I would add that there is a good chance they have already paid out enough cash to cover any earnings. Everyone realizes that the current divdend has to include return of capital. But I get the impression that you determine that at the end of the year. You look at total income, and compare that to the total payout. Any amount above income is capital.
> If possible it would be a painful option for
More painful than a firesale of assets in a futile attempt to de-lever, thereby driving the value of our few remaining assets still farther into the dirt? Doing that could very well bring us to zero NAV. Redirecting the dividends is a far better option.
NRO sells some assets claiming the loss. They then with hold the divvy and pay down leverage.
If possible it would be a painful option for shareholders.
Rock and a hard place for shareholders for sure.
> As a REIT, it has to pay out 90% of
I think it's 90% of taxable income, not 90% of dividends. They can reduce the taxable income by realizing losses. What did they pay for SFI? Say $40/share. For each share of that they sell, they realize a $38 loss. So that's $38 of cash flow that doesn't legally have to be distributed, and can be used to reduce debt. And if they were so malfeasant as to neglect to procure early repayment terms on the debt, they could at least set the cash aside so it offsets the debt and the NAV doesn't suffer.
> Unfortunately as it's assets fall in price, this could
> be an act of futility. NRO will receive less in each
> sale, pay off less leverage, and NAV continues to fall,
> requiring more selling. It's an ugly scenario.
Thank you. Hence my point: why the hell are they paying out dividends with cash instead of retiring debt? It's the most idiotic possible course of action.
What is happening is the NAV and price are going back to their recent ratio.
Of late the price as been 15% - 20% discount to the NAV. At the close of Fri the discount was very small.
The real problem is the NAV lost 22% last week. I was willing to hold on while the price bounced around, but the NAV did alright. Now the NAV is getting killed.
This calls for a real rethink of holding this. We just lost one year's worth of dividend in one week.
Trying to not panic, but it is getting hard.