Lease Incentives

12 Months Ended

Dec. 31, 2020

Lease Incentives

Lease Incentives

8. Lease Incentives

The following table summarizes lease incentives as of December 31, 2020 and 2019 (in thousands):

	At December 31,
		2020		2019
Non-contingent lease incentives	$	2,462	$	2,552

The following table summarizes our lease incentive activity for the years ended December 31, 2020, 2019 and 2018 (in thousands):

	2020							2019							2018
		Funding		Amortization		Adjustment			Funding		Amortization		Adjustment			Funding		Amortization		Write-off
Non-contingent lease incentives	$	220	$	(426)	$	115	(1)	$	387	$	(385)	$	(11,893)	(2)	$	1,272	$	(1,733)	$	—
Contingent lease incentives		—		—		—			—		—		—			—		(359)		(6,219)	(3)
Net increase (decrease)	$	220	$	(426)	$	115		$	387	$	(385)	$	(11,893)		$	1,272	$	(2,092)	$	(6,219)

(1) We reclassified a $300 interim working capital loan as lease incentive. See Note 7. Notes Receivable for further discussion. Additionally, we wrote-off $185 of lease incentive related to a master lease for which we determined it was not probable we will collect substantially all of the contractual lease obligations through maturity. See Note 5. Real Estate Investments for further discussion.

(2) In accordance with ASC 842 lease standard adopted on January 1, 2019, we wrote-off $12,093 of lease incentives related to leases for which we determined it is not probable we will collect substantially all of the contractual lease obligation through maturity. See Note 1. General for further discussion. Additionally, we reclassified a $200 interim working capital loan as lease incentive. See Note 7. Notes Receivable for further discussion.

(3) We entered into an amended master lease agreement with Senior Lifestyle Management, LLC (“Senior Lifestyle”). Among the provisions of the amendment, the contingent lease incentive payable to Senior Lifestyle was removed. Therefore, we wrote-off the Senior Lifestyle contingent lease incentive.

Non-contingent lease incentives represent payments made to our lessees for various reasons including entering into a new lease or lease amendments and extensions. Contingent lease incentives represent potential contingent earn-out payments that may be made to our lessees in the future, as part of our lease agreements. From time to time, we may commit to provide contingent payments to our lessees, upon our properties achieving certain rent coverage ratios. Once the contingent payment becomes probable and estimable, the contingent payment is recorded as a lease incentive. Lease incentives are amortized as a yield adjustment to rental income over the remaining life of the lease.