3.	Real Estate Fund Investments

Real estate fund investments are comprised of (i) Property Funds, (ii) Alternative Investment Funds and (iii) Residential Development Fund.

Property Funds

We manage three Property Funds comprised of (i) Paramount Group Real Estate Fund II, L.P. (“Fund II”), (ii) Paramount Group Real Estate Fund III, L.P. (“Fund III”), (iii) Paramount Group Real Estate Fund VII, LP (“Fund VII”) and Paramount Group Real Estate Fund VII-H, L.P. (“Fund VII-H”), collectively “Fund VII”. The following is a summary of the Property Funds, our ownership interests in these funds and the funds’ ownership interests in the underlying properties.

			As of March 31, 2016
	Paramount Ownership		60 Wall Street			One Market Plaza				50 Beale Street			670 Broadway
Fund II		10.0%		46.3	%		-				-			-
Fund III		3.1%		16.0	%		2.0	%			-			-
Fund VII		7.2%		-			-				42.8	%		100.0	%
Total Property Funds				62.3	%		2.0	%			42.8	%		100.0	%
Other Investors				37.7	%		98.0	%	⁽¹⁾		57.2	%		-
Total				100.0	%		100.0	%			100.0	%		100.0	%

⁽¹⁾

Includes a 49.0% direct ownership interest held by us.

Alternative Investment Fund

We manage one Alternative Investment Fund, Paramount Group Real Estate Fund VIII L.P. (“Fund VIII”), which had an aggregate of $580,200,000 of committed capital, of which $166,560,000 was invested as of March 31, 2016. The following is a summary of our ownership interest in Fund VIII and the underlying investments in Fund VIII.

(Amounts in thousands)

Paramount

Investment

Investment Type

Ownership

Interest Rate

Initial Maturity

26 Broadway ⁽¹⁾

Mezzanine Loan

1.7%

8.3%

Jan-2022

1440 Broadway ⁽²⁾

Mezzanine Loan

1.7%

6.4%

Oct-2019

700 Eighth Avenue ⁽³⁾

Mortgage/Mezzanine Loans

1.7%

6.4%

Dec-2016

_________________

⁽¹⁾

The loan is secured by the equity interests in the owner of 26 Broadway, an 836,000 square foot office building, located in the financial district of Manhattan. The loan has a fixed interest rate and is subordinate to $220,000 of other debt.

⁽²⁾

The loan is secured by the equity interests in the owner of 1440 Broadway, a 751,546 square foot office and retail property located in Manhattan. The loan bears interest at LIBOR plus 600 bps, has a one-year extension option and is subordinate to $265,000 of other debt.

⁽³⁾

The senior mortgage and mezzanine loans are secured by 700 Eighth Avenue, a 26,126 square foot retail property located in Manhattan. The loans bear interest at LIBOR plus 600 bps and have one-year extension options.

Residential Development Fund

The purpose of the Residential Development Fund (“Residential Fund”) is to construct a multifamily residential project in San Francisco. As of March 31, 2016, the Residential Fund had an aggregate of $135,600,000 of committed capital, of which $69,000,000 has been invested.

On January 1, 2016, we adopted ASU 2015-02 Amendments to the Consolidation Analysis. The adoption of ASU 2015-02 resulted in the deconsolidation of all of our real estate fund investments that were accounted for at fair value, except for the Residential Fund, which is accounted for at historical cost and will continue to be consolidated into our financial statements. See Note 2, Basis of Presentation and Significant Accounting Policies – Recently Issued Accounting Literature.

Unconsolidated Real Estate Funds

As of March 31, 2016, after the adoption of ASU 2015-02, our investments in unconsolidated real estate funds aggregated $26,880,000 and consisted of $23,132,000 of investments in Property Funds and $3,748,000 of investments in the Alternative Investment Fund. Our share of the loss from the investments in unconsolidated real estate funds aggregated $326,000 and was comprised of a loss of $345,000 from our investment in Property Funds and income of $19,000 from our investment in the Alternative Investment Fund.

Consolidated Real Estate Funds

Below is a summary of the fair value of our consolidated real estate fund investments on our consolidated balance sheet as of December 31, 2015 and income from fund investments for the three months ended March 31, 2015.


	As of
(Amounts in thousands)	December 31, 2015
Real estate fund investments:
Property Funds	$	248,824
Alternative Investment Fund		167,614
Total	$	416,438

	For the
	Three Months Ended
(Amounts in thousands)	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
Less noncontrolling interests		(3,218	)	⁽¹⁾
Our share of income from real estate
funds	$	2,003

________________________________

⁽¹⁾Includes $1,334 of asset management fee income that was reflected as a reduction

of the amounts attributable to noncontrolling interests.