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 13, 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 13, 2008 and filed (by the required date) on May 15, 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 9.01Financial Statements and Exhibits.

(a)	Financial statements of business acquired.
	1stStreet Hotel LLC (prior owner of the Burbank, California Residence Inn)
	(Audited)
	Independent Auditor’s Report	4
	Balance Sheet – December 31, 2007	5
	Statement of Operations – Year Ended December 31, 2007	6
	Statement of Members’ Equity – Year Ended December 31, 2007	7
	Statement of Cash Flows – Year Ended December 31, 2007	8
	Notes to Financial Statements	9-11
	(Unaudited)
	Balance Sheets – March 31, 2008 and March 31, 2007	12
	Statements of Operations – Three Months Ended March 31, 2008 and 2007	13
	Statements of Cash Flows – Three Months Ended March 31, 2008 and 2007	14
	Ocean Ranch Hotels LLC (prior owner of the San Diego, California Residence Inn)
	(Audited)
	Independent Auditor’s Report	15
	Balance Sheet – December 31, 2007	16
	Statement of Operations – Year Ended December 31, 2007	17
	Statement of Members’ Equity – Year Ended December 31, 2007	18
	Statement of Cash Flows – Year Ended December 31, 2007	19
	Notes to Financial Statements	20-23
	(Unaudited)
	Balance Sheets – March 31, 2008 and March 31, 2007	24
	Statements of Operations – Three Months Ended March 31, 2008 and 2007	25
	Statements of Cash Flows – Three Months Ended March 31, 2008 and 2007	26

2

(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	27
	Notes to Pro Forma Condensed Consolidated Balance Sheet	29
	Pro Forma Condensed Consolidated Statements of Operations for the Year Ended December 31, 2007 and Three Months Ended March 31, 2008	30
	Notes to Pro Forma Condensed Consolidated Statements of Operations	36
(c)	Shell company transactions.
	Not Applicable.
(d)	Exhibits.
	None.

3

INDEPENDENT AUDITOR’S REPORT

The Members

1^st Street Hotel LLC

We have audited the accompanying balance sheet of 1st Street Hotel LLC (the “Company”) as of December 31, 2007, and the related statements of operations, members’ equity, and cash flows for the year then ended. 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. 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 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 financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2007, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 7, the hotel assets of the Company were sold on May 13, 2008.

/s/ Moss Adams LLP

Irvine, California

July 14, 2008

4

1ST STREET HOTEL LLC

BALANCE SHEET

DECEMBER 31, 2007

ASSETS
Investment in hotel property, net of accumulated depreciation of $194,742	$	36,244,647
Cash and cash equivalents		288,777
Restricted cash		27,691
Accounts receivable		208,957
Total assets	$	36,770,072
LIABILITIES AND MEMBERS’ EQUITY
Accounts and retentions payable	$	1,856,686
Note payable		25,536,622
Total liabilities		27,393,308
MEMBERS’ EQUITY		9,376,764
	$	36,770,072

Seeaccompanying notes.

5

1ST STREET HOTEL LLC

STATEMENT OF OPERATIONS

YEAR ENDED DECEMBER 31, 2007

REVENUES:
Rooms	$	1,411,250
EXPENSES:
Sales and marketing		332,958
Hotel administration and general		288,260
Operating		229,431
Depreciation and amortization		194,742
Management fees		116,141
Repairs and maintenance		66,119
Utilities		59,230
Total expenses		1,286,881
OPERATING INCOME		124,369
Interest expense		(390,650	)
NET LOSS	$	(266,281	)

See accompanying notes.

6

1ST STREET HOTEL LLC

STATEMENT OF MEMBERS’ EQUITY

YEAR ENDED DECEMBER 31, 2007

Balance, January 1, 2007	$	9,781,953
Distributions		(138,908	)
Net loss		(266,281	)
Balance, December 31, 2007	$	9,376,764

Seeaccompanying notes.

