10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2013

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______ TO _______

Commission File Number 000-53603

Apple REIT Nine, Inc.

(Exact name of registrant as specified in its charter)

Virginia	26-1379210
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
814 East Main Street Richmond, Virginia	23219
(Address of principal executive offices)	(Zip Code)

(804) 344-8121

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.Yes x  No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x  No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer   ¨	Accelerated filer   ¨	Non-accelerated filer   x	Smaller reporting company   ¨
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

Number of registrant’s common shares outstanding as of August 1, 2013:182,784,131

APPLE REIT NINE, INC.

FORM 10-Q

INDEX

			Page Number
PART I.  FINANCIAL INFORMATION
	Item 1.	Financial Statements (Unaudited)
		Consolidated Balance Sheets –June 30, 2013 and December 31, 2012	3
		Consolidated Statements of Operations - Three and six months ended June 30, 2013 and 2012	4
		Consolidated Statements of Cash Flows – Six months ended June 30, 2013 and 2012	5
		Notes to Consolidated Financial Statements	6
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	14
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
	Item 4.	Controls and Procedures	29
PART II.  OTHER INFORMATION
	Item 1.	Legal Proceedings	30
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
	Item 6.	Exhibits	32
Signatures			33

This Form 10-Q includes references to certain trademarks or service marks.  The Courtyard® by Marriott, Fairfield Inn® by Marriott, Fairfield Inn and Suites® by Marriott, TownePlace Suites® by Marriott, SpringHill Suites® by Marriott, Residence Inn® by Marriott and Marriott® trademarks are the property of Marriott International, Inc. or one of its affiliates.  The Hampton Inn®, Hampton Inn and Suites®, Homewood Suites® by Hilton, Embassy Suites Hotels®, Hilton Garden Inn®, Home2 Suites® by Hilton and Hilton® trademarks are the property of Hilton Worldwide or one or more of its affiliates.  For convenience, the applicable trademark or service mark symbol has been omitted but will be deemed to be included wherever the above referenced terms are used.

PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

APPLE REIT NINE, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

	June 30,			December 31,
	2013			2012
	(unaudited)
Assets
Investment in real estate, net of accumulated depreciation of $173,060 and $145,927, respectively	$	1,451,132		$	1,463,894
Cash and cash equivalents		0			9,027
Restricted cash-furniture, fixtures and other escrows		9,806			9,922
Note receivable, net		19,250			22,375
Due from third party managers, net		18,607			10,751
Other assets, net		10,369			10,048
Total Assets	$	1,509,164		$	1,526,017
Liabilities
Credit facility	$	17,800		$	0
Notes payable		164,682			166,783
Accounts payable and accrued expenses		13,763			13,101
Total Liabilities		196,245			179,884
Shareholders' Equity
Preferred stock, authorized 30,000,000 shares; none issued and outstanding		0			0
Series A preferred stock, no par value, authorized 400,000,000 shares; issued and outstanding 182,784,131 and 182,619,400 shares, respectively		0			0
Series B convertible preferred stock, no par value, authorized 480,000 shares; issued and outstanding 480,000 shares		48			48
Common stock, no par value, authorized 400,000,000 shares; issued and outstanding 182,784,131 and 182,619,400 shares, respectively		1,807,387			1,805,335
Distributions greater than net income		(494,516	)		(459,250	)
Total Shareholders' Equity		1,312,919			1,346,133
Total Liabilities and Shareholders' Equity	$	1,509,164		$	1,526,017

See notes to consolidated financial statements.

3

APPLE REIT NINE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(in thousands, except per share data)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
Revenues:
Room revenue	$	95,115		$	88,047		$	179,388		$	167,600
Other revenue		9,457			9,063			17,587			17,601
Total revenue		104,572			97,110			196,975			185,201
Expenses:
Operating expense		25,821			24,239			49,518			46,651
Hotel administrative expense		7,220			6,956			14,069			13,581
Sales and marketing		8,648			8,211			16,599			15,582
Utilities		3,535			3,417			6,940			6,704
Repair and maintenance		3,771			3,293			7,329			6,518
Franchise fees		4,301			3,916			8,063			7,395
Management fees		3,560			3,173			6,762			6,246
Property taxes, insurance and other		5,657			4,979			10,789			9,954
General and administrative		2,239			2,327			4,099			4,931
Acquisition related costs		74			430			74			461
Depreciation expense		13,633			13,166			27,133			26,009
Total expenses		78,459			74,107			151,375			144,032
Operating income		26,113			23,003			45,600			41,169
Interest expense, net		(2,229	)		(1,579	)		(4,414	)		(2,955	)
Income before income taxes		23,884			21,424			41,186			38,214
Income tax expense		(349	)		(391	)		(745	)		(589	)
Income from continuing operations		23,535			21,033			40,441			37,625
Income from discontinued operations		0			1,525			0			6,792
Net income	$	23,535		$	22,558		$	40,441		$	44,417
Basic and diluted net income per common share
From continuing operations	$	0.13		$	0.11		$	0.22		$	0.20
From discontinued operations		0.00			0.01			0.00			0.04
Total basic and diluted net income per common share	$	0.13		$	0.12		$	0.22		$	0.24
Weighted average common shares outstanding - basic and diluted		182,496			182,110			182,446			182,236

See notes to consolidated financial statements.

4

APPLE REIT NINE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)

	Six Months Ended
	June 30,
	2013			2012
Cash flows from operating activities:
Net income	$	40,441		$	44,417
Adjustments to reconcile net income to cash provided by     operating activities:
Depreciation		27,133			26,009
Amortization of deferred financing costs, fair value    adjustments and other non-cash expenses, net		215			247
Straight-line rental income		0			(1,975	)
Changes in operating assets and liabilities:
Increase in due from third party managers, net		(7,856	)		(8,110	)
Increase in other assets, net		(434	)		(839	)
Decrease (increase) in accounts payable and accrued expenses		662			(1,658	)
Net cash provided by operating activities		60,161			58,091
Cash flows from investing activities:
Cash paid for acquisitions, net		(7,220	)		(14,832	)
Net proceeds (costs) from sale of assets		(353	)		135,416
Capital improvements and development costs		(6,824	)		(9,204	)
Increase in capital improvement reserves		(129	)		(941	)
Payments received on note receivable		3,150			840
Net cash provided by (used in) investing activities		(11,376	)		111,279
Cash flows from financing activities:
Net proceeds related to issuance of Units		21,929			26,210
Redemptions of Units		(19,992	)		(31,990	)
Special distribution paid to common shareholders		0			(136,113	)
Monthly distributions paid to common shareholders		(75,707	)		(79,386	)
Net proceeds from credit facility		17,800			0
Proceeds from notes payable		0			30,000
Payments of notes payable		(1,842	)		(1,262	)
Deferred financing costs		0			(174	)
Net cash used in financing activities		(57,812	)		(192,715	)
Decrease in cash and cash equivalents		(9,027	)		(23,345	)
Cash and cash equivalents, beginning of period		9,027			30,733
Cash and cash equivalents, end of period	$	0		$	7,388
Non-cash transactions:
Note receivable issued from sale of assets	$	0		$	60,000

See notes to consolidated financial statements.

5

APPLE REIT NINE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.  Organization and Summary of Significant Accounting Policies

Organization

Apple REIT Nine, Inc., together with its wholly owned subsidiaries (the “Company”), is a Virginia corporation that has elected to be treated as a real estate investment trust (“REIT”) for federal income tax purposes.  The Company was formed to invest in income-producing real estate in the United States.  Initial capitalization occurred on November 9, 2007 and operations began on July 31, 2008 when the Company acquired its first hotel.  The Company concluded its best-efforts offering of Units (each Unit consists of one common share and one Series A preferred share) in December 2010.  The Company’s fiscal year end is December 31.  The Company has no foreign operations or assets and its operating structure includes only one segment.  The consolidated financial statements include the accounts of the Company and its subsidiaries.  All intercompany accounts and transactions have been eliminated.  Although the Company has an interest in a variable interest entity through its note receivable, it is not the primary beneficiary as the Company does not have any elements of power in the decision making process of the entity and does not share in any of the benefits, and therefore does not consolidate the entity.  As of June 30, 2013, the Company owned 89 hotels located in 27 states with an aggregate of 11,371 rooms.

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with the rules and regulations for reporting on Form 10-Q.  Accordingly, they do not include all of the information required by accounting principles generally accepted in the United States for complete financial statements.  In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.  These unaudited financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in its 2012 Annual Report on Form 10-K.  Operating results for the three and six months ended June 30, 2013 are not necessarily indicative of the results that may be expected for the twelve month period ending December 31, 2013.

Use of Estimates

The preparation of the financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Reclassifications

Certain amounts in the 2012 consolidated financial statements have been reclassified to conform with the 2013 presentation with no effect on previously reported net income or shareholders’ equity.

Restricted Cash

Restricted cash includes reserves for debt service, real estate taxes, and insurance, and reserves for furniture, fixtures, and equipment replacements of up to 5% of property revenue for certain hotels, as required by certain management or mortgage debt agreement restrictions and provisions.

Earnings Per Common Share

Basic earnings per common share is computed based upon the weighted average number of shares outstanding during the period.  Diluted earnings per common share is calculated after giving effect to all potential common shares that were dilutive and outstanding for the period.  There were no potential common shares with a dilutive effect for the three and six months ended June 30, 2013 or 2012.  As a result, basic and dilutive outstanding shares were the same.  Series B convertible preferred shares are not included in earnings per common share calculations until such time that such shares are eligible to be converted to common shares.

6

2.  Disposition and Discontinued Operations

On April 27, 2012, the Company completed the sale of its 406 acres of land and land improvements located on 110 sites in the Ft. Worth, Texas area (the “110 parcels”) and the assignment of the lease for a total sale price of $198.4 million.  The 110 parcels were acquired in April 2009 for a total purchase price of $147.3 million and were leased to a subsidiary of Chesapeake Energy Corporation (“Chesapeake”) under a long term lease for the production of natural gas.  At closing, the Company received approximately $138.4 million in cash proceeds and issued a note receivable totaling $60.0 million to the purchaser (the “note”).  The note, which approximated fair market value, is secured by a junior lien on the land and land improvements owned by the purchaser.  The stated interest rate on the note is 10.5%.  The note requires interest only payments for the first three years of the note.  After the first three years, interest is accrued and payments will only be received once the purchaser extinguishes its senior loan with a third party.  Once the senior loan is repaid, the Company will receive all payments from the existing lease until fully repaid or the note reaches maturity which is April 2049.  Although the purchaser is not affiliated with the Company, a partner of the purchaser is also a member of the Board of Directors of Apple REIT Ten, Inc.  In conjunction with the sale, the Company incurred a brokerage commission to Apple Suites Realty Group, Inc. (“ASRG”) totaling approximately $4.0 million, representing 2% of the gross sales price.  Of this amount, approximately $2.8 million was paid to ASRG during the second quarter of 2012 and the remaining $1.2 million will be paid upon repayment of the $60.0 million note.  The $4.0 million commission has been recorded as a reduction to the deferred gain on sale as described below.

The total gain on sale was approximately $33.3 million (total sale price of $198.4 million less carrying value totaling $160.5 million, ASRG fee totaling $4.0 million, closing costs totaling $0.3 million and related franchise taxes totaling $0.3 million).  In accordance with the Accounting Standards Codification on real estate sales, the sales transaction is being accounted for under the cost recovery method, therefore the gain on sale and interest earned on the note will be deferred until cash payments by the purchaser, including principal and interest on the note due to the Company and the payment of the $138.4 million at closing exceed the Company’s cost basis of the 110 parcels sold.  The note receivable is included in the Company’s consolidated balance sheets, net of the total deferred gain.  As of June 30, 2013, the note receivable, net was $19.3 million, including $60.0 million note receivable offset by $33.3 million deferred gain and $7.4 million deferred interest earned.  As of December 31, 2012, the note receivable, net was $22.4 million, including $60.0 million note receivable offset by $33.4 million deferred gain and $4.3 million deferred interest earned.  The 110 parcels was a separate reportable segment and the results of operations for these properties have been classified in the consolidated statements of operations in the line item income from discontinued operations.

The following table sets forth the components of income from discontinued operations for the three and six months ended June 30, 2012 (in thousands):

	Three Months		Six Months
	Ended		Ended
	June 30, 2012		June 30, 2012
Rental revenue	$	1,532	$	6,826
Operating expenses		7		34
Depreciation expense		0		0
Income from discontinued operations	$	1,525	$	6,792

Prior to the sale, the lease was classified as an operating lease and rental income was recognized on a straight-line basis over the initial term of the lease.  Rental revenue includes approximately $0.4 million and $2.0 million of adjustments to record rent on the straight-line basis for the three and six months ended June 30, 2012.

7

3.  Credit Facility

In November 2012, the Company entered into a $50 million credit facility with a commercial bank that is utilized for working capital, hotel renovations and development, and other general corporate funding purposes, including the payment of redemptions and distributions.  The credit facility may be increased to $100 million, subject to certain conditions.  Under the terms of the credit agreement, the Company may make voluntary prepayments in whole or in part at any time.  The credit facility matures in November 2014; however, the Company has the right, upon satisfaction of certain conditions, including covenant compliance and payment of an extension fee, to extend the maturity date to November 2015.  Interest payments are due monthly and the interest rate, subject to certain exceptions, is equal to the one-month LIBOR (the London Inter-Bank Offered Rate for a one-month term) plus a margin ranging from 2.25% to 2.75%, depending upon the Company’s leverage ratio, as calculated under the terms of the credit agreement.  The Company is also required to pay an unused facility fee of 0.30% or 0.40% on the unused portion of the revolving credit facility, based on the amount of borrowings outstanding during the quarter.  As of June 30, 2013, the credit facility had an outstanding principal balance of $17.8 million and an annual interest rate of approximately 2.44%.  As of December 31, 2012, there were no borrowings outstanding under the credit facility.

The credit agreement requires the Company to maintain a specific pool of Unencumbered Borrowing Base Properties (must be a minimum of ten properties and must satisfy conditions as defined in the credit agreement).  The obligations of the lender to make any advances under the credit facility are subject to certain conditions, including that the outstanding borrowings do not exceed the Borrowing Base Availability, as defined in the credit agreement.  The credit facility contains customary affirmative covenants and negative covenants and events of defaults.  It also contains quarterly financial covenants, which include, among others, a minimum tangible net worth, maximum debt limits, and minimum debt service and fixed charge coverage ratios.  The Company was in compliance with each of these covenants at June 30, 2013.

4.  Fair Value of Financial Instruments

The Company estimates the fair value of its debt and note receivable by discounting the future cash flows of each instrument at estimated market rates consistent with the maturity of an instrument with similar credit terms and credit characteristics which are Level 3 inputs.  Market rates take into consideration general market conditions and maturity.  As of June 30, 2013, the carrying value and estimated fair value of the Company’s debt was approximately $182.5 million and $182.7 million.  As of December 31, 2012, the carrying value and estimated fair value of the Company’s debt was approximately $166.8 million and $173.3 million.  As of June 30, 2013 and December 31, 2012, the carrying value of the $60 million note receivable as discussed in note 2 approximates fair market value.  The carrying value of the Company’s other financial instruments approximates fair value due to the short-term nature of these financial instruments.

5.  Related Parties

The Company has, and is expected to continue to engage in, significant transactions with related parties.  These transactions cannot be construed to be at arm’s length and the results of the Company’s operations may be different if these transactions were conducted with non-related parties.  The Company’s independent members of the Board of Directors oversee and annually review the Company’s related party relationships (which include the relationships discussed in this section) and are required to approve any significant modifications to the contracts, as well as any new significant related party transactions.  There were no changes to the contracts discussed in this section and no new significant related party transactions during the six months ended June 30, 2013 (other than the transactions related to the completion of Apple REIT Six, Inc.’s merger with a third party discussed below).  The Board of Directors is not required to approve each individual transaction that falls under the related party relationships.  However, under the direction of the Board of Directors, at least one member of the Company’s senior management team approves each related party transaction.

8

The term the “Apple REIT Entities” means Apple REIT Six, Inc., Apple REIT Seven, Inc., Apple REIT Eight, Inc., Apple REIT Nine, Inc. and Apple REIT Ten, Inc.  The term the “Advisors” means Apple Six Advisors, Inc., Apple Seven Advisors, Inc., Apple Eight Advisors, Inc., Apple Nine Advisors, Inc. (“A9A”), Apple Ten Advisors, Inc., Apple Suites Realty Group, Inc. (“ASRG”) and Apple Six Realty Group, Inc.  The Advisors are wholly owned by Glade M. Knight, Chairman and Chief Executive Officer of the Company.  Mr. Knight is also Chairman and Chief Executive Officer of Apple REIT Seven, Inc., Apple REIT Eight, Inc. and Apple REIT Ten, Inc.  Members of the Company’s Board of Directors are also on the Board of Directors of Apple REIT Seven, Inc. and Apple REIT Eight, Inc.

On May 14, 2013, Apple REIT Six, Inc. merged with and into an entity that is not affiliated with the Apple REIT Entities or its Advisors.  Pursuant to the terms and conditions of the merger agreement, dated as of November 29, 2012, upon completion of the merger, the separate corporate existence of Apple REIT Six, Inc. ceased (the “Merger”).  Prior to the Merger, Glade M. Knight was Chairman and Chief Executive Office of Apple REIT Six, Inc. and members of the Company’s Board of Directors were also on the Board of Directors of Apple REIT Six, Inc.

ASRG Agreement

The Company has a contract with ASRG, to acquire and dispose of real estate assets for the Company.  A fee of 2% of the gross purchase price or gross sale price in addition to certain reimbursable expenses is paid to ASRG for these services.  As of June 30, 2013, payments to ASRG for fees under the terms of this contract related to the acquisition of assets have totaled approximately $33.6 million since inception.  Of this amount, the Company incurred approximately $0.1 million and $0.3 million during the six months ended June 30, 2013 and 2012, which is included in acquisition related costs in the Company’s consolidated statements of operations.  During the second quarter of 2013, the Company paid fees to ASRG for the purchase of two land parcels located at the Residence Inn hotels in Manassas, Virginia and San Bernardino, California, both which had previously been leased from a third party.  In addition, the Company incurred a brokerage commission to ASRG totaling approximately $4.0 million related to the sale of the Company’s 110 parcels in April 2012, which has been recorded as a reduction to the deferred gain on sale.  Of this amount, approximately $2.8 million was paid to ASRG during the second quarter of 2012 and the remaining $1.2 million will be paid upon repayment of the $60 million note.

A9A Agreement

The Company is party to an advisory agreement with A9A, pursuant to which A9A provides management services to the Company.  A9A provides these management services through Apple Fund Management, LLC (“AFM”), which immediately after the Merger became a wholly-owned subsidiary of A9A.  This transaction between A9A and Apple REIT Six, Inc. was made with no cash consideration exchanged between the entities.  Prior to May 14, 2013, AFM was a wholly-owned subsidiary of Apple REIT Six, Inc.  An annual advisory fee ranging from 0.1% to 0.25% of total equity proceeds received by the Company, in addition to certain reimbursable expenses as described below, are payable to A9A for these management services.  Total advisory fees incurred by the Company under the advisory agreement are included in general and administrative expenses and totaled approximately $1.4 million and $1.5 million for the six months ended June 30, 2013 and 2012.

