JERUSALEM (AP) — A real estate deal in Jerusalem’s Old City, at the epicenter of the Israeli-Palestinian conflict, has sent the historic Armenian community there into a panic as residents search for answers about the feared loss of their homes to a mysterious investor.

The 99-year lease of some 25% of the Old City’s Armenian Quarter has touched sensitive nerves in the Holy Land and sparked a controversy extending far beyond the Old City walls. The fallout has forced the highest authority of the Armenian Orthodox Church to cloister himself in a convent and prompted a disgraced priest who is allegedly behind the deal to flee to a Los Angeles suburb.

“If they sell this place, they sell my heart,” Garo Nalbandian, an 80-year-old photojournalist, said of the Ottoman-era barracks where he has lived for five decades among a dwindling community of Armenians. Their ancestors came to Jerusalem over 1,500 years ago and then after 1915, when Ottoman Turks killed an estimated 1.5 million Armenians in what’s widely regarded as the first genocide of the 20th century.

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Alarm over the lease spread in April, following a surprise visit by Israeli land surveyors. Word got around that an Australian-Israeli investor, whose company sign appeared on the site, planned to transform the parking lot and limestone fortress of Armenian apartments and shops into an ultra-luxury hotel.

As anger, confusion and fears of possible evictions mounted, the Armenian patriarchate — the body managing the community’s civil and religious affairs — acknowledged that the church had signed away the patch of land. The Armenian patriarch, Nourhan Manougian, alleged that a now-defrocked priest bore full responsibility for the “fraudulent and deceitful” deal that the patriarch said took place without his full knowledge.

The admission inflamed passions in the Armenian Quarter, where activists decried the deal as a threat to the community’s longtime presence in Jerusalem. Jordan, with its historic ties to Jerusalem’s Christian sites, said it feared for the “future of the holy city.”

Palestinian officials accused Manougian of helping Israel in a decades-long battle between Israel and the Palestinians over a city that both sides claim as their capital. For Palestinians, such struggles over real estate are the centerpiece of the decades-old conflict, emblematic of what they see as a wider Israeli effort to remove them from strategic areas in east Jerusalem.

“From a Palestinian point of view, this is treason. From a peace activist point of view, this undermines possible solutions to the conflict,” said Dimitri Diliani, president of the National Christian Coalition of the Holy Land.

In a dramatic move, Palestinian President Mahmoud Abbas and Jordan’s King Abdullah II suspended recognition of Manougian, the patriarch who has served for the past decade in what is normally a lifelong position. That renders him unable to sign contracts, make transactions and make decisions in the Palestinian territories and Jordan.

The priest who coordinated the deal, Baret Yeretsian, was deposed, assaulted by a mob of angry young Armenians and whisked away by Israeli police before seeking refuge in southern California. Manougian has barricaded himself in the Armenian convent, unwilling or unable to be seen publicly, according to residents.

“This quarter is everything to me. It’s the only place we have for Armenians to gather in the Holy Land,” said 22-year-old community leader Hagop Djernazian. “We have to fight for it.”

The quarter is home to some 2,000 Armenians with the same status as Palestinians in Israeli-annexed east Jerusalem — residents but not citizens, effectively stateless. Israel annexed east Jerusalem, where the Old City is located, after capturing it in 1967, a move not recognized internationally.

For the past month — most recently last Friday — protesters have formed a human chain around the quarter and gathered under Manougian’s window, shouting “traitor” and demanding that he come clean about who has leased the land and how.

While the Armenian church has refused to disclose details about the sale, Yeretsian identified the investor as Australian-Israeli businessman Danny Rothman. As the church’s real estate manager, Yeretsian said he was acting at the request of the patriarch.

There is very little information available about Rothman, who also has used the last name Rubinstein, according to a 2016 Cyprus regulatory decision fining him for falsifying his academic background.

His LinkedIn page describes him as chairman of a hotel company called Xana Capital. Records show the firm — formed in the United Arab Emirates — was registered in Israel in July 2021. Weeks later, a dozen Armenian priests raised the first alarm about a property deal being struck without their consent.

A sign recently popped up marking the Armenian parking lot as the property of Xana Capital.

Rothman, who is based in London, declined to comment when reached by The Associated Press. “I never get interviewed by the press. I’m a private person,” he said before hanging up.

The self-exiled priest, Yeretsian, said that Rothman plans to develop a high-end resort in the Armenian Quarter. The project, he added, would be managed by the One&Only hotel company based in Dubai, in the United Arab Emirates, which established diplomatic relations with Israel in 2020. The deal appears to be one of the most high-profile — and controversial — to come out of the business ties that were forged under the U.S-brokered agreements known as the Abraham Accords.

Israel’s Foreign Ministry declined to comment, citing the political sensitivity.

Kerzner International, owner of One&Only Resorts, also declined to comment. The Dubai-based company said only that it is “always exploring opportunities to grow its portfolio of ultra-luxury resorts.”

Renowned Israeli architect Moshe Safdie told the AP that Rothman would fund the project and that he would design it. Construction, he said, would start following excavations at the parking lot. It is unclear whether residents will be evicted, but the patriarchate has promised to assist any residents who are displaced.

The saga reflects the struggle over politics and real estate that has bedeviled the Holy Land for centuries.

Jewish investors in Israel and abroad long have sought to buy east Jerusalem properties. The Armenian Quarter is desirable because it abuts the Jewish Quarter and the Western Wall, the holiest place where Jews can pray.

Their goal is to expand the Jewish presence in east Jerusalem, cementing Israeli control of the part of the city claimed by Palestinians as their capital.

Scandals involving land sales to Jewish settlers have previously embroiled the Greek Orthodox Church, the custodian of many Christian sites in the region.

Two decades ago, the Greek Church sold two Palestinian-run hotels in the Old City to foreign companies acting as fronts for a Jewish settler group. The secretive deals led to the downfall of the Greek patriarch and prompted international uproar.

Yeretsian, in California, dismissed fears of an Israeli settler take-over of the Armenian Quarter as “propaganda” based solely on Rothman’s Jewish identity.

“The intention was never to Judaize the place,” he said, claiming that Rothman has no political agenda. He insisted that the Armenian patriarch was fully engaged in the long-running negotiations and personally signed off on the contract.

“I did my job faithfully in the best interest of the patriarchate,” he said, declining to offer further details about the lease that he said expires after a century. The patriarchate declined to say what it would do with the money from the deal.

Meanwhile, Jerusalem’s Armenians — long ruled by foreign powers, displaced by wars and squeezed between Israelis and Palestinians — are filled with nagging dread.

“Our lands were acquired inch by inch with blood and sweat,” said 26-year-old resident Satrig Balian. “With one signature, they were given away.”