Cornell sues to confirm AJ Capital’s Roosevelt Island hotel lease is terminated

Cornell University filed a lawsuit on April 29, 2026, in the Supreme Court of the State of New York, New York County, seeking a declaratory judgment that the 65-year ground lease for the Graduate Roosevelt Island Hotel has been terminated.
This suit comes a week after ACRES Capital filed a lawsuit, but not a foreclosure action, alleging defaults on a $76.5 million loan secured by AJ Capital’s leasehold on the hotel.

Cornell’s suit states that the lender ACRES Capital, which had a right to preserve the leasehold by curing the defaults or filing a foreclosure action, did not do either, implying its rights will also be terminated with this lease termination. ACRES Capital earlier filed a suit in Nassau County under index number 624757/2025, to enforce a guaranty of minimum interest reserve under its loan documents.

“The Recognized Mortgagee [ACRES Capital] did not deliver a Notice of Foreclosure to Cornell, did not commence foreclosure proceedings, and did not otherwise cure or take steps to cure the Hotel closure default within the extended cure period. Accordingly, neither Graduate [AJ Capital] nor the Recognized Mortgagee cured the Hotel closure default,” Cornell University said in its lawsuit.

Case LINK

The university, acting as landlord, claims the lease officially ended on April 9, 2026, following a series of uncured defaults by the tenant, Graduate Roosevelt Island Owner LLC.

The Real Deal reported on this lawsuit yesterday.

The legal action seeks the immediate ejectment of the tenant, which remains in possession of the premises at 22 North Loop Road despite the termination notice.

The dispute centers on the November 25, 2025, closure of the 224-room hotel. Cornell alleges that the permanent cessation of operations constitutes a material breach of the lease, which explicitly required the tenant to operate the hotel at all times during the term in accordance with a three-star AAA “Hotel Operating Standard.”

The university asserts that the hotel was a critical component of the broader Cornell Tech campus project, serving as a venue for academic events, faculty visits, and student activities.

According to the complaint, the closure has caused Cornell substantial financial harm, including over $605,646 in lost revenue from conference space rentals and catering, and $80,000 in lost sales from the Bloomberg Café.

The financial structure of the 2018 lease, which was valued at $113,043,461 at its inception, tied base rent payments to the hotel’s gross operating income.

Cornell claims that by shuttering the hotel, the tenant effectively reduced the university’s rent receipts to zero. In addition to the operational default, Cornell alleges the tenant failed to pay utility charges for January and February 2026, amounting to approximately $52,310. Following the expiration of contractually required cure periods, Cornell delivered a termination notice on April 2, 2026.

The complaint states that the lender declared an event of default under the loan documents in October 2025 and subsequently withheld funds necessary for the hotel’s operation. On April 22, 2026, the lender escalated the conflict by filing a motion for summary judgment in lieu of complaint to enforce a recourse guaranty and recover the full outstanding debt of $79,272,362. Cornell notes that the lender failed to exercise its own rights under the ground lease to cure the tenant’s defaults or initiate its own foreclosure proceedings to protect its leasehold interest within the allotted timeframe. Cornell is now seeking to recover immediate possession of the property and a money judgment for various damages.

These include approximately $483,790 in accelerated base rent and $198,838 in campus-allocated maintenance charges, both of which became due upon the termination of the lease. The university also seeks to recover the fair market value of the tenant’s “use and occupancy” of the premises from the date of termination through the date of eventual recovery. Attorneys from Fried, Frank, Harris, Shriver & Jacobson LLP are representing Cornell in the proceedings.

The property

The specialty building in Roosevelt Island has 37,626 square feet of built space and 59,556 square feet of additional air rights for a total buildable of 97,097 square feet according to a PincusCo analysis of city data. The parcel has frontage of 59 feet and is 280 feet deep with a total lot size of 28,226 square feet. The lot is irregular. The zoning is C4-5 which allows for up to 3.4 times floor area ratio (FAR) for commercial and up to 3.44 times FAR for residential. The city-designated market value for the property in 2022 is $29.8 million.

Development

NYC Economic Development Corporation submitted a new building construction project for a 36,309 square-foot business (B) building at 34 North Loop Road. The plan was filed on May 23, 2017 and was permitted on December 26, 2018. It calls for the construction of a 70-foot tall, four-story building and was filed with the New York City Department of Buildings under job number 121203768. The project is described in the filing as: application filed to erect a 4 story new building (eec building.

Over the past five years, there has been no NYC Department of Buildings new building, demolition, or alteration permit application valued at more than $20,000 filed for this parcel.

For the tax lot building, it received its initial certificate of occupancy on October 25, 2017.

Violations and lawsuits

According to city public data, the property has not received any significant violations in the last year.

There were no lawsuits or bankruptcies filed against the property for the past 24 months.

The neighborhood

In Roosevelt Island, The majority, or 59 percent of the 2.4 million square feet of commercial built space are elevator buildings, with specialty buildings next occupying 35 percent of the space. In sales, Roosevelt Island has not had any sales in the last two years. For development, Roosevelt Island has not had any major developments in the last two years.

The block

On this tax block, PincusCo has identified the owners of five of the 13 commercial properties representing 1,863,619 square feet of the 2,403,876 square feet. The largest owner is Aj Capital Partners, followed by L+M Development Partners and then Nyc Health + Hospitals. On the tax block, there were three new building construction projects totaling 306,088 square feet. The largest is a 365-unit, 268,800 square-foot residential (R-2) building submitted by Related Companies and filed by Jamar Adams with plans filed September 4, 2019 and permitted March 29, 2023. The second largest is a 36,309 square-foot business (B) building submitted by NYC Economic Development Corporation and filed by Richard Cote with plans filed May 23, 2017 and permitted December 26, 2018.

The surrounding

This is the first commercial real estate event of interest identified within the 400-foot radius of 34 North Loop Road in the past 24 months.

Direct link to the property’s ACRIS page
Direct link to the property’s ACRIS page