It has become known that the Caisse de dépôt lost a significant amount of money with the real estate company Avison Young The newspaper.
• Also read: Nothing “too fancy”: The Caisse uses AI to manage nearly $20 billion in assets
• Also read: The Caisse is preparing extensive layoffs
• Also read: Caisse de dépôt: Real estate reduces results
The Quebecer's nest egg invested $250 million in 2018 to purchase preferred shares in the Toronto company.
However, Standard & Poor's (S&P) announced last week that Avison had failed to make required payments on its prime term loan in the second half of 2023.
The US rating agency has therefore raised Avison Young's credit rating from CCC to SD. This means that the highly indebted company finds itself in a situation of “selective” default on payments, i.e. on part of its loans.
S&P also upgraded its rating on the quality of Avison's management and governance to “negative” from “moderately negative” in light of information received from the company.
Recapitalization
On Monday, Avison Young announced that it had completed a “recapitalization transaction” with its lenders and shareholders.
“With this transaction, Avison Young reduced its financial obligations by more than half and secured additional capital to advance its strategic objectives,” the company said in a statement.
“We have worked together to find a solution that is satisfactory to all parties involved, with the aim of supporting the company's turnaround in the face of difficult market conditions. We believe that this is the best solution under the circumstances,” responded Kate Monfette , spokesperson for the Caisse.
A source familiar with the matter told the Journal that the Caisse lost significant sums as a result of this restructuring, although he declined to quantify the amount. It was assured that the institution did not return any money to Avison as part of the process.
In 2021, the Caisse's investment in Avison Young was valued at at least $300 million, suggesting that the institution reinvested in the company following the onset of the COVID-19 pandemic, which dealt a hard blow to the commercial real estate sector Company is specialized.
We will have an idea of the loss in value of the fund's investment in Avison when the institution publishes its annual report in April.
Until August 2023, three Caisse representatives – Benoit Raillard, Eva Maglis and France Desharnais – sat on Avison Young's board of directors.
Can you share information about this story?
Write to us or call us directly at 1 800-63SCOOP.