Empire State Realty Trust (ESRT) has agreed to acquire the Scholastic Building at 555‑557 Broadway in Manhattan’s SoHo submarket for $386 million in cash. The 368,000‑square‑foot office complex is 70 % leased, including a 15‑year lease with Scholastic for 222,000 sq ft and fully leased 28,000 sq ft of retail space. The all‑cash transaction is expected to close in December 2025.
The deal adds a high‑quality, long‑term tenant to ESRT’s core office portfolio and expands the REIT’s presence in a prime New York City location. The long‑term lease with Scholastic provides predictable cash flow and positions ESRT to capture rent growth from the remaining vacant space. The acquisition aligns with the REIT’s capital‑recycling strategy, which focuses on acquiring premium NYC assets while divesting non‑core suburban holdings.
ESRT’s portfolio totals approximately 7.8 million rentable square feet of office space, 0.8 million rentable square feet of retail space, and 743 residential units. In the third quarter of 2025, the REIT reported revenue of $197.73 million and a Core FFO of $0.23 per share, reflecting continued strength in its core office assets. The same‑store property cash NOI grew 5.2 % year‑over‑year in Q3 2024, while a 2.9 % decline in Q4 2024 was attributed to non‑recurring items and higher operating expenses.
Scholastic’s sale‑leaseback of its Missouri distribution center for $95 million is part of a broader strategy to unlock real‑estate value and fund share buybacks. By retaining a long‑term lease at the Broadway location, Scholastic reduces its footprint while maintaining a presence in a high‑visibility market. The transaction provides ESRT with a tenant that has a strong balance sheet and a long‑term commitment, enhancing the REIT’s risk profile.
Anthony E. Malkin, ESRT’s Chairman and CEO, said the acquisition delivers “a combination of contractual revenue, embedded growth, and significant value‑creation potential.” He added that the deal reflects the REIT’s focus on modernized, amenitized office assets in the city’s most dynamic market and signals confidence in the continued demand for high‑quality space.
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