The legal battle over a Roosevelt Island hotel has taken a turn.
A new hotel entity is now suing the former hotel, The Graduate by Hilton, in landlord-tenant court, seeking an eviction. The new hotel is an affiliate of the old hotel’s lender, ACRES Capital, and plans to take over the property and reopen the space under a new name.
The new suit is the latest development in the fight over the island’s only hotel, on the site of Cornell University’s Tech campus, a Bloomberg-era initiative to grow New York’s tech industry.
The Graduate, a chain of college-themed hotels from AJ Capital, signed a 65-year ground lease with Cornell in 2018, which satisfied the university’s own agreement with the city to have an operating hotel on the tech campus. Base rent started at 1 percent of revenue and went up from there, according to court documents. The hotel is 18 stories 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 loan from ACRES in 2022.
Hilton Hotels bought the Graduate branding from AJ Capital for $220 million in 2024. As part of the agreement, AJ Capital would own the real estate and management of the 34 existing locations.
But after just a few years of operating, the Graduate borrower failed to keep its debt service reserve account with the lender flush, and also failed to pay the lenders’ legal fees associated with requests to work out the loan, according to the ACRES lender. Separately, the hotel was late on about $50,000 in utility payments to Cornell.
In November 2025, the Graduate hotel ceased operations on Roosevelt Island.
The hotel has since blamed the lender, the ACRES affiliate. In court documents, attorneys for the Graduate claim ACRES refused to release the hotel’s operating revenue that would allow it to continue operations. Instead it took that revenue to pay debt service and default interest.
“Lenders set out to force the Hotel to close and thereby manufacture a purported recourse event against Guarantor, while also purportedly giving Lenders the right to take the Hotel for themselves,” the AJ Capital affiliate said in court documents.
After the Graduate ceased operations, lawsuits came from every direction. First, the ACRES affiliate sued a guarantor entity tied to AJ Capital and the Graduate chain, looking to collect on the full $76 million. By ceasing operations, the hotel triggered the recourse guaranty, it said.
Cornell then brought a suit against the Graduate for defaulting on its lease, and the Graduate responded with its own suit.
Now, another ACRES affiliate is taking over the hotel space, according to ACRES’ lead counsel William Brewer of Brewer, Attorneys & Counselors. The new entity has not taken over the lease through its relationship to AJ Capital but rather applied to take over the lease separately and negotiated with Cornell, he said.
“They made a loan, they hoped the loan would be paid,” Brewer said of his client. “The building was empty, my client saw an opportunity to take an asset they were already familiar with and to apply for a lease.”
AJ Capital made the decision unilaterally to shutter its hotel, he said, as it apparently wasn’t operating in a way that enabled it to cover costs as well as debt service.
The new hotel entity, referred to in court documents as The Hotel at Roosevelt Island, has assembled a hospitality team including HEI Hotels to operate the new venture. The new hotel has already been approved by the city’s Economic Development Corporation, according to Brewer. It is now trying 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 comment.
The lawsuits between Cornell and the Graduate, as well as between the lender and guarantor entity on the original hotel, remain ongoing.
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