As the takeover battle over Equity Office Property ( EOP ) demonstrates, real estate investment trusts have never been hotter. At $54 per share, the latest bid from the Blackstone Group exceeds $38 billion, which would qualify as the largest buyout on record.

REITs are just as popular with smaller investors: IPOs and secondary offerings in the sector approximated $18 billion in 2006, the highest activity level since $26 billion in 1997.

Mutual fund investors have also benefited as funds that specialize in REIT funds have also been hitting new highs. The 90 of the largest mutual funds with a real estate focus have returned an average 5% so far this year. That comes on the heels of an average return of 35.8% in 2006, an annualized 26.7% over the last three years and an annualized 24.5% over the last five years. Any way you look at it, REITs have been one of the best ways to build wealth and add diversification to a portfolio this month -- and over the last few years.

Those who prefer to hold individual stocks should consider four companies that get top marks from TheStreet.com Rating's models in each of the subsectors of this industry: office properties, regional malls, health care and apartment REITs.

Since it's too late to get in on EOP...

Our first pick is SL Green Realty ( SLG), which has a market cap of $7.9 billion and is up 9% year to date. Across the country, office REITs, which have performed sluggishly in recent years, are finally benefiting from lower unemployment rates and lack of significant land and building supply in most areas.

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