SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 8-K

                                 CURRENT REPORT

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

Date of Report (Date of Earliest Event Reported):  May 8, 2000



                               APPLE SUITES, INC.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)


   VIRGINIA                        000-30491                 54-1933472
  (State of                       (Commission                (IRS Employer
incorporation)                    File Number)               Identification No.)


      306 EAST MAIN STREET
      RICHMOND, VIRGINIA                                     23219
      (Address of principal                                  (Zip Code)
      executive offices)



               Registrant's telephone number, including area code:
                                 (804) 643-1761


<PAGE>




                               APPLE SUITES, INC.

                                    FORM 8-K

                                      Index

<TABLE>
<CAPTION>
                                                                                    Page No.
                                                                                    --------
<S>           <C>                                                                   <C>
Item 2.        Acquisition or Disposition of Assets                                   6

Item 7.        Financial Statements and Exhibits

         a.    Financial Statements

               Malvern, Pennsylvania Homewood Suites(R) by Hilton hotel

1.       Property Financial Statements                                               13

               Independent Auditors Report*

               Balance Sheets - December 31, 1999 and December 31, 1998*

               Statements  of  Shareholders'  Equity - Years ended  December 31,
               1998 and December 31, 1999*

               Income Statements - Years ended December 31, 1999 and
               December 31, 1998*

               Statements  of Cash Flows - Years  ended  December  31,  1999 and
               December 31, 1998*

               Notes to the Financial Statements - December 31, 1999 and
               December 31, 1998*

                                      * * *

               Balance Sheet - March 31, 2000 (unaudited)*

               Statement  of  Shareholders'  Equity - For the Period  January 1,
               2000 through March 31, 2000 (unaudited)*

               Income  Statement - For the Period  January 1, 2000 through March
               31, 2000 (unaudited)*

</TABLE>

-------------------------
*To be filed by amendment.


                                      -2-
<PAGE>

<TABLE>
<S>           <C>                                                                   <C>
               Statement of Cash Flows - For the Period  January 1, 2000 through
               March 31, 2000 (unaudited)*

               Notes to the  Financial  Statements  - For the Period  January 1,
               2000 through March 31, 2000 (unaudited)*

   2.      Pro Forma Financial Statements*                                          14
</TABLE>

-------------------------
*To be filed by amendment.


                                      -3-
<PAGE>

b.     Exhibits

         4.1      Note dated May 8, 2000 in the principal  amount of $11,616,750
                  made  payable  by Apple  Suites,  Inc.  to the order of Promus
                  Hotels, Inc.

         4.2      Leasehold and Subleasehold Mortgage,  Assignment of Leases and
                  Rents and  Security  Agreement  dated  May 8, 2000 from  Apple
                  Suites,   Inc.,  as  Trustee  for  Apple  Suites  Pennsylvania
                  Business  Trust,  and Apple  Suites  Management,  Inc. for the
                  benefit of Promus  Hotels,  Inc.  pertaining  to the  Malvern,
                  Pennsylvania hotel.

         4.3      Fee and  Leasehold  Deed of Trust,  Assignment  of Leases  and
                  Rents and  Security  Agreement  dated  May 8, 2000 from  Apple
                  Suites, Inc. and Apple Suites Management, Inc. for the benefit
                  of Promus  Hotels,  Inc.,  constituting  a second  lien on the
                  Jackson, Mississippi hotel.

         4.4      Deed to Secure Debt Modification  Agreement dated May 8, 2000,
                  among Promus Hotels, Inc., Apple Suites, Inc. and Apple Suites
                  Management, Inc. pertaining to the Atlanta - Peachtree hotel.

         4.5      Second Deed to Secure Debt Modification Agreement dated May 8,
                  2000, among Promus Hotels,  Inc., Apple Suites, Inc. and Apple
                  Suites   Management,   Inc.   pertaining   to  the  Atlanta  -
                  Galleria/Cumberland hotel.

         4.6      Mortgage  Modification  Agreement dated May 8, 2000 from Apple
                  Suites, Inc. and Apple Suites Management, Inc. for the benefit
                  of  Promus  Hotels,  Inc.  constituting  a second  lien on the
                  Detroit - Warren hotel.

         4.7      Deed of Trust  Modification  Agreement dated May 8, 2000, from
                  Apple Suites,  Inc. and Apple Suites Management,  Inc. for the
                  benefit of Promus Hotels,  Inc.  constituting a second lien on
                  the Salt Lake City - Midvale hotel.

         4.8      Third Deed of Trust Modification  Agreement dated May 8, 2000,
                  among  Promus   Hotels,   Inc.,   Apple  Suites  REIT  Limited
                  Partnership  and Apple  Suites  Services  Limited  Partnership
                  pertaining to the North Dallas - Plano hotel.

         4.9      Third Deed of Trust Modification  Agreement dated May 8, 2000,
                  among  Promus   Hotels,   Inc.,   Apple  Suites  REIT  Limited
                  Partnership  and Apple  Suites  Services  Limited  Partnership
                  pertaining  to the Dallas - Addison  and  Dallas -  Irving/Las
                  Colinas hotels.

         10.1     Indemnity dated May 8, 2000 from Apple Suites,  Inc. to Promus
                  Hotels, Inc. pertaining to the Malvern, Pennsylvania hotel.

         10.2     Master Hotel Lease  Agreement  dated May 8, 2000 between Apple
                  Suites,   Inc.,  as  Trustee  for  Apple  Suites  Pennsylvania
                  Business Trust (as lessor) and Apple Suites  Management,  Inc.
                  (as lessee).



                                      -4-
<PAGE>

         10.3     Homewood Suites License Agreement between Promus Hotels,  Inc.
                  and Apple Suites Management,  Inc.  pertaining to the Malvern,
                  Pennsylvania hotel.

         10.4     Management  Agreement  dated May 8, 2000 between  Apple Suites
                  Management,  Inc. and Promus  Hotels,  Inc.  pertaining to the
                  Malvern, Pennsylvania hotel.

         10.5     Letter  dated May 8, 2000 among Apple  Suites,  Inc.,  Hampton
                  Inns,  Inc.,  Promus Hotels  Florida,  Inc. and Promus Hotels,
                  Inc.  pertaining  to the  repayment  of  notes  made by  Apple
                  Suites,  Inc. in  connection  with the  purchase of all of its
                  Homewood Suites(R)by Hilton hotels.

         10.6     Letter dated May 8, 2000 between Apple Suites, Inc. and Promus
                  Hotels,  Inc.  pertaining  to the  release  of  certain  hotel
                  properties  as security  upon the repayment of certain debt by
                  Apple Suites, Inc.

         10.7     Comfort  Letter dated May 8, 2000 among Promus  Hotels,  Inc.,
                  Apple Suites,  Inc., as Trustee for Apple Suites  Pennsylvania
                  Business Trust and Apple Suites Management, Inc. pertaining to
                  the Malvern, Pennsylvania hotel.

         10.8     Negative  Pledge  Agreement  dated May 8, 2000  between  Apple
                  Suites, Inc. and Promus Hotels, Inc.

