues:
Rooms	$	11,521,198		$	521,643		$	11,191,623
Food & beverage		92,676			2,981			75,040
Other		134,975			8,005			151,433
Total revenues		11,748,849			532,629			11,418,096
Direct costs and expenses:
Rooms		1,983,115			113,871			2,013,779
Food and beverage		218,655			7,476			208,506
Other		91,834			8,033			99,998
Total direct costs and expenses		2,293,604			129,380			2,322,283
Total operating revenues, less direct costs and expenses		9,455,245			403,249			9,095,813
Operating expenses:
Depreciation and amortization expense		2,412,585			88,599			1,796,716
Administrative and general		1,124,742			65,301			1,252,574
Utilities		476,509			21,384			476,025
Property taxes		514,163			21,437			447,450
Property operations and maintenance		500,541			47,884			674,307
Management, incentive and franchise fees		948,216			37,474			1,101,070
Sales and marketing		891,679			52,593			872,044
Insurance and other expenses		119,450			13,705			115,976
Total operating expenses		6,987,885			348,377			6,736,162
Operating income		2,467,360			54,872			2,359,651
Other (expense) income:
Interest expense		(2,627,436	)		(106,873	)		(2,095,158	)
Interest income		3,422			291			45,768
Total other expense		(2,624,014	)		(106,582	)		(2,049,390	)
Net (loss) income	$	(156,654	)	$	(51,710	)	$	310,261

The accompanying notes are an integral part of these combined financial statements.

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Homecourt Hospitality Group

Combined Statements of Owners’ Equity

For the Period Ended December 31, 2007, January 18, 2007 and the

Year Ended December 31, 2006

	Total Owners’ Equity
Predecessor *
Balance, January 1, 2006	$	3,585,742
Distributions to owners		(1,398,000	)
Net income		310,261
Balance, December 31, 2006		2,498,003
Net loss		(51,710	)
Sale of the McKibbon Group		(2,446,293	)
Balance, January 18, 2007	$	—
Homecourt Hospitality Group
Balance, January 19, 2007	$	—
Contributions		12,957,554
Distributions to owners		(2,227,000	)
Net loss		(156,654	)
Balance, December 31, 2007	$	10,573,900

* See Note A to the combined financial statements.

The accompanying notes are an integral part of these combined financial statements.

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Homecourt Hospitality Group

Combined Statement of Cash Flows

For the Period Ended December 31, 2007, January 18, 2007 and the

Year Ended December 31, 2006

	January 19, 2007 through December 31, 2007			Predecessor
				January 1, 2007 through January 18, 2007			Year Ended December 31, 2006
Cash flows from operating activities:
Net (loss) income	$	(156,654	)	$	(51,710	)	$	310,261
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization expense		2,412,585			88,599			1,796,716
Amortization of loan costs		69,221			3,550			71,982
Changes in operating assets and liabilities:
Trade accounts receivable		(426,925	)		(2,957	)		221,021
Prepaid expenses and other assets		(22,661	)		5,977			(181,249	)
Accounts payable and accrued expenses		807,630			(13,192	)		(400,700	)
Net cash provided by operating activities		2,683,196			30,267			1,818,031
Cash flows from investing activities:
Purchase of property and equipment		(11,031,016	)		(14,595	)		(464,711	)
Payments for franchise fee application		(242,000	)		—			—
Net cash used in investing activities		(11,273,016	)		(14,595	)		(464,711	)
Cash flows from financing activities:
Restricted cash		(1,122,453	)		—			308,883
Payments for loan origination costs		(722,312	)		—			—
Owners’ contributions		12,957,554			—			—
Owners’ distributions		(2,227,000	)		—			(1,398,000	)
Payments on note payable		—			(22,561	)		(363,845	)
Net cash provided by (used in) financing activities		8,885,789			(22,561	)		(1,452,962	)
Net increase (decrease) in cash		295,969			(6,889	)		(99,642	)
Cash, beginning of year		—			1,498,121			1,597,763
Cash, end of year	$	295,969		$	1,491,232		$	1,498,121
Supplemental disclosure of cash flow information:
Cash paid for interest	$	2,531,797		$	—		$	1,950,536
Supplemental disclosure of non-cash transactions:
Purchase of Homecourt Hospitality Group, financed by notes payable	$	43,906,000		$	—		$	—

The accompanying notes are an integral part of these combined financial statements.

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Homecourt Hospitality Group

Notes to Combined Financial Statements

December 31, 2007 and 2006

Note A – Organization

The combined financial statements include four hotel properties (collectively, the Hotels). The Hotels are located within the states of Florida, South Carolina and Alabama.

The Hotels were primarily owned by Homecourt Hospitality, LLC (for each state of business) and PHREG, LLC (collectively, the Homecourt Hospitality Group), during the period from January 19, 2007 through December 31, 2007 and by McKibbon Hotel Group of Birmingham, Alabama, L.P., McKibbon Hotel Group of Greenville, South Carolina, L.P., McKibbon Hotel Group of Jacksonville, Florida, L.P., and McKibbon Hotel Group of Telecom Park, Florida, L.P. (collectively, the McKibbon Group) during the year ended December 31, 2006 and for the period from January 1, 2007 through January 18, 2007. The McKibbon Group is commonly referred to as the Predecessor. As a result of the purchase of the Hotels, the Homecourt Hospitality Group recorded certain of the Hotels’ assets and liabilities on a basis different from the Predecessor. The Predecessor combined financials for the period from January 1, 2007 through January 18, 2007 and for the year ended December 31, 2006 are being presented along with the Homecourt Hospitality Group for the period from January 19, 2007 through December 31, 2007. As a result of the purchase, the Predecessor combined financial statements are not comparable to the Homecourt Hospitality Group.

On November 5, 2007, the Homecourt Hospitality Group entered into a purchase agreement with Apple Eight Hospitality Ownership, Inc. for the sale of the Hotels for $61,700,000.

Note B – Summary of Significant Accounting Policies

The accompanying combined financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. The following is a summary of the Hotels’ significant accounting policies:

Principles of Combination

The combined financial statements include the accounts of the following hotel properties:

Homewood Suites St. Johns Center (Jacksonville, Florida)

Homewood Suites (Birmingham, Alabama)

Residence Inn Airport (Greenville, South Carolina)

TownePlace Suites (Tampa, Florida)

The Hotels were all under common ownership and control. All significant inter-company transactions have been eliminated in the combination.

Basis of Presentation

The accompanying combined financial statements have been prepared for purposes of enabling Apple Eight Hospitality Ownership, Inc. to comply with certain requirements of the Securities and Exchange Commission.

The Homecourt Hospitality Group combined financial statements as of December 31, 2007 and for the period from January 19, 2007 through December 31, 2007 include the assets, liabilities and results of operations of the Hotels and not the limited liability companies that own the individual hotels.

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Homecourt Hospitality Group

Notes to Combined Financial Statements

December 31, 2007 and 2006

The Predecessor combined financial statements as of December 31, 2006 and for the year ended December 31, 2006 and for the period from January 1, 2007 through January 18, 2007 include the assets, liabilities and results of operations of the Hotels and not the partnerships that own the individual hotels. The McKibbon Group leased the land for the Hotels from McKibbon Brothers, a related party entity. The land has been carved out of McKibbon Brothers and presented in the combined financial statements of the Predecessor to accurately present the assets of the Hotels being acquired. The McKibbon Brothers sold the land to the Homecourt Hospitality Group as a part of the purchase on January 19, 2007.

Homecourt Hospitality Group Purchase

On January 19, 2007, the Homecourt Hospitality Group purchased the Hotels owned and operated by the McKibbon Group for a purchase price of $53.5 million plus closing costs of approximately $1.4 million, of which approximately $44 million was financed. The total cost of approximately $54.9 million was allocated to the net assets purchased based on their approximate fair market value, as determined by an independent third party appraisal as follows:

Buildings	$	40,938,495
Furniture, fixtures and equipment		7,330,553
Land		6,584,408
Total	$	54,853,456

The following presents the combined, condensed balance sheets of the Predecessor on a historical cost basis immediately before the sale and of the Hotels after the sale, reflecting the initial capitalization, the funding of the debt, and the payment of cash at the time of the sale.