7

1ST STREET HOTEL LLC

STATEMENT OF CASH FLOWS

DECEMBER 31, 2007

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(266,281	)
Noncash items included in net loss:
Depreciation and amortization		194,742
Changes in:
Accounts receivables		(208,957	)
Accounts and retentions payable		52,531
Net cash used in operating activities		(227,965	)
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in Hotel		(21,898,081	)
Increase in restricted cash		(27,691	)
Net cash used in investing activities		(21,925,772	)
CASH FLOWS FROM FINANCING ACTIVITIES
Notes payable proceeds		22,546,873
Member distributions		(138,908	)
Net cash provided by financing activities		22,407,965
NET INCREASE IN CASH AND CASH EQUIVALENTS		254,228
CASH AND CASH EQUIVALENTS, beginning of year		34,549
CASH AND CASH EQUIVALENTS, end of year	$	288,777
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for interest, net of interest capitalized of $737,000	$	390,650

See accompanying notes.

8

1ST STREET HOTEL LLC

NOTES TO FINANCIAL STATEMENTS

Note 1 - Nature of Business

1st Street Hotel LLC (the “Company”), is a Delaware limited liability company which was formed on June 2, 2006 for the purpose of acquiring land, developing a Residence Inn by Marriott (the “Hotel”) and operating the Company under a management agreement with the Residence Inn by Marriott (the “Manager”). The Hotel, located in Burbank, California, became operational in October 2007, when the management agreement became effective and the Company commenced operations.

Note 2 - Summary of Significant Accounting Policies

Cash and cash equivalents - Cash and cash equivalents include cash held in financial institutions, and other highly liquid short term investments with initial maturity of ninety days or less.

Restricted cash - Pursuant to the management agreement, the Company is required to maintain cash reserves for the replacement of and additions to furniture, fixtures and equipment. The unexpended reserve, classified as restricted cash, totaled $27,691 as of December 31, 2007.

Concentration of credit risk - The Company has placed the majority of its cash with one major financial institution. At December 31, 2007 and at various times throughout the year then ended, the Company maintained balances of cash and cash equivalents in excess of federally insured limits.

Investment in Hotel Property - The investment in the Hotel is stated at cost. Interest incurred during the construction of the Hotel has been capitalized and is being depreciated over the life of the asset. Total interest capitalized was approximately $737,000. Costs of improvements are capitalized. Costs of normal repairs and maintenance are charged to expense as incurred. Depreciation expense is computed using the straight-line method over the estimated useful lives of the assets. The useful lives of assets are 39 years for building and improvements and 7 years for furniture, fixtures and equipment.

Valuation of long-lived assets - The Company accounts for the valuation of long-lived assets under Statement of Financial Accounting Standards (“SFAS”) No. 144,Accounting for the Impairment or Disposal of Long-lived Assets.SFAS No. 144 requires that long-lived assets and certain identifiable intangible assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of the long-lived asset is measured by a comparison of the carrying amount of the asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets. Assets to be disposed of are reportable at the lower of the carrying amount or fair value, less costs to sell. No impairment losses have been recorded to date.

9

1ST STREET HOTEL LLC

NOTES TO FINANCIAL STATEMENTS

Note 2 - Summary of Significant Accounting Policies(continued)

Revenue recognition - Revenue is recognized as earned, which is generally defined as the date upon which a guest occupies a room or consummation of purchases of other hotel services.

Income taxes - No federal or state income taxes are payable by the Company and, therefore, no tax provision has been reflected in the accompanying financial statements. The Company is treated as partnership for federal and state income tax purposes. The members are required to include their respective share of the Company’s profits or losses in their individual tax returns. The tax returns, the status of the Company for tax purposes, and the amount of allocable income or loss from the Company, are subject to examinations by the Internal Revenue Service and if examination result in changes with respect to the Company’s tax status, or in changes to allowable income or loss from the Company, the tax liability of the members would be changed accordingly.

