Racebrook targets $250m for debut vehicle

The firm, originally founded as a portfolio company of Warburg Pincus in 2004, has launched its first discretionary fund, Racebrook Capital Partners. The vehicle is focused on distressed debt and equity opportunities in North America, particularly non- and sub-performing whole loans.

Racebrook Capital is raising its first discretionary real estate fund targeting $250 million for distressed debt and equity investments.

Sources familiar with the matter said the New York-based firm has been fundraising for the vehicle, Racebrook Capital Partners, since late summer.

The vehicle is expected to target non- and sub-performing whole loans, in particular, as well as distressed construction loans, CMBS, mezzanine notes and distressed equity sales across all property sectors. Racebrook’s placement agent is Eureka Capital Partners, the person said. Racebrook declined to comment.

Racebrook was founded in 2004 as a portfolio company of Warburg Pincus. According to documents seen by PERE, Warburg committed $100 million through its Warburg Pincus Fund VIII vehicle.

The firm was co-founded by chief executive officer John Cuticelli, formerly with Max Capital Management and who ran HSBC Holdings/US Concord’s $3 billion balance sheet of non-performing US commercial mortgage loans in the 1990s, and chief investment officer Victor Fracaro, previously senior investment officer at DivcoWest and a former investment professional at Morgan Stanley Real Estate in the 1990s. Mark Troen, Racebrook’s chief real estate and development officer, is also a principal and co-founder. He was previously chief development officer at New York-based developer Monday Properties.

In July, Racebrook acquired the real estate auction house Sheldon Good & Company after the sale was approved by a bankruptcy court. Racebrook’s subsidiary, Racebrook Marketing Concepts, said in a statement at the time it would acquire the assets of Sheldon Good, after being the original stalking horse bidder. Racebrook Marketing reportedly bid $1.2 million for the troubled company, agreeing to also pay off a $1.9 million debtor-in-possession (DIP) loan, according to various media reports.

Racebrook is expected to work closely with its auction and advisory arms to source deals. RCP  is targeting gross returns of 18 percent.