	Predecessor January 18, 2007		Successor January 19, 2007
Assets:
Property and equipment, net	$	25,206,466	$	54,853,456
Cash and cash equivalents		1,491,232		—
Restricted cash		108,822		—
Trade accounts receivable		355,241		—
Prepaid expenses and other assets		342,924		—
Intangible assets, net		254,317		—
Total assets	$	27,759,002	$	54,853,456
Liabilities and owners’ equity:
Notes payable	$	24,554,875	$	43,906,000
Accounts payable and accrued expenses		757,834		—
Total liabilities		25,312,709		43,906,000
Total owners’ equity		2,446,293		10,947,456
Total liabilities and owners’ equity	$	27,759,002	$	54,853,456

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Homecourt Hospitality Group

Notes to Combined Financial Statements

December 31, 2007 and 2006

Use of Estimates

The preparation of combined financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, cash held in financial institutions, and other highly liquid short term investments with original maturities of three months or less when purchased. The cash balances may at times exceed federal depository insurance limits.

Restricted Cash

Restricted cash represents escrow and reserve accounts held as compensating balances for the notes payable. This restricted cash balance is not available for use in the Hotels’ operations.

Property and Equipment

Prior to January 19, 2007, property and equipment was recorded at cost less accumulated depreciation. Property and equipment has been adjusted to fair value at January 19, 2007, as a result of the acquisition by the Homecourt Hospitality Group. Major repairs and improvements are capitalized and normal maintenance and repairs are charged to expense as incurred. Depreciation is computed principally by the straight-line method over the following estimated useful lives of the related assets:

Buildings	39 years
Land improvements	15 years
Furniture, fixtures and equipment	5 years

Depreciation expense related to property and equipment totaled approximately $2,398,000, $88,600 and $1,796,700 for the periods from January 19, 2007 through December 31, 2007, January 1, 2007 through January 18, 2007 and the year ended December 31, 2006, respectively.

Valuation of Long-Lived Assets

The Hotels periodically review long-lived assets to be held and used in operations for impairment whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. An impairment loss is recognized when the estimated, undiscounted, future cash flows from the assets are less than the carrying value of the assets. Assets to be disposed of are reported at the lower of their carrying amount or fair value less cost to sell. For the periods from January 19, 2007 through December 31, 2007, January 1, 2007 through January 18, 2007 and the year ended December 31, 2006, no impairment loss has been identified or recorded.

Income Taxes

Income taxes on earnings are payable personally by the owners of the Hotels pursuant to an election under Section 701 of the Internal Revenue Code and the Hotels are not taxed as a corporation. Accordingly, no provision has been made for federal or state income taxes in these financial statements.

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Homecourt Hospitality Group

Notes to Combined Financial Statements

December 31, 2007 and 2006

Trade Accounts Receivable

Trade accounts receivable are primarily comprised of trade receivables due from guests of the Hotels. The Hotels use the direct write off method for uncollectible receivables which approximates the allowance for doubtful accounts method. At December 31, 2007 and December 31, 2006, no allowance for doubtful accounts was determined to be necessary. Recoveries of trade receivables previously written off are recorded when received.

Intangible Assets

Deferred loan costs are amortized on a straight-line basis to interest expense over the term of the loan. The straight-line basis approximates the effective interest method of amortization for loan costs. The costs associated with the franchise agreements are being amortized over 15 years in accordance with the terms of the franchise agreements. Loan origination costs amortization totaled approximately $69,200, $3,600 and $72,000 for the periods from January 19, 2007 through December 31, 2007, January 1, 2007 through January 18, 2007 and the year ended December 31, 2006. Amortization expense related to the franchise agreements totaled approximately $14,700, $0 and $100 for the periods from January 19, 2007 through December 31, 2007, January 1, 2007 through January 18, 2007 and the year ended December 31, 2006, respectively. During 2003, the Residence Inn Airport, received a franchise credit of approximately $100,000 from Marriott Corporation which was being amortized over a 15 year term through January 18, 2007. The amortization of the credit is netted against the franchise fee amortization expense for the period from January 1, 2007 through January 18, 2007 and the year ended December 31, 2006, respectively.

Revenue Recognition

Revenue is derived from hotel and leisure operations, including the rental of rooms and food and beverage sales. Revenues are recognized when services have been provided. The Hotels present sales and other taxes collected from customers on a net basis; accordingly such taxes are not included in revenues or cost of goods sold.

Recently Issued Accounting Pronouncements

In July 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation 48,Accounting for Uncertainty in Income Taxes: an interpretation of FASB Statement No. 109. (FIN 48), which clarifies SFAS 109, establishes the criterion that an individual tax position has to meet for some or all of the benefits of that position to be recognized in the Company’s financial statements. On initial application, FIN 48 will be applied to all tax positions for which the statute of limitations remains open. Only tax positions that meet the more-likely-than-not recognition threshold at the adoption date will be recognized or continue to be recognized. The cumulative effect of applying FIN 48 will be reported as an adjustment to retained earnings at the beginning of the period in which it is adopted. FIN 48 is effective for fiscal years beginning after December 15, 2007, and will be adopted by the Hotels effective January 1, 2008. The adoption of this interpretation is not anticipated to have a material impact on the Hotels results of operations or financial position.

In September 2006, the FASB issued Statement No. 157,Fair Value Measurements (Statement 157). Statement 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. The Statement applies under other accounting pronouncements that require or permit fair value measurements. Accordingly, this Statement does not require any new fair value measurements. This guidance was issued to increase consistency and comparability in fair value measurements and to expand disclosures about fair value measurements. Statement 157 is effective for financial statements issued for fiscal years beginning after November��15, 2007. The adoption of the statement is not anticipated to have a material impact on the Hotels’ results of operations or financial position.

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Homecourt Hospitality Group

Notes to Combined Financial Statements

December 31, 2007 and 2006

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

In December 2007, the FASB issued Statement No. 141R,Business Combinations (Statement 141R). This statement revises Statement 141, Business Combinations, by requiring an acquirer to recognize the assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree at the acquisition date, measured at their fair values as of that date, with limited exceptions. This method replaces the cost-allocation process, which required the cost of an acquisition to be allocated to the individual assets acquired and liabilities assumed based on their estimated fair values. A significant change included in Statement 141R is the requirement that costs incurred to effect an acquisition, as well as restructuring costs resulting from an acquisition, must be accounted for separately as expenses. These costs were previously capitalized as part of the cost of the acquisition. Another significant change is the requirement that pre-acquisition contingencies be recognized at fair value as of the date of acquisition if it is more likely than not that they will meet the definition of an asset or liability. Statement 141R will be adopted by the Hotels January 1, 2009. The adoption of the statement is not anticipated to have a material impact on the Hotels results of operations or financial position.

In December 2007, the FASB issued Statement No. 160, Noncontrolling Interests in Consolidated Financial Statements-an amendment of ARB No. 51 (Statement 160). Statement 160 requires that ownership interests in subsidiaries held by parties other than the parent be clearly identified, labeled, and presented in the consolidated statement of financial position within equity, but separate from the parent’s equity. The Statement also requires that the amount of consolidated net income attributable to the parent and to the noncontrolling interest be clearly identified and presented on the face of the consolidated statement of income. Statement 160 will be adopted by the Hotels on January 1, 2009. The adoption of the statement is not anticipated to have a material impact on the Hotels’ results of operations or financial position.

Note C – Property and Equipment

Property and equipment consists of the following at December 31, 2007 and December 31, 2006:

	2007			Predecessor 2006
Buildings	$	40,950,327		$	17,355,901
Furniture, fixtures and equipment		7,402,281			8,071,807
Land, grounds and landscaping		6,584,408			6,252,630
Total		54,937,016			31,680,338
Accumulated depreciation		(2,397,816	)		(6,399,868	)
Property and equipment, net	$	52,539,200		$	25,280,470

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Homecourt Hospitality Group

Notes to Combined Financial Statements

December 31, 2007 and 2006

Note D – Intangible Assets

Intangible assets consist of the following at December 31, 2007 and December 31, 2006:

	2007			Predecessor 2006
Deferred loan costs	$	722,312		$	458,026
Deferred franchise fees		242,000			19,200
Total		964,312			477,226
Accumulated amortization		(83,990	)		(219,359	)
Total intangible assets, net	$	880,322		$	257,867

Note E – Notes Payable

At December 31, 2007, notes payable consist of various mortgage loans bearing interest rates ranging from 6.03% to 6.06%, with monthly principal and interest payments ranging from approximately $39,000 to $104,000, maturing on February 8, 2017, at which time the entire outstanding principal balances will be due and payable. Monthly payments to escrow and other restricted cash accounts are also required. The notes payable are collateralized by the respective hotel’s buildings, structures and other tangible property. The notes payable are guaranteed by certain members of the Homecourt Hospitality Group.

