ULM Properties' student housing bonds downgraded to B3 by Moody's

-University of Louisiana at Monroe Project bonds were downgraded to B3 from B2 by Moody's Ratings, which cited weak demand for the housing.

The outlook is stable, reflecting what Moody's said was a modest reserve position that "should enable the project to avoid default in the near term."

The bonds were issued as Series 2019A Louisiana Local Government Environmental and Commercial Development Authority student housing revenue bonds.

"The downgrade results from weak demand for the project, resulting in below sufficient coverage and continued taps to the debt service reserve fund," Moody's said Wednesday.

The facility has an 85% occupancy rate, which Moody's described as low. Debt service coverage was 0.98X as of Dec. 31, 2024, resulting in draws on the debt service reserve, which has been periodically replenished when occupancy has strengthened.

"Project management has been working to find alternative sources of demand, with limited success," Moody's said.

The borrower, Provident Group?ULM Properties LLC, has non-profit corporation Provident Resources Group, as its single member. Provident Resources Group develops, constructs and operates student housing.

Neither Provident Resources Group nor University of Louisiana at Monroe immediately responded to requests for comment.

Moody's downgrade of these bonds follows credit problems experienced by two student housing projects supported by bonds in Florida. Moody's downgraded one of them, PRG-UnionWest Properties LLC, to Ba3 from Ba1 in December.