Vatican suffers £100mn-plus loss on Knightsbridge office sale

The Vatican has made a loss of more than £100mn on the sale of a luxurious Knightsbridge office at the centre of a criminal investigation that has embroiled the Holy See.

The Vatican announced on Friday that it had completed the sale of 60 Sloane Avenue in west London to private equity group Bain Capital for £186mn.

Senior officials of the Holy See — the body which governs the Vatican, raises charitable donations and invests a portion of them for commercial gain — spent a total €350mn, or around £300mn, to take ownership of the building between 2014 and 2018.

That means the sale of the building to Bain, a process the Financial Times first revealed last November, will crystallise losses of well over £100mn for the Catholic Church.

During the Vatican’s eight-year ownership of the building, the value of high-end London offices has risen fast, and the lossmaking sale has raised eyebrows among the capital’s top estate agents.

“It’s surprising . . . It’s not as if capital values have gone down in prime central London in that time, quite the opposite. Maybe [the Vatican] overpaid to assemble the deal and undersold to exit from it,” said one.

The loss “makes no sense”, said another.

The sale to Bain cuts the Holy See’s ties with the unassuming office block, but does not resolve questions about the property, which have given rise to a far-reaching review over the way in which the Church handles its financial affairs.

A decade ago, the block was bought by companies controlled by Raffaele Mincione, a former Italian banker, for £129mn.

Mincione then sold a stake in the building in 2014 to a unit of the Vatican responsible for managing charitable donations — known as Peter’s Pence and intended in part for “the relief of those most in need” — at a price which implied a far higher valuation than that paid by Mincione.

In 2018, the Vatican bought the remainder of Mincione’s stake to take full control. Last year, Vatican prosecutors charged the former banker with various crimes including fraud and embezzlement.

The Vatican said on Friday that the losses it had incurred on the sale would be “transferred to the reserve of the Secretariat of State, without in any way affecting Peter’s Pence, and with it the donations of the faithful”.

Mincione faces criminal proceedings in the Vatican over his role in the deal. He has maintained that the increase in the property’s value was justified by independent auditors and third-party consultants, and denies any wrongdoing.

In the latest twist in the saga, Mincione filed a claim in Luxembourg last week against Credit Suisse, alleging that the Swiss bank failed to tell him that investments made in his fund came from Peter’s Pence.

In testimony before the Vatican’s criminal court last month, Mincione said the Holy See knew the risks of investing in the project, which at one stage was earmarked to be converted into luxury flats, and was nursing a loss as a result of “irrational” decisions.

“The word risk is specified at least 150 times in our fund . . . It’s like when you go buy cigarettes and the words ‘Smoke Kills’ is written on it,” said Mincione.