At December 31, 2006, notes payable consist of various mortgage loans bearing interest rates ranging from 8.25% to 8.5%, with monthly principal and interest payments, maturing on various dates from July 1, 2009 through June 16, 2010, at which time the entire outstanding principal balance was due and payable. Monthly payments to escrow and other restricted cash accounts were also required. The notes payable were collateralized by the respective hotel’s buildings, structures and other tangible property. The notes payable were guaranteed by McKibbon Brothers, Inc., an affiliated entity of the owners. The notes payable were paid in full as a result of the sale to the Homecourt Hospitality Group on January 18, 2007.

The Hotels are not subject to any debt covenants, requirements or restrictions as of December 31, 2007.

Maturity of the 2007 notes payable is as follows:

2008	$	444,072
2009		563,148
2010		598,094
2011		635,209
2012		674,626
Thereafter		40,990,851
	$	43,906,000

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Homecourt Hospitality Group

Notes to Combined Financial Statements

December 31, 2007 and 2006

Note F – Commitments and Contingencies

Franchise Agreement

Each of the Hotels is obligated to pay monthly assessments to Hilton Hotels Corporation or Marriott Corporation in accordance with the respective franchise agreements. The franchise agreements have 15 year terms. Under the franchise agreements, the Hotels are obligated to pay a program fee and a royalty fee based on a percentage of gross rooms revenue. As part of the sale, the existing franchise agreements were renegotiated under the same terms and conditions. The expenses under the franchise agreements totaled approximately $479,000, $20,000 and $399,000 for the periods from January 19, 2007 through December 31, 2007, January 1, 2007 through January 18, 2007 and for the year ended December 31, 2006, respectively.

The franchise agreements also require payments to Hilton Hotels Corporation or Marriott Corporation of monthly advertising fees and monthly reservation fees equal to a percentage of revenues. Total fees paid to Hilton and Marriott, included in sales and marketing expenses in the accompanying combined statements of operations, totaled approximately $407,000, $19,000 and $391,000 for the period from January 19, 2007 through December 31, 2007, January 1, 2007 through January 18, 2007 and the year ended December 31, 2006, respectively.

Management Agreement / Related Party Transactions

The Hotels are co-managed by the McKibbon Hotel Group, Inc. and McKibbon Hotel Management, Inc. (the Managers), related parties of the McKibbon Group (the Management Agreement). The Management Agreements have various inceptions and expirations dates. The Managers operate the Hotels in accordance with the standards outlined in the Management Agreements. Additionally, all personnel of the Hotels are employees of the Managers, with the Managers hiring, supervising and discharging all personnel working at the Hotels. The Hotels reimbursed the Managers approximately $1,683,000 for the period ended December 31, 2007, $79,000 for the period from January 1, 2007 through January 18, 2007 and $1,598,000 for the year ended December 31, 2006, respectively for employee salaries. Under the Management Agreements, the Hotels pay a management fee based on a percentage of total gross revenues derived from the operation of the Hotels, adjusted for certain expenses. As part of the sale to the Homecourt Hospitality Group, the existing Management Agreement was renegotiated under the same terms and conditions except for an increase in the management fee percentage and the elimination of the incentive fee. Total management fees for the period ended December 31, 2007 totaled approximately $470,000, $14,500 for the period from January 1, 2007 through January 18, 2007, and $320,800 for the year ended December 31, 2006. Total incentive fees for the period from January 1, 2007 through January 18, 2007 totaled approximately $3,000 and $381,000 for the year ended December 31, 2006. As a result of the renegotiated Management Agreement, there were no incentive fees for the period ended December 31, 2007.

-15-

Homecourt Hospitality Group

Combined Balance Sheets

	March 31, 2008		December 31, 2007
	(unaudited)
Assets
Property and equipment, net	$	51,984,720	$	52,539,200
Cash and cash equivalents		300,833		295,969
Restricted cash		1,105,216		1,122,453
Trade accounts receivable		531,168		426,925
Prepaid expenses and other assets		201,319		22,661
Intangible assets, net		858,382		880,322
Total Assets	$	54,981,638	$	55,287,530
Liabilities and Owners’ Equity
Notes payable	$	43,855,227	$	43,906,000
Accounts payable and accrued expenses		794,989		807,630
Total Liabilites		44,650,216		44,713,630
Total Owners’ Equity		10,331,422		10,573,900
Total Liabilities and Owners’ Equity	$	54,981,638	$	55,287,530

-16-

Homecourt Hospitality Group

Combined Statements of Operations

Three Month Periods Ended March 31, 2008 and 2007

Unaudited

	2008			2007
Operating revenues:
Rooms	$	3,105,749		$	3,146,769
Other		56,185			61,163
Total revenues		3,161,934			3,207,932
Expenses:
Operating expense		585,859			587,434
Depreciation and amortization expense		652,538			646,537
Administrative and general		291,223			284,143
Utilities		129,683			110,662
Property taxes		114,218			114,274
Property operations and maintenance		128,141			159,302
Management, incentive and franchise fees		263,371			256,188
Sales and marketing		221,282			236,038
Insurance and other expenses		61,789			49,675
Total expenses		2,448,104			2,444,253
Operating income		713,830			763,679
Other (expense) income:
Interest expense		(669,867	)		(618,682	)
Interest income		1,532			316
Total other expense		(668,335	)		(618,366	)
Net income	$	45,495		$	145,313

-17-

Homecourt Hospitality Group

Combined Statements of Cash Flows

Three Month Periods Ended March 31, 2008 and 2007

Unaudited

	2008			2007
Cash flows from operating activities:
Net income	$	45,495		$	145,313
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization expense		652,538			646,537
Changes in operating assets and liabilities:
Trade accounts receivable		(104,243	)		(380,287	)
Prepaid expenses and other assets		(178,658	)		(1,324,859	)
Accounts payable and accrued expenses		(12,641	)		825,116
Net cash provided by (used in) in operating activities		402,491			(88,180	)
Cash flows from investing activities:
Purchase of property and equipment		(76,118	)		(57,727	)
Net cash used in investing activities		(76,118	)		(57,727	)
Cash flows from financing activities:
Restricted cash		17,237			(580,984	)
Owners contributions/(distributions)		(287,973	)		1,302,708
Payments on note payable		(50,773	)		—
Net cash provided by (used in) financing activities		(321,509	)		721,724
Net increase in cash		4,864			575,817
Cash, beginning of year		295,969			—
Cash, end of year	$	300,833		$	575,817

-18-

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Member of

Homecourt Hospitality – Winston Salem, LLC:

We have audited the accompanying balance sheets ofCourtyard by Marriott, Winston-Salem, North Carolina(a hotel owned by Homecourt Hospitality – Winston Salem, LLC), as of December 31, 2007 and 2006, and the related statements of operations, owner’s equity, and cash flows for the year ended December 31, 2007 and the period from November 10, 2006 to December 31, 2006. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America as established by the American Institute of Certified Public Accountants. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Courtyard by Marriott, Winston-Salem, North Carolina as of December 31, 2007 and 2006, and the results of its operations and its cash flows for the year ended December 31, 2007 and the period from November 10, 2006 to December 31, 2006, in conformity with accounting principles generally accepted in the United States of America.

/s/ Grant Thornton LLP

Orlando, Florida

March 11, 2008

-19-

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors

Inland American Real Estate Trust, Inc.:

We have audited the accompanying statements of operations, owner’s equity, and cash flows ofCourtyard by Marriott, Winston-Salem, North Carolina,(a hotel owned and operated by Winston Hotels, Inc.) for the period from January 1, 2006 to November 9, 2006. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America as established by the American Institute of Certified Public Accountants. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the statements of operations, owner’s equity, and cash flows are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the statements of operations, owner’s equity and cash flows, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the results of operations. We believe that our audit of the statements of operations, owner’s equity and cash flows provides a reasonable basis for our opinion.

In our opinion, the statements of operations, owner’s equity and cash flows referred to above present fairly, in all material respects, the results of operations and cash flows of Courtyard by Marriott, Winston-Salem, North Carolina for the period from January 1, 2006 to November 9, 2006, in conformity with accounting principles generally accepted in the United States of America.

/s/     Grant Thornton LLP

Orlando, Florida

March 11, 2008

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Courtyard by Marriott, Winston-Salem, North Carolina

Balance Sheets

December 31, 2007 and 2006

	2007		2006
Assets
Property and equipment, net	$	9,944,668	$	10,177,348
Cash		187,364		88,817
Restricted cash		206,422		211,573
Trade accounts receivable		14,300		15,099
Prepaid expenses and other assets		9,218		35,697
Due from affiliates		—		14,812
Intangible assets, net		154,618		170,808
Total assets	$	10,516,590	$	10,714,154
Liabilities and Owner’s Equity
Note payable	$	8,000,000	$	8,000,000
Accounts payable and accrued expenses		239,229		149,849
Total liabilities		8,239,229		8,149,849
Commitments and Contingencies (Note F)
Total owner’s equity		2,277,361		2,564,305
Total liabilities and owner’s equity	$	10,516,590	$	10,714,154

The accompanying notes are an integral part of these combined financial statements.