         10.9     Promissory  Note  dated May 8, 2000 in the  amount of  $55,350
                  made payable by Apple Suites Management,  Inc. to the order of
                  Apple Suites, Inc. (Hotel Franchise Fees)

         10.10    Promissory  Note  dated May 8, 2000 in the  amount of  $12,300
                  made payable by Apple Suites Management,  Inc. to the order of
                  Apple Suites, Inc. (Hotel Supplies)

         10.11    Declaration  of Trust of Apple  Suites  Pennsylvania  Business
                  Trust

         10.12    Ground Lease dated July 1, 1996 between  named  Landlords  and
                  Promus  Hotels,  Inc. as Tenant,  as amended by  Amendment  to
                  Ground Lease dated as of July 1, 1996 and Second  Amendment to
                  Ground  Lease and  Amendment  to Short Form Lease  dated as of
                  March 6, 2000

         10.13    Assignment  and  Assumption  of Lease dated May 8, 2000 by and
                  among named  Landlords,  Promus  Hotels,  Inc. as Assignor and
                  Apple Suites,  Inc., as Trustee for Apple Suites  Pennsylvania
                  Business Trust, as Assignee

         24       Consent of Independent Auditors*


                                      -5-
<PAGE>

Item 2.  Acquisition or Disposition of Assets

         On May 8,  2000,  Apple  Suites,  Inc.  ("we")  purchased  a  long-term
leasehold  interest  in  the  Malvern   (Philadelphia),   Pennsylvania  Homewood
Suites(R) by Hilton hotel.  This  leasehold  interest was  purchased  through an
assignment  and  assumption of lease,  dated as of May 8, 2000 with respect to a
ground  lease,  dated  as  of  July  1,  1996.  The  total  purchase  price  was
$15,489,000.  We used the net proceeds from our offering of common shares to pay
25% of this total,  or  $3,872,250,  at closing in cash.  The balance of 75%, or
$11,616,750, is being financed by the seller, Promus Hotels, Inc., as short-term
or "bridge  financing."  The  financing  and the ground  lease are  described in
further detail in other sections below.

         We made this  purchase  through one of our  subsidiaries,  Apple Suites
Pennsylvania Business Trust (a business trust organized under Pennsylvania law),
based on business and tax planning  considerations.  We are the sole trustee and
sole  beneficiary  of Apple  Suites  Pennsylvania  Business  Trust.  The Malvern
(Philadelphia),  Pennsylvania  hotel has been leased to Apple Suites Management,
Inc. under a master hotel lease agreement dated as of May 8, 2000.

         We paid a real  estate  commission  on this  purchase  to Apple  Suites
Realty Group,  Inc., as our real estate  broker.  This  corporation  is owned by
Glade M. Knight,  who is our president and chief  executive  officer.  The total
amount of the real estate commission was $309,780,  which equals 2% of the total
purchase price.

HOTEL SUPPLIES AND FRANCHISE FEES

         We have  provided  Apple  Suites  Management,  Inc.  with funds for the
purchase of certain hotel supplies (such as sheets, towels and so forth) for the
Malvern  (Philadelphia),  Pennsylvania  hotel. Apple Suites Management,  Inc. is
obligated to repay us under a promissory  note made in the  principal  amount of
$12,300.  This  promissory  note  provides for an annual  interest  rate of nine
percent (9%),  which would increase to twelve percent (12%) if a default occurs,
and  repayment in sixty-one  (61) monthly  installments.  The first  installment
consists of interest only. The due date for the first installment,  subject to a
five-day grace period,  is June 1, 2000. The remaining  installments  consist of
principal and interest on an amortized basis. The final maturity date is June 1,
2005.

         We have also provided Apple Suites Management,  Inc. with funds for the
payment of hotel franchise fees to Promus Hotels,  Inc. Apple Suites Management,
Inc. is  obligated  to repay us under a  promissory  note made in the  principal
amount of $55,350.  This  promissory  note is  substantially  similar to the one
described  above,  but provides for  repayment in one hundred  twenty-one  (121)
monthly installments and has a final maturity date of June 1, 2010.

DESCRIPTION OF FINANCING

         As  indicated  above,  Promus  Hotels,  Inc.  is  financing  75% of the
purchase price with respect to the Malvern  (Philadelphia),  Pennsylvania hotel.
This  financing is  substantially  similar to the  financing  provided by Promus
Hotels,  Inc. when we purchased  our other hotels.  The amounts we owe to Promus
Hotels, Inc. are evidenced by the following promissory notes:



                                      -6-
<PAGE>

<TABLE>
<CAPTION>
                                    Original
         Month of                  Principal           Annual Rate             Date of
      Promissory Note                Amount            of Interest            Maturity
      ---------------                ------            -----------            --------
<S>                                 <C>                    <C>             <C>
September 1999                      $26,625,000            8.5%            October 1, 2000
October 1999                        $ 7,350,000            8.5%            October 1, 2000
November 1999                       $30,210,000            8.5%            December 1, 2000
December 1999                       $ 4,384,500            8.5%            January 1, 2001
May 2000                            $11,616,750            8.5%            April 28, 2001
                                     ----------

                      TOTAL         $80,186,250
                                     ==========
</TABLE>

         We  consider  the  financing  from  Promus  Hotels,  Inc. to be "bridge
financing"  because of its  short-term  nature  (that is, each  promissory  note
reaches  maturity  within  approximately  one  year of its  date of  execution).
Despite the temporary use of bridge  financing,  over the long-term we will seek
to hold our properties on an all-cash basis, as indicated in the prospectus.

         The promissory notes have several  provisions in common,  which include
the following:

         o        monthly interest payments,  based on the actual number of days
                  per month
         o        our  delivery  of monthly  notices  to specify  the net equity
                  proceeds from our offering
         o        our right to prepay  the notes,  in whole or in part,  without
                  premium or penalty
         o        a late  payment  premium of four  percent (4%) for any payment
                  not made within ten (10) days of its due date

         Revenue  from the  operation of the hotels will be used to pay interest
under the promissory  notes we have made to Promus Hotels,  Inc. The "net equity
proceeds"  from our  offering of common  shares are intended to be the source of
our  principal  payments.  The  phrase  "net  equity  proceeds"  means the total
proceeds from our offering of common shares, as reduced by selling  commissions,
a marketing expense allowance,  closing costs,  various fees and charges (legal,
accounting,  and  so  forth),  a  working  capital  reserve  and a  reserve  for
renovations, repairs and replacements of capital improvements.

         Under a letter  agreement  dated May 8, 2000,  we are  permitted to use
such net equity  proceeds  to pay 25% of the  purchase  price for the  leasehold
interest in the Malvern  (Philadelphia),  Pennsylvania hotel.  Otherwise, to the
extent that we have such net equity proceeds, we generally are obligated to make
monthly principal payments under the promissory notes listed above.

DEEDS OF TRUST AND RELATED DOCUMENTS

         Each of our hotels, including the Malvern (Philadelphia),  Pennsylvania
hotel, is encumbered.  In general, the encumbrances consist of a mortgage on the
hotel building and its  underlying  real  property,  a security  interest in any
personal property and an assignment of hotel rents and revenues, all in favor of
Promus Hotels,  Inc. (As described above, Promus Hotels, Inc. provided financing
for our hotel purchases).



