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 5.0% 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 June 30, 2017 and December 31, 2016, and income or loss recognized from these investments for the three and six months ended June 30, 2017 and 2016.

	As of
(Amounts in thousands)	June 30, 2017		December 31, 2016
Our Share of Investments:
Property funds	$	16,749	$	22,811
Alternative investment fund		5,252		5,362
Investments in unconsolidated real estate funds	$	22,001	$	28,173

	For the Three Months Ended						For the Six Months Ended
(Amounts in thousands)	June 30,						June 30,
Our Share of Net Loss:	2017			2016			2017			2016
Net investment income (loss)	$	71		$	(68	)	$	124		$	(607	)
Net realized (loss) gain		(5	)		-			174			-
Net unrealized loss		(324	)		(2,807	)		(228	)		(2,578	)
Carried interest		(2,153	)		1,915			(2,193	)		1,899
Loss from unconsolidated real estate funds ⁽¹⁾	$	(2,411	)	$	(960	)	$	(2,123	)	$	(1,286	)

⁽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 June 30, 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, all of 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 June 30, 2017							As of December 31, 2016
Balance Sheets:	Fund II		Fund III		Fund VII			Fund II		Fund III		Fund VII
Real estate investments	$	11,151	$	19,669	$	158,822	⁽¹⁾	$	64,989	$	39,376	$	165,556	⁽¹⁾
Cash and cash equivalents		882		2,102		2,676			1,297		2,221		741
Other assets		115		-		97			127		-		-
Total assets	$	12,148	$	21,771	$	161,595		$	66,413	$	41,597	$	166,297

Other liabilities	$	90	$	75	$	1,531		$	60	$	49	$	1,483
Total liabilities		90		75		1,531			60		49		1,483
Equity		12,058		21,696		160,064			66,353		41,548		164,814
Total liabilities and equity	$	12,148	$	21,771	$	161,595		$	66,413	$	41,597	$	166,297

⁽¹⁾

Includes $122,677 and $123,105 as of June 30, 2017 and December 31, 2016, respectively, attributable to the investment in 50 Beale Street, which was sold on July 17, 2017. See Note 22, Subsequent Events.

	For the Three Months Ended June 30,
(Amounts in thousands)	2017									2016
Income Statements:	Fund II			Fund III			Fund VII			Fund II			Fund III			Fund VII
Investment income	$	1		$	1		$	777		$	1		$	-		$	-
Investment expenses		82			107			560			696			86			481
Net investment (loss) income		(81	)		(106	)		217			(695	)		(86	)		(481	)
Net realized losses		-			-			(66	)		-			-			-
Net unrealized gains (losses)		17			(29	)		(4,456	)		(33,304	)		(11,353	)		11,638
(Loss) income from real estate fund investments	$	(64	)	$	(135	)	$	(4,305	)	$	(33,999	)	$	(11,439	)	$	11,157

	For the Six Months Ended June 30,
(Amounts in thousands)	2017									2016
Income Statements:	Fund II			Fund III			Fund VII			Fund II			Fund III			Fund VII
Investment income	$	1		$	1,141		$	962		$	2		$	-		$	-
Investment expenses		278			117			1,036			1,383			138			1,011
Net investment (loss) income		(277	)		1,024			(74	)		(1,381	)		(138	)		(1,011	)
Net realized losses		(15,201	)		(5,253	)		(66	)		-			-			-
Net unrealized (losses) gains		(4,980	)		(3,018	)		(4,321	)		(31,878	)		(10,728	)		12,744
(Loss) income from real estate fund investments	$	(20,458	)	$	(7,247	)	$	(4,461	)	$	(33,259	)	$	(10,866	)	$	11,733