Educational Development Corporation Completes Major Real Estate Transaction: Headquarters Complex to Be Sold with Leaseback Structure

Educational Development Corporation (NASDAQ: EDUC) has finalized a significant commercial real estate deal that marks a strategic shift in the company’s asset management approach. On September 19, 2024, EDUC executed a Commercial Real Estate Contract with Partner Holdings for the disposition of its primary operations facility located at 5400-5402 South 122nd East Avenue in Tulsa, Oklahoma—commonly referred to as the Hilti Complex.

Transaction Highlights and Financial Impact

The total consideration for this real estate disposition reached $38,250,000 (prior to fees, commissions, and closing expenses). The company intends to deploy these proceeds toward eliminating its outstanding Term Loans and Revolving Credit facilities with its banking partner, a strategic move designed to enhance shareholder value.

Management emphasized that this transaction delivers immediate financial benefits. The interest expense savings from debt reduction will outpace the monthly lease obligations, while the elimination of mortgage payments strengthens overall financial performance. As the company emphasized in its announcement, cash flow improvements from this restructuring, combined with recently executed subleasing arrangements covering approximately half of its operational space, are projected to materially enhance monthly liquidity.

Property Composition and Tenant Structure

The Hilti Complex comprises multiple structures across 34 acres, providing 402,000 square feet of rentable office and warehouse capacity. The property currently hosts several tenants under existing agreements:

• Hilti operates approximately 183,800 square feet under a 15-year lease, which will transfer to Partner Holdings upon closing
• Crusoe Energy System occupies roughly 110,000 square feet under a 5-year sublease arrangement
• The remaining 218,200 square feet will be subject to a new lease arrangement with EDUC

Notably, the transaction excludes approximately 17 acres of undeveloped adjacent land, which Educational Development Corporation will retain. As part of the purchase agreement, Partner Holdings receives a right of first refusal on any future sale of this retained parcel.

Transaction Timeline and Lease Terms

Partner Holdings has been granted a 75-day due diligence window commencing September 19, 2024, to conduct all necessary investigations and inspections. The closing is scheduled for 30 days following the completion of due diligence activities.

The lease arrangement Educational Development Corporation will occupy spans 15 years, with an initial rate of $8.52 per square foot. Annual escalations of 2.5% are structured to commence in the second year. The lease incorporates triple-net provisions, positioning the company as responsible for utilities, insurance, property taxes, and routine maintenance, while Partner Holdings assumes responsibility for structural and roof-related maintenance. Educational Development Corporation retains subletting rights for any unoccupied space, subject to landlord approval.

About Educational Development Corporation

Educational Development Corporation operates as a diversified educational publisher and distributor. The company owns and publishes Kane Miller Books, produces Learning Wrap-Ups (educational manipulatives), and manufactures SmartLab Toys (STEAM-focused products). Additionally, EDUC serves as the exclusive U.S. distributor for Usborne Publishing Limited’s children’s book catalog. Distribution channels include over 4,000 retail locations, independent brand partners conducting direct sales through book shows, social media, school partnerships, and consumer events.