Apple REIT Ten, Inc. - FORM 8-K/A

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K/A

AMENDMENT NO. 1 TO

CURRENT REPORT

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

Date of Report (Date of earliest event reported): September 1, 2011

APPLE REIT TEN, INC.

(Exact name of registrant as specified in its charter)


Virginia	333-168971	27-3218228
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification Number)


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

(804) 344-8121
(Registrant’s telephone number, including area code)

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


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

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

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

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

Apple REIT Ten, Inc. hereby amends Item 9.01 of its Current Report on Form 8-K dated September 1, 2011 and filed (by the required date) on September 7, 2011 for the purpose of filing certain financial statements and information. In accordance with Rule 12b-15 under the Securities and Exchange Act of 1934, as amended, this Amendment No. 1 sets forth the complete text of the item as amended.


Item 9.01.	Financial Statements and Exhibits.


(a)	Financial statements of businesses acquired.


	SASI, LLC (Mason, Ohio Hilton Garden Inn)

	(Audited)
	Independent Auditors’ Report		3
	Balance Sheet – As of December 31, 2010		4
	Statement of Income – For the Year Ended December 31, 2010		5
	Statement of Cash Flows – For the Year Ended December 31, 2010		6
	Notes to Financial Statements		7

	(Unaudited)
	Balance Sheets – As of June 30, 2011 and 2010		13
	Statements of Income – For the Six Months Ended June 30, 2011 and 2010		14
	Statements of Cash Flows – For the Six Months Ended June 30, 2011 and 2010		15

	Omaha Downtown Lodging Investors II, LLC and Scottsdale Lodging Investors, LLC (2 Hotels)
	(Omaha, Nebraska Hilton Garden Inn and Scottsdale, Arizona Hilton Garden Inn)

	(Audited)
	Independent Auditors’ Report		16
	Combined Balance Sheet – As of December 31, 2010		17
	Combined Statement of Operations and Members’ Deficit –Year Ended December 31, 2010		18
	Combined Statement of Cash Flows – Year Ended December 31, 2010		19
	Notes to Combined Financial Statements		20

	(Unaudited)
	Combined Balance Sheets – As of June 30, 2011 and 2010		26
	Combined Statements of Operations and Members’ Deficit – For the Six Months Ended June 30, 2011 and 2010		27
	Combined Statements of Cash Flows – For the Six Months Ended June 30, 2011 and 2010		28


(b)	Pro forma financial information.

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

	Apple REIT Ten, Inc. (Unaudited)


	Pro Forma Condensed Consolidated Balance Sheet as of June 30, 2011		29
	Notes to Pro Forma Condensed Consolidated Balance Sheet		31
	Pro Forma Condensed Consolidated Statements of Operations for the Year Ended December 31, 2010 and Six Months Ended June 30, 2011		32
	Notes to Pro Forma Condensed Consolidated Statements of Operations		37


(c)	Shell company transactions.

	Not Applicable

(d)	Exhibits.

	None

Independent Auditors’ Report

To the Board of Directors
Apple Ten Hospitality Ownership, Inc.

We have audited the accompanying balance sheet of SASI, LLC, as of December 31, 2010, and the related statement of income and cash flows for the year then ended. These financial statements are the responsibility of SASI, LLC’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of SASI, LLC, as of December 31, 2010, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

(COMPANY SIGNATURE)

Montgomery, Alabama
October 5, 2011


SASI, LLC BALANCE SHEET DECEMBER 31, 2010



ASSETS

Investment in hotels, net of accumulated depreciation of $563,028	$	9,672,904
Cash and cash equivalents		719,486
Accounts receivable		39,005
Prepaid expenses and other current assets		21,677
Intangible assets, net of accumulated amortization of $7,014		107,757
Other assets		14,467


TOTAL ASSETS	$	10,575,296


LIABILITIES AND MEMBERS’ EQUITY

LIABILITIES

Mortgage payable	$	8,356,109
Accounts payable and accrued expenses		195,487


Total liabilities		8,551,596


MEMBERS’ EQUITY		2,023,700


TOTAL LIABILITIES AND MEMBERS’ EQUITY	$	10,575,296

See independent auditors’ report and notes to financial statements.


SASI, LLC STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 2010



REVENUES

Rooms	$	2,190,282
Other		303,414


Total revenues		2,493,696


EXPENSES

Rooms		608,852
Hotel administration		362,719
Property operation, maintenance and energy costs		237,610
Management and franchise fees		188,689
Taxes, insurance and other		153,888
Depreciation and amortization		570,042


Total expenses		2,121,800


OPERATING INCOME		371,896


OTHER EXPENSE

Interest expense		(349,109	)


NET INCOME	$	22,787

See independent auditors’ report and notes to financial statements.


SASI, LLC STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2010



INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

CASH FLOWS FROM OPERATING ACTIVITIES

Net income	$	22,787
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		570,042
Change in assets and liabilities:
Increase in:
Accounts receivable		(39,005	)
Prepaid expenses and other current assets		(36,144	)
Increase in:
Accounts payable and accrued expenses		195,487


Net cash provided by operating activities		713,167


CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of capital assets		(3,661,824	)
Franchise fees		(60,000	)


Net cash used by investing activities		(3,721,824	)


CASH FLOWS FROM FINANCING ACTIVITIES

Principal payments on mortgage payable		(109,312	)
Borrowings on mortgage payable		1,738,055
Payment of loan fees		(54,771	)
Contributions		2,148,338


Net cash provided by financing activities		3,722,310


NET INCREASE IN CASH AND CASH EQUIVALENTS		713,653

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		5,833


CASH AND CASH EQUIVALENTS AT END OF YEAR	$	719,486


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Cash payments for interest, including capitalized interest	$	387,789

See independent auditors’ report and notes to financial statements.

SASI, LLC

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2010


1.	NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

	Nature of Business

	SASI, LLC (the Company) is an Ohio limited liability company which was formed on March 29, 2007 for the purpose of developing and operating a Hilton Garden Inn and operating the hotel under a management agreement with Schulte Hospitality Group, Inc. (the Manager). The hotel opened on February 8, 2010 and is located in Mason, Ohio.

	Personal Assets and Liabilities and Members’ Salaries

	In accordance with the generally accepted method of presenting limited liability company and partnership financial statements, the financial statements do not include the personal assets and liabilities of the members, including their obligation for income taxes on their distributive shares of the net income of the limited liability company or partnership nor any provision for income tax expense.

	The expenses shown in the statements of income do not include any salaries to the members.

	Cash and Cash Equivalents

	The Company considers all short-term investments with an original maturity of three months or less to be cash equivalents.

	Accounts Receivable

	The Company reports trade receivables at gross amounts due from customers. Because historical losses related to these receivables have been insignificant, management uses the direct write-off method to account for bad debts. On a continuing basis, management analyzes delinquent receivables and, once these receivables are determined to be uncollectible, they are written off through a charge against operations.