Loan origination costs - Construction loan costs are capitalized to investment in Hotel Property and are depreciated in accordance with the Company’s normal depreciation policies.

Accounting 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 amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Note 3 - Investment in Hotel Property

Investment in Hotel Property consists of the following at December 31, 2007:

Land and land improvements	$	4,430,866
Building and improvements		29,041,802
Furniture, fixtures and equipment		2,966,721
		36,439,389
Accumulated depreciation and amortization		(194,742	)
Investment in Hotel Property, net	$	36,244,647

10

1ST STREET HOTEL LLC

NOTES TO FINANCIAL STATEMENTS

Note 4 - Note Payable

In May 2006, the Company obtained a construction note payable from a bank for a maximum commitment of $26,575,000. The term of the note is 48 months, with interest only payments through June 2009 and principal and interest payments until June 1, 2010 on which date the entire remaining unpaid balance is due. As of December 31, 2007, the Hotel was operational although construction costs continued to be incurred and the Company had drawn a total of $25,536,622. The final draw was made in March 2008. The loan is secured by the investment in the Company.

In January 2008, the Company amended the construction loan to include an additional $1,600,000 in funds, bringing the total maximum construction loan commitment to $28,175,000, to cover the remaining construction costs.

As discussed in Note 7, the note was repaid in full using the proceeds from the sale of the Hotel in May 2008.

Note 5 - Management Agreement

The Company has a management agreement with the Residence Inn by Marriott, Inc. (“Marriott”), a Delaware corporation, to operate the Company under the name Residence Inn by Marriott. The management agreement has a 30-year term with the option to renew for two additional 10-year terms. The management agreement entitles Marriott to a monthly base management fee as well as an incentive management fee. The base management fee is equal to 6% of gross revenues for the first two years of operations and 7% thereafter. The incentive management fee is equal to 25% of the excess of the operating profit (as defined by the agreement) over $4,141,200.

Note 6 - Related Party Transactions

The managing member of the Company is also the President and CEO of a company related through common ownership and management. The Company awarded the contract for the development of the Company totaling approximately $36,325,000 to this company for a development fee of $1,373,346. Payables under related party contracts at December 31, 2007 totaled approximately $1,800,000 and are included in accounts payable.

The Company pays a 5% management fee on net house profit of the Company to a company related through common ownership for performing management and administrative functions for the Company. During the year ended December 31, 2007, approximately $31,000 was paid in management fees to this related party.

Note 7 - Subsequent Event

On May 13, 2008, the Hotel was sold to Apple REIT Eight, Inc for a gross purchase price of approximately $50 million. The construction note payable was repaid using the proceeds from the sale.

11

1ST STREET HOTEL LLC

BALANCE SHEETS (unaudited)

	March 31, 2008		March 31, 2007
ASSETS
Investment in hotel, net of accumulated depreciation of $490,456	$	36,379,815	$	21,037,730
Cash and cash equivalents		400,616		28,953
Restricted cash		63,883		—
Accounts receivable		312,950		—
Total assets	$	37,157,264	$	21,066,683
LIABILITIES AND MEMBERS’ EQUITY
Accounts and retentions payable	$	282,504	$	2,145,232
Notes payable		27,543,084		9,142,498
Total liabilities		27,825,588		11,287,730
MEMBERS’ EQUITY		9,331,676		9,778,953
	$	37,157,264	$	21,066,683

12

1ST STREET HOTEL LLC

STATEMENTS OF OPERATIONS (unaudited)

THREE MONTHS ENDED MARCH 31,

	2008			2007
REVENUES:
Rooms	$	1,782,904		$	—
EXPENSES:
Operating		278,971			3,000
Hotel administration		254,318			—
Sales and marketing		125,543			—
Utilities		54,470			—
Repairs and maintenance		75,808			—
Management fees		150,854			—
Depreciation and amortization		295,714			—
Total expenses		1,235,678			3,000
OPERATING INCOME (LOSS)		547,226			(3,000	)
Interest expense		(397,848	)		—
NET INCOME (LOSS)	$	149,378		$	(3,000	)