Apple REIT Entities and Advisors Cost Sharing Structure

In addition to the fees payable to ASRG or A9A, the Company reimbursed to ASRG or A9A, or paid directly to AFM on behalf of ASRG or A9A, approximately $1.0 million for both the six months ended June 30, 2013 and 2012.  The expenses reimbursed were approximately $0 and $0.1 million, respectively, for costs reimbursed under the contract with ASRG and approximately $1.0 million and $0.9 million, respectively, for costs reimbursed under the contract with A9A.  The costs are included in general and administrative expenses and are for the Company’s allocated share of the staffing and related costs provided by AFM at the direction of A9A.

9

AFM is an affiliate of each of the Advisors.  Each of the Advisors provides management services through the use of AFM to, respectively, Apple REIT Six, Inc. (prior to the Merger), Apple REIT Seven, Inc., Apple REIT Eight, Inc., Apple REIT Nine, Inc. and Apple REIT Ten.  In connection with the Merger, effective May 14, 2013, the entire membership interest of Apple REIT Six, Inc. in AFM was transferred and assigned to A9A, which then became the sole member of AFM.  As part of the assignment, A9A and the other Advisors agreed to indemnify the buyer of Apple REIT Six, Inc. for liabilities related to AFM.  The assignment of AFM’s interest to A9A had no impact on the Company’s advisory agreement with A9A or the process of allocating costs from AFM to the Apple REIT Entities or Advisors as described below, except Apple REIT Six, Inc. and its advisors, Apple Six Advisors, Inc. and Apple Six Realty Group, Inc. (collectively “A6 Advisors”), no longer participate in the cost sharing arrangement, thereby increasing the remaining companies’ share of the allocated costs.

Also, in connection with the Merger, on May 13, 2013, the Company acquired from Apple REIT Six, Inc. the Apple REIT Entities’ and Advisors’ headquarters in Richmond, Virginia (“Headquarters”) and assumed the Fort Worth, Texas office lease agreement for approximately $4.5 million, which approximated fair value at the time of acquisition based on third party market comparisons.  As part of the purchase, the Company agreed to release Apple REIT Six, Inc. from any liabilities related to the Headquarters or office lease.  As described below, any costs associated with the Headquarters and office lease, including office rent, utilities, office supplies, etc. (“Office Related Costs”) will continue to be allocated to the Apple REIT Entities and Advisors, excluding Apple REIT Six, Inc. and A6 Advisors.

Prior to the Merger, amounts reimbursed to AFM included both compensation for personnel and Office Related Costs used by the companies.  As discussed above, as a result of the Merger, beginning on May 14, 2013, Office Related Costs are now allocated from the Company to the other Apple REIT Entities and Advisors, excluding Apple REIT Six, Inc. and A6 Advisors.  Each of these companies has agreed to reimburse the Company for its share of these costs.  From the period May 14, 2013 through June 30, 2013, the Company received reimbursement of its costs totaling approximately $85,000 from the participating entities.  The Company’s net allocated Office Related Costs were approximately $58,000 and is included in general and administrative costs in the Company’s consolidated statements of operations.

All of the Office Related Costs and costs of AFM are allocated among the Apple REIT Entities and the Advisors, excluding Apple REIT Six, Inc. and A6 Advisors after the Merger.  The allocation of costs is reviewed at least annually by the Compensation Committees of the Apple REIT Entities.  In making the allocation, management of each of the entities and their Compensation Committee consider all relevant facts related to each company’s level of business activity and the extent to which each company requires the services of particular personnel of AFM.  Such payments are based on the actual costs of the services and are not based on formal record keeping regarding the time these personnel devote to the Company, but are based on a good faith estimate by the employee and/or his or her supervisor of the time devoted by the employee to the Company.  Although there is a potential conflict on time allocation of employees due to the fact that a senior manager, officer or staff member will provide services to more than one company, the Company believes that the executives and staff compensation sharing arrangement described above allows the companies to share costs yet attract and retain superior executives and staff.  The cost sharing structure also allows each entity to maintain a much more cost effective structure than having separate staffing arrangements.  Since the employees of AFM perform services for the Apple REIT Entities and Advisors at the direction of the Advisors, individuals, including executive officers, receive their compensation at the direction of the Advisors and may receive consideration directly from the Advisors.

As part of the cost sharing arrangements, the day-to-day transactions may result in amounts due to or from the Apple REIT Entities and Advisors (excluding Apple REIT Six, Inc. and A6 Advisors after the Merger).  To efficiently manage cash disbursements, an individual Apple REIT Entity or Advisor (excluding Apple REIT Six, Inc. and A6 Advisors after the Merger) may make payments for any or all of the related companies.  The amounts due to or from the related Apple REIT Entity or Advisor (excluding Apple REIT Six, Inc. and A6 Advisors after the Merger) are reimbursed or collected and are not significant in amount.

10

The Company has incurred legal fees associated with the Legal Proceedings and Related Matters discussed herein.  The Company also incurs other professional fees such as accounting, auditing and reporting.  These fees are included in general and administrative expense in the Company’s consolidated statements of operations.  To be cost effective, these services received by the Company are shared as applicable across the other Apple REIT Entities.  The professionals cannot always specifically identify their fees for one company; therefore management allocates these costs across the companies that benefit from the services.  The total costs for the Legal Proceedings and Related Matters discussed herein for all of the Apple REIT Entities was approximately $1.7 million for the six months ended June 30, 2013, of which approximately $0.4 million was allocated to the Company.  Total costs for the six months ended June 30, 2012 for all of the Apple REIT Entities was approximately $3.2 million, of which approximately $0.7 million was allocated to the Company.          

Apple Air Holding, LLC (“Apple Air”) Membership Interest

Included in other assets, net on the Company’s consolidated balance sheet is a 24% equity investment in Apple Air.  The other current members of Apple Air are Apple REIT Seven, Inc., Apple REIT Eight, Inc. and Apple REIT Ten, Inc.  In connection with the Merger, on May 13, 2013, Apple REIT Ten, Inc. acquired its membership interest in Apple Air from Apple REIT Six, Inc.  Through its equity investment, the Company has access to Apple Air’s aircraft for acquisition, asset management and renovation purposes.  The Company’s equity investment was approximately $1.8 million and $1.9 million as of June 30, 2013 and December 31, 2012.  The Company has recorded its share of income and losses of the entity under the equity method of accounting and adjusted its investment in Apple Air accordingly.  For the six months ended June 30, 2013 and 2012, the Company recorded a loss of approximately $102,000 and $95,000 respectively, as its share of the net loss of Apple Air, which primarily relates to the depreciation of the aircraft, and is included in general and administrative expense in the Company’s consolidated statements of operations.

6.  Shareholders’ Equity

Special Distribution

As a result of the sale of its 110 parcels, the Board of Directors approved a special distribution of $0.75 per Unit, totaling $136.1 million on May 17, 2012 to shareholders of record on May 11, 2012 (the “Special Distribution”).

Monthly Distributions

For the three months ended June 30, 2013 and 2012, the Company made distributions (excluding the Special Distribution discussed above) of $0.2076 and $0.2158 per common share for a total of $37.9 million and $39.3 million.  For the six months ended June 30, 2013 and 2012, the Company made distributions (excluding the Special Distribution discussed above) of $0.4151 and $0.4358 per common share for a total of $75.7 million and $79.4 million.  In conjunction with the Special Distribution, in May 2012 the Company’s Board of Directors reduced the annual distribution rate from $0.88 per common share to $0.83 per common share.  The reduction was effective with the June 2012 distribution. In August 2012, the Board of Directors increased the annualized distribution rate from $0.83 per common share to $0.83025 per common share.  The distribution will continue to be paid monthly.  Total distributions (including the Special Distribution) for the three months ended June 30, 2013 and 2012 totaled $37.9 million and $175.4 million, and $75.7 million and $215.5 million for the six months ended June 30, 2013 and 2012.

Unit Redemption Program

In July 2009, the Company instituted a Unit Redemption Program to provide limited interim liquidity to its shareholders who have held their Units for at least one year.  Since the inception of the program through April 2012, shareholders were permitted to request redemption of Units for a purchase price equal to 92% of the price paid per Unit if the Units have been owned for less than three years, or 100% of the price paid per Unit if the Units have been owned more than three years.  In May 2012, as a result of the Special Distribution, the purchase price per Unit under the Company’s Unit Redemption Program was adjusted by the amount of the Special Distribution (from $11.00 to $10.25 for the maximum purchase price, based on the original purchase price and length of time such Units have been held by the shareholder).  The maximum number of Units that may be redeemed in any given year is five percent of the weighted average number of Units outstanding during the 12-month period immediately prior to the date of redemption. The Company reserves the right to change the purchase price of redemptions, reject any request for redemption, or otherwise amend the terms of, suspend, or terminate the Unit Redemption Program.  As noted below, since July 2011, the total redemption requests have exceeded the authorized amount of redemptions and, as a result, the Board of Directors has limited the amount of redemptions as deemed prudent.  Effective June 19, 2013, the Board of Directors suspended the Company’s Unit Redemption Program, as it evaluates a potential consolidation transaction in which the Company, Apple REIT Seven, Inc. and Apple REIT Eight, Inc. would be combined (the “Consolidation Transaction”).

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Since inception of the program through June 30, 2013, the Company has redeemed approximately 11.7 million Units representing $121.2 million, including 2.0 million Units in the amount of $20.0 million and 3.0 million Units in the amount of $32.0 million redeemed during the six months ended June 30, 2013 and 2012, respectively.  As contemplated in the program, beginning with the July 2011 redemption, the scheduled redemption date for the third quarter of 2011, the Company redeemed Units on a pro-rata basis.  Prior to July 2011, the Company redeemed 100% of redemption requests.  The following is a summary of the Unit redemptions during 2012 and the first six month of 2013:

Redemption Date	Total Requested Unit Redemptions at Redemption Date		Units Redeemed		Total Redemption Requests Not Redeemed at Redemption Date
January 2012		10,689,219		1,507,187		9,182,032
April 2012		11,229,890		1,509,922		9,719,968
July 2012		10,730,084		1,004,365		9,725,719
October 2012		11,155,269		1,003,267		10,152,002
January 2013		12,135,251		990,324		11,144,927
April 2013		13,039,019		988,095		12,050,924

Dividend Reinvestment Plan

In December 2010, the Company instituted a Dividend Reinvestment Plan for its shareholders. The plan provides a way to increase shareholder investment in the Company by reinvesting dividends to purchase additional Units of the Company. The uses of the proceeds from this plan may include purchasing Units under the Company’s Unit Redemption Program, enhancing properties, satisfying financing obligations and other expenses, increasing working capital, funding various corporate operations, and acquiring hotels.  As a result of the Special Distribution, beginning in May 2012, the offering price per Unit under the Company’s Dividend Reinvestment Plan was adjusted by the amount of the Special Distribution (from $11.00 to $10.25).  The Company has registered 20.0 million Units for potential issuance under the plan.  During the six months ended June 30, 2013 and 2012, approximately 2.1 million Units, representing $22.0 million in proceeds to the Company, and 2.4 million Units, representing $26.2 million in proceeds to the Company, were issued under the plan.  Since inception of the plan through June 30, 2013, approximately 12.3 million Units, representing $131.0 million in proceeds to the Company, were issued under the plan.  Effective June 19, 2013, the Board of Directors suspended the Company’s Dividend Reinvestment Plan, as it assesses the Consolidation Transaction.

7.  Legal Proceedings and Related Matters

On December 13, 2011, the United States District Court for the Eastern District of New York ordered that three putative class actions, Kronberg, et al. v. David Lerner Associates, Inc., et al., Kowalski v. Apple REIT Ten, Inc., et al., and Leff v. Apple REIT Ten, Inc., et al., be consolidated and amended the caption of the consolidated matter to be In re Apple REITs Litigation. The District Court also appointed lead plaintiffs and lead counsel for the consolidated action and ordered lead plaintiffs to file and serve a consolidated complaint by February 17, 2012. The Company was previously named as a party in all three of the above mentioned class action lawsuits.

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On February 17, 2012, lead plaintiffs and lead counsel in the In re Apple REITs Litigation, Civil Action No. 1:11-cv-02919-KAM-JO, filed an amended consolidated complaint in the United States District Court for the Eastern District of New York against the Company, Apple Suites Realty Group, Inc., Apple Eight Advisors, Inc., Apple Nine Advisors, Inc., Apple Ten Advisors, Inc., Apple Fund Management, LLC, Apple REIT Six, Inc., Apple REIT Seven, Inc., Apple REIT Eight, Inc. and Apple REIT Ten, Inc., their directors and certain officers, and David Lerner Associates, Inc. and David Lerner. The consolidated complaint, which was dismissed in April 2013, was purportedly brought on behalf of all purchasers of Units in the Company and the other Apple REIT Entities, or those who otherwise acquired these Units that were offered and sold to them by David Lerner Associates, Inc., or its affiliates and on behalf of subclasses of shareholders in New Jersey, New York, Connecticut and Florida, and alleges that the Apple REIT Entities “misrepresented the investment objectives of the Apple REITs, the dividend payment policy of the Apple REITs, and the value of their Apple REIT investments.”The consolidated complaint asserts claims under Sections 11, 12 and 15 of the Securities Act of 1933, as well as claims for breach of fiduciary duty, aiding and abetting breach of fiduciary duty, negligence, and unjust enrichment, and claims for violation of the securities laws of Connecticut and Florida. The complaint seeks, among other things, certification of a putative nationwide class and the state subclasses, damages, rescission of share purchases and other costs and expenses.

On April 18, 2012, the Company, and the other defendants moved to dismiss the consolidated complaint in the In re Apple REITs Litigation.  By Order entered on March 31, 2013 and opinion issued on April 3, 2013, the Court dismissed the consolidated complaint in its entirety with prejudice and without leave to amend. Plaintiffs filed a Notice of Appeal to the Second Circuit Court of Appeals on April 12, 2013, and filed their Brief for Plaintiffs-Appellants on July 26, 2013.  Defendants-Appellees have requested that their brief be due on October 25, 2013.  The Company believes that Plaintiffs’ claims against it, its officers and directors and other Apple REIT Entities were properly dismissed by the lower court, and intends to vigorously defend the judgment as entered.  In the event some or all of Plaintiffs’ claims are revived as a result of Plaintiffs’ appeal, the Company will, once again, defend against them vigorously.  At this time, the Company cannot reasonably predict the outcome of these proceedings or provide a reasonable estimate of the possible loss or range of loss due to these proceedings, if any.

The Securities and Exchange Commission (“SEC”) staff has been conducting a non-public investigation, which is focused principally on the adequacy of certain disclosures in the Company's filings with the SEC beginning in 2008, as well as the Company's review of certain transactions involving the Company and the other Apple REIT Entities.  The Company intends to continue to cooperate with the SEC staff, and it is engaging in a dialogue with the SEC staff concerning these issues and the roles of certain officers.  The Company does not believe the issues raised by the SEC staff affect the material accuracy of the Company's consolidated financial statements.  At this time, the Company cannot predict the outcome of this investigation as to the Company or any of its officers, nor can it predict the timing associated with any such conclusion or resolution.

8.  Subsequent Events

In July 2013, the Company declared and paid approximately $12.6 million, or $0.0691875 per outstanding common share, in distributions to its common shareholders.

On August 7, 2013, after the approval by its Board of Directors, the Company entered into an Agreement and Plan of Merger with Apple REIT Seven, Inc. and Apple REIT Eight, Inc., where Apple REIT Seven, Inc. and Apple REIT Eight, Inc. would merge into the Company.  Under the Agreement and Plan of Merger, each outstanding Unit of Apple REIT Seven, Inc. would be exchanged for one common share of the Company and each outstanding Unit of Apple REIT Eight, Inc. would be exchanged for 0.85 common shares of the Company.  The transaction is subject to shareholder approval by each of the companies and to customary closing conditions.  As a result, there is no assurance that the merger will occur.

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Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This quarterly report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  Forward-looking statements are typically identified by use of terms such as “may,” “believe,” “expect,” “anticipate,” “intend,” “estimate,” “project,” “target,” “goal,” “plan,” “should,” “will,” “predict,” “potential,” and similar expressions that convey the uncertainty of future events or outcomes.  Such statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance, or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements.  Such factors include, but are not limited to, the ability of the Company to implement its acquisition strategy and operating strategy; the Company’s ability to manage planned growth; changes in economic cycles; financing risks; the outcome of current and future litigation, regulatory proceedings or inquiries; changes in laws or regulations or interpretations of current laws and regulations that impact the Company’s business, assets or classification as a real estate investment trust; and competition within the hotel and real estate industry.  Although the Company believes that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore there can be no assurance that such statements included in the quarterly report will prove to be accurate.  In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the results or conditions described in such statements or the objectives and plans of the Company will be achieved.  In addition, the Company’s qualification as a real estate investment trust involves the application of highly technical and complex provisions of the Internal Revenue Code.  Readers should carefully review the Company’s financial statements and the notes thereto, as well as the risk factors described in the Company’s filings with the Securities and Exchange Commission (“SEC”).  Any forward-looking statement that the Company makes speaks only as of the date of this report.  The Company undertakes no obligation to publically update or revise any forward-looking statements or cautionary factors, as a result of new information, future events, or otherwise, except as required by law.

Overview

Apple REIT Nine, Inc., together with its wholly owned subsidiaries (the “Company”) was formed to invest in income-producing real estate in the United States.  The Company was initially capitalized November 9, 2007, with its first investor closing on May 14, 2008.  The Company completed its best-efforts offering of Units (each Unit consists of one common share and one Series A preferred share) in December 2010.  The Company has elected to be treated as a real estate investment trust (“REIT”) for federal income tax purposes.  The Company’s first hotel was acquired on July 31, 2008.  As of June 30, 2013, the Company owned 89 hotels (one acquired during 2012, 11 acquired and one newly constructed hotel opened during 2011, 43 acquired during 2010, 12 acquired during 2009 and 21 acquired during 2008).  Accordingly, the results of operations include only results from the date of ownership of the properties.

Hotel Operations

Although hotel performance can be influenced by many factors including local competition, local and general economic conditions in the United States and the performance of individual managers assigned to each hotel, performance of the hotels as compared to other hotels within their respective local markets, in general, has met the Company’s expectations for the period owned.  The hotel industry and the Company continue to see improvement in both revenues and operating income as compared to the prior year.  Although there is no way to predict future general economic conditions, and there are several key factors that may continue to negatively affect the economic recovery in the United States and add to general market uncertainty, including but not limited to, the continued high levels of unemployment, the slow pace of the economic recovery in the United States and the uncertainty surrounding the fiscal policy of the United States, the Company and industry are forecasting a mid-single digit percentage increase in revenue for 2013 as compared to 2012 for comparable hotels.

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In evaluating financial condition and operating performance, the most important indicators on which the Company focuses are revenue measurements, such as average occupancy, average daily rate (“ADR”), revenue per available room (“RevPAR”) and market yield which compares an individual hotel’s results to others in its local market, and expenses, such as hotel operating expenses, general and administrative expenses and other expenses described below.

