Educational Development Corporation Executes $32.5M Sale-Leaseback Agreement for Headquarters and Warehouse Facility

Educational Development Corporation (EDUC) has entered a $32.5 million sale-leaseback agreement for its Tulsa headquarters, eliminating Term Loans and Revolving Loan, and enhancing cash flow. The sale includes a 402,000 square foot complex, with EDUC leasing back its portion under a 10-year triple-net lease at $8.00 per square foot. The transaction is expected to conclude 90 days after contract execution.

Educational Development Corporation (EDC) has executed a significant real estate transaction, announcing a $32.5 million sale and leaseback agreement for its Tulsa headquarters. The sale includes a 402,000 square foot complex, with EDC leasing back its portion under a 10-year triple-net lease at $8.00 per square foot. The transaction is expected to conclude 90 days after contract execution.

The proceeds from the sale will be utilized to pay off the Term Loans and Revolving Loan outstanding in the Credit Agreement with the Company's Bank. EDC expects this move to enhance its cash flow and reduce debt, which is particularly beneficial given the company's recent financial performance. The complex, known as the Hilti Complex, is located at 5400-5402 South 122nd East Avenue, Tulsa, Oklahoma 74146, and consists of multiple buildings with a total of 402,000 square feet of rentable office and warehouse space on 37 acres.

The sale agreement includes the assignment of existing tenant leases, including those with Hilti and Crusoe AI, to the buyer. EDC will retain a 15-year triple-net lease for its occupied space, which totals approximately 218,200 square feet. The initial lease rate is $8.00 per square foot, with a 2.5% annual escalation. The lease also includes renewal and extension options with similar escalations.

EDC's President and Chief Executive Officer, Craig White, stated that the decision to sell the Hilti Complex and reduce borrowings is in the best interest of its shareholders. The company expects to have limited working capital borrowings going forward, with the interest saved on reduced borrowings exceeding monthly rental payments and eliminating monthly mortgage payments. This move is expected to provide an immediate improvement to the company's monthly cash flows and strengthen its cash flow from operations in the upcoming years.

The sale and leaseback agreement is part of EDC's strategic pivot towards the education technology sector. The company aims to leverage its existing K-12 education brands to capitalize on the growing AI/AR/VR edtech market, which is projected to reach $549.6 billion by 2033. By reducing debt and enhancing financial flexibility, EDC is positioning itself to invest in innovation and growth opportunities.

This strategic realignment, while addressing immediate financial concerns, also underscores EDC's commitment to long-term growth and competitive positioning in the education technology sector.

References:
[1] https://finance.yahoo.com/news/educational-development-corporation-announces-sale-200000246.html
[2] https://www.marketscreener.com/news/educational-development-corporation-announces-sale-and-leaseback-agreement-of-headquarters-and-wareh-ce7c50dad888ff22
[3] https://www.ainvest.com/news/unlocking-educational-development-corporation-strategic-reallocation-positions-edtech-growth-2508/