Eric Cassin is a contributing editor to Real Estate Southern California, from which this article is excerpted.

Back in October of 2004, Australia-based Macquarie Office Trust had just a slight presence in the Southern California office market; its sole office asset here was the two-building Pasadena Towers property that it had picked up the month prior with joint venture partner Equity Office Properties. Having just completed their takeover of the US-focused Principal America Office Trust, Macquarie executives realized that they were "looking a bit short" on some of Southern California's better office markets, according to CEO Simon Jones.

Around six months later, Macquarie executives approached Los Angeles-based Maguire Properties, which was exploring the Australian market for capital options. Macquarie eventually beat out the other potential partners that Maguire was considering and the two organizations announced their $1-billion joint venture in early January of this year. Macquarie holds an 80% interest in the joint venture, while Maguire has a 20% interest. As part of the deal structure, Maguire receives both leasing and management fees and has "an opportunity to earn beyond that by meeting certain hurdles," according to Bill Flaherty, senior vice president of marketing for Maguire Properties.

This joint venture is an example of the ferocious appetite currently exhibited by Australian investors for Southern California real estate. Australian buyers spent more than $1.5 billion on Southland real estate purchases in 2005, according to statistics from New York City-based research firm Real Capital Analytics. This number (which includes the Macquarie/Maguire joint venture) shows a drastic rise from 2004, when Australians spent less than $48 million in Southern California. And industry experts predict that Australian investors' spending in 2006 will outpace their total dollar volume generated in 2005.