Page 18 - Apple REIT 9 2008 Annual Report

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ASRG and A9A are 100% 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 Six, Inc., Apple REIT Seven, Inc. and Apple REIT Eight,
Inc., other REITS. Members of the Company’s Board of Directors are also on the Board of Directors of Apple REIT Six, Inc., Apple
REIT Seven, Inc. and Apple REIT Eight, Inc.
During the fourth quarter of 2008, the Company entered into a series of assignment of contracts with Apple REIT Eight,
Inc. (“AR8”) to become the purchaser under three purchase contracts. The purchase contracts are for four hotels which are under
construction: a Fairfield Inn & Suites and SpringHill Suites, both 200 room hotels located in Orlando, Florida, with a combined
purchase price of $54.8 million, a 119 room SpringHill Suites hotel in Baton Rouge, Louisiana with a purchase price of $15.1
million and a 124 room Hampton Inn & Suites hotel in Rochester, Minnesota with a purchase price of $14.1 million. Under the
terms and conditions of the contracts, AR8 assigned to the Company all of its rights and obligations under these purchase contracts.
No consideration or fees was paid to AR8 for the assignment of the purchase contracts except for the reimbursement payment of the
following: (i) initial deposits totaling $1.2 million made by AR8; and (ii) other costs totaling approximately $64,000 paid by AR8 to
third parties. These reimbursement payments did not constitute or result in a profit for AR8.
Item 1A. Risk Factors
The following describes several risk factors which are applicable to the Company.
Hotel Operations
The Company’s hotels are subject to all of the risks common to the hotel industry. These risks could adversely affect hotel
occupancy and the rates that can be charged for hotel rooms as well as hotel operating expenses, and generally include:
• increases in supply of hotel rooms that exceed increases in demand;
• increases in energy costs and other travel expenses that reduce business and leisure travel;
• reduced business and leisure travel due to continued geo-political uncertainty, including terrorism;
• adverse effects of declines in general and local economic activity; and
• adverse effects of a downturn in the hotel industry.
General Economic Conditions
Changes in general or local economic or market conditions, increased costs of energy, increased costs of insurance, increased
costs of products, increased costs and shortages of labor, competitive factors, fuel shortages, quality of management, the ability of a
hotel chain to fulfill any obligations to operators of its hotel business, limited alternative uses for the building, changing consumer
habits, condemnation or uninsured losses, changing demographics, changing traffic patterns, inability to remodel outmoded buildings
as required by the franchise or lease agreement and other factors beyond the Company’s control may reduce the value of properties
that the Company owns. As a result, cash available to make distributions to shareholders may be affected.