This comes almost six months after MCL Cos. defaulted on a $300-million construction loan, reinsured against default by Mitsui Sumitomo Insurance. To avoid a formal foreclosure proceeding in court, MCL signed over the title to River East Center I, the two-tower structure that includes a 455-room Embassy Suites Hotel, 620-unit condo tower, 257,530 sf of retail space and a 1,142-stall parking garage. However, Fremont's loan is secured only by the retail and parking components of the project.

The initial funding of $48 million was used to retire existing mechanics' liens, pay outstanding tenant improvements and delinquent property taxes, and pay off MCL's partners. Some $8 million will be available to fund ongoing retail leasing and demising costs. Sources say interviewing for potential developers to take over the retail leasing is already under way; MCL will still manage River East Center I.

The property's location, in-place cash flow, and the financial strength of the project's new sponsorship helped seal the financing despite poor leasing momentum and a miserable overall market.