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Basis of Presentation and Summary of Significant Accounting Policies
 6 Months Ended
Jun. 30, 2011
Basis of Presentation and Summary of Significant Accounting Policies [Abstract]  
Basis of Presentation and Summary of Significant Accounting Policies
NOTE 2 — Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP, have been condensed or omitted in accordance with such rules and regulations, although management believes the disclosures are adequate to prevent the information presented from being misleading. In the opinion of management, all adjustments (consisting of normal recurring items) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2011, are not necessarily indicative of the results that may be expected for the year ending December 31, 2011.
The balance sheet at December 31, 2010, has been derived from the audited financial statements at that date, but does not include all of the information and disclosures required by GAAP for complete financial statements. For further information, refer to the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2010. Certain 2010 financial statement amounts have been reclassified to conform to the 2011 presentation, including adjustments for discontinued operations.
Principles of Consolidation
The accompanying condensed consolidated financial statements include the accounts of the Partnership and its consolidated entities. Pursuant to a Management and Contribution Agreement between the Partnership and Aimco, we have acquired, in exchange for interests in the Partnership, the economic benefits of subsidiaries of Aimco in which we do not have an interest, and Aimco has granted us a right of first refusal to acquire such subsidiaries’ assets for no additional consideration. Pursuant to the agreement, Aimco has also granted us certain rights with respect to assets of such subsidiaries. We consolidate all variable interest entities for which we are the primary beneficiary. Generally, we consolidate real estate partnerships and other entities that are not variable interest entities when we own, directly or indirectly, a majority voting interest in the entity or are otherwise able to control the entity. All significant intercompany balances and transactions have been eliminated in consolidation.
Interests in consolidated real estate partnerships held by limited partners other than us are reflected as noncontrolling interests in consolidated real estate partnerships. The assets of consolidated real estate partnerships owned or controlled by Aimco or us generally are not available to pay creditors of Aimco or the Partnership.
As used herein, and except where the context otherwise requires, “partnership” refers to a limited partnership or a limited liability company and “partner” refers to a partner in a limited partnership or a member in a limited liability company.
Variable Interest Entities
We consolidate all variable interest entities for which we are the primary beneficiary. Generally, a variable interest entity, or VIE, is an entity with one or more of the following characteristics: (a) the total equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support; (b) as a group, the holders of the equity investment at risk lack (i) the ability to make decisions about an entity’s activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; or (c) the equity investors have voting rights that are not proportional to their economic interests and substantially all of the entity’s activities either involve, or are conducted on behalf of, an investor that has disproportionately few voting rights.
In determining whether we are the primary beneficiary of a VIE, we consider qualitative and quantitative factors, including, but not limited to: which activities most significantly impact the VIE’s economic performance and which party controls such activities; the amount and characteristics of our investment; the obligation or likelihood for us or other investors to provide financial support; and the similarity with and significance to the business activities of us and the other investors. Significant judgments related to these determinations include estimates about the current and future fair values and performance of real estate held by these VIEs and general market conditions.
As of June 30, 2011, we were the primary beneficiary of, and therefore consolidated, approximately 125 VIEs, which owned 84 apartment properties with 12,982 units. Real estate with a carrying value of $817.3 million collateralized $643.5 million of debt of those VIEs. Any significant amounts of assets and liabilities related to our consolidated VIEs are identified parenthetically on our accompanying condensed consolidated balance sheets. The creditors of the consolidated VIEs do not have recourse to our general credit.
As of June 30, 2011, we also held variable interests in 244 VIEs for which we were not the primary beneficiary. Those VIEs consist primarily of partnerships that are engaged, directly or indirectly, in the ownership and management of 297 apartment properties with 18,606 units. We are involved with those VIEs as an equity holder, lender, management agent, or through other contractual relationships. The majority of our investments in unconsolidated VIEs, or approximately $42.8 million at June 30, 2011, are held through consolidated investment partnerships that are VIEs and in which we generally hold a 1% or less general partner or equivalent interest. Accordingly, substantially all of the investment balances related to these unconsolidated VIEs are attributed to the noncontrolling interests in the consolidated investment partnerships that hold the investments in these unconsolidated VIEs. Our maximum risk of loss related to our investment in these VIEs is generally limited to our equity interest in the consolidated investment partnerships, which is insignificant. The remainder of our investment in unconsolidated VIEs, or approximately $5.9 million at June 30, 2011, is held through consolidated tax credit funds that are VIEs and in which we hold substantially all of the economic interests. Our maximum risk of loss related to our investment in these VIEs is limited to our $5.9 million recorded investment in such entities.
