5.	Real Estate Fund Investments

Unconsolidated Real Estate Funds

We manage four 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, L.P. (“Fund VII”) and (iv) Paramount Group Real Estate Fund VII-H, L.P. (“Fund VII-H”). We also manage Paramount Group Real Estate Fund VIII L.P. (“Fund VIII”), our Alternative Investment Fund, which invests in mortgage and mezzanine loans and preferred equity investments.

As of December 31, 2016, Fund II and Fund III collectively owned a 62.3% interest in 60 Wall Street, a 1.6 million square foot office tower in Manhattan. On January 24, 2017, Fund II and Fund III, together with the other investors that owned the remaining 37.7% interest, sold their interests in 60 Wall Street to a newly formed joint venture, in which we have a 5.2% ownership interest. Accordingly, beginning on January 24, 2017, we began accounting for our investment in 60 Wall Street under the equity method (see Note 4, Investments in Unconsolidated Joint Ventures).

The following tables summarize our investments in these unconsolidated real estate funds as of March 31, 2017 and December 31, 2016, and income or loss recognized from these investments for the three months ended March 31, 2017 and 2016.

	As of
(Amounts in thousands)	March 31, 2017		December 31, 2016
Our Share of Investments:
Property funds	$	19,250	$	22,811
Alternative investment fund		4,663		5,362
Investments in unconsolidated real estate funds	$	23,913	$	28,173

	For the Three Months Ended March 31, 2017
							Alternative
(Amounts in thousands)	Total			Property Funds			Investment Fund
Our Share of Net Income:
Net investment income (loss)	$	53		$	(7	)	$	60
Net realized gains		179			179			-
Net unrealized income		96			78			18
Carried interest		(40	)		(40	)		-
Income from unconsolidated real estate funds ⁽¹⁾	$	288		$	210		$	78

	For the Three Months Ended March 31, 2016
							Alternative
(Amounts in thousands)	Total			Property Funds			Investment Fund
Our Share of Net (Loss) Income:
Net investment (loss) income	$	(539	)	$	(569	)	$	30
Net unrealized income (loss)		229			240			(11	)
Carried interest		(16	)		(16	)		-
(Loss) income from unconsolidated real estate funds ⁽¹⁾	$	(326	)	$	(345	)	$	19

⁽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.

As of March 31, 2017, 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 March 31, 2017						As of December 31, 2016
Balance Sheets:	Fund II		Fund III		Fund VII		Fund II		Fund III		Fund VII
Real estate investments	$	11,134	$	19,697	$	165,690	$	64,989	$	39,376	$	165,556
Cash and cash equivalents		931		2,185		878		1,297		2,221		741
Other assets		115		-		-		127		-		-
Total assets	$	12,180	$	21,882	$	166,568	$	66,413	$	41,597	$	166,297

Other liabilities	$	58	$	53	$	1,967	$	60	$	49	$	1,483
Total liabilities		58		53		1,967		60		49		1,483
Equity		12,122		21,829		164,601		66,353		41,548		164,814
Total liabilities and equity	$	12,180	$	21,882	$	166,568	$	66,413	$	41,597	$	166,297

	For the Three Months Ended March 31,
(Amounts in thousands)	2017									2016
Income Statements:	Fund II			Fund III			Fund VII			Fund II			Fund III			Fund VII
Investment income	$	-		$	1,140		$	185		$	-		$	-		$	-
Investment expenses		196			10			476			687			52			530
Net investment (loss) income		(196	)		1,130			(291	)		(687	)		(52	)		(530	)
Net realized losses		(15,201	)		(5,253	)		-			-			-			-
Net unrealized (losses) gains		(4,997	)		(2,989	)		134			1,425			625			1,106
(Loss) income from real estate fund investments	$	(20,394	)	$	(7,112	)	$	(157	)	$	738		$	573		$	576