The following is a summary of the results from continuing operations of the 89 hotels owned as of June 30, 2013 for their respective periods of ownership by the Company:

	Three Months Ended June 30,															Six Months Ended June 30,
(in thousands, except statistical data)	2013			Percent of Revenue			2012			Percent of Revenue			Percent Change			2013			Percent of Revenue			2012			Percent of Revenue			Percent Change
Total revenue	$	104,572			100	%	$	97,110			100	%		8	%	$	196,975			100	%	$	185,201			100	%		6	%
Hotel operating expenses		56,856			54	%		53,205			55	%		7	%		109,280			55	%		102,677			55	%		6	%
Property taxes, insurance and other expense		5,657			5	%		4,979			5	%		14	%		10,789			5	%		9,954			5	%		8	%
General and administrative expense		2,239			2	%		2,327			2	%		-4	%		4,099			2	%		4,931			3	%		-17	%
Acquisition related costs		74						430						-83	%		74						461						-84	%
Depreciation		13,633						13,166						4	%		27,133						26,009						4	%
Interest expense, net		2,229						1,579						41	%		4,414						2,955						49	%
Income tax expense		349						391						-11	%		745						589						26	%
Number of hotels		89						89						0	%		89						89						0	%
Average Market Yield(1)		123						121						2	%		123						122						1	%
ADR	$	115					$	112						3	%	$	115					$	112						3	%
Occupancy		80	%					77	%					4	%		76	%					73	%					4	%
RevPAR	$	92					$	86						7	%	$	87					$	82						6	%
Total rooms sold(2)		823,519						783,545						5	%		1,556,537						1,492,334						4	%
Total rooms available(3)		1,034,761						1,022,903						1	%		2,061,270						2,041,998						1	%

(1)  Calculated from data provided by Smith Travel Research, Inc.®  Excludes hotels under renovation or opened less than two years during the applicable periods.

(2)  Represents the number of room nights sold during the period.

(3)  Represents the number of rooms owned by the Company multiplied by the number of nights in the period.

Potential Consolidation Transaction

During June 2013, the Boards of Directors of the Company, Apple REIT Seven, Inc. and Apple REIT Eight, Inc. authorized the evaluation of a potential consolidation transaction in which the Company, Apple REIT Seven, Inc. and Apple REIT Eight, Inc. would be combined (the “Consolidation Transaction”).  Each of the company’s respective Board of Directors has designated a special committee consisting of two non-management directors to evaluate the Consolidation Transaction. The special committee of each Board has retained third party financial and legal advisors to assist the special committee in its evaluation of the Consolidation Transaction.  Effective June 19, 2013, the Board of Directors suspended the Company’s Dividend Reinvestment and Unit Redemption Programs, as it assesses the Consolidation Transaction.  On August 7, 2013 the Company entered into an Agreement and Plan of Merger with Apple REIT Seven, Inc. and Apple REIT Eight, Inc. See further discussion in Subsequent Events.

Legal Proceedings

The term the “Apple REIT Entities” means Apple REIT Six, Inc., Apple REIT Seven, Inc., Apple REIT Eight, Inc., Apple REIT Nine, Inc. and Apple REIT Ten, Inc.

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On December 13, 2011, the United States District Court for the Eastern District of New York ordered that three putative class actions, Kronberg, et al. v. David Lerner Associates, Inc., et al., Kowalski v. Apple REIT Ten, Inc., et al., and Leff v. Apple REIT Ten, Inc., et al., be consolidated and amended the caption of the consolidated matter to be In re Apple REITs Litigation. The District Court also appointed lead plaintiffs and lead counsel for the consolidated action and ordered lead plaintiffs to file and serve a consolidated complaint by February 17, 2012. The Company was previously named as a party in all three of the above mentioned class action lawsuits.

On February 17, 2012, lead plaintiffs and lead counsel in the In re Apple REITs Litigation, Civil Action No. 1:11-cv-02919-KAM-JO, filed an amended consolidated complaint in the United States District Court for the Eastern District of New York against the Company, Apple Suites Realty Group, Inc., Apple Eight Advisors, Inc., Apple Nine Advisors, Inc., Apple Ten Advisors, Inc., Apple Fund Management, LLC, Apple REIT Six, Inc., Apple REIT Seven, Inc., Apple REIT Eight, Inc. and Apple REIT Ten, Inc., their directors and certain officers, and David Lerner Associates, Inc. and David Lerner. The consolidated complaint, which was dismissed in April 2013, was purportedly brought on behalf of all purchasers of Units in the Company and the other Apple REIT Entities, or those who otherwise acquired these Units that were offered and sold to them by David Lerner Associates, Inc., or its affiliates and on behalf of subclasses of shareholders in New Jersey, New York, Connecticut and Florida, and alleges that the Apple REIT Entities “misrepresented the investment objectives of the Apple REITs, the dividend payment policy of the Apple REITs, and the value of their Apple REIT investments.”The consolidated complaint asserts claims under Sections 11, 12 and 15 of the Securities Act of 1933, as well as claims for breach of fiduciary duty, aiding and abetting breach of fiduciary duty, negligence, and unjust enrichment, and claims for violation of the securities laws of Connecticut and Florida. The complaint seeks, among other things, certification of a putative nationwide class and the state subclasses, damages, rescission of share purchases and other costs and expenses.

On April 18, 2012, the Company, and the other defendants moved to dismiss the consolidated complaint in the In re Apple REITs Litigation.  By Order entered on March 31, 2013 and opinion issued on April 3, 2013, the Court dismissed the consolidated complaint in its entirety with prejudice and without leave to amend. Plaintiffs filed a Notice of Appeal to the Second Circuit Court of Appeals on April 12, 2013, and filed their Brief for Plaintiffs-Appellants on July 26, 2013.  Defendants-Appellees have requested that their brief be due on October 25, 2013.  The Company believes that Plaintiffs’ claims against it, its officers and directors and other Apple REIT Entities were properly dismissed by the lower court, and intends to vigorously defend the judgment as entered.  In the event some or all of Plaintiffs’ claims are revived as a result of Plaintiffs’ appeal, the Company will, once again, defend against them vigorously.  At this time, the Company cannot reasonably predict the outcome of these proceedings or provide a reasonable estimate of the possible loss or range of loss due to these proceedings, if any.

Hotels Owned

The following table summarizes the location, brand, manager, date acquired, number of rooms and gross purchase price for each of the 89 hotels the Company owned as of June 30, 2013.  All dollar amounts are in thousands.

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City	State	Brand	Manager	Date Acquired	Rooms		Gross Purchase Price
Tucson	AZ	Hilton Garden Inn	Western	7/31/2008		125	$	18,375
Santa Clarita	CA	Courtyard	Dimension	9/24/2008		140		22,700
Charlotte	NC	Homewood Suites	McKibbon	9/24/2008		112		5,750
Allen	TX	Hampton Inn & Suites	Gateway	9/26/2008		103		12,500
Twinsburg	OH	Hilton Garden Inn	Gateway	10/7/2008		142		17,792
Lewisville	TX	Hilton Garden Inn	Gateway	10/16/2008		165		28,000
Duncanville	TX	Hilton Garden Inn	Gateway	10/21/2008		142		19,500
Santa Clarita	CA	Hampton Inn	Dimension	10/29/2008		128		17,129
Santa Clarita	CA	Residence Inn	Dimension	10/29/2008		90		16,600
Santa Clarita	CA	Fairfield Inn	Dimension	10/29/2008		66		9,337
Beaumont	TX	Residence Inn	Western	10/29/2008		133		16,900
Pueblo	CO	Hampton Inn & Suites	Dimension	10/31/2008		81		8,025
Allen	TX	Hilton Garden Inn	Gateway	10/31/2008		150		18,500
Bristol	VA	Courtyard	LBA	11/7/2008		175		18,650
Durham	NC	Homewood Suites	McKibbon	12/4/2008		122		19,050
Hattiesburg	MS	Residence Inn	LBA	12/11/2008		84		9,793
Jackson	TN	Courtyard	Vista	12/16/2008		94		15,200
Jackson	TN	Hampton Inn & Suites	Vista	12/30/2008		83		12,600
Pittsburgh	PA	Hampton Inn	Vista	12/31/2008		132		20,458
Fort Lauderdale	FL	Hampton Inn	Vista	12/31/2008		109		19,290
Frisco	TX	Hilton Garden Inn	Western	12/31/2008		102		15,050
Round Rock	TX	Hampton Inn	Vista	3/6/2009		94		11,500
Panama City	FL	Hampton Inn & Suites	LBA	3/12/2009		95		11,600
Austin	TX	Homewood Suites	Vista	4/14/2009		97		17,700
Austin	TX	Hampton Inn	Vista	4/14/2009		124		18,000
Dothan	AL	Hilton Garden Inn	LBA	6/1/2009		104		11,601
Troy	AL	Courtyard	LBA	6/18/2009		90		8,696
Orlando	FL	Fairfield Inn & Suites	Marriott	7/1/2009		200		25,800
Orlando	FL	SpringHill Suites	Marriott	7/1/2009		200		29,000
Clovis	CA	Hampton Inn & Suites	Dimension	7/31/2009		86		11,150
Rochester	MN	Hampton Inn & Suites	Raymond	8/3/2009		124		14,136
Johnson City	TN	Courtyard	LBA	9/25/2009		90		9,880
Baton Rouge	LA	SpringHill Suites	Dimension	9/25/2009		119		15,100
Houston	TX	Marriott	Western	1/8/2010		206		50,750
Albany	GA	Fairfield Inn & Suites	LBA	1/14/2010		87		7,920
Panama City	FL	TownePlace Suites	LBA	1/19/2010		103		10,640
Clovis	CA	Homewood Suites	Dimension	2/2/2010		83		12,435
Jacksonville	NC	TownePlace Suites	LBA	2/16/2010		86		9,200
Miami	FL	Hampton Inn & Suites	Dimension	4/9/2010		121		11,900
Anchorage	AK	Embassy Suites	Stonebridge	4/30/2010		169		42,000
Boise	ID	Hampton Inn & Suites	Raymond	4/30/2010		186		22,370
Rogers	AR	Homewood Suites	Raymond	4/30/2010		126		10,900
St. Louis	MO	Hampton Inn & Suites	Raymond	4/30/2010		126		16,000
Oklahoma City	OK	Hampton Inn & Suites	Raymond	5/28/2010		200		32,657
Ft. Worth	TX	TownePlace Suites	Western	7/19/2010		140		18,435

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City	State	Brand	Manager	Date Acquired	Rooms		Gross Purchase Price
Lafayette	LA	Hilton Garden Inn	LBA	7/30/2010		153	$	17,261
West Monroe	LA	Hilton Garden Inn	InterMountain	7/30/2010		134		15,639
Silver Spring	MD	Hilton Garden Inn	White	7/30/2010		107		17,400
Rogers	AR	Hampton Inn	Raymond	8/31/2010		122		9,600
St. Louis	MO	Hampton Inn	Raymond	8/31/2010		190		23,000
Kansas City	MO	Hampton Inn	Raymond	8/31/2010		122		10,130
Alexandria	LA	Courtyard	LBA	9/15/2010		96		9,915
Grapevine	TX	Hilton Garden Inn	Western	9/24/2010		110		17,000
Nashville	TN	Hilton Garden Inn	Vista	9/30/2010		194		42,667
Indianapolis	IN	SpringHill Suites	White	11/2/2010		130		12,800
Mishawaka	IN	Residence Inn	White	11/2/2010		106		13,700
Phoenix	AZ	Courtyard	White	11/2/2010		164		16,000
Phoenix	AZ	Residence Inn	White	11/2/2010		129		14,000
Mettawa	IL	Residence Inn	White	11/2/2010		130		23,500
Mettawa	IL	Hilton Garden Inn	White	11/2/2010		170		30,500
Austin	TX	Hilton Garden Inn	White	11/2/2010		117		16,000
Novi	MI	Hilton Garden Inn	White	11/2/2010		148		16,200
Warrenville	IL	Hilton Garden Inn	White	11/2/2010		135		22,000
Schaumburg	IL	Hilton Garden Inn	White	11/2/2010		166		20,500
Salt Lake City	UT	SpringHill Suites	White	11/2/2010		143		17,500
Austin	TX	Fairfield Inn & Suites	White	11/2/2010		150		17,750
Austin	TX	Courtyard	White	11/2/2010		145		20,000
Chandler	AZ	Courtyard	White	11/2/2010		150		17,000
Chandler	AZ	Fairfield Inn & Suites	White	11/2/2010		110		12,000
Tampa	FL	Embassy Suites	White	11/2/2010		147		21,800
Andover	MA	SpringHill Suites	Marriott	11/5/2010		136		6,500
Philadelphia (Collegeville)	PA	Courtyard	White	11/15/2010		132		20,000
Holly Springs	NC	Hampton Inn & Suites	LBA	11/30/2010		124		14,880
Philadelphia (Malvern)	PA	Courtyard	White	11/30/2010		127		21,000
Arlington	TX	Hampton Inn & Suites	Western	12/1/2010		98		9,900
Irving	TX	Homewood Suites	Western	12/29/2010		77		10,250
Mount Laurel	NJ	Homewood Suites	Tharaldson	1/11/2011		118		15,000
West Orange	NJ	Courtyard	Tharaldson	1/11/2011		131		21,500
Texarkana	TX	Hampton Inn & Suites	InterMountain	1/31/2011		81		9,100
Fayetteville	NC	Home2 Suites	LBA	2/3/2011		118		11,397
Manassas	VA	Residence Inn	Tharaldson	2/16/2011		107		14,900
San Bernardino	CA	Residence Inn	Tharaldson	2/16/2011		95		13,600
Alexandria (1)	VA	SpringHill Suites	Marriott	3/28/2011		155		24,863
Dallas	TX	Hilton	Hilton	5/17/2011		224		42,000
Santa Ana	CA	Courtyard	Dimension	5/23/2011		155		24,800
Lafayette	LA	SpringHill Suites	LBA	6/23/2011		103		10,232
Tucson	AZ	TownePlace Suites	Western	10/6/2011		124		15,852
El Paso	TX	Hilton Garden Inn	Western	12/19/2011		145		19,974
Nashville	TN	Home2 Suites	Vista	5/31/2012		119		16,660
Total						11,371	$	1,546,839

(1)  Hotel construction was completed by the Company and the hotel opened for business on March 28, 2011.  The gross purchase price includes the acquisition of land during 2009 and construction costs.

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Development Project

In July 2012, the Company acquired approximately one acre of land in downtown Richmond, Virginia for a purchase price totaling $3.0 million, for the development of adjoining Courtyard and Residence Inn hotels.  In May 2013, the Company entered into a construction contract with a third party and began construction of the hotels during the second quarter of 2013, which is expected to be completed within two years.  Upon completion, the Courtyard and Residence Inn are expected to contain approximately 135 and 75 guest rooms, respectively and are planned to be managed by White.  The Company expects to spend a total of approximately $35 million to develop the hotels and has incurred approximately $3.0 million in development costs as of June 30, 2013.

Results of Operations

As of June 30, 2013, the Company owned 89 hotels with 11,371 rooms (including one newly constructed hotel acquired on May 31, 2012, the same day the hotel opened for business).  No other hotels have been purchased since the beginning of January 1, 2012.

Hotel performance is impacted by many factors, including the economic conditions in the United States as well as each locality.  Although hampered by government spending uncertainty, economic indicators in the United States have shown evidence of a sustainable recovery, which continues to overall positively impact the lodging industry.  As a result, the Company’s revenue and operating income improved during the first six months of 2013 as compared to the same period of 2012 and the Company expects continued improvement in revenue and operating income in 2013 as compared to 2012.  The Company’s hotels in general have shown results consistent with industry and brand averages for the period of ownership.

Revenues

The Company’s principal source of revenue is hotel revenue consisting of room and other related revenue.  For the three months ended June 30, 2013 and 2012, the Company had hotel revenue of $104.6 million and $97.1 million, respectively.  For the six months ended June 30, 2013 and 2012, the Company had hotel revenue of $197.0 million and $185.2 million, respectively.  This revenue reflects hotel operations for the 89 hotels owned as of June 30, 2013 for their respective periods of ownership by the Company.  For the three months ended June 30, 2013 and 2012, the hotels achieved combined average occupancy of 80% and 77%, ADR of $115 and $112 and RevPAR of $92 and $86.  For the six months ended June 30, 2013 and 2012, the hotels achieved combined average occupancy of 76% and 73%, ADR of $115 and $112 and RevPAR of $87 and $82.  ADR is calculated as room revenue divided by the number of rooms sold, and RevPAR is calculated as occupancy multiplied by ADR.

During the second quarter and first half of 2013, the Company experienced an increase in demand as demonstrated by the improvement in average occupancy for its comparable hotels of 3% during these periods in 2013 as compared to the same period of 2012.  In addition, also signifying a progressing economy, the Company experienced an increase in ADR of 3% for comparable hotels during the second quarter and first half of 2013 as compared to the prior year.  Although certain markets have been negatively impacted by reduced government spending, with overall continued demand and room rate improvement, the Company and industry are forecasting a mid-single digit percentage increase in revenue for 2013 as compared to 2012 for comparable hotels.  The Company’s hotels continue to be leaders in their respective markets.  The Company’s average Market Yield for the first six months of 2013 and 2012 was 123 and 122, respectively.  The Market Yield is a measure of each hotel’s RevPAR compared to the average in the market, with 100 being the average (the index excludes hotels under renovation or open less than two years) and is provided by Smith Travel Research, Inc.®, an independent company that tracks historical hotel performance in most markets throughout the world.  The Company will continue to pursue market opportunities to improve revenue.

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Expenses

Hotel operating expenses relate to the 89 hotels owned as of June 30, 2013 for their respective periods owned and consist of direct room expenses, hotel administrative expense, sales and marketing expense, utilities expense, repair and maintenance expense, franchise fees and management fees.  For the three months ended June 30, 2013 and 2012, hotel operating expenses totaled $56.9 million or 54% of total revenue and $53.2 million or 55% of total revenue.  For the six months ended June 30, 2013 and 2012, hotel operating expenses totaled $109.3 million or 55% of total revenue and $102.7 million or 55% of total revenue.  Overall hotel operational expenses for the first six months of 2013 reflect the impact of increases in revenues and occupancy at most of the Company’s hotels, and the Company’s efforts to control costs.  Certain operating costs such as management costs, certain utility costs and minimum supply and maintenance costs are relatively fixed in nature. The Company has been successful in reducing, relative to revenue increases, certain labor costs, hotel supply costs, maintenance costs and utility costs by continually monitoring and sharing utilization data across its hotels and management companies.  The Company has experienced an increase in labor benefit costs compared to the prior year, which are likely to continue to grow at increased rates due to the associated new government regulations surrounding healthcare.  Although operating expenses will increase as revenue increases, the Company will continue to work with its management companies to reduce costs as a percentage of revenue where possible while maintaining quality and service levels at each property.

