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): July 2, 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 July 2, 2008 and filed (by the required date) on July 8, 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.

James River TPS Investment Associates, L.L.C. (prior owner of the Suffolk, Virginia TownePlace Suites)

(Audited)
Independent Auditor’s Report	4
Balance Sheet – December 31, 2007	5
Statement of Operations – Year Ended December 31, 2007	7
Statement of Changes in Members’ Equity – Year Ended December 31, 2007	8
Statement of Cash Flows – Year Ended December 31, 2007	9
Notes to Financial Statements	10
(Unaudited)
Balance Sheets – June 30, 2008 and June 30, 2007	15
Statements of Operations – Six Months Ended June 30, 2008 and 2007	17
Statements of Cash Flows – Six Months Ended June 30, 2008 and 2007	19

Nansemond CY Investment Associates, L.L.C. (prior owner of the Suffolk, Virginia Courtyard)

(Audited)
Independent Auditor’s Report	20
Balance Sheet – December 31, 2007	21
Statement of Operations – Year Ended December 31, 2007	23
Statement of Changes in Members’ Equity – Year Ended December 31, 2007	25
Statement of Cash Flows – Year Ended December 31, 2007	26
Notes to Financial Statements	27
(Unaudited)
Balance Sheets – June 30, 2008 and June 30, 2007	32
Statements of Operations – Six Months Ended June 30, 2008 and 2007	34
Statements of Cash Flows – Six Months Ended June 30, 2008 and 2007	36

(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 June 30, 2008	37
Notes to Pro Forma Condensed Consolidated Balance Sheet	39
Pro Forma Condensed Consolidated Statements of Operations for the Year Ended December  31, 2007 and Six Months Ended June 30, 2008	40
Notes to Pro Forma Condensed Consolidated Statements of Operations	48

(c) Shell company transactions.

Not Applicable.

(d) Exhibits.

None.

INDEPENDENT AUDITOR’S REPORT

The Members

James River TPS Investment Associates, L.L.C.

Virginia Beach, Virginia

We have audited the accompanying balance sheet of James River TPS Investment Associates (a limited liability company) as of December 31, 2007, and the related statements of operations, changes in 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 the 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 examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes 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 James River TPS Investment Associates, L.L.C. 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.

/s/ McPhillips Roberts & Deans, PLC

September 2, 2008

Norfolk, Virginia

4

JAMES RIVER TPS INVESTMENT ASSOCIATES

(a limited liability company)

BALANCE SHEET

December 31, 2007

Assets
Current Assets
Cash	$	21,275
Accounts receivable
Trade		3,505
Related parties		41,972
Inventories		1,028
Prepaid expenses		9,298
Total Current Assets		77,078
Property, Plant and Equipment
Land		671,799
Building and improvements		7,279,649
Furniture, fixtures and equipment		1,517,061
		9,468,509
Less allowance for depreciation		(219,404	)
Net Property, Plant and Equipment		9,249,105
Other Assets
Franchise costs, net of amortization		38,833
Loan acquisition costs, net of amortization		299,022
Linen reserve		15,555
Deposits		1,925
Total Other Assets		355,335
TOTAL ASSETS	$	9,681,518

See Accompanying Notes to Financial Statements

5

JAMES RIVER TPS INVESTMENT ASSOCIATES

(a limited liability company)

BALANCE SHEET

December 31, 2007

Liabilities and Members’ Equity
Current Liabilities
Accounts payable
Trade	$	25,322
Related parties		156,280
Advance deposits		700
Payroll and sales taxes		29,595
Subtotal		211,897
Accrued expenses
Interest, related parties		27,759
Interest, mortgage		39,699
Management fees		37,162
Other		8,968
Loans, related parties		241,117
Current maturities of capital lease obligations		26,832
Current maturities of long-term debt		167,642
Total Current Liabilities		761,076
Long-Term Liabilities
Capital lease obligations, net of current portion		115,511
Long-term debt, net of current portion		7,983,395
Total Long-Term Liabilities		8,098,906
Total Liabilities		8,859,982
Members’ Equity		821,536
TOTAL LIABILITIES AND MEMBERS’ EQUITY	$	9,681,518

6

JAMES RIVER TPS INVESTMENT ASSOCIATES

(a limited liability company)

STATEMENT OF OPERATIONS

For the Year Ended December 31, 2007

Sales
Rooms	$	722,770		92.1	%
Telephone and internet services		2,322		0.3	%
Other income		59,631		7.6	%
Total Sales		784,723		100.0	%
Departmental Expenses
Rooms		220,292		30.5	%
Telephone and internet services		13,878		597.7	%
Total Departmental Expenses		234,170		29.8	%
Income From Operations		550,553		70.2	%
Undistributed Operating Expenses
Administrative and general		114,688		14.6	%
Marketing		67,609		8.6	%
Utilities		40,856		5.2	%
Management fees		37,162		4.7	%
Property maintenance		66,980		8.5	%
Franchise fees		17,368		2.2	%
Total Undistributed Operating Expenses		344,663		43.8	%
Income After Undistributed Operating Expenses		205,890		26.4	%
Property Taxes and Insurance
Property taxes		41,315		5.3	%
Insurance		12,454		1.6	%
Total Property Taxes and Insurance		53,769		6.9	%
Income Before Interest and Depreciation		152,121		19.5	%
Other Expenses
Interest expense		345,256		44.0	%
Depreciation		219,404		28.0	%
Amortization		16,905		2.2	%
Total Other Expenses		581,565		74.2	%
NET LOSS	$	(429,444	)	-54.7	%

See Accompanying Notes to Financial Statements

7

JAMES RIVER TPS INVESTMENT ASSOCIATES

(a limited liability company)

STATEMENT OF CHANGES IN MEMBERS’ EQUITY

For the Year Ended December 31, 2007

Members’ Equity, January 1, 2007	$	—
Capital contributions		1,250,980
Net loss for 2007		(429,444	)
Members’ Equity December 31, 2007	$	821,536

See Accompanying Notes to Financial Statements

8

JAMES RIVER TPS INVESTMENT ASSOCIATES

(a limited liability company)

