Avison Young (Canada) Inc.

The stable outlook over the next 12 months reflects S&P Global Ratings' expectation of EBITDA cash interest coverage of 1.0x-2.0x. The outlook also considers Avison Young's nominal market position, adequate liquidity, and leverage covenant cushion. We could lower the ratings over the next 12 months if EBITDA cash interest coverage declines below 1.0x, liquidity deteriorates, or the company's covenant cushion becomes very tight and we become less confident that the company will be able to obtain a waiver. An upgrade is unlikely over the next 12 months. Over the longer term, we could raise the ratings if the company reports operating profitability on a sustained basis, leverage declines well below 5.0x, and EBITDA cash interest coverage remains 2.0x-3.0x. U.S. GDP

...Avison Young (Canada) Inc. continues to grow through debt-funded acquisitions. From 2009 through June 30, 2022, Avison Young completed 55 acquisitions and recruited approximately 400 experienced real estate professionals. In August 2022, the company issued a US$75 million senior secured term loan with proceeds to be used solely to fund its current and future acquisitions. We believe these acquisitions could increase the company's scale and international footprint, although there could be risks in the integration process. We expect Avison Young's EBITDA cash interest coverage to remain 1.0x-2.0x. For the rolling 12 months ended June 2022, S&P Global Ratings' calculated adjusted EBITDA for Avison Young was C$87.0 million, compared with C$83.0 million in 2021 and C$5.1 million in 2020. As a result, EBITDA cash interest coverage improved to 2.0x as of June 30, 2022, compared with 2.1x in 2021 and 0.1x in 2020. Despite improvement, we view the company's market position and operating performance...

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