	Investment in Hotel Property

	The investment in the hotel is stated at cost. Interest and property taxes incurred during the construction of the facilities were capitalized and depreciated over the life of the asset. Costs of improvements are capitalized. Costs of normal repairs and maintenance are charged to expense as incurred. Upon the sale or retirement of property and equipment, the cost and related accumulated depreciation are removed from the respective accounts, and the resulting gain or loss, if any, is included in income.

	Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets. The useful lives of assets are 39 years for buildings, 15 years for improvements and 5 years for furniture, fixtures and equipment.

SASI, LLC

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2010


1.	NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

	Asset Impairment

	The Company reviews their long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets held and used is measured by a comparison of the carrying amount of an asset to undiscounted expected cash flows. Future events could cause the Company to conclude that impairment indicators exist and that long-lived assets may be impaired. To date, no impairment losses have been recorded.

	Franchise Fees

	Franchise fees are amortized on a straight-line basis over the term of the agreement commencing on the hotel opening date.

	Loan Origination Costs

	Permanent loan costs are amortized using a straight-line basis, which approximates the effective interest method, over the term of the respective mortgage.

	Income Taxes

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

	Effective January 1, 2009, the Company implemented the accounting guidance for uncertainty in income taxes using the provisions of Financial Accounting Standards Board (FASB) ASC 740-10, Income Taxes. Using that guidance, tax positions initially need to be recognized in the financial statements when it is more-likely-than-not the position will be sustained upon examination by the tax authorities.

	As of December 31, 2010, the Company had no uncertain tax positions that qualify for either recognition or disclosure in the financial statements and no interest or penalties related to income taxes. The federal and state income tax years of 2007 through 2010 remain subject to examination as of December 31, 2010.

	Revenue Recognition

	Revenue is recognized as earned, which is generally defined as the date upon which a guest occupies a room or utilizes the Company’s services.

SASI, LLC

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2010


1.	NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

	Sales and Marketing

	Sales and marketing costs are expensed when incurred. These costs represent the expense for franchise advertising and reservation systems under the terms of the hotel management agreement and general and administrative expenses that are directly attributable to advertising and promotion. Sales and marketing expenses totaled $133,106 for the year ended December 31, 2010.

	Lodging and Sales Taxes

	The Company collects various taxes from customers and remits these amounts to applicable taxing authorities. The Company’s accounting policy is to exclude these taxes from revenues and expenses.

	Use of Estimates in the Preparation of Financial Statements

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

	Subsequent Events

	Management has evaluated subsequent events through October 5, 2011, which is the date the financial statements were available to be issued.

2.	INVESTMENT IN HOTEL PROPERTIES

	Investment in hotel properties as of December 31, 2010, is summarized below:


Land and land improvements	$	1,359,852
Building and improvements		6,741,898
Furniture, fixtures and equipment		2,134,182


		10,235,933
Less accumulated depreciation		(563,028	)


Investment in hotels, net	$	9,672,904


	Depreciation expense was $563,028 for the year ended December 31, 2010.

SASI, LLC

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2010


3.	INTANGIBLE ASSETS

	Franchise Fees

	Franchise fees totaling $60,000 have been paid to Hilton Hotels as of December 31, 2010. Amortization expense totaled $3,667 for the year ended December 31, 2010.

	Estimated aggregate amortization expense is as follows:


2011	$	4,000
2012		4,000
2013		4,000
2014		4,000
2015		4,000
Thereafter		36,333


Total	$	56,333


	The Company is subject to a franchise agreement with Hilton Hotels under which the Company agrees to use the Franchisor’s trademark, standards of service (cleanliness, management, advertising) and construction quality and design. The agreement covers a term of 20 years. The agreement provides for payment of royalty fees, which are calculated monthly, and totaled $107,315 in 2010.

	Loan Costs

	Permanent loan costs totaling $54,771 have been paid as of December 31, 2010. Amortization expense totaled $3,347 for the year ended December 31, 2010.

	Estimated aggregate amortization expense is as follows:


2011	$	3,651
2012		3,651
2013		3,651
2014		3,651
2015		3,651
Thereafter		33,169


Total	$	51,424

SASI, LLC

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2010


4.	MORTGAGE PAYABLE

	Mortgage payable at December 31, 2010, consisted of the following:


Note with WesBanco Bank; term of 27 years and due April 2035; interest at 5.27%, secured by the related hotel property and equipment	$	8,356,109


	Future maturities at December 31, 2010, are as follows:


Year ending December 31,
2011	$	173,854
2012		183,241
2013		193,134
2014		203,562
2015		214,553
Thereafter		7,387,765


Total	$	8,356,109


5.	CHANGES IN EQUITY

	Changes in the Company’s equity accounts during 2010 are summarized below:


Members’ equity at beginning of year	$	(147,425	)

Net income		22,787
Contributions		2,148,338


Members’ equity at end of year	$	2,023,700


6.	RELATED PARTIES

	The Company is subject to a management agreement with Schulte Hospitality Group, Inc., which covers an initial term of 3 years with automatic, annual renewals. The agreement provides for payment of accounting fees of $450 per month, external support fees of $300 per month and monthly base management fees equal to 3.25% of gross rental revenues. Management fees of $81,374 were expensed in 2010. Amounts due to Schulte Hospitality Group, Inc. totaled $6,243 at December 31, 2010.

7.	CONCENTRATION OF CREDIT RISK

	The Company maintains their cash in bank deposit accounts which, at times, may exceed federally insured limits. The balances are insured by the Federal Deposit Insurance Corporation up to $250,000. At December 31, 2010, the Company uninsured cash balances totaled $248,768 and the Company has not experienced any losses.

SASI, LLC

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2010


8.	SUBSEQUENT EVENT

	In July 2011, the Company entered into a contract to sell the real and personal property of the hotel to Apple Ten Hospitality Ownership, Inc. for a gross purchase price of $14,825,000. The sale was completed on September 1, 2011.

