I think the main issue for me with NRO is that I would be happier if they weren't paying out such a large dividend. I could see buying it because of the price drop and their holdings are now at bargain prices. It would be nice if the discount to MAV was higher though.
Those are all the right questions, but the answers are very hard to find. I think a large portion of the decline is "guilt by association" with Lehman Bros. these days. (see http://stockcharts.com/charts/performance/perf.html?NRO,LEH and stretch the X axis to full length)
When one looks over their holdings, it looks pretty good. When one attempts to find their annual income per share vs their payout, it gets more difficult.
I'm continuing to investigate. On page 12 of their semi-annual report it shows significant realized capital gains. It also shows they are distributing more than the value they are receiving in income. At the time of the report, the excess distribution appears to be about balanced with "unrealized" capital gain. Much of that may have disappeared in more recent times as real estate assets have declined in value.
Then under Assets, it shows significantly higher dividends and interest receivable than it shows as payable under the Liabilities column.
So there seems to be a contradiction here. I'm going to call and see if I can get it explained.
Looking at it in an entirely different light:
It's been under "distribution" since last Summer and the beginning of the "credit crunch." It's also showing a very generous trade range in the last year. So, the confusion continues.
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