X-Message-Number: 6065 Subject: Re: CryoNet #6057 - #6064 Date: Fri, 12 Apr 1996 11:52:20 -0400 From: "Perry E. Metzger" <> I would not normally note any of this -- I'm not an Alcor member any longer so what happens to your patients isn't my business. However, what you've done really does smell *bad*. > From: dave <> > Subject: Alcor's building > > I want to clear up a small error in Brian's posting where he said Alcor > has a large mortgage on our building. The amount is large about $500,000, > but the relationship to value is no longer as large and we don't owe money > to an outside company anymore. > > Since the building is now worth about twice what we paid for it Thats of necessity misleading. Real estate is so illiquid and volatile that it is almost always impossible to assess its value accurately. The worth of any object is how much someone is willing to pay for it, not how much someone claims it is worth, so you can never really know the value of a piece of real estate until you've sold it, at which point you only know what it *was* worth. I've had people very close to me skirt bankruptcy when they held lots of real estate that was putatively worth far more than their debt. We all know of plenty of large lending institutions that got into trouble in similar ways a few years ago, and those folks were reputedly experts. It is also far from clear, given national demographics, that real estate will continue to rise in value at a particularly steady rate, if necessarily at all. It is also far from clear that investing so large a fraction of your patient care in a single "investment" is safe. The patient care money is now heavily invested in a single illiquid investment. It is also far from clear that this sort of self dealing can ever be done objectively, which is a reason that most organizations that have fiduciary responsibilities prohibit it outright. > and the mortgage has stayed about the same amount, I feel the > mortgage is now only about 1/3 the present value of the building. > > And, we no longer owe the money to an outside company, we only owe > money to Alcor. Alcor now holds the mortgage. This is also misleading. Your patient care trust now has bought a mortgage as an investment (not the same as prepaying a mortgage by a longshot especially since the price of the note is usually different from the outstanding principal balance -- the future value of money, you know). If Alcor's current income fails to be enough to pay off the interest owed, then presumably the patient care trust (which unfortunately for Alcor's patients isn't really a trust) loses the interest and any premium that was paid for the mortage. Every time that the board decides not to pay back the patient care funds because 'they only owe the money to themselves' more real money has been robbed from the fund, but of course now the temptation to do this is there. Now, I'm not saying outright that this sort of thing is going to of necessity hurt the long term welfare of your patients. However, you guys should be extremely ashamed of having done this, not proud of your fiscal acumen. I must say that all this makes me glad not to be with Alcor. Perry Rate This Message: http://www.cryonet.org/cgi-bin/rate.cgi?msg=6065