SASI, LLC

BALANCE SHEETS (UNAUDITED)

JUNE 30, 2011 AND 2010


	2011		2010

ASSETS

Investment in hotels, net of accumulated depreciation of $870,133 and $255,923, respectively	$	9,366,436	$	9,980,008
Cash and cash equivalents		342,970		297,511
Accounts receivable		59,119		46,200
Prepaid expenses and other current assets		35,672		13,052
Intangible assets, net of accumulated amortization of $10,840 and $3,188, respectively		103,931		111,583


TOTAL ASSETS	$	9,908,128	$	10,448,354


LIABILITIES AND MEMBERS’ EQUITY

LIABILITIES

Mortgages payable	$	8,270,494	$	8,438,248
Accounts payable and accrued expenses		203,936		192,777


Total liabilities		8,474,430		8,631,025


MEMBERS’ EQUITY		1,433,698		1,817,329


TOTAL LIABILITIES AND MEMBERS’ EQUITY	$	9,908,128	$	10,448,354

SASI, LLC

STATEMENTS OF INCOME (UNAUDITED)

FOR THE SIX MONTHS ENDED JUNE 30, 2011 AND 2010


	2011			2010

REVENUES

Rooms	$	1,370,519		$	706,516
Other		238,506			104,692


Total revenues		1,609,025			811,208


EXPENSES

Rooms		328,864			218,390
Hotel administration		303,634			170,076
Property operation, maintenance and energy costs		90,989			57,384
Management and franchise fees		121,747			89,742
Taxes, insurance and other		71,174			70,783
Depreciation and amortization		310,931			259,111


Total expenses		1,227,339			865,486


OPERATING INCOME (LOSS)		381,686			(54,278	)

OTHER INCOME (EXPENSE)

Interest expense		(221,688	)		(80,950	)

Total other income (expense)		(221,688	)		(80,950	)

NET INCOME (LOSS)	$	159,998		$	(135,228	)

SASI, LLC

STATEMENTS OF CASH FLOWS (UNAUDITED)

FOR THE SIX MONTHS ENDED JUNE 30, 2011 AND 2010


INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
	2011			2010

CASH FLOWS FROM OPERATING ACTIVITIES

Net income (loss)	$	159,998		$	(135,228	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		310,931			259,111
Change in assets and liabilities:
(Increase) decrease in:
Accounts receivable		(20,114	)		(46,200	)
Prepaid expenses and other current assets		472			(13,052	)
Increase in:
Accounts payable and accrued expenses		8,449			192,777

Net cash provided by operating activities		459,736			257,408

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of capital assets		(637	)		(3,661,824	)
Franchise fees		—			(60,000	)

Net cash used by investing activities		(637	)		(3,721,824	)

CASH FLOWS FROM FINANCING ACTIVITIES

Principal payments on mortgages payable		(85,615	)		(27,173	)
Borrowings on mortgages payable		—			1,738,055
Payment of loan fees		—			(54,771	)
Contributions		—			2,099,983
Distributions		(750,000	)		—

Net cash provided (used) by financing activities		(835,615	)		3,756,094

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(376,516	)		291,678

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		719,486			5,833

CASH AND CASH EQUIVALENTS AT JUNE 30	$	342,970		$	297,511


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash payments for interest	$	221,688		$	119,630

INDEPENDENT AUDITORS’ REPORT

To the Members and Managers
Omaha Downtown Lodging Investors II, LLC and Scottsdale Lodging Investors, LLC
Middleton, Wisconsin

We have audited the accompanying combined balance sheet of Omaha Downtown Lodging Investors II, LLC and Scottsdale Lodging Investors, LLC as of December 31, 2010 and the related combined statements of operations and members’ deficit and cash flows for the year then ended. These financial statements are the responsibility of the companies’ management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Omaha Downtown Lodging Investors II, LLC and Scottsdale Lodging Investors, LLC as of December 31, 2010 and the results of their operations and cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

/s/ Baker Tilly Virchow Krause, LLP

Madison, Wisconsin
September 15, 2011

OMAHA DOWNTOWN LODGING

INVESTORS II, LLC AND SCOTTSDALE

LODGING INVESTORS, LLC

COMBINED BALANCE SHEET

December 31, 2010


ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	185,124
Cash reserves		1,880,271
Accounts receivable		238,312
Inventories		78,773
Prepaid expenses		37,318
Other current assets		3,615
Current portion of notes receivable		250,748

Total Current Assets		2,674,161


PROPERTY AND EQUIPMENT, NET		18,166,519


OTHER ASSETS
Notes receivable		581,004
Deferred costs, net		99,397
Intangible assets, net		19,587

Total Other Assets		699,988


TOTAL ASSETS	$	21,540,668


LIABILITIES AND MEMBERS’ DEFICIT

CURRENT LIABILITIES
Current maturities of long term debt	$	703,050
Accounts payable		199,335
Accrued expenses		340,910
Accrued property taxes		408,004
Deferred revenues		831,752

Total Current Liabilities		2,483,051


LONG-TERM LIABILITIES
Long-term debt		26,203,272


Total Liabilities		28,686,323


MEMBERS’ DEFICIT		(7,145,655	)


TOTAL LIABILITIES AND MEMBERS’ DEFICIT	$	21,540,668

See accompanying notes to combined financial statements.

OMAHA DOWNTOWN LODGING
INVESTORS II, LLC AND SCOTTSDALE
LODGING INVESTORS, LLC

COMBINED STATEMENT OF OPERATIONS AND MEMBERS’ DEFICIT
Year Ended December 31, 2010


REVENUES
Rooms	$	8,905,433
Food and beverage		1,618,963
Other		713,397

Total Revenues		11,237,793


COSTS AND EXPENSES
Rooms		980,771
Food and beverage		1,215,469
Advertising and marketing		750,117
General and administrative		2,367,426
Utilities		460,190
Repairs and maintenance		384,778
Franchise and management fees		898,590
Taxes, insurance and other		587,375
Depreciation and amortization		1,192,618

Total Costs and Expenses		8,837,334


OPERATING INCOME		2,400,459

OTHER INCOME (EXPENSES)
Interest expense		(1,541,301	)
Interest income		93,167
TIF revenue		205,897
Loss on fixed asset disposal		(2,177	)

Total Other Income (Expenses)		(1,244,414	)


NET INCOME		1,156,045

Preferred return to Class A member		(17,350	)


NET INCOME ATTRIBUTABLE TO MEMBERS		1,138,695

MEMBERS’ DEFICIT - Beginning of Year		(7,111,339	)
Distributions		(1,173,011	)


MEMBERS’ DEFICIT - END OF YEAR	$	(7,145,655	)

See accompanying notes to combined financial statements.

OMAHA DOWNTOWN LODGING
INVESTORS II, LLC AND SCOTTSDALE
LODGING INVESTORS, LLC

COMBINED STATEMENT OF CASH FLOWS
Year Ended December 31, 2010


CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	1,156,045
Adjustments to reconcile net income to net cash flows from operating activities:
Loss on fixed asset disposal		2,177
Depreciation and amortization		1,192,618
Changes in assets and liabilities:
Accounts receivable		66,201
Inventories		3,326
Prepaid expenses		15,430
Accounts payable		(14,165	)
Accrued expenses		(15,240	)
Accrued property taxes		14,124
Deferred revenues		(205,897	)

Net Cash Flows from Operating Activities		2,214,619


CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures		(26,904	)
Principal received for note receivable		205,897
Net increase in cash reserves		(552,088	)

Net Cash Flows from Investing Activities		(373,095	)


CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long-term debt		(666,375	)
Preferred return payment to Class A member		(17,350	)
Distributions to members		(1,173,011	)

Net Cash Flows from Financing Activities		(1,856,736	)


Net Change in Cash and Cash Equivalents		(15,212	)

CASH AND CASH EQUIVALENTS - Beginning of Year		200,336


CASH AND CASH EQUIVALENTS - END OF YEAR	$	185,124


SUPPLEMENTAL CASH FLOW DISCLOSURES

Cash paid for interest	$	1,543,226

See accompanying notes to combined financial statements.

