EXHIBIT 8
July 26, 1999
Board of Directors
Apple Suites, Inc.
9 North Third Street
Richmond, VA 23219
Dear Sirs:
We have acted as counsel to Apple Suites, Inc. (the "Company"), a
Virginia corporation, in connection with the preparation of the registration
statement on Form S-11 to which this opinion is attached as an exhibit (the
"Registration Statement"). The Company is filing the Registration Statement with
the Securities and Exchange Commission under the Securities Act of 1933, as
amended (the "Act"), to register under the Act 30,166,666.67 Common Shares of
the Company. Terms not otherwise defined herein shall have the meanings assigned
to them in the Registration Statement.
We have reviewed originals or copies of (i) the Articles of
Incorporation, Bylaws and other corporate documents of the Company, (ii) certain
resolutions of the Board of Directors of the Company, (iii) the Registration
Statement and the prospectus included therein (the "Prospectus"), and (iv) the
form of Advisory Agreement between the Company and Apple Suites, Inc., a
Virginia corporation (the "Advisor"), included in the Registration Statement as
an exhibit. In addition, we have reviewed such other documents and have made
such legal and factual inquiries as we have deemed necessary or advisable for
purposes of rendering the opinions set forth below.
We understand and assume that the Company will duly elect to be treated
as a real estate investment trust ("REIT") for federal income tax purposes
commencing with its taxable year ended December 31, 1999. The Company's initial
and continuing qualification as a REIT depends upon the satisfaction of various
requirements under the Internal Revenue Code of 1986, as amended (the "Code").
The satisfaction of those requirements generally will be within the control of
the Company's Board of Directors and the Advisor, which has been engaged to
conduct the affairs of the Company under the supervision of the Board of
Directors. The Advisor and appropriate officers of the Company have made the
following representations to us with respect to the operation of the Company:
Board of Directors
July 26, 1999
Page 2
1. The Company will operate in compliance with the Articles of
Incorporation and the Bylaws;
2. The Company will not operate so that it becomes either (i) a
financial institution referred to in Section 582(c)(5) of the Code, or (ii) an
insurance company to which subchapter L of the Code applies;
3. The Company will have at least 100 Shareholders for at least 335
days of each full taxable year, or proportionate part of any shorter taxable
year, after its first taxable year and will not be closely held as defined in
Section 856(h) of the Code;
4. The Company will use a calendar year for federal income tax
purposes;
5. The Company will elect to be treated as a REIT under the Code, and
will not elect to be treated as an S Corporation, a real estate mortgage
investment conduit, a regulated investment company, or any entity other than a
REIT for federal income tax purposes;
6. The Company will not revoke its election to be treated as a REIT and
will satisfy all relevant filing and other administrative requirements
established by the Internal Revenue Service that must be met to elect and to
maintain REIT status;
7. The Company will not have, as of the close of any taxable year, any
earnings and profits accumulated in any year during which the Company was not
treated as a REIT under the Code;
8. The Company will conduct its operations as described in the
Registration Statement (including the Prospectus), will operate in a manner so
as to qualify for taxation as a REIT under the Code, and intends to continue to
operate in such a manner;
9. The Company will invest in assets that, when acquired by the
Company, will cause the Company to satisfy (i) the asset test described in the
Prospectus, and (ii) the sources of income tests described in the Prospectus;
10. The Company will not hold any assets for sale to customers in the
ordinary course of a trade or business and will attempt to comply with the terms
of safe-harbor provisions in the Code prescribing when asset sales by a REIT
will not be characterized as prohibited transactions;
11. The Company expects that substantially all of the operating gross
income from the properties of the Company will be considered "rents from real
property" within the meaning of Section 856(d) of the Code;
12. The Company will comply with the distribution requirements of the
Code applicable to REITs;
Board of Directors
July 26, 1999
Page 3
13. The Company will comply for each taxable year with the Treasury
regulations prescribed for the purpose of ascertaining the actual ownership of
outstanding Shares of the Company; and
14. The Company anticipates that it will be a "domestically controlled
REIT," within the meaning of Section 897(h) of the Code.
Based on the foregoing documents, representations, and assumptions
being, and continuing to be, accurate, we are of the opinion that:
1. The Company's proposed method of operation will enable it to meet
the requirements for qualification as a REIT under the Code;
2. Provided that a Shareholder which is an Exempt Organization does
not incur any "acquisition indebtedness" as defined in Section 514(c) of the
Code in connection with its acquisition of Shares, dividends paid by the Company
to such Shareholder will not constitute unrelated business taxable income under
Section 512 of the Code even if the Company owns "debt-financed property" as
that term is defined in Section 514(b) of the Code; and
3. The statements and legal conclusions contained in the Registration
Statement under the caption "Federal Income Tax Considerations" describe the
material federal income tax aspects of the offering made by the Registration
Statement applicable to the Company and the Shareholders, are correct in all
material respects, and the discussion thereunder does not omit any material
provision with respect to the matters covered.
With respect to our opinion contained in paragraph 1 above, you should
note that qualification of the Company as a REIT will depend, in part, upon the
Company's ability, through its actual operations, to meet the qualification
tests as described in the Prospectus.
The foregoing opinions are based solely on the provisions of the Code,
the Treasury regulations promulgated thereunder and the judicial and
administrative rulings, pronouncements and decisions now in effect, all of which
are subject to change, which change may be retroactively applied, or possible
differing interpretations that may affect the conclusions stated herein. To the
extent this opinion relies upon recent tax legislation, and recently promulgated
Treasury regulations, no assurance can be given as to the interpretations of
such recent legislation that will be reflected in applicable Internal Revenue
Service rulings and future Treasury regulations, which could be applied
retroactively. Further, this opinion does not purport to deal with any aspects
of state law that may affect particular investors nor with certain types of
investors subject to special treatment under the federal income tax laws.
Board of Directors
July 26, 1999
Page 4
We hereby consent to the reference to our firm under the captions
"Federal Income Tax Considerations" and "Legal Matters" in the Registration
Statement and to the filing of this opinion as an exhibit to the Registration
Statement. In giving this consent, we do not admit that we are in the category
of persons whose consent is required by Section 7 of the Act or the rules and
regulations promulgated thereunder by the Securities and Exchange Commission.
Very truly yours,
/s/ McGuire, Woods, Battle & Boothe LLP