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Courtyard by Marriott, Winston-Salem, North Carolina

Statements of Operations

For the Year Ended December 31, 2007 and Periods Ended December 31, 2006

and November 9, 2006

							Predecessor
	2007			November 10, 2006 to December 31, 2006			January 1, 2006 to November 9, 2006
Operating revenues:
Rooms	$	2,860,131		$	265,360		$	2,166,209
Food & beverage		173,791			15,293			144,274
Other		48,416			944			29,329
Total revenues		3,082,338			281,597			2,339,812
Direct costs and expenses:
Rooms		606,204			73,615			572,037
Food and beverage		138,194			17,954			123,566
Other		25,571			3,211			31,069
Total direct costs and expenses		769,969			94,780			726,672
Total operating revenues, less direct costs and expenses		2,312,369			186,817			1,613,140
Operating expenses:
Depreciation and amortization expense		468,797			63,454			399,151
Administrative and general		344,968			33,769			181,798
Utilities		85,725			9,655			78,481
Property taxes		112,832			13,301			79,327
Property operations and maintenance		156,601			18,713			139,258
Management and franchise fees		281,590			25,877			303,257
Sales and marketing		236,476			18,109			135,924
Insurance and other expenses		43,154			4,642			26,363
Total operating expenses		1,730,143			187,520			1,343,559
Operating income (loss)		582,226			(703	)		269,581
Other (expense) income:
Interest expense		(492,543	)		(70,035	)		—
Interest income		2,373			123			—
Total other expense		(490,170	)		(69,912	)		—
Net income (loss)	$	92,056		$	(70,615	)	$	269,581

The accompanying notes are an integral part of these financial statements.

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Courtyard by Marriott, Winston-Salem, North Carolina

Statements of Owner’s Equity

For the Year Ended December 31, 2007 and Periods Ended December 31, 2006

and November 9, 2006

	Total Owner’s Equity
Predecessor *
Balance, January 1, 2006	$	6,175,796
Distributions to owners		(250,924	)
Contribution of property and equipment by Winston SPE II, LLC		1,157,578
Net income		269,581
Sale of Winston SPE II, LLC		(7,352,031	)
Balance, November 9, 2006	$	—
Successor
Balance, November 10, 2006	$	—
Owner contributions		2,754,920
Distributions to owners		(120,000	)
Net loss		(70,615	)
Balance, December 31, 2006		2,564,305
Distributions to owners		(379,000	)
Net income		92,056
Balance, December 31, 2007	$	2,277,361

* See Note A to the financial statements

The accompanying notes are an integral part of these financial statements.

-23-

Courtyard by Marriott, Winston-Salem, North Carolina

Statements of Cash Flows

For the Year Ended December 31, 2007 and Periods Ended December 31, 2006

and November 9, 2006

							Predecessor
	2007			November 10, 2006 to December 31, 2006			January 1, 2006 to November 9, 2006
Cash flows from operating activities:
Net income (loss):	$	92,056		$	(70,615	)	$	269,581
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization expense		468,797			63,454			399,151
Amortization of loan costs		10,231			1,703			—
Changes in operating assets and liabilities:
Trade accounts receivable		799			(15,099	)		(8,860	)
Due from affiliates		14,812			(14,812	)		—
Prepaid expenses and other assets		26,479			(35,697	)		1,807
Accounts payable and accrued expenses		89,380			149,849			83,981
Net cash provided by operating activities		702,554			78,783			745,660
Cash flows from investing activities:
Purchase of property and equipment		(230,158	)		(2,240,013	)		—
Payment for franchise fee application		—			(82,500	)		—
Net cash used in investing activities		(230,158	)		(2,322,513	)		—
Cash flows from financing activities:
Owner contributions		—			2,754,920			—
Distributions to owners		(379,000	)		(120,000	)		(250,924	)
Restricted cash		5,151			(211,573	)		—
Payments for loan origination costs		—			(90,800	)		—
Net cash (used in) provided by financing activities		(373,849	)		2,332,547			(250,924	)
Net increase in cash		98,547			88,817			494,736
Cash, beginning of period		88,817			—			348,883
Cash, end of period	$	187,364		$	88,817		$	843,619
Supplemental disclosure of cash flow information:
Cash paid for interest	$	482,313		$	36,960		$	—
Supplemental disclosure of non-cash flow information:
Purchase of Courtyard by Marriott hotel financed by note payable	$	—		$	8,000,000		$	—
Contribution of property and equipment by Winston SPE II, LLC	$	—		$	—		$	1,157,578

The accompanying notes are an integral part of these financial statements.

-24-

Courtyard by Marriott, Winston-Salem, North Carolina

Notes to Financial Statements

December 31, 2007 and 2006

Note A – Hotel Organization

The Courtyard by Marriott in Winston Salem, North Carolina (the Hotel), was owned by Homecourt Hospitality – Winston Salem, LLC (the Successor) during the period from November 10, 2006 through December 31, 2006 and for the year ended December 31, 2007. For the period from January 1, 2006 through November 9, 2006, the Hotel was owned by two entities, Winston SPE II, LLC and Barclay Hospitality Services, Inc., which were wholly owned subsidiaries of Winston Hotels, Inc. (the Predecessor). Winston Hotels, Inc. was subsequently purchased by Inland American Real Estate Trust, Inc. As a result of the sale of the Hotel by the Predecessor, the Successor recorded certain of the Hotel’s assets and liabilities on a basis different from the Predecessor. The Predecessor statements of operations, owner’s equity and cash flows for the period from January 1, 2006 through November 9, 2006 have been presented with the Successor financial statements. The Successor financial statements are not comparable to those of the Predecessor.

On November 5, 2007, the Successor entered into a purchase contract with Apple Eight Hospitality Ownership, Inc. for the purchase of the Hotel for $13,000,000.

Note B – Summary of Significant Accounting Policies

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. The following is a summary of the Hotel’s significant accounting policies:

Basis of Presentation

The accompanying financial statements have been prepared for purposes of enabling Apple Eight Hospitality Ownership, Inc. to comply with certain requirements of the Securities and Exchange Commission.

The Successor financial statements as of December 31, 2007 and 2006 and for the year ended December 31, 2007 and for the period from November 10, 2006 to December 31, 2006, include the assets, liabilities and results of operations of the Hotel and not the partnership that owns the hotel.

The Predecessor financial statements for the period from January 1, 2006 to November 9, 2006, include the results of operations, changes in owner’s equity and cash flow activity of the Hotel and not the two entities that owned the hotel, Winston SPE II LLC and Barclay Hospitality Services, Inc (the “Entities”). For the period from January 1, 2006 to November 9, 2006, Winston SPE II LLC leased the property and equipment of the Hotel to Barclay Hospitality Services, Inc. The Hotel assets, including property and equipment, liabilities, and results of operations, including all corporate overhead expenses related to the Hotel, have been carved out of the Entities, and presented to accurately present the Hotel being acquired. Winston Hotels, Inc. sold the property and equipment of the Hotel to the Successor as a part of the purchase on November 10, 2006.

-25-

Courtyard by Marriott, Winston-Salem, North Carolina

Notes to Financial Statements

December 31, 2007 and 2006

Winston SPE II, LLC held a $155 million credit facility that was used for the financing of its hotels. Prior to acquisition by the Successor, the Hotel served as collateral under the credit facility. The Hotel has not presented the mortgage note payable in the accompanying financial statements as the credit facility is a line of credit for many hotel properties owned by Winston SPE II, LLC. The credit facility is not allocated to each hotel property. A portion of the proceeds from the sale to the Successor, were applied to the credit facility.

Homecourt Hospitality Purchase Accounting

On November 10, 2006, the Successor purchased the Hotel owned and operated by Winston Hotels, Inc., for a purchase price of $10 million plus closing costs of approximately $238,000, of which approximately $8 million was financed. The total cost of approximately $10.2 million was allocated to the net assets purchased based on their approximate fair market value, as determined by an independent third party appraisal as follows:

Land	$	1,025,784
Buildings and improvements		7,385,606
Furniture, fixtures and equipment		1,827,000
Property and equipment, net	$	10,238,390

-26-

Courtyard by Marriott, Winston-Salem, North Carolina

Notes to Financial Statements

December 31, 2007 and 2006

The following presents the condensed balance sheet of the Hotel as owned by the Predecessor on a historical cost basis immediately before the sale and the Hotel as owned by the Successor after the initial capitalization, the funding of debt, and the prepayment of certain expenses as set forth by the closing statement.

