REITs have sure been hot. The Morgan Stanley REIT index soared 29 percent in the first 11 months of 2004, following a 36 percent rise in 2003--a winning streak that means a $1,000 investment in the index less than two years ago would have earned you total returns of $700.

Will 2005 bring comparable gains? We doubt it. First, the gap between REITs' yields and the yields of benchmark 10-year Treasuries is narrowing. Also, the group…

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