Freed gives up control but keeps stake in Sullivan Center

(Crain's) — Joseph Freed & Associates LLC has restructured the debt on the Sullivan Center on State Street — the future home of a Target store — but has given up control of the property to a lending joint venture led by a Boston-based real estate investment trust.

Winthrop Realty Trust and Elad Canada Inc., which recently paid $128 million for a $140.3 million loan on the property, known best as the former Carson Pirie Scott store, now get a share of the profits in the property under the restructuring, according to a recent Winthrop news release.

Related story: Freed's defaulted loan on Sullivan Center sold

The loan has been restructured into a $100 million note from a third-party lender, a $47.5 million mezzanine loan and a provision giving the Winthrop venture almost two-thirds of the property's future profits, Winthrop said in the release.

The deal allows Freed to keep an interest in a major development as it loses control of several others to lenders trying to collect on defaulted loans. A Los Angeles firm has agreed to buy the Block 37 mall, a Freed development that Bank of America Corp. foreclosed on last year

Designed by Louis Sullivan and built at the turn of the 20th century, the Sullivan Center operated as the flagship store for Carson Pirie Scott until the department store chain shut it down in 2007. Freed has been trying to fill the space with new tenants. Target plans to open a CityTarget store of about 125,000 square feet there this summer.