Property taxes, insurance, and other expense for the three months ended June 30, 2013 and 2012 totaled $5.7 million or 5% of total revenue and $5.0 million or 5% of total revenue.  For the six months ended June 30, 2013 and 2012, property taxes, insurance, and other expense totaled $10.8 million or 5% of total revenue and $10.0 million or 5% of total revenue.  For comparable hotels, real estate taxes increased due to higher taxes for certain properties due to the reassessment of property values by localities resulting from the improved economy, partially offset by a decrease in 2013 due to successful appeals of tax assessments at certain locations.  Also, for comparable hotels, 2013 insurance rates increased modestly.  

General and administrative expense for the three months ended June 30, 2013 and 2012 was $2.2 million and $2.3 million.  For the six months ended June 30, 2013 and 2012, general and administrative expenses were $4.1 million and $4.9 million. The principal components of general and administrative expense are advisory fees and reimbursable expenses, legal fees, accounting fees, the Company’s share of the loss in its investment in Apple Air Holding, LLC, reporting expenses and potential consolidation related costs.  Legal and potential consolidation costs are described below.

During the six months ended June 30, 2013 and 2012, the Company incurred approximately $0.4 million and $0.7 million, respectively in legal costs related to the legal matters discussed herein and continued costs related to responding to requests from the staff of the SEC.  The SEC staff has been conducting a non-public investigation, which is focused principally on the adequacy of certain disclosures in the Company’s filings with the SEC beginning in 2008, as well as the Company’s review of certain transactions involving the Company and the other Apple REIT Entities.  The Company intends to continue to cooperate with the SEC staff, and it is engaging in a dialogue with the SEC staff concerning these issues and the roles of certain officers. The Company does not believe the issues raised by the SEC staff affect the material accuracy of the Company's consolidated financial statements.  At this time, the Company cannot predict the outcome of this investigation as to the Company or any of its officers, nor can it predict the timing associated with any such conclusion or resolution.  As discussed below under Related Parties, the Company shares legal counsel with the other Apple REIT Entities.  Total costs for these legal matters for all of the Apple REIT Entities were approximately $1.7 million and $3.2 million during the six months ended June 30, 2013 and 2012.  The Company anticipates it will continue to incur costs associated with these matters.  

In conjunction with the potential Consolidation Transaction discussed herein, the Company incurred approximately $0.06 million in expenses during the second quarter of 2013.  The Company will continue to incur these costs during 2013 if a transaction is pursued.  Also, during the fourth quarter of 2011, the Company began to incur costs associated with its evaluation of a prior potential consolidation transaction with Apple REIT Six, Inc., Apple REIT Seven, Inc. and Apple REIT Eight, Inc. (the “other Apple REITs”).  Total costs incurred during the six months ended June 30, 2012 related to the prior potential consolidation transaction were approximately $0.6 million.  In May 2012, it was determined by the Board of Directors of the Company and the Board of Directors of each of the other Apple REITs not to move forward with the prior potential consolidation transaction at that time.

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Acquisition related costs for the three months ended June 30, 2013 and 2012 were $0.1 million and $0.4 million, and $0.1 million and $0.5 million for the six months ended June 30, 2013 and 2012.  During the second quarter of 2013, the Company purchased two land parcels which had previously been leased from a third party.  The Company has no planned hotel acquisitions for 2013, and completed only one hotel acquisition during 2012, resulting in a significant decline in these costs from prior years.  

Depreciation expense for the three months ended June 30, 2013 and 2012 was $13.6 million and $13.2 million, and $27.1 million and $26.0 million for the six months ended June 30, 2013 and 2012.  Depreciation expense primarily represents expense of the Company’s 89 hotel buildings and related improvements, and associated personal property (furniture, fixtures, and equipment) for their respective periods owned.  The increase was due to the increase in the number of properties owned and renovations completed throughout 2013 and 2012.

Interest expense for the three months ended June 30, 2013 and 2012 was $2.4 million and $1.8 million, respectively and for both periods is net of approximately $0.1 million of interest capitalized associated with renovation and construction projects.  Interest expense for the six months ended June 30, 2013 and 2012 was $4.7 million and $3.3 million, respectively and is net of approximately $0.1 million and $0.3 million of interest capitalized associated with renovation and construction projects.  Interest expense primarily arose from debt assumed with the acquisition of 14 of the Company’s hotels, the origination of three mortgage loans during the third quarter 2012, borrowings on the Company’s $50 million revolving line of credit beginning in January 2013 and borrowings on the Company’s $30 million non-revolving line of credit in May 2012 that was extinguished and paid off during the third quarter of 2012.  During the three months ended June 30, 2013 and 2012, the Company also recognized $0.1 million and $0.2 million in interest income, and $0.3 million for both the six months ended June 30, 2013 and 2012, primarily representing interest on excess cash invested in short-term money market instruments and one mortgage note acquired during 2010.

Discontinued Operations

On April 27, 2012, the Company completed the sale of its 406 acres of land and land improvements located on 110 sites in the Ft. Worth, Texas area (the “110 parcels”) and the assignment of the lease for a total sale price of $198.4 million.  The 110 parcels were acquired in April 2009 for a total purchase price of $147.3 million and were leased to a subsidiary of Chesapeake Energy Corporation (“Chesapeake”) under a long term lease for the production of natural gas.  At closing, the Company received approximately $138.4 million in cash proceeds and issued a note receivable totaling $60.0 million to the purchaser (the “note”).  The note, which approximated fair market value, is secured by a junior lien on the land and land improvements owned by the purchaser.  The stated interest rate on the note is 10.5%.  The note requires interest only payments for the first three years of the note.  After the first three years, interest is accrued and payments will only be received once the purchaser extinguishes its senior loan with a third party.  Once the senior loan is repaid, the Company will receive all payments from the existing lease until fully repaid or the note reaches maturity which is April 2049.  Although the purchaser is not affiliated with the Company, a partner of the purchaser is also a member of the Board of Directors of Apple REIT Ten, Inc.  In conjunction with the sale, the Company incurred a brokerage commission to Apple Suites Realty Group, Inc. (“ASRG”) totaling approximately $4.0 million, representing 2% of the gross sales price.  Of this amount, approximately $2.8 million was paid to ASRG during the second quarter of 2012 and the remaining $1.2 million will be paid upon repayment of the $60.0 million note.  The $4.0 million commission has been recorded as a reduction to the deferred gain on sale as described below.

The total gain on sale was approximately $33.3 million (total sale price of $198.4 million less carrying value totaling $160.5 million, ASRG fee totaling $4.0 million, closing costs totaling $0.3 million and related franchise taxes totaling $0.3 million).  In accordance with the Accounting Standards Codification on real estate sales, the sales transaction is being accounted for under the cost recovery method, therefore the gain on sale and interest earned on the note will be deferred until cash payments by the purchaser, including principal and interest on the note due to the Company and the payment of the $138.4 million at closing exceed the Company’s cost basis of the 110 parcels sold.  The note receivable is included in the Company’s consolidated balance sheets, net of the total deferred gain.  As of June 30, 2013, the note receivable, net was $19.3 million, including $60.0 million note receivable offset by $33.3 million deferred gain and $7.4 million deferred interest earned.  As of December 31, 2012, the note receivable, net was $22.4 million, including $60.0 million note receivable offset by $33.4 million deferred gain and $4.3 million deferred interest earned.  The 110 parcels was a separate reportable segment and the results of operations for these properties have been classified in the consolidated statements of operations in the line item income from discontinued operations.

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The following table sets forth the components of income from discontinued operations for the three and six months ended June 30, 2012 (in thousands):

	Three Months		Six Months
	Ended		Ended
	June 30, 2012		June 30, 2012
Rental revenue	$	1,532	$	6,826
Operating expenses		7		34
Depreciation expense		0		0
Income from discontinued operations	$	1,525	$	6,792

Prior to the sale, the lease was classified as an operating lease and rental income was recognized on a straight-line basis over the initial term of the lease.  Rental revenue includes approximately $0.4 million and $2.0 million of adjustments to record rent on the straight-line basis for the three and six months ended June 30, 2012.

Related Parties

The Company has, and is expected to continue to engage in, significant transactions with related parties.  These transactions cannot be construed to be at arm’s length and the results of the Company’s operations may be different if these transactions were conducted with non-related parties.  The Company’s independent members of the Board of Directors oversee and annually review the Company’s related party relationships (which include the relationships discussed in this section) and are required to approve any significant modifications to the contracts, as well as any new significant related party transactions.  There were no changes to the contracts discussed in this section and no new significant related party transactions during the six months ended June 30, 2013 (other than the transactions related to the completion of Apple REIT Six, Inc.’s merger with a third party discussed below).  The Board of Directors is not required to approve each individual transaction that falls under the related party relationships.  However, under the direction of the Board of Directors, at least one member of the Company’s senior management team approves each related party transaction.

The term the “Apple REIT Entities” means Apple REIT Six, Inc., Apple REIT Seven, Inc., Apple REIT Eight, Inc., Apple REIT Nine, Inc. and Apple REIT Ten, Inc.  The term the “Advisors” means Apple Six Advisors, Inc., Apple Seven Advisors, Inc., Apple Eight Advisors, Inc., Apple Nine Advisors, Inc. (“A9A”), Apple Ten Advisors, Inc., Apple Suites Realty Group, Inc. (“ASRG”) and Apple Six Realty Group, Inc.  The Advisors are wholly owned by Glade M. Knight, Chairman and Chief Executive Officer of the Company.  Mr. Knight is also Chairman and Chief Executive Officer of Apple REIT Seven, Inc., Apple REIT Eight, Inc. and Apple REIT Ten, Inc.  Members of the Company’s Board of Directors are also on the Board of Directors of Apple REIT Seven, Inc. and Apple REIT Eight, Inc.

On May 14, 2013, Apple REIT Six, Inc. merged with and into an entity that is not affiliated with the Apple REIT Entities or its Advisors.  Pursuant to the terms and conditions of the merger agreement, dated as of November 29, 2012, upon completion of the merger, the separate corporate existence of Apple REIT Six, Inc. ceased (the “Merger”).  Prior to the Merger, Glade M. Knight was Chairman and Chief Executive Office of Apple REIT Six, Inc. and members of the Company’s Board of Directors were also on the Board of Directors of Apple REIT Six, Inc.

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ASRG Agreement

The Company has a contract with ASRG, to acquire and dispose of real estate assets for the Company.  A fee of 2% of the gross purchase price or gross sale price in addition to certain reimbursable expenses is paid to ASRG for these services.  As of June 30, 2013, payments to ASRG for fees under the terms of this contract related to the acquisition of assets have totaled approximately $33.6 million since inception.  Of this amount, the Company incurred approximately $0.1 million and $0.3 million during the six months ended June 30, 2013 and 2012, which is included in acquisition related costs in the Company’s consolidated statements of operations.  During the second quarter of 2013, the Company paid fees to ASRG for the purchase of two land parcels located at the Residence Inn hotels in Manassas, Virginia and San Bernardino, California, both which had previously been leased from a third party.  In addition, the Company incurred a brokerage commission to ASRG totaling approximately $4.0 million related to the sale of the Company’s 110 parcels in April 2012, which has been recorded as a reduction to the deferred gain on sale.  Of this amount, approximately $2.8 million was paid to ASRG during the second quarter of 2012 and the remaining $1.2 million will be paid upon repayment of the $60 million note.

A9A Agreement

The Company is party to an advisory agreement with A9A, pursuant to which A9A provides management services to the Company.  A9A provides these management services through Apple Fund Management, LLC (“AFM”), which immediately after the Merger became a wholly-owned subsidiary of A9A.  This transaction between A9A and Apple REIT Six, Inc. was made with no cash consideration exchanged between the entities.  Prior to May 14, 2013, AFM was a wholly-owned subsidiary of Apple REIT Six, Inc.  An annual advisory fee ranging from 0.1% to 0.25% of total equity proceeds received by the Company, in addition to certain reimbursable expenses as described below, are payable to A9A for these management services.  Total advisory fees incurred by the Company under the advisory agreement are included in general and administrative expenses and totaled approximately $1.4 million and $1.5 million for the six months ended June 30, 2013 and 2012.

Apple REIT Entities and Advisors Cost Sharing Structure

In addition to the fees payable to ASRG or A9A, the Company reimbursed to ASRG or A9A, or paid directly to AFM on behalf of ASRG or A9A, approximately $1.0 million for both the six months ended June 30, 2013 and 2012.  The expenses reimbursed were approximately $0 and $0.1 million, respectively, for costs reimbursed under the contract with ASRG and approximately $1.0 million and $0.9 million, respectively, for costs reimbursed under the contract with A9A.  The costs are included in general and administrative expenses and are for the Company’s allocated share of the staffing and related costs provided by AFM at the direction of A9A.

AFM is an affiliate of each of the Advisors.  Each of the Advisors provides management services through the use of AFM to, respectively, Apple REIT Six, Inc. (prior to the Merger), Apple REIT Seven, Inc., Apple REIT Eight, Inc., Apple REIT Nine, Inc. and Apple REIT Ten.  In connection with the Merger, effective May 14, 2013, the entire membership interest of Apple REIT Six, Inc. in AFM was transferred and assigned to A9A, which then became the sole member of AFM.  As part of the assignment, A9A and the other Advisors agreed to indemnify the buyer of Apple REIT Six, Inc. for liabilities related to AFM.  The assignment of AFM’s interest to A9A had no impact on the Company’s advisory agreement with A9A or the process of allocating costs from AFM to the Apple REIT Entities or Advisors as described below, except Apple REIT Six, Inc. and its advisors, Apple Six Advisors, Inc. and Apple Six Realty Group, Inc. (collectively “A6 Advisors”), no longer participate in the cost sharing arrangement, thereby increasing the remaining companies’ share of the allocated costs.

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Also, in connection with the Merger, on May 13, 2013, the Company acquired from Apple REIT Six, Inc. the Apple REIT Entities’ and Advisors’ headquarters in Richmond, Virginia (“Headquarters”) and assumed the Fort Worth, Texas office lease agreement for approximately $4.5 million, which approximated fair value at the time of acquisition based on third party market comparisons.  As part of the purchase, the Company agreed to release Apple REIT Six, Inc. from any liabilities related to the Headquarters or office lease.  As described below, any costs associated with the Headquarters and office lease, including office rent, utilities, office supplies, etc. (“Office Related Costs”) will continue to be allocated to the Apple REIT Entities and Advisors, excluding Apple REIT Six, Inc. and A6 Advisors.

Prior to the Merger, amounts reimbursed to AFM included both compensation for personnel and Office Related Costs used by the companies.  As discussed above, as a result of the Merger, beginning on May 14, 2013, Office Related Costs are now allocated from the Company to the other Apple REIT Entities and Advisors, excluding Apple REIT Six, Inc. and A6 Advisors.  Each of these companies has agreed to reimburse the Company for its share of these costs.  From the period May 14, 2013 through June 30, 2013, the Company received reimbursement of its costs totaling approximately $85,000 from the participating entities.  The Company’s net allocated Office Related Costs were approximately $58,000 and is included in general and administrative costs in the Company’s consolidated statements of operations.

All of the Office Related Costs and costs of AFM are allocated among the Apple REIT Entities and the Advisors, excluding Apple REIT Six, Inc. and A6 Advisors after the Merger.  The allocation of costs is reviewed at least annually by the Compensation Committees of the Apple REIT Entities.  In making the allocation, management of each of the entities and their Compensation Committee consider all relevant facts related to each company’s level of business activity and the extent to which each company requires the services of particular personnel of AFM.  Such payments are based on the actual costs of the services and are not based on formal record keeping regarding the time these personnel devote to the Company, but are based on a good faith estimate by the employee and/or his or her supervisor of the time devoted by the employee to the Company.  Although there is a potential conflict on time allocation of employees due to the fact that a senior manager, officer or staff member will provide services to more than one company, the Company believes that the executives and staff compensation sharing arrangement described above allows the companies to share costs yet attract and retain superior executives and staff.  The cost sharing structure also allows each entity to maintain a much more cost effective structure than having separate staffing arrangements.  Since the employees of AFM perform services for the Apple REIT Entities and Advisors at the direction of the Advisors, individuals, including executive officers, receive their compensation at the direction of the Advisors and may receive consideration directly from the Advisors.

As part of the cost sharing arrangements, the day-to-day transactions may result in amounts due to or from the Apple REIT Entities and Advisors (excluding Apple REIT Six, Inc. and A6 Advisors after the Merger).  To efficiently manage cash disbursements, an individual Apple REIT Entity or Advisor (excluding Apple REIT Six, Inc. and A6 Advisors after the Merger) may make payments for any or all of the related companies.  The amounts due to or from the related Apple REIT Entity or Advisor (excluding Apple REIT Six, Inc. and A6 Advisors after the Merger) are reimbursed or collected and are not significant in amount.

The Company has incurred legal fees associated with the Legal Proceedings and Related Matters discussed herein.  The Company also incurs other professional fees such as accounting, auditing and reporting.  These fees are included in general and administrative expense in the Company’s consolidated statements of operations.  To be cost effective, these services received by the Company are shared as applicable across the other Apple REIT Entities.  The professionals cannot always specifically identify their fees for one company; therefore management allocates these costs across the companies that benefit from the services.  The total costs for the Legal Proceedings and Related Matters discussed herein for all of the Apple REIT Entities was approximately $1.7 million for the six months ended June 30, 2013, of which approximately $0.4 million was allocated to the Company.  Total costs for the six months ended June 30, 2012 for all of the Apple REIT Entities was approximately $3.2 million, of which approximately $0.7 million was allocated to the Company.       

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Apple Air Holding, LLC (“Apple Air”) Membership Interest

Included in other assets, net on the Company’s consolidated balance sheet is a 24% equity investment in Apple Air.  The other current members of Apple Air are Apple REIT Seven, Inc., Apple REIT Eight, Inc. and Apple REIT Ten, Inc.  In connection with the Merger, on May 13, 2013, Apple REIT Ten, Inc. acquired its membership interest in Apple Air from Apple REIT Six, Inc.  Through its equity investment, the Company has access to Apple Air’s aircraft for acquisition, asset management and renovation purposes.  The Company’s equity investment was approximately $1.8 million and $1.9 million as of June 30, 2013 and December 31, 2012.  The Company has recorded its share of income and losses of the entity under the equity method of accounting and adjusted its investment in Apple Air accordingly.  For the six months ended June 30, 2013 and 2012, the Company recorded a loss of approximately $102,000 and $95,000 respectively, as its share of the net loss of Apple Air, which primarily relates to the depreciation of the aircraft, and is included in general and administrative expense in the Company’s consolidated statements of operations.

Liquidity and Capital Resources

Capital Resources

In November 2012, the Company entered into a $50 million credit facility with a commercial bank that is utilized for working capital, hotel renovations and development, and other general corporate funding purposes, including the payment of redemptions and distributions.  The credit facility may be increased to $100 million, subject to certain conditions.  Under the terms of the credit agreement, the Company may make voluntary prepayments in whole or in part at any time.  The credit facility matures in November 2014; however, the Company has the right, upon satisfaction of certain conditions, including covenant compliance and payment of an extension fee, to extend the maturity date to November 2015.  Interest payments are due monthly and the interest rate, subject to certain exceptions, is equal to the one-month LIBOR (the London Inter-Bank Offered Rate for a one-month term) plus a margin ranging from 2.25% to 2.75%, depending upon the Company’s leverage ratio, as calculated under the terms of the credit agreement.  The Company is also required to pay an unused facility fee of 0.30% or 0.40% on the unused portion of the revolving credit facility, based on the amount of borrowings outstanding during the quarter.  As of June 30, 2013, the credit facility had an outstanding principal balance of $17.8 million and an annual interest rate of approximately 2.44%.  As of December 31, 2012, there were no borrowings outstanding under the credit facility.