OMAHA DOWNTOWN LODGING
INVESTORS II, LLC AND SCOTTSDALE
LODGING INVESTORS, LLC

NOTES TO COMBINED FINANCIAL STATEMENTS
Year Ended December 31, 2010

NOTE 1 - Summary of Significant Accounting Policies

Nature of Operations

Omaha Lodging Investors, LLC and Scottsdale Lodging Investors, LLC (the “Companies”) are limited liability companies organized under the laws of the state Wisconsin for the purpose of developing, owning and operating hotels and restaurants in the cities of Omaha, Nebraska and Scottsdale, Arizona, respectively. The hotel in Omaha also includes a free-standing restaurant and parking ramp. The hotels operate as Hilton Garden Inn hotels pursuant to franchise license agreements with a franchise company that is part of Hilton Worldwide, Inc.

Principles of Combination

Due to common ownership, the accompanying combined financial statements include the accounts of the aforementioned entities as if they were a single entity. There were no transactions between the entities during 2010.

Use of Estimates

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

Cash and Cash Equivalents

The Companies consider all highly liquid investments with maturities of three months or less when purchased to be cash equivalents. The Companies maintain cash accounts which, at various times, exceed the federally insured limits of $250,000 per bank. The Companies have not experienced any losses in such accounts and do not believe they are exposed to any significant credit risks.

Cash Reserves

The Companies maintain a reserve for replacements fund used to fund renovations and the replacement of fixed assets. As of December 31, 2010 the balance in the reserve for replacements fund was $1,547,079. Of this total, $606,525 is being held with the lender and withdrawals are subject to their approval. The Companies also maintain a tax escrow account used to fund the payment of real estate taxes. As of December 31, 2010 the balance in the tax escrow account was $333,192.

Accounts Receivable

Customer accounts receivable are reported at the amount management expects to collect from balances outstanding at year-end. Receivables primarily exist from nightly hotel occupancy. Balances are considered past due after 30 days and do not bear interest. Uncollectible balances are written off against bad debt expense when they become known. Management closely monitors outstanding balances and has not experienced historical losses from bad debt write-offs. As such, no allowance for doubtful accounts is considered necessary.

OMAHA DOWNTOWN LODGING
INVESTORS II, LLC AND SCOTTSDALE
LODGING INVESTORS, LLC

NOTES TO COMBINED FINANCIAL STATEMENTS
Year Ended December 31, 2010

NOTE 1 - Summary of Significant Accounting Policies (cont.)

Inventories

Inventories consist primarily of food and beverage inventory and are valued at lower of cost, using the first-in, first-out (FIFO) method, or market.

Deferred Costs, Net

Deferred costs consist of loan fees of $255,326 which are being amortized over the lives of the loans using the effective interest method. Accumulated amortization of these fees was $155,929 as of December 31, 2010.

Intangible Assets, Net

Intangible assets consist of franchise fees of $28,000 which are being amortized over the term of the franchise agreement. Accumulated amortization of these franchise fees was $8,413 as of December 31, 2010.

Property and Equipment, Net

Property and equipment are stated at cost and depreciated using the straight-line method over their estimated useful lives. Major expenditures for property and equipment are capitalized. Maintenance, repairs, and minor renewals are expensed as incurred. When assets are retired or otherwise disposed of, their costs and related accumulated depreciation are removed from the accounts and resulting gains or losses are included in income.

Depreciation of property and equipment is provided over the following useful lives:


	Years


Land improvements	15
Buildings and improvements	39
Furniture, fixtures and equipment	5-7

Impairment of Long-Lived Assets

The Companies review long-lived assets, including property and equipment, for impairment whenever events or changes in business circumstances indicate that the carrying amount of an asset may not be fully recoverable. An impairment loss would be recognized when the estimated future cash flows from the use of the asset are less than the carrying amount of that asset. To date, there have been no such losses.

Deferred Revenues

The Companies record income from a Tax Increment Financing (TIF) agreement when received. The total amount of TIF receipts under the agreement is $1,553,000. During 2010, the Companies received $205,897 of TIF receipts. The Companies have received $721,248 through December 31, 2010 and the remaining $831,752 is shown as deferred revenues on the accompanying combined financial statements.

OMAHA DOWNTOWN LODGING
INVESTORS II, LLC AND SCOTTSDALE
LODGING INVESTORS, LLC

NOTES TO COMBINED FINANCIAL STATEMENTS
Year Ended December 31, 2010

NOTE 1 - Summary of Significant Accounting Policies (cont.)

Preferred Member’s Interest

Omaha Downtown Lodging Investors II, LLC has two classes of members. A preferred return in an amount equal to 6.50% per annum of the outstanding Class A preferred capital balance is paid to the Class A member. At December 31, 2010, the outstanding preferred capital balance of the Class A member was $226,989.

Revenue Recognition

The Companies recognize revenue from rooms as earned on the close of business each day. Revenues from advanced sales are recorded as deposits and are recognized after the obligation has been satisfied. Revenues do not include sales tax as the Companies consider themselves a pass-through conduit for collecting and remitting sales taxes.

Advertising and Marketing Costs

The Companies expense all advertising and marketing costs as incurred.

Income Taxes

The Companies have elected to be taxed as partnerships. As such, the Companies’ income, losses and credits are reflected on the income tax returns of the members. Therefore, no provision or liability for income taxes has been included in the accompanying combined financial statements.

The Companies follow an accounting standard related to the accounting for uncertainty in income taxes, which states that the tax effects from an uncertain tax position can be recognized in the financial statements only if the position is more likely than not to be sustained on audit, based on the technical merits of the position. The Companies recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. At the adoption date, the Companies applied the new accounting standard to all tax positions for which the statute of limitations remained open.

Fair Value of Financial Instruments

The Companies’ short-term financial instruments consist of the following: cash, accounts receivable and accounts payable. The carrying values of these short-term financial instruments approximate their estimated fair values based on the instruments short-term nature.

The carrying value of the Companies’ variable rate long-term debt approximates fair value because interest rates on the variable rate debt change as the underlying market rates change. The carrying value of the Companies’ fixed rate debt is considered to approximate fair value as there is no separate market for the debt and the loans cannot be settled by the Companies for amounts different than the recorded amounts.

