Petros and MidCap launch joint financing for Knoxville Marriott hotel

Petros PACE Finance and MidCap Financial have successfully collaborated to complete their first joint unitranche financing for a new AC Hotel by Marriott in Knoxville, Tennessee. This innovative financing solution combines both senior debt and Commercial Property Assessed Clean Energy (C-PACE) funding, allowing developers to secure the necessary capital for construction seamlessly. The partnership marks a significant step forward for both companies as they aim to deliver efficient financing options tailored to the needs of developers and investors. In this article, we will explore the details of this landmark transaction and its implications for the future of real estate financing.

Overview of the Joint Unitranche Financing

On July 1, 2025, Petros PACE Finance, recognized as one of the largest C-PACE providers in the United States, alongside MidCap Financial, a specialist in providing senior debt solutions across various industries, announced their inaugural joint unitranche transaction. This collaboration has resulted in a total of $39 million in funding dedicated to constructing an AC Hotel by Marriott in downtown Knoxville.

The breakdown of this significant financial package includes $15 million sourced from C-PACE funding through Petros and $24 million from MidCap’s senior debt offerings. This strategic partnership aims to provide a single source solution for developers looking to streamline their financing process while ensuring that projects meet sustainability goals.

A Seamless Financing Solution

The collaboration between Petros and MidCap represents an evolution in how real estate projects can be financed. Connor Murch from Petros and Bob Moran from MidCap structured this transaction as a unified construction loan solution, enabling developers to navigate complex financing landscapes with ease.

Kevin McMeen, President and CEO of Petros PACE Finance, emphasized that offering unitranche financing showcases their commitment to product innovation as they continue evolving into a valuable partner for developers. He expressed excitement about working with MidCap and anticipates more unitranche deals in the future.

Benefits for Developers

This joint venture is particularly advantageous for developers like Vector Hospitality. Aman Patel, President of Vector Hospitality, noted his satisfaction with what he described as the most seamless transaction he has encountered. The combined efforts of Petros and MidCap fostered trust throughout every stage of the process—ultimately leading to an award-winning hotel project.

The AC Hotel will feature 161 rooms strategically located near key drivers such as the University of Tennessee and several corporate headquarters. The funding will also support energy-efficient upgrades including advanced HVAC systems, LED lighting solutions, water-saving plumbing fixtures, and enhanced building envelopes—all contributing to sustainable development practices.

The Future Impact on Real Estate Financing

This pioneering unitranche structure merges C-PACE with traditional mortgage financing into one cohesive solution that simplifies transactions for investors and developers alike. By coordinating deal sizing, structuring, pricing, and vetting processes under one roof, all parties involved benefit from accelerated timelines and reduced complexity associated with securing financing.

Richard Graham from MidCap Financial highlighted their focus on delivering flexible financing solutions efficiently; he believes that this collaborative effort streamlines underwriting processes while maintaining transparency throughout all stages—from initial discussions through completion.

Sustainable Development Goals

This innovative approach not only addresses immediate financial needs but also aligns closely with growing demands for environmentally friendly construction practices within commercial real estate sectors. By integrating C-PACE funding into traditional lending frameworks like unitranche structures—developers can significantly invest in sustainable technologies without compromising project budgets or timelines.

Conclusion: A New Era in Real Estate Financing

The successful partnership between Petros PACE Finance and MidCap Financial sets an exciting precedent within commercial real estate finance. As demand grows for integrated financial solutions that emphasize sustainability alongside efficiency—this inaugural joint financing showcases how such collaborations can reshape industry standards moving forward.

As more developers recognize these benefits—particularly regarding streamlined processes conducive towards achieving ESG goals—they may increasingly seek out similar partnerships aimed at enhancing project viability while addressing environmental concerns effectively.
Whether you are interested in exploring these new opportunities or seeking guidance on your own development projects—consider how integrated financial solutions can propel your business forward.