Avison Young was downgraded after a credit ratings firm said the Toronto-based real estate services provider with more than 5,000 employees worldwide defaulted on $400 million in debts and failed to make required loan payments in the past two quarters.
Standard & Poor's Global Ratings division said it cut Avison Young’s rating to the SD, or selective default, category late on Feb. 23 in a brief statement on its website. S&P ranks debt and creditworthiness to determine whether a company is likely to pay in a timely manner.
S&P said Avison Young "remains current on its debt service obligations under its revolving credit facility. In addition to taking the rating action, our assessment of information received from the company has led us to revise our assessment of management and governance on the issuer to negative from moderately negative," S&P wrote in its statement.
Avison Young Chief Executive Officer Mark Rose told Bloomberg News in an interview on Feb. 24 that the company is undertaking a restructuring program aimed at repairing its balance sheet. Rose added that his company is in the process of eliminating more than half its obligations and is planning to remove its non-independent directors, according to the report.
Avison Young is a commercial real estate adviser that represents institutions, as well as high-net-worth individuals and family trusts, and manages assets, construction projects and leasing and mortgage financing. The firm was founded in 1996 and grew from 11 to 64 offices between 2009 and 2015. Avison Young expanded further after Quebec’s CDPQ public pension fund invested $250 million into the firm in 2018, allowing it to grow into 19 countries.
The downgrade comes at a time when some commercial real estate companies have struggled due to higher lending rates. Investor CDPQ recently posted a negative return within its real estate holdings. The CDPQ recently announced plans to make changes involving the management of both of its real estate arms Ivanhoe Cambridge and Otera Capital and assume direct control over its real estate divisions.
Avison Young's offices include 14 in Canada, including in Montreal where it grew rapidly after buying out Devencore in 2021. Avison Young operates 56 offices in the United States, including 11 in California, as well as 12 offices in the United Kingdom, 5 in Germany, where it eliminated the jobs of 6 of its 50 employees last December. It also operates one office each in Israel, Poland, South Korea and Romania.