Investors that initially offered up to $175 million to purchase Boston-based UrbanMeritage’s Newbury Street portfolio along the city’s famed shopping boulevard are sharpening their pencils and their offers as they enter the second round of bidding, according to industry sources.

After eliminating some would-be buyers in the first round, UrbanMeritage and partner Taurus Investment Holdings, whose portfolio includes 28 buildings on Newbury, Boylston, Clarendon and Dartmouth streets, are readying the entire portfolio for sale, leaning toward all-cash buyers over those needing financing, sources told Banker & Tradesman.

Now, interested investors will need to decide whether they think the properties are actually worth the price, which some property owners in the area are calling “very high.”

“Everybody wants to get to the second round,” said one local property owner that wished to remain anonymous. “The information from owners is very limited in the first round. Now [bidders] will need to go through every property and line item very closely … and will either think, ‘my gosh, this is a crazy number,’ or ‘wow, this is a great value.’”

A ‘Generational’ Opportunity

Some sources, citing the scarcity of similar properties coming on the market, are calling the portfolio’s impending sale a “generational” opportunity. Interested investors are viewing the Newbury Street portfolio relative to similarly positioned properties along Chicago’s Magnificent Mile or Madison Avenue in New York City – especially if those same investors already own property in those retail markets, and are looking to round out their holdings with a Boston presence.

The Newbury Line includes approximately 105,000 square feet of retail space, 36,000 square feet of office space, 50 residential units and 55 parking spaces, according to reports. The 28 buildings are approximately 75 percent leased. Several are completely vacant shells awaiting renovation, but most are 100 percent leased and renovated, according to industry sources.

Boston Realty Advisors, located on Boylston Street in the Back Bay, has been active in sales and leasing on Newbury Street, and has been coaching some prospective buyers and helping them with valuations of UrbanMeritage’s properties. Jason Weissman, principal, said the underwriting is very strong, but also justified, and that bids are fluctuating between $170 and $180 million.

“To have a critical mass of Back Bay assets like this, and given how Urban has aggregated the portfolio, it’s really a special opportunity,” Weissman said.

But some local real estate experts are unsure if the purchase price will actually remain that high, simply because of the range in quality of some of the properties included in the offering – which can range from top-name retail spots to lower quality, older office space. But even if the price does come down some, it won’t be much, because that price range is “very tight,” sources say. Either way, the portfolio includes or will include locations currently occupied by high-profile retailers like Pinkberry, Ben Sherman, Scoop NYC and Marc Jacobs. Principals from the ownership group declined to comment for this article.

“If it sells for the price it’s rumored to be going for, it provides a very good comparable for when other owners go to sell their own properties,” said a longtime property owner in the area. “When that sort of pricing comes out, it could be a very good indication of investor confidence in the area and Boston retail.”

Money To Spend

UrbanMeritage spent upwards of $105 million to purchase the properties, and have increased rents 100 to 150 percent in some properties just by performing gut renovations to buildings, Principal Michael Jammen told Banker & Tradesman in June.

The company purchased 177 Newbury Street for $3.5 million in 2007, according to The Warren Group, publisher of Banker & Tradesman. The building was an 18-room boarding house at the time, and the company needed to relocate residents before gutting the property.

The firm gets 75 to 80 percent of its revenue from retail operations in its properties, but those operations account for only 30 to 40 percent of the Newbury Line’s square footage, he said. As of June, the firm still had $200 million left in the fund that purchased the portfolio

“We have more money to spend and more deals to look at,” Jammen said at the time. “We have not lost a tenant yet. Choosing a tenant is the most important part of what we do.”

Even so, he added that his company had been moving hair and nail salons to the upper floors of its properties to make way for more of the lucrative, high-end, street-level retailers UrbanMeritage has attracted to Newbury in the past. The firm has had issues leasing some available spaces on the second or third floors, sandwiched between, say, a hair salon and a nail salon.

Average retail rents in the Back Bay have climbed to about $120-per-square-foot, sources told Banker & Tradesman recently. And according to information provided by UrbanMeritage, storefront vacancies on Newbury Street have dropped to just 3 percent this year, compared to roughly 7.5 percent at the same time last year. In 2009, vacancies spiked to approximately 12 percent.

UrbanMeritage and Taurus began buying its so-called Newbury Line properties in 2006, when it purchased 95 and 91 Newbury Street. It has since accumulated 28 properties in the portfolio, largely with money from Anglo Irish Bank.

Sources were unsure if the local property owners would retain any portion of ownership in the buildings. The owners have tapped Eastdil Secured to sell the Newbury Line portfolio. Eastdil has also been retained to divest Anglo Irish’s approximately $9.5 billion U.S. real estate portfolio, about a quarter of which is concentrated in Greater Boston. However, since the Newbury Line is a highly performing portfolio, it is being sold separately on behalf of Taurus, which provided the equity capital, instead of Anglo Irish, which provided the debt, according to sources.

Eastdil has also been hired by Anglo Irish to market the luxury Mandarin Oriental Boston hotel, according to reports. The bank is retaining its ownership in the hotel and selling the property as a stand-alone asset, separate from the sale of its remaining U.S. holdings.

Anglo Irish’s U.S. holdings are slated to be sold to Texas-based Lone Star Funds and affiliates of Wells Fargo and JPMorgan Chase.