Overseas InvestmentsAn Irish businessman has paid $64 million (€45.362 million) for two office investments in the centre of Boston.

The initial yield of 4.5 per cent on the largest investment will move to about 7 per cent by 2012 when pre-agreed fixed rental increases kick in, according to Jeremy Kelly of Dublin agents Kelly Walsh. The agency is looking for further investment opportunities in Boston and Chicago for private clients planning to diversify into the American commercial property market. Much of the interest in the American market has been triggered by the relatively good value available by comparison with Europe and the fact that the euro is at a 15-year high against the dollar.

The largest of the investments bought by Kelly Walsh - costing $34 million (€24.1 million) - was at 45 Milk Street in the heart of Boston's financial district. The distinctive nine-storey "jewel box" office building extends to 6,409sq m (68,995sq ft) and is fully occupied.

The building is multi-let and is producing a net operating income of $1.6 million (€1.134 million) per annum, rising to $2.75 million (€1.95 million) per annum by 2013. The block is located at the corner of Arch Milk and Devonshire streets, just steps from Boston's epicentre, Post Office Square. The second building, acquired for $30.25 million (€21.44 million), is at 30 Winter Street on the edge of Boston's central business district. Again, the block is multi-let and producing a net operating income of $1.4 million (€992,000), rising to $2.6 million (€1.843 million) by 2013. The 8,145sq m (87,675sq ft) building has stunning views of the Boston Common State House and Charles river. The block has been extensively renovated in the last five years.

Around 88 per cent of the space is occupied and average rents of $322.75/€228.75 per sq m ($30/€21.25 per sq ft) are about 40 per cent below the current market levels. The initial yield in this case will be about 4 per cent but this will move to about 7.5 per cent by 2012 given the pre-agreed fixed rental increases.

Jeremy Kelly says the liquidity of the US commercial property market was due in part to the fact that acquisition costs varied between 2.5 and 4 per cent compared to 11 per cent in Ireland. "The fact that the average American investor holds commercial property for no more than two to three years has obviously a lot to do with the low acquisition costs."