Lease Incentives

6 Months Ended

Jun. 30, 2021

5.	Lease Incentives

Our lease incentive balances at June 30, 2021 and December 31, 2020 are as follows (in thousands):


		June 30, 2021		December 31, 2020
Non-contingent lease incentives	$	2,414	$	2,462

The following table summarizes our lease incentives activity for the six months ended June 30, 2021 and 2020 (in thousands):


	Six Months Ended June 30,
	2021				2020
		Funding		Amortization		Funding		Amortization		Reclassification
Non-contingent lease incentives	$	180	$	(228)	$	13	$	(209)	$	115	⁽¹⁾

(1)

We reclassified a $300 interim working capital loan as lease incentive. See Note 4. 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 2. Real Estate Investments for further discussion.

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.