Avison Young (Canada) Inc.

The negative outlook over the next 12 months reflects S&P Global Ratings' expectation of EBITDA cash interest coverage of 0.5x-1.0x. The outlook also considers Avison Young's relatively modest market position, adequate liquidity, and existing waiver on its leverage covenant cushion. We could lower the rating over the next six to 12 months if EBITDA interest coverage remains below 1.0x, if liquidity deteriorates, or if the company's covenant cushion becomes very tight and we are less confident that it will be able to obtain a waiver. We could revise the outlook to stable over the next six to 12 months if EBITDA cash interest coverage improves to 1.0x-1.5x on a sustained basis. U.S. GDP growth of 6.7% and 3.7% in 2021

...Although improving, Avison Young (Canada) Inc.'s EBITDA cash interest coverage remains below 1.0x. For the rolling 12 months ended June 30, 2021, S&P Global Ratings-calculated adjusted EBITDA for Avison Young was C$12.8 million, from C$5.1 million in 2020 and C$51.7 million in 2019. Unlike lender-adjusted EBITDA, S&P Global Ratings-adjusted EBITDA does not give credit for lost brokerage revenue, the pro forma impact of cost-savings, growth investments, severance, IT system enhancements, and the amortization of the company's deferred recruiting expenses. We view the company's market position and operating performance as weaker than peers'. The company operates in a highly fragmented market for commercial real estate (CRE) services and lacks the scale and market position of its much larger peers CBRE, Jones Lang LaSalle, Cushman & Wakefield, and Newmark Knight. Recently, Avison Young made technological investments that could bolster revenue and cash flow. For the six months ended June 30,...

Full Report