Roosevelt Island Hotel Faces Eviction After Loan Defaults
The property's new owners look to take over the 224-room site as the previous operator faces an eviction lawsuit.
Updated on Oct. 28, 2026 in Hospitality
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A new entity, The Hotel at Roosevelt Island, has filed an eviction lawsuit against the former Graduate hotel property. The move comes after the 224-room hotel ceased operations in November 2025 following debt service and utility payment defaults.
Why it matters
The legal action highlights the operational risks inherent in long-term ground leases when developers fail to meet debt service or maintenance obligations. For hotel operators, this serves as a reminder of how quickly ownership transitions can trigger total site closure.
The property involves a 65-year ground lease with Cornell and a $76.5 million loan from ACRES Capital. The site, which features 224 rooms across 18 stories, shuttered after falling behind on utility payments and failing to maintain its debt service reserve account.
The players
Cornell
An Ivy League university that manages the tech campus and land where the hotel is located.
HEI Hotels
A hospitality management firm hired by the new ownership group to operate the site.
ACRES Capital
A private lender that provided the $76.5 million loan for the hotel development.
New York City Economic Development Corporation
A city agency that oversees local development projects and approved the new hotel entity.
Hilton Hotels
A global hospitality company that acquired the Graduate brand for $220 million in 2024.
The details
The conflict stems from the borrower failing to keep a debt service reserve account funded and neglecting to pay legal fees tied to loan workout requests. After the previous operator ceased all activity in November 2025, the new entity negotiated directly with Cornell to secure the ground lease. The incoming venture, which has engaged HEI Hotels to handle operations, secured approval from the New York City Economic Development Corporation to take over the project.
Timeline
2018: The Graduate signed a 65-year ground lease with Cornell.
2021: The Roosevelt Island hotel location opened.
2022: The Graduate took out a $76.5 million loan from ACRES Capital.
2024: Hilton Hotels purchased the Graduate branding for $220 million.
November 2025: The Graduate hotel ceased operations.
Market Landscape
The eviction case follows established enforcement patterns for New York City ground lease development standards. It reflects the tightening scrutiny on hospitality projects that fail to maintain financial covenants required by both university landlords and private creditors.
Operators holding similar long-term ground leases should review their debt service reserve requirements and utility payment schedules immediately. Ensure that any default notices from land-holding entities are addressed with counsel to prevent the sudden loss of operating rights.
The takeaway
Large-scale hospitality projects are uniquely vulnerable to ownership turnover when debt service and ground lease terms are not strictly managed. Owners should track their specific ground lease covenants and maintain clear, proactive communication with all capital partners regarding reserve account balances.
Further reading
For broader trends on commercial lease stability, explore the Hospitality section.
Source note: This article includes information reported by The Real Deal New York.
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