	Predecessor		Successor
	November 9, 2006		November 10, 2006
Assets:
Property and equipment, net	$	6,601,275	$	10,238,390
Cash		843,619		—
Restricted cash		—		—
Trade accounts receivable		46,860		—
Prepaid expenses and other assets		12,555		—
Intangible assets, net		26,855		—
Total assets	$	7,531,164	$	10,238,390
Liabilities and owner’s equity:
Note payable	$	—	$	8,000,000
Accounts payable and accrued expenses		179,133		—
Total liabilities		179,133		8,000,000
Total owners’ equity		7,352,031		2,238,390
Total liabilities and owner’s equity	$	7,531,164	$	10,238,390

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

-27-

Courtyard by Marriott, Winston-Salem, North Carolina

Notes to Financial Statements

December 31, 2007 and 2006

Property and Equipment

Prior to November 10, 2006, property and equipment was recorded at cost less accumulated depreciation. As discussed in Note A, as a result of the acquisition by the Successor, property and equipment has been adjusted to fair value at November 10, 2006. Major repairs and improvements are capitalized and normal maintenance and repairs are charged to expense as incurred. For the year ended December 31, 2007 and for the period from November 10, 2006 to December 31, 2006, depreciation is computed principally by the straight-line method over the following estimated useful lives of the related assets:

Building and improvements	39 years
Furniture, fixtures and equipment	5 years

For the period from January 1, 2006 to November 9, 2006, depreciation was computed principally by the straight-line method over the following estimated useful lives of the related assets:

Building and improvements	30 years
Land improvements	5 years
Furniture, fixtures and equipment	5 years

Depreciation expense related to property and equipment totaled approximately $462,800, $62,700 and $394,600 for the year ended December 31, 2007, the period from November 10, 2006 to December 31, 2006 and the period from January 1, 2006 to November 9, 2006, respectively.

Valuation of Long-Lived Assets

The Hotel periodically reviews long-lived assets to be held and used in operations for impairment whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. An impairment loss is recognized when the estimated, undiscounted, future cash flows from the assets are less than the carrying value of the assets. Assets to be disposed of are reported at the lower of their carrying amount or fair value less cost to sell. For the year ended December 31, 2007, the period from November 10, 2006 to December 31, 2006 and the period from January 1, 2006 to November 9, 2006, no impairment loss has been identified or recorded.

Restricted Cash

Restricted cash represents escrow and reserve accounts held as compensating balances for the note payable. This restricted cash balance is not available for use in the Hotel’s operations.

Trade Accounts Receivable

Trade accounts receivable are primarily comprised of trade receivables due from guests of the Hotel. The Hotel uses the direct write off method for uncollectible receivables which approximates the allowance for doubtful accounts method. At December 31, 2007 and 2006, no allowance for doubtful account was determined to be necessary. Recoveries of trade receivables previously written off are recorded when received.

-28-

Courtyard by Marriott, Winston-Salem, North Carolina

Notes to Financial Statements

December 31, 2007 and 2006

Intangible Assets

Deferred loan costs are amortized on a straight-line basis to interest expense over the term of the loan. The straight-line basis approximates the effective interest method of amortization for loan costs. Amortization expense of loan costs totaled approximately $10,200 and $1,700 for the year ended December 31, 2007 and for the period from November 10, 2006 to December 31, 2006. Costs associated with the Successor franchise agreement are being amortized over 12 years in accordance with the term of the agreement. Amortization expense related to the franchise agreements totaled approximately $6,000 and $790, for the year ended December 31, 2007 and the period from November 10, 2006 to December 31, 2006.

For the period from January 1, 2006 to November 9, 2006, the costs associated with the Predecessor franchise agreement were being amortized over 20 years in accordance with the term of the agreement. Amortization expense related to the intangible assets totaled approximately $4,500, for the period from January 1, 2006 to November 9, 2006.

Revenue Recognition

Revenue is derived from hotel and leisure operations, including the rental of rooms and food and beverage sales. Revenues are recognized when services have been provided. The Hotel presents sales and other taxes collected from customers on a net basis, accordingly such taxes are not included in revenues or cost of good sold.

Income Taxes

Income taxes on earnings are payable personally by the owners of the Hotel pursuant to an election under Section 701 of the Internal Revenue Code and the Hotel is not taxed as a corporation. Accordingly, no provision has been made for federal or state income taxes in these financial statements.

Recently Issued Accounting Pronouncements

In July 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation 48, Accounting for Uncertainty in Income Taxes: an interpretation of FASB Statement No. 109. (FIN 48), which clarifies SFAS 109, establishes the criterion that an individual tax position has to meet for some or all of the benefits of that position to be recognized in the Hotel’s financial statements. On initial application, FIN 48 will be applied to all tax positions for which the statute of limitations remains open. Only tax positions that meet the more-likely-than-not recognition threshold at the adoption date will be recognized or continue to be recognized. The cumulative effect of applying FIN 48 will be reported as an adjustment to retained earnings at the beginning of the period in which it is adopted. FIN 48 is effective for fiscal years beginning after December 15, 2007, and will be adopted by the Hotel effective January 1, 2008. The Hotel is currently reviewing the provisions of SFAS 157 to determine the impact on its financial statements.

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Courtyard by Marriott, Winston-Salem, North Carolina

Notes to Financial Statements

December 31, 2007 and 2006

In September 2006, the FASB issued Statement of Financial Accounting Standards (SFAS) No. 157, Fair Value Measurements (Statement 157). SFAS 157 defines fair value, establishes a framework for measuring fair value and enhances disclosures about fair value measurements required under other accounting pronouncements, but does not change existing guidance as to whether or not an instrument is carried at fair value. SFAS 157 is effective for fiscal years beginning after November 15, 2007, and will be adopted by the Hotel effective January 1, 2008. The Hotel is currently reviewing the provisions of SFAS 157 to determine the impact on its financial statements.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (Statement 159), which permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007, and will be adopted by the Hotel effective January 1, 2008. The Hotel is currently evaluating the impact of adopting SFAS 159 on its financial position, cash flows, and results of operations.

In December 2007, the FASB issued SFAS No. 141 (revised 2007),Business Combinations(Statement 141R). Statement 141R changes how a reporting enterprise will account for the acquisition of a business in fiscal years beginning after December 15, 2008. When effective, Statement 141R will replace existing Statement 141 in its entirety. Statement 141R will apply, prospectively, to business combinations with an acquisition date on or after the beginning of the first annual reporting period beginning after December 15, 2008, and will be adopted by the Hotel effective January 1, 2009. The Hotel is currently reviewing the provisions of SFAS 141R to determine its impact on its financial statements.

Note C – Property and Equipment

Property and equipment consists of the following at December 31:

	2007			2006
Land	$	1,025,784		$	1,025,784
Buildings and improvements		7,502,687			7,385,606
Furniture, fixtures and equipment		1,941,700			1,828,623
Total		10,470,171			10,240,013
Less – Accumulated depreciation		(525,503	)		(62,665	)
Property and equipment, net	$	9,944,668		$	10,177,348

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Courtyard by Marriott, Winston-Salem, North Carolina

Notes to Financial Statements

December 31, 2007 and 2006

Note D – Intangible Assets

Intangible assets consist of the following at December 31:

	2007			2006
Deferred loan costs	$	102,300		$	102,300
Deferred franchise fees		71,000			71,000
Total		173,300			173,300
Less – Accumulated amortization		(18,682	)		(2,492	)
Total intangible assets, net	$	154,618		$	170,808

Note E – Note Payable

On November 10, 2006, the Successor entered into a mortgage note payable bearing fixed interest at 5.94% with interest only payments through December 8, 2008 and monthly principal and interest payments of $47,656 beginning on January 8, 2009. The mortgage loan matures on December 8, 2016 at which time the entire outstanding principal balance will be due and payable. Additional monthly deposits to tax and insurance escrow accounts, along with other restricted cash accounts are also required. The mortgage note payable is guaranteed by members of Homecourt Hospitality, LLC, the Manager of the Hotel.

Total interest expense for the year ended December 31, 2007 and for the period from November 10, 2006 to December 31, 2006 was approximately $482,000 and $68,000, respectively. Total accrued interest as of December 31, 2007 and 2006 was approximately $32,000. The bank loan is collateralized by the hotel’s building, structures, and other tangible property.

The bank loans require the Hotel to comply with certain operating and other covenants, restrictive future encumbrances and limit situations where a change in control in the Hotel may occur. The covenants include periodically providing financial information on Hotel operations, maintenance of certain insurance coverage, ability to provide monthly deposits to restricted cash held by the bank, and restrictions on the sale or disposition of a significant portion of the Hotel’s assets. The Hotel is in compliance with the covenants, requirements and restrictions as of December 31, 2007.

