Mar 1 (Reuters) - Spanish real estate group Colonial on Thursday announced a net loss of 1.02 billion euros ($1.1 billion) for the 2023 financial year, caused by a 9% drop in the value of its assets due to rising interest rates.

The company had posted a net profit of €8 million in 2022.

Real estate companies such as Colonial and its counterpart Merlin Properties make profits from renting out their assets and have to include in their results the impact of an updated valuation of their properties that is carried out every six months.

"The correction in the value of Colonial's assets was lower than the average for other European real estate companies, which was between 15% and 25%," CEO Pere Viñolas told reporters.

The tightening of monetary policy by central banks to fight inflation has weighed heavily on the sector, hampering real estate investments, Viñolas said.

The ECB has kept interest rates at record highs since September and has consistently refused to talk about a rate cut, arguing that wage growth is still too fast to start relaxing restrictive policies.

"The real estate sector is awaiting clarity on the path of monetary policy, but inflation expectations are more focused than they were a year ago, so the conditions for real estate investment to normalize are already on the table," added Viñolas.

The group reported a 7% year-on-year increase in operating income for 2023, to €172 million.

Colonial also posted earnings per share (EPS) of €0.32, above its forecast of €0.31. The company expects EPS to remain stable this year, conditioned by the evolution of its divestment policy.

The company made €723 million in divestments in 2023 and expects additional asset sales of around €500 million this year to reduce its net debt.

Colonial's shares in the Spanish index are down 23% year-to-date.

(Reporting by Matteo Allievi and Jakub Olesiuk; edited in Spanish by José Muñoz)