Scholastic is selling its headquarters building in New York City and its main distribution warehouse, in Jefferson City, Mo., and will lease back both facilities. The transactions are expected to close by the end of the year.
The headquarters building at 555-557 Broadway will be bought by a subsidiary of Empire State Realty Trust for $386 million, and the warehouse will be bought by affiliates of Fortress Investment Group for $95 million.
Scholastic estimated that after taxes, fees, etc., the sales will net $401 million. Scholastic president and CEO Peter Warwick said that the transactions, which "unlock the value of our owned real estate," will "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."
For the headquarters building, after the sale Scholastic will take a 15-year lease, with two 10-year lease extensions; for the warehouse, it will begin a 20-year triple-net lease, with two 10-year lease extensions.