Scholastic announces sale-leasebacks of owned real estate assets

Scholastic Corporation (SCHL) announced that it has entered into sale-leaseback transactions for its headquarters location in New York City and its primary distribution facility in Jefferson City, Missouri, which together are expected to generate estimated net proceeds of $401M. “The sale of these real estate assets aligns with the Company’s long-term plan to monetize its significant non-operating assets to improve the efficiency of its balance sheet and create shareholder value. Proceeds are expected to be deployed in accordance with the Company’s capital allocation priorities, including debt reduction and share repurchases,” the company stated. Under the terms of the transactions, Scholastic is to sell 555-557 Broadway to a subsidiary of Empire State Realty Trust (ESRT) for gross proceeds of $386M in cash and Jefferson City to funds managed by affiliates of Fortress Investment Group for gross proceeds of $95M in cash. Upon closing of each of these transactions, Scholastic will enter into long-term leases to continue operations at both locations, while substantially reducing its footprint at 555-557 Broadway. Both transactions are expected to close before the end of 2025, following satisfaction of customary closing conditions, including title confirmation and surveys for Jefferson City. “Today’s announcement reflects meaningful momentum for Scholastic as we unlock the value of our owned real estate and focus on accelerating long-term, profitable growth and shareholder value creation. Following highly competitive processes, these transactions maximize value from our most significant non-operating assets, while securing long-term use of strategic real estate key to our operations, now rightsized for our business needs. With a stronger balance sheet, we will be better positioned to continue investing in the extraordinary potential of our brand, content and mission, while returning capital to shareholders,” said Peter Warwick, President and CEO of Scholastic.