The Real Deal Reports on Lawsuit Against AJ Capital Affiliate Over Abandoned Roosevelt Island Hotel
April 23, 2026 – The Real Deal reports that an affiliate of lender ACRES Capital, represented by Brewer, Attorneys & Counselors, filed suit against an affiliate of AJ Capital Partners seeking more than $79 million after the Graduate by Hilton on Roosevelt Island, New York had its ground lease terminated by Cornell University.
The action comes nearly six months after the hotel ceased operating – during which time Hilton continued to portray the property on its booking site as “sold out.”
AMF Levered II, LLC and ACRES Real Estate SPE 10, LLC filed a Motion for Summary Judgment in Lieu of Complaint in the Supreme Court of the State of New York, Commercial Division on Wednesday, against Graduate Hotels Real Estate Fund III LP — an AJ Capital Partners entity and the guarantor of an over $76 million commercial mortgage loan secured by a leasehold interest in the Graduate by Hilton on Roosevelt Island.
The Graduate by Hilton on Cornell Tech's campus — Roosevelt Island's only hotel — opened in 2021 and closed in November 2025. The 224-key, 18-story property operated under a 65-year ground lease signed in 2018. Following a series of defaults, Cornell University terminated that ground lease on April 9, 2026 – which set the stage for ACRES to seek the full value of the debt from the guarantor.
According to court documents filed in New York State Supreme Court, the borrower failed to maintain required debt service reserve accounts, failed to pay lenders' fees associated with loan workout requests, and failed to make utility payments to Cornell University — multiple defaults that ultimately led to the termination of the ground lease.
"AJ Capital shut down the only hotel on Roosevelt Island, turned Union employees out of work, walked away from its obligations to Cornell University, and attempted to leave its lender holding the bag on almost $80 million," said William A. Brewer III, partner at Brewer, Attorneys & Counselors and lead counsel for Plaintiffs.
"Graduate Hotels Real Estate Fund III LP signed a guaranty that waives every defense to collection when Cornell's termination of the ground lease — caused directly by AJ Capital's abandonment of the property — fired the full recourse trigger,” Mr. Brewer added. "The documentary record leaves no room for argument. It is now time for the guarantor to fulfill its own obligation.”
The action was filed as a Motion for Summary Judgment, reflecting the Plaintiffs' position that the facts and documents leave no triable issues. The plaintiffs are seeking more than $79 million.