Maturity of the loan is as follows:

2008	$	—
2009		91,289
2010		96,958
2011		102,978
2012		109,372
Thereafter		7,599,403
	$	8,000,000

-31-

Courtyard by Marriott, Winston-Salem, North Carolina

Notes to Financial Statements

December 31, 2007 and 2006

Note F – Commitments and Contingencies

Franchise Agreement

The Hotel is obligated to pay monthly assessments to Marriott International, Inc., in accordance with the Successor franchise agreement. Under the agreement, the Hotel is obligated to pay a marketing fund, reservation and a royalty fee based on a percentage of gross rooms revenue. Royalty fee expenses under the franchise agreement totaled approximately $158,300 and $14,600 for the year ended December 31, 2007 and period from November 10, 2006 to December 31, 2006, respectively. Other marketing and reservation related expenses of approximately $138,200 and $12,100 for the year ended December 31, 2007 and period from November 10, 2006 to December 31, 2006, respectively, are included in sales and marketing expenses. The franchise agreement terminates on October 3, 2018.

Prior to November 10, 2006, the Hotel was obligated to pay monthly assessments to Marriott International, Inc., in accordance with the Predecessor franchise agreement. Under the agreement, the Hotel was obligated to pay a royalty fee based on a percentage of gross rooms revenue, a marketing fee, a reservation fee, and a property management system fee for maintenance and use of software. Expenses under the franchise agreement totaled approximately $209,000 for the period ended November 10, 2006. The Predecessor franchise agreement was terminated on November 10, 2006 when the Hotel was sold to Homecourt Hospitality – Winston Salem, LLC.

Management Agreement

For the year ended December 31, 2007 and the period from November 10, 2006 to December 31, 2006, the Hotel is managed by MHH Management, LLC (the Manager), under a Management Agreement that has a five year term and expires November 10, 2011 (the Management Agreement). The Manager operates the Hotel in accordance with the standards outlined in the Management Agreement. Under the Management Agreement, the Hotel pays a management fee based on a percentage of total gross revenues derived from the operation of the Hotel, adjusted for certain expenses. Total management fees for the year ended December 31, 2007 and the period from November 10, 2006 to December 31, 2006 were approximately $123,300 and $11,300, respectively.

For the period from January 1, 2006 to November 9, 2006, the Hotel was managed by Noble Investment Group (the Manager), under a Management Agreement that expired December 28, 2004 and had an automatic renewal for three successive one (1) year terms (the Management Agreement). The Manager operated the Hotel in accordance with the standards outlined in the Management Agreement. Under the Management Agreement, the Hotel paid a management fee based on a percentage of total gross revenues derived from the operation of the Hotel, adjusted for certain expenses. Total management fees for the period ended November 9, 2006 were approximately $94,000.

-32-

Courtyard by Marriott, Winston-Salem, North Carolina

Balance Sheets

	March 31, 2008		December 31, 2007
	(unaudited)
Assets
Property and equipment, net	$	9,836,123	$	9,944,668
Cash		96,401		187,364
Restricted cash		271,430		206,422
Trade accounts receivable		71,198		14,300
Prepaid expenses and other assets		3,859		9,218
Intangible assets, net		152,102		154,618
Total Assets	$	10,431,113	$	10,516,590
Liabilities and Owners’ Equity
Note payable	$	8,000,000	$	8,000,000
Accounts payable and accrued expenses		176,743		239,229
Total Liabilites		8,176,743		8,239,229
Total Owner’s Equity		2,254,370		2,277,361
Total Liabilities and Owner’s Equity	$	10,431,113	$	10,516,590

-33-

Courtyard by Marriott, Winston-Salem, North Carolina

Statements of Operations

Three Month Periods Ended March 31, 2008 and 2007

Unaudited

	2008			2007
Operating revenues:
Rooms	$	709,721		$	632,528
Other		63,087			48,117
Total revenues		772,808			680,645
Expenses:
Operating expense		183,260			168,443
Depreciation and amortization expense		119,441			118,731
Administrative and general		79,025			69,837
Utilities		22,319			20,056
Property taxes		24,987			24,468
Property operations and maintenance		35,306			41,840
Management and franchise fees		70,255			62,180
Sales and marketing		61,599			57,761
Insurance and other expenses		16,749			9,881
Total expenses		612,941			573,197
Operating income		159,867			107,448
Other (expense) income:
Interest expense		(120,120	)		(118,909	)
Interest income		385			429
Total other expense		(119,735	)		(118,480	)
Net income (loss)	$	40,132		$	(11,032	)

-34-

Courtyard by Marriott, Winston-Salem, North Carolina

Statements of Cash Flows

Three Month Periods Ended March 31, 2008 and 2007

Unaudited

	2008			2007
Cash flows from operating activities:
Net income (loss)	$	40,132		$	(11,032	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization expense		119,441			118,731
Changes in operating assets and liabilities:
Trade accounts receivable		(56,898	)		(31,073	)
Prepaid expenses and other assets		4,134			25,207
Accounts payable and accrued expenses		(62,486	)		73,105
Net cash provided by operating activities		44,323			174,938
Cash flows from investing activities:
Purchase of property and equipment		(7,155	)		(45,934	)
Net cash used in investing activities		(7,155	)		(45,934	)
Cash flows from financing activities:
Restricted cash		(65,008	)		(70,776	)
Owners distributions		(63,123	)		—
Net cash used in financing activities		(128,131	)		(70,776	)
Net increase (decrease) in cash		(90,963	)		58,228
Cash, beginning of year		187,364			88,817
Cash, end of year	$	96,401		$	147,045

-35-

Apple REIT Eight, Inc.

Pro Forma Condensed Consolidated Balance Sheet as of March 31, 2008 (unaudited)

(in thousands, except share data)

The following unaudited Pro Forma Condensed Consolidated Balance Sheet of Apple REIT Eight, Inc. gives effect to the following hotel acquisitions:

Franchise	Location		Gross Purchase Price (millions)		Actual Acquisition Date
Courtyard	Winston-Salem, NC		$	13.5	May 19, 2008
Hilton Garden Inn	Hilton Head, SC			13.5	May 29, 2008
True North Hotels Portfolio (4 Hotels):
Residence Inn	Kansas City, MO			17.4	April 30, 2008
Residence Inn	Overland Park, KS			15.9	April 30, 2008
Residence Inn	Westford, MA			14.9	April 30, 2008
Fairfield Inn & Suites	Overland Park, KS			12.1	Pending
Intermountain Hotels Portfolio (2 Hotels):
Residence Inn	Fayetteville, NC			12.2	May 9, 2008
Courtyard	Wichita, KS			8.3	June 13, 2008
Dimension Hotels Portfolio (3 Hotels):
Courtyard	Cypress, CA			31.2	April 30, 2008
Homewood Suites	San Jose, CA			19.5	Pending
Homewood Suites	Tukwila, WA			14.5	Pending
Homecourt Hospitality Group (4 Hotels):
Residence Inn	Greenville, SC			8.7	May 19, 2008
Homewood Suites	Birmingham, AL	��		16.5	May 23, 2008
Homewood Suites	Jacksonville, FL			23.3	June 17, 2008
TownePlace Suites	Tampa, FL			11.2	June 17, 2008
	Total		$	232.7

This Pro Forma Condensed Consolidated Balance Sheet also assumes all of the hotels had been leased to our wholly-owned taxable REIT subsidiaries pursuant to master hotel lease arrangements. The hotels acquired will be managed by affiliates of True North Hotel Group, Inc., McKibbon Hotel Group, Inc., Intermountain Management, LLC and Dimension Development Company under separate management agreements.

Such pro forma information is based in part upon the historical Consolidated Balance Sheet of Apple REIT Eight, Inc. and the historical balance sheets of the hotel properties.

The following unaudited Pro Forma Condensed Consolidated Balance Sheet of Apple REIT Eight, Inc. is not necessarily indicative of what the actual financial position would have been assuming such transactions had been completed as of March 31, 2008, nor does it purport to represent the future financial position of Apple REIT Eight, Inc.

The unaudited Pro Forma Condensed Consolidated Balance Sheet should be read in conjunction with, and is qualified in its entirety by, the historical balance sheets of the acquired hotels.

