Make Intelligent Investment Decisions
with Monte Carlo Simulations
Utilize thousands of scenarios for data-driven decisions
Unlock Powerful Property Insights
Data-Driven Precision
Move Beyond the Pro Forma
Understand how real world risks and uncertainty impact projections.
Deeper Insights Lead to Better Decisions
Achieve deeper investment clarity with Mill Analytics.
Innovate and Differentiate
Lead the market and competition with Mill Analytics’ tool to generate innovative investment insights.
Real World Applications
of Monte Carlo Simulations
Smarter Property Underwriting Through Predictive Analytics
Equity Investor/LPs
- Sponsors/GPs typically present equity investors/LPs with a single pro forma and investment outcome.
- Mill Analytics goes beyond static forecasts and empowers LPs by analyzing the results of thousands of different scenarios to provide LPs with a deeper, data-driven understanding of each opportunity.
- By leveraging Mill Analytics, equity investors gain greater insight into potential risks and returns, enabling them to make more informed, risk-adjusted decisions in an ever-changing real estate market.
Sponsors/GPs
- Attracting LP interest and engagement in an equity investment is often one of the biggest challenges for a Sponsor/GP.
- Mill Analytics helps Sponsors build investor confidence by providing a rigorous, unbiased stress test to support their projections, offering LPs greater transparency into potential risks and returns.
- This investor focused approach sets Sponsors apart in a competitive equity-raising environment, giving them a distinct advantage in securing investor commitments.
Acquisitions
- Mill Analytics Monte Carlo Simulation application is a powerful tool in the acquisition process, helping to quantify uncertainty and enhance decision-making through probabilistic forecasting.
- Rather than relying on Base, Upside, and Downside cases, our software generates a range of possible IRRs, equity multiples, cash on cash returns, and NPVs, providing clear visibility into the probability of achieving target returns
- It also stress-tests investments in adverse market conditions and helps determine if the investment will remain viable.
Investment Sales Brokers
- Investment Sales Brokers use Mill Analytics to identify the likely outcome of the next buyer’s investment—not just based on their own underwriting, but also incorporating the perspectives of potential buyers.
- By leveraging this powerful analytical tool, brokers gain a competitive advantage that differentiates them in a highly competitive market, enhances their understanding of likely transaction outcomes, builds credibility with clients, and assists in setting expectations.
Frequently Asked
Questions
Comprehensive Answers to Common Questions About Our Monte Carlo Simulation Application
A Monte Carlo Simulation is a statistical analysis method developed and advanced by physicists Stanislaw Ulam and John von Neumann as part of the Manhattan Project during World War II. It is used to analyze the probability of different outcomes in situations where there is vast complexity and uncertainty.
For example, structural engineers utilize Monte Carlo Simulations to model the effect of random factors, such as wind load or material weaknesses, on structures to understand and mitigate risks. Mill Analytics has created the first Monte Carlo Simulation designed exclusively for the commercial real estate industry. Our analytic software helps owners, operators, and investors address the many uncertainties of underwriting property investments by simulating thousands of possible outcomes, enabling more strategic and data driven decision making.
Mill Analytics uses pro forma property level data in a cashflow format as the Base Case for analysis. The model is run again and again—many thousands of times—to produce tens to hundreds of thousands of random values for the variables, using user inputs and variable ranges. Each result of the simulation is recorded and combined with other results to create a range of possible outcomes—a "distribution." The distribution is then analyzed and summarized into a dashboard report that shows the probability of achieving the returns and results in the Base Case as well as the most likely outcome for IRR, Equity Multiple, Average Cash on Cash Returns, Net Profit/Loss, and Net Present Value. A sample report can be found here .
Most pro formas only provide a Base Case return, while few others also provide an Upside and Downside scenario. Mill Analytics enables investors to go far beyond the Base, Upside, and Downside cases and analyze the results of thousands of scenarios for greater insight into the potential outcomes of an investment.
We are evaluating its use for future versions of our software but, at this time, we only utilize traditional statistical methods.
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