6.	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 5, Investments in Unconsolidated Joint Ventures.

We own a 7.2% interest in Fund VII and Fund VII-H that, prior to July 17, 2017, owned 42.8% of 50 Beale. On July 17, 2017, Fund VII and Fund VII-H completed the sale of their interests to us and a new joint venture, in which we have a 36.6% ownership interest (see Note 3, Acquisitions).

The following tables summarize our investments in these unconsolidated real estate funds as of September 30, 2017 and December 31, 2016, and income or loss recognized from these investments for the three and nine months ended September 30, 2017 and 2016.

	As of
(Amounts in thousands)	September 30, 2017		December 31, 2016
Our Share of Investments:
Property funds	$	2,673	$	22,811
Alternative investment fund		5,473		5,362
Investments in unconsolidated real estate funds	$	8,146	$	28,173

	For the Three Months Ended						For the Nine Months Ended
(Amounts in thousands)	September 30,						September 30,
Our Share of Net Loss:	2017			2016			2017			2016
Net investment income (loss)	$	104		$	170		$	228		$	(437	)
Net realized loss		(839	)		-			(665	)		-
Net unrealized gain (loss)		202			(361	)		(26	)		(2,939	)
Carried interest		(3,397	)		(1,063	)		(5,590	)		836
Loss from unconsolidated real estate funds ⁽¹⁾	$	(3,930	)	$	(1,254	)	$	(6,053	)	$	(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.

As of September 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 September 30, 2017						As of December 31, 2016
Balance Sheets:	Fund II		Fund III		Fund VII		Fund II		Fund III		Fund VII
Real estate investments	$	51	$	15,701	$	33,259	$	64,989	$	39,376	$	165,556	⁽¹⁾
Cash and cash equivalents		826		2,305		762		1,297		2,221		741
Other assets		115		-		2		127		-		-
Total assets	$	992	$	18,006	$	34,023	$	66,413	$	41,597	$	166,297

Other liabilities	$	45	$	29	$	618	$	60	$	49	$	1,483
Total liabilities		45		29		618		60		49		1,483
Equity		947		17,977		33,405		66,353		41,548		164,814
Total liabilities and equity	$	992	$	18,006	$	34,023	$	66,413	$	41,597	$	166,297

⁽¹⁾	Includes $123,105 attributable to 50 Beale that was sold July 17, 2017.

	For the Three Months Ended September 30,
(Amounts in thousands)	2017									2016
Income Statements:	Fund II			Fund III			Fund VII			Fund II			Fund III			Fund VII
Investment income	$	2		$	303		$	479		$	1,389		$	480		$	1,233
Investment expenses		13			54			120			668			55			501
Net investment (loss) income		(11	)		249			359			721			425			732
Net realized losses		(5,020	)		(1,735	)		(3,809	)		-			-			-
Net unrealized gains (losses)		5,031			1,607			(4,871	)		(40	)		177			(4,815	)
Income (loss) from real estate fund investments	$	-		$	121		$	(8,321	)	$	681		$	602		$	(4,083	)

	For the Nine Months Ended September 30,
(Amounts in thousands)	2017									2016
Income Statements:	Fund II			Fund III			Fund VII			Fund II			Fund III			Fund VII
Investment income	$	3		$	1,444		$	1,441		$	1,391		$	480		$	1,233
Investment expenses		291			171			1,156			2,051			193			1,512
Net investment (loss) income		(288	)		1,273			285			(660	)		287			(279	)
Net realized losses		(20,221	)		(6,988	)		(3,875	)		-			-			-
Net unrealized gains (losses)		51			(1,411	)		(9,192	)		(31,918	)		(10,551	)		7,929
(Loss) income from real estate fund investments	$	(20,458	)	$	(7,126	)	$	(12,782	)	$	(32,578	)	$	(10,264	)	$	7,650