Tricor invests in Avison Young
Vancouver-based Tricor Pacific Capital Inc. recently invested $40 million in Avison Young, a Toronto-based brokerage that has expanded rapidly in the past three years to reach a total of 25 offices across Canada and the U.S.
Tricor?s investment will support that expansion as Avison Young sets its sights on opening an office in New York soon.
?They?ve got a very strong CEO and senior management team that?s executing a very significant growth plan,? said Rod Senft, managing director of Tricor in Vancouver, regarding the rationale behind Tricor?s investment in Avison Young. Senft, along with fellow managing director Bradley Seaman, became a director of Avison Young when the deal closed in mid-October.
?All the senior executives have equity, and that?s something that really distinguishes them in the market,? Senft added. ?The only missing piece for them was the capital to really do the acquisitions and bring on the people that they needed.?
Highlighting this is that none of Avison Young?s executives are cashing in their own stakes as part of the deal. Tricor?s investment is purely for expansion purposes, including opening and developing offices, acquisitions and securing talent.
?Pricing for the companies and the talent that we?re buying is off substantially from 2007,? said Bob Levine, a principal in Avison Young?s Vancouver office.
The investment is especially significant, given that it follows DTZ Holdings plc?s acquisition of J.J. Barnicke Ltd. in 2007 and Cushman & Wakefield Ltd.?s gobbling up of Royal LePage Commercial Inc. in 2005 (LePage finally disappeared from the company?s name last year).
Senft believes Tricor?s investment will help Avison Young fulfil its expansion plans, especially given the opportunities available in the U.S.
?What we hope we?re doing is creating Canada?s next significant success story in the real estate business,? Senft said. ?[It] will, hopefully, not lose its Canadian identity but really capitalize on the disarray in the American market and really be able to grow.?
Back to the GST
Developers have been increasing attention this month on the lack of clarity regarding the phase-out of the HST, which voters in the province rejected this past summer in a referendum. Playing on fears – backed up by statistics and surveys – that homebuyers will defer purchases of new homes pending clarity on the tax rules, developers are calling on the province to explain how new home sales will be taxed as the HST approaches termination by March 31, 2013.
?For developers and builders to move forward with projects that are critical not only economically, but to specific neighbourhoods, there needs to be clarity from the government,? said Hari Minhas of Colliers International Residential Marketing in an email informing media of Panther Constructors Ltd.?s plans to make it ?like HST never happened? on select units being offered for sale in its 28-unit The Flats project at 219 East Georgia Street.
?The consumer, frankly, has no idea what the rollback will look like,? Minhas said, ?and we do not know the full extent of what its impact on our industry will be.?
Don Forsgren, Urban Development Institute-Pacific Region president, then spoke with Canadian Press regarding the woes spawned by the government?s lack of celerity in providing information regarding how the HST will be phased out. As a result of the lack of information, the UDI says a quarter of its members have deferred projects and up to 2,000 residential units provincewide are stalled.
?We don?t have a transition date and we don?t have transition rules, so we?re in the muddied period where it?s hard to start new projects,? UDI executive director Maureen Enser said last week. ?And because we?re not starting new projects, a lot of companies are really wondering what to do with their employees.?
Enser noted that each new unit of residential construction translates to four jobs. Construction deferred means employment postponed and idle workers. ?At a time when the government is talking about a jobs strategy, we?re actually losing jobs in our industry,? she said.
While individual developers may choose to act as if the HST never happened, all developers will face the challenge of writing contracts to reflect the lack of information regarding sales taxes.
Said Enser, ?You don?t know, to enter into projects, what to include in your contracts.??
