Avison Young (Canada) Inc.

The negative outlook reflects our expectation that challenging CRE market conditions could weaken Avison Young's operating performance in the next 6-12 months, eroding its liquidity. We could lower our ratings on Avison Young if we believe there is an increased risk of default or a covenant breach in the next six months. We could also lower the ratings if the company announces another debt exchange offer or restructuring. We could revise the outlook to stable if the company's operating performance stabilizes due to improved CRE market conditions and its liquidity improves such that we believe Avison Young could maintain sufficient liquidity for its operations in the next 12 months. U.S. real GDP growth of 2.5% in 2024 and 1.7% in

...We expect Avison Young (Canada) Inc.'s EBITDA cash interest coverage to remain below 1.0x over the next six to 12 months due to subdued leasing and capital markets activity. Avison Young posted negative operating cash flow in the first quarter of 2024 and generated EBITDA of $3.9 million for the rolling 12 months ended March 31, 2024, based on S&P Global Ratings' calculation. As a result, EBITDA cash interest coverage ratio was 0.1x as of the rolling 12 months ended March 31, 2024. Our base-case assumption is that Avison Young will generate minimal S&P Global Ratings adjusted EBITDA for full-year 2024, subsequently hampering the liquidity and cash interest coverage ratio. That said, Avison Young remains compliant with the financial covenant of minimum last-12-month lender adjusted EBITDA requirement for the rolling 12 months ended March 31, 2024. S&P Global economists now believe the Federal Reserve will start cutting its benchmark rate in September, and we expect a rebound in capital markets...

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