Another Lawsuit Against AJ Capital Affiliate Seeks Full $82.5 Million Debt on the Graduate by Hilton Roosevelt Island
NEW YORK, N.Y. – August 13, 2026 – Affiliates of commercial mortgage lender ACRES Capital sued the AJ Capital Partners entity that guaranteed the loan on the Graduate by Hilton Roosevelt Island on Wednesday, seeking the full outstanding debt of more than $82 million.
AMF Levered II, LLC and ACRES Real Estate SPE 10, LLC filed the complaint in the Supreme Court of the State of New York, Nassau County, against Graduate Hotels Real Estate Fund III LP. Brewer, Attorneys & Counselors and Steven E. Losquadro, P.C. represent the Plaintiffs.
This is the third lawsuit filed by the lender against the Graduate guarantor, including a prior lawsuit for the full amount of the debt based on AJ Capital Partners’ decision to shutter the hotel in November 2025 and a lawsuit based on the Graduate’s failure to fund a debt service reserve account that served as security for the loan.
The lender extended $69.5 million in September 2022, secured by a leasehold interest in the hotel.
On July 20, 2026 — two weeks after the Commercial Division denied its motion to dismiss a related enforcement action — Graduate Hotels Real Estate Fund III filed a counterclaim seeking damages from the lender. The complaint alleges that filing constitutes an "Interference Event" under Section 9.3(c)(v) of the Loan Agreement, which makes the debt full recourse when the guarantor asserts a non-compulsory counterclaim against the lender in an enforcement action arising from an event of default.
The complaint further alleges the guarantor irrevocably waived any right to assert a counterclaim of any nature with respect to its guaranty obligations.
The borrower defaulted on obligations including funding the debt service reserve account and the replacement reserve and reimbursing the lender's expenses. The lender accelerated the debt on October 10, 2025, and demanded payment in full on August 6, 2026. The guarantor has not paid. The debt totals no less than $82.5 million as of July 31, 2026, and continues to accrue interest at the default rate.
"The guarantor waived its right to assert any counterclaim, and then asserted one," said William A. Brewer III, partner at Brewer, Attorneys & Counselors and lead counsel for Plaintiffs. "The loan agreement specifically addresses that conduct, and it makes the entire debt recourse."
The borrower closed the hotel in November 2025. In April 2026, Cornell University terminated the ground lease, and the Plaintiffs have a separate action pending in New York County seeking the same debt on independent grounds arising from that termination. The Plaintiffs do not seek double recovery and will credit any amount recovered in one action against the other.