18.	Investments

Equity Method and Cost Method Investments

(in thousands)	September 30, 2017		December 31, 2016
Equity method investments	$	134,905	$	30,844
Cost method investments		3,088		2,595
Investments	$	137,993	$	33,439

The Company recognized a gain of $2.1 million and $0.8 million related to its equity method investments for the three months ended September 30, 2017 and 2016, respectively. The Company recognized gains of $4.0 million and $2.5 million related to its equity method investments for the nine months ended September 30, 2017 and 2016, respectively. The Company’s share of the gains or losses is reflected in “Gains (losses) on equity method investments” in the Company’s unaudited condensed consolidated statements of operations.

On September 8, 2017 the Company invested $100 million in Real Estate LP, which is controlled and managed by Cantor. As of September 30, 2017, the Company’s investment is accounted for under the equity method, and the related gain recognized was $0.9 million for the three and nine months ended September 30, 2017.

On November 4, 2016, the Company acquired the remaining interest in Lucera, which had previously been accounted for using the equity method. This transaction resulted in the consolidation of the entity in the Company’s unaudited condensed consolidated financial statements (see Note 17—“Related Party Transactions” for more information).

See Note 17—“Related Party Transactions,” for information regarding related party transactions with unconsolidated entities included in the Company’s unaudited condensed consolidated financial statements.

Cost Method Investments

The Company had previously acquired investments for which it did not have the ability to exert significant influence over operating and financial policies. The investments are generally accounted for using the cost method of accounting in accordance with FASB guidance, Investments—Other. The carrying value of the cost method investments was $3.1 million as of September 30, 2017 and $2.6 million as of December 31, 2016, and is included in “Investments” in the Company’s unaudited condensed consolidated statements of financial condition.

Investments in Variable Interest Entities

Certain of the Company’s equity method investments included in the tables above are considered Variable Interest Entities (“VIEs”), as defined under the accounting guidance for consolidation. The Company is not considered the primary beneficiary of and therefore does not consolidate these VIEs. The Company’s involvement with such entities is in the form of direct equity interests and related agreements. The Company’s maximum exposure to loss with respect to the VIEs is its investment in such entities as well as a credit facility and a subordinated loan.

The following table sets forth the Company’s investment in its unconsolidated VIEs and the maximum exposure to loss with respect to such entities as of September 30, 2017 and December 31, 2016. The amounts presented in the “Investment” column below are included in, and not in addition to, the equity method investment table above (in thousands):

September 30, 2017

December 31, 2016

Investment

Maximum

Exposure to

Loss

Investment

Maximum

Exposure to

Loss

Variable interest entities¹

3,651

4,631

4,608

5,588

The Company has entered into a subordinated loan agreement with Aqua, whereby the Company agreed to lend the principal sum of $980 thousand. As of September 30, 2017, the Company’s maximum exposure to loss with respect to its unconsolidated VIEs includes the sum of its equity investments in its unconsolidated VIEs and the $980 thousand subordinated loan to Aqua.

Consolidated VIE

Through the acquisition of GFI, the Company is invested in a limited liability company that is focused on developing a proprietary trading technology. The limited liability company is a VIE and it was determined that the Company is the primary beneficiary of this VIE because the Company, through GFI, was the provider of the majority of this VIE’s start-up capital and has the power to direct the activities of this VIE that most significantly impact its economic performance, primarily through its voting percentage and consent rights on the activities that would most significantly influence the entity. The consolidated VIE had total assets of $6.3 million as of September 30, 2017, which primarily consisted of clearing margin. There were no material restrictions on the consolidated VIE’s assets. The consolidated VIE had total liabilities of $2.0 million as of September 30, 2017. The Company’s exposure to economic loss on this VIE is approximately $2.6 million.