The credit agreement requires the Company to maintain a specific pool of Unencumbered Borrowing Base Properties (must be a minimum of ten properties and must satisfy conditions as defined in the credit agreement).  The obligations of the lender to make any advances under the credit facility are subject to certain conditions, including that the outstanding borrowings do not exceed the Borrowing Base Availability.  The credit facility contains customary affirmative covenants and negative covenants and events of default.  In addition, the credit facility contains the following quarterly financial covenants (capitalized terms are defined in the credit agreement):

·   A maximum Consolidated Total Indebtedness limit of 45% of the aggregate Real Estate Values for all Eligible Real Estate that is or qualifies as an Unencumbered Borrowing Base Property;

·   A maximum Consolidated Total Indebtedness limit of 50% of the Consolidated Total Asset Value;

·   A minimum Adjusted Consolidated EBITDA to Consolidated Fixed Charges covenant of 1.75 to 1.00 for the total of the four trailing quarterly periods;

·   A minimum Consolidated Tangible Net Worth of $1.0 billion;

·   A maximum Consolidated Secured Debt limit of 40% of Consolidated Total Asset Value;

·   A minimum Adjusted NOI for all Eligible Real Estate that is or qualifies as an Unencumbered Borrowing Base Property to Implied Debt Service covenant of 2.25 to 1.00;

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·   A maximum Consolidated Secured Recourse Indebtedness of $10 million; and

·   Restricted Payments (including Distributions and Unit Redemptions), net of proceeds from the Company’s Dividend Reinvestment Plan, cannot exceed $38 million during any calendar quarter and quarterly Distributions cannot exceed $0.21 per share through June 30, 2013, and thereafter must not exceed $152 million in any cumulative 12 month period and Distributions cannot exceed $0.83025 per share for any calendar year, unless such Restricted Payments are less than the Company’s Funds From Operations for any cumulative four calendar quarters.

The Company was in compliance with each of these covenants at June 30, 2013.

Capital Uses

The Company’s principal sources of liquidity are the operating cash flow generated from the Company’s properties, interest received on the Company’s note receivables and its $50 million revolving credit facility.  The Company anticipates that cash flow from operations, interest received from notes receivables and availability under its revolving credit facility will be adequate to meet its anticipated liquidity requirements, including debt service, capital improvements (including its development project discussed herein), required distributions to shareholders (the Company is not required to make distributions at its current rate for REIT purposes), and planned Unit redemptions.

As a result of the sale of its 110 parcels, the Board of Directors approved a special distribution of $0.75 per Unit, totaling $136.1 million on May 17, 2012 to shareholders of record on May 11, 2012 (the “Special Distribution”).  As a result of the sale and Special Distribution, the Company’s Board of Directors changed the annualized distribution rate from $0.88 per Unit to $0.83 per Unit beginning with the June 2012 distribution, and in August 2012, the Board of Directors increased the annualized distribution rate from $0.83 per Unit to $0.83025 per Unit.  Additionally, the offering price per Unit under the Company’s Dividend Reinvestment Plan was adjusted by the amount of the Special Distribution (from $11.00 to $10.25), and the purchase price per Unit under the Company’s Unit Redemption Program was adjusted by the amount of the Special Distribution (from $11.00 to $10.25 for the maximum purchase price, based on the original purchase price and length of time such Units have been held by the shareholder).

To maintain its REIT status the Company is required to distribute at least 90% of its ordinary income.  Distributions during the first six months of 2013 totaled approximately $75.7 million and were paid at a monthly rate of $0.0691875 per common share.  For the same period the Company’s net cash generated from operations was approximately $60.2 million.  This shortfall includes a return of capital and was funded primarily by borrowings on the credit facility and cash on hand.  

The Company’s objective in setting an annualized distribution rate is to project a rate that will provide consistency over the life of the Company taking into account acquisitions, dispositions, capital improvements, ramp up of new properties, completion of planned development projects and varying economic cycles.  To meet this objective, the Company may require the use of debt and offering proceeds, in addition to cash from operations.  Since a portion of distributions has been funded with borrowed funds, the Company’s ability to maintain its current intended rate of distribution will be primarily based on the ability of the Company’s properties to generate cash from operations at this level, as well as the Company’s ability to utilize currently available financing, or the Company’s ability to obtain additional financing. Since there can be no assurance of the Company’s ability to obtain additional financing or that properties owned by the Company will provide income at this level, there can be no assurance as to the classification or duration of distributions at the current rate.  The Board of Directors monitors the Company’s distribution rate relative to the performance of the hotels on an ongoing basis and may make adjustments to the distribution rate as determined to be prudent in relation to other cash requirements of the Company.

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In July 2009, the Company instituted a Unit Redemption Program to provide limited interim liquidity to its shareholders who have held their Units for at least one year.  Since the inception of the program through April 2012, shareholders were permitted to request redemption of Units for a purchase price equal to 92% of the price paid per Unit if the Units have been owned for less than three years, or 100% of the price paid per Unit if the Units have been owned more than three years.  In May 2012, as a result of the Special Distribution, the purchase price per Unit under the Company’s Unit Redemption Program was adjusted by the amount of the Special Distribution (from $11.00 to $10.25 for the maximum purchase price, based on the original purchase price and length of time such Units have been held by the shareholder).  The maximum number of Units that may be redeemed in any given year is five percent of the weighted average number of Units outstanding during the 12-month period immediately prior to the date of redemption. The Company reserves the right to change the purchase price of redemptions, reject any request for redemption, or otherwise amend the terms of, suspend, or terminate the Unit Redemption Program.  As noted below, since July 2011, the total redemption requests have exceeded the authorized amount of redemptions and, as a result, the Board of Directors has limited the amount of redemptions as deemed prudent.  Effective June 19, 2013, the Board of Directors suspended the Company’s Unit Redemption Program, as it assesses the Consolidation Transaction.

Since inception of the program through June 30, 2013, the Company has redeemed approximately 11.7 million Units representing $121.2 million, including 2.0 million Units in the amount of $20.0 million and 3.0 million Units in the amount of $32.0 million redeemed during six months ended June 30, 2013 and 2012, respectively.  As contemplated in the program, beginning with the July 2011 redemption, the scheduled redemption date for the third quarter of 2011, the Company redeemed Units on a pro-rata basis.  Prior to July 2011, the Company redeemed 100% of redemption requests.  The following is a summary of the Unit redemptions during 2012 and the first six months of 2013:

Redemption Date	Total Requested Unit Redemptions at Redemption Date		Units Redeemed		Total Redemption Requests Not Redeemed at Redemption Date
January 2012		10,689,219		1,507,187		9,182,032
April 2012		11,229,890		1,509,922		9,719,968
July 2012		10,730,084		1,004,365		9,725,719
October 2012		11,155,269		1,003,267		10,152,002
January 2013		12,135,251		990,324		11,144,927
April 2013		13,039,019		988,095		12,050,924

In December 2010, the Company instituted a Dividend Reinvestment Plan for its shareholders. The plan provides a way to increase shareholder investment in the Company by reinvesting dividends to purchase additional Units of the Company. The uses of the proceeds from this plan may include purchasing Units under the Company’s Unit Redemption Program, enhancing properties, satisfying financing obligations and other expenses, increasing working capital, funding various corporate operations, and acquiring hotels.  As a result of the Special Distribution, beginning in May 2012, the offering price per Unit under the Company’s Dividend Reinvestment Plan was adjusted by the amount of the Special Distribution (from $11.00 to $10.25).  The Company has registered 20.0 million Units for potential issuance under the plan.  During the six months ended June 30, 2013 and 2012, approximately 2.1 million Units, representing $22.0 million in proceeds to the Company, and 2.4 million Units, representing $26.2 million in proceeds to the Company, were issued under the plan.  Since inception of the plan through June 30, 2013, approximately 12.3 million Units, representing $131.0 million in proceeds to the Company, were issued under the plan.  Effective June 19, 2013, the Board of Directors suspended the Company’s Dividend Reinvestment Plan, as it assesses the Consolidation Transaction.

The Company has on-going capital commitments to fund its capital improvements.  The Company is required, under all of the hotel management agreements and certain loan agreements, to make available, for the repair, replacement, refurbishing of furniture, fixtures, and equipment, a percentage of gross revenues provided that such amount may be used for the Company’s capital expenditures with respect to the hotels.  As of June 30, 2013, the Company held $7.7 million in reserves for capital expenditures.  During the first six months of 2013, the Company spent approximately $5.9 million on capital expenditures for existing hotels and anticipates spending an additional $17 to $20 million for the remainder of the year.  Additionally, the Company acquired land in Richmond, Virginia for the development of adjoining Courtyard and Residence Inn hotels.  In May 2013, the Company entered into a construction contract with a third party and began construction of the hotels during the second quarter of 2013, which is expected to be completed within two years.  The Company expects to spend a total of approximately $35 million to develop the hotels and has incurred approximately $3.0 million in development costs as of June 30, 2013, of which approximately $2.0 million was incurred during the first six months of 2013.

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In connection with the Merger, on May 13, 2013, the Company acquired from Apple REIT Six, Inc. the Apple REIT Entities’ and Advisors’ headquarters in Richmond, Virginia (“Headquarters”) and assumed the Fort Worth, Texas office lease agreement for approximately $4.5 million.  As part of the purchase, the Company agreed to release Apple REIT Six, Inc. from any liabilities related to the Headquarters or office lease.  Any costs associated with the Headquarters and office lease, including office rent, utilities, office supplies, etc. will continue to be allocated to the Apple REIT Entities and Advisors, excluding Apple REIT Six, Inc. and A6 Advisors as described above in Related Parties.

Impact of Inflation

Operators of hotels, in general, possess the ability to adjust room rates daily to reflect the effects of inflation. Competitive pressures may, however, limit the operators’ ability to raise room rates. Currently the Company is not experiencing any material impact from inflation.

Business Interruption

Being in the real estate industry, the Company is exposed to natural disasters on both a local and national scale. Although management believes there is adequate insurance to cover this exposure, there can be no assurance that such events will not have a material adverse effect on the Company’s financial position or results of operations.

Seasonality

The hotel industry historically has been seasonal in nature. Seasonal variations in occupancy at the Company’s hotels may cause quarterly fluctuations in its revenues. Generally, occupancy rates and hotel revenues are greater in the second and third quarters than in the first and fourth quarters.  To the extent that cash flow from operations is insufficient during any quarter, due to temporary or seasonal fluctuations in revenue, the Company expects to utilize cash on hand or, if necessary, any available other financing sources to make distributions.

Subsequent Events

In July 2013, the Company declared and paid approximately $12.6 million, or $0.0691875 per outstanding common share, in distributions to its common shareholders.

On August 7, 2013, after the approval by its Board of Directors, the Company entered into an Agreement and Plan of Merger with Apple REIT Seven, Inc. and Apple REIT Eight, Inc., where Apple REIT Seven, Inc. and Apple REIT Eight, Inc. would merge into the Company.  Under the Agreement and Plan of Merger, each outstanding Unit of Apple REIT Seven, Inc. would be exchanged for one common share of the Company and each outstanding Unit of Apple REIT Eight, Inc. would be exchanged for 0.85 common shares of the Company.  The transaction is subject to shareholder approval by each of the companies and to customary closing conditions.  As a result, there is no assurance that the merger will occur.

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Item 3.  Quantitative and Qualitative Disclosures About Market Risk

The Company does not engage in transactions in derivative financial instruments or derivative commodity instruments.  As of June 30, 2013, the Company’s financial instruments were not exposed to significant market risk due to foreign currency exchange risk, commodity price risk or equity price risk.  The Company will be exposed to interest rate risk due to possible changes in short term interest rates as it invests its cash or borrows on its credit facility.  Based on the balance of the Company’s credit facility at June 30, 2013 of $17.8 million, every 100 basis points change in interest rates could impact the Company’s annual net income by approximately $0.2 million, all other factors remaining the same.  The Company’s cash balance at June 30, 2013 was $0.

Item 4.  Controls and Procedures

Senior management, including the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this report.  Based on this evaluation process, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2013.  There have been no changes in the Company’s internal control over financial reporting that occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings                                                      

The term the “Apple REIT Entities” means Apple REIT Six, Inc., Apple REIT Seven, Inc., Apple REIT Eight, Inc., Apple REIT Nine, Inc. and Apple REIT Ten, Inc.

On December 13, 2011, the United States District Court for the Eastern District of New York ordered that three putative class actions, Kronberg, et al. v. David Lerner Associates, Inc., et al., Kowalski v. Apple REIT Ten, Inc., et al., and Leff v. Apple REIT Ten, Inc., et al., be consolidated and amended the caption of the consolidated matter to be In re Apple REITs Litigation. The District Court also appointed lead plaintiffs and lead counsel for the consolidated action and ordered lead plaintiffs to file and serve a consolidated complaint by February 17, 2012. The Company was previously named as a party in all three of the above mentioned class action lawsuits.

On February 17, 2012, lead plaintiffs and lead counsel in the In re Apple REITs Litigation, Civil Action No. 1:11-cv-02919-KAM-JO, filed an amended consolidated complaint in the United States District Court for the Eastern District of New York against the Company, Apple Suites Realty Group, Inc., Apple Eight Advisors, Inc., Apple Nine Advisors, Inc., Apple Ten Advisors, Inc., Apple Fund Management, LLC, Apple REIT Six, Inc., Apple REIT Seven, Inc., Apple REIT Eight, Inc. and Apple REIT Ten, Inc., their directors and certain officers, and David Lerner Associates, Inc. and David Lerner. The consolidated complaint, which was dismissed in April 2013, was purportedly brought on behalf of all purchasers of Units in the Company and the other Apple REIT Entities, or those who otherwise acquired these Units that were offered and sold to them by David Lerner Associates, Inc., or its affiliates and on behalf of subclasses of shareholders in New Jersey, New York, Connecticut and Florida, and alleges that the Apple REIT Entities “misrepresented the investment objectives of the Apple REITs, the dividend payment policy of the Apple REITs, and the value of their Apple REIT investments.”The consolidated complaint asserts claims under Sections 11, 12 and 15 of the Securities Act of 1933, as well as claims for breach of fiduciary duty, aiding and abetting breach of fiduciary duty, negligence, and unjust enrichment, and claims for violation of the securities laws of Connecticut and Florida. The complaint seeks, among other things, certification of a putative nationwide class and the state subclasses, damages, rescission of share purchases and other costs and expenses.

On April 18, 2012, the Company, and the other defendants moved to dismiss the consolidated complaint in the In re Apple REITs Litigation.  By Order entered on March 31, 2013 and opinion issued on April 3, 2013, the Court dismissed the consolidated complaint in its entirety with prejudice and without leave to amend. Plaintiffs filed a Notice of Appeal to the Second Circuit Court of Appeals on April 12, 2013, and filed their Brief for Plaintiffs-Appellants on July 26, 2013.  Defendants-Appellees have requested that their brief be due on October 25, 2013.  The Company believes that Plaintiffs’ claims against it, its officers and directors and other Apple REIT Entities were properly dismissed by the lower court, and intends to vigorously defend the judgment as entered.  In the event some or all of Plaintiffs’ claims are revived as a result of Plaintiffs’ appeal, the Company will, once again, defend against them vigorously.  At this time, the Company cannot reasonably predict the outcome of these proceedings or provide a reasonable estimate of the possible loss or range of loss due to these proceedings, if any.

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Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

Unit Redemption Program

In July 2009, the Company instituted a Unit Redemption Program to provide limited interim liquidity to its shareholders who have held their Units for at least one year.  Since the inception of the program through April 2012, shareholders were permitted to request redemption of Units for a purchase price equal to 92% of the price paid per Unit if the Units have been owned for less than three years, or 100% of the price paid per Unit if the Units have been owned more than three years.  In May 2012, as a result of the payment of the special distribution of $0.75 per Unit, the purchase price per Unit under the Company’s Unit Redemption Program was adjusted by the amount of the special distribution (from $11.00 to $10.25 for the maximum purchase price, based on the original purchase price and length of time such Units have been held by the shareholder).  The maximum number of Units that may be redeemed in any given year is five percent of the weighted average number of Units outstanding during the 12-month period immediately prior to the date of redemption.  The Company reserves the right to change the purchase price of redemptions, reject any request for redemption, or otherwise amend the terms of, suspend, or terminate the Unit Redemption Program.  As noted below, since July 2011, the total redemption requests have exceeded the authorized amount of redemptions and, as a result, the Board of Directors has limited the amount of redemptions as deemed prudent.  Effective June 19, 2013, the Board of Directors suspended the Company’s Unit Redemption Program, as it evaluates a potential consolidation transaction in which the Company, Apple REIT Seven, Inc. and Apple REIT Eight, Inc. would be combined.

Since inception of the program through June 30, 2013, the Company has redeemed approximately 11.7 million Units representing $121.2 million.  During the six months ended June 30, 2013, the Company redeemed approximately 2.0 million Units in the amount of $20.0 million.  As contemplated in the program, beginning with the July 2011 redemption, the Company redeemed Units on a pro-rata basis with approximately 41% and 18% of the amounts requested redeemed in the third and fourth quarters of 2011; 14%, 13%, 9% and 9% in the first, second, third and fourth quarters of 2012; and 8% in both the first and second quarters of 2013, leaving approximately 12.1 million Units requested but not redeemed as of the last scheduled redemption date in the second quarter of 2013 (April 2013).  Prior to July 2011, the Company had redeemed 100% of redemption requests.  The Company has a number of cash sources including cash from operations, dividend reinvestment plan proceeds, proceeds from borrowings and asset sales from which it can make redemptions. See the Company’s complete consolidated statements of cash flows for the for the six months ended June 30, 2013 and 2012 included in the Company’s interim financial statements in Item 1 of this Form 10-Q for a further description of the sources and uses of the Company’s cash flows.  The following is a summary of the Unit redemptions during 2012 and the first six months of 2013:

Redemption Date	Total Requested Unit Redemptions at Redemption Date		Units Redeemed		Total Redemption Requests Not Redeemed at Redemption Date
January 2012		10,689,219		1,507,187		9,182,032
April 2012		11,229,890		1,509,922		9,719,968
July 2012		10,730,084		1,004,365		9,725,719
October 2012		11,155,269		1,003,267		10,152,002
January 2013		12,135,251		990,324		11,144,927
April 2013		13,039,019		988,095		12,050,924

The following is a summary of redemptions during the second quarter of 2013 (no redemptions occurred in May and June of 2013).

Issuer Purchases of Equity Securities
	(a)		(b)		(c)		(d)
Period	Total Number of Units Purchased		Average Price Paid per Unit		Total Number of Units Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Units that May Yet Be Purchased Under the Plans or Programs
April 2013		988,095	$	10.11		988,095		(1)

(1)The maximum number of Units that may be redeemed in any 12 month period is limited to up to five percent (5.0%) of the weighted average number of Units outstanding from the beginning of the 12 month period, subject to the Company’s right to change the number of Units to be redeemed.