                                      -7-
<PAGE>

         These  encumbrances  are  created by  substantially  similar  documents
having a variety of names, many of which depend on state law. For simplicity, we
will refer to each of these documents as a "deed of trust." At each closing on a
purchase with respect to a hotel or group of hotels,  we further  encumbered our
other hotels with  additional  deeds of trust or with  negative  pledges.  These
additional  encumbrances  are  designed to provide  additional  security for the
earlier promissory notes.

         We are subject to various  requirements  under the deeds of trust.  For
instance,  we must  maintain  adequate  insurance  on the hotels and we must not
grant any further deeds of trust or  assignments of rents or leases with respect
to the hotels.

         Each deed of trust  contains  a  substantially  similar  definition  of
events of  default.  In each  case,  the  events  of  default  include  (without
limitation)  any default that occurs under any of the promissory  notes or under
another deed of trust,  and any sale of the secured  property  without the prior
consent of Promus Hotels,  Inc. Upon any event of default,  various remedies are
available  to Promus  Hotels,  Inc.  Those  remedies  include,  for  example (a)
declaring the entire  principal  balance  under the  promissory  notes,  and all
accrued  and unpaid  interest,  to be due and  payable  immediately;  (b) taking
possession of the secured  property,  including the hotels;  and (c)  collecting
hotel  rents and  revenues,  or  foreclosing  on the hotels,  to satisfy  unpaid
amounts under the  promissory  notes.  Each deed of trust requires us to pay any
costs that may be incurred in exercising such remedies.

         Negative  pledges  apply to the three  hotels in Florida,  Maryland and
Virginia.  The negative pledges prohibit any transfer or further  encumbrance of
the hotels,  in whole or in part,  without the prior  written  consent of Promus
Hotels,  Inc. The negative  pledges will terminate when our promissory  notes to
Promus Hotels, Inc. are paid in full.

GROUND LEASE

         The Malvern  (Philadelphia),  Pennsylvania hotel is subject to a ground
lease dated as of July 1, 1996.  We caused  Apple Suites  Pennsylvania  Business
Trust, in our capacity as its sole trustee and sole  beneficiary,  to become the
tenant under the ground  lease.  This result was achieved  through an assignment
and assumption of lease dated as of May 8, 2000.

         The ground  lease has an initial  term of 30 years.  The tenant has the
option to extend  the  ground  lease for three  additional  periods of ten years
each.

         The  ground  lease  provides  for  annual  rent,  payable in advance in
monthly  installments.  The annual rent is  $100,000  for each of the first five
years (that is, until August 1, 2000). Every five years, the annual rent will be
adjusted  in  proportion  to the  Consumer  Price  Index  for  the  metropolitan
Philadelphia area.

         The tenant has certain obligations under the ground lease. For example,
the tenant must operate the premises in accordance  with applicable law and must
maintain general public liability insurance on the premises.  For a default that
involves the tenant's  failure to provide  insurance and that  continues for ten
days after written notice to the tenant, the landlord may arrange for substitute
insurance  at the  tenant's  expense.  Furthermore,  because  a hotel  has  been


                                      -8-
<PAGE>

constructed on the premises, the permitted uses of the premises during the first
ten years under the ground lease are limited to hotel and related uses.

         Under the ground lease,  the tenant has 30 days after written notice to
cure any  payment  default  under the ground  lease,  and 60 days after  written
notice to cure any other default. If the default cannot be cured in 60 days, the
cure period will be extended if the tenant  promptly  begins to cure the default
and  diligently  continues to do so. In general,  if a default occurs and is not
cured  within the  appropriate  time period,  the  landlord's  remedies  include
terminating the ground lease.

         If the  landlord  wishes to sell the  premises and the tenant is not in
default,  the landlord  must notify the tenant in writing and grant it the first
option to purchase the  premises.  If this option is declined,  the landlord may
sell the premises  within six months,  but the terms and  conditions of the sale
cannot be  materially  more  favorable  to the buyer than  those  offered to the
tenant.

         Upon expiration or termination of the ground lease, all improvements on
the land become the property of the landlord without any payment or compensation
due to the tenant.  Thus,  unless we purchase the interests of the landlord,  we
will  not own  the  hotel  past  the  term of the  ground  lease.  However,  the
expiration or  termination of the ground lease will not affect our obligation to
repay the  $11,616,750  purchase money  promissory note issued to Promus Hotels,
Inc.

MASTER HOTEL LEASE AGREEMENT

         We, as tenant under the ground  lease,  have in turn leased the Malvern
(Philadelphia),  Pennsylvania hotel to Apple Suites Management, Inc. pursuant to
a master  hotel  lease  agreement  dated as of May 8, 2000.  This  agreement  is
substantially  similar  to  the  master  hotel  lease  agreements,  dated  as of
September 20, 1999, that apply to our other hotels.

         The agreement  provides for an initial term of ten years.  Apple Suites
Management,  Inc.  has the option to extend  the lease  term for two  additional
five-year periods, provided it is not in default at the end of the prior term or
at the time the option is exercised.  The master hotel lease agreement  provides
that Apple  Suites  Management,  Inc.  will pay an annual base rent, a quarterly
percentage  rent and a quarterly  sundry  rent.  Each type of rent is  explained
below.

         Annual base rent is payable in advance in equal  monthly  installments.
Beginning in 2001, the base rent will be adjusted each year in proportion to the
Consumer Price Index (based on the U.S. City Average).  The annual base rent for
the Malvern (Philadelphia), Pennsylvania hotel is currently $942,375.

         Percentage  rent is payable  quarterly.  Percentage  rent  depends on a
formula that compares fixed "suite revenue breakpoints" with a portion of "suite
revenue,"  which is equal to gross  revenue from suite  rentals  (less sales and
room taxes).  Beginning in 2001, the suite revenue  breakpoints will be adjusted
each year in  proportion  to the Consumer  Price Index  (based on the U.S.  City
Average).  Suite revenue  breakpoints have been determined for the first quarter
of each year during the initial  term of the master hotel lease  agreement.  The
suite revenue  breakpoints for subsequent quarters are determined by multiplying
the first  quarter  values by two,  three or four,  respectively.  The following
table shows the suite revenue  breakpoints for the first quarter for the Malvern
(Philadelphia),  Pennsylvania  hotel,  before any adjustment due to the Consumer
Price Index:


                                      -9-
<PAGE>

<TABLE>
<CAPTION>
                                    Suite Revenue Breakpoints for the First Quarter

     2001          2002         2003         2004         2005          2006         2007         2008         2009
     ----          ----         ----         ----         ----          ----         ----         ----         ----
<S>             <C>          <C>          <C>          <C>          <C>           <C>          <C>          <C>
$300,219        $309,456     $323,313     $332,550     $341,700     $351,025      $360,263     $369,500     $378,738
</TABLE>

         Specifically, the percentage rent is equal to the sum of (a) 17% of all
year-to-date suite revenue, up to the applicable suite revenue breakpoint;  plus
(b) 55% of the  year-to-date  suite  revenue in excess of the  applicable  suite
revenue breakpoint, as reduced by base rent and the percentage rent paid year to
date.

         The  sundry  rent is  payable  quarterly  and  equals 99% of all sundry
revenue,  which consists of revenue other than suite revenue, less the amount of
sundry rent paid year-to-date.

