Real estate investment trusts are coming back from the mid-1970s when many collapsed and investors lost billions of dollars, and multiplying with a vengeance. As one indicator, more REITs were organized in the first half of 1985 than in the past four years combined.

But some investment experts fear that the trusts' boom, which has been spurred by high yields in recent years and the threat that tax reform will hurt other real estate investments, could be coming at an inopportune time.

REITs are companies that pool shareholders' money to buy or finance shopping centers, office buildings and other properties and pay 95 percent of the profits in dividends. Experts say they are beginning to suffer from a nationwide glut of commercial property. High vacancy rates are pinching rental income while lower inflation is cutting profits from gains in property values, they say.

Meanwhile, many new REITs are buying high-priced or risky properties, as good, bargain-priced real estate is hard to find, according to these experts.

Consequently, many new REITs fell short of raising the investor capital that they wanted, and their stocks are trading lower than their initial offering prices.

"Investor expectations of income growth from REITs cannot be as high as in the recent past," said Martin Cohen, portfolio manager of a real estate mutual fund that is offered by National Securities & Research and that invests in REITs.

"Anytime you bring on a lot of new players in any market, there's going to be some weak sisters," said Arthur G. Von Thaden, chairman and president of BankAmerica Realty Services, which advises a REIT offered by the banking company. "Not all will have strong managers and not all will produce good results."

But while dividends and stock prices will be hurt in the short run, the industry, overall, is in good shape financially and many REITs will remain good investments in the longer term, experts say.

Nobody expects a recurrence of what happened in the mid-1970s, when some REITs failed and the industry shrunk by half amid a slumping real estate market.

In those days, the trusts relied heavily on short-term loans that they used to make mortgage loans for high-risk construction and development projects. When those projects defaulted and interest rates shot up, many REITs could not make loan payments, in turn causing millions of dollars of losses among U.S. banks.

Today's REITs, by contrast, are much smarter and less reliant on borrowings than their predecessors, experts say.

Most real estate investment trusts are the safer, equity type that own properties rather than lending to them. Many equity trusts, in fact, survived quite nicely a decade ago when mortgage trusts were suffering.

Accordingly, REITs are considered one of the safest real estate investments today. They also have been among the most attractive financially.

Between 1979 and 1984, real estate trusts posted a compounded annual return of 20.5 percent compared with 16.1 percent for Standard & Poor's index of 500 stocks, according to NAREIT, the National Association of Real Estate Investment Trusts.

Such attractive returns, along with anticipation that tax reform will reduce write-offs from real estate tax shelters and favor income-oriented real estate investments such as REITs, have helped to spur the surge in new trusts.

At least 16 real estate investment trusts completed initial public offerings last year and 28 are in the process of initial offerings, adding to the 125 already in existence. About 28 companies completed $1.5 billion of new REIT offerings last year, more than double the 712 million in new offerings from 23 companies in all of 1984, NAREIT said.

Still, many experts urge caution in investing in new REITs, particularly "blind-pool" trusts that have not yet specified what they will buy, as well as those without proven track records in real estate investing.

New trusts that haven't bought properties yet are hampered because "real estate prices are high and returns are low," said Alan Crittenden, who publishes a real estate newsletter in Novato, Calif.

Despite the commercial real estate glut, trusts and other institutions, such as insurance companies and real estate syndicates, have been competing for prime real estate, bidding up prices and making it harder to find good deals, according to Crittendon.

"There's lots of money coming in, and only so much quality property," said Mark Decker, executive vice president of NAREIT.

Such conditions are making real estate less attractive as an overall investment in the near term, said Robert A. Frank, a real estate analyst with Alex. Brown & Sons, a Baltimore-based investment company.

Frank said real estate generally will produce smaller returns than other assets in the next three years, barring an unusually strong surge in demand for office and residential space.

"Investors in new REITs are being taken for a very unpleasant ride," portfolio manager Cohen said, noting that 12 of 13 new trusts that he is tracking are selling below their initial offering prices.

Grubb & Ellis Realty Income Trust raised $25 million in its initial offering last April, instead of the $50 million that it hoped for, and its share price has lagged below its $20 initial offering price.

ICM Property Investors, another recent offering, managed to raise $115 million of an expected $125 million, but its share price also has languished below the initial tag.

Analyst Frank contends that pension funds and other institutions are not buying many of the new deals, preferring to wait for share prices to fall further.

The new deals are being bought instead by less-sophisticated retail investors who are not as able to size up real estate investment trusts' management expertise, which generally is said to be the most important factor in evaluating a trust.

Consequently, many experts are recommending that investors stick for now to established REITs with strong track records.

Pressure to increase or maintain yields is leading some trusts to invest in riskier deals such as joint ventures with developers to put up new office and residential buildings, portfolio manager Cohen said.

Such deals could produce higher profits if successful, but they also risk lower earnings or even losses should occupancy and rental rates fall below expectations, he said.

If that happens, the whole trust could suffer, because some trusts have only four or five properties altogether. "If any one of them is a loser, the whole trust is a loser," Cohen said.

The rate of return for trusts is not expected to match the impressive levels of recent years. "If you're expecting to get a 22 percent return over the next couple of years, you're making a big mistake," analyst Frank said.