3.	Real Estate Fund Investments

On January 1, 2016, we adopted ASU 2015-02 Amendments to the Consolidation Analysis using the modified retrospective method. 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

The following tables summarize our investments in unconsolidated real estate funds as of June 30, 2016 and income or loss recognized from these investments for the three and six months ended June 30, 2016.

(Amounts in thousands)	As of June 30, 2016
Our Share of Investments:
Property funds ⁽¹⁾	$	22,874
Alternative investment fund ⁽²⁾		2,924
Investments in unconsolidated real estate funds	$	25,798

⁽¹⁾

Represents our investments in Paramount Group Real Estate Fund II, L.P. (“Fund II”), Paramount Group Real Estate Fund III, L.P. (“Fund III”), and Paramount Group Real Estate Fund VII, L.P. (“Fund VII”) and Paramount Group Real Estate Fund VII-H, L.P. (“Fund VII-H”).

⁽²⁾

Represents our investment in Paramount Group Real Estate Fund VIII, L.P. (“Fund VIII”).

	For the			For the
	Three Months Ended			Six Months Ended
(Amounts in thousands)	June 30, 2016			June 30, 2016
Our Share of Net Loss:
Net investment loss	$	(69	)	$	(607	)
Net unrealized losses		(2,807	)		(2,578	)
Carried interest		1,916			1,899
Loss from unconsolidated real estate funds ⁽¹⁾	$	(960	)	$	(1,286	)

⁽¹⁾

Excludes asset management, property management and other fee income from real estate funds, which is included as a component of “fee and other income” in our consolidated statements of income for the three and six months ended June 30, 2016.

As of June 30, 2016, we own a 10.0% interest in Fund II and a 7.5% interest in Fund VII, which are accounted for under the equity method. The following tables summarize Fund II and Fund VII’s financial information as of the dates of and for the periods set forth below.

(Amounts in thousands)	As of June 30, 2016
Balance Sheets	Fund II		Fund VII
Real estate investments	$	35,016	$	165,177
Cash and cash equivalents		513		410
Other assets		127		-
Total assets	$	35,656	$	165,587

Other liabilities	$	743	$	1,027
Total liabilities		743		1,027
Equity		34,913		164,560
Total liabilities and equity	$	35,656	$	165,587

	For the Three Months Ended June 30, 2016						For the Six Months Ended June 30, 2016
(Amounts in thousands)	Fund II			Fund VII			Fund II			Fund VII
Investment income	$	1		$	-		$	2		$	-
Investment expenses		696			481			1,383			1,011
Net investment loss		(695	)		(481	)		(1,381	)		(1,011	)
Net unrealized (losses) gains		(33,304	)		11,638			(31,878	)		12,744
(Loss) income from real estate fund investments	$	(33,999	)	$	11,157		$	(33,259	)	$	11,733

Consolidated Real Estate Funds

Below is a summary of the fair value of our Property Funds and the Alternative Investment Fund that were consolidated on our balance sheet as of December 31, 2015 and income from fund investments for the three and six months ended June 30, 2015.

(Amounts in thousands)	As of December 31, 2015
Real estate fund investments ⁽¹⁾	$	416,438
Cash and other assets, net		7,050
Total real estate fund investments		423,488
Less: noncontrolling interests in consolidated real estate funds		(396,196	)
Paramount Group, Inc.'s equity in real estate fund investments	$	27,292

⁽¹⁾

Represents the fair value of investments owned by Fund II, Fund III, Fund VII, Fund VII-H and Fund VIII.

	For the			For the
	Three Months Ended			Six Months Ended
(Amounts in thousands)	June 30, 2015			June 30, 2015
Net investment income	$	2,808		$	7,157
Net unrealized gains		11,264			12,136
Income from real estate fund investments		14,072			19,293
Less: noncontrolling interests in consolidated real estate funds ⁽¹⁾		(7,302	)		(10,520	)
Income from real estate fund investments attributable to Paramount Group, Inc.	$	6,770		$	8,773

⁽¹⁾

Includes $1,279 and $2,613 of asset management fee income that was reflected as a reduction of the amounts attributable to noncontrolling interests for the three and six months ended June 30, 2015, respectively.