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Lease Incentives

9 Months Ended

Sep. 30, 2025

6.	Lease Incentives

Our non-contingent lease incentive balances at September 30, 2025 and December 31, 2024 were $2,717,000 and $3,522,000, respectively. The following table summarizes our lease incentives activity for the nine months ended September 30, 2025 and 2024 (in thousands):



	Nine Months Ended September 30,
		2025			2024
Lease incentives funded	$	—		$	1,794
Amortization of lease incentives		(556)			(626)
Adjustment for collectability of lease incentives		(249)	⁽¹⁾		—
Other adjustments		—			(191)	⁽²⁾
Net (decrease) increase in non-contingent lease incentives	$	(805)		$	977

(1)	Represents uncollectible lease incentive balances written-off due to the termination of two existing leases with the same operator, and combining them into a single master lease.

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

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.