#Knoxville #United States #Petros Pace #MidCap Financial #Knoxville Hotel

Joint Financing for New Hotel in Knoxville

On July 1, 2025, Petros Pace Finance (Petros) and MidCap Financial (MidCap) announced a significant achievement in the hospitality sector with their inaugural joint unitranche financing. This collaboration involves funding a new AC Hotel by Marriott in Knoxville, Tennessee. The project is developed by Vector Hospitality and represents a total investment of $39 million, combining C-PACE financing and senior debt to create a streamlined financing solution.

The Financing Details

Petros, well-known as one of the largest C-PACE providers in the nation, contributed $15 million toward the sustainable aspects of the hotel, while MidCap supported with $24 million in senior debt. This partnership aims to simplify the financing process for developers, offering a single comprehensive solution that encompasses both C-PACE and traditional mortgage lending.

Kevin McMeen, President, and CEO of Petros emphasized, "This venture is a pivotal move in enhancing our role as a key partner for developers. Our collaboration with MidCap showcases our commitment to innovation in structured finance. We anticipate more joint ventures in the future."

Likewise, Richard Graham from MidCap highlighted the adaptability and cooperative nature of the unitranche structure that facilitates efficient underwriting processes and fortifies relationships between lenders and developers. This was evident in the seamless partnership that enabled quick assessments and decisive actions.

Project Overview and Anticipated Benefits

The new AC Hotel will feature 161 rooms, strategically located in downtown Knoxville. Expected to cater to business travelers and tourists alike, the hotel benefits from its proximity to the University of Tennessee, major corporate entities, and healthcare facilities in the region.

Sustainability is a core focus of this project, with C-PACE financing allocated for an energy-efficient HVAC system, advanced building insulation, LED lighting, and water-conserving plumbing solutions, making the hotel more environmentally friendly. The construction commenced in March 2025, with a projected completion date in November 2026, aiming for a building that meets the highest standards of energy efficiency and sustainability.

Aman Patel, President of Vector Hospitality, voiced confidence in the processes employed by Petros and MidCap, stating, "This was the most seamless transaction I have ever experienced. Their collaboration has established trust at every level, and we are excited about delivering an award-winning hotel in Knoxville."

About Petros Pace Finance

Petros Pace Finance specializes in C-PACE financing, focusing on facilitating long-term finance for commercial property owners while promoting sustainability and efficiency in real estate projects. They are backing their initiatives through a robust investment portfolio managed by Apollo Global Management, ensuring substantial capital availability across eligible markets.

About MidCap Financial

MidCap Financial offers multifaceted senior debt solutions across various sectors, targeting growth in the middle-market space. Their strategies emphasize speed and flexibility, allowing for tailored financing options that meet the unique challenges faced by modern companies.

In summary, this joint financing for the Knoxville Marriott hotel not only illustrates a significant step in collaboration between innovative financial institutions but also emphasizes a growing trend toward sustainable building practices within the hospitality industry.