OMAHA DOWNTOWN LODGING
INVESTORS II, LLC AND SCOTTSDALE
LODGING INVESTORS, LLC

NOTES TO COMBINED FINANCIAL STATEMENTS
Year Ended December 31, 2010

NOTE 2 - Property and Equipment

The major categories of property and equipment at December 31, 2010 are summarized as follows:


Land improvements	$	3,528,909
Buildings and improvements		15,046,056
Furniture, fixtures and equipment		11,032,208
Land		3,555,672

Subtotal		33,162,845
Less: Accumulated depreciation		15,056,081

Subtotal		18,106,764
Construction in progress		59,755


Property and Equipment, Net	$	18,166,519

NOTE 3 - Notes Receivable

Omaha Downtown Lodging Investors II, LLC entered into a redevelopment promissory note with the City of Omaha on March 2, 2000 in the amount of $1,553,000. The note accrues interest at 9.00% per annum. The Companies receive back from the City of Omaha in the form of note payments, 99% of the real estate taxes incurred annually by Omaha Downtown Lodging Investors II, LLC, until the entire amount of the note is satisfied. The balance of the note at December 31, 2010 was $831,752. The Companies expect to receive $250,748 during 2011 based on the 2010 real estate tax assessment. This amount is shown as current portion of notes receivable on the accompanying balance sheet.

NOTE 4 - Accrued Expenses

Accrued expenses consist of the following at December 31, 2010:


Advanced deposits	$	28,477
Accrued wages		65,582
Accrued payroll, room and sales taxes		112,829
Accrued interest		134,022


Total Accrued Expenses	$	340,910

OMAHA DOWNTOWN LODGING
INVESTORS II, LLC AND SCOTTSDALE
LODGING INVESTORS, LLC

NOTES TO COMBINED FINANCIAL STATEMENTS
Year Ended December 31, 2010

NOTE 5 - Long-Term Debt

Long-term debt is summarized as follows:


Promissory note payable to Morgan Stanley Mortgage Capital with monthly payments of $67,957, including principal and interest at 6.07% per annum. This note is due February 2017 and is secured by a first mortgage on the Arizona property.	$	10,718,524

Promissory note payable to Morgan Stanley Mortgage Capital with monthly payments of $92,321, including principal and interest at 5.26% per annum. This note is due September 2012 and is secured by a first mortgage on the Nebraska property.		15,932,937

Promissory note payable to First National Bank of Omaha that accrues interest at 250 basis points over the Five Year Treasury Constant Maturities rate (4.84% at December 31, 2010) per annum. The note matures on November 15, 2014. The note is secured by the TIF note receivable as described in Note 3.		254,861


Total		26,906,322

Less: Current portion		(703,050	)


Long-Term Portion	$	26,203,272

Principal requirements on long-term debt for years ending after December 31, 2010 are as follows:


2011	$	703,050
2012		15,842,672
2013		194,116
2014		206,233
2015		219,105
Thereafter		9,741,146


Total Long-Term Debt	$	26,906,322

OMAHA DOWNTOWN LODGING
INVESTORS II, LLC AND SCOTTSDALE
LODGING INVESTORS, LLC

NOTES TO COMBINED FINANCIAL STATEMENTS
Year Ended December 31, 2010

NOTE 6 - Related Party

North Central Management, Inc, an affiliate of the Companies, provides management services to the Companies for a fee of 4% of gross revenues, as defined in the management agreement. Total fees paid by the Companies to the affiliate were $395,628 during 2010. There were no accrued management fees as of December 31, 2010.

NOTE 7 - Subsequent Event

The Companies have evaluated subsequent events through September 15, 2011, the date that the financial statements were available to be issued for events requiring recording or disclosure in the Companies’ combined financial statements.

The Omaha property was sold on September 1, 2011 to an unrelated party in an arms length transaction. The selling price was greater than the net book value of the property. The proceeds were used to retire the mortgage and satisfy other liabilities with the remaining assets distributed to the members according to the operating agreement.

During 2011, the Scottsdale property entered into a contract to sell the property to an unrelated party in an arms length transaction. The sale has not been completed as of the issuance of these combined financial statements. The contract price is greater than the net book value of the property. According to the contract, the existing mortgage will be assumed by the buyer. The proceeds will be used to satisfy other liabilities with the remaining assets distributed to the members according to the operating agreement.

OMAHA DOWNTOWN LODGING
INVESTORS II, LLC AND SCOTTSDALE
LODGING INVESTORS, LLC

COMBINED BALANCE SHEETS (UNAUDITED)
June 30, 2011 and June 30, 2010


	June 30, 2011			June 30, 2010

ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	1,180,396		$	467,833
Cash reserves		2,319,980			1,822,520
Accounts receivable		395,191			389,623
Inventories		69,997			81,916
Prepaid expenses		6,723			21,670
Other current assets		3,615			3,615
Current portion of notes receivable		250,000			214,217

Total Current Assets		4,225,902			3,001,394


PROPERTY AND EQUIPMENT, NET		17,668,700			18,680,322

OTHER ASSETS
Notes receivable		456,377			706,377
Deferred costs, net		84,382			114,659
Intangible assets, net		18,867			20,309

Total Other Assets		559,626			841,345


TOTAL ASSETS	$	22,454,228		$	22,523,061


LIABILITIES AND MEMBERS’ DEFICIT
CURRENT LIABILITIES
Current maturities of long term debt	$	738,202		$	684,712
Accounts payable		318,009			295,184
Accrued expenses		447,541			402,490
Accrued property taxes		392,660			391,521
Deferred revenues		706,377			920,594

Total Current Liabilities		2,602,789			2,694,501

LONG-TERM LIABILITIES
Long-term debt		25,817,961			26,560,890


Total Liabilities		28,420,750			29,255,391


MEMBERS’ DEFICIT		(5,966,522	)		(6,732,330	)


TOTAL LIABILITIES AND MEMBERS’ DEFICIT	$	22,454,228		$	22,523,061

OMAHA DOWNTOWN LODGING
INVESTORS II, LLC AND SCOTTSDALE
LODGING INVESTORS, LLC

COMBINED STATEMENTS OF OPERATIONS AND MEMBERS’ DEFICIT (UNAUDITED)

Periods From January 1, 2011 to June 30, 2011 and January 1, 2010 to June 30, 2010


	June 30, 2011			June 30, 2010

REVENUES
Rooms	$	5,204,981		$	4,889,344
Food and beverage		941,712			853,336
Other		480,684			420,686

Total Revenues		6,627,377			6,163,366


COSTS AND EXPENSES
Rooms		547,294			484,476
Food and beverage		670,749			634,075
Advertising and marketing		464,722			388,316
General and administrative		1,348,655			1,253,102
Utilities		234,694			221,702
Repairs and maintenance		184,173			184,081
Franchise and management fees		532,079			490,707
Taxes, insurance and other		295,671			293,051
Depreciation and amortization		525,353			661,325

Total Costs and Expenses		4,803,390			4,610,835


OPERATING INCOME		1,823,987			1,552,531


OTHER INCOME (EXPENSES)
Interest expense		(751,461	)		(769,998	)
Interest income		26,415			30,800
TIF revenue		125,374			117,055
Loss on fixed asset disposal		—			(6,198	)

Total Other Income (Expenses)		(599,672	)		(628,341	)


NET INCOME		1,224,315			924,190

Preferred return to Class A member		(6,862	)		(8,863	)


