4.	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 consolidated 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 September 30, 2016, and income or loss recognized from these investments for the three and nine months ended September 30, 2016.

(Amounts in thousands)	As of September 30, 2016
Our Share of Investments:
Property funds ⁽¹⁾	$	20,813
Alternative investment fund ⁽²⁾		4,708
Investments in unconsolidated real estate funds	$	25,521

⁽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 Three Months Ended			For the Nine Months Ended
(Amounts in thousands)	September 30, 2016			September 30, 2016
Our Share of Net Loss:
Net investment income (loss)	$	170		$	(437	)
Net unrealized losses		(361	)		(2,939	)
Carried interest		(1,063	)		836
Loss from unconsolidated real estate funds ⁽¹⁾	$	(1,254	)	$	(2,540	)

⁽¹⁾

Excludes asset 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 nine months ended September 30, 2016.

As of September 30, 2016, we own a 10.0% interest in Fund II, a 3.1% interest in Fund III, and a 7.5% interest in Fund VII, which are accounted for under the equity method. The following tables provide summarized financial information for Fund II, Fund III and Fund VII as of the dates and for the periods set forth below.

(Amounts in thousands)	As of September 30, 2016
Balance Sheets:	Fund II		Fund III		Fund VII
Real estate investments	$	34,977	$	26,424	$	160,362
Cash and cash equivalents		604		1,185		852
Other assets		127		-		-
Total assets	$	35,708	$	27,609	$	161,214

Other liabilities	$	113	$	80	$	1,106
Total liabilities		113		80		1,106
Equity		35,595		27,529		160,108
Total liabilities and equity	$	35,708	$	27,609	$	161,214

(Amounts in thousands)	For the Three Months Ended September 30, 2016								For the Nine Months Ended September 30, 2016
Income Statements:	Fund II			Fund III		Fund VII			Fund II			Fund III			Fund VII
Investment income	$	1,389		$	480	$	1,233		$	1,391		$	480		$	1,233
Investment expenses		668			55		501			2,051			193			1,512
Net investment income (loss)		721			425		732			(660	)		287			(279	)
Net unrealized (losses) gains		(40	)		177		(4,815	)		(31,918	)		(10,551	)		7,929
Income (loss) from real estate fund investments	$	681		$	602	$	(4,083	)	$	(32,578	)	$	(10,264	)	$	7,650

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 nine months ended September 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			Nine Months Ended
(Amounts in thousands)	September 30, 2015			September 30, 2015
Net investment income	$	3,206		$	10,363
Net realized gains		11,955			11,955
Previously recorded unrealized gains on exited investments		(6,790	)		(6,058	)
Net unrealized gains		2,562			13,966
Income from real estate fund investments		10,933			30,226
Less: noncontrolling interests in consolidated real estate funds ⁽¹⁾		(8,763	)		(19,283	)
Income from real estate fund investments attributable to Paramount Group, Inc.	$	2,170		$	10,943

⁽¹⁾

Includes $1,372 and $3,985 of asset management fee income that was reflected as a reduction of the amounts attributable to noncontrolling interests for the three and nine months ended September 30, 2015, respectively.