Porchside view from unit at Bluff at Waterworks Landing.

TUSCALOOSA, AL-A sponsor’s good reputation, combined with the newness of a student housing asset, helped HFF close $19.6 million in refinancing on behalf of developer Ellis-Trick.  The loan is being used to pay off construction financing on the 162-unit, 308-bed Bluff at Waterworks Landing.

In an interview with GlobSt.com, HFF associate director Adam Herrin brought up some interesting facts about the loan itself, as well as the market in which the four-year-old student housing project is located. “It was a higher leverage request,” acknowledges Herrin, who placed the loan with Freddie Mac. “But given the reputation Ellis-Trick has in the market, and the newness of the property, we were able to achieve favorable terms.” He goes on to say that Freddie Mac offered the best leverage and interest rate – at 3.77% — than other lenders approached.

Herrin also explains that the asset on 534 7th Ave. Northeast, which serves University of Alabama, is in a student housing market that is undergoing some changes. “Tuscaloosa has been a market that traditionally leased by the unit,” he comments. “Over time, we’ve seen student housing developers building housing that leases by the bed.” In fact, the 99.7% occupied Bluff at Waterworks Landing began as a unit lease project. However, “the developer moved to leasing by the bed, because he felt he could get more revenue out of it,” Herrin says.

Tuscaloosa, as a whole, has been what Herrin describes as a “sleepy little market,” at least, until the past couple of years. Enrollment has increased at the college, not so much because of new course offerings or professors, but because of Alabama’s continued success at the BCS Bowl Championshipseries.  “It’s kind of interesting what happens to college applications when a team wins a national championship or ends up at the Rose Bowl,” Herrin observes.  He goes on to say that enrollment at University of Alabama grew 6% during the 2012-2013 school year.