STATEMENT OF CASH FLOWS

For the Year Ended December 31, 2007

Cash Flows From Operating Activities
Net loss	$	(429,444	)
Adjustments to reconcile net loss to net cash provided by operating activities
Depreciation and amortization		236,309
Changes in operating assets and liabilities
Accounts receivable		(45,477	)
Inventories and linens		(16,583	)
Prepaid expenses		(9,298	)
Deposits		(1,925	)
Accounts payable		181,602
Advance deposits		700
Payroll and sales tax payable		29,595
Accrued expenses		113,588
Net Cash Provided by Operating Activities		59,067
Cash Flows From Investing Activities
Property and equipment additions		(9,312,247	)
Payments for franchise costs		(40,000	)
Net Cash Used in Investing Activities		(9,352,247	)
Cash Flows From Financing Activities
Proceeds from long-term debt		8,200,000
Loan costs paid		(314,760	)
Payments on capital leases		(13,919	)
Payments on long-term debt		(48,963	)
Proceeds from capital contributions		1,250,980
Net proceeds from related party loans		241,117
Net Cash Provided by Financing Activities		9,314,455
Net Increase in Cash		21,275
Cash, Beginning of Year		—
CASH, END OF YEAR	$	21,275
Supplemental Disclosure of Cash Flow Information
Cash paid for interest, net of amounts capitalized	$	277,798
Supplemental Disclosure of Non-Cash Investing and Financing Activity
Equipment acquired using capital leases	$	156,262

See Accompanying Notes to Financial Statements

9

JAMES RIVER TPS INVESTMENT ASSOCIATES

(a limited liability company)

NOTES TO FINANCIAL STATEMENTS

NOTE 1—NATURE OF BUSINESS

James River TPS Investment Associates (a limited liability company) was formed on July 1, 2005, under the provisions of the Virginia Limited Liability Company Act. The Company was formed for a term to continue until December 31, 2055 unless sooner terminated in accordance with the operating agreement. The Company constructed and operates the 72 room Towne Place Suites by Marriott at 8050 Harbor View Boulevard in Suffolk, Virginia, which began operations June 4, 2007. Subsequent to year end, the Company sold substantially all of its assets.

NOTE 2—SIGNIFICANT ACCOUNTING POLICIES

Estimates Management uses estimates and assumptions in preparing financial statements. Those estimates and assumptions affect the reported assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could differ from those estimates.

Accounts Receivable Management considers the need for an allowance for uncollectible accounts receivable based on its review of accounts receivable and historical collection experience. A trade accounts receivable is deemed past due if payments are not received by the due date stated on the billing statement, which generally is one month past the statement date. Receivables from franchisers are not considered to be past due at any time. Past due accounts are not charged a monthly finance charge on the past due balance. Past due receivables may only be charged off upon approval by management. The Company generally does not require collateral for its receivables.

Inventories Inventories of food and beverage are stated at cost (first-in, first-out method).

Property, Plant and Equipment Property, plant and equipment are stated at cost, which includes interest on funds borrowed to finance the acquisition or construction of major capital additions. Such interest amounted to $196,622 in 2007. Depreciation, including equipment acquired using capital leases, is calculated using the straight-line method based on the following estimated useful lives:

Buildings	40 years
Improvements	15-20 years
Furniture, fixtures and equipment	5-8 years

Franchise Costs Franchise costs totaling $40,000 are being amortized on the straight-line basis over the 20 year life of the franchise agreement.

Loan Acquisition Costs Loan costs totaling $314,760 are being amortized on the straight-line basis over the 10 year life of the related loan.

10

JAMES RIVER TPS INVESTMENT ASSOCIATES

(a limited liability company)

NOTES TO FINANCIAL STATEMENTS

Revenue Recognition The Company recognizes revenue from its room and restaurant facilities as earned on the close of each business day.

Advertising The Company expenses the costs of advertising as incurred. Advertising expense, which includes the advertising assessment (See Note 8), totaled $49,729 in 2007.

Income Tax Status The Company is taxed as a partnership and thus is not subject to state and federal income taxes. Accordingly, net income or loss and any available tax credits are allocated to the individual partners in proportion to their income and loss rates of participation.

NOTE 3—RELATED PARTY TRANSACTIONS

The Company is committed under a management agreement terminating in 2017 to pay a management fee of 5% of gross sales. The management company is a corporation, which is controlled by the majority member of the Class A and B members of the Company. Management fees amounted to $37,162, all of which was accrued at December 31, 2007. The Company had outstanding loans from the management company’s line of credit totaling $110,000 at December 31, 2007. Outstanding accrued interest related to these loans totaled $281 at December 31, 2007. Other net payables due to the management company totaled $156,280 at December 31, 2007. Internal audit services provided by the management company totaled $2,763 in 2007. Accounting services, which are also provided by the management company, totaled $3,150 in 2007. Expenses incurred by the management company on behalf of the Company and allocated to various departments totaled $8,388 in 2007.

The Company had loans outstanding totaling $131,117 from the aforementioned member of the Company at December 31, 2007. These loans had outstanding accrued interest of $27,478 at December 31, 2007.

The Company rents warehouse space from an affiliate. Warehouse rental from this affiliate totaled $2,461 in 2007. Additionally, certain maintenance and facility construction services are provided by an affiliate. During 2007, payments to this affiliate totaled $62,405 of which $62,246 was capitalized during construction.

At December 31, 2007, the Company had receivables from other affiliates totaling $41,972.

NOTE 4—CAPITALIZATION OF LEASES

Certain equipment, totaling $156,262, for which the Company entered into lease arrangements, is accounted for as purchased equipment.

11

JAMES RIVER TPS INVESTMENT ASSOCIATES

(a limited liability company)

NOTES TO FINANCIAL STATEMENTS

The following table summarizes the Company’s future lease obligations under the aforementioned capital leases:

Year	Minimum Lease Payments
2008	$	39,786
2009		39,786
2010		39,786
2011		39,786
2012		17,539
Total minimum lease payments		176,683
Less amount representing interest at various rates		(34,340	)
Present value of minimum lease payments	$	142,343

NOTE 5—LONG-TERM DEBT

	2007
Note payable, bank secured by first deed of trust on property, also secured by equipment and other assets as detailed in the agreement, payable in monthly installments of $43,619 including interest at 6.031%, through June 2017 with all outstanding amounts due and payable on July 1, 2017. Additionally, all leases and rents have been assigned to the lender. There are certain prepayment penalties associated with this note.	$	6,701,037
Note payable, bank secured by second deed of trust on property, also secured by equipment and other assets as detailed in the agreement, payable in monthly installments of interest only at 8.5%, with all outstanding amounts due and payable on July 1, 2012. Additionally, all leases and rents have been assigned to the lender. The loan is further guaranteed by the managing member.		850,000
The Company’s portion of a $1.5 million note payable, bank, for which they are jointly and severally liable with a related party. Interest only at 2.5% above the one-month London Interbank Offered Rate (LIBOR) through March 2008. Then payable in monthly principal installments of $5,000 along with interest at 2.25% above the one-month LIBOR, beginning April 2008. A final payment of all unpaid principal and interest is due March 31, 2011. The loan is further guaranteed by the managing member.		600,000
		8,151,037
Less current maturities		(167,642	)
Total long-term debt	$	7,983,395

12

JAMES RIVER TPS INVESTMENT ASSOCIATES

(a limited liability company)

NOTES TO FINANCIAL STATEMENTS

Principal maturities of long-term debt are:

Year	Total
2008	$	167,642
2009		190,246
2010		198,322
2011		581,899
2012		1,006,007
Thereafter		6,006,921
Total	$	8,151,037

NOTE 6—CONCENTRATION OF CREDIT RISK

At various times during the year presented, the Company may have had on deposit with a single financial institution more than $100,000, which is the limit currently insured by the Federal Deposit Insurance Corporation. At December 31, 2007, the Company’s uninsured cash balances were below this limit.