13

1ST STREET HOTEL LLC

STATEMENTS OF CASH FLOWS (unaudited)

THREE MONTHS ENDED MARCH 31,

	2008			2007
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	149,378		$	(3,000	)
Noncash items included in net income (loss):
Depreciation and amortization		295,714			—
Changes in:
Accounts receivables		(103,993	)		—
Accounts and retentions payable		(1,574,182	)		341,077
Net cash provided by (used in) operating activities		(1,233,083	)		338,077
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in Hotel		(430,882	)		(6,496,422	)
Increase in restricted cash		(36,192	)		—
Net cash used in investing activities		(467,074	)		(6,496,422	)
CASH FLOWS FROM FINANCING ACTIVITIES
Note payable proceeds		2,006,462			6,152,749
Member distributions		(194,466	)		—
Net cash provided by financing activities		1,811,996			6,152,749
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		111,839			(5,596	)
CASH AND CASH EQUIVALENTS, beginning of year		288,777			34,549
CASH AND CASH EQUIVALENTS, end of year	$	400,616		$	28,953
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for interest	$	397,848		$	—

14

INDEPENDENT AUDITOR’S REPORT

The Members

Ocean Ranch Hotels LLC

We have audited the accompanying balance sheet of Ocean Ranch Hotels LLC (the “Company”) as of December 31, 2007, and the related statements of operations, members’ equity, and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on this financial statement based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. 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 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 audit provides a reasonable basis for our opinion.

In our opinion, the financial statement referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2007, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 7, the hotel assets of the Company were sold on May 13, 2008.

/s/ Moss Adams LLP

Irvine, California

July 14, 2008

15

OCEAN RANCH HOTELS LLC

BALANCE SHEET

DECEMBER 31, 2007

ASSETS
Investment in Hotel property, net of accumulated depreciation of $179,603	$	21,494,491
Cash and cash equivalents		237,636
Restricted cash		21,635
Accounts receivable		113,255
Total assets	$	21,867,017
LIABILITIES AND MEMBERS’ EQUITY
Accounts and retentions payable	$	405,000
Note payable		17,103,623
Total liabilities		17,508,623
MEMBERS’ EQUITY		4,358,394
	$	21,867,017

See accompanying notes.

16

OCEAN RANCH HOTELS LLC

STATEMENT OF OPERATIONS

YEAR ENDED DECEMBER 31, 2007

REVENUES:
Rooms	$	1,087,327
EXPENSES:
Operating		204,798
Hotel administration and general		237,244
Sales and marketing		314,771
Utilities		44,464
Repairs and maintenance		26,393
Management fees		87,696
Depreciation and amortization		179,603
Total expenses		1,094,969
OPERATING LOSS		(7,642	)
Interest expense		(308,219	)
NET LOSS	$	(315,861	)

Seeaccompanying notes.

17

OCEAN RANCH HOTELS LLC

STATEMENT OF MEMBERS’ EQUITY

YEAR ENDED DECEMBER 31, 2007

Balance, January 1, 2007	$	4,758,230
Distributions		(83,975	)
Net loss		(315,861	)
Balance, December 31, 2007	$	4,358,394

See accompanying notes.

18

OCEAN RANCH HOTELS LLC

STATEMENT OF CASH FLOWS

DECEMBER 31, 2007

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(315,861	)
Noncash items included in net loss:
Depreciation and amortization		179,603
Changes in:
Accounts receivables		(113,255	)
Accounts and retentions payable		(1,014,555	)
Net cash used in operating activities		(1,264,068	)
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in Hotel		(14,876,864	)
Increase in restricted cash		(21,635	)
Net cash used in investing activities		(14,898,499	)
CASH FLOWS FROM FINANCING ACTIVITIES
Note payable proceeds		16,473,471
Member distributions		(83,975	)
Net cash provided by financing activities		16,389,496
NET INCREASE IN CASH AND CASH EQUIVALENTS		226,929
CASH AND CASH EQUIVALENTS, beginning of year	$	10,707
CASH AND CASH EQUIVALENTS, end of year	$	237,636
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for interest, net of interest capitalized of $362,678	$	(308,219	)

Seeaccompanying notes.