OTHER AGREEMENTS

         The Malvern (Philadelphia),  Pennsylvania hotel is subject to a license
agreement and a management  agreement with Promus  Hotels,  Inc. We have entered
into an environmental indemnity agreement with Promus Hotels, Inc., as well as a
comfort letter agreement regarding the lease with Apple Suites Management,  Inc.
and  certain  other  issues.  These  agreements  are  substantially  similar  to
agreements that exist with respect to our other hotels.

DESCRIPTION OF MALVERN, PENNSYLVANIA HOTEL

         The   Homewood   Suites(R)   by  Hilton  in   Malvern   (Philadelphia),
Pennsylvania is located on a 4.1 acre site at 12 East Swedesford Road,  Malvern,
Pennsylvania,  near  Philadelphia.  The  hotel is  approximately  22 miles  from
downtown Philadelphia and 25 miles from the Philadelphia International Airport.

         The hotel opened in 1998. It was  constructed  with a masonry frame and
has a sand stucco  exterior  finish.  The hotel consists of a single  four-story
building.  The hotel contains 123 suites, which have a combined rentable area of
63,600 square feet. The following types of suites are available:

<TABLE>
<CAPTION>
         Type of Suite                                Number Available                   Square Feet/ Suite
         -------------                                ----------------                   ------------------
<S>                                                           <C>                                <C>
         Master Suite                                         95                                 500
         Homewood Suite                                       21                                 500
         Two-Bedroom Suite                                     7                                 800
</TABLE>


         The hotel offers a 40-seat  breakfast/lounge  area, a meeting room that
accommodates  25 to 30 people,  and a business center that offers guests the use
of a personal computer, a photocopier and an electric  typewriter.  Recreational
facilities  include an outdoor pool, a whirlpool and an exercise room. The hotel
also  contains  a guest  convenience  store and  laundry.  The hotel has its own
parking lot with 136 spaces.  The hotel provides  complimentary  shuttle service
within a 5 mile radius.



                                      -10-
<PAGE>

         We believe that the hotel has been  generally  well  maintained  and is
generally  in very good  condition.  Over the next 12  months,  we plan to spend
approximately  $100,000  on  renovations  or  improvements.  We expect  that the
principal  renovations and  improvements  will include  upgrading  bathrooms and
kitchens,  providing  additional signage and replacing exterior doors. We expect
to pay for the costs of these  renovations and  improvements  with proceeds from
our ongoing offering of common shares.

         During  2000,  the average stay at the hotel has been  approximately  5
nights, and approximately 59% of the guests have stayed for five nights or more.
In general,  occupancy at the hotel is not seasonal.  The following  table shows
average daily occupancy rates,  expressed as a percentage,  since the opening of
the hotel:

                  Average Daily Occupancy Rate (calendar year)

                                                         2000
                  1998             1999              (annualized)
                  ----             ----               -----------

                  66.7%            76.4%                74.4%

         During 2000, the average daily rate per suite has been $122.01, and the
average daily net revenue per suite has been $90.79. As explained above, revenue
from  the  hotel's  operations  will be  used  to pay  interest  due  under  the
promissory note we executed in connection with our purchase of the hotel.  There
can be no assurance, however, the proceeds of the offering will be sufficient to
permit the payments of principal.  Assuming that no principal  payments are made
until the maturity of the promissory  note, and that the hotel continues to have
the level of net revenue  specified  above,  approximately  24.2% of the hotel's
revenue would be needed to cover its portion of the interest payments.

         The hotel's current daily rate structure is based on length of stay and
type of suite, as summarized below:

Length of Stay
(number of nights)            Homewood            Master           Two Bedroom
------------------            --------            ------           -----------
1   to   4                      $145               $145               $194
5   to 11                        129                129                185
12 to 29                         124                124                179
30 or more                        99                 99                159

         The hotel offers a weekend  discount.  This discount  varies by type of
suite and generally  reduces the basic rate by 38%. The weekend  discount is not
available  to guests who stay for five  nights or more.  The hotel  also  offers
discounts to guests who stay under certain corporate  accounts.  These discounts
are often  negotiated  with the  corporate  customer  and vary from  account  to
account.  We estimate that  approximately  43% of the hotel's guests during 2000
received a corporate discount.



                                      -11-
<PAGE>

         The chief  corporate  accounts (as  designated in the hotel's  records)
include: SAP, Astra Zeneca, Vanguard, Shared Medical Systems,  Centocor, Unisys,
Wyeth,  Supplyforce.com,  Decision  One,  and SCT  (Systems/Computer  Training).
During  2000,  the  10  largest   corporate   accounts  were   responsible   for
approximately 43% of the hotel's occupancy. There can be no assurance,  however,
that the hotel will continue to receive significant occupancy, or any occupancy,
from the corporate accounts identified above.

         The table below shows the average  effective  annual  rental per square
foot since the opening of the hotel:

                                                      2000
               1998               1999            (annualized)
               ----               ----            ------------
              $52.85             $59.58              $63.72

         The  depreciable  real property  component of the hotel has a currently
estimated  Federal tax basis of $14,898,789 and will be depreciated  over a life
of 39 years (or less,  as  permitted  by the  Internal  Revenue  Code) using the
straight-line  method. The basis of the personal property component of the hotel
will be depreciated in accordance  with the modified  accelerated  cost recovery
system of the Internal Revenue Code.

         The following table  summarizes the hotel's real estate tax information
for 2000:

Tax                             Assessed          Tax Rate              Amount
Jurisdiction                      Value          (per $1000)            of Tax
------------                      -----          -----------            ------

School District                $14,248,760         11.670              $166,283
County of Chester               14,248,760          3.014                42,946
East Whiteland Township         14,248,760          0.445                 6,341
                                                                       --------

                                                          TOTAL        $215,570

         We estimate that the annual  property tax on the expected  improvements
will be approximately $1,600 or less.

         At least seven  competing  hotels are located within eight miles of the
hotel.  (The  names  of  the  competing  franchises,  as  listed  below,  may be
registered as service marks or trade names.) Of these competing hotels,  two are
newer than the hotel.  The newer  competing  hotels have franchises with Hampton
Inn and Choice Hotels.  The other competing hotels have franchises with Marriott
(in 2 cases) Sheraton, Summerfield Suites and Wyndham. We believe that the rates
charged by our hotel are generally  competitive  with the rates charged by these
other  hotels.  We are aware of ongoing or proposed  construction  for two other
extended-stay  hotels  within  approximately  six miles of the hotel.  We expect
these new hotels to be franchised with Residence Inn and Springhill Suites.


                                      -12-
<PAGE>

                                  ITEM 7.a.1.*

*To be filed by amendment.  It is  impracticable  to include herein the required
financial statements for the Property. The required financial statements will be
filed as an amendment  to this report as soon as possible,  but in no event more
than 60 days after the date of filing of this report.


                                      -13-
<PAGE>

                                  ITEM 7.a.2.*

*To be filed by amendment.  It is  impracticable  to include herein the required
pro forma financial  information.  The required pro forma financial  information
will be filed as an  amendment  to this  report as soon as  possible,  but in no
event more than 60 days after the date of filing of this report.


                                      -14-
<PAGE>

                                   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 Suites, Inc.


Date: May 23, 2000                 By:      /s/ Glade M. Knight
                                            -------------------
                                            Glade M. Knight,
                                            Chief Executive Officer of
                                              Apple Suites, Inc.