NOTE 7—MEMBERS’ EQUITY

At December 31, the respective members’ equity was as follows:

Member Class	Interest	2007
A	43%	$	17,520
B	57%		804,016
		$	821,536

Funds available for distribution from operations as defined by the Operating Agreement are distributed among the Members in proportion to their respective interests. Gains and losses on sales are allocated based upon capital account balances preceding the transactions, which give rise to the gains and losses. Funds available for distribution from sale of assets or refinancing as well as net losses and tax credits from operations are allocated based upon members’ respective interests.

13

JAMES RIVER TPS INVESTMENT ASSOCIATES

(a limited liability company)

NOTES TO FINANCIAL STATEMENTS

NOTE 8—COMMITMENTS

Franchise Agreement The Company operates under a Marriott franchise, which expires in 2027. The franchise agreement requires a franchise royalty fee to be paid monthly. However, the Company qualifies for a Development Incentive Program which defers the royalty fee for a period of 18 months from the opening date. When royalty fees commence the fee will be 5% of gross room sales. Under the terms of the agreement the Company is also required to pay advertising and reservation assessments. The detail of these fees and assessments were as follows:

	2007
Advertising	$	10,855
Reservation		6,513
	$	17,368

Operating Leases Future minimum rent payments required under operating leases that have initial or remaining noncancelable terms in excess of one year as of December 31, 2007 are as follows:

Year	Equipment
2008	$	31,311
2009		31,311
2010		19,975
2011		13,398
2012		5,582
Total minimum payments	$	101,577

Total rental expense was $23,595 in 2007.

14

JAMES RIVER TPS INVESTMENT ASSOCIATES

(a limited liability company)

BALANCE SHEETS (UNAUDITED)

June 30, 2008 and 2007

	2008			2007
Assets
Current Assets
Cash	$	88,304		$	14,343
Accounts receivable
Trade		241,296			17,604
Related parties		10,965			217,920
Inventories		1,009			692
Prepaid expenses		11,510			3,065
Total Current Assets		353,084			253,624
Property, Plant and Equipment
Land		671,799			671,799
Building and improvements		7,279,649			7,237,872
Furniture, fixtures and equipment		1,517,061			1,492,284
Work in progress		4,425			—
		9,472,934			9,401,955
Less allowance for depreciation		(408,662	)		(31,343	)
Net Property, Plant and Equipment		9,064,272			9,370,612
Other Assets
Franchise costs, net of amortization		37,833			39,833
Loan acquisition costs, net of amortization		283,284			314,760
Linen, china, glass and silver		15,555			15,555
Deposits		1,925			1,925
Total Other Assets		338,597			372,073
TOTAL ASSETS	$	9,755,953		$	9,996,309

15

JAMES RIVER TPS INVESTMENT ASSOCIATES

(a limited liability company)

BALANCE SHEETS (UNAUDITED)

June 30, 2008 and 2007

	2008		2007
Liabilities and Members' Equity
Current Liabilities
Accounts payable
Trade	$	244,014	$	686,802
Related parties		17,749		16,649
Payroll and sales taxes		47,815		35,313
Subtotal		309,578		738,764
Accrued expenses
Interest, mortgage		39,447		—
Interest, related parties		27,759		—
Management fees		67,024		6,768
Other		193,304		6,398
Loans, related party		328,117		432,731
Current maturities of capital lease obligations		28,227		—
Current maturities of long-term debt		178,944		—
Total Current Liabilities		1,172,400		1,184,661
Long-Term Liabilities
Capital lease obligations, net of current portion		103,257		153,354
Long-term debt, net of current portion		7,911,888		7,600,000
Total Long-Term Liabilities		8,015,145		7,753,354
Total Liabilities		9,187,545		8,938,015
Members' Equity		568,408		1,058,294
TOTAL LIABILITIES AND MEMBERS' EQUITY	$	9,755,953	$	9,996,309

16

JAMES RIVER TPS INVESTMENT ASSOCIATES

(a limited liability company)

STATEMENTS OF OPERATIONS (UNAUDITED)

For the Six Months Ended June 30, 2008 and 2007

	2008		%		2007			%
Sales
Rooms	$	613,114	98.6	%	$	122,378		97.8	%
Telephone and internet services		886	0.1	%		728		0.6	%
Other income		7,921	1.3	%		1,968		1.6	%
Total Sales		621,921	100.0	%		125,074		100.0	%
Departmental Expenses
Rooms		118,054	19.3	%		83,388		68.1	%
Telephone and internet services		12,104	1366.1	%		2,488		341.8	%
Total Departmental Expenses		130,158	20.9	%		85,876		68.7	%
Income From Operations		491,763	79.1	%		39,198		31.3	%
Undistributed Operating Expenses
Administrative and general		86,459	13.9	%		50,027		40.0	%
Marketing		28,671	4.6	%		36,462		29.2	%
Utilities		32,518	5.2	%		5,246		4.2	%
Management fees		31,569	5.1	%		6,318		5.1	%
Property maintenance		45,775	7.4	%		18,886		15.1	%
Franchise fees		18,315	2.9	%		2,943		2.4	%
Total Undistributed Operating Expenses		243,307	39.1	%		119,882		96.0	%
Income (Loss) After Undistributed Operating Expenses		248,456	40.0	%		(80,684	)	-64.7	%
Property Taxes and Insurance
Property taxes		38,171	6.1	%		6,938		5.5	%
Insurance		10,439	1.7	%		5,424		4.3	%
Total Property Taxes and Insurance		48,610	7.8	%		12,362		9.8	%

Continued

17

JAMES RIVER TPS INVESTMENT ASSOCIATES

(a limited liability company)

STATEMENTS OF OPERATIONS (UNAUDITED)

For the Six Months Ended June 30, 2008 and 2007

Continued

	2008			%		2007			%
Income (Loss) Before Interest and Depreciation	$	199,846		32.2	%	$	(93,046	)	-74.5	%
Other Expenses
Interest expense		246,978		39.7	%		68,130		54.5	%
Depreciation		189,258		30.4	%		31,343		25.1	%
Amortization		16,738		2.7	%		167		0.1	%
Total Other Expenses		452,974		72.8	%		99,640		79.7	%
NET LOSS	$	(253,128	)	-40.6	%	$	(192,686	)	-154.2	%