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Item 6.  Exhibits

Exhibit Number	Description of Documents
3.1	Articles of Incorporation of the Registrant. (Incorporated by reference to Exhibit 3.1 to the registrant’s registration statement on Form S-11 (SEC File No. 333-147414) filed November 15, 2007 and effective April 25, 2008)
3.2	Bylaws of the Registrant, as amended.  (Incorporated by reference to Exhibit 3.2 to the registrant’s registration statement on Form S-11 (SEC File No. 333-147414) filed November 15, 2007 and effective April 25, 2008)

31.1	Certification of the Company’s Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002  (FILED HEREWITH)
31.2	Certification of the Company’s Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002  (FILED HEREWITH)
32.1	Certification of the Company’s Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002  (FILED HEREWITH)
101	The following materials from Apple REIT Nine, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013 formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Cash Flows, and (iv) related notes to these financial statements, tagged as blocks of text and in detail (FURNISHED HEREWITH)

32

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

APPLE REIT NINE, INC.
By:	/s/    GLADE M. KNIGHT	Date:  August 8, 2013
	Glade M. Knight,
	Chairman of the Board and Chief Executive Officer (Principal Executive Officer)
By:	/s/    BRYAN PEERY	Date:  August 8, 2013
	Bryan Peery,
	Chief Financial Officer (Principal Financial and Principal Accounting Officer)

33

EX-31.1

 Exhibit 31.1

CERTIFICATION

I, Glade M. Knight, certify that:

1. I have reviewed this report on Form 10-Q of Apple REIT Nine, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 8, 2013	/s/    GLADE M. KNIGHT
	Glade M. Knight Chief Executive Officer
	APPLE REIT NINE, Inc.

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Bryan Peery, certify that:

1. I have reviewed this report on Form 10-Q of Apple REIT Nine, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 8, 2013	/s/    BRYAN PEERY
	Bryan Peery Chief Financial Officer APPLE REIT NINE, Inc.

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Apple REIT Nine, Inc., (the “Company”) on Form 10-Q for the quarter ending June 30, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned hereby certifies, pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities and Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of June 30, 2013, and for the period then ended.

/s/    GLADE M. KNIGHT

Glade M. Knight

Chief Executive Officer

/s/    BRYAN PEERY

Bryan Peery

Chief Financial Officer

August 8, 2013

XML

Organization and Summary of Significant Accounting Policies (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Organization and Summary of Significant Accounting Policies (Details) [Line Items]
Unit description			one common share and one Series A preferred share
Number of Reportable Segments			1
Percentage of Revenue Reserved for Replacements			up to 5%
Weighted Average Number Diluted Shares Outstanding Adjustment (in Shares)	0	0	0	0
Hotels [Member]
Organization and Summary of Significant Accounting Policies (Details) [Line Items]
Number of Real Estate Properties	89		89
Number of States in which Entity Operates	27		27
Aggregate Hotel Rooms [Member]
Organization and Summary of Significant Accounting Policies (Details) [Line Items]
Number of Units in Real Estate Property	11,371		11,371

XML

Consolidated Statements of Operations (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Revenues:
Room revenue	$ 95,115	$ 88,047	$ 179,388	$ 167,600
Other revenue	9,457	9,063	17,587	17,601
Total revenue	104,572	97,110	196,975	185,201
Expenses:
Operating expense	25,821	24,239	49,518	46,651
Hotel administrative expense	7,220	6,956	14,069	13,581
Sales and marketing	8,648	8,211	16,599	15,582
Utilities	3,535	3,417	6,940	6,704
Repair and maintenance	3,771	3,293	7,329	6,518
Franchise fees	4,301	3,916	8,063	7,395
Management fees	3,560	3,173	6,762	6,246
Property taxes, insurance and other	5,657	4,979	10,789	9,954
General and administrative	2,239	2,327	4,099	4,931
Acquisition related costs	74	430	74	461
Depreciation expense	13,633	13,166	27,133	26,009
Total expenses	78,459	74,107	151,375	144,032
Operating income	26,113	23,003	45,600	41,169
Interest expense, net	(2,229)	(1,579)	(4,414)	(2,955)
Income before income taxes	23,884	21,424	41,186	38,214
Income tax expense	(349)	(391)	(745)	(589)
Income from continuing operations	23,535	21,033	40,441	37,625
Income from discontinued operations	0	1,525	0	6,792
Net income	$ 23,535	$ 22,558	$ 40,441	$ 44,417
Basic and diluted net income per common share
From continuing operations (in Dollars per share)	$ 0.13	$ 0.11	$ 0.22	$ 0.20
From discontinued operations (in Dollars per share)	$ 0.00	$ 0.01	$ 0.00	$ 0.04
Total basic and diluted net income per common share (in Dollars per share)	$ 0.13	$ 0.12	$ 0.22	$ 0.24
Weighted average common shares outstanding - basic and diluted (in Shares)	182,496	182,110	182,446	182,236

XML

Related Parties

6 Months Ended

Jun. 30, 2013

Related Party Transactions [Abstract]

Related Party Transactions Disclosure [Text Block]

5.  Related Parties

The Company has, and is expected to continue to engage in, significant transactions with related parties.  These transactions cannot be construed to be at arm’s length and the results of the Company’s operations may be different if these transactions were conducted with non-related parties.  The Company’s independent members of the Board of Directors oversee and annually review the Company’s related party relationships (which include the relationships discussed in this section) and are required to approve any significant modifications to the contracts, as well as any new significant related party transactions.  There were no changes to the contracts discussed in this section and no new significant related party transactions during the six months ended June 30, 2013 (other than the transactions related to the completion of Apple REIT Six, Inc.’s merger with a third party discussed below).  The Board of Directors is not required to approve each individual transaction that falls under the related party relationships.  However, under the direction of the Board of Directors, at least one member of the Company’s senior management team approves each related party transaction.

The term the “Apple REIT Entities” means Apple REIT Six, Inc., Apple REIT Seven, Inc., Apple REIT Eight, Inc., Apple REIT Nine, Inc. and Apple REIT Ten, Inc.  The term the “Advisors” means Apple Six Advisors, Inc., Apple Seven Advisors, Inc., Apple Eight Advisors, Inc., Apple Nine Advisors, Inc. (“A9A”), Apple Ten Advisors, Inc., Apple Suites Realty Group, Inc. (“ASRG”) and Apple Six Realty Group, Inc.  The Advisors are wholly owned by Glade M. Knight, Chairman and Chief Executive Officer of the Company.  Mr. Knight is also Chairman and Chief Executive Officer of Apple REIT Seven, Inc., Apple REIT Eight, Inc. and Apple REIT Ten, Inc.  Members of the Company’s Board of Directors are also on the Board of Directors of Apple REIT Seven, Inc. and Apple REIT Eight, Inc.

On May 14, 2013, Apple REIT Six, Inc. merged with and into an entity that is not affiliated with the Apple REIT Entities or its Advisors.  Pursuant to the terms and conditions of the merger agreement, dated as of November 29, 2012, upon completion of the merger, the separate corporate existence of Apple REIT Six, Inc. ceased (the “Merger”).  Prior to the Merger, Glade M. Knight was Chairman and Chief Executive Office of Apple REIT Six, Inc. and members of the Company’s Board of Directors were also on the Board of Directors of Apple REIT Six, Inc.

ASRG Agreement

The Company has a contract with ASRG, to acquire and dispose of real estate assets for the Company.  A fee of 2% of the gross purchase price or gross sale price in addition to certain reimbursable expenses is paid to ASRG for these services.  As of June 30, 2013, payments to ASRG for fees under the terms of this contract related to the acquisition of assets have totaled approximately $33.6 million since inception.  Of this amount, the Company incurred approximately $0.1 million and $0.3 million during the six months ended June 30, 2013 and 2012, which is included in acquisition related costs in the Company’s consolidated statements of operations.  During the second quarter of 2013, the Company paid fees to ASRG for the purchase of two land parcels located at the Residence Inn hotels in Manassas, Virginia and San Bernardino, California, both which had previously been leased from a third party.  In addition, the Company incurred a brokerage commission to ASRG totaling approximately $4.0 million related to the sale of the Company’s 110 parcels in April 2012, which has been recorded as a reduction to the deferred gain on sale.  Of this amount, approximately $2.8 million was paid to ASRG during the second quarter of 2012 and the remaining $1.2 million will be paid upon repayment of the $60 million note.

A9A Agreement

The Company is party to an advisory agreement with A9A, pursuant to which A9A provides management services to the Company.  A9A provides these management services through Apple Fund Management, LLC (“AFM”), which immediately after the Merger became a wholly-owned subsidiary of A9A.  This transaction between A9A and Apple REIT Six, Inc. was made with no cash consideration exchanged between the entities.  Prior to May 14, 2013, AFM was a wholly-owned subsidiary of Apple REIT Six, Inc.  An annual advisory fee ranging from 0.1% to 0.25% of total equity proceeds received by the Company, in addition to certain reimbursable expenses as described below, are payable to A9A for these management services.  Total advisory fees incurred by the Company under the advisory agreement are included in general and administrative expenses and totaled approximately $1.4 million and $1.5 million for the six months ended June 30, 2013 and 2012.

Apple REIT Entities and Advisors Cost Sharing Structure

In addition to the fees payable to ASRG or A9A, the Company reimbursed to ASRG or A9A, or paid directly to AFM on behalf of ASRG or A9A, approximately $1.0 million for both the six months ended June 30, 2013 and 2012.  The expenses reimbursed were approximately $0 and $0.1 million, respectively, for costs reimbursed under the contract with ASRG and approximately $1.0 million and $0.9 million, respectively, for costs reimbursed under the contract with A9A.  The costs are included in general and administrative expenses and are for the Company’s allocated share of the staffing and related costs provided by AFM at the direction of A9A.

AFM is an affiliate of each of the Advisors.  Each of the Advisors provides management services through the use of AFM to, respectively, Apple REIT Six, Inc. (prior to the Merger), Apple REIT Seven, Inc., Apple REIT Eight, Inc., Apple REIT Nine, Inc. and Apple REIT Ten.  In connection with the Merger, effective May 14, 2013, the entire membership interest of Apple REIT Six, Inc. in AFM was transferred and assigned to A9A, which then became the sole member of AFM.  As part of the assignment, A9A and the other Advisors agreed to indemnify the buyer of Apple REIT Six, Inc. for liabilities related to AFM.  The assignment of AFM’s interest to A9A had no impact on the Company’s advisory agreement with A9A or the process of allocating costs from AFM to the Apple REIT Entities or Advisors as described below, except Apple REIT Six, Inc. and its advisors, Apple Six Advisors, Inc. and Apple Six Realty Group, Inc. (collectively “A6 Advisors”), no longer participate in the cost sharing arrangement, thereby increasing the remaining companies’ share of the allocated costs.

Also, in connection with the Merger, on May 13, 2013, the Company acquired from Apple REIT Six, Inc. the Apple REIT Entities’ and Advisors’ headquarters in Richmond, Virginia (“Headquarters”) and assumed the Fort Worth, Texas office lease agreement for approximately $4.5 million, which approximated fair value at the time of acquisition based on third party market comparisons.  As part of the purchase, the Company agreed to release Apple REIT Six, Inc. from any liabilities related to the Headquarters or office lease.  As described below, any costs associated with the Headquarters and office lease, including office rent, utilities, office supplies, etc. (“Office Related Costs”) will continue to be allocated to the Apple REIT Entities and Advisors, excluding Apple REIT Six, Inc. and A6 Advisors.

Prior to the Merger, amounts reimbursed to AFM included both compensation for personnel and Office Related Costs used by the companies.  As discussed above, as a result of the Merger, beginning on May 14, 2013, Office Related Costs are now allocated from the Company to the other Apple REIT Entities and Advisors, excluding Apple REIT Six, Inc. and A6 Advisors.  Each of these companies has agreed to reimburse the Company for its share of these costs.  From the period May 14, 2013 through June 30, 2013, the Company received reimbursement of its costs totaling approximately $85,000 from the participating entities.  The Company’s net allocated Office Related Costs were approximately $58,000 and is included in general and administrative costs in the Company’s consolidated statements of operations.

All of the Office Related Costs and costs of AFM are allocated among the Apple REIT Entities and the Advisors, excluding Apple REIT Six, Inc. and A6 Advisors after the Merger.  The allocation of costs is reviewed at least annually by the Compensation Committees of the Apple REIT Entities.  In making the allocation, management of each of the entities and their Compensation Committee consider all relevant facts related to each company’s level of business activity and the extent to which each company requires the services of particular personnel of AFM.  Such payments are based on the actual costs of the services and are not based on formal record keeping regarding the time these personnel devote to the Company, but are based on a good faith estimate by the employee and/or his or her supervisor of the time devoted by the employee to the Company.  Although there is a potential conflict on time allocation of employees due to the fact that a senior manager, officer or staff member will provide services to more than one company, the Company believes that the executives and staff compensation sharing arrangement described above allows the companies to share costs yet attract and retain superior executives and staff.  The cost sharing structure also allows each entity to maintain a much more cost effective structure than having separate staffing arrangements.  Since the employees of AFM perform services for the Apple REIT Entities and Advisors at the direction of the Advisors, individuals, including executive officers, receive their compensation at the direction of the Advisors and may receive consideration directly from the Advisors.

As part of the cost sharing arrangements, the day-to-day transactions may result in amounts due to or from the Apple REIT Entities and Advisors (excluding Apple REIT Six, Inc. and A6 Advisors after the Merger).  To efficiently manage cash disbursements, an individual Apple REIT Entity or Advisor (excluding Apple REIT Six, Inc. and A6 Advisors after the Merger) may make payments for any or all of the related companies.  The amounts due to or from the related Apple REIT Entity or Advisor (excluding Apple REIT Six, Inc. and A6 Advisors after the Merger) are reimbursed or collected and are not significant in amount.

The Company has incurred legal fees associated with the Legal Proceedings and Related Matters discussed herein.  The Company also incurs other professional fees such as accounting, auditing and reporting.  These fees are included in general and administrative expense in the Company’s consolidated statements of operations.  To be cost effective, these services received by the Company are shared as applicable across the other Apple REIT Entities.  The professionals cannot always specifically identify their fees for one company; therefore management allocates these costs across the companies that benefit from the services.  The total costs for the Legal Proceedings and Related Matters discussed herein for all of the Apple REIT Entities was approximately $1.7 million for the six months ended June 30, 2013, of which approximately $0.4 million was allocated to the Company.  Total costs for the six months ended June 30, 2012 for all of the Apple REIT Entities was approximately $3.2 million, of which approximately $0.7 million was allocated to the Company.          

Apple Air Holding, LLC (“Apple Air”) Membership Interest

Included in other assets, net on the Company’s consolidated balance sheet is a 24% equity investment in Apple Air.  The other current members of Apple Air are Apple REIT Seven, Inc., Apple REIT Eight, Inc. and Apple REIT Ten, Inc.  In connection with the Merger, on May 13, 2013, Apple REIT Ten, Inc. acquired its membership interest in Apple Air from Apple REIT Six, Inc.  Through its equity investment, the Company has access to Apple Air’s aircraft for acquisition, asset management and renovation purposes.  The Company’s equity investment was approximately $1.8 million and $1.9 million as of June 30, 2013 and December 31, 2012.  The Company has recorded its share of income and losses of the entity under the equity method of accounting and adjusted its investment in Apple Air accordingly.  For the six months ended June 30, 2013 and 2012, the Company recorded a loss of approximately $102,000 and $95,000 respectively, as its share of the net loss of Apple Air, which primarily relates to the depreciation of the aircraft, and is included in general and administrative expense in the Company’s consolidated statements of operations.

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Shareholder's Equity (Details) - Schedule of Unit Redemption (Redemptions [Member])	1 Months Ended
	Apr. 30, 2013	Jan. 31, 2013	Oct. 31, 2012	Jul. 31, 2012	Apr. 30, 2012	Jan. 31, 2012
Redemptions [Member]
Shareholder's Equity (Details) - Schedule of Unit Redemption [Line Items]
Total Requested Unit Redemptions at Redemption Date	13,039,019	12,135,251	11,155,269	10,730,084	11,229,890	10,689,219
Units Redeemed (in Shares)	988,095	990,324	1,003,267	1,004,365	1,509,922	1,507,187
Total Redemption Requests Not Redeemed at Redemption Date	12,050,924	11,144,927	10,152,002	9,725,719	9,719,968	9,182,032

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Disposition and Discontinued Operations (Details) (USD $)	3 Months Ended	6 Months Ended			12 Months Ended			1 Months Ended
	Mar. 31, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012	Dec. 31, 2012 Sale of 110 Sites Leased to Third Party [Member] acre	Jun. 30, 2013 Sale of 110 Sites Leased to Third Party [Member]	Apr. 27, 2012 Sale of 110 Sites Leased to Third Party [Member]	Apr. 30, 2009 Acquisition of 110 Sites Leased to Third Party [Member]
Disposition and Discontinued Operations (Details) [Line Items]
Disposal Date					Apr. 27, 2012
Area of Land (in Acres)					406
Land Sites Sold					110
Total Sales Price of Real Estate Sold					$ 198,400,000
Land Parcels Sold					110
Payments to Acquire Real Estate								147,300,000
Proceeds from Sale of Real Estate Held-for-investment					138,400,000
Note Receivable Issued					60,000,000
Note Receivable, Collateral					junior lien on the land and land improvements owned by the purchaser
Interest Rate on Note Receivable					10.50%
Gains (Losses) on Sales of Investment Real Estate					33,300,000
Assets Held-for-sale, at Carrying Value							160,500,000
Closing Costs on Sale of Real Estate					300,000
Franchise Taxes on Sale of Real Estate					300,000
Note Receivable, Net		19,250,000		22,375,000	22,400,000	19,300,000
Notes, Loans and Financing Receivable, Gross, Noncurrent		60,000,000		60,000,000	60,000,000	60,000,000
Deferred Gain on Sale of Real Estate Assets					33,400,000	33,300,000
Deferred Interest Earned on Note Receivable					4,300,000	7,400,000
Straight Line Rent	$ 400,000	$ 0	$ 1,975,000

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Subsequent Events (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	6 Months Ended		0 Months Ended	1 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Aug. 07, 2013 Subsequent Event [Member]	Jul. 31, 2013 Subsequent Event [Member]
Subsequent Events (Details) [Line Items]
Payments of Ordinary Dividends, Common Stock (in Dollars)	$ 75,707	$ 79,386		$ 12,600
Common Stock, Dividends, Per Share, Cash Paid (in Dollars per share)				$ 0.0691875
Subsequent Event, Description			On August 7, 2013, after the approval by its Board of Directors, the Company entered into an Agreement and Plan of Merger with Apple REIT Seven, Inc. and Apple REIT Eight, Inc., where Apple REIT Seven, Inc. and Apple REIT Eight, Inc. would merge into the Company.Under the Agreement and Plan of Merger, each outstanding Unit of Apple REIT Seven, Inc. would be exchanged for one common share of the Company and each outstanding Unit of Apple REIT Eight, Inc. would be exchanged for 0.85 common shares of the Company.The transaction is subject to shareholder approval by each of the companies and to customary closing conditions.As a result, there is no assurance that the merger will occur.

