Cronheim Hotel Capital Secures $39 Million for AC Hotel Knoxville

News Summary

Cronheim Hotel Capital has secured $39 million in construction financing for the AC Hotel Knoxville Downtown project. This amount covers 75 percent of project costs and includes an innovative CPACE program for future funding. Scheduled to open in winter 2026, the seven-story hotel will feature 161 rooms, a rooftop bar, and modern design appealing to business and leisure travelers. Construction began in March 2025, with a focus on sustainability and energy-efficient systems, catering to the needs of the University of Tennessee and local healthcare facilities.

Major Financing Secured for AC Hotel Knoxville Downtown Project

In a significant development for the hospitality industry, Cronheim Hotel Capital (CHC) has successfully secured $39 million in construction financing for a new hotel project located in downtown Knoxville. This financing is projected to cover up to 75 percent of the total construction costs on a non-recourse basis, marking a crucial step in the project’s progression.

Innovative Financing Structure

The financing package also incorporates a creative Commercial Property Assessed Clean Energy (C-PACE) structure. This innovative approach allows for future funding aimed at minimizing the overall C-PACE interest expense, enhancing the financial viability of the project. Such arrangements underscore the increasing trend towards sustainability in construction and operations within the hospitality sector.

Project Overview

The AC Hotel Knoxville Downtown is set to be a seven-story facility featuring 161 rooms. The hotel’s design will embrace flexible, open spaces paired with modern finishes, making it a contemporary addition to the Knoxville skyline. One of the standout features will be a rooftop bar and kitchen, offering guests panoramic views of iconic landmarks, including Neyland Stadium and the Sunsphere.

Unique Design Elements

The design concept aims to reflect Knoxville’s distinctive blend of historic and contemporary features. With this focus, the hotel hopes to create an inviting and aesthetically pleasing environment that resonates with both tourists and locals alike.

Timeline for Completion

Construction activities are set to commence in March 2025, with an expected completion date in November 2026. This timeline is ambitious, but it reflects the developers’ commitment to bringing high-quality facilities to the area quickly.

Sustainability Initiatives

The project’s financing will notably support the installation of energy-efficient systems. This includes enhancements like upgraded HVAC systems, improved building envelope designs, LED lighting, and water-conserving plumbing. These initiatives signal a strong commitment to sustainability, aligning with modern trends in construction and energy management.

Catering to Key Markets

The AC Hotel is strategically designed to cater to the demand generated by a number of nearby institutions, most notably the University of Tennessee and regional healthcare facilities. This positioning will likely attract a steady stream of guests, providing critical support to local businesses and the economy.

Challenges in Financing

Securing construction financing, especially for high-cost projects, poses unique challenges in today’s financial environment. The successful acquisition of funds for this project has been attributed to factors including the strength of the project sponsor, the reputable brand associated with the hotel, and its prime location, all of which have opened the door to various financing options.

Looking Ahead

The AC Hotel Knoxville Downtown is expected to be a significant asset to the local community and the wider East Tennessee region. With its modern amenities, sustainable features, and prime location, the hotel is poised to enhance the local hospitality landscape when it opens its doors in winter 2026. As the construction begins, anticipation continues to grow among residents and stakeholders alike for what will undoubtedly be a vibrant addition to downtown Knoxville.

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Additional Resources

• Lodging Magazine: Cronheim Hotel Capital Secures Funds for Construction of AC Hotel Knoxville Downtown
• Wikipedia: Knoxville
• Rebusinessonline: Cronheim Hotel Capital Secures $39M Construction Financing for AC Hotel Knoxville Downtown
• Google Search: Knoxville hotels
• PR Newswire: Petros Pace Finance and Midcap Financial Provide Financing for Newbuild Marriott Hotel in Knoxville
• Encyclopedia Britannica: Hotel Development Financing
• Knox News: Knoxville Construction Near World’s Fair Park
• Google News: Knoxville hotel construction