18

JAMES RIVER TPS INVESTMENT ASSOCIATES

(a limited liability company)

STATEMENTS OF CASH FLOWS (UNAUDITED)

For the Six Months Ended June 30, 2008 and 2007

	2008			2007
Cash Flows From Operating Activities
Net loss	$	(253,128	)	$	(192,686	)
Adjustments to reconcile net loss to net cash provided by operating activities
Depreciation and amortization		205,996			31,510
Changes in operating assets and liabilities
Accounts receivable		(206,784	)		(235,524	)
Inventories		19			(16,247	)
Prepaid expenses		(2,212	)		(3,065	)
Deposits		—			(1,925	)
Accounts payable		80,161			716,617
Advance deposits		(700	)		—
Payroll and sales tax payable		18,220			35,313
Accrued expenses		213,946			—
Net Cash Provided by Operating Activities		55,518			333,993
Cash Flows From Investing Activities
Capital expenditures		(4,425	)		(9,248,601	)
Payment for franchise rights		—			(40,000	)
Net Cash Used in Investing Activities		(4,425	)		(9,288,601	)
Cash Flows From Financing Activities
Proceeds from long-term debt		—			7,600,000
Loan costs paid		—			(314,760	)
Proceeds from capital contributions		—			1,250,980
Payments on capital leases		(10,859	)		—
Payments on long-term debt		(60,205	)		—
Proceeds from related party loan		87,000			432,731
Net Cash Provided by Financing Activities		15,936			8,968,951
Net Increase in Cash		67,029			14,343
Cash, Beginning of Period		21,275			—
CASH, END OF PERIOD	$	88,304		$	14,343
Supplemental Disclosures
Cash paid for interest, net of amounts capitalized	$	244,230		$	68,130
Equipment acquired using capital leases	$	—		$	156,262

19

INDEPENDENT AUDITOR’S REPORT

The Members

Nansemond CY Investment Associates, L.L.C.

Virginia Beach, Virginia

We have audited the accompanying balance sheet of Nansemond CY Investment Associates (a limited liability company) as of December 31, 2007, and the related statements of operations, changes in 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 the 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 examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes 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 Nansemond CY Investment Associates, L.L.C. 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.

/s/ McPhillips Roberts & Deans, PLC

July 29, 2008

Norfolk, Virginia

20

NANSEMOND CY INVESTMENT ASSOCIATES

(a limited liability company)

BALANCE SHEET

December 31, 2007

Assets
Current Assets
Cash	$	17,284
Accounts receivable
Trade		10,004
Related parties		132,196
Other		19,043
Inventories		8,000
Prepaid expenses		13,214
Total Current Assets		199,741
Property, Plant and Equipment
Land		897,207
Building and improvements		8,867,287
Furniture, fixtures and equipment		1,816,535
		11,581,029
Less allowance for depreciation		(265,876	)
Net Property, Plant and Equipment		11,315,153
Other Assets
Franchise costs, net of amortization		48,542
Loan acquisition costs, net of amortization		374,328
Linen, china, glass and silver		21,946
Deposits		2,871
Total Other Assets		447,687
TOTAL ASSETS	$	11,962,581

See Accompanying Notes to Financial Statements

21

NANSEMOND CY INVESTMENT ASSOCIATES

(a limited liability company)

BALANCE SHEET

December 31, 2007

Liabilities and Members’ Equity
Current Liabilities
Accounts payable
Trade	$	59,583
Related parties		109,171
Advance deposits		1,087
Payroll and sales taxes		52,657
Subtotal		222,498
Accrued expenses
Interest, related party		22,825
Interest, mortgage		43,913
Management fees		59,714
Other		35,507
Notes payable, related party		605,682
Current maturities of capital lease obligations		33,460
Current maturities of long-term debt		227,385
Total Current Liabilities		1,250,984
Long-Term Liabilities
Capital lease obligation, net of current portion		145,229
Long-term debt, net of current portion		9,708,811
Total Long-Term Liabilities		9,854,040
Total Liabilities		11,105,024
Members’ Equity		857,557
TOTAL LIABILITIES AND MEMBERS’ EQUITY	$	11,962,581

22

NANSEMOND CY INVESTMENT ASSOCIATES

(a limited liability company)

STATEMENT OF OPERATIONS

For the Year Ended December 31, 2007

	2007		%
Sales
Rooms	$	1,066,099	89.4	%
Food		88,290	7.4	%
Beverage		21,194	1.8	%
Telephone		3,108	0.3	%
Market		8,798	0.7	%
Other income		4,875	0.4	%
Total Sales		1,192,364	100.0	%
Departmental Expenses
Rooms		360,791	33.8	%
Food		141,724	160.5	%
Beverage		21,159	99.8	%
Telephone		15,750	506.8	%
Market		4,080	46.4	%
Total Departmental Expenses		543,504	45.6	%
Income From Operations		648,860	54.4	%
Undistributed Operating Expenses
Administrative and general		203,774	17.1	%
Marketing		103,913	8.7	%
Utilities		65,506	5.5	%
Management fees		59,714	5.0	%
Property maintenance		71,873	6.0	%
Franchise fees		89,899	7.5	%
Total Undistributed Operating Expenses		594,679	49.8	%
Income After Undistributed Operating Expenses		54,181	4.6	%
Property Taxes and Insurance
Property taxes		46,654	3.9	%
Insurance		15,810	1.3	%
Total Property Taxes and Insurance		62,464	5.2	%

Continued

See Accompanying Notes to Financial Statements

23

NANSEMOND CY INVESTMENT ASSOCIATES

(a limited liability company)

STATEMENT OF OPERATIONS

For the Year Ended December 31, 2007

Continued

	2007			%
Loss Before Rent, Interest and Depreciation	$	(8,283	)	-0.6	%
Other Expenses
Interest expense		397,125		33.3	%
Depreciation		265,876		22.3	%
Amortization		21,159		1.8	%
Total Other Expenses		684,160		57.4	%
NET LOSS	$	(692,443	)	-58.0	%

See Accompanying Notes to Financial Statements

24

NANSEMOND CY INVESTMENT ASSOCIATES

(a limited liability company)

STATEMENT OF CHANGES IN MEMBERS’ EQUITY

For the Year Ended December 31, 2007

Members’ Equity, January 1, 2007	$	—
Capital contributions		1,550,000
Net loss		(692,443	)
Members’ Equity December 31, 2007	$	857,557

See Accompanying Notes to Financial Statements

25

NANSEMOND CY INVESTMENT ASSOCIATES

(a limited liability company)

