Good as gold or paper profits? What to make of APSA’s annual report

What does a “return to the ordinary operating conditions” mean for the Holy See’s financial health?

The Administration for the Patrimony of the Apostolic See released its annual report last week, hailing strong and stabilizing results for 2025 and what it called a “return to ordinary operating conditions” after a change in investment strategy yielded extraordinary returns the previous year.

Credit: Vatican media.

The headline figures present a dramatic picture: APSA’s returns fell to €22.8 million, down from €62.2 million the year before.

But Archbishop Giordano Piccinotti, APSA’s president, sought to frame the 2025 returns “in the proper perspective” in a lengthy interview with official Vatican media, noting that 2024 was an exceptional and unrepeatable year, driven by reallocation of investments and a rebalancing of portfolio priorities.

Engaging with the details of the report, and APSA’s performance, the archbishop argued for a close reading of the results, which he argued were essentially good news: “The previous year was an extraordinary one that cannot be repeated, characterised by proceeds linked to the restructuring of the investment portfolio. By contrast, 2025 represents a return to ordinary operating conditions, and in this context the indicators are positive.”

But with the Vatican still posting an operational deficit last year, despite the extraordinary returns, what does a “return to the ordinary” mean for the Holy See’s financial health, and how positive, exactly, are APSA’s returns?

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Archbishop Piccinotti’s desire to put some necessary context around APSA’s 2025 results is very reasonable, and his observation that 2024 was an extraordinary year is certainly true.

The 2024 results, and the extraordinary returns realized by the Holy See’s sovereign asset and investment manager, did come almost entirely from a major realignment in investment strategy which yielded some €30 million in trading gains versus just under half a million for 2025.

That drop in gains was further accentuated, according to the archbishop, by the application of new accounting measures “which provide for changes in the value of investment portfolios to be recognised directly in Net Assets rather than in the income statement.”

So, while the 2025 report records a trading loss of €3.7 million in the investment portfolio, Piccinotti said, this number should not be “taken in isolation,” and ought to be read in the broader context of €16 million in positive returns on APSA’s portfolio which, “in the interests of transparency and prudent accounting,” are no longer booked as income but recorded directly as a change in value of the portfolio, meaning the investment performance was essentially up €12.6 million.

For those with a real weather-eye on long term indicators and the ultimate stability of APSA’s revenue generation, perhaps the best news of the report came in its accounting of the management of the Holy See’s thousands of real estate holdings, both in Italy and abroad. Returns on those properties rose by €9.4 million last year to a total of €44.5 million, thanks to, the archbishop claimed, “more efficient management, higher operating revenues, and the rationalisation of maintenance costs.”

By this, the archbishop means that some €7 million in maintenance expenses across the portfolio was booked against the value of the assets themselves, rather than recorded as operating expenses.

APSA’s net assets rose in value by €89 million last year, the archbishop said, and this is the key figure to bear in mind; they may have booked less liquid profit than last year’s one-off event, but what they have is worth more than it was, and that’s the fundamental good news.

“APSA’s purpose is not to generate an annual profit, but rather to preserve and strengthen the patrimony entrusted to it,” Piccinotti said, and APSA’s results should be read through that lens. And most reasonable observers would accept that, according to the archbishop’s standard, APSA had a good year in 2025.

But some experts might challenge the archbishop’s definition of APSA’s purpose and, depending on how one redefines it, come to a different assessment of its year-to-year results.

For example, strictly defined in the apostolic constitution for the Roman curia, APSA is “responsible for the administration and management of the real estate and movable assets of the Holy See which are meant to provide the resources necessary for the Roman Curia properly to carry out its work.”

Prudent stewardship is clearly a core function for APSA, but providing the necessary resources for the Roman curia to function would seem to require an emphasis on annual profit generation, too. And, while the overall 2025 Vatican budget figures are not due out for several months yet, the fact remains that the curia has been operating a structural budget deficit in the tens of millions for many years.

Closing that gap has been the overwhelming priority of the Holy See’s various financial organs, not least because that deficit has taken to swallowing one-time realizations of value when assets are sold, and even in some cases appearing to trigger fire sales of assets to cover operational shortfalls in recent years.

In this light, the APSA figure likely to have the most impact on the Holy See’s next budget statement isn’t the uptick in value of its assets but the sharp drop in its contribution to the curial operational budget, which went down from €46 million to €22.7 million. Accepting that the 2024 contribution was an exceptional sum in an extraordinary year, Piccinotti’s claim that the lower amount still demonstrated real results and “tangible” support for the Holy See’s core functions makes sense.

The issue, though, is that APSA is one of only a handful of revenue generating centers the Holy See has, and “tangible” signs of support do not necessarily add up to a balanced budget.

In its 2024 budget statement, the Holy See recorded that operational costs rose by €40 million that year, and booked an operational shortfall of €44 million.

This was widely hailed at the time as a halving of the budget deficit, but those reading the fine print noted that much of the financial progress was coming from a series of non-repeatable revenue events.

While APSA’s leadership might reasonably contend that a €22 million contribution to the Vatican budget is a reasonable annual amount, and last year’s double payment was never meant to be replicated, Piccinotti’s return to business as usual is likely to paint a stark picture in the next curial budget statement.

Perhaps more concerning though, is what is behind the headline numbers of APSA’s successful 2025. Archbishop Piccinotti played up the net increase of €89 million in value for APSA’s assets and investments, and it is a sizable figure, in and of itself. But it came largely from a passive revaluation of existing holdings.

Specifically, the two largest drivers of that increase in value came from revaluation of physical gold holdings, which APSA priced as having risen by €40.8 million since they were last priced, and their real estate book valuations, which they marked up by €39.2 million.

While it is true to say it is better for APSA’s bottom line for its assets to be worth more, rather than less, it’s equally true to observe that a notional €40 million increase in the value of the literal gold in its vaults does little to nothing for the practical financial health of the Holy See. With an ongoing structural budget deficit in the tens of millions, that increase in value has no operational yield and produces zero euros in liquidity to support the work of the Holy See.

Similarly, the more than €39 million in increased value for the Vatican’s real estate holdings is of highly debatable significance, not to say of little real practical help.

The report does not break down where across APSA’s property holdings the increased value came, but according to the report, 61% of total surface area directly owned by APSA (475,453 sq meters) and 69% of all managed space are designated as generating zero revenue against their maintenance costs, not just no profit.

That figure isn’t outlandish because so much of the Church’s property holdings concern actual sites of worship. However, an additional 16% of APSA’s holdings are designated as assisted or discount rent (canone agevolato) generating a return at below market performance of 4%. Only 23% of APSA’s surface area property is designated for revenue generation at market rates, making about 6.9% of its value each year.

Again, APSA does not delineate in its report where the real estate asset value increases are within its portfolio, but assuming the €39.2 million is spread evenly across all its holdings, only €9 million would pertain to properties generating a market rate return on their value, yielding just over half a million.

None of this is to say, necessarily, that APSA is posting especially bleak numbers. Assessed along Archbishop Piccinotti’s own narrowly defined sense of mission, APSA could be said to be doing fine, in as much as it is making money and its assets are growing in value. The problem is APSA does not exist in a vacuum and its ultimate purpose is not to merely ensure its own stability.

The real question is not if APSA is doing well, but if it is doing well enough to meet the needs of the Holy See. The Church won’t have a real answer to that until the next Vatican budget statement comes out, expected in October or November.

If the curial budget deficit returns to runaway proportions, notional increases to the value of APSA’s gold in the basement won’t be of much help.