If you're wondering where and how to invest in real estate in 2010, you might be interested in the results of a new survey that asked institutional investors -- all deep pocket, big players -- about their strategies for the coming 12 months.

New York and London-based research firm Preqin reports that 62 percent of the large investment companies it surveyed said they plan to buy into - or add to their holdings - of private equity REITs, or real estate investment trusts.

That's up from 45 percent in a similar survey Preqin conducted in early 2009.

Even more interesting: Fully three quarters of these investors said they are most interested in REITs that are devoting at least some of their acquisition activities to distressed commercial and retail real estate that they can buy at rock bottom prices, turn around, and either hold for income or sell at a profit.

Why should smaller-scale investors care about where the big players plan to put their bucks this year? Aren't the types of opportunities the big guys pursue simply out of the reach of smaller players?

Not when the targeted investment vehicles are stock-market-traded REITs, and come with minimum entry prices of a thousand dollars, twenty five hundred dollars and up.

REITs open the door for smaller investors to ownership of commercial properties like downtown office buildings, shopping malls, giant apartment complexes and the like.

Equity REITs pool investors' money to buy these buildings either all cash or with moderately-leveraged mortgage debt. Though REITs come with the risk of declines in share prices when the stock market goes south, they are often well-managed companies run by experienced real estate professionals.

Some REITS, such as CGM Realty, one of investor magazine Smart Money's top rated stocks for 2010, have come through the ups and downs of the past decade with surprisingly high returns for stockholders.

CGM's 10-year annual average return, according to Smart Money, is 18.2 percent. During the past five rocky years, that return declined sharply, but still was an average annual 5.9 percent.

Unlike other public companies, REITs by law must distribute at least 90 percent of their taxable income to shareholders in the form of dividends.

Over the past three decades, according to industry data, REITs have returned an average 11.9 percent to their investors, well above the average for other stocks.

2010 could be an especially high yielding year, say some investment analysts, because cash-rich REITs are sitting in the catbird seat to take defaulted commercial property off the hands of banks who badly want to get rid of them.

Published: February 17, 2010

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Kenneth R. Harney writes an award-winning, nationally-syndicated column on housing and real estate from Washington, D.C. He is also managing director of the National Real Estate Development Center, a professional education company. He is a past member of the Federal Reserve Board's Consumer Advisory Council, a committee that by federal statute reviews all Fed actions on home mortgage, consumer credit and banking industry regulation. He served as a member of the U.S. Department of Housing and Urban Development's Working Group on Computerized Loan Origination (CLO) systems, and is a member of the Editorial Board of the Fannie Mae Foundation's journal, Housing Policy Debate. He is the author of two books on mortgage finance and real estate.