In addition to our investments in unconsolidated VIEs discussed above, at June 30, 2011, we had in aggregate $99.8 million of receivables from these unconsolidated VIEs and we had a contractual obligation to advance funds to certain unconsolidated VIEs totaling $3.4 million. Our maximum risk of loss associated with our lending and management activities related to these unconsolidated VIEs is limited to these amounts. We may be subject to additional losses to the extent of any receivables relating to future provision of services to these entities or financial support that we voluntarily provide.
As discussed in Note 5, noncompliance with applicable requirements related to our consolidated and unconsolidated tax credit partnerships, substantially all of which are VIEs, could result in projected tax credits not being realized and require a refund of investor contributions already received or a reduction of future investor contributions. We have not historically had, nor do we anticipate, any material refunds or reductions of investor capital contributions in connection with these arrangements.
Notes Receivable
Notes receivable from unconsolidated real estate partnerships and from non-affiliates represent our two portfolio segments (as defined in FASB ASC Topic 310) that we use to evaluate for potential loan loss. Notes receivable from unconsolidated real estate partnerships consist primarily of notes receivable from partnerships in which we are the general partner but do not consolidate the partnership. These loans are typically due on demand, have no stated maturity date and may not require current payments of principal or interest. Notes receivable from non-affiliates have stated maturity dates and may require current payments of principal and interest. Repayment of our notes is subject to a number of variables, including the performance and value of the underlying real estate properties and the claims of unaffiliated mortgage lenders, which are generally senior to our claims. Our notes receivable consist of two classes: loans extended by us that we carry at the face amount plus accrued interest, which we refer to as “par value notes”; and loans extended by predecessors whose positions we generally acquired at a discount, which we refer to as “discounted notes.”
We record interest income on par value notes as earned in accordance with the terms of the related loan agreements. We discontinue the accrual of interest on such notes when the notes are impaired, as discussed below, or when there is otherwise significant uncertainty as to the collection of interest. We record income on such nonaccrual loans using the cost recovery method, under which we apply cash receipts first to the recorded amount of the loan; thereafter, any additional receipts are recognized as income.
We recognize interest income on discounted notes receivable based upon whether the amount and timing of collections are both probable and reasonably estimable. We consider collections to be probable and reasonably estimable when the borrower has closed or entered into certain pending transactions (which include real estate sales, refinancings, foreclosures and rights offerings) that provide a reliable source of repayment. In such instances, we recognize accretion income, on a prospective basis using the effective interest method over the estimated remaining term of the notes, equal to the difference between the carrying amount of the discounted notes and the estimated collectible value. We record income on all other discounted notes using the cost recovery method.
We assess the collectibility of notes receivable on a periodic basis, which assessment consists primarily of an evaluation of cash flow projections of the borrower to determine whether estimated cash flows are sufficient to repay principal and interest in accordance with the contractual terms of the note. We update our cash flow projections of the borrowers annually, and more frequently for certain loans depending on facts and circumstances. We recognize provisions for losses on notes receivable when it is probable that principal and interest will not be received in accordance with the contractual terms of the loan. Factors that affect this assessment include the fair value of the partnership’s real estate, pending transactions to refinance the partnership’s senior obligations or sell the partnership’s real estate, and market conditions (current and forecasted) related to a particular asset. The amount of the provision to be recognized generally is based on the fair value of the partnership’s real estate that represents the primary source of loan repayment. In certain instances where other sources of cash flow are available to repay the loan, the provision is measured by discounting the estimated cash flows at the loan’s original effective interest rate.
The following table summarizes our notes receivable as of June 30, 2011 and December 31, 2010 (in thousands):
                                                 
