Cronheim Hotel Capital secures $39 million for the construction of AC Hotel Knoxville Downtown

Knoxville, TN Cronheim Hotel Capital (“CHC”) has secured $39 million for the construction of the AC Hotel Knoxville Downtown. The financing provides up to 75% of the total project costs on a non-recourse basis and incorporates a creative CPACE structure with future fundings to minimize the total CPACE interest expense. 

The property will be developed by Vector Hospitality Inc. Scheduled to open in Winter 2026, the seven-story, 161 room AC by Marriott, located at 427 Walnut St. and 416 Locust St. will feature flexible, open spaces with modern finishes as well as a rooftop bar and kitchen with views of Neyland Stadium, Sunsphere and the surrounding city. Inspired by AC Hotels' philosophy of purposeful design and curated moments, the property will offer a hospitality experience rooted in simplicity, refinement, and a strong connection to place.

“The AC brand is about creating space with intention—every moment, every material, every detail has purpose,” said Aman Patel, president of Vector Hospitality. “Our vision is to design a hotel that reflects the soul of Knoxville—a city that’s both deeply historic and effortlessly current. We’re honored to help shape this next chapter in its downtown evolution.”

David Turley, president of CHC, said, “Construction financing remains challenging in the current environment, particularly above 70% LTC. Given the strength of the sponsor, flag and location, we were able to source a number of options that provided attractive leverage for the project. Wasn’t easy, but we are pleased to have delivered a high-leverage construction loan that will bring this project to completion.”