EDC Announces Sale and Leaseback Agreement of Headquarters and Warehouse Facility.

Educational Development Corporation has sold its headquarters and warehouse facility in Tulsa, Oklahoma, for $32.5 million. The proceeds will be used to pay off outstanding loans. The company has entered into a leaseback agreement with the buyer, allowing it to continue occupying the facility. This transaction is expected to help EDC manage its debt and improve its financial position.

Educational Development Corporation (EDUC) has executed a significant financial transaction by selling its Tulsa headquarters and distribution warehouse, known as the Hilti Complex, for $32.5 million. The proceeds from this sale will be utilized to pay off the company's outstanding Term Loans and Revolving Loan, thereby improving its monthly cash flows. EDUC has also entered into a leaseback agreement with the buyer, allowing the company to continue occupying the facility under a 10-year triple-net lease.

The Hilti Complex spans 402,000 square feet and includes existing tenants such as Hilti and Crusoe AI. The sale excludes an adjacent land parcel, which will remain under EDUC's ownership. The company will lease back its space at $8.00 per square foot with 2.5% annual increases under the 10-year lease agreement. This transaction is expected to eliminate EDUC's debt and enhance its balance sheet, providing immediate positive implications for the company's financial position.

The sale-leaseback deal is a strategic move for EDUC, as it will allow the company to convert excess inventory into cash and reduce its debt burden. The company expects the interest savings from the reduced debt to exceed the new lease payments, resulting in improved monthly cash flows. By maintaining its operational footprint while shedding substantial debt, EDUC can focus on its core competencies and explore new growth opportunities in the education technology sector.

The transaction is expected to close after a 45-day due diligence period, during which the buyer will conduct necessary investigations, inspections, and reviews. The absence of a financing contingency in the contract indicates a high degree of confidence in the deal's completion. The 10-year triple-net lease agreement will require EDUC to cover utilities, insurance, property taxes, and regular maintenance, providing a predictable and inflation-adjusted cost structure.

The sale of the Hilti Complex is part of EDUC's broader operational efficiency strategy, which includes maintaining future expansion possibilities while optimizing its current footprint and capital structure. This strategic pivot is aimed at unlocking shareholder value and positioning the company for long-term growth in the education technology sector.

References:
[1] https://www.stocktitan.net/news/EDUC/educational-development-corporation-announces-sale-and-leaseback-u2umqcy91qv1.html
[2] https://www.ainvest.com/news/unlocking-educational-development-corporation-strategic-reallocation-positions-edtech-growth-2508/