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CEO Denies Avison Young Is In Distress, Says Firm Is Ready To Snag Top Brokers After Debt Restructure


Mark Rose, the chairman and CEO of Avison Young, says the Canadian commercial real estate services firm's months of financial uncertainty are behind it after reaching a deal to slash its corporate debt load by more than half. 

Avison Young CEO Mark Rose discusses the post-debt restructuring of the firm.

The restructuring, scheduled to close next month, allows the company to reduce the size and interest rate of its corporate debt in exchange for what Rose told Bisnow in an interview on Saturday is a “minuscule amount” of equity.

An additional influx of capital coming with the deal will position Avison Young to grow again through hiring and acquisitions, Rose said. While the firm's board of directors will shrink by more than half, Rose said the firm didn't have to reduce its headcount and has a clear financial path forward.

“The next report you should be hearing from us is what we're investing in, who we're hiring and who we're buying,” Rose told Bisnow.

Rose declined to reveal specific details on the restructured loans, but the deal stems from two loans Avison Young took out, a $325M senior loan in 2019 and a $50M senior loan in 2022 that both mature in January 2025. They were declared in default last week by S&P Global Ratings.

The company's lenders agreed to reduce the roughly half-billion dollars in debt by more than 50% and bring the interest rate down to a “market rate,” Rose said. Avison Young also has a revolving credit facility of more than $60M that has stayed current and will be expanded in the new debt structure, Rose said.

“And the next obvious question is, ‘Well, then you must have given up something else.’ No, it's just eliminated,” Rose said. “It just goes away, because everybody believes in the company and our strategy and where we're going.”

While S&P said in a release on Friday that Avison Young failed to make required principal and interest payments on its senior loan for the past two quarters, Rose said those nonpayments were agreed upon in advance as the parties worked on a deal to tackle the debt.

The company has seen some key executive departures in the past year, as ratings agencies have raised red flags about its debt-to-earnings ratio and shrinking cash. Rose attributed the departures both to clashes with the company's culture and the need to restructure leadership in the wake of the pandemic.

“Some people fit into the culture, and some people don't,” Rose said. 

Talks to restructure the debt began in 2022, but Rose said they accelerated last year when it became clear that the commercial real estate market was amid a major pullback.

All of the company's lenders and investors, which include Canadian pension fund Caisse de dépôt et placement du Québec, have agreed to the new deal, he said, partly because of the company's proactivity.

“We see our clients in pain, we see major investors writing off billions upon billions, people handing back buildings that have never handed back buildings before,” Rose said, adding that he told the lenders, “I think we need to reinvest. I think we need to restructure to position this company to be ahead of the rest of the peers in the industry by being ready to face forward while everybody is still dealing with their particular issues.” 

The company is privately owned and doesn't need to report its financial performance, but its publicly traded peers have disclosed a mixed bag during this quarter's earnings season.

Newmark saw net income skyrocket by 468% during the fourth quarter, in part due to the firm’s sale of more than $50B in loans from the failed Signature Bank. CBRE also reported its net income jumping nearly 500% in Q4 to $477M, buoyed by its recurring revenues in workplace and property management.

But during the same period, Cushman & Wakefield reported a net loss of more than $35M, hampered by a 46% increase in net interest it spent in 2023 and a drop in revenue from its major service lines. Investment sales specialist Marcus & Millichap posted a net loss of more than $10M, with revenues dropping 37% in Q4.

Moody’s said last year that Avison Young was “small scale in terms of revenue relative to its sector peers” and that its weakened credit metrics were a constraint for the firm. Rose said Avison Young isn't, nor has it been, in distress.

“This is not an Avison Young issue,” Rose said. “You look at Marcus & Millichap’s numbers. That’s a good company. They’re in the capital markets business, and they were down 50%. Who cares? They’ll be fine. But right now they’re going to be down 50%.

“It’s a cycle, and we just happen to be at the bottom of the cycle,” he added.


Avison Young's declining credit rating was a result of the actions it took at the peak of the market.

It took on a $250M preferred equity investment from CDPQ in 2018, and the next year it took out a $325M loan to finance the acquisition of UK commercial real estate consultancy GVA Grimley, which pushed up the firm’s headcount to roughly 5,000 employees with 120 offices in 20 countries.