STATEMENT OF CASH FLOWS

For the Year Ended December 31, 2007

Cash Flows From Operating Activities
Net loss	$	(692,443	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization		287,035
Changes in operating assets and liabilities
Accounts receivable		(161,243	)
Inventories		(8,000	)
Prepaid expenses		(35,160	)
Deposits		(2,871	)
Advance deposits		1,087
Accounts payable		168,754
Payroll and sales tax payable		52,657
Accrued expenses		161,959
Net Cash Used in Operating Activities		(228,225	)
Cash Flows From Investing Activities
Property and equipment additions		(11,384,917	)
Payments for franchise costs		(50,000	)
Net Cash Used in Investing Activities		(11,434,917	)
Cash Flows From Financing Activities
Proceeds from long-term debt		10,000,000
Loan costs paid		(394,029	)
Payments on capital leases		(17,423	)
Payments on long-term debt		(63,804	)
Proceeds from capital contributions		1,550,000
Net proceeds from related party note		605,682
Net Cash Provided by Financing Activities		11,680,426
Net Increase in Cash		17,284
Cash, Beginning of Year		—
CASH, END OF YEAR	$	17,284
Supplemental Disclosure of Cash Flow Information
Cash paid for interest, net of amount capitalized	$	330,387
Supplemental Disclosure of Non-Cash Investing and Financing Activity
Equipment acquired using capital leases	$	196,112

See Accompanying Notes to Financial Statements

26

NANSEMOND CY INVESTMENT ASSOCIATES

(a limited liability company)

NOTES TO FINANCIAL STATEMENTS

NOTE 1—NATURE OF BUSINESS

Nansemond CY Investment Associates (a limited liability company) was formed on July 5, 2005, under the provisions of the Virginia Limited Liability Company Act. The Company was formed for a term to continue until December 31, 2055 unless sooner terminated in accordance with the operating agreement. The Company constructed and operates the 92 room Courtyard by Marriott at 8060 Harbor View Boulevard in Suffolk, Virginia, which began operations May 30, 2007.

NOTE 2—SIGNIFICANT ACCOUNTING POLICIES

Estimates Management uses estimates and assumptions in preparing financial statements. Those estimates and assumptions affect the reported assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could differ from those estimates.

Accounts Receivable Management considers the need for an allowance for uncollectible accounts receivable based on its review of accounts receivable and historical collection experience. A trade accounts receivable is deemed past due if payments are not received by the due date stated on the billing statement, which generally is one month past the statement date. Receivables from franchisers are not considered to be past due at any time. Past due accounts are not charged a monthly finance charge on the past due balance. Past due receivables may only be charged off upon approval by management. The Company generally does not require collateral for its receivables.

Inventories Inventories of food and beverage are stated at cost (first-in, first-out method).

Property, Plant and Equipment Property, plant and equipment are stated at cost, which includes interest on funds borrowed to finance the acquisition or construction of major capital additions. Such interest amounted to $237,404 in 2007. Depreciation, including equipment acquired using capital leases, is calculated using the straight-line method based on the following estimated useful lives:

Buildings	40 years
Improvements	15-20 years
Furniture, fixtures and equipment	5-8 years

Franchise Costs Franchise costs totaling $50,000 are being amortized on the straight-line basis over the 20 year life of the franchise agreement.

Loan Acquisition Costs Loan costs totaling $394,029 are being amortized on the straight-line basis over the 10 year life of the related loan.

27

NANSEMOND CY INVESTMENT ASSOCIATES

(a limited liability company)

NOTES TO FINANCIAL STATEMENTS

Revenue Recognition The Company recognizes revenue from its room and restaurant facilities as earned on the close of each business day.

Advertising The Company expenses the costs of advertising as incurred. Advertising expense, which includes the advertising assessment (See Note 8), totaled $81,956 in 2007.

Income Tax Status The Company is taxed as a partnership and thus is not subject to state and federal income taxes. Accordingly, net income or loss and any available tax credits are allocated to the individual partners in proportion to their income and loss rates of participation.

NOTE 3—RELATED PARTY TRANSACTIONS

The Company is committed under a management agreement terminating in 2017 to pay a management fee of 5% of gross sales. The management company is a corporation, which is controlled by the majority member of the Class A and B members of the Company. Management fees amounted to $59,714, all of which was accrued and unpaid at December 31, 2007. The Company had outstanding loans from the management company totaling $407,422 at December 31, 2007. Outstanding accrued interest related to these loans totaled $702 at December 31, 2007. Other net payables due to the management company totaled $109,171 at December 31, 2007. Internal audit services provided by the management company totaled $3,531 in 2007. Accounting services, which are also provided by the management company, totaled $5,600 in 2007. Expenses incurred by the management company on behalf of the Company and allocated to various departments totaled $11,294 in 2007.

The Company had loans outstanding totaling $198,260 from the aforementioned member of the Company at December 31, 2007. These loans had outstanding accrued interest of $22,123 at December 31, 2007.

The Company rents warehouse space from an affiliate. Warehouse rental from this affiliate totaled $3,145 in 2007. Additionally, certain maintenance and facility construction services are provided by an affiliate. During 2007, payments to this affiliate totaled $122,277 of which $122,075 was capitalized during construction.

At December 31, 2007, the Company had receivables from other affiliates totaling $132,196.

NOTE 4—CAPITALIZATION OF LEASES

Certain equipment, totaling $196,112, for which the Company entered into lease arrangements, is accounted for as purchased equipment.

28

NANSEMOND CY INVESTMENT ASSOCIATES

(a limited liability company)

NOTES TO FINANCIAL STATEMENTS

The following table summarizes the Company’s future lease obligations under the aforementioned capital leases:

Year	Minimum Lease Payments
2008	$	50,433
2009		50,433
2010		50,433
2011		50,433
2012		21,994
Total minimum lease payments		223,726
Less amount representing interest at various rates		(45,037	)
Present value of minimum lease payments	$	178,689

NOTE 5—LONG-TERM DEBT

	2007
Note payable, bank secured by first deed of trust on property, also secured by equipment and other assets as detailed in the agreement, payable in monthly installments of $56,866 including interest at 6.031%, through June 2017 with all outstanding amounts due and payable on July 1, 2017. Additionally, all leases and rents have been assigned to the lender. There are certain prepayment penalties associated with this note.	$	8,736,196
Note payable, bank secured by second deed of trust on property, also secured by equipment and other assets as detailed in the agreement, payable in monthly installments of interest only at 8.5%, with all outstanding amounts due and payable on July 1, 2012. Additionally, all leases and rents have been assigned to the lender. The loan is further guaranteed by the managing member.		300,000
The Company’s portion of a $1.5 million note payable, bank, for which they are jointly and severally liable with a related party. Interest only at 2.5% above the one-month London Interbank Offered Rate (LIBOR) through March 2008. Then payable in monthly principal installments of $7,500 along with interest at 2.25% above the one-month LIBOR, beginning April 2008. A final payment of all unpaid principal and interest is due March 31, 2011. The loan is further guaranteed by the managing member.		900,000
		9,936,196
Less current maturities		(227,385	)
Total long-term debt	$	9,708,811

29

NANSEMOND CY INVESTMENT ASSOCIATES

(a limited liability company)

NOTES TO FINANCIAL STATEMENTS

Principal maturities of long-term debt are:

Year	Total
2008	$	227,385
2009		259,799
2010		270,327
2011		844,009
2012		503,383
Thereafter		7,831,293
Total	$	9,936,196

NOTE 6—CONCENTRATION OF CREDIT RISK

At various times during the year presented, the Company may have had on deposit with a single financial institution more than $100,000, which is the limit currently insured by the Federal Deposit Insurance Corporation. At December 31, 2007, the Company’s uninsured cash balances were below this limit.

