Madison Square Garden is in need of $850 million in renovations, the arena’s management said, and it may not be able to afford them. Previous estimates had pegged the upgrades at $500 million and the Knicks had secured a $375 million loan to help cover the work last week. The rest was to be covered by inter-company loans and the basketball team’s existing cash flows. Last week’s loan terms stipulate that the arena’s debt can only be six times as large as its cash flow, and it’s already getting close at a 5.33 leverage ratio once the loans are drawn, according to research firm CreditSights. One option for the Knicks is to raise ticket prices. Another is to allow player contracts to expire at the end of this season without picking up the tab for any new sky-high salaries, or to borrow some cash from parent company Cablevision Systems. Still, there is the possibility that the Garden’s renovation project could be even more costly than the $850 million now projected. “The New York City construction project that comes in on budget and on time is as rare as a C train after midnight,” CreditSights quipped.

The opportunity to get rich quick off of skyrocketing real estate investment trust shares has largely passed, but it still pays to diversify your portfolio by investing in the publicly-traded commercial property trusts, according to Money magazine. After REIT prices plunged by more than 70 percent between 2007 and 2009, vulture investors took note and the industry began raising capital in order to buy properties at rock-bottom prices. That sent shares soaring 100 percent since March, and it’s not too late to get in on their success. “You always should have some money in REITs because they are a great diversifier,” said Chris Cordaro, a financial adviser in Morristown, N.J., because REITs tend to move in a different direction than stocks. When it comes to choosing a REIT, analysts are recommending equity REITs over mortgage REITs, given the mortgage market’s current woes. Craig Guttenplan, an analyst at CreditSights, a research firm, recommended Simon Property Group, which signs most of its tenants to long-term leases and hasn’t been as damaged by falling rents and rising vacancies. Other recommendations included Boston Properties and Realty Income. Watch the video above to find out Money’s best investing bets of 2010, including real estate. [CNN Money]