    June 30, 2011     December 31, 2010  
    Unconsolidated                     Unconsolidated              
    Real Estate     Non-             Real Estate     Non-        
    Partnerships     Affiliates     Total     Partnerships     Affiliates     Total  
Par value notes
  $ 10,081     $ 19,572     $ 29,653     $ 10,821     $ 17,899     $ 28,720  
Discounted notes
    1,011       97,506       98,517       980       98,827       99,807  
Allowance for loan losses
    (883 )     —       (883 )     (905 )     —       (905 )
 
                                   
Total notes receivable
  $ 10,209     $ 117,078     $ 127,287     $ 10,896     $ 116,726     $ 127,622  
 
                                   
 
                                               
Face value of discounted notes
  $ 31,448     $ 106,466     $ 137,914     $ 31,755     $ 108,621     $ 140,376  
Notes receivable from unconsolidated real estate partnerships are generally unsecured and have various annual interest rates ranging between 4.3% and 12.0% and averaging 9.8%. Notes receivable from non-affiliates have various annual interest rates ranging between 2.1% and 8.8% and averaging 4.1%. Included in the notes receivable from non-affiliates at June 30, 2011 and December 31, 2010 are $99.9 million and $103.9 million, respectively, in notes that were secured by interests in real estate or interests in real estate partnerships.
During the six months ended June 30, 2011, there have been no significant changes in the allowance for loan losses related to our notes receivable from unconsolidated real estate partnerships and non-affiliates. Additionally, there have been no significant changes related to the carrying amounts, our average recorded investment in or unpaid principal balances for impaired loans. During the three and six months ended June 30, 2011 and 2010, we did not recognize any significant amounts of interest income related to impaired or non-impaired notes receivable.
We recognize interest income as earned on the $28.5 million of our par value notes receivable at June 30, 2011 that are estimated to be collectible and have not been impaired. Of our total par value notes outstanding at June 30, 2011, notes with balances of $18.9 million have stated maturity dates and the remainder have no stated maturity date and are governed by the terms of the partnership agreements pursuant to which the loans were extended. At June 30, 2011, none of the par value notes with stated maturity dates were past due.
Notes Receivable from Aimco
In addition to the notes receivable discussed above, we had notes receivable that we received in exchange for the sale of certain real estate assets to Aimco in December 2000. The notes bear interest at 5.7% per annum and had original principal amounts of $10.1 million. Unpaid principal and interest on the $7.6 million note is due upon demand on the $2.5 million note was due on December 31, 2010, and as of the date of this filing, has not been repaid. At June 30, 2011 and December 31, 2010, the balance of the notes totaled $17.7 million and $17.2 million, respectively, which includes accrued and unpaid interest. In assessing collectability of these notes, we consider Aimco’s financial position and potential sources of repayment, including future distributions we may pay on the common partnership units owned by Aimco.
Partners’ Capital (including Noncontrolling Interests)
The following table presents a reconciliation of our consolidated temporary capital account from December 31, 2010 to June 30, 2011 (in thousands):
         
    Redeemable  
    Preferred Units  
Balance, December 31, 2010
  $ 103,428  
Preferred distributions
    (3,342 )
Redemption of preferred units
    (41 )
Repurchase of preferred units
    (10,000 )
Net income
    3,342  
 
     
Balance, June 30, 2011
  $ 93,387  
 
     
The following table presents a reconciliation of our consolidated permanent equity accounts from December 31, 2010 to June 30, 2011(in thousands):
                         