NET INCOME ATTRIBUTABLE TO MEMBERS		1,217,453			915,327

MEMBERS’ DEFICIT - Beginning of Year		(7,145,656	)		(7,111,339	)

Distributions		(38,319	)		(536,318	)


MEMBERS’ DEFICIT - END OF YEAR	$	(5,966,522	)	$	(6,732,330	)

OMAHA DOWNTOWN LODGING
INVESTORS II, LLC AND SCOTTSDALE
LODGING INVESTORS, LLC

COMBINED STATEMENTS OF CASH FLOWS (UNAUDITED)

Periods From January 1, 2011 to June 30, 2011 and January 1, 2010 to June 30, 2010


	June 30, 2011			June 30, 2010

CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	1,224,315		$	924,190
Adjustments to reconcile net income to net cash flows from operating activities:
Loss on fixed asset disposal		—			6,198
Depreciation and amortization		525,353			661,325
Changes in assets and liabilities:
Accounts receivable		(156,879	)		(85,110	)
Inventories		8,776			183
Prepaid expenses		30,595			31,078
Accounts payable		118,673			81,684
Accrued expenses		106,631			46,340
Accrued property taxes		(15,344	)		(2,359	)
Deferred revenues		(125,374	)		(117,055	)

Net Cash Flows from Operating Activities		1,716,746			1,546,474


CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures		(11,799	)		(29,419	)
Principal received for note receivable		125,374			117,055
Net increase in cash reserves		(439,709	)		(494,337	)

Net Cash Flows from Investing Activities		(326,134	)		(406,701	)


CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long-term debt		(350,159	)		(327,095	)
Preferred return payment to Class A member		(6,862	)		(8,863	)
Distributions to members		(38,319	)		(536,318	)

Net Cash Flows from Financing Activities		(395,340	)		(872,276	)


Net Change in Cash and Cash Equivalents		995,272			267,497

CASH AND CASH EQUIVALENTS - Beginning of Year		185,124			200,336


CASH AND CASH EQUIVALENTS - END OF YEAR	$	1,180,396		$	467,833


SUPPLEMENTAL CASH FLOW DISCLOSURES
Cash paid for interest	$	758,977		$	778,770

Apple REIT Ten, Inc.

Pro Forma Condensed Consolidated Balance Sheet as of June 30, 2011 (unaudited)

(in thousands, except share data)

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


Franchise	Location	Gross Purchase Price (millions)		Actual Acquisition Date


CN Hotel Portfolio (1 Hotel):
Home2 Suites	Jacksonville, NC	$	12.0	Pending

Hawkeye Hotel Portfolio (1 Hotel):
Hampton Inn & Suites	Davenport, IA		13.0	July 19, 2011

McKibbon Hotel Portfolio (3 Hotels):
Homewood Suites	Knoxville, TN		15.0	July 19, 2011
TownePlace Suites	Knoxville, TN		9.0	August 9, 2011
Homewood Suites	Gainesville, FL		14.6	Pending

Omaha and Scottsdale Hotel Portfolio (2 Hotels):
Hilton Garden Inn	Omaha, NE		30.0	September 1, 2011
Hilton Garden Inn	Scottsdale, AZ		16.3	October 3, 2011

Chicago Hotel Portfolio (2 Hotels):
Hilton Garden Inn	Des Plaines, IL		38.0	September 20, 2011
Hampton Inn & Suites	Skokie, IL		32.0	Pending

Hilton Garden Inn	Mason, OH		14.8	September 1, 2011
Hilton Garden Inn	Merrillville, IN		14.8	September 30, 2011
Homewood Suites	Austin/Round Rock, TX		15.5	October 3, 2011
Fairfield Inn & Suites	South Bend, IN		17.5	November 1, 2011


	Total	$	242.5

This Pro Forma Condensed Consolidated Balance Sheet also assumes all of the hotels had been leased to our wholly-owned taxable REIT subsidiaries pursuant to master hotel lease arrangements. The hotels acquired will be managed by affiliates of LBAM Investor Group, L.L.C., MHH Management, LLC, Raymond Management Company, Inc., Schulte Hospitality Group, Inc., Vista Host, Inc. and White Lodging Services Corporation under separate management agreements.

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

The following unaudited Pro Forma Condensed Consolidated Balance Sheet of Apple REIT Ten, Inc. is not necessarily indicative of what the actual financial position would have been assuming such transactions had been completed as of June 30, 2011 nor does it purport to represent the future financial position of Apple REIT Ten, Inc.

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

Balance Sheet as of June 30, 2011 (unaudited)
(In thousands, except share data)


	Company Historical Balance Sheet			Pro forma Adjustments				Total Pro forma


ASSETS
Investment in hotel properties, net	$	186,522		$	241,998		(A)	$	428,520
Cash and cash equivalents		142,838			(141,838	)	(D)		1,000
Other assets		6,025			6,691		(C)		12,716

Total Assets	$	335,385		$	106,851			$	442,236


LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Notes payable	$	—			83,121		(C)	$	83,121
Accounts payable and accrued expenses		1,584			2,013		(C)		3,597

Total Liabilities		1,584			85,134				86,718


Preferred stock, authorized 30,000,000 shares		—			—				—
Series A preferred stock, no par value, authorized 400,000,000 shares		—			—				—
Series B convertible preferred stock, no par value, authorized 480,000 shares		48			—				48
Common stock, no par value, authorized 400,000,000 shares		344,961			27,560		(E)		372,521
Accumulated deficit		(3,600	)		(5,843	)	(B)		(9,443	)
Cumulative distributions paid		(7,608	)		—				(7,608	)

Total Shareholders’ Equity		333,801			21,717				355,518

Total Liabilities and Shareholders’ Equity	$	335,385		$	106,851			$	442,236


	Notes to Pro Forma Condensed Consolidated Balance Sheet (unaudited)

(A)	The estimated total purchase price for the 13 properties that have been, or will be purchased after June 30, 2011 consists of the following. This purchase price allocation is preliminary and subject to change.