                                      -15-
[{"type": "8-K", "sequence": "1", "description": "FORM 8-K", "secsgml_size_bytes": 34861}]
{"company-data": {"conformed-name": "APPLE SUITES INC", "cik": "0001084681", "assigned-sic": "6798", "irs-number": "541933472", "state-of-incorporation": "VA", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "000-30491", "film-number": "642201"}, "business-address": {"street1": "306 EAST MAIN ST", "city": "RICHMOND", "state": "VA", "zip": "23219", "phone": "8046431761"}, "mail-address": {"street1": "306 EAST MAIN ST", "city": "RICHMOND", "state": "VA", "zip": "23219"}}
SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 8-K

                                 CURRENT REPORT

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

Date of Report (Date of Earliest Event Reported):  May 8, 2000

                               APPLE SUITES, INC.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

   VIRGINIA                        000-30491                 54-1933472
  (State of                       (Commission                (IRS Employer
incorporation)                    File Number)               Identification No.)

      306 EAST MAIN STREET
      RICHMOND, VIRGINIA                                     23219
      (Address of principal                                  (Zip Code)
      executive offices)

               Registrant's telephone number, including area code:
                                 (804) 643-1761
APPLE SUITES, INC.

                                    FORM 8-K

                                      Index
Page No.
                                                                                    --------
Item 2.        Acquisition or Disposition of Assets                                   6

Item 7.        Financial Statements and Exhibits

         a.    Financial Statements

               Malvern, Pennsylvania Homewood Suites(R) by Hilton hotel

1.       Property Financial Statements                                               13

               Independent Auditors Report*

               Balance Sheets - December 31, 1999 and December 31, 1998*

               Statements  of  Shareholders'  Equity - Years ended  December 31,
               1998 and December 31, 1999*

               Income Statements - Years ended December 31, 1999 and
               December 31, 1998*

               Statements  of Cash Flows - Years  ended  December  31,  1999 and
               December 31, 1998*

               Notes to the Financial Statements - December 31, 1999 and
               December 31, 1998*

                                      * * *

               Balance Sheet - March 31, 2000 (unaudited)*

               Statement  of  Shareholders'  Equity - For the Period  January 1,
               2000 through March 31, 2000 (unaudited)*

               Income  Statement - For the Period  January 1, 2000 through March
               31, 2000 (unaudited)*
-------------------------
*To be filed by amendment.

                                      -2-
Statement of Cash Flows - For the Period  January 1, 2000 through
               March 31, 2000 (unaudited)*

               Notes to the  Financial  Statements  - For the Period  January 1,
               2000 through March 31, 2000 (unaudited)*

   2.      Pro Forma Financial Statements*                                          14
-------------------------
*To be filed by amendment.

                                      -3-
b.     Exhibits

         4.1      Note dated May 8, 2000 in the principal  amount of $11,616,750
                  made  payable  by Apple  Suites,  Inc.  to the order of Promus
                  Hotels, Inc.

         4.2      Leasehold and Subleasehold Mortgage,  Assignment of Leases and
                  Rents and  Security  Agreement  dated  May 8, 2000 from  Apple
                  Suites,   Inc.,  as  Trustee  for  Apple  Suites  Pennsylvania
                  Business  Trust,  and Apple  Suites  Management,  Inc. for the
                  benefit of Promus  Hotels,  Inc.  pertaining  to the  Malvern,
                  Pennsylvania hotel.

         4.3      Fee and  Leasehold  Deed of Trust,  Assignment  of Leases  and
                  Rents and  Security  Agreement  dated  May 8, 2000 from  Apple
                  Suites, Inc. and Apple Suites Management, Inc. for the benefit
                  of Promus  Hotels,  Inc.,  constituting  a second  lien on the
                  Jackson, Mississippi hotel.

         4.4      Deed to Secure Debt Modification  Agreement dated May 8, 2000,
                  among Promus Hotels, Inc., Apple Suites, Inc. and Apple Suites
                  Management, Inc. pertaining to the Atlanta - Peachtree hotel.

         4.5      Second Deed to Secure Debt Modification Agreement dated May 8,
                  2000, among Promus Hotels,  Inc., Apple Suites, Inc. and Apple
                  Suites   Management,   Inc.   pertaining   to  the  Atlanta  -
                  Galleria/Cumberland hotel.

         4.6      Mortgage  Modification  Agreement dated May 8, 2000 from Apple
                  Suites, Inc. and Apple Suites Management, Inc. for the benefit
                  of  Promus  Hotels,  Inc.  constituting  a second  lien on the
                  Detroit - Warren hotel.

         4.7      Deed of Trust  Modification  Agreement dated May 8, 2000, from
                  Apple Suites,  Inc. and Apple Suites Management,  Inc. for the
                  benefit of Promus Hotels,  Inc.  constituting a second lien on
                  the Salt Lake City - Midvale hotel.

         4.8      Third Deed of Trust Modification  Agreement dated May 8, 2000,
                  among  Promus   Hotels,   Inc.,   Apple  Suites  REIT  Limited
                  Partnership  and Apple  Suites  Services  Limited  Partnership
                  pertaining to the North Dallas - Plano hotel.

         4.9      Third Deed of Trust Modification  Agreement dated May 8, 2000,
                  among  Promus   Hotels,   Inc.,   Apple  Suites  REIT  Limited
                  Partnership  and Apple  Suites  Services  Limited  Partnership
                  pertaining  to the Dallas - Addison  and  Dallas -  Irving/Las
                  Colinas hotels.

         10.1     Indemnity dated May 8, 2000 from Apple Suites,  Inc. to Promus
                  Hotels, Inc. pertaining to the Malvern, Pennsylvania hotel.

         10.2     Master Hotel Lease  Agreement  dated May 8, 2000 between Apple
                  Suites,   Inc.,  as  Trustee  for  Apple  Suites  Pennsylvania
                  Business Trust (as lessor) and Apple Suites  Management,  Inc.
                  (as lessee).

                                      -4-
10.3     Homewood Suites License Agreement between Promus Hotels,  Inc.
                  and Apple Suites Management,  Inc.  pertaining to the Malvern,
                  Pennsylvania hotel.

         10.4     Management  Agreement  dated May 8, 2000 between  Apple Suites
                  Management,  Inc. and Promus  Hotels,  Inc.  pertaining to the
                  Malvern, Pennsylvania hotel.

         10.5     Letter  dated May 8, 2000 among Apple  Suites,  Inc.,  Hampton
                  Inns,  Inc.,  Promus Hotels  Florida,  Inc. and Promus Hotels,
                  Inc.  pertaining  to the  repayment  of  notes  made by  Apple
                  Suites,  Inc. in  connection  with the  purchase of all of its
                  Homewood Suites(R)by Hilton hotels.

         10.6     Letter dated May 8, 2000 between Apple Suites, Inc. and Promus
                  Hotels,  Inc.  pertaining  to the  release  of  certain  hotel
                  properties  as security  upon the repayment of certain debt by
                  Apple Suites, Inc.

         10.7     Comfort  Letter dated May 8, 2000 among Promus  Hotels,  Inc.,
                  Apple Suites,  Inc., as Trustee for Apple Suites  Pennsylvania
                  Business Trust and Apple Suites Management, Inc. pertaining to
                  the Malvern, Pennsylvania hotel.