19

OCEAN RANCH HOTELS LLC

NOTES TO FINANCIAL STATEMENTS

Note 1- Nature of Business

Ocean Ranch Hotels LLC (the “Company”), is a California limited liability company which was formed on July 21, 2006 for the purpose of acquiring land, developing a Residence Inn by Marriott (the “Hotel”) and operating the hotel under a management agreement with the Residence Inn by Marriott (the “Manager”). The Hotel, located in Oceanside, California became operational in September 2007, when the management agreement became effective and the Company commenced operations.

Note 2 - Summary of Significant Accounting Policies

Cash and cash equivalents - Cash and cash equivalents include cash held in financial institutions, and other highly liquid short term investments with initial maturity of ninety days or less.

Restricted cash - Pursuant to the management agreement, the Company is required to maintain cash reserves for the replacement of and additions to furniture, fixtures and equipment. The unexpended reserve, classified as restricted cash, totaled $21,635 as of December 31, 2007.

Concentration of credit risk - The Company has placed the majority of its cash with one major financial institution. At December 31, 2007 and at various times throughout the year then ended, the Hotel maintained balances of cash and cash equivalents in excess of federally insured limits.

Investment in Hotel Property - The investment in the Hotel is stated at cost. Interest incurred during the construction of the Hotel has been capitalized and is being depreciated over the life of the asset. Total interest capitalized was approximately $363,000. Costs of improvements are capitalized. Costs of normal repairs and maintenance are charged to expense as incurred. Depreciation expense is computed using the straight-line method over the estimated useful lives of the assets. The useful lives of assets are 39 years for buildings and improvements and 7 years for furniture, fixtures and equipment.

20

OCEAN RANCH HOTELS LLC

NOTES TO FINANCIAL STATEMENTS

Note 2 - Summary of Significant Accounting Policies(continued)

Valuation of long-lived assets - The Company accounts for the valuation of long-lived assets under Statement of Financial Accounting Standards SFAS No. 144,Accounting for the Impairment or Disposal of Long-lived Assets.SFAS No. 144 requires that long-lived assets and certain identifiable intangible assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of the long-lived asset is measured by a comparison of the carrying amount of the asset to future undiscounted net cash flows expected to be generated by the asset, exclusive of interest. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets. Assets to be disposed of are reportable at the lower of the carrying amount or fair value, less costs to sell. No impairment losses have been recorded to date.

Revenue recognition - Revenue is recognized as earned, which is generally defined as the date upon which a guest occupies a room or consummation of purchases of other hotel services.

Income taxes - No federal or state income taxes are payable by the Company and, therefore, no tax provision has been reflected in the accompanying financial statements. The Company is treated as a partnership for federal and state income tax purposes. The members are required to include their respective share of the Company’s’ profits or losses in their individual tax returns. The tax returns, the status of the Company for tax purposes, and the amount of allocable income or loss from the Company, are subject to examinations by the Internal Revenue Service and if examination result in changes with respect to the Company’s tax status, or in changes to allowable income or loss from the Company, the tax liability of the members would be changed accordingly.

Loan origination costs - Construction loan costs are capitalized to investment in Hotel Property and are depreciated in accordance with the Company’s normal depreciation policies.

