Petros and MidCap Finalize First Joint Unitranche Deal
In a major advancement for commercial real estate financing, Petros PACE Finance and MidCap Financial have announced the completion of their first joint unitranche financing deal. The two institutions collaborated to provide a total of $39 million in funding for the construction of a new AC Hotel by Marriott in downtown Knoxville, Tennessee.
This breakthrough transaction includes $15 million in Commercial Property Assessed Clean Energy (C-PACE) financing from Petros and $24 million in senior debt from MidCap. The financing structure was designed as a seamless, integrated loan package, simplifying the process for the developer, Vector Hospitality.
Innovative Single Source Financing Approach
The unitranche structure combines both C-PACE and senior mortgage debt into a unified loan solution. This approach allows borrowers to bypass the complexities of managing multiple financing sources. Instead, they gain access to a streamlined process that enhances efficiency and reduces delays during underwriting and disbursement.
“Offering unitranche financing is a significant step forward in Petros’ evolution as a valued partner to our developer customers,” said Kevin McMeen, President and CEO of Petros. “This demonstrates our commitment to product innovation and reflects our collaborative spirit with respected lenders like MidCap.”
Richard Graham, Managing Director and Head of Commercial Real Estate at MidCap, echoed this sentiment: “The unitranche structure helped streamline underwriting and made for a smooth, collaborative process. Petros presented a well-structured opportunity, and we look forward to future transactions that deliver efficient and cost-effective capital solutions.”
Developer Praises Seamless Execution
Aman Patel, President of Vector Hospitality, shared his positive experience working with both Petros and MidCap. “This was the most seamless transaction I have ever experienced,” he said. “Petros and MidCap earned our confidence and trust at every stage of the process. Thanks to their partnership, we are on track to deliver an award-winning hotel.”
The AC Hotel will feature 161 guest rooms and is strategically located in downtown Knoxville. The property is expected to benefit from demand generated by the University of Tennessee, local corporate headquarters, healthcare facilities, and other regional institutions.
Focus on Sustainability and Energy Efficiency
A significant component of the financing includes sustainability upgrades. The C-PACE funding will support the installation of an energy-efficient HVAC system, improved building envelope, LED lighting, water-conserving plumbing, and other green features. These enhancements align with growing investor and consumer interest in environmentally responsible building practices.
Construction on the hotel began in March 2025 and is expected to be completed by November 2026. Once finished, the AC Hotel is poised to become a key hospitality asset in the Knoxville market.
About Petros PACE Finance
Petros PACE Finance, LLC is a national leader in the C-PACE marketplace, offering long-term financing to commercial property owners seeking to lower energy expenses, reduce carbon emissions, and increase property values. The company is a portfolio investment of Apollo Global Management and has billions in committed capital for eligible markets across the United States. For more information, visit www.petros-pace.com.
About MidCap Financial
MidCap Financial specializes in providing senior debt solutions to middle-market companies across various industries. As of March 31, 2025, the firm manages or services approximately $55 billion in commitments. MidCap is managed by Apollo Capital Management, L.P., a subsidiary of Apollo Global Management. Learn more at www.midcapfinancial.com.
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