The folks at NAREIT tell us that there are three reasons to invest in REITs: performance, dividends, and diversification. Apparently a great number of investors have taken note.

Nicholas Yulico at reports that the wave of REIT privatizations has driven prices up enough to close the gap between public and private owners of real estate.

The REIT privatization wave has helped send the sector's share prices sharply higher, but that rally could cause the deal spigot to dry up.

A few months ago, the argument could be made that REITs' real estate portfolios were undervalued in the public markets based on where stocks were trading. That explained why private equity groups and other institutional investors were able to pay lofty premiums to take real estate investment trusts private and gain attractive real estate properties that could either be repositioned for the long term or flipped immediately for a nice profit….

Year to date, the MSCI U.S. REIT Index is up about 13% on a total return basis — much of it due to the privatization surge.

But the gap is now closing between the private market value of REIT assets and the public market value (as reflected in the stock price), says Matthew Lustig, who heads the real estate investment banking group at Lazard.

The REIT movement has now taken hold in Asia as well. Chris Prystay at reports that the burgeoning Asian REIT sector is spreading its wings.

Asian real-estate investment trusts are spreading, offering investors a wider opportunity to cash in on a regionwide property boom.

REITs are a relatively new investment vehicle in Asia, but during the past three years they have proliferated in Japan and Singapore and popped up in a few other markets, including Hong Kong, South Korea and Malaysia. Increasingly, many are crossing borders to hold properties in several different countries.

Singapore, which has seven listed REITs, is Asia's largest market for the property trusts outside Japan. But in Hong Kong, which currently has just three listed REITs, a slew of new REIT listings is expected this year. Analysts expect the number of REITs in Singapore and Hong Kong combined to reach two dozen by the end of 2006.

The global REIT rally has run higher and longer than most analyst expected. As the old saying goes, "they do not ring a bell at the top." This might not be the top, but this kind of news should give the unmitigated bulls some pause.