Accounting 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 amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

21

OCEAN RANCH HOTELS LLC

NOTES TO FINANCIAL STATEMENTS

Note 3 - Investment in Hotel Property

Investment in Hotel Property consists of the following at December 31, 2007:

Land and land improvements	$	2,529,049
Building and improvements		17,204,056
Furniture, fixtures and equipment		1,940,989
		21,674,094
Accumulated depreciation and amortization		(179,603	)
Investment in Hotel Property, net	$	21,494,491

Note 4 - Notes Payable

In September 2006, the Company obtained a construction note payable from a bank for a maximum commitment of $17,868,678. The term of the note is 48 months, with interest only payments due monthly. The loan expires on September 7, 2010 on which date the entire remaining unpaid balance is due. As of December 31, 2007, the Hotel was operational although construction costs continued to be incurred and the Company had drawn a total of $17,103,623. The final draw was made in March 2008. The loan is secured by the investment in the Hotel.

As discussed in Note 7, the note was repaid in full using the proceeds from the Hotel in May 2008.

Note 5 - Management Agreement

The Hotel has a management agreement with the Residence Inn by Marriott, Inc. (“Marriott”), a Delaware corporation, to operate the Hotel under the name Residence Inn by Marriott. The management agreement has a 30 year term with the option to renew for two additional ten-year terms. The management agreement entitles Marriott to a monthly base management fee as well as an incentive management fee. The base management fee is equal to 6% of gross revenues for the first two years of operations and 7% thereafter. The incentive management fee is equal to 25% of the excess of the operating profits (as defined by the agreement) over $2,306,400.

22

OCEAN RANCH HOTELS LLC

NOTES TO FINANCIAL STATEMENTS

Note 6 - Related Party Transactions

The managing member of the Company is also the President and CEO of a company related through common ownership and management. The Company awarded the contract for the development of the Company totaling approximately $22,618,678 to this company for a development fee of $859,071. Payables under related party contracts at December 31, 2007 totaled approximately $405,000 and are included in accounts payable.

The Company pays a 5% management fee on net house profit of the Hotel to a company related through common ownership for performing management and administrative functions for the Hotel. During the year ended December 31, 2007, approximately $22,000 was paid in management fees to this related party.

Note 7 - Subsequent Event

On May 13, 2008, the Hotel was sold to Apple REIT Eight, Inc for a gross purchase price of approximately $28 million. The construction note payable was repaid using the proceeds from the sale.

23

OCEAN RANCH HOTELS LLC

BALANCE SHEETS (unaudited)

	March 31, 2008		March 31, 2007
ASSETS
Investment in hotel, net of accumulated depreciation of $361,554	$	21,678,834	$	10,796,477
Cash and cash equivalents		347,310		6,483
Restricted cash		42,460		—
Accounts receivable		113,186		—
Total assets	$	22,181,790	$	10,802,960
LIABILITIES AND MEMBERS’ EQUITY
Accounts and retentions payable	$	79,656	$	1,675,427
Notes payable		17,868,678		4,371,999
Total liabilities		17,948,334		6,047,426
MEMBERS’ EQUITY		4,233,456		4,755,534
	$	22,181,790	$	10,802,960

24

OCEAN RANCH HOTELS LLC

STATEMENTS OF OPERATIONS (unaudited)

THREE MONTHS ENDED MARCH 31,

	2008			2007
REVENUES:
Rooms	$	1,035,628		$	—
EXPENSES:
Operating		191,966			2,696
Hotel administration and general		200,323			—
Sales and marketing		79,877			—
Utilities		48,369			—
Repairs and maintenance		28,681			—
Management fees		83,735			—
Depreciation and amortization		181,951			—
Total expenses		814,902			2,696
OPERATING INCOME (LOSS)		220,726			(2,696	)
Interest expense		(250,775	)		—
NET LOSS	$	(30,049	)	$	(2,696	)

25

OCEAN RANCH HOTELS LLC

STATEMENTS OF CASH FLOWS (unaudited)