            Noncontrolling        
          interests in        
    Partners’ capital     consolidated real     Total  
    attributable to     estate     partners’  
    the Partnership     partnerships     capital  
Balance, December 31, 2010
  $ 1,030,895     $ 292,407     $ 1,323,302  
Contributions
    —       11,121       11,121  
Issuance of common OP Units to Aimco
    60,973       —       60,973  
Preferred unit distributions
    (24,877 )     —       (24,877 )
Common distributions
    (30,599 )     (16,606 )     (47,205 )
Discount on repurchase of preferred units
    3,000       —       3,000  
Repurchases of common units
    (3,351 )     —       (3,351 )
Amortization of Aimco stock based compensation cost
    3,557       —       3,557  
Common OP Units issued to Aimco in connection with Aimco stock option exercises
    1,806       —       1,806  
Effect of changes in ownership for consolidated entities (Note 4)
    (27,958 )     14,124       (13,834 )
Change in accumulated other comprehensive loss
    849       (103 )     746  
Other
    270       (53 )     217  
Net loss
    (47,078 )     (10,076 )     (57,154 )
 
                 
Balance, June 30, 2011
  $ 967,487     $ 290,814     $ 1,258,301  
 
                 
Derivative Financial Instruments
We have limited exposure to derivative financial instruments. We are contractually obligated on certain of our variable rate debt to limit our exposure to interest rate fluctuations, and we do so by entering into interest rate swap agreements. We primarily use long-term, fixed-rate and self-amortizing non-recourse debt to avoid, among other things, risk related to fluctuating interest rates. For our variable rate debt, we are sometimes required by our lenders to limit our exposure to interest rate fluctuations by entering into interest rate swap agreements, which moderate our exposure to interest rate risk by effectively converting the interest on variable rate debt to a fixed rate. The fair values of the interest rate swaps are reflected as assets or liabilities in the balance sheet, and periodic changes in fair value are included in interest expense or partners’ capital, as appropriate.
At June 30, 2011 and December 31, 2010, we had interest rate swaps with aggregate notional amounts of $52.3 million, and recorded fair values of $3.6 million and $2.7 million, respectively, reflected in accrued liabilities and other in our condensed consolidated balance sheets. At June 30, 2011, these interest rate swaps had a weighted average term of 9.6 years. We have designated these interest rate swaps as cash flow hedges and recognize any changes in their fair value as an adjustment of accumulated other comprehensive loss within partners’ capital to the extent of their effectiveness. Changes in the fair value of these instruments and the related amounts of such changes that were reflected as an adjustment of accumulated other comprehensive loss within partners’ capital and as an adjustment of earnings (ineffectiveness) are discussed in the Fair Value Measurements section below.
If the forward rates at June 30, 2011 remain constant, we estimate that during the next twelve months, we would reclassify into earnings approximately $1.6 million of the unrealized losses in accumulated other comprehensive loss. If market interest rates increase above the 3.43% weighted average fixed rate under these interest rate swaps we will benefit from a lower effective rate than the underlying variable rates on this debt.
We have entered into total rate of return swaps on various fixed-rate property debt to convert these borrowings from a fixed rate to a variable rate and provide an efficient financing product to lower our cost of borrowing. In exchange for our receipt of a fixed rate generally equal to the underlying borrowing’s interest rate, the total rate of return swaps require that we pay a variable rate, equivalent to one of several indices, plus a risk spread. The underlying borrowings are generally callable at our option, with no prepayment penalty, with 30 days advance notice, and the swaps mature in 2012.
We designate total rate of return swaps as hedges of the risk of overall changes in the fair value of the underlying borrowings. At each reporting period, we estimate the fair value of these borrowings and the total rate of return swaps and recognize any changes therein as an adjustment of interest expense.
As of June 30, 2011 and December 31, 2010, we had borrowings payable subject to total rate of return swaps with aggregate outstanding principal balances of $164.3 million and $276.9 million, respectively. We reduced by $112.0 million the amount of debt subject to certain total rate of return swaps and terminated the associated swaps during the six months ended June 30, 2011, in connection with our refinancing of the underlying debt. We repaid the debt subject to the swaps at par and, accordingly, no payments were required upon termination of the swaps. The remaining reduction in the outstanding principal balance during the six months ended June 30, 2011 was due to other principal amortization. At June 30, 2011, the weighted average fixed receive rate under the total return swaps was 6.4% and the weighted average variable pay rate was 1.6%, based on the applicable index rates effective as of that date. Information related to the fair value of these instruments at June 30, 2011 and December 31, 2010, is discussed in the Fair Value Measurements section below.
Fair Value Measurements
We measure certain assets and liabilities in our consolidated financial statements at fair value, both on a recurring and nonrecurring basis. Certain of these fair value measurements are based on significant unobservable inputs classified within Level 3 of the valuation hierarchy defined in FASB ASC Topic 820. When a determination is made to classify a fair value measurement within Level 3 of the valuation hierarchy, the determination is based upon the significance of the unobservable factors to the overall fair value measurement. However, Level 3 fair value measurements typically also include observable components that can be validated to observable external sources; accordingly, the changes in fair value in the table below are due in part to observable factors that are part of the valuation methodology.
The table below presents information regarding significant items measured in our condensed consolidated financial statements at fair value on a recurring basis, consisting of investments in securities classified as available for sale (AFS), interest rate swaps (IR swaps), total rate of return swaps (TRR swaps) and debt subject to TRR swaps (TRR debt) (in thousands):
                                         