         10.8     Negative  Pledge  Agreement  dated May 8, 2000  between  Apple
                  Suites, Inc. and Promus Hotels, Inc.

         10.9     Promissory  Note  dated May 8, 2000 in the  amount of  $55,350
                  made payable by Apple Suites Management,  Inc. to the order of
                  Apple Suites, Inc. (Hotel Franchise Fees)

         10.10    Promissory  Note  dated May 8, 2000 in the  amount of  $12,300
                  made payable by Apple Suites Management,  Inc. to the order of
                  Apple Suites, Inc. (Hotel Supplies)

         10.11    Declaration  of Trust of Apple  Suites  Pennsylvania  Business
                  Trust

         10.12    Ground Lease dated July 1, 1996 between  named  Landlords  and
                  Promus  Hotels,  Inc. as Tenant,  as amended by  Amendment  to
                  Ground Lease dated as of July 1, 1996 and Second  Amendment to
                  Ground  Lease and  Amendment  to Short Form Lease  dated as of
                  March 6, 2000

         10.13    Assignment  and  Assumption  of Lease dated May 8, 2000 by and
                  among named  Landlords,  Promus  Hotels,  Inc. as Assignor and
                  Apple Suites,  Inc., as Trustee for Apple Suites  Pennsylvania
                  Business Trust, as Assignee

         24       Consent of Independent Auditors*

                                      -5-
Item 2.  Acquisition or Disposition of Assets

         On May 8,  2000,  Apple  Suites,  Inc.  ("we")  purchased  a  long-term
leasehold  interest  in  the  Malvern   (Philadelphia),   Pennsylvania  Homewood
Suites(R) by Hilton hotel.  This  leasehold  interest was  purchased  through an
assignment  and  assumption of lease,  dated as of May 8, 2000 with respect to a
ground  lease,  dated  as  of  July  1,  1996.  The  total  purchase  price  was
$15,489,000.  We used the net proceeds from our offering of common shares to pay
25% of this total,  or  $3,872,250,  at closing in cash.  The balance of 75%, or
$11,616,750, is being financed by the seller, Promus Hotels, Inc., as short-term
or "bridge  financing."  The  financing  and the ground  lease are  described in
further detail in other sections below.

         We made this  purchase  through one of our  subsidiaries,  Apple Suites
Pennsylvania Business Trust (a business trust organized under Pennsylvania law),
based on business and tax planning  considerations.  We are the sole trustee and
sole  beneficiary  of Apple  Suites  Pennsylvania  Business  Trust.  The Malvern
(Philadelphia),  Pennsylvania  hotel has been leased to Apple Suites Management,
Inc. under a master hotel lease agreement dated as of May 8, 2000.

         We paid a real  estate  commission  on this  purchase  to Apple  Suites
Realty Group,  Inc., as our real estate  broker.  This  corporation  is owned by
Glade M. Knight,  who is our president and chief  executive  officer.  The total
amount of the real estate commission was $309,780,  which equals 2% of the total
purchase price.

HOTEL SUPPLIES AND FRANCHISE FEES

         We have  provided  Apple  Suites  Management,  Inc.  with funds for the
purchase of certain hotel supplies (such as sheets, towels and so forth) for the
Malvern  (Philadelphia),  Pennsylvania  hotel. Apple Suites Management,  Inc. is
obligated to repay us under a promissory  note made in the  principal  amount of
$12,300.  This  promissory  note  provides for an annual  interest  rate of nine
percent (9%),  which would increase to twelve percent (12%) if a default occurs,
and  repayment in sixty-one  (61) monthly  installments.  The first  installment
consists of interest only. The due date for the first installment,  subject to a
five-day grace period,  is June 1, 2000. The remaining  installments  consist of
principal and interest on an amortized basis. The final maturity date is June 1,
2005.

         We have also provided Apple Suites Management,  Inc. with funds for the
payment of hotel franchise fees to Promus Hotels,  Inc. Apple Suites Management,
Inc. is  obligated  to repay us under a  promissory  note made in the  principal
amount of $55,350.  This  promissory  note is  substantially  similar to the one
described  above,  but provides for  repayment in one hundred  twenty-one  (121)
monthly installments and has a final maturity date of June 1, 2010.

DESCRIPTION OF FINANCING

         As  indicated  above,  Promus  Hotels,  Inc.  is  financing  75% of the
purchase price with respect to the Malvern  (Philadelphia),  Pennsylvania hotel.
This  financing is  substantially  similar to the  financing  provided by Promus
Hotels,  Inc. when we purchased  our other hotels.  The amounts we owe to Promus
Hotels, Inc. are evidenced by the following promissory notes:

                                      -6-
Original
         Month of                  Principal           Annual Rate             Date of
      Promissory Note                Amount            of Interest            Maturity
      ---------------                ------            -----------            --------
September 1999                      $26,625,000            8.5%            October 1, 2000
October 1999                        $ 7,350,000            8.5%            October 1, 2000
November 1999                       $30,210,000            8.5%            December 1, 2000
December 1999                       $ 4,384,500            8.5%            January 1, 2001
May 2000                            $11,616,750            8.5%            April 28, 2001
                                     ----------

                      TOTAL         $80,186,250
                                     ==========
We  consider  the  financing  from  Promus  Hotels,  Inc. to be "bridge
financing"  because of its  short-term  nature  (that is, each  promissory  note
reaches  maturity  within  approximately  one  year of its  date of  execution).
Despite the temporary use of bridge  financing,  over the long-term we will seek
to hold our properties on an all-cash basis, as indicated in the prospectus.

         The promissory notes have several  provisions in common,  which include
the following:

         o        monthly interest payments,  based on the actual number of days
                  per month
         o        our  delivery  of monthly  notices  to specify  the net equity
                  proceeds from our offering
         o        our right to prepay  the notes,  in whole or in part,  without
                  premium or penalty
         o        a late  payment  premium of four  percent (4%) for any payment
                  not made within ten (10) days of its due date

         Revenue  from the  operation of the hotels will be used to pay interest
under the promissory  notes we have made to Promus Hotels,  Inc. The "net equity
proceeds"  from our  offering of common  shares are intended to be the source of
our  principal  payments.  The  phrase  "net  equity  proceeds"  means the total
proceeds from our offering of common shares, as reduced by selling  commissions,
a marketing expense allowance,  closing costs,  various fees and charges (legal,
accounting,  and  so  forth),  a  working  capital  reserve  and a  reserve  for
renovations, repairs and replacements of capital improvements.

         Under a letter  agreement  dated May 8, 2000,  we are  permitted to use
such net equity  proceeds  to pay 25% of the  purchase  price for the  leasehold
interest in the Malvern  (Philadelphia),  Pennsylvania hotel.  Otherwise, to the
extent that we have such net equity proceeds, we generally are obligated to make
monthly principal payments under the promissory notes listed above.

DEEDS OF TRUST AND RELATED DOCUMENTS

         Each of our hotels, including the Malvern (Philadelphia),  Pennsylvania
hotel, is encumbered.  In general, the encumbrances consist of a mortgage on the
hotel building and its  underlying  real  property,  a security  interest in any
personal property and an assignment of hotel rents and revenues, all in favor of
Promus Hotels,  Inc. (As described above, Promus Hotels, Inc. provided financing
for our hotel purchases).