THREE MONTHS ENDED MARCH 31,

	2008			2007
Net loss	$	(30,049	)	$	(2,696	)
Noncash items included in net loss:
Depreciation and amortization		181,951			—
Changes in:
Accounts receivables		69			—
Accounts and retentions payable		(325,344	)		255,872
Net cash provided by (used in) operating activities		(173,373	)		253,176
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in Hotel		(366,294	)		(3,999,247	)
Increase in restricted cash		(20,825	)		—
Net cash used in investing activities		(387,119	)		(3,999,247	)
CASH FLOWS FROM FINANCING ACTIVITIES
Note payable proceeds		765,055			3,741,847
Member distributions		(94,889	)		—
Net cash provided by financing activities		670,166			3,741,847
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		109,674			(4,224	)
CASH AND CASH EQUIVALENTS, beginning of year		237,636			10,707
CASH AND CASH EQUIVALENTS, end of year	$	347,310		$	6,483
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for interest	$	250,775		$	—

26

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
Residence Inn	Burbank, CA		$	50.5	May 13, 2008
Residence Inn	San Diego, CA			28.8	May 13, 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 (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			8.9	June 13, 2008
Dimension Hotels Portfolio (3 Hotels):
Courtyard	Cypress, CA			31.2	April 30, 2008
Homewood Suites	San Jose, CA			21.9	July 2, 2008
Homewood Suites	Tukwila, WA			15.7	July 2, 2008
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	$	316.2

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, Marriott International, Inc. 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.

27

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		$	323,432		(A)	$	738,406
Cash and cash equivalents		406,070			(232,970	)	(C)		173,100
Other assets, net		20,464			980		(B)		21,444
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

28

Notes to Pro Forma Condensed Consolidated Balance Sheet (unaudited)

(A) The estimated total purchase price for the 17 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			Burbank, CA Residence Inn		San Diego, CA Residence Inn		Total Combined
Purchase price per contract	$	60,100		$	21,075		$	68,733	$	13,500		$	59,700		$	13,500		$	50,500	$	28,750	$	315,858
Other closing and capitalized costs (credits) incurred		301			105			344		68			299			68			44		27		1,256
Acquisition fee payable to Apple Suites Realty
Group (2% of purchase price per contract)		1,202			422			1,375		270			1,194			270			1,010		575		6,318
Investment in hotel properties		61,603			21,602			70,452		13,838			61,193			13,838			51,554		29,352		323,432		(A)
Net other assets/(liabilities) assumed		(25,665	)		(7,060	)		—		(7,920	)		(43,381	)		(6,463	)		17		10		(90,462	)	(B)
Total purchase price	$	35,938		$	14,542		$	70,452	$	5,918		$	17,812		$	7,375		$	51,571	$	29,362	$	232,970		(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.

29

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
Residence Inn	Burbank, CA		50.5	May 13, 2008
Residence Inn	San Diego, CA		28.8	May 13, 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		8.9	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		21.9	July 2, 2008
Homewood Suites	Tukwila, WA		15.7	July 2, 2008
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	$	702.3

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.

30

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 SpringHill Suites (A)		True North Hotels Portfolio (7 Hotels) (A)			Intermountain Hotels Portfolio (7 Hotels) (A)		Dimension Hotels Portfolio (4 Hotels) (A)
Revenue:
Room revenue	$	11,631		$	99	$	70		$	125	$	177	$	383	$	658	$	3,697		$	3,180	$	4,828
Other revenue		980			2		4			2		21		7		29		22			90		418
Total revenue		12,611			101		74			127		198		390		687		3,719			3,270		5,246
Expenses:
Operating expenses		6,422			25		55			56		64		155		252		1,739			1,205		2,215
General and administrative		1,144			8		27			10		10		35		27		313			383		421
Management and franchise fees		816			11		6			10		30		28		50		341			321		336
Taxes, insurance and other		709			4		11			5		9		22		39		204			183		271
Depreciation of real estate owned		2,729			—		—			—		—		27		—		610			302		512
Land lease		1,506			—		—			—		—		—		—		—			—		—
Investment and interest, net		(6,231	)		—		—			—		—		79		—		582			234		756
Total expenses		7,095			48		99			81		113		346		368		3,789			2,628		4,511
Income tax expense		—			—		—			—		—		—		—		—			—		—
Net income (loss)	$	5,516		$	53	$	(25	)	$	46	$	85	$	44	$	319	$	(70	)	$	642	$	735
Basic and diluted earnings per common share	$	0.07
Weighted average common shares outstanding - basic and diluted		75,397