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Organization and Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2013

Accounting Policies [Abstract]

Organization, Consolidation, Basis of Presentation, Business Description and Accounting Policies [Text Block]

1.  Organization and Summary of Significant Accounting Policies

Organization

Apple REIT Nine, Inc., together with its wholly owned subsidiaries (the “Company”), is a Virginia corporation that has elected to be treated as a real estate investment trust (“REIT”) for federal income tax purposes.  The Company was formed to invest in income-producing real estate in the United States.  Initial capitalization occurred on November 9, 2007 and operations began on July 31, 2008 when the Company acquired its first hotel.  The Company concluded its best-efforts offering of Units (each Unit consists of one common share and one Series A preferred share) in December 2010.  The Company’s fiscal year end is December 31.  The Company has no foreign operations or assets and its operating structure includes only one segment.  The consolidated financial statements include the accounts of the Company and its subsidiaries.  All intercompany accounts and transactions have been eliminated.  Although the Company has an interest in a variable interest entity through its note receivable, it is not the primary beneficiary as the Company does not have any elements of power in the decision making process of the entity and does not share in any of the benefits, and therefore does not consolidate the entity.  As of June 30, 2013, the Company owned 89 hotels located in 27 states with an aggregate of 11,371 rooms.

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with the rules and regulations for reporting on Form 10-Q.  Accordingly, they do not include all of the information required by accounting principles generally accepted in the United States for complete financial statements.  In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.  These unaudited financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in its 2012 Annual Report on Form 10-K.  Operating results for the three and six months ended June 30, 2013 are not necessarily indicative of the results that may be expected for the twelve month period ending December 31, 2013.

Use of Estimates

The preparation of the financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Reclassifications

Certain amounts in the 2012 consolidated financial statements have been reclassified to conform with the 2013 presentation with no effect on previously reported net income or shareholders’ equity.

Restricted Cash

Restricted cash includes reserves for debt service, real estate taxes, and insurance, and reserves for furniture, fixtures, and equipment replacements of up to 5% of property revenue for certain hotels, as required by certain management or mortgage debt agreement restrictions and provisions.

Earnings Per Common Share

Basic earnings per common share is computed based upon the weighted average number of shares outstanding during the period.  Diluted earnings per common share is calculated after giving effect to all potential common shares that were dilutive and outstanding for the period.  There were no potential common shares with a dilutive effect for the three and six months ended June 30, 2013 or 2012.  As a result, basic and dilutive outstanding shares were the same.  Series B convertible preferred shares are not included in earnings per common share calculations until such time that such shares are eligible to be converted to common shares.

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Credit Facility

6 Months Ended

Jun. 30, 2013

Debt Disclosure [Abstract]

Debt Disclosure [Text Block]

3.  Credit Facility

In November 2012, the Company entered into a $50 million credit facility with a commercial bank that is utilized for working capital, hotel renovations and development, and other general corporate funding purposes, including the payment of redemptions and distributions.  The credit facility may be increased to $100 million, subject to certain conditions.  Under the terms of the credit agreement, the Company may make voluntary prepayments in whole or in part at any time.  The credit facility matures in November 2014; however, the Company has the right, upon satisfaction of certain conditions, including covenant compliance and payment of an extension fee, to extend the maturity date to November 2015.  Interest payments are due monthly and the interest rate, subject to certain exceptions, is equal to the one-month LIBOR (the London Inter-Bank Offered Rate for a one-month term) plus a margin ranging from 2.25% to 2.75%, depending upon the Company’s leverage ratio, as calculated under the terms of the credit agreement.  The Company is also required to pay an unused facility fee of 0.30% or 0.40% on the unused portion of the revolving credit facility, based on the amount of borrowings outstanding during the quarter.  As of June 30, 2013, the credit facility had an outstanding principal balance of $17.8 million and an annual interest rate of approximately 2.44%.  As of December 31, 2012, there were no borrowings outstanding under the credit facility.

The credit agreement requires the Company to maintain a specific pool of Unencumbered Borrowing Base Properties (must be a minimum of ten properties and must satisfy conditions as defined in the credit agreement).  The obligations of the lender to make any advances under the credit facility are subject to certain conditions, including that the outstanding borrowings do not exceed the Borrowing Base Availability, as defined in the credit agreement.  The credit facility contains customary affirmative covenants and negative covenants and events of defaults.  It also contains quarterly financial covenants, which include, among others, a minimum tangible net worth, maximum debt limits, and minimum debt service and fixed charge coverage ratios.  The Company was in compliance with each of these covenants at June 30, 2013.

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Shareholder's Equity

6 Months Ended

Jun. 30, 2013

Stockholders' Equity Note [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

6.  Shareholders’ Equity

Special Distribution

As a result of the sale of its 110 parcels, the Board of Directors approved a special distribution of $0.75 per Unit, totaling $136.1 million on May 17, 2012 to shareholders of record on May 11, 2012 (the “Special Distribution”).

Monthly Distributions

For the three months ended June 30, 2013 and 2012, the Company made distributions (excluding the Special Distribution discussed above) of $0.2076 and $0.2158 per common share for a total of $37.9 million and $39.3 million.  For the six months ended June 30, 2013 and 2012, the Company made distributions (excluding the Special Distribution discussed above) of $0.4151 and $0.4358 per common share for a total of $75.7 million and $79.4 million.  In conjunction with the Special Distribution, in May 2012 the Company’s Board of Directors reduced the annual distribution rate from $0.88 per common share to $0.83 per common share.  The reduction was effective with the June 2012 distribution. In August 2012, the Board of Directors increased the annualized distribution rate from $0.83 per common share to $0.83025 per common share.  The distribution will continue to be paid monthly.  Total distributions (including the Special Distribution) for the three months ended June 30, 2013 and 2012 totaled $37.9 million and $175.4 million, and $75.7 million and $215.5 million for the six months ended June 30, 2013 and 2012.

Unit Redemption Program

In July 2009, the Company instituted a Unit Redemption Program to provide limited interim liquidity to its shareholders who have held their Units for at least one year.  Since the inception of the program through April 2012, shareholders were permitted to request redemption of Units for a purchase price equal to 92% of the price paid per Unit if the Units have been owned for less than three years, or 100% of the price paid per Unit if the Units have been owned more than three years.  In May 2012, as a result of the Special Distribution, the purchase price per Unit under the Company’s Unit Redemption Program was adjusted by the amount of the Special Distribution (from $11.00 to $10.25 for the maximum purchase price, based on the original purchase price and length of time such Units have been held by the shareholder).  The maximum number of Units that may be redeemed in any given year is five percent of the weighted average number of Units outstanding during the 12-month period immediately prior to the date of redemption. The Company reserves the right to change the purchase price of redemptions, reject any request for redemption, or otherwise amend the terms of, suspend, or terminate the Unit Redemption Program.  As noted below, since July 2011, the total redemption requests have exceeded the authorized amount of redemptions and, as a result, the Board of Directors has limited the amount of redemptions as deemed prudent.  Effective June 19, 2013, the Board of Directors suspended the Company’s Unit Redemption Program, as it evaluates a potential consolidation transaction in which the Company, Apple REIT Seven, Inc. and Apple REIT Eight, Inc. would be combined (the “Consolidation Transaction”).

Since inception of the program through June 30, 2013, the Company has redeemed approximately 11.7 million Units representing $121.2 million, including 2.0 million Units in the amount of $20.0 million and 3.0 million Units in the amount of $32.0 million redeemed during the six months ended June 30, 2013 and 2012, respectively.  As contemplated in the program, beginning with the July 2011 redemption, the scheduled redemption date for the third quarter of 2011, the Company redeemed Units on a pro-rata basis.  Prior to July 2011, the Company redeemed 100% of redemption requests.  The following is a summary of the Unit redemptions during 2012 and the first six month of 2013:

Redemption Date	Total Requested Unit Redemptions at Redemption Date		Units Redeemed		Total Redemption Requests Not Redeemed at Redemption Date
January 2012		10,689,219		1,507,187		9,182,032
April 2012		11,229,890		1,509,922		9,719,968
July 2012		10,730,084		1,004,365		9,725,719
October 2012		11,155,269		1,003,267		10,152,002
January 2013		12,135,251		990,324		11,144,927
April 2013		13,039,019		988,095		12,050,924

Dividend Reinvestment Plan

In December 2010, the Company instituted a Dividend Reinvestment Plan for its shareholders. The plan provides a way to increase shareholder investment in the Company by reinvesting dividends to purchase additional Units of the Company. The uses of the proceeds from this plan may include purchasing Units under the Company’s Unit Redemption Program, enhancing properties, satisfying financing obligations and other expenses, increasing working capital, funding various corporate operations, and acquiring hotels.  As a result of the Special Distribution, beginning in May 2012, the offering price per Unit under the Company’s Dividend Reinvestment Plan was adjusted by the amount of the Special Distribution (from $11.00 to $10.25).  The Company has registered 20.0 million Units for potential issuance under the plan.  During the six months ended June 30, 2013 and 2012, approximately 2.1 million Units, representing $22.0 million in proceeds to the Company, and 2.4 million Units, representing $26.2 million in proceeds to the Company, were issued under the plan.  Since inception of the plan through June 30, 2013, approximately 12.3 million Units, representing $131.0 million in proceeds to the Company, were issued under the plan.  Effective June 19, 2013, the Board of Directors suspended the Company’s Dividend Reinvestment Plan, as it assesses the Consolidation Transaction.

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Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2013

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

4.  Fair Value of Financial Instruments

The Company estimates the fair value of its debt and note receivable by discounting the future cash flows of each instrument at estimated market rates consistent with the maturity of an instrument with similar credit terms and credit characteristics which are Level 3 inputs.  Market rates take into consideration general market conditions and maturity.  As of June 30, 2013, the carrying value and estimated fair value of the Company’s debt was approximately $182.5 million and $182.7 million.  As of December 31, 2012, the carrying value and estimated fair value of the Company’s debt was approximately $166.8 million and $173.3 million.  As of June 30, 2013 and December 31, 2012, the carrying value of the $60 million note receivable as discussed in note 2 approximates fair market value.  The carrying value of the Company’s other financial instruments approximates fair value due to the short-term nature of these financial instruments.

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Consolidated Balance Sheets (Parentheticals) (USD $) In Thousands, except Share data, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Investment in real estate accumulated depreciation (in Dollars)	$ 173,060	$ 145,927
Preferred stock, shares authorized (in Shares)	30,000,000	30,000,000
Preferred stock, shares issued (in Shares)	0	0
Preferred stock, shares outstanding (in Shares)	0	0
Common stock, shares authorized (in Shares)	400,000,000	400,000,000
Common stock, shares issued (in Shares)	182,784,131	182,619,400
Common stock, shares outstanding (in Shares)	182,784,131	182,619,400
Series A Preferred Stock [Member]
Preferred stock, shares authorized (in Shares)	400,000,000	400,000,000
Preferred stock, shares issued (in Shares)	182,784,131	182,619,400
Preferred stock, shares outstanding (in Shares)	182,784,131	182,619,400
Series B Convertible Preferred Stock [Member]
Preferred stock, shares authorized (in Shares)	480,000	480,000
Preferred stock, shares issued (in Shares)	480,000	480,000
Preferred stock, shares outstanding (in Shares)	480,000	480,000

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Accounting Policies, by Policy (Policies)

6 Months Ended

Jun. 30, 2013

Accounting Policies [Abstract]

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

Organization

Apple REIT Nine, Inc., together with its wholly owned subsidiaries (the “Company”), is a Virginia corporation that has elected to be treated as a real estate investment trust (“REIT”) for federal income tax purposes.  The Company was formed to invest in income-producing real estate in the United States.  Initial capitalization occurred on November 9, 2007 and operations began on July 31, 2008 when the Company acquired its first hotel.  The Company concluded its best-efforts offering of Units (each Unit consists of one common share and one Series A preferred share) in December 2010.  The Company’s fiscal year end is December 31.  The Company has no foreign operations or assets and its operating structure includes only one segment.  The consolidated financial statements include the accounts of the Company and its subsidiaries.  All intercompany accounts and transactions have been eliminated.  Although the Company has an interest in a variable interest entity through its note receivable, it is not the primary beneficiary as the Company does not have any elements of power in the decision making process of the entity and does not share in any of the benefits, and therefore does not consolidate the entity.  As of June 30, 2013, the Company owned 89 hotels located in 27 states with an aggregate of 11,371 rooms.

Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with the rules and regulations for reporting on Form 10-Q.  Accordingly, they do not include all of the information required by accounting principles generally accepted in the United States for complete financial statements.  In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.  These unaudited financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in its 2012 Annual Report on Form 10-K.  Operating results for the three and six months ended June 30, 2013 are not necessarily indicative of the results that may be expected for the twelve month period ending December 31, 2013.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

The preparation of the financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Reclassification, Policy [Policy Text Block]

Reclassifications

Certain amounts in the 2012 consolidated financial statements have been reclassified to conform with the 2013 presentation with no effect on previously reported net income or shareholders’ equity.

Cash and Cash Equivalents, Restricted Cash and Cash Equivalents, Policy [Policy Text Block]

Restricted Cash

Restricted cash includes reserves for debt service, real estate taxes, and insurance, and reserves for furniture, fixtures, and equipment replacements of up to 5% of property revenue for certain hotels, as required by certain management or mortgage debt agreement restrictions and provisions.

Earnings Per Share, Policy [Policy Text Block]

Earnings Per Common Share

Basic earnings per common share is computed based upon the weighted average number of shares outstanding during the period.  Diluted earnings per common share is calculated after giving effect to all potential common shares that were dilutive and outstanding for the period.  There were no potential common shares with a dilutive effect for the three and six months ended June 30, 2013 or 2012.  As a result, basic and dilutive outstanding shares were the same.  Series B convertible preferred shares are not included in earnings per common share calculations until such time that such shares are eligible to be converted to common shares.

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Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Cash flows from operating activities:
Net income	$ 40,441	$ 44,417
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation	27,133	26,009
Amortization of deferred financing costs, fair value adjustments and other non-cash expenses, net	215	247
Straight-line rental income	0	(1,975)
Changes in operating assets and liabilities:
Increase in due from third party managers, net	(7,856)	(8,110)
Increase in other assets, net	(434)	(839)
Decrease (increase) in accounts payable and accrued expenses	662	(1,658)
Net cash provided by operating activities	60,161	58,091
Cash flows from investing activities:
Cash paid for acquisitions, net	(7,220)	(14,832)
Net proceeds (costs) from sale of assets	(353)	135,416
Capital improvements and development costs	(6,824)	(9,204)
Increase in capital improvement reserves	(129)	(941)
Payments received on note receivable	3,150	840
Net cash provided by (used in) investing activities	(11,376)	111,279
Cash flows from financing activities:
Net proceeds related to issuance of Units	21,929	26,210
Redemptions of Units	(19,992)	(31,990)
Special distribution paid to common shareholders	0	(136,113)
Monthly distributions paid to common shareholders	(75,707)	(79,386)
Net proceeds from credit facility	17,800	0
Proceeds from notes payable	0	30,000
Payments of notes payable	(1,842)	(1,262)
Deferred financing costs	0	(174)
Net cash used in financing activities	(57,812)	(192,715)
Decrease in cash and cash equivalents	(9,027)	(23,345)
Cash and cash equivalents, beginning of period	9,027	30,733
Cash and cash equivalents, end of period	0	7,388
Non-cash transactions:
Note receivable issued from sale of assets	$ 0	$ 60,000

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Assets
Investment in real estate, net of accumulated depreciation of $173,060 and $145,927, respectively	$ 1,451,132	$ 1,463,894
Cash and cash equivalents	0	9,027
Restricted cash-furniture, fixtures and other escrows	9,806	9,922
Note receivable, net	19,250	22,375
Due from third party managers, net	18,607	10,751
Other assets, net	10,369	10,048
Total Assets	1,509,164	1,526,017
Liabilities
Credit facility	17,800	0
Notes payable	164,682	166,783
Accounts payable and accrued expenses	13,763	13,101
Total Liabilities	196,245	179,884
Shareholders' Equity
Preferred stock, value issued	0	0
Common stock, no par value, authorized 400,000,000 shares; issued and outstanding 182,784,131 and 182,619,400 shares, respectively	1,807,387	1,805,335
Distributions greater than net income	(494,516)	(459,250)
Total Shareholders' Equity	1,312,919	1,346,133
Total Liabilities and Shareholders' Equity	1,509,164	1,526,017
Series A Preferred Stock [Member]
Shareholders' Equity
Preferred stock, value issued	0	0
Series B Convertible Preferred Stock [Member]
Shareholders' Equity
Preferred stock, value issued	$ 48	$ 48

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Shareholder's Equity (Details) (USD $)	6 Months Ended		12 Months Ended	3 Months Ended		6 Months Ended		2 Months Ended	5 Months Ended	11 Months Ended	3 Months Ended	6 Months Ended			14 Months Ended	24 Months Ended		34 Months Ended	48 Months Ended	6 Months Ended		14 Months Ended	17 Months Ended	31 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012 Special Distribution [Member]	Jun. 30, 2013 Monthly Distributions [Member]	Jun. 30, 2012 Monthly Distributions [Member]	Jun. 30, 2013 Monthly Distributions [Member]	Jun. 30, 2012 Monthly Distributions [Member]	Jul. 31, 2012 Annual Distribution [Member]	May 31, 2012 Annual Distribution [Member]	Jun. 30, 2013 Annual Distribution [Member]	Jun. 30, 2012 Total Distributions [Member]	Jun. 30, 2012 Total Distributions [Member]	Jun. 30, 2013 Unit Redemption Program [Member]	Jun. 30, 2012 Unit Redemption Program [Member]	Jun. 30, 2013 Unit Redemption Program [Member]	Jun. 30, 2013 Unit Redemption Program [Member]	Jun. 30, 2011 Unit Redemption Program [Member]	Apr. 30, 2012 Unit Redemption Program [Member]	Jun. 30, 2013 Unit Redemption Program [Member]	Jun. 30, 2013 Dividend Reinvestment Plan [Member]	Jun. 30, 2012 Dividend Reinvestment Plan [Member]	Jun. 30, 2013 Dividend Reinvestment Plan [Member]	Apr. 30, 2012 Dividend Reinvestment Plan [Member]	Jun. 30, 2013 Dividend Reinvestment Plan [Member]
Shareholder's Equity (Details) [Line Items]
Special Distribution, Amount Per Unit (in Dollars per share)			$ 0.75
Payments of Special Distribution	$ 0	$ 136,113,000	$ 136,100,000
Dividends Payable, Date to be Paid			May 17, 2012
Dividends Payable, Date of Record			May 11, 2012
Common Stock, Dividends, Per Share, Cash Paid (in Dollars per share)				$ 0.2076	$ 0.2158	$ 0.4151	$ 0.4358
Payments of Ordinary Dividends, Common Stock (in Dollars)	75,707,000	79,386,000		37,900,000	39,300,000	75,700,000	79,400,000
Annual Distribution rate (in Dollars per share)								$ 0.83	$ 0.88	$ 0.83025
Payments of Total Distributions											175,400,000	215,500,000
Unit redemption eligibility period													1 year
Redemption rate, Units owned less than 3 years													92.00%
Redemption rate, Units owned more than 3 years													100.00%
Changes Resulting From Special Distribution, Description															In May 2012, as a result of the Special Distribution, the purchase price per Unit under the Company's Unit Redemption Program was adjusted by the amount of the Special Distribution (from $11.00 to $10.25 for the maximum purchase price, based on the original purchase price and length of time such Units have been held by the shareholder).							As a result of the Special Distribution, beginning in May 2012, the offering price per Unit under the Company's Dividend Reinvestment Plan was adjusted by the amount of the Special Distribution (from $11.00 to $10.25).
Unit Redemption, Maximum Purchase Price (in Dollars per share)															$ 10.25			$ 11.00
Weighted average number of Units outstanding, percentage redeemable													5.00%
Units Redeemed (in Shares)													2,000,000	3,000,000					11,700,000
Payments for Redemption of Units	19,992,000	31,990,000											20,000,000	32,000,000					121,200,000
Redemption requests redeemed, description																pro-rata basis
Redemption requests redeemed, percentage																	100.00%
Dividend Reinvestment Plan, Offering Price Per Unit (in Dollars per share)																						$ 10.25	$ 11.00
Units Authorized (in Shares)																				20,000,000		20,000,000		20,000,000
Stock Issued During Period, Shares, Dividend Reinvestment Plan (in Shares)																				2,100,000	2,400,000			12,300,000
Stock Issued During Period, Value, Dividend Reinvestment Plan																				$ 22,000,000	$ 26,200,000			$ 131,000,000

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Subsequent Events

6 Months Ended

Jun. 30, 2013

Subsequent Events [Abstract]

Subsequent Events [Text Block]

8.  Subsequent Events

In July 2013, the Company declared and paid approximately $12.6 million, or $0.0691875 per outstanding common share, in distributions to its common shareholders.

