Page 13 - Apple REIT 9 2008 Annual Report

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PART I
This Annual 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. Such statements involve known and unknown
risks, uncertainties, and other factors which may cause the actual results, performance, or achievements of Apple REIT Nine, Inc.
(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, including the current economic
recession throughout the United States, and competition within the 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 this Annual 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 and Item 1A.
Item 1. Business
The Company is a Virginia corporation that was formed to invest in hotels, residential apartment communities and other income-
producing real estate in selected metropolitan areas in the United States. Initial capitalization occurred on November 9, 2007, when
10 Units, each Unit consisting of one common share and one Series A preferred share, were purchased by Apple Nine Advisors, Inc.
(“A9A”) and 480,000 Series B convertible preferred shares were purchased by Glade M. Knight, the Company’s Chairman and Chief
Executive Officer. The Company’s first investor closing under its ongoing best-efforts offering occurred on May 14, 2008 and the
Company began operations on July 31, 2008 when it purchased its first hotel. The Company’s fiscal year end is December 31.
The Company intends to qualify as a real estate investment trust (“REIT”) for federal income tax purposes. The REIT
Modernization Act, effective January 1, 2001, permits real estate investment trusts to establish taxable businesses to conduct certain
previously disallowed business activities. The Company has wholly-owned taxable REIT subsidiaries (collectively, the “Lessee”),
which lease all of the Company’s hotels from wholly-owned qualified REIT subsidiaries. The hotels are operated and managed by
affiliates of Dimension Development Two, LLC (“Dimension”), McKibbon Hotel Group, Inc. (“McKibbon”), Gateway Hospitality
Group, Inc. (“Gateway”), LBAM-Investor Group, L.L.C. (“LBA”), Texas Western Management Partners, L.P. (“Western”) and Vista
Host, Inc. (“Vista”) under separate hotel management agreements.
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 inter-company transactions and balances have been
eliminated upon consolidation. Refer to Part II, Item 8 of this report, for the consolidated financial statements.
Website Access
The Company does not have an Internet website. The Company will make available free of charge, upon request, paper copies of
its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed
or furnished pursuant to section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended.
Business Objectives
The Company’s primary objective is to enhance shareholder value by increasing funds from operations and cash available for
distributions through acquisitions and internal growth. The acquisition strategy includes purchasing income producing real estate in
underdeveloped markets with strong brand recognition, high levels of customer satisfaction and the potential for cash flow growth.
The internal growth strategy includes utilizing the Company’s asset management expertise to improve the quality of the Company’s
properties by, where cost effective, renovating existing properties, aggressively managing rates and partnering with industry leaders
in property management, thereby improving revenue and operating performance of each property in their individual market. Although
there are many factors that influence profitability, including national and local economic conditions, the Company believes its planned
acquisitions and strong asset management will improve financial results, although there can be no assurance of these results.