The interest rate on that loan wound up at roughly 15%, Rose confirmed to Bisnow. He said the company wasn't concerned with the leverage at the time because it had grown so rapidly.

“We were growing at 30%, 40% and 50% a year. So it didn't really matter what 15% was against the growth rates,” Rose said. “When you hit a couple of black swans, as we've done with Covid and now with this freeze in liquidity, then when you can't grow the same way, then it really comes into play.”

Its cost of capital didn't stop Avison Young's pursuit of scale. In 2022, it acquired Madison Marquette’s office and industrial property management, agency leasing and project management service businesses. The move added 235 team members and 20M SF to the firm’s portfolio. 

Last month, Avison Young bought another piece of Madison Marquette, the firm’s retail property management, retail marketing, leasing and specialty leasing lines in the U.S., which added 6.1M SF and 37 employees.

Those acquisitions fueled growth, but they also introduced leaders that didn't quite fit with Rose's vision of the company culture, he said. Some of the high-profile hires the company made were also undone.

Former GVA CEO Gerry Hughes left as Avison Young’s European president in 2021 to launch his own consultancy. Juan Bueno, hired as U.S. president in 2021 after a stint as vice president at Home Depot, left the firm in June

John Sikaitis, who was named Avison Young’s chief innovation officer after being hired away from JLL in 2019, left in March for CBRE. Chief Information Officer Mike Hart departed the company in June. 

Christine Battist, who had been chief financial officer for five years, left in April, according to her LinkedIn profile. 

“We had bought a few companies that it was very clear to us that it made sense that it was the right time to make some changes there,” Rose said. “We tried some different things, we tried to bring in kind of new people with different backgrounds. Those really didn't work for us. And so we changed them as fast as we brought them in.”

Harry Klaff was promoted to president to replace Bueno, while Bill Torzolini, who describes himself on LinkedIn as a semi-retired CFO who has acted as a part-time business adviser for Avison Young since 2021, is now interim CFO, an Avison Young spokesperson said. Other executives have been replaced with internal promotions.

Some of the firm's highest-profile brokers have also departed the company over the past 18 months, including Mitti Liebersohn and Arthur Mirante, who joined Savills in New York, two principals and a director from Avison Young’s Manchester, UK, office and two Atlanta principals, Casey Keitchen and Art Waldrop, who left for Newmark in December.

Colliers also snagged a four-broker team in Oakland, California, but Rose said that was a result of Avison Young's decision to shutter that office. 

“We've done things in the UK where there were businesses that existed but they just don't work in 2024, and we've shut down those businesses too,” Rose said. “That's what you do to get your company ready for a full restructure.”

When asked about the run of top brokers departing, Rose said some of them left because they were “starving to death and needed to take somebody's check to survive. And that's part of our business.”

“I can't come up with a top producer who has left us as opposed to people who have taken some checks,” he added. “The list of people who want to join [Avison Young] and get away from the public companies — and knowing now that we are fully past the restructuring and you can own equity in the company — we have our pick of the who's who right now who are trying to come to us.”

Because the company is majority-owned by the brokers, Rose said he is sure “there were sleepless nights” for many of the brokers who hold equity in the business as it was dealing with an increasingly dire public outlook on its debt.

He added that those principals voted to approve the restructuring deal, which includes removing a level of influence upon the firm. All four board seats held by Avison Young principals will be eliminated going forward, as will the two seats held by CDPQ. 

CDPQ's preferred equity will be converted into permanent equity, Rose said, and the brokers' ownership of the company will be slightly reduced. He described the outcome of the negotiations as a major victory.

“In a situation like this, where more than 50% of your obligations are just eliminated and not really traded for anything and everybody is still in from management to all of your investors, there's a pretty significant belief in the company,” he said. “Everybody thinks that we are absolutely on target.”

CORRECTION, FEB. 27, 11:15 A.M. ET: Bill Torzolini is interim chief financial officer at Avison Young. An Avison Young spokesperson previously said he was serving as permanent CFO. This story has been updated.