On August 7, 2013, after the approval by its Board of Directors, the Company entered into an Agreement and Plan of Merger with Apple REIT Seven, Inc. and Apple REIT Eight, Inc., where Apple REIT Seven, Inc. and Apple REIT Eight, Inc. would merge into the Company.  Under the Agreement and Plan of Merger, each outstanding Unit of Apple REIT Seven, Inc. would be exchanged for one common share of the Company and each outstanding Unit of Apple REIT Eight, Inc. would be exchanged for 0.85 common shares of the Company.  The transaction is subject to shareholder approval by each of the companies and to customary closing conditions.  As a result, there is no assurance that the merger will occur.

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Shareholder's Equity (Tables)

6 Months Ended

Jun. 30, 2013

Stockholders' Equity Note [Abstract]

Summary of Unit Redemptions [Table Text Block]

The following is a summary of the Unit redemptions during 2012 and the first six month of 2013:

Redemption Date	Total Requested Unit Redemptions at Redemption Date		Units Redeemed		Total Redemption Requests Not Redeemed at Redemption Date
January 2012		10,689,219		1,507,187		9,182,032
April 2012		11,229,890		1,509,922		9,719,968
July 2012		10,730,084		1,004,365		9,725,719
October 2012		11,155,269		1,003,267		10,152,002
January 2013		12,135,251		990,324		11,144,927
April 2013		13,039,019		988,095		12,050,924

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Legal Proceedings and Related Matters

6 Months Ended

Jun. 30, 2013

Disclosure Text Block Supplement [Abstract]

Legal Matters and Contingencies [Text Block]

7.  Legal Proceedings and Related Matters

On December 13, 2011, the United States District Court for the Eastern District of New York ordered that three putative class actions, Kronberg, et al. v. David Lerner Associates, Inc., et al., Kowalski v. Apple REIT Ten, Inc., et al., and Leff v. Apple REIT Ten, Inc., et al., be consolidated and amended the caption of the consolidated matter to be In re Apple REITs Litigation. The District Court also appointed lead plaintiffs and lead counsel for the consolidated action and ordered lead plaintiffs to file and serve a consolidated complaint by February 17, 2012. The Company was previously named as a party in all three of the above mentioned class action lawsuits.

On February 17, 2012, lead plaintiffs and lead counsel in the In re Apple REITs Litigation, Civil Action No. 1:11-cv-02919-KAM-JO, filed an amended consolidated complaint in the United States District Court for the Eastern District of New York against the Company, Apple Suites Realty Group, Inc., Apple Eight Advisors, Inc., Apple Nine Advisors, Inc., Apple Ten Advisors, Inc., Apple Fund Management, LLC, Apple REIT Six, Inc., Apple REIT Seven, Inc., Apple REIT Eight, Inc. and Apple REIT Ten, Inc., their directors and certain officers, and David Lerner Associates, Inc. and David Lerner. The consolidated complaint, which was dismissed in April 2013, was purportedly brought on behalf of all purchasers of Units in the Company and the other Apple REIT Entities, or those who otherwise acquired these Units that were offered and sold to them by David Lerner Associates, Inc., or its affiliates and on behalf of subclasses of shareholders in New Jersey, New York, Connecticut and Florida, and alleges that the Apple REIT Entities “misrepresented the investment objectives of the Apple REITs, the dividend payment policy of the Apple REITs, and the value of their Apple REIT investments.”The consolidated complaint asserts claims under Sections 11, 12 and 15 of the Securities Act of 1933, as well as claims for breach of fiduciary duty, aiding and abetting breach of fiduciary duty, negligence, and unjust enrichment, and claims for violation of the securities laws of Connecticut and Florida. The complaint seeks, among other things, certification of a putative nationwide class and the state subclasses, damages, rescission of share purchases and other costs and expenses.

On April 18, 2012, the Company, and the other defendants moved to dismiss the consolidated complaint in the In re Apple REITs Litigation.  By Order entered on March 31, 2013 and opinion issued on April 3, 2013, the Court dismissed the consolidated complaint in its entirety with prejudice and without leave to amend. Plaintiffs filed a Notice of Appeal to the Second Circuit Court of Appeals on April 12, 2013, and filed their Brief for Plaintiffs-Appellants on July 26, 2013.  Defendants-Appellees have requested that their brief be due on October 25, 2013.  The Company believes that Plaintiffs’ claims against it, its officers and directors and other Apple REIT Entities were properly dismissed by the lower court, and intends to vigorously defend the judgment as entered.  In the event some or all of Plaintiffs’ claims are revived as a result of Plaintiffs’ appeal, the Company will, once again, defend against them vigorously.  At this time, the Company cannot reasonably predict the outcome of these proceedings or provide a reasonable estimate of the possible loss or range of loss due to these proceedings, if any.

The Securities and Exchange Commission (“SEC”) staff has been conducting a non-public investigation, which is focused principally on the adequacy of certain disclosures in the Company's filings with the SEC beginning in 2008, as well as the Company's review of certain transactions involving the Company and the other Apple REIT Entities.  The Company intends to continue to cooperate with the SEC staff, and it is engaging in a dialogue with the SEC staff concerning these issues and the roles of certain officers.  The Company does not believe the issues raised by the SEC staff affect the material accuracy of the Company's consolidated financial statements.  At this time, the Company cannot predict the outcome of this investigation as to the Company or any of its officers, nor can it predict the timing associated with any such conclusion or resolution.

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Disposition and Discontinued Operations

6 Months Ended

Jun. 30, 2013

Discontinued Operations and Disposal Groups [Abstract]

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

2.  Disposition and Discontinued Operations

On April 27, 2012, the Company completed the sale of its 406 acres of land and land improvements located on 110 sites in the Ft. Worth, Texas area (the “110 parcels”) and the assignment of the lease for a total sale price of $198.4 million.  The 110 parcels were acquired in April 2009 for a total purchase price of $147.3 million and were leased to a subsidiary of Chesapeake Energy Corporation (“Chesapeake”) under a long term lease for the production of natural gas.  At closing, the Company received approximately $138.4 million in cash proceeds and issued a note receivable totaling $60.0 million to the purchaser (the “note”).  The note, which approximated fair market value, is secured by a junior lien on the land and land improvements owned by the purchaser.  The stated interest rate on the note is 10.5%.  The note requires interest only payments for the first three years of the note.  After the first three years, interest is accrued and payments will only be received once the purchaser extinguishes its senior loan with a third party.  Once the senior loan is repaid, the Company will receive all payments from the existing lease until fully repaid or the note reaches maturity which is April 2049.  Although the purchaser is not affiliated with the Company, a partner of the purchaser is also a member of the Board of Directors of Apple REIT Ten, Inc.  In conjunction with the sale, the Company incurred a brokerage commission to Apple Suites Realty Group, Inc. (“ASRG”) totaling approximately $4.0 million, representing 2% of the gross sales price.  Of this amount, approximately $2.8 million was paid to ASRG during the second quarter of 2012 and the remaining $1.2 million will be paid upon repayment of the $60.0 million note.  The $4.0 million commission has been recorded as a reduction to the deferred gain on sale as described below.

The total gain on sale was approximately $33.3 million (total sale price of $198.4 million less carrying value totaling $160.5 million, ASRG fee totaling $4.0 million, closing costs totaling $0.3 million and related franchise taxes totaling $0.3 million).  In accordance with the Accounting Standards Codification on real estate sales, the sales transaction is being accounted for under the cost recovery method, therefore the gain on sale and interest earned on the note will be deferred until cash payments by the purchaser, including principal and interest on the note due to the Company and the payment of the $138.4 million at closing exceed the Company’s cost basis of the 110 parcels sold.  The note receivable is included in the Company’s consolidated balance sheets, net of the total deferred gain.  As of June 30, 2013, the note receivable, net was $19.3 million, including $60.0 million note receivable offset by $33.3 million deferred gain and $7.4 million deferred interest earned.  As of December 31, 2012, the note receivable, net was $22.4 million, including $60.0 million note receivable offset by $33.4 million deferred gain and $4.3 million deferred interest earned.  The 110 parcels was a separate reportable segment and the results of operations for these properties have been classified in the consolidated statements of operations in the line item income from discontinued operations.

The following table sets forth the components of income from discontinued operations for the three and six months ended June 30, 2012 (in thousands):

	Three Months		Six Months
	Ended		Ended
	June 30, 2012		June 30, 2012
Rental revenue	$	1,532	$	6,826
Operating expenses		7		34
Depreciation expense		0		0
Income from discontinued operations	$	1,525	$	6,792

Prior to the sale, the lease was classified as an operating lease and rental income was recognized on a straight-line basis over the initial term of the lease.  Rental revenue includes approximately $0.4 million and $2.0 million of adjustments to record rent on the straight-line basis for the three and six months ended June 30, 2012.

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Disposition and Discontinued Operations (Details) - Components of Income from Discontinued Operations (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Components of Income from Discontinued Operations [Abstract]
Rental revenue		$ 1,532		$ 6,826
Operating expenses		7		34
Depreciation expense		0		0
Income from discontinued operations	$ 0	$ 1,525	$ 0	$ 6,792

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Disposition and Discontinued Operations (Tables)

6 Months Ended

Jun. 30, 2013

Discontinued Operations and Disposal Groups [Abstract]

Schedule of Disposal Groups, Including Discontinued Operations, Income Statement, Balance Sheet and Additional Disclosures [Table Text Block]

The following table sets forth the components of income from discontinued operations for the three and six months ended June 30, 2012 (in thousands):

	Three Months		Six Months
	Ended		Ended
	June 30, 2012		June 30, 2012
Rental revenue	$	1,532	$	6,826
Operating expenses		7		34
Depreciation expense		0		0
Income from discontinued operations	$	1,525	$	6,792

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Related Parties (Details) (USD $)		0 Months Ended	2 Months Ended	3 Months Ended	12 Months Ended	3 Months Ended	0 Months Ended	6 Months Ended		68 Months Ended	6 Months Ended																	2 Months Ended
	Jun. 30, 2013 Real Estate Disposal Fees Remaining To Be Paid [Member] Sale of 110 Sites Leased to Third Party [Member] Apple Suites Realty Group (ASRG) [Member]	May 14, 2013 Cash Consideration Exchanged Between Entities [Member] Assignment and Transfer of Apple REIT Six, Inc.'s Interest in Apple Fund Management to Apple Nine Advisors (A9A) [Member]	Jun. 30, 2013 Reimbursement Received From Related Parties For Their Proportionate Share of Office Related Costs Provided by Apple REIT Nine, Inc. [Member]	Jun. 30, 2013 Purchase of Previously Leased Land Parcels [Member]	Dec. 31, 2012 Sale of 110 Sites Leased to Third Party [Member] Apple Suites Realty Group (ASRG) [Member] Real Estate Disposal Fees Incurred [Member]	Jun. 30, 2012 Sale of 110 Sites Leased to Third Party [Member] Apple Suites Realty Group (ASRG) [Member] Real Estate Disposal Fees Paid [Member]	May 13, 2013 Acquisition of Headquarters and Assignment of Office Lease Agreement from Apple REIT Six, Inc. [Member]	Jun. 30, 2013 Apple Suites Realty Group (ASRG) [Member] Real Estate Acquisition Fees Incurred [Member]	Jun. 30, 2012 Apple Suites Realty Group (ASRG) [Member] Real Estate Acquisition Fees Incurred [Member]	Jun. 30, 2013 Apple Suites Realty Group (ASRG) [Member] Real Estate Acquisition Fees Incurred [Member]	Jun. 30, 2013 Apple Suites Realty Group (ASRG) [Member] Reimbursement to Related Party for Company's Proportionate Share of Staffing and Related Costs Provided by Related Party [Member]	Jun. 30, 2012 Apple Suites Realty Group (ASRG) [Member] Reimbursement to Related Party for Company's Proportionate Share of Staffing and Related Costs Provided by Related Party [Member]	Jun. 30, 2013 Apple Suites Realty Group (ASRG) [Member]	Jun. 30, 2013 Apple Nine Advisors (A9A) [Member] Advisory Fees Incurred [Member]	Jun. 30, 2012 Apple Nine Advisors (A9A) [Member] Advisory Fees Incurred [Member]	Jun. 30, 2013 Apple Nine Advisors (A9A) [Member] Reimbursement to Related Party for Company's Proportionate Share of Staffing and Related Costs Provided by Related Party [Member]	Jun. 30, 2012 Apple Nine Advisors (A9A) [Member] Reimbursement to Related Party for Company's Proportionate Share of Staffing and Related Costs Provided by Related Party [Member]	Jun. 30, 2013 Apple Nine Advisors (A9A) [Member]	Jun. 30, 2013 ASRG and A9A [Member] Reimbursement to Related Party for Company's Proportionate Share of Staffing and Related Costs Provided by Related Party [Member]	Jun. 30, 2012 ASRG and A9A [Member] Reimbursement to Related Party for Company's Proportionate Share of Staffing and Related Costs Provided by Related Party [Member]	Jun. 30, 2013 All Apple REIT Entities [Member] Legal Proceedings and SEC Investigation [Member]	Jun. 30, 2012 All Apple REIT Entities [Member] Legal Proceedings and SEC Investigation [Member]	Jun. 30, 2013 Apple REIT Nine, Inc. [Member] Legal Proceedings and SEC Investigation [Member]	Jun. 30, 2012 Apple REIT Nine, Inc. [Member] Legal Proceedings and SEC Investigation [Member]	Jun. 30, 2013 Apple Air Holding, LLC [Member]	Jun. 30, 2012 Apple Air Holding, LLC [Member]	Dec. 31, 2012 Apple Air Holding, LLC [Member]	Jun. 30, 2013 Net Allocated Office Related Costs to Apple REIT Nine, Inc. [Member]
Related Parties (Details) [Line Items]
Real estate acquisition and disposal fee, Related Party, Percent													2.00%
Costs and Expenses, Related Party					$ 4,000,000	$ 2,800,000		$ 100,000	$ 300,000	$ 33,600,000	$ 0	$ 100,000		$ 1,400,000	$ 1,500,000	$ 1,000,000	$ 900,000		$ 1,000,000	$ 1,000,000
Number of Land Parcels Purchased				2
Accounts Payable, Related Parties	1,200,000
Management Advisory Fee, Related Party, Percent																		0.1% to 0.25%
Related Party Transaction, Amounts of Transaction		0					4,500,000
Reimbursement of Office Related Costs From Related Parties			85,000
Net Allocated Office Related Costs																												58,000
Legal Fees																					1,700,000	3,200,000	400,000	700,000
Equity Method Investment, Ownership Percentage																									24.00%
Equity Method Investments																									1,800,000		1,900,000
Income (Loss) from Equity Method Investments																									$ (102,000)	$ (95,000)

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Credit Facility (Details) (USD $)	6 Months Ended
	Jun. 30, 2013	Dec. 31, 2012
Credit Facility (Details) [Line Items]
Line of Credit Facility, Amount Outstanding (in Dollars)	$ 17,800,000	$ 0
Revolving Credit Facility $50 Million [Member]
Credit Facility (Details) [Line Items]
Debt Instrument, Origination Date	November 2012
Line of Credit Facility, Maximum Borrowing Capacity (in Dollars)	50,000,000
Line of Credit Facility, Borrowing Capacity, Description	may be increased to $100 million, subject to certain conditions
Debt Instrument, Maturity Date, Description	matures in November 2014; however, the Company has the right, upon satisfaction of certain conditions, including covenant compliance and payment of an extension fee, to extend the maturity date to November 2015
Line of Credit Facility, Interest Rate Description	one-month LIBOR (the London Inter-Bank Offered Rate for a one-month term) plus a margin ranging from 2.25% to 2.75%, depending upon the Company's leverage ratio, as calculated under the terms of the credit agreement
Line of Credit Facility, Amount Outstanding (in Dollars)	$ 17,800,000	$ 0
Line of Credit Facility, Interest Rate at Period End	2.44%
Line of Credit Facility, Collateral	the Company to maintain a specific pool of Unencumbered Borrowing Base Properties (must be a minimum of ten properties and must satisfy conditions as defined in the credit agreement)
Line of Credit Facility, Covenant Terms	The credit facility contains customary affirmative covenants and negative covenants and events of defaults.It also contains quarterly financial covenants, which include, among others, a minimum tangible net worth, maximum debt limits, and minimum debt service and fixed charge coverage ratios.The Company was in compliance with each of these covenants at June 30, 2013.
Minimum [Member] | Revolving Credit Facility $50 Million [Member]
Credit Facility (Details) [Line Items]
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage	0.30%
Maximum [Member] | Revolving Credit Facility $50 Million [Member]
Credit Facility (Details) [Line Items]
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage	0.40%

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Document And Entity Information	6 Months Ended
	Jun. 30, 2013	Aug. 01, 2013
Document and Entity Information [Abstract]
Entity Registrant Name	Apple REIT Nine, Inc.
Document Type	10-Q
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		182,784,131
Amendment Flag	false
Entity Central Index Key	0001418121
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Non-accelerated Filer
Entity Well-known Seasoned Issuer	No
Document Period End Date	Jun. 30, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q2

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Fair Value of Financial Instruments (Details) (USD $) In Millions, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Fair Value Disclosures [Abstract]
Long-term Debt	$ 182.5	$ 166.8
Long-term Debt, Fair Value	182.7	173.3
Notes, Loans and Financing Receivable, Gross, Noncurrent	60	60
Notes Receivable, Fair Value Disclosure	$ 60	$ 60