                                      -7-
These  encumbrances  are  created by  substantially  similar  documents
having a variety of names, many of which depend on state law. For simplicity, we
will refer to each of these documents as a "deed of trust." At each closing on a
purchase with respect to a hotel or group of hotels,  we further  encumbered our
other hotels with  additional  deeds of trust or with  negative  pledges.  These
additional  encumbrances  are  designed to provide  additional  security for the
earlier promissory notes.

         We are subject to various  requirements  under the deeds of trust.  For
instance,  we must  maintain  adequate  insurance  on the hotels and we must not
grant any further deeds of trust or  assignments of rents or leases with respect
to the hotels.

         Each deed of trust  contains  a  substantially  similar  definition  of
events of  default.  In each  case,  the  events  of  default  include  (without
limitation)  any default that occurs under any of the promissory  notes or under
another deed of trust,  and any sale of the secured  property  without the prior
consent of Promus Hotels,  Inc. Upon any event of default,  various remedies are
available  to Promus  Hotels,  Inc.  Those  remedies  include,  for  example (a)
declaring the entire  principal  balance  under the  promissory  notes,  and all
accrued  and unpaid  interest,  to be due and  payable  immediately;  (b) taking
possession of the secured  property,  including the hotels;  and (c)  collecting
hotel  rents and  revenues,  or  foreclosing  on the hotels,  to satisfy  unpaid
amounts under the  promissory  notes.  Each deed of trust requires us to pay any
costs that may be incurred in exercising such remedies.

         Negative  pledges  apply to the three  hotels in Florida,  Maryland and
Virginia.  The negative pledges prohibit any transfer or further  encumbrance of
the hotels,  in whole or in part,  without the prior  written  consent of Promus
Hotels,  Inc. The negative  pledges will terminate when our promissory  notes to
Promus Hotels, Inc. are paid in full.

GROUND LEASE

         The Malvern  (Philadelphia),  Pennsylvania hotel is subject to a ground
lease dated as of July 1, 1996.  We caused  Apple Suites  Pennsylvania  Business
Trust, in our capacity as its sole trustee and sole  beneficiary,  to become the
tenant under the ground  lease.  This result was achieved  through an assignment
and assumption of lease dated as of May 8, 2000.

         The ground  lease has an initial  term of 30 years.  The tenant has the
option to extend  the  ground  lease for three  additional  periods of ten years
each.

         The  ground  lease  provides  for  annual  rent,  payable in advance in
monthly  installments.  The annual rent is  $100,000  for each of the first five
years (that is, until August 1, 2000). Every five years, the annual rent will be
adjusted  in  proportion  to the  Consumer  Price  Index  for  the  metropolitan
Philadelphia area.

         The tenant has certain obligations under the ground lease. For example,
the tenant must operate the premises in accordance  with applicable law and must
maintain general public liability insurance on the premises.  For a default that
involves the tenant's  failure to provide  insurance and that  continues for ten
days after written notice to the tenant, the landlord may arrange for substitute
insurance  at the  tenant's  expense.  Furthermore,  because  a hotel  has  been

                                      -8-
constructed on the premises, the permitted uses of the premises during the first
ten years under the ground lease are limited to hotel and related uses.

         Under the ground lease,  the tenant has 30 days after written notice to
cure any  payment  default  under the ground  lease,  and 60 days after  written
notice to cure any other default. If the default cannot be cured in 60 days, the
cure period will be extended if the tenant  promptly  begins to cure the default
and  diligently  continues to do so. In general,  if a default occurs and is not
cured  within the  appropriate  time period,  the  landlord's  remedies  include
terminating the ground lease.

         If the  landlord  wishes to sell the  premises and the tenant is not in
default,  the landlord  must notify the tenant in writing and grant it the first
option to purchase the  premises.  If this option is declined,  the landlord may
sell the premises  within six months,  but the terms and  conditions of the sale
cannot be  materially  more  favorable  to the buyer than  those  offered to the
tenant.

         Upon expiration or termination of the ground lease, all improvements on
the land become the property of the landlord without any payment or compensation
due to the tenant.  Thus,  unless we purchase the interests of the landlord,  we
will  not own  the  hotel  past  the  term of the  ground  lease.  However,  the
expiration or  termination of the ground lease will not affect our obligation to
repay the  $11,616,750  purchase money  promissory note issued to Promus Hotels,
Inc.

MASTER HOTEL LEASE AGREEMENT

         We, as tenant under the ground  lease,  have in turn leased the Malvern
(Philadelphia),  Pennsylvania hotel to Apple Suites Management, Inc. pursuant to
a master  hotel  lease  agreement  dated as of May 8, 2000.  This  agreement  is
substantially  similar  to  the  master  hotel  lease  agreements,  dated  as of
September 20, 1999, that apply to our other hotels.

         The agreement  provides for an initial term of ten years.  Apple Suites
Management,  Inc.  has the option to extend  the lease  term for two  additional
five-year periods, provided it is not in default at the end of the prior term or
at the time the option is exercised.  The master hotel lease agreement  provides
that Apple  Suites  Management,  Inc.  will pay an annual base rent, a quarterly
percentage  rent and a quarterly  sundry  rent.  Each type of rent is  explained
below.

         Annual base rent is payable in advance in equal  monthly  installments.
Beginning in 2001, the base rent will be adjusted each year in proportion to the
Consumer Price Index (based on the U.S. City Average).  The annual base rent for
the Malvern (Philadelphia), Pennsylvania hotel is currently $942,375.

         Percentage  rent is payable  quarterly.  Percentage  rent  depends on a
formula that compares fixed "suite revenue breakpoints" with a portion of "suite
revenue,"  which is equal to gross  revenue from suite  rentals  (less sales and
room taxes).  Beginning in 2001, the suite revenue  breakpoints will be adjusted
each year in  proportion  to the Consumer  Price Index  (based on the U.S.  City
Average).  Suite revenue  breakpoints have been determined for the first quarter
of each year during the initial  term of the master hotel lease  agreement.  The
suite revenue  breakpoints for subsequent quarters are determined by multiplying
the first  quarter  values by two,  three or four,  respectively.  The following
table shows the suite revenue  breakpoints for the first quarter for the Malvern
(Philadelphia),  Pennsylvania  hotel,  before any adjustment due to the Consumer
Price Index:

                                      -9-
Suite Revenue Breakpoints for the First Quarter

     2001          2002         2003         2004         2005          2006         2007         2008         2009
     ----          ----         ----         ----         ----          ----         ----         ----         ----
$300,219        $309,456     $323,313     $332,550     $341,700     $351,025      $360,263     $369,500     $378,738
Specifically, the percentage rent is equal to the sum of (a) 17% of all
year-to-date suite revenue, up to the applicable suite revenue breakpoint;  plus
(b) 55% of the  year-to-date  suite  revenue in excess of the  applicable  suite
revenue breakpoint, as reduced by base rent and the percentage rent paid year to
date.

         The  sundry  rent is  payable  quarterly  and  equals 99% of all sundry
revenue,  which consists of revenue other than suite revenue, less the amount of
sundry rent paid year-to-date.