    Level 2     Level 3        
            IR     TRR     TRR        
    AFS (1)     swaps (2)     swaps (3)     debt (4)     Total  
Fair value at December 31, 2009
  $ —     $ (1,596 )   $ (24,307 )   $ 24,307     $ (1,596 )
Unrealized gains (losses) included in earnings (5)
    —       (23 )     907       (907 )     (23 )
Realized gains (losses) included in earnings
    —       —       —       —       —  
Unrealized gains (losses) included in partners’ capital
    —       (2,006 )     —       —       (2,006 )
 
                             
Fair value at June 30, 2010
  $ —     $ (3,625 )   $ (23,400 )   $ 23,400     $ (3,625 )
 
                             
 
                                       
Fair value at December 31, 2010
  $ —     $ (2,746 )   $ (19,542 )   $ 19,542     $ (2,746 )
Purchases
    51,534       —       —       —       51,534  
Investment accretion (see Note 4)
    269       —       —       —       269  
Unrealized gains (losses) included in earnings (5)
    —       (24 )     8,547       (8,547 )     (24 )
Realized gains (losses) included in earnings
    —       —       —       —       —  
Unrealized gains (losses) included in partners’ capital
    1,573       (827 )     —       —       746  
 
                             
Fair value at June 30, 2011
  $ 53,376     $ (3,597 )   $ (10,995 )   $ 10,995     $ 49,779  
 
                             
     
(1)  
The fair value of investments classified as available for sale is estimated using an income and market approach with primarily observable inputs, including information yields and other information regarding similar types of investments, and adjusted for certain unobservable inputs specific to these investments. The discount to the face value of the investments is accreted into interest income over the expected term of the investments. The amortized cost of these investments was $51.8 million at June 30, 2011. Refer to Note 4 for further discussion of these investments.
 
(2)  
The fair value of interest rate swaps is estimated using an income approach with primarily observable inputs including information regarding the hedged variable cash flows and forward yield curves relating to the variable interest rates on which the hedged cash flows are based.
     
(3)  
Total rate of return swaps have contractually-defined termination values generally equal to the difference between the fair value and the counterparty’s purchased value of the underlying borrowings. We calculate the termination value, which we believe is representative of the fair value, of total rate of return swaps using a market approach by reference to estimates of the fair value of the underlying borrowings, which are discussed below, and an evaluation of potential changes in the credit quality of the counterparties to these arrangements.
 
