X-Message-Number: 6073
Date:  Sat, 13 Apr 96 18:10:37 
From: Steve Bridge <>
Subject: The mortgage and Alcor

To CryoNet
>From Steve Bridge, President
Alcor Life Extension Foundation
April 13, 1996

In reply to:     Message #6065
                 Subject: Re: CryoNet #6057 - #6064
                 Date: Fri, 12 Apr 1996 11:52:20 -0400
                 From: "Perry E. Metzger" <>

     I'm not planning on turning Perry's comments into an excuse to revive
CRYONICS.POLITICS again.  He is welcome to his opinions as to the wisdom
of Alcor's investments or CryoCare investments or his own.  Perry
generally has opinions different from those of most other people around
him (he's a cryonicist, after all), and that adds something to the
intellectual mix in cryonics.  In this case, I believe he is incorrect,
perhaps partly due to some misinterpretation of the situation.

     A couple of specific items:

>That's 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.

     Perry's own comment is misleading here.  Property isn't like
collecting books and art.  Ownership of real property is more illiquid
than gold or stocks, perhaps; but it's not more volatile in value.  And it
is not impossible to assess the value of property correctly.  One can
compare your own property with similar ones that are for sale or have been
sold recently and come up with a generally accurate figure.  One can also
ask local real estate professional to evaluate and compare the properties.
Finally, the local assessor's figures can be used as a third comparison.
>From all three of these viewpoints, this building looks pretty good.

     But then, Alcor has never invested in any property that wasn't
related to its cryonics function and doesn't intend to.  Alcor's mortgage
investment was not on some random piece of property; it was on the property
we occupy.

>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.

     We considered that; but since every suspension brings in more funds
to invest back into Alcor's other varied investments, that percentage
won't seem "so large a fraction" for very long at all.   The mortgage
itself is very secure, I feel; see below.

     It appears that Perry has misinterpreted much of this transaction and
lacks knowledge on the structure of Alcor and Cryonics Property, LLC (the
limited liability company which owns the property).

Perry says:

>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.


>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

     Perry seems to believe that Alcor's Patient Care Fund loaned money to
*Alcor* and that Alcor solely owns and occupies the building.  This is

     The Acoma building is owned by Cryonics Property, LLC, a limited
liability company (an entity which combines some of characteristics of
both corporation and limited partnership). The membership of the LLC
consists of several individual Alcor suspension members and Alcor itself.
When the LLC purchased the Acoma property, it assumed a mortgage which had
been taken out by the previous building owner.  This mortgage had a
"balloon payment" (in commercial property this is really a "roll-over
date" that gives the lender the chance to change the interest rate and
to charge profit points to the borrower) due December 1st of 1995.

     When it was discovered that the lender planned to charge the LLC a
"service charge" of over $20,000 to renew the loan, the LLC management
decided to explore other options and asked Alcor to consider taking over
the mortgage.

     Alcor pays rent to the LLC for 4 out of 11 units in the building.
The remaining 7 units are leased to four other stable, secure companies on
long-term leases (3-5 years).  These companies themselves pay more than
enough rent to cover the LLC mortgage.  It is not dependent on "Alcor's
current income."

     Alcor's Board of Directors cannot "decide not to pay back the patient
care funds."  Alcor's Board doesn't run the LLC.  It is a separate
company.  And we have set up the mortgage through the administration of a
title company to further set the two entities apart in this transaction.

>However, you guys should be extremely ashamed of having done this, not
proud of your fiscal acumen.

     Perry is welcome to his opinion; but this is nonsensical.  Alcor has
nothing to be ashamed of.  Alcor is trying to secure its future, just like
all of the other cryonics organizations are.

Steve Bridge

Stephen Bridge, President ()

Alcor Life Extension Foundation
Non-profit cryonic suspension services since 1972.
7895 E. Acoma Dr., Suite 110, Scottsdale AZ 85260-6916
Phone (602) 922-9013  (800) 367-2228   FAX (602) 922-9027
 for general requests

Rate This Message: http://www.cryonet.org/cgi-bin/rate.cgi?msg=6073