These are projects posted by the students of Dr. Gove Allen at Brigham Young University. These students have taken one semester-long course on VBA and generally have had no prior programming experience

Friday, December 7, 2012

Argus Translator 1.0

Executive Summary

            I have been working at Utah Retirement Systems on the real estate investment team for approximately 6 months. One of my assignments has been to assess the risk within the real estate portfolio of the overall state pension fund. Monte Carlo simulation is one of the tools that I and my team have chosen to use to assess risk.
            Argus DCF is a software platform used to build financial models for various types of commercial real estate properties. A single Argus file contains significant amounts of data related to a single property, which is then used to build a discounted cash flow schedule and determine the IRR associated with those cash flows.
Though it is considered an industry standard software platform, it is not without its weaknesses. One of these is its Monte Carlo simulation engine, which is neither as fast nor as powerful as Excel add-ins such as Risk Solver and ModelRisk. While Argus will export its assumptions and results into Excel, the exported data are in a static format. In order for this exported data to be useful, it is necessary to reconnect the assumptions to the results using formulas in order to create a dynamic model. Only then can the model be used in Monte Carlo simulations. This requires a significant time commitment, often several days, for each property. With a portfolio in excess of 300 properties, the time commitment required to accurately assess portfolio risk is prohibitive.
The program I have designed pulls data from an Access database containing Argus data and then builds a dynamic cash flow model in Excel that is simulation-ready. I will further discuss this program and its functionality in the pages that follow.

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