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Lease Incentives

12 Months Ended

Dec. 31, 2024

8. Lease Incentives

Our non-contingent lease incentive balances at December 31, 2024 and 2023 were $3,522,000 and $2,607,000, respectively. The following table summarizes our non-contingent lease incentive activity for the years ended

December 31, 2024, 2023 and 2022 (in thousands):



	Year Ended December 31,
		2024			2023			2022
Lease incentives funded	$	1,924		$	1,627		$	418
Amortization of lease incentives		(818)			(773)			(877)
Adjustment for collectability of lease incentives		—			(26)	⁽²⁾		(256)	⁽²⁾
Other adjustments		(191)	⁽¹⁾		(10)	⁽¹⁾		(174)	⁽¹⁾
Net increase in non-contingent lease incentives	$	915		$	818		$	(889)

(1)	Represents lease incentive balances written-off due to property sales.

(2)	Represents uncollectible lease incentive balances written-off.

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.