(4)  
This represents changes in fair value of debt subject to our total rate of return swaps. We estimate the fair value of debt instruments using an income and market approach, including comparison of the contractual terms to observable and unobservable inputs such as market interest rate risk spreads, collateral quality and loan-to-value ratios on similarly encumbered assets within our portfolio. These borrowings are collateralized and non-recourse to us; therefore, we believe changes in our credit rating will not materially affect a market participant’s estimate of the borrowings’ fair value.
 
(5)  
Unrealized gains (losses) relate to periodic revaluations of fair value, including revaluations resulting from repayment of the debt at par, and have not resulted from the settlement of a swap position as we have not historically incurred any termination payments upon settlement. These unrealized gains (losses) are included in interest expense in the accompanying condensed consolidated statements of operations.
The table below presents information regarding amounts measured at fair value in our condensed consolidated financial statements on a nonrecurring basis during the six months ended June 30, 2011 and 2010, all of which were based, in part, on significant unobservable inputs classified within Level 3 of the valuation hierarchy (in thousands):
                                 
    Six Months Ended     Six Months Ended  
    June 30, 2011     June 30, 2010  
    Fair value     Total     Fair value     Total  
    measurement     gain (loss)     measurement     gain (loss)  
Real estate (impairment losses) (1)(3)
  $ 49,114     $ (7,390 )   $ 29,050     $ (6,883 )
Real estate (newly consolidated) (2)(3)
    —       —       117,083       236  
Property debt (newly consolidated) (2)(4)
    —       —       83,890       —  
     
(1)  
During the six months ended June 30, 2011 and 2010, we reduced the aggregate carrying amounts of $56.5 million and $35.9 million, respectively, for real estate assets classified as held for sale to their estimated fair value, less estimated costs to sell. These impairment losses recognized generally resulted from a reduction in the estimated holding period for these assets. In periods prior to their classification as held for sale, we evaluated the recoverability of their carrying amounts based on an analysis of the undiscounted cash flows over the anticipated expected holding period.
 
(2)  
In connection with our adoption of revised accounting guidance regarding consolidation of VIEs and reconsideration events during the six months ended June 30, 2010, we consolidated 17 partnerships at fair value. With the exception of such partnerships’ investments in real estate properties and related non-recourse property debt obligations, we determined the carrying amounts of the related assets and liabilities approximated their fair values. The difference between our recorded investments in such partnerships and the fair value of the assets and liabilities recognized in consolidation resulted in an adjustment of consolidated partners’ capital (allocated between the Partnership and noncontrolling interests) for those partnerships consolidated in connection with our adoption of the revised accounting guidance for VIEs. For the partnerships we consolidated at fair value due to reconsideration events during the six months ended June 30, 2010, the difference between our recorded investments in such partnerships and the fair value of the assets, liabilities and noncontrolling interests recognized upon consolidation resulted in our recognition of a gain, which is included in gain on disposition of unconsolidated real estate and other in our condensed consolidated statement of operations for the six months ended June 30, 2010.
 
(3)  
We estimate the fair value of real estate using income and market valuation techniques using information such as broker estimates, purchase prices for recent transactions on comparable assets and net operating income capitalization analyses using observable and unobservable inputs such as capitalization rates, asset quality grading, geographic location analysis, and local supply and demand observations.
 