OTHER AGREEMENTS

         The Malvern (Philadelphia),  Pennsylvania hotel is subject to a license
agreement and a management  agreement with Promus  Hotels,  Inc. We have entered
into an environmental indemnity agreement with Promus Hotels, Inc., as well as a
comfort letter agreement regarding the lease with Apple Suites Management,  Inc.
and  certain  other  issues.  These  agreements  are  substantially  similar  to
agreements that exist with respect to our other hotels.

DESCRIPTION OF MALVERN, PENNSYLVANIA HOTEL

         The   Homewood   Suites(R)   by  Hilton  in   Malvern   (Philadelphia),
Pennsylvania is located on a 4.1 acre site at 12 East Swedesford Road,  Malvern,
Pennsylvania,  near  Philadelphia.  The  hotel is  approximately  22 miles  from
downtown Philadelphia and 25 miles from the Philadelphia International Airport.

         The hotel opened in 1998. It was  constructed  with a masonry frame and
has a sand stucco  exterior  finish.  The hotel consists of a single  four-story
building.  The hotel contains 123 suites, which have a combined rentable area of
63,600 square feet. The following types of suites are available:
Type of Suite                                Number Available                   Square Feet/ Suite
         -------------                                ----------------                   ------------------
Master Suite                                         95                                 500
         Homewood Suite                                       21                                 500
         Two-Bedroom Suite                                     7                                 800
The hotel offers a 40-seat  breakfast/lounge  area, a meeting room that
accommodates  25 to 30 people,  and a business center that offers guests the use
of a personal computer, a photocopier and an electric  typewriter.  Recreational
facilities  include an outdoor pool, a whirlpool and an exercise room. The hotel
also  contains  a guest  convenience  store and  laundry.  The hotel has its own
parking lot with 136 spaces.  The hotel provides  complimentary  shuttle service
within a 5 mile radius.

                                      -10-
We believe that the hotel has been  generally  well  maintained  and is
generally  in very good  condition.  Over the next 12  months,  we plan to spend
approximately  $100,000  on  renovations  or  improvements.  We expect  that the
principal  renovations and  improvements  will include  upgrading  bathrooms and
kitchens,  providing  additional signage and replacing exterior doors. We expect
to pay for the costs of these  renovations and  improvements  with proceeds from
our ongoing offering of common shares.

         During  2000,  the average stay at the hotel has been  approximately  5
nights, and approximately 59% of the guests have stayed for five nights or more.
In general,  occupancy at the hotel is not seasonal.  The following  table shows
average daily occupancy rates,  expressed as a percentage,  since the opening of
the hotel:

                  Average Daily Occupancy Rate (calendar year)

                                                         2000
                  1998             1999              (annualized)
                  ----             ----               -----------

                  66.7%            76.4%                74.4%

         During 2000, the average daily rate per suite has been $122.01, and the
average daily net revenue per suite has been $90.79. As explained above, revenue
from  the  hotel's  operations  will be  used  to pay  interest  due  under  the
promissory note we executed in connection with our purchase of the hotel.  There
can be no assurance, however, the proceeds of the offering will be sufficient to
permit the payments of principal.  Assuming that no principal  payments are made
until the maturity of the promissory  note, and that the hotel continues to have
the level of net revenue  specified  above,  approximately  24.2% of the hotel's
revenue would be needed to cover its portion of the interest payments.

         The hotel's current daily rate structure is based on length of stay and
type of suite, as summarized below:

Length of Stay
(number of nights)            Homewood            Master           Two Bedroom
------------------            --------            ------           -----------
1   to   4                      $145               $145               $194
5   to 11                        129                129                185
12 to 29                         124                124                179
30 or more                        99                 99                159

         The hotel offers a weekend  discount.  This discount  varies by type of
suite and generally  reduces the basic rate by 38%. The weekend  discount is not
available  to guests who stay for five  nights or more.  The hotel  also  offers
discounts to guests who stay under certain corporate  accounts.  These discounts
are often  negotiated  with the  corporate  customer  and vary from  account  to
account.  We estimate that  approximately  43% of the hotel's guests during 2000
received a corporate discount.

                                      -11-
The chief  corporate  accounts (as  designated in the hotel's  records)
include: SAP, Astra Zeneca, Vanguard, Shared Medical Systems,  Centocor, Unisys,
Wyeth,  Supplyforce.com,  Decision  One,  and SCT  (Systems/Computer  Training).
During  2000,  the  10  largest   corporate   accounts  were   responsible   for
approximately 43% of the hotel's occupancy. There can be no assurance,  however,
that the hotel will continue to receive significant occupancy, or any occupancy,
from the corporate accounts identified above.

         The table below shows the average  effective  annual  rental per square
foot since the opening of the hotel:

                                                      2000
               1998               1999            (annualized)
               ----               ----            ------------
              $52.85             $59.58              $63.72

         The  depreciable  real property  component of the hotel has a currently
estimated  Federal tax basis of $14,898,789 and will be depreciated  over a life
of 39 years (or less,  as  permitted  by the  Internal  Revenue  Code) using the
straight-line  method. The basis of the personal property component of the hotel
will be depreciated in accordance  with the modified  accelerated  cost recovery
system of the Internal Revenue Code.

         The following table  summarizes the hotel's real estate tax information
for 2000:

Tax                             Assessed          Tax Rate              Amount
Jurisdiction                      Value          (per $1000)            of Tax
------------                      -----          -----------            ------

School District                $14,248,760         11.670              $166,283
County of Chester               14,248,760          3.014                42,946
East Whiteland Township         14,248,760          0.445                 6,341
                                                                       --------

                                                          TOTAL        $215,570

         We estimate that the annual  property tax on the expected  improvements
will be approximately $1,600 or less.

         At least seven  competing  hotels are located within eight miles of the
hotel.  (The  names  of  the  competing  franchises,  as  listed  below,  may be
registered as service marks or trade names.) Of these competing hotels,  two are
newer than the hotel.  The newer  competing  hotels have franchises with Hampton
Inn and Choice Hotels.  The other competing hotels have franchises with Marriott
(in 2 cases) Sheraton, Summerfield Suites and Wyndham. We believe that the rates
charged by our hotel are generally  competitive  with the rates charged by these
other  hotels.  We are aware of ongoing or proposed  construction  for two other
extended-stay  hotels  within  approximately  six miles of the hotel.  We expect
these new hotels to be franchised with Residence Inn and Springhill Suites.

                                      -12-
ITEM 7.a.1.*

*To be filed by amendment.  It is  impracticable  to include herein the required
financial statements for the Property. The required financial statements will be
filed as an amendment  to this report as soon as possible,  but in no event more
than 60 days after the date of filing of this report.

                                      -13-
ITEM 7.a.2.*

*To be filed by amendment.  It is  impracticable  to include herein the required
pro forma financial  information.  The required pro forma financial  information
will be filed as an  amendment  to this  report as soon as  possible,  but in no
event more than 60 days after the date of filing of this report.

                                      -14-
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 Suites, Inc.

Date: May 23, 2000                 By:      /s/ Glade M. Knight
                                            -------------------
                                            Glade M. Knight,
                                            Chief Executive Officer of
                                              Apple Suites, Inc.

                                      -15-