(In thousands)	Jacksonville, NC Home2 Suites			Davenport, IA Hampton Inn & Suites			Knoxville, TN Homewood Suites			Knoxville, TN TownePlace Suites			Gainesville, FL Homewood Suites			Omaha, NE Hilton Garden Inn			Scottsdale, AZ Hilton Garden Inn


Purchase price per contract	$	12,000		$	13,000		$	15,000		$	9,000		$	14,550		$	30,018		$	16,300
Other capitalized costs (credits) incurred		25			71			1,017			(219	)		65			93			80

Investment in hotel properties		12,025			13,071			16,017			8,781			14,615			30,111			16,380

Acquisition fee payable to Apple Suites Realty Group (2% of purchase price per contract)		240			260			300			180			291			600			326
Other acquisition related costs		30			50			60			54			36			344			41
Net other assets/(liabilities) assumed		(24	)		(199	)		(11,182	)		(6,790	)		(13,113	)		(199	)		(8,900	)

Total purchase price	$	12,271		$	13,182		$	5,195		$	2,225		$	1,829		$	30,856		$	7,847


(In thousands)	Des Plaines, IL Hilton Garden Inn			Skokie, IL Hampton Inn & Suites			Mason, OH Hilton Garden Inn			Merrillville, IN Hilton Garden Inn			Austin/Round Rock, TX Homewood Suites			South Bend Indiana Fairfield Inn & Suites			Total Combined


Purchase price per contract	$	38,000		$	32,000		$	14,825		$	14,825		$	15,500		$	17,500		$	242,518
Other capitalized costs (credits) incurred		(2,043	)		121			80			80			60			50			(520	)

Investment in hotel properties		35,957			32,121			14,905			14,905			15,560			17,550			241,998		(A)

Acquisition fee payable to Apple Suites Realty Group (2% of purchase price per contract)		760			640			297			297			310			350			4,851		(B)
Other acquisition related costs		106			80			69			39			39			44			992		(B)
Net other assets/(liabilities) assumed		(18,169	)		(19,143	)		(79	)		(168	)		(99	)		(378	)		(78,443	)	(C)

Total purchase price	$	18,654		$	13,698		$	15,192		$	15,073		$	15,810		$	17,566		$	169,398


Less: Cash on hand at June 30, 2011																				(142,838	)
Plus: Working capital requirements																				1,000

																				(141,838	)	(D)

Equity proceeds needed for acquisitions and working capital																				27,560		(E)


(B)	Represents costs incurred to complete the acquisition, including, title, legal, accounting and other related costs, as well as the commission paid to Apple Suites Realty Group totaling 2% of purchase price per contract.

(C)	Represents other assets and liabilities assumed in the acquisition of the hotel including, mortgage payable, debt service escrows, operational charges and credits and accrued property taxes.

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

(E)	Represents the issuance of additional shares required to fund acquisitions.

Apple REIT Ten, Inc.
Pro Forma Condensed Consolidated Statements of Operations (unaudited)
For the year ended December 31, 2010 and six months ended June 30, 2011
(in thousands, except per share data)

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


Franchise	Location	Gross Purchase Price (millions)		Actual Acquisition Date


Hilton Garden Inn	Denver, CO	$	58.5	March 4, 2011

CN Hotel Portfolio (4 Hotels):
Hampton Inn & Suites	Winston-Salem, NC		11.0	March 15, 2011
Fairfield Inn & Suites	Matthews, NC		10.0	March 25, 2011
TownePlace Suites	Columbia, SC		10.5	March 25, 2011
Home2 Suites	Jacksonville, NC		12.0	Pending

McKibbon Hotel Portfolio (8 Hotels):
SpringHill Suites	Knoxville, TN		14.5	June 2, 2011
Hilton Garden Inn	Gainesville, FL		12.5	June 2, 2011
SpringHill Suites	Richmond, VA		11.0	June 2, 2011
TownePlace Suites	Pensacola, FL		11.5	June 2, 2011
Hampton Inn & Suites	Mobile, AL		13.0	June 2, 2011
Homewood Suites	Knoxville, TN		15.0	July 19, 2011
TownePlace Suites	Knoxville, TN		9.0	August 9, 2011
Homewood Suites	Gainesville, FL		14.6	Pending

Hawkeye Hotel Portfolio (3 Hotels):
Homewood Suites	Cedar Rapids, IA		13.0	June 8, 2011
Hampton Inn & Suites	Cedar Rapids, IA		13.0	June 8, 2011
Hampton Inn & Suites	Davenport, IA		13.0	July 19, 2011

Omaha and Scottsdale Hotel Portfolio (2 Hotels):
Hilton Garden Inn	Omaha, NE		30.0	September 1, 2011
Hilton Garden Inn	Scottsdale, AZ		16.3	October 3, 2011

Chicago Hotel Portfolio (2 Hotels):
Hilton Garden Inn	Des Plaines, IL		38.0	September 20, 2011
Hampton Inn & Suites	Skokie, IL		32.0	Pending

Hilton Garden Inn	Mason, OH		14.8	September 1, 2011
Hilton Garden Inn	Merrillville, IN		14.8	September 30, 2011
Homewood Suites	Austin/Round Rock, TX		15.5	October 3, 2011
Fairfield Inn & Suites	South Bend, IN		17.5	November 1, 2011


	Total	$	421.0

These Pro Forma Condensed Consolidated Statements of Operations also assume all of the hotels had been leased to our wholly-owned taxable REIT subsidiaries pursuant to master hotel lease arrangements. The hotels acquired will be managed by affiliates of LBAM Investor Group, L.L.C., MHH Management, LLC, Newport Hospitality Group, Inc., Raymond Management Company, Inc., Schulte Hospitality Group, Inc., Stonebridge Realty Advisors, Inc., Vista Host, Inc. and White Lodging Services Corporation under separate management agreements.

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

The following unaudited Pro Forma Condensed Consolidated Statements of Operations of Apple REIT Ten, Inc. are not necessarily indicative of what the actual financial results would have been assuming such transactions had been completed on the latter of January 1, 2010, or the date the hotel began operations nor do they purport to represent the future financial results of Apple REIT Ten, Inc.

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

Pro Forma Condensed Consolidated Statement of Operations (unaudited)

For the year ended December 31, 2010

(In thousands, except per share data)


	Company Historical Statement of Operations			Denver, CO Hilton Garden Inn (A)		CN Hotel Portfolio (A)		McKibbon Hotel Portfolio (A)		Hawkeye Hotel Portfolio (A)		Omaha Downtown Lodging Investors II, LLC and Scottsdale Lodging Investors, LLC (A)		Chicago Hotel Portfolio (A)

Revenue:
Room revenue	$	—		$	8,978	$	3,339	$	21,903	$	6,644	$	8,905	$	14,490
Other revenue		—			2,372		59		510		67		2,333		2,399

Total revenue		—			11,350		3,398		22,413		6,711		11,238		16,889


Expenses
Operating expenses		—			3,798		1,097		7,925		1,946		3,792		7,161
General and administrative		28			1,635		34		2,369		387		2,367		2,947
Management and franchise fees		—			1,003		494		1,935		950		899		1,229
Taxes, insurance and other		—			374		234		1,336		451		587		1,699
Acquisition related costs		—			—		—		—		—		—		—
Depreciation of real estate owned		—			1,325		463		4,083		720		1,193		2,300

Interest, net		3			753		324		3,227		1,365		1,244		2,839

Total expenses		31			8,888		2,646		20,875		5,819		10,082		18,175

Income tax expense		—			—		—		—		—		—		—


Net income (loss)	$	(31	)	$	2,462	$	752	$	1,538	$	892	$	1,156	$	(1,286	)


Basic and diluted earnings per common share	$	(3,083.50	)


