Peachtree Group has lent US$49.8 million in construction financing for The AC & Element Hotel project in Birmingham, Alabama. Received by Ascent Hospitality, the funds will be used to construct a dual-branded hotel at a former office site. In total, the structure will have 338 rooms. AC Hotel will have 190 of these rooms that are aimed toward business travellers. The remaining 148 rooms will be under Element Hotels. They are aimed for extended stay with features such as kitchens.
Ascent Hospitality bought the building in 2018 from Hughes Capital Partners for US$3.66 million. It then began exterior and interior renovations as part of the hotel project. It is scheduled for completion in January 2025.
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The 16-story future hotel property is located on 20th street, downtown Birmingham and was originally put up in 1906. It operated as an office property until the early 2000’s when it became vacant.
Comments on the AC & Element Hotel project
Michael Harper, executive vice president at Peachtree Group, said the deal was made attractive by both AC and Element’s success under Marriott International ownership. This is coupled with the project’s location near many corporate offices and the University of Alabama-Birmingham campus, which includes a medical centre.
“We don’t like any deals where you’ve got one single driver and it’s kind of binary on the success. Here, you have a nice healthy mix,” Harper said. “We’ve had success lending in the Birmingham market. We have also done multiple loans in the downtown area from about a mile radius of this hotel, successfully deploying capital, and have been repaid on similar conversion-type projects.”
While Peachtree lends across all property types, its origins are in the hospitality industry. The firm remains very active in the sector, deploying $556 million of $1.1 billion in originations year-to-date as of late September for five hotel loan acquisitions.
