Scholastic Corporation announced binding agreements to complete two significant sale-leaseback transactions involving its New York City headquarters at 555–557 Broadway and its primary distribution center in Jefferson City, Missouri. The combined transactions are expected to generate $401 million in net proceeds, which the company plans to allocate to key financial priorities, including debt reduction and share repurchases.
The decision marks a significant step in Scholastic’s long-term strategy to monetize non-operating assets, strengthen its balance sheet, and maintain operational continuity. The company will continue to operate at both locations under long-term leases and will reduce its footprint at its New York headquarters to align with its current business needs.
As outlined in the agreements, the company will sell 555–557 Broadway to a subsidiary of Empire State Realty Trust for $386 million in cash, and the Jefferson City distribution facility to funds managed by affiliates of Fortress Investment Group for $95 million. Both transactions are expected to close before the end of 2025, subject to customary closing conditions, including title confirmation and survey completion for the Jefferson City property.
The Board of Directors evaluated multiple strategic options, conducted competitive processes, and ultimately determined that the sale-leaseback approach delivered the most compelling outcome for enhancing shareholder value. Scholastic expects the transactions to streamline its operational footprint, minimize disruption for employees, and preserve access to strategically important real estate.
The company detailed projected financial impacts, including estimated net proceeds of $327 million from the 555–557 Broadway sale and $74 million from the Jefferson City sale, after taxes, fees, and related obligations. Scholastic will enter into a 15-year lease for the New York property with options for two additional 10-year extensions, resulting in an estimated incremental annual expense of $11.2 million. Empire State Realty Trust will assume responsibility for maintenance, capital investments, and the existing retail and second-floor leases at the building, which generated $11.2 million in rental income during fiscal 2025. Capital expenditures for the property had totaled $7.3 million in fiscal 2025.
For the Jefferson City facility, Scholastic will enter into a 20-year triple-net lease with two optional 10-year extensions, with straight-line annual rent expense of $7.6 million.
Support: Newmark Group served as Scholastic’s exclusive financial advisor on both transactions, with Hogan Lovells providing legal counsel and Gagnier Communications serving as strategic communications advisor.
KEY QUOTE:
“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.”
Peter Warwick, President and CEO, Scholastic