NOTE 7—MEMBERS’ EQUITY

At December 31, the respective members’ equity (deficit) was as follows:

Member Class	Interest	2007
A	43%	$	(47,350	)
B	57%		904,907
		$	857,557

Funds available for distribution from operations as defined by the Operating Agreement are distributed among the Members in proportion to their respective interests. Gains and losses on sales are allocated based upon capital account balances preceding the transactions, which give rise to the gains and losses. Funds available for distribution from sale of assets or refinancing as well as net losses and tax credits from operations are allocated based upon members’ respective interests.

30

NANSEMOND CY INVESTMENT ASSOCIATES

(a limited liability company)

NOTES TO FINANCIAL STATEMENTS

NOTE 8—COMMITMENTS

Franchise Agreement The Company operates under a Marriott franchise, which expires in 2027. The franchise agreement requires a franchise royalty fee to be paid monthly. The fee is 5.5% of gross room sales. Under the terms of the agreement the Company is also required to pay advertising and reservation assessments. The detail of these fees and assessments were as follows:

	2007
Franchise	$	58,862
Advertising		21,405
Reservation		9,632
	$	89,899

Operating Leases Future minimum rent payments required under operating leases that have initial or remaining noncancelable terms in excess of one year as of December 31, 2007 are as follows:

Year	Equipment
2008	$	33,759
2009		33,759
2010		22,505
2011		16,878
2012		5,626
Total minimum payments	$	112,527

Total rental expense was $24,442 in 2007.

31

NANSEMOND CY INVESTMENT ASSOCIATES

(a limited liability company)

BALANCE SHEETS (UNAUDITED)

June 30, 2008 and 2007

	2008			2007
Assets
Current Assets
Cash	$	122,941		$	19,715
Accounts receivable
Trade		76,854			26,839
Related parties		191,787			59,981
Inventories		5,999			7,408
Prepaid expenses		17,681			5,276
Total Current Assets		415,262			119,219
Property, Plant and Equipment
Land		897,207			897,207
Building and improvements		8,867,287			8,664,404
Furniture, fixtures and equipment		1,816,535			1,782,337
Work in progress		1,275			—
		11,582,304			11,343,948
Less allowance for depreciation		(494,636	)		(37,982	)
Net Property, Plant and Equipment		11,087,668			11,305,966
Other Assets
Franchise costs, net of amortization		47,292			49,792
Loan acquisition costs, net of amortization		354,626			394,029
Linen, china, glass and silver		21,946			21,946
Deposits		2,871			2,871
Total Other Assets		426,735			468,638
TOTAL ASSETS	$	11,929,665		$	11,893,823

32

NANSEMOND CY INVESTMENT ASSOCIATES

(a limited liability company)

BALANCE SHEETS (UNAUDITED)

June 30, 2008 and 2007

	2008		2007
Liabilities and Members’ Equity
Current Liabilities
Accounts payable
Trade	$	112,338	$	542,649
Related parties		90,638		88,594
Advance deposits		1,139		286
Payroll and sales taxes		80,901		50,543
Subtotal		285,016		682,072
Accrued expenses
Interest, mortgage		43,578		—
Interest, related party		22,825		—
Management fees		107,914		10,732
Other		85,725		28,317
Loans, related party		817,182		698,922
Current maturities of capital lease obligations		38,050		—
Current maturities of long-term debt		256,881		—
Total Current Liabilities		1,657,171		1,420,043
Long-Term Liabilities
Capital lease obligations, net of current portion		127,114		192,548
Long-term debt, net of current portion		9,590,093		9,100,000
Total Liabilities		11,374,378		10,712,591
Members’ Equity		555,287		1,181,232
TOTAL LIABILITIES AND MEMBERS’ EQUITY	$	11,929,665	$	11,893,823

33

NANSEMOND CY INVESTMENT ASSOCIATES

(a limited liability company)

STATEMENTS OF OPERATIONS (UNAUDITED)

For the Six Months Ended June 30, 2008 and 2007

	2008		%		2007			%
Sales
Rooms	$	867,443	90.2	%	$	166,507		89.5	%
Food		66,637	6.9	%		12,573		6.8	%
Beverage		11,511	1.2	%		4,183		2.3	%
Telephone and internet services		2,398	0.2	%		429		0.2	%
Market		6,080	0.6	%		1,486		0.8	%
Other income		8,276	0.9	%		722		0.4	%
Total Sales		962,345	100.0	%		185,900		100.0	%
Departmental Expenses
Rooms		200,841	23.2	%		169,948		102.1	%
Food		72,474	108.8	%		44,704		355.6	%
Beverage		9,285	80.7	%		6,743		161.2	%
Telephone and internet services		13,021	543.0	%		2,926		682.1	%
Market		3,016	49.6	%		1,572		105.8	%
Total Departmental Expenses		298,637	31.0	%		225,893		121.5	%
Income (Loss) From Operations		663,708	69.0	%		(39,993	)	-21.5	%
Undistributed Operating Expenses
Administrative and general		106,179	11.0	%		142,161		76.5	%
Marketing		65,527	6.8	%		63,216		34.0	%
Utilities		54,442	5.7	%		8,313		4.5	%
Management fees		48,278	5.0	%		9,332		5.0	%
Property maintenance		52,773	5.5	%		32,377		17.4	%
Franchise fees		68,151	7.1	%		14,053		7.6	%
Total Undistributed Operating Expenses		395,350	41.1	%		269,452		145.0	%
Income (Loss) After Undistributed Operating Expenses		268,358	27.9	%		(309,445	)	-166.5	%
Property Taxes and Insurance
Property taxes		42,509	4.4	%		8,071		4.3	%
Insurance		13,136	1.4	%		6,590		3.5	%
Total Property Taxes and Insurance		55,645	5.8	%		14,661		7.8	%

