Empire State Realty Trust (ESRT) completed a $386 million sale‑leaseback of Scholastic Corporation’s New York City headquarters at 555–557 Broadway on December 19 2025. The transaction gives ESRT ownership of the 110,000‑square‑foot building and a 15‑year leaseback that keeps Scholastic in place while transferring all ownership and maintenance responsibilities to the REIT.
ESRT’s balance sheet remains strong, with a current ratio of 3.01 and a history of healthy free‑cash‑flow generation. The acquisition adds a high‑quality, long‑term tenant to ESRT’s core Manhattan portfolio, reinforcing its strategy of acquiring modern, well‑located office assets. The sale‑leaseback provides ESRT with a predictable income stream and a substantial cash inflow that can be deployed for portfolio optimization or capital recycling.
Scholastic’s net proceeds of $386 million will be used to reduce debt and fund share buybacks, aligning with its broader strategy of streamlining its real‑estate footprint and focusing on core publishing operations. The company will downsize from 10 of its 12 floors to the top six floors, freeing up space for future expansion or alternative uses. In the quarter ending August 2025, Scholastic reported a $71 million net loss on revenue that fell 4.9 % year‑over‑year, but its fiscal second quarter of 2026 (ending December 18 2025) showed revenue up 1 % to $551.1 million and adjusted EPS rising 41 % to $2.57, indicating improving profitability as the company reallocates capital.
Manhattan commercial‑real‑estate sales rose 9 % year‑over‑year in 2025, reflecting a resilient market for high‑quality office space in SoHo. The sale‑leaseback is one of the largest single‑property transactions in the district this year, underscoring continued demand for premium office assets even as the broader market navigates post‑pandemic shifts. The deal also highlights Scholastic’s willingness to monetize non‑core assets to support its financial strategy.
Management emphasized the strategic fit of the transaction. ESRT Chairman and CEO Anthony E. Malkin said the deal “adds a high‑quality tenant and strengthens our portfolio in a prime location.” Scholastic President and CEO Peter Warwick noted that the proceeds “unlock value from non‑operating assets, enabling us to accelerate shareholder returns and focus on long‑term growth.” Iole Lucchese, Scholastic’s Chair of the Board, added that the sale “positions the company for sustained value creation.”
Analysts have noted that ESRT’s valuation appears low relative to peers, suggesting the REIT may be undervalued in light of the new leaseback. Scholastic’s stock remained flat after its earnings announcement, indicating that investors view the transaction as a neutral catalyst for the company’s long‑term strategy.
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