Page 35 - Apple REIT 9 2008 Annual Report

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In December 2007, the FASB issued Statement No. 160, Noncontrolling Interests in Consolidated Financial Statements-an
amendment of Accounting Research Bulletin No. 51 (“SFAS 160”). SFAS 160 requires that ownership interests in subsidiaries held
by parties other than the parent be clearly identified, labeled, and presented in the consolidated statement of financial position within
equity, but separate from the parent’s equity. The Statement also requires that the amount of consolidated net income attributable to the
parent and to the noncontrolling interest be clearly identified and presented on the face of the consolidated statement of income. SFAS
160 will be adopted by the Company in the first quarter of 2009. The adoption of the statement is not anticipated to have a material
impact on the Company’s results of operations or financial position.
In March 2008, FASB issued Statement No. 161, Disclosures about Derivative Instruments and Hedging Activities, an
Amendment of FASB Statement No. 133 (“SFAS 161”). SFAS 161 is intended to improve transparency in financial reporting by
requiring enhanced disclosures of an entity’s derivative instruments and hedging activities and their effects on the entity’s financial
position, financial performance, and cash flows. SFAS 161 applies to all derivative instruments within the scope of SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities (“SFAS 133”). It also applies to non-derivative hedging instruments
and all hedged items designated and qualifying as hedges under SFAS 133. SFAS 161 is effective prospectively for financial
statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The
Company does not currently have any instruments that qualify within the scope of SFAS 133, and therefore the adoption of this
statement is not anticipated to have a material impact on the Company’s financial statements.
Item 7A. Quantitative and Qualitative Disclosure About Market Risk
The Company does not engage in transactions in derivative financial instruments or derivative commodity instruments. As of
December 31, 2008, the Company’s financial instruments were not exposed to significant market risk due to interest rate risk, foreign
currency exchange risk, commodity price risk or equity price risk. The Company will be exposed to changes in short term money
market rates as it invests the proceeds from sale of Units pending use in acquisitions and renovations. Based on the Company’s cash
invested at December 31, 2008, of $75 million, every 100 basis points change in interest rates will impact the Company’s annual net
income by approximately $750,000, all other factors remaining the same.
The Company has assumed fixed interest rate notes payable to lenders under permanent financing arrangements. The following
table summarizes the annual maturities and average interest rates of the Company’s fixed rate notes payable outstanding at December
31, 2008. All dollar amounts are in thousands.
Fair Market
2009 2010 2011 2012 2013 Thereafter Total Value
Maturities $ 474 $ 503 $ 534 $ 2,311 $ 601 $ 33,780 $ 38,203 $ 40,367
Average interest rates 5.3% 5.3% 5.3% 5.4% 5.6% 5.6%