The authorized battle over a Roosevelt Island resort has taken a flip.
A brand new resort entity is now suing the previous resort, The Graduate by Hilton, in landlord-tenant courtroom, looking for an eviction. The brand new resort is an affiliate of the previous resort’s lender, ACRES Capital, and plans to take over the property and reopen the house underneath a brand new identify.
The brand new swimsuit is the most recent growth within the combat over the island’s solely resort, on the positioning of Cornell College’s Tech campus, a Bloomberg-era initiative to develop New York’s tech business.
The Graduate, a series of college-themed motels from AJ Capital, signed a 65-year ground lease with Cornell in 2018, which happy the college’s personal settlement with town to have an working resort on the tech campus. Base hire began at 1 % of income and went up from there, in accordance with courtroom paperwork. The resort is eighteen tales with 224 rooms.
The Roosevelt Island location opened in 2021. An AJ Capital affiliate allegedly spent $135 million on the buildout, taking out a $76.5 million mortgage from ACRES in 2022.
Hilton Resorts purchased the Graduate branding from AJ Capital for $220 million in 2024. As a part of the settlement, AJ Capital would personal the actual property and administration of the 34 current places.
However after only a few years of working, the Graduate borrower didn’t maintain its debt service reserve account with the lender flush, and in addition didn’t pay the lenders’ authorized charges related to requests to work out the mortgage, in accordance with the ACRES lender. Individually, the resort was late on about $50,000 in utility funds to Cornell.
In November 2025, the Graduate resort ceased operations on Roosevelt Island.
The resort has since blamed the lender, the ACRES affiliate. In courtroom paperwork, attorneys for the Graduate declare ACRES refused to launch the resort’s working income that will permit it to proceed operations. As an alternative it took that income to pay debt service and default curiosity.
“Lenders got down to drive the Resort to shut and thereby manufacture a purported recourse occasion towards Guarantor, whereas additionally purportedly giving Lenders the fitting to take the Resort for themselves,” the AJ Capital affiliate mentioned in courtroom paperwork.
After the Graduate ceased operations, lawsuits got here from each path. First, the ACRES affiliate sued a guarantor entity tied to AJ Capital and the Graduate chain, trying to gather on the total $76 million. By ceasing operations, the resort triggered the recourse warranty, it mentioned.
Cornell then introduced a swimsuit towards the Graduate for defaulting on its lease, and the Graduate responded with its personal swimsuit.
Now, one other ACRES affiliate is taking up the resort house, in accordance with ACRES’ lead counsel William Brewer of Brewer, Attorneys & Counselors. The brand new entity has not taken over the lease by its relationship to AJ Capital however fairly utilized to take over the lease individually and negotiated with Cornell, he mentioned.
“They made a mortgage, they hoped the mortgage could be paid,” Brewer mentioned of his shopper. “The constructing was empty, my shopper noticed a possibility to take an asset they had been already accustomed to and to use for a lease.”
AJ Capital made the choice unilaterally to shutter its resort, he mentioned, because it apparently wasn’t working in a approach that enabled it to cowl prices in addition to debt service.
The brand new resort entity, referred to in courtroom paperwork as The Resort at Roosevelt Island, has assembled a hospitality group together with HEI Resorts to function the brand new enterprise. The brand new resort has already been authorized by town’s Financial Growth Company, in accordance with Brewer. It’s now making an attempt to evict the Graduate from the premises.
Neither attorneys for AJ Capital and the Graduate, attorneys and representatives for Cornell Tech, nor NYCEDC responded to requests for remark.
The lawsuits between Cornell and the Graduate, in addition to between the lender and guarantor entity on the unique resort, stay ongoing.
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