Palace Capital PLC said on Thursday that its annual net asset value dropped, with its portfolio value also decreasing in a tumultuous year for the property market.

The London-based investor in commercial real estate said its net asset value per share fell to 294 pence in its financial year ended March 31, down 23% from 383p per share the prior year. The company’s net asset value dropped to £128.5 million, down 28% from £177.2 million the previous year.

Its portfolio value shrunk 26% to £192.4 million, from £259.0 million the prior year.

The company’s total property return was negative 11.6% for the year, compared to last year when it was positive 12.5%. Palace Capital said it outperformed its MSCI UK Quarterly Property Index benchmark of negative 12.6%.

‘The past year has been transformational both for the company and for the wider macroeconomic and geopolitical environment,’ said Interim Chair Steven Owen.

‘Such uncertainty and volatility in the economic environment has negatively impacted the property market, particularly with regard to the reduction in property valuations due to the significant increases in both short and long term interest rates.’

Palace Capital swung to a pretax loss of £35.8 million, from a profit of £24.6 million the previous year. Revenue was down 33% to £33.0 million from £49.1 million/

Net rental income increased 2.5% to £15.6 million from £15.2 million, whilst gross property income increased 2.9% to £17.9 million from £17.4 million.

The company declared a final dividend of 3.75 pence per share, unchanged from last year. The total dividend of 15.0p per share was up 13% from 13.25p.

Interim Chair Owen said: ‘The board’s strategy remains focused on maximising cash returns to shareholders, whilst continuing to remain mindful of consolidation in the real estate sector.

‘Given its low leverage, the company is well placed in terms of flexibility and optionality regarding the timing of its disposal programme and other strategic initiatives, including various options for returning capital to shareholders.’

Shares in Palace Capital were down 0.4% at 236.00 pence in London on Thursday.

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