REITs on the Move: Vornado Realty Trust and SL Green Realty Corp.

The Masters were talking up the REITs just yesterday and pondered - Could it be time to buy REITs?   Turned out the answer was "yes".  Today shares of Vornado Realty Trust (NYSE:VNO) are up 5% and SL Green Realty (NYSE:SLG) are up 7.5%, there's only one response for that one day gain..1-2-shabadoo!

Here's how that index of REIT's the Masters pointed out yesterday have done thus far: 

Name	Symbol	Last price	Change	Gain %	Overall Return
Russell Real Estate Secs C	RRSCX	22.01	0.00 (0.00%)	0.00%	0.00%
Vornado Realty Trust	VNO	50.30	+2.31 (4.81%)	4.97%	4.97%
SL Green Realty Corp.	SLG	26.91	+1.95 (7.81%)	7.04%	7.04%
Simon Property Group, Inc	SPG	54.73	+0.74 (1.37%)	1.88%	1.88%
Mack-Cali Realty Corp.	CLI	25.91	+0.64 (2.53%)	2.53%	2.53%
Digital Realty Trust, Inc.	DLR	37.50	+1.15 (3.16%)	3.96%	3.96%
First Potomac Realty Trust	FPO	11.05	+0.06 (0.55%)	0.64%	0.64%

REITs were up 28% in April as bargain-hunters swooped in. And more good news for investors: As REIT prices rise, the secondary offerings they do to raise cash for more acquisitions and balance sheet stability will become less dilutive.

The problem is that many REITs are focused on the commercial sector, where problems may still be in the early stages -- even if residential real estate is close to a bottom. With retailers filing for bankruptcy and closing stores, they may have trouble filling vacancies: It's still not clear who will move into the big boxes vacated by the failures of companies like Circuit City and Steve & Barry's. Here's the main thing to look for in REITs right now, aside from the usual low vacancy rates, solid cash flow, strong balance sheet, good yield, solid properties, good corporate governance, etc.:

If the company is involved in commercial real estate, make sure that it doesn't have short-term debt that will need to be rolled over anytime soon. The commercial lending market remains very tight and even companies whose operations are rolling along nicely can descend into bankruptcy if they can't refinance. Look up General Growth Properties for more on this.

Companies with too much short-term debt may not, no matter how great their long-term prospects are, be able to survive the recession. Companies with no pressing need to borrow money might suffer from lousy results for a few more quarters but if you buy them cheap enough, you'll still make a lot of money.

So what REITs can you invest in?

Russell Real Estate Securities (RRSCX), which employs multiple managers and invests across an array of residential, commercial, retail and other offerings.

Many investors are familiar with the bigger REITs such as Vornado Realty Trust (VNO) and Simon Property Group (SPG).  Other to consider include Mack-Cali Realty (CLI), Digital Realty Trust (DLR), SL Green Realty (SLG) and First Potomac Realty Trust (FPO).

REITs Tickers Alone: RRSCX  VNO  SLG  SPG  CLI  DLR  FPO