3.	Real Estate Fund Investments

Real estate fund investments that are presented at fair value on our consolidated balance sheets are comprised of (i) Property Funds and (ii) Alternative Investment Funds.

The Company

Below is a summary of the fair value of fund investments on our consolidated balance sheet.


(Amounts in thousands)	As of
Balance Sheet	March 31, 2015		December 31, 2014
Real Estate Fund Investments:
Property Funds	$	182,610	$	183,216
Alternative Investment Funds		141,672		140,171
Total	$	324,282	$	323,387

Below is a summary of the fair value of fund investments on our consolidated statement of income.


(Amounts in thousands)	Three months ended
Income Statement	March 31, 2015
Investment income	$	4,495
Investment expenses		147
Net investment income		4,348
Net unrealized gains		873
Income from real estate fund investments	$	5,221

Property Funds

The purpose of the Property Funds is to invest in office buildings and related facilities primarily in New York City, Washington, D.C. and San Francisco. As of March 31, 2015, the Property Funds were comprised of (i) Fund II, (ii) Fund III, (iii) Fund VII and (iv) Fund VII-H. The following is a summary of the investments of our Property Funds.

	As of March 31, 2015
	60 Wall Street			One Market Plaza				50 Beale Street
Fund II		46.3	%		-				-
Fund III		16.0	%		2.0	%			-
Fund VII ⁽¹⁾		-			-				41.1	%
Fund VII-H ⁽¹⁾		-			-				1.7	%
Total Property Funds		62.3	%		2.0	%			42.8	%
Other Investors		37.7	%		98.0	%	⁽²⁾		57.2	%
Total		100.0	%		100.0	%			100.0	%

⁽¹⁾	As of March 31, 2015, Fund VII and Fund VII-H had an aggregate of $57.6 million of committed capital that had not yet been invested.

⁽²⁾	Includes a 49% direct ownership interest held by us.

Alternative Investment Funds

The purpose of the Alternative Investment Funds is to invest primarily in real estate related debt and preferred equity investments. As of March 31, 2015, the Alternative Investment Funds were comprised of (i) PGRESS, (ii) PGRESS-H, (iii) PGRESS-A and (iv) Fund VIII, which had an aggregate of $434,000,000 of committed capital that had not yet been invested. The following is a summary of the investments of our Alternative Investment Funds.


(Amounts in thousands)		%	Interest/			As of
Fund	Investment Type	Ownership	Dividend Rate		Initial Maturity	March 31, 2015		December 31, 2014
Fund VIII	Mezzanine Loan	2.1%		8.3%	Jan-2022	$	46,750	$	45,947
PGRESS Funds	Preferred Equity Investments	4.9% - 5.4%	10.3% - 15.0%		Sep-2015 - Feb-2019		94,922		94,224
						$	141,672	$	140,171

The Predecessor

Below is a summary of realized and unrealized gains from real estate fund investments on our consolidated statement of income.


(Amounts in thousands)	Three months ended
Income Statement	March 31, 2014
Realized gains on real estate fund investments	$	-
Unrealized gains on real estate fund investments		46,167
Realized and unrealized gains, net	$	46,167

Asset Management Fees

Our predecessor earned asset management fees from the Funds it managed. Asset management fees and expenses related to Funds included in the combined consolidated statement of income are eliminated in combination and consolidation. The limited partners’ share of such fees are reflected as a reduction of net income attributable to noncontrolling interests, which results in a corresponding increase in net income attributable to our Predecessor.

Below is a summary of the asset management fees earned by our Predecessor.


(Amounts in thousands)	Three months ended
Income Statement	March 31, 2014
Gross asset management fees	$	7,410
Eliminated fees⁽¹⁾		(390	)
Net asset management fees	$	7,020

⁽¹⁾	Eliminated fees reflect a reduction in asset management fees from the general partner interest in each of the Funds.

The following table summarizes the income statements for the three months ended March 31, 2014 for each of the Property Funds’ underlying investments.

(Amounts in thousands)	Property Funds' underlying investments for the period ended March 31, 2014
Statement of Income	1633 Broadway			900 Third Ave			31 West 52nd St			1301 Ave of the Americas			One Market Plaza			Liberty Place			1899 Penn. Ave			2099 Penn. Ave			425 Eye St
Rental income	$	35,719		$	8,782		$	18,099		$	26,610		$	18,213		$	2,039		$	2,104		$	33		$	2,658
Tenant reimbursement income		2,817			763			1,189			2,116			388			621			1,140			2			744
Fee and other income		522			444			1,282			570			1,363			14			28			3			179
Total revenue		39,058			9,989			20,570			29,296			19,964			2,674			3,272			38			3,581

Building operating		13,611			4,045			5,743			12,680			7,165			1,082			1,257			1,080			1,514
Related party management fees		701			264			326			410			217			71			75			1			105
Operating		14,312			4,309			6,069			13,090			7,382			1,153			1,332			1,081			1,619
Depreciation and amortization		2,787			1,587			5,529			9,214			9,004			-			983			-			1,395
General and administrative		-			7			27			27			13			5			5			387			7
Total expenses		17,099			5,903			11,625			22,331			16,399			1,158			2,320			1,468			3,021
Operating income (loss)		21,959			4,086			8,945			6,965			3,565			1,516			952			(1,430	)		560
Unrealized gain on interest rate swaps		7,280			1,766			2,602			3,253			6,915			-			-			-			-
Interest and debt expense		(12,731	)		(3,657	)		(5,505	)		(15,170	)		(13,738	)		(945	)		(1,128	)		(828	)		(1,219	)
Unrealized depreciation on investment in real estate		-			-			-			-			-			(30	)		-			(10	)		-
Net income (loss) before taxes		16,508			2,195			6,042			(4,952	)		(3,258	)		541			(176	)		(2,268	)		(659	)
Income tax benefit (expense)		-			-			-			-			-			3			68			-			(2,339	)
Net income (loss)	$	16,508		$	2,195		$	6,042		$	(4,952	)	$	(3,258	)	$	544		$	(108	)	$	(2,268	)	$	(2,998	)