-36-

Balance Sheet as of March 31, 2008 (unaudited)

(In thousands, except share data)

	Company Historical Balance Sheet			Pro forma Adjustments			Total Pro forma
ASSETS
Investment in hotel properties, net	$	414,974		$	238,251	(A)	$	653,225
Cash and cash equivalents		406,070			(147,762	)  (C)		258,308
Other assets, net		20,464			953	(B)		21,417
Total Assets	$	841,508		$	91,442		$	932,950
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Intangible liabilities, net	$	10,055		$	—		$	10,055
Mortgage notes payable - secured		5,143			91,442	(B)		96,585
Accounts payable and accrued expenses		2,197			—			2,197
Total liabilities		17,395			91,442			108,837
Preferred stock, authorized 15,000,000 shares		—			—			—
Series A preferred stock, no par value, authorized 200,000,000 shares		—			—			—
Series B convertible preferred stock, no par value, authorized 240,000 shares		24			—			24
Common stock, no par value, authorized 200,000,000 shares		843,990			—			843,990
Distributions greater than net income		(19,901	)		—			(19,901	)
Total shareholders’ equity		824,113			—			824,113
Total liabilities and shareholders’ equity	$	841,508		$	91,442		$	932,950

-37-

Notes to Pro Forma Condensed Consolidated Balance Sheet (unaudited)

(A) The estimated total purchase price for the 15 properties that have been, or will be, purchased after March 31, 2008 consists of the following. This purchase price allocation is preliminary and subject to change.

(In thousands)	True North Hotels Portfolio			Intermountain Hotels Portfolio			Dimension Hotels Portfolio		Winston-Salem, NC Courtyard			Homecourt Hotels Portfolio			Hilton Head, SC Hilton Garden Inn			Total Combined
Purchase price per contract	$	60,100		$	20,474		$	65,164	$	13,500		$	59,700		$	13,500		$	232,438
Other closing and capitalized costs (credits) incurred		301			103			326		68			299			68			1,165
Acquisition fee payable to Apple Suites Realty Group (2% of purchase price per contract)		1,202			409			1,303		270			1,194			270			4,648
Investment in hotel properties		61,603			20,986			66,793		13,838			61,193			13,838			238,251	(A)
Net other assets/(liabilities) assumed		(25,665	)		(7,060	)		—		(7,920	)		(43,381	)		(6,463	)		(90,489	)  (B)
Total purchase price	$	35,938		$	13,926		$	66,793	$	5,918		$	17,812		$	7,375		$	147,762	(C)

(B) Represents other assets and liabilities assumed in the acquisition of the hotels including, mortgages payable, operational charges and credits and prepaid or accrued property taxes.

(C) Represents the reduction of cash and cash equivalents by the amount utilized to fund the acquisitions.

-38-

Apple REIT Eight, Inc.

Pro Forma Condensed Consolidated Statement of Operations (unaudited)

For the year ended December 31, 2007 and three months ended March 31, 2008

(in thousands, except per share data)

The following unaudited Pro Forma Condensed Consolidated Statements of Operations of Apple REIT Eight, Inc. gives effect to the following hotel acquisitions:

Franchise	Location	Gross Purchase Price (millions)		Actual Acquisition Date
Courtyard	Somerset, NJ	$	16.0	November 9, 2007
SpringHill Suites	Greensboro, NC		8.0	November 9, 2007
Courtyard	Harrisonburg, VA		23.2	November 16, 2007
Hampton Inn	Bowling Green, KY		18.8	December 6, 2007
Homewood Suites	Chattanooga, TN		8.6	December 14, 2007
Hampton Inn	Port Wentworth, GA		10.8	January 2, 2008
Independent	New York, NY		99.0	January 4, 2008
Hilton Garden Inn	Annapolis, MD		25.0	January 15, 2008
Hampton Inn	Matthews, NC		11.3	January 15, 2008
Hampton Inn	Dunn, NC		12.5	January 24, 2008
Hilton Garden Inn	Tallahassee, FL		13.2	January 25, 2008
Hampton Inn	Concord, NC		9.2	March 7, 2008
SpringHill Suites	Sanford, FL		11.2	March 14, 2008
Courtyard	Winston-Salem, NC		13.5	May 19, 2008
Hilton Garden Inn	Hilton Head, SC		13.5	May 29, 2008
True North Hotels Portfolio (7 Hotels):
Residence Inn	Marlborough, MA		20.2	January 15, 2008
Hampton Inn & Suites	Westford, MA		15.3	March 6, 2008
SpringHill Suites	Overland Park, KS		8.9	March 17, 2008
Residence Inn	Kansas City, MO		17.4	April 30, 2008
Residence Inn	Overland Park, KS		15.9	April 30, 2008
Residence Inn	Westford, MA		14.9	April 30, 2008
Fairfield Inn & Suites	Overland Park, KS		12.1	Pending
Intermountain Hotels Portfolio (7 Hotels):
Fairfield Inn & Suites	Rogers, AR		8.0	February 29, 2008
Residence Inn	Rogers, AR		11.7	February 29, 2008
Courtyard	Texarkana, TX		12.9	March 7, 2008
TownePlace Suites	Texarkana, TX		9.1	March 7, 2008
Residence Inn	Springdale, AR		5.6	March 14, 2008
Residence Inn	Fayetteville, NC		12.2	May 9, 2008
Courtyard	Wichita, KS		8.3	June 13, 2008
Dimension Hotels Portfolio (4 Hotels):
Hilton Garden Inn	Sacramento, CA		27.6	March 7, 2008
Courtyard	Cypress, CA		31.2	April 30, 2008
Homewood Suites	San Jose, CA		19.5	Pending
Homewood Suites	Tukwila, WA		14.5	Pending
Homecourt Hospitality Group (4 Hotels):
Residence Inn	Greenville, SC		8.7	May 19, 2008
Homewood Suites	Birmingham, AL		16.5	May 23, 2008
Homewood Suites	Jacksonville, FL		23.3	June 17, 2008
TownePlace Suites	Tampa, FL		11.2	June 17, 2008
	Total	$	618.8

These Pro Forma Condensed Consolidated Statements of Operations also assume all of the hotels had been leased to our wholly-owned taxable REIT subsidiaries pursuant to master hotel lease arrangements. The hotels acquired will be managed by affiliates of Newport Hospitality Group, Inc., Larry Blumberg & Associates, True North Hotel Group, Inc., White Lodging Services Corporation, McKibbon Hotel Group, Inc., Intermountain Management, LLC, Marriott International, Inc. and Dimension Development Company under separate management agreements.

Such pro forma information is based in part upon the historical Consolidated Statement of Operations of Apple REIT Eight, Inc. and the historical Statements of Operations of the hotel properties.

The following unaudited Pro Forma Condensed Consolidated Statements of Operations of Apple REIT Eight, Inc. are not necessarily indicative of what the actual financial results would have been assuming such transactions had been completed as of January 1, 2007, nor do they purport to represent the future financial results of Apple REIT Eight, Inc.

The unaudited Pro Forma Condensed Consolidated Statements of Operations should be read in conjunction with, and is qualified in its entirety by, the historical Statements of Operations of the acquired hotels.

-39-

Pro Forma Condensed Consolidated Statement of Operations (unaudited)

For the three months ended March 31, 2008

(In thousands, except per share data)

	Company Historical Statement of Operations			Charlotte/ Matthews - Hilton Hampton Inn (A)		Riva Hospitality, LLC Annapolis, MD Hilton Garden Inn (A)			Dunn, NC Hampton Inn (A)		Carlton Hospitality, LLC Tallahassee, FL Hilton Garden Inn (A)		Concord, NC Hampton Inn (A)		Sanford, FL Spring Hill Suites (A)		True North Hotels Portfolio (7 Hotels) (A)			Intermountain Hotels Portfolio (7 Hotels) (A)
Revenue:
Room revenue	$	11,631		$	99	$	70		$	125	$	177	$	383	$	658	$	3,697		$	3,180
Other revenue		980			2		4			2		21		7		29		22			90
Total revenue		12,611			101		74			127		198		390		687		3,719			3,270
Expenses:
Operating expenses		6,422			25		55			56		64		155		252		1,739			1,205
General and administrative		1,144			8		27			10		10		35		27		313			383
Management and franchise fees		816			11		6			10		30		28		50		341			321
Taxes, insurance and other		709			4		11			5		9		22		39		204			183
Depreciation of real estate owned		2,729			—		—			—		—		27		—		610			302
Land lease		1,506			—		—			—		—		—		—		—			—
Investment and interest, net		(6,231	)		—		—			—		—		79		—		582			234
Total expenses		7,095			48		99			81		113		346		368		3,789			2,628
Income tax expense		—			—		—			—		—		—		—		—			—
Net income (loss)	$	5,516		$	53	$	(25	)	$	46	$	85	$	44	$	319	$	(70	)	$	642
Basic and diluted earnings per common share	$	0.07
Weighted average common shares outstanding - basic and diluted		75,397

