The problem, of course, is that the distressed real estate market that presents such an opportunity also makes it a tough time to raise capital on favorable terms. If investors had $1 billion ready to invest in real estate, the situation wouldn't be so bleak -- but the opportunity also wouldn't be nearly as compelling. So it's a pretty classic catch-22.

But the takeaway for investors is an important one: Vornado has a highly-regarded management team, and if they've decided it's time to start readying the war chest, it means that great deals are likely to be on the horizon.

Even if Vornado has trouble raising capital, there are many other REITs out there, some of which avoided the excesses of the past few years and are ready to pounce when the time is right. Cohen & Steers co-CEO Marty Cohen recently told Barron's that the bottom may be near for REITs: "They are trading at steep discounts to asset values, even using our reduced estimates of value, historically high dividend yields and low price-to-cash-flow multiples. The single most important factor affecting a recovery will be the course of the economy. Fortunately, in this cycle there hasn't been a great deal of overbuilding, which would have worsened the outlook considerably, as it did in the early 1990s. We expect the record fiscal and monetary stimulation being put in place worldwide to at least stem the economy's decline. We should start seeing evidence of this by the end of 2009, when economic statistics begin to suggest a bottom."