Investing.com -- Scholastic Corporation (NASDAQ:SCHL) stock surged 5.2% in premarket trading Tuesday after the company announced binding agreements to sell its New York City headquarters and Missouri distribution center in sale-leaseback transactions expected to generate $401 million in net proceeds.
The global children’s publishing company has entered deals to sell its 555-557 Broadway headquarters to Empire State Realty Trust (NYSE:ESRT) for $386 million and its Jefferson City distribution facility to funds managed by Fortress Investment Group for $95 million. Scholastic will continue operations at both locations through long-term leases while substantially reducing its footprint at the New York property.
The transactions are expected to close before the end of 2025, subject to customary closing conditions. The company plans to deploy the proceeds toward its capital allocation priorities, including debt reduction and share repurchases.
"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," said Peter Warwick, President and CEO of Scholastic.
The New York property sale is expected to generate $327 million in estimated net proceeds after taxes and fees, with Scholastic entering a 15-year lease with two 10-year extension options. The arrangement includes an estimated incremental annual expense of $11.2 million, reflecting rent partially offset by reduced operating expenses.
The Jefferson City facility sale is expected to yield $74 million in net proceeds, with Scholastic signing a 20-year triple net lease with two 10-year extensions and annual rent of $7.6 million.
Scholastic’s board ran competitive processes with potential counterparties before determining these transactions offered the best opportunity to enhance the company’s balance sheet while minimizing disruption to operations. The company plans to provide additional details during its earnings call scheduled for December 18, 2025.
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