Financing Obligations

12 Months Ended

Dec. 31, 2017

In October 2017, Herc consummated a sale-leaseback transaction pursuant to which it sold 42 of its properties located in the U.S. for gross proceeds of approximately $119.5 million, and entered into a master lease agreement pursuant to which it will continue operations at those properties as a tenant. The triple net lease agreement has an initial term of 20 years, subject to extension, at Herc's option, for up to five additional periods of five years each. The sale of the properties did not qualify for sale-leaseback accounting due to continuing involvement with the properties. Therefore, the book value of the building and land will remain on the Company's consolidated balance sheet.

In connection with the sale-leaseback, the Company capitalized $2.7 million in deferred financing obligations issuance costs. The costs are being amortized to interest expense using the effective interest method. Non-cash interest expense related to the amortization of these costs for the year ended December 31, 2017 was $0.1 million.

The Company's financing obligations consist of the following (in millions):



	Weighted Average Effective Interest Rate at December 31, 2017	Maturity	December 31, 2017
Financing Obligations	4.62%	2037	$	118.2
Unamortized Financing Issuance Costs			(2.6		)
Total financing obligations			115.6
Less: Current maturities of financing obligations			(2.7		)
Financing obligations, net			$	112.9

As of December 31, 2017, future minimum financing payments for the agreement referred to above are as follows (in millions):



2018	$	7.9
2019	7.9
2020	7.9
2021	7.9
2022	7.9
Thereafter	117.0
Total minimum financing obligations payments	156.5
Obligations subject to non-cash gain on future sale of property	32.4
Less amount representing interest (at a weighted-average interest rate of 4.62%)	(70.7		)
Total financing obligations	$	118.2