Lease Incentives

9 Months Ended

Sep. 30, 2023

Lease Incentives

Lease Incentives

5. Lease Incentives

Our non-contingent lease incentive balances at September 30, 2023 and December 31, 2022 were $2,193,000 and $1,789,000, respectively. The following table summarizes our lease incentives activity for the nine months ended September 30, 2023 and 2022 (in thousands):

	Nine Months Ended September 30,
		2023			2022
Lease incentives funded	$	1,023	(1)	$	418
Amortization of lease incentives		(584)			(665)
Adjustment for collectability of lease incentives		—			(256)	(3)
Other adjustments (2)		(35)			(174)
Net increase (decrease) in non-contingent lease incentives	$	404		$	(677)

(1) As part of our investment in a $54,134 JV, we committed to fund $2,100 of lease incentive, of which $1,004 was funded during the nine months ended September 30, 2023.

(2) Primarily relates to lease incentive balance write-off related to property sales.

(3) Represents the lease incentive balance write-off related to a closed property and subsequent lease termination and lease incentive balance write-off related to 12 assisted living communities transitioned to an existing operator.

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.