Scholastic has acted on its promise to sell its two largest real estate holdings and then lease back part of the properties. The two sales—for its headquarters on Broadway in New York City and its primary distribution facility in Jefferson City, Mo., are expected to generate estimated net proceeds of $401 million. The sales are expected to close before the end of the year.

According to the Scholastic announcement, it will sell 555-557 Broadway to a subsidiary of Empire State Realty Trust (ESRT), for gross proceeds of $386 million in cash, and sell its Jefferson City facility to funds managed by affiliates of Fortress Investment Group for gross proceeds of $95 million in cash. Upon closing of each of these transactions, Scholastic will enter into long-term leases to continue operations at both locations.

For its headquarters building, Scholastic has signed a 15-year lease with two 10-year lease extensions. The new owners will assume responsibility for maintenance and capital investments in the Broadway building. In fiscal 2025, Scholastic noted, it incurred capital expenditures of $7.3 million related to the property. ESRT will also assume the current leases for retail space and the second floor of the Broadway building. In fiscal 2025 the company received $11.2 million in rental income from those leases. The sale of its headquarters will also let Scholastic “substantially” reduce its footprint in the building, the announcement said. According to Scholastic, beginning in 2026, the company will use floors 6-12 to house its Broadway-based employees.

Scholastic will receive net proceeds from the sale of its Jefferson City warehouse of $74 million and has signed a 20-year triple net lease (which calls for Scholastic to pay all operating expenses) with two 10-year lease extensions, with annual rent of $7.6 million.

Scholastic will use the proceeds from the sales to pay down debt and to repurchase shares, a move companies use to try to increase their share price.