Continued

34

NANSEMOND CY INVESTMENT ASSOCIATES

(a limited liability company)

STATEMENTS OF OPERATIONS (UNAUDITED)

For the Six Months Ended June 30, 2008 and 2007

Continued

	2008			%		2007			%
Income (Loss) Before Interest and Depreciation	$	212,713		22.1	%	$	(324,106	)	-174.3	%
Other Expenses
Interest expense		265,270		27.6	%		6,473		3.5	%
Depreciation		228,761		23.8	%		37,982		20.4	%
Amortization		20,952		2.2	%		208		0.1	%
Total Other Expenses		514,983		53.6	%		44,663		24.0	%
NET LOSS	$	(302,270	)	-31.5	%	$	(368,769	)	-198.3	%

35

NANSEMOND CY INVESTMENT ASSOCIATES

(a limited liability company)

STATEMENTS OF CASH FLOWS (UNAUDITED)

For the Six Months Ended June 30, 2008 and 2007

	2008			2007
Cash Flows From Operating Activities
Net loss	$	(302,270	)	$	(368,769	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities
Depreciation and amortization		249,713			38,190
Changes in operating assets and liabilities
Accounts receivable		(107,398	)		(86,820	)
Inventories		2,001			(7,408	)
Prepaid expenses		(4,467	)		(27,222	)
Deposits		—			(2,871	)
Accounts payable		34,222			631,244
Advance deposits		52			286
Payroll and sales tax payable		28,244			50,543
Accrued expenses		98,083			39,049
Net Cash Provided by (Used in) Operating Activities		(1,820	)		266,222
Cash Flows From Investing Activities
Payments for franchise rights		—			(50,000	)
Capital expenditures		(1,276	)		(11,151,400	)
Net Cash Used in Investing Activities		(1,276	)		(11,201,400	)
Cash Flows From Financing Activities
Loan costs paid		—			(394,029	)
Proceeds from capital contributions		—			1,550,000
Payments on capital leases		(13,525	)		—
Payments on long-term debt		(89,222	)		9,100,000
Proceeds from related party loan		211,500			698,922
Net Cash Provided by Financing Activities		108,753			10,954,893
Net Increase in Cash		105,657			19,715
Cash, Beginning of Period		17,284			—
CASH, END OF PERIOD	$	122,941		$	19,715
Supplemental Disclosures
Cash paid for interest	$	265,605		$	6,473
Equipment acquired using capital leases	$	—		$	192,548

36

Apple REIT Eight, Inc.

Pro Forma Condensed Consolidated Balance Sheet as of June 30, 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	Suffolk, VA	$	12.5	July 2, 2008
TownePlace Suites	Suffolk, VA		10.0	July 2, 2008
True North Hotels Portfolio (1 Hotel):
Fairfield Inn & Suites	Overland Park, KS		12.1	August 20, 2008
Dimension Hotels Portfolio (2 Hotels):
Homewood Suites	San Jose, CA		21.9	July 2, 2008
Homewood Suites	Tukwila, WA		15.7	July 2, 2008
	Total	$	72.2

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 Dimension Development Company, True North Hotel Group, Inc. and Crestline Hotels and Resorts, Inc. 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 June 30, 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.

37

Balance Sheet as of June 30, 2008 (unaudited)

(In thousands, except share data)

	Company Historical Balance Sheet			Pro forma Adjustments				Total Pro forma
ASSETS
Investment in hotel properties, net	$	817,035		$	74,194		(A)	$	891,229
Cash and cash equivalents		127,999			(59,165	)	(C)		68,834
Other assets, net		32,087			245		(B)		32,332
Total Assets	$	977,121		$	15,274			$	992,395
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Intangible liabilities, net	$	9,868		$	—			$	9,868
Notes payable		96,825			15,274		(B)		112,099
Accounts payable and accrued expenses		4,421			—				4,421
Total liabilities		111,114			15,274				126,388
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		900,564			—				900,564
Distributions greater than net income		(32,244	)		—				(32,244	)
Accumulated other comprehensive loss		(2,337	)		—				(2,337	)
Total shareholders’ equity		866,007			—				866,007
Total liabilities and shareholders’ equity	$	977,121		$	15,274			$	992,395

38

Notes to Pro Forma Condensed Consolidated Balance Sheet (unaudited)

(A) The estimated total purchase price for the 5 properties that have been, or will be, purchased after June 30, 2008 consists of the following. This purchase price allocation is preliminary and subject to change.

(In thousands)	True North Hotels Portfolio		Dimension Hotels Portfolio		Suffolk, VA Courtyard			Suffolk, VA TownePlace Suites			Total Combined
Purchase price per contract	$	12,050	$	37,569	$	12,500		$	10,000		$	72,119
Other closing and capitalized costs (credits) incurred		60		257		174			142			633
Acquisition fee payable to Apple Suites Realty Group (2% of purchase price per contract)		241		751		250			200			1,442
Investment in hotel properties		12,351		38,577		12,924			10,342			74,194	(A)
Net other assets/(liabilities) assumed		—		57		(8,540	)		(6,546	)		(15,029	) (B)
Total purchase price	$	12,351	$	38,634	$	4,384		$	3,796		$	59,165	(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.

39

Apple REIT Eight, Inc.

Pro Forma Condensed Consolidated Statements of Operations (unaudited)

For the year ended December 31, 2007 and six months ended June 30, 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
Courtyard	Charlottesville, VA		27.9	June 5, 2008
Courtyard	Virginia Beach, VA		27.1	June 5, 2008
Courtyard	Virginia Beach, VA		39.7	June 5, 2008
Courtyard	Carolina Beach, NC		24.2	June 5, 2008
Courtyard	Suffolk, VA		12.5	July 2, 2008
TownePlace Suites	Suffolk, VA		10.0	July 2, 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	August 20, 2008
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	$	843.7

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., Dimension Development Company and Crestline Hotels and Resorts, Inc. 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.