31

Pro Forma Condensed Consolidated Statement of Operations (unaudited)

For the three months ended March 31, 2008

(In thousands, except per share data)

	Winston-Salem, NC Courtyard (A)		Homecourt Hospitality Group (4 Hotels) (A)		Hilton Head, SC Hilton Garden Inn (A)			Burbank, CA Residence Inn (A)		San Diego, CA Residence Inn (A)			Pro forma Adjustments				Total Pro forma
Revenue:
Room revenue	$	710	$	3,106	$	424		$	1,682	$	1,014		$	—				31,784
Other revenue		63		56		36			101		22			—				1,853
Total revenue		773		3,162		460			1,783		1,036			—				33,637
Expenses:
Operating expenses		303		1,066		239			425		280			—				14,501
General and administrative		79		291		47			254		200			—				3,249
Management and franchise fees		70		263		23			151		84			—				2,540
Taxes, insurance and other		42		176		48			110		69			—				1,902
Depreciation of real estate owned		119		653		97			296		182			(2,798	)	(C)		5,472
														2,743		(D)
Land lease		—		—		—			—		—			—				1,506
Investment and interest, net		120		668		102			398		251			589		(E)		(2,452	)
Total expenses		733		3,117		556			1,634		1,066			534				26,718
Income tax expense		—		—		—			—		—			—		(G)		—
Net income (loss)	$	40	$	45	$	(96	)	$	149	$	(30	)	$	(534	)			6,919
Basic and diluted earnings per common share																	$	0.09
Weighted average common shares outstanding - basic and diluted														—		(F)		75,397

32

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 Independent (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 per common share	$	0.35
Weighted average common shares outstanding - basic and diluted		15,376

33

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 per common share
Weighted average common shares outstanding - basic and diluted

34

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)			Burbank, CA Residence Inn (A)			San Diego, CA Residence Inn (A)			Pro forma Adjustments				Total Pro forma
Revenue:
Room revenue	$	20,378	$	2,860	$	12,043		$	2,172		$	1,324		$	1,069		$	—			$	119,096
Other revenue		2,055		222		239			224			87			18			—				7,110
Total revenue		22,433		3,082		12,282			2,396			1,411			1,087			—				126,206
Expenses
Operating expenses		7,338		1,248		4,413			1,130			569			484			—				54,996
General and administrative		3,718		345		1,190			206			288			237			2,000		(B)		17,908
Management and franchise fees		2,382		282		986			156			116			88			—				11,432
Taxes, insurance and other		811		156		669			215			118			106			—				6,068
Depreciation of real estate owned		3,509		469		2,501			391			195			180			(17,967	)	(C)		19,003
																		19,003		(D)
Interest, net		3,362		490		2,731			421			391			308			(10,355	)	(E)		5,751
Total expenses		21,120		2,990		12,490			2,519			1,677			1,403			(7,319	)			115,158
Income tax expense		—		—		—			—			—			—			(92	)	(G)		—
Net income (loss)	$	1,313	$	92	$	(208	)	$	(123	)	$	(266	)	$	(316	)	$	7,411			$	11,048
Basic and diluted earnings per common share																					$	0.20
Weighted average common shares outstanding - basic and diluted																		40,180		(F)		55,556

35

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, four 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, San Diego, CA Residence Inn, opened September 2007, Burbank, CA Residence Inn opened October 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.

36

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
	July 24, 2008

37