(4)  
Refer to the recurring fair value measurements table for an explanation of the valuation techniques we use to estimate the fair value of debt.
We believe that the aggregate fair value of our cash and cash equivalents, receivables, payables and short-term secured debt approximates their aggregate carrying amounts at June 30, 2011 and December 31, 2010, due to their relatively short-term nature and high probability of realization. We estimate fair value for our notes receivable and debt instruments using present value techniques that include income and market valuation approaches using observable inputs such as market rates for debt with the same or similar terms and unobservable inputs such as collateral quality and loan-to-value ratios on similarly encumbered assets. Because of the significance of unobservable inputs to these fair value measurements, we classify them within Level 3 of the fair value hierarchy. Present value calculations vary depending on the assumptions used, including the discount rate and estimates of future cash flows. In many cases, the fair value estimates may not be realizable in immediate settlement of the instruments. The estimated aggregate fair value of our notes receivable was approximately $114.7 million and $116.0 million at June 30, 2011 and December 31, 2010, respectively, as compared to their carrying amounts of $127.3 million and $127.6 million. The estimated aggregate fair value of our consolidated debt (including amounts reported in liabilities related to assets held for sale) was approximately $5.5 billion and $5.6 billion at June 30, 2011 and December 31, 2010, respectively, as compared to aggregate carrying amounts of $5.4 billion and $5.5 billion, respectively. The fair values of our derivative instruments at June 30, 2011 and December 31, 2010, are included in the recurring fair value measurements table above.
In May 2011, the FASB issued Accounting Standards Update 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs, or ASU 2011-04. ASU 2011-04 amended ASC 820, Fair Value Measurements and Disclosures, to converge the fair value measurement guidance in GAAP and International Financial Reporting Standards. The amendments, which primarily require additional fair value disclosures, are to be applied prospectively for annual periods beginning after December 15, 2011. We are currently evaluating the effect ASU 2011-04 will have on our consolidated financial statements.
Comprehensive Income or Loss
As discussed in the Derivative Financial Instruments section, we recognize changes in the fair value of our cash flow hedges as changes in accumulated other comprehensive loss within partners’ capital. Additionally, as discussed in Note 4, we have investments classified as available for sale which are measured at fair value with unrealized gains or losses recognized as an adjustment of accumulated other comprehensive loss within equity. Our consolidated comprehensive loss for the three months ended June 30, 2011 and 2010, totaled $26.1 million and $11.8 million, respectively, and for the six months ended June 30, 2011 and 2010, totaled $53.1 million and $28.5 million, respectively, before the effects of noncontrolling interests.
In June 2011, the FASB issued Accounting Standards Update 2011-05, Presentation of Comprehensive Income, or ASU 2011-15, which revises the manner in which companies present comprehensive income. Under ASU 2011-15, companies may present comprehensive income, which is net income adjusted for the components of other comprehensive income, either in a single, continuous statement of comprehensive income or by using two separate but consecutive statements. Regardless of the alternative chosen, companies must display adjustments for items reclassified from other comprehensive income into net income within the presentation of both net income and other comprehensive income. ASU 2011-05 is effective for interim and annual periods beginning after December 15, 2011. We are currently evaluating the effect ASU 2011-15 will have on our consolidated financial statements and have not yet determined which method of presentation we will elect.
Concentration of Credit Risk
At June 30, 2011, we had total rate of return swap positions with two financial institutions totaling $164.6 million. We periodically evaluate counterparty credit risk associated with these arrangements. In the event either counterparty were to default under these arrangements, loss of the net interest benefit we generally receive under these arrangements, which is equal to the difference between the fixed rate we receive and the variable rate we pay, may adversely impact our results of operations and operating cash flows. However, at the current time, we have concluded we do not have material exposure.
Income Taxes
In March 2008, we were notified by the Internal Revenue Service, or the IRS, that it intended to examine our 2006 Federal tax return. During June 2008, the IRS issued AIMCO-GP, Inc., our general and tax matters partner, a summary report including the IRS’s proposed adjustments to our 2006 Federal tax return. In addition, in May 2009, we were notified by the IRS that it intended to examine our 2007 Federal tax return. During November 2009, the IRS issued AIMCO-GP, Inc. a summary report including the IRS’s proposed adjustments to our 2007 Federal tax return. The matter is currently pending administratively before IRS Appeals and the IRS has made no determination. We do not expect the 2006 or 2007 proposed adjustments to have any material effect on our unrecognized tax benefits, financial condition or results of operations.
Use of Estimates
The preparation of our condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts included in the financial statements and accompanying notes thereto. Actual results could differ from those estimates.