Weighted average common shares outstanding - basic and diluted		—

Pro Forma Condensed Consolidated Statement of Operations (unaudited)

For the year ended December 31, 2010

(In thousands, except per share data)


	SASI, LLC Mason, OH Hilton Garden Inn (A)		Ascent Hospitality, Inc. Merrillville, IN Hilton Garden Inn (A)		VHRMR Round Rock , LTD Austin/Round Rock, TX Homewood Suites (A)			KRG/White LS Hotel, LLC & Kite Realty/White LS Hotel Operators, LLC South Bend, IN Fairfield Inn & Suites (A)			Pro forma Adjustments				Total Pro forma

Revenue:
Room revenue	$	2,190	$	3,203	$	459		$	1,568		$	—			$	71,679
Other revenue		304		343		10			19			—				8,416

Total revenue		2,494		3,546		469			1,587			—				80,095


Expenses
Operating expenses		846		1,236		297			526			—				28,624
General and administrative		363		631		64			195			1,000		(B)		12,020
Management and franchise fees		189		261		32			56			—				7,048
Taxes, insurance and other		154		290		244			352			(434	)	(I)		5,287
Acquisition related costs		—		—		—			—			9,821		(H)		9,821
Depreciation of real estate owned		570		679		171			624			(12,128	)	(C)		10,737
												10,737		(D)
Interest, net		349		344		94			214			(5,835	)	(E)		4,921

Total expenses		2,471		3,441		902			1,967			3,161				78,458

Income tax expense		—		—		—			—			—		(G)		—


Net income (loss)	$	23	$	105	$	(433	)	$	(380	)	$	(3,161	)		$	1,637


Basic and diluted earnings per common share															$	0.05


Weighted average common shares outstanding - basic and diluted												31,423		(F)		31,423

Pro Forma Condensed Consolidated Statement of Operations (unaudited)
For the six months ended June 30, 2011
(In thousands, except per share data)


	Company Historical Statement of Operations			Denver, CO Hilton Garden Inn (A)		CN Hotel Portfolio (A)		McKibbon Hotel Portfolio (A)		Hawkeye Hotel Portfolio (A)			Omaha Downtown Lodging Investors II, LLC and Scottsdale Lodging Investors, LLC (A)		Chicago Hotel Portfolio (A)


Revenue:
Room revenue	$	6,711		$	1,273	$	1,061	$	10,135	$	3,170		$	5,205	$	7,113
Other revenue		813			381		19		220		42			1,422		1,418

Total revenue		7,524			1,654		1,080		10,355		3,212			6,627		8,531


Expenses
Operating expenses		3,279			736		334		3,678		1,136			2,101		3,339
General and administrative		1,374			142		68		1,140		227			1,349		1,493
Management and franchise fees		576			224		96		915		426			532		610
Taxes, insurance and other		465			66		84		605		349			296		803
Acquisition related costs		4,548			—		—		—		—			—		—
Depreciation of real estate owned		1,098			225		135		1,277		457			525		741

Interest, net		(247	)		128		137		1,732		638			600		1,226

Total expenses		11,093			1,521		854		9,347		3,233			5,403		8,212

Income tax expense		—			—		—		—		—			—		—


Net income (loss)	$	(3,569	)	$	133	$	226	$	1,008	$	(21	)	$	1,224	$	319


Basic and diluted earnings per common share	$	(0.18	)


Weighted average common shares outstanding - basic and diluted		19,547

Pro Forma Condensed Consolidated Statement of Operations (unaudited)
For the six months ended June 30, 2011
(In thousands, except per share data)


	SASI, LLC Mason, OH Hilton Garden Inn (A)		Ascent Hospitality, Inc. Merrillville, IN Hilton Garden Inn (A)		VHRMR Round Rock, LTD Austin/Round Rock, TX Homewood Suites (A)		KRG/White LS Hotel, LLC & Kite Realty/White LS Hotel Operators, LLC South Bend, IN Fairfield Inn & Suites (A)			Pro forma Adjustments			Total Pro forma


Revenue:
Room revenue	$	1,371	$	1,635	$	1,902	$	1,381		$	—		$	40,957
Other revenue		238		180		36		21			—			4,790

Total revenue		1,609		1,815		1,938		1,402			—			45,747


Expenses
Operating expenses		419		521		682		496			—			16,721
General and administrative		304		401		136		148			250	(B)		7,032
Management and franchise fees		122		160		173		49			—			3,883
Taxes, insurance and other		71		110		80		198			—			3,127
Acquisition related costs		—		—		—		—			(4,259	) (H)		289
Depreciation of real estate owned		311		340		338		458			(4,807	) (C)		5,997
											4,899	(D)
Interest, net		222		203		159		240			(2,597	) (E)		2,441

Total expenses		1,449		1,735		1,568		1,589			(6,514	)		39,490

Income tax expense		—		—		—		—			—	(G)		—


Net income (loss)	$	160	$	80	$	370	$	(187	)	$	6,514		$	6,257


Basic and diluted earnings per common share													$	0.18


Weighted average common shares outstanding - basic and diluted											16,154	(F)		35,701

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

(A) Represents results of operations for the hotels on a pro forma basis as if the hotels were owned by the Company at January 1, 2010 for the respective period prior to acquisition by the Company. The Company was initially formed on August 13, 2010, and had no operations prior to that date. Additionally, six properties began operations subsequent to January 1, 2010, and one property remained under construction as of June 30, 2011. Therefore, these hotels had limited historical operational activity prior to their opening. The properties and their applicable status are as follows: Mason, OH Hilton Garden Inn, opened February 2010, Winston-Salem, NC Hampton Inn & Suites, opened April 2010, South Bend, IN Fairfield Inn & Suites, opened June 2010, Cedar Rapids, IA Homewood Suites, opened August 2010, Austin/Round Rock, TX Homewood Suites, opened September 2010, Matthews, NC Fairfield Inn & Suites, opened November 2010 and Jacksonville, NC Home2 Suites is under construction.

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

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

(E) Interest expense related to prior owner’s debt which was not assumed has been eliminated.

(F) Represents the weighted average number of shares required to be issued to generate the purchase price of each hotel, net of any debt assumed. The calculation assumes all properties were acquired on the latter of January 1, 2010, or the dates the hotels began operations.

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

(H) Represents costs incurred to complete acquisitions, including, title, legal, accounting and other related costs, as well as the commission paid to Apple Suites Realty Group totaling 2% of purchase price per contract. These costs have been adjusted for hotel acquisitions on the latter of January 1, 2010 or the dates the hotels began operations.

(I) Represents preopening expenses which are the Seller’s responsibility and therefore have been eliminated.

SIGNATURES

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


	Apple REIT Ten, Inc.

	By:	/s/ Glade M. Knight

		Glade M. Knight,
		Chief Executive Officer

		November 9, 2011

Apple REIT Ten, Inc. - FORM 8-K/A - November 9, 2011

Apple REIT Ten, Inc. Reports