-40-

Pro Forma Condensed Consolidated Statement of Operations (unaudited)

For the three months ended March 31, 2008

(In thousands, except per share data)

	Dimension Hotels Portfolio (4 Hotels) (A)		Winston-Salem, NC Courtyard (A)		Homecourt Hospitality Group (4 Hotels) (A)		Hilton Head, SC Hilton Garden Inn (A)			Pro forma Adjustments			Total Pro forma
Revenue:
Room revenue	$	4,828	$	710	$	3,106	$	424		$	—			29,088
Other revenue		418		63		56		36			—			1,730
Total revenue		5,246		773		3,162		460			—			30,818
Expenses:
Operating expenses		2,215		303		1,066		239			—			13,796
General and administrative		421		79		291		47			—			2,795
Management and franchise fees		336		70		263		23			—			2,305
Taxes, insurance and other		271		42		176		48			—			1,723
Depreciation of real estate owned		512		119		653		97			(2,320	)  (C)		4,882
											2,153	(D)
Land lease		—		—		—		—			—			1,506
Investment and interest, net		756		120		668		102			625	(E)		(3,065	)
Total expenses		4,511		733		3,117		556			458			23,942
Income tax expense		—		—		—		—			—	(G)		—
Net income (loss)	$	735	$	40	$	45	$	(96	)	$	(458	)		6,876
Basic and diluted earnings per common share													$	0.09
Weighted average common shares outstanding - basic and diluted											—	(F)		75,397

-41-

Pro Forma Condensed Consolidated Statement of Operations (unaudited)

For the year ended December 31, 2007

(In thousands, except per share data)

	Company Historical Statement of Operations			TLC Somerset, S.M.L.L.C. Somerset, NJ Courtyard (A)		Newport Patriot, L.L.C. Bowling Green, KY Hampton Inn (A)		Amtel Associates, LLC Chattanooga, TN Homewood Suites (A)		BRR Greensboro, S.M.L.L.C. & BRR Harrisonburg, S.M.L.L.C. SpringHill Suites and Courtyard (A)		Newport Historic, L.L.C., Newport Virginian, L.L.C. & Newport Savannah, L.L.C. Port Wentworth, GA Hampton Inn (A)		Hotel 57 New York, NY Indpendent (A)
Revenue:
Room revenue	$	1,385		$	4,181	$	3,181	$	2,011	$	5,395	$	2,942	$	12,702
Other revenue		100			429		51		50		239		40		2,153
Total revenue		1,485			4,610		3,232		2,061		5,634		2,982		14,855
Expenses
Operating expenses		769			2,284		1,343		725		2,002		1,058		11,416
General and administrative		1,046			463		315		178		574		382		2,051
Management and franchise fees		117			432		252		260		764		390		501
Taxes, insurance and other		165			198		78		164		135		160		531
Depreciation of real estate owned		333			180		208		—		319		299		2,604
Interest, net		(6,343	)		507		152		375		321		397		4,421
Total expenses		(3,913	)		4,064		2,348		1,702		4,115		2,686		21,524
Income tax expense		—			—		57		—		35		—		—
Net income (loss)	$	5,398		$	546	$	827	$	359	$	1,484	$	296	$	(6,669	)
Basic and diluted earnings (loss) per common share	$	0.35
Weighted average common shares outstanding - basic and diluted		15,376

-42-

Pro Forma Condensed Consolidated Statement of Operations (unaudited)

For the year ended December 31, 2007

(In thousands, except per share data)

	Charlotte/ Matthews - Hilton Hampton Inn (A)		Riva Hospitality, LLC Annapolis, MD Hilton Garden Inn (A)			Dunn, NC Hampton Inn (A)			Carlton Hospitality, LLC Tallahassee, FL Hilton Garden Inn (A)			Concord, NC Hampton Inn (A)		Sanford, FL SpringHill Suites (A)			True North Hotels Portfolio (7 Hotels) (A)		Intermountain Hotels Portfolio (7 Hotels) (A)
Revenue:
Room revenue	$	2,610	$	1,557		$	2,408		$	2,700		$	2,245	$	2,500		$	18,275	$	15,158
Other revenue		70		69			30			318			54		113			95		454
Total revenue		2,680		1,626			2,438			3,018			2,299		2,613			18,370		15,612
Expenses
Operating expenses		876		992			854			1,422			707		1,290			8,126		5,950
General and administrative		273		307			403			115			201		86			1,392		2,138
Management and franchise fees		218		197			194			258			288		308			1,761		1,482
Taxes, insurance and other		85		60			93			218			101		242			908		855
Depreciation of real estate owned		136		608			338			841			248		221			2,501		1,886
Interest, net		181		393			764			541			249		(17	)		3,612		2,850
Total expenses		1,769		2,557			2,646			3,395			1,794		2,130			18,300		15,161
Income tax expense		—		—			—			—			—		—			—		—
Net income (loss)	$	911	$	(931	)	$	(208	)	$	(377	)	$	505	$	483		$	70	$	451
Basic and diluted earnings (loss) per common share
Weighted average common shares outstanding - basic and diluted

-43-

Pro Forma Condensed Consolidated Statement of Operations (unaudited)

For the year ended December 31, 2007

(In thousands, except per share data)

	Dimension Hotels Portfolio (4 Hotels) (A)		Winston-Salem, NC Courtyard (A)		Homecourt Hospitality Group (4 Hotels) (A)			Hilton Head, SC Hilton Garden Inn (A)			Pro forma Adjustments			Total Pro forma
Revenue:
Room revenue	$	20,378	$	2,860	$	12,043		$	2,172		$	—		$	116,703
Other revenue		2,055		222		239			224			—			7,005
Total revenue		22,433		3,082		12,282			2,396			—			123,708
Expenses
Operating expenses		7,338		1,248		4,413			1,130			—			53,943
General and administrative		3,718		345		1,190			206			2,000	(B)		17,383
Management and franchise fees		2,382		282		986			156			—			11,228
Taxes, insurance and other		811		156		669			215			—			5,844
Depreciation of real estate owned		3,509		469		2,501			391			(17,592	)  (C)		18,331
												18,331	(D)
Interest, net		3,362		490		2,731			421			(10,146	)  (E)		5,261
Total expenses		21,120		2,990		12,490			2,519			(7,407	)		111,990
Income tax expense		—		—		—			—			(92	)  (G)		—
Net income (loss)	$	1,313	$	92	$	(208	)	$	(123	)	$	7,499		$	11,718
Basic and diluted earnings (loss) per common share														$	0.22
Weighted average common shares outstanding - basic and diluted												38,683	(F)		54,059

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Notes to Pro Forma Condensed Consolidated Statements of Operations (unaudited):

(A) Represents results of operations for the hotels on a pro forma basis as if the hotels were owned by the Company at January 1, 2007 for the respective period prior to acquisition by the Company. The Company was initially formed on January 22, 2007, and had no operations before that date. Additionally, two properties began operations during 2007, and one property remained under construction as of March 31, 2008. Therefore, these hotels had limited historical operational activity prior to their opening. The properties and their applicable status are as follows: Annapolis, MD Hilton Garden Inn, opened June 2007, Westford, MA Hampton Inn & Suites, opened August 2007 and Overland Park, KS Fairfield Inn & Suites is under construction.

(B) Represents adjustments to level of administrative and other costs associated with being a public company and owning additional properties, including the advisory fee, accounting and legal expenses, net of cost savings derived from owning multiple operating properties.

(C) Represents elimination of historical depreciation and amortization expense of the acquired properties.

(D) Represents the depreciation on the hotels acquired based on the purchase price allocation to depreciable property and the dates the hotels began operation. The weighted average lives of the depreciable assets are 39 years for building and seven years for furniture, fixtures and equipment (FF&E). These estimated useful lives are based on management’s knowledge of the properties and the hotel industry in general.

(E) Interest expense related to prior owner’s debt which was not assumed has been eliminated. Interest income has been adjusted for funds used to acquire properties as of January 1, 2007, or the dates the hotels began operations.

(F) Represents the weighted average number of shares required to be issued to generate the purchase price of each hotel, net of any debt assumed. The calculation assumes all properties were acquired on the latter of January 1, 2007, or the dates the hotels began operations.

(G) Estimated income tax expense of our wholly owned taxable REIT subsidiaries is zero based on the contractual agreements put in place between the Company and our lessees, based on a combined tax rate of 40% of taxable income. Based on the terms of the lease agreements, our taxable subsidiaries would have incurred a loss during these periods. No operating loss benefit has been recorded as realization is not certain.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Apple REIT Eight, Inc.
By:	/s/    Glade M. Knight
	Glade M. Knight, Chief Executive Officer June 20, 2008

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