40

Pro Forma Condensed Consolidated Statement of Operations (unaudited)

For the six months ended June 30, 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)
Revenue:
Room revenue	$	41,884		$	99	$	70		$	125	$	177	$	383	$	658	$	4,647	$	3,872
Other revenue		2,946			2		4			2		21		7		29		79		118
Total revenue		44,830			101		74			127		198		390		687		4,726		3,990
Expenses:
Operating expenses		21,145			25		55			56		64		155		252		2,186		1,483
General and administrative		2,415			8		27			10		10		35		27		382		465
Management and franchise fees		3,164			11		6			10		30		28		50		446		395
Taxes, insurance and other		2,128			4		11			5		9		22		39		250		221
Depreciation of real estate owned		7,642			—		—			—		—		27		—		711		404
Land lease		3,091			—		—			—		—		—		—		—		—
Investment and interest, net		(7,569	)		—		—			—		—		79		—		714		336
Total expenses		32,016			48		99			81		113		346		368		4,689		3,304
Income tax expense		—			—		—			—		—		—		—		—		—
Net income (loss)	$	12,814		$	53	$	(25	)	$	46	$	85	$	44	$	319	$	37	$	686
Basic and diluted earnings per common share	$	0.16
Weighted average common shares outstanding - basic and diluted		82,605

41

Pro Forma Condensed Consolidated Statement of Operations (unaudited)

For the six months ended June 30, 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)			Burbank, CA Residence Inn (A)		San Diego, CA Residence Inn (A)		Rivanna River Investment Associates Charlottesville, VA Courtyard (A)		Leeward-Princess Anne Investment Associates Virginia Beach, VA Courtyard (A)
Revenue:
Room revenue	$	7,781	$	1,203	$	5,282		$	707		$	3,010	$	1,765	$	2,042	$	1,742
Other revenue		554		96		93			60			177		35		205		230
Total revenue		8,335		1,299		5,375			767			3,187		1,800		2,247		1,972
Expenses:
Operating expenses		3,610		483		1,887			399			850		551		760		885
General and administrative		770		123		484			78			199		162		141		146
Management and franchise fees		440		119		447			38			266		152		349		305
Taxes, insurance and other		413		64		304			80			231		120		94		147
Depreciation of real estate owned		760		228		1,600			162			—		—		182		127
Land lease		—		—		—			—			—		—		—		—
Investment and interest, net		1,193		181		1,154			170			—		—		238		245
Total expenses		7,186		1,198		5,876			927			1,546		985		1,764		1,855
Income tax expense		—		—		—			—			—		—		—		—
Net income (loss)	$	1,149	$	101	$	(501	)	$	(160	)	$	1,641	$	815	$	483	$	117
Basic and diluted earnings per common share
Weighted average common shares outstanding—basic and diluted

42

Pro Forma Condensed Consolidated Statement of Operations (unaudited)

For the six months ended June 30, 2008

(In thousands, except per share data)

	Eastward Investment Associates Virginia Beach, VA Courtyard (A)			Carolina Beach Investment Associates Carolina Beach, NC Courtyard (A)		Nansemond CY Investment Associates Suffolk, VA Courtyard (A)			James River TPS Investment Associates Suffolk, VA TownePlace Suites (A)			Pro forma Adjustments			Total Pro forma
Revenue:
Room revenue	$	1,917		$	1,766	$	867		$	613		$	—			80,610
Other revenue		314			455		95			9			—			5,531
Total revenue		2,231			2,221		962			622			—			86,141
Expenses:
Operating expenses		976			1,042		471			237			—			37,572
General and administrative		157			150		106			86			—			5,981
Management and franchise fees		368			253		116			50			—			7,043
Taxes, insurance and other		310			134		56			49			—			4,691
Depreciation of real estate owned		403			373		250			206			(5,433 5,168	)(C)  (D)		12,810
Land lease		—			—		—			—			—			3,091
Investment and interest, net		339			266		265			247			1,367	(E)		(775	)
Total expenses		2,553			2,218		1,264			875			1,102			70,413
Income tax expense		—			—		—			—			—	(G)		—
Net income (loss)	$	(322	)	$	3	$	(302	)	$	(253	)	$	(1,102	)		15,728
Basic and diluted earnings per common share															$	0.18
Weighted average common shares outstanding—basic and diluted													6,015	(F)		88,620

43

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

44

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

45

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)			Rivanna River Investment Associates Charlottesville, VA Courtyard (A)
Revenue:
Room revenue	$	20,378	$	2,860	$	12,043		$	2,172		$	1,324		$	1,069		$	4,812
Other revenue		2,055		222		239			224			87			18			500
Total revenue		22,433		3,082		12,282			2,396			1,411			1,087			5,312
Expenses
Operating expenses		7,338		1,248		4,413			1,130			569			484			1,864
General and administrative		3,718		345		1,190			206			288			237			385
Management and franchise fees		2,382		282		986			156			116			88			674
Taxes, insurance and other		811		156		669			215			118			106			186
Depreciation of real estate owned		3,509		469		2,501			391			195			180			544
Interest, net		3,362		490		2,731			421			391			308			576
Total expenses		21,120		2,990		12,490			2,519			1,677			1,403			4,229
Income tax expense		—		—		—			—			—			—			—
Net income (loss)	$	1,313	$	92	$	(208	)	$	(123	)	$	(266	)	$	(316	)	$	1,083
Basic and diluted earnings per common share
Weighted average common shares outstanding - basic and diluted

46

Pro Forma Condensed Consolidated Statement of Operations (unaudited)

For the year ended December 31, 2007

(In thousands, except per share data)

	Leeward- Princess Anne Investment Associates Virginia Beach, VA Courtyard (A)		Eastward Investment Associates Virginia Beach, VA Courtyard (A)		Carolina Beach Investment Associates Carolina Beach, NC Courtyard (A)		Nansemond CY Investment Associates Suffolk, VA Courtyard (A)			James River TPS Investment Associates Suffolk, VA TownePlace Suites (A)			Pro forma Adjustments			Total Pro forma
Revenue:
Room revenue	$	5,916	$	6,987	$	5,282	$	1,066		$	723			—		$	143,882
Other revenue		681		1,006		1,224		126			62			—			10,709
Total revenue		6,597		7,993		6,506		1,192			785			—			154,591
Expenses
Operating expenses		2,537		2,844		2,815		784			410			—			66,250
General and administrative		390		432		449		204			115			2,000	(B)		19,883
Management and franchise fees		829		988		767		150			54			—			14,894
Taxes, insurance and other		315		375		217		62			54			—			7,277
Depreciation of real estate owned		487		1,459		938		287			236			(21,918	)(C)		22,399
														22,399	(D)
Interest, net		760		1,058		781		397			345			(13,757	)(E)		6,266
Total expenses		5,318		7,156		5,967		1,884			1,214			(11,276	)		136,969
Income tax expense		—		—		—		—			—			(92	)(G)		—
Net income (loss)	$	1,279	$	837	$	539	$	(692	)	$	(429	)	$	11,368		$	17,622
Basic and diluted earnings per common share																$	0.26
Weighted average common shares outstanding - basic and diluted														53,207	(F)		68,583

47

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, six properties began operations during 2007, and one property remained under construction as of June 30, 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, Suffolk, VA Courtyard opened May 2007, Suffolk, VA TownePlace Suites opened June 2007, and Overland Park, KS Fairfield Inn & Suites under construction as of June 30, 2008 opened August 2008.

(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.

48

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 September 16, 2008

49