Educational Development Corporation Announces Sale and Leaseback Agreement of Headquarters and Warehouse Facility

Rhea-AI Summary

Educational Development Corporation (NASDAQ: EDUC) has executed a Commercial Real Estate Contract to sell its Tulsa headquarters and distribution warehouse (Hilti Complex) for $32.5 million. The transaction, expected to close after a 45-day due diligence period, excludes an adjacent land parcel.

The complex spans 402,000 square feet with existing tenants Hilti (183,800 sq ft) and Crusoe AI (110,000 sq ft). EDUC will lease back its space at $8.00 per square foot with 2.5% annual increases under a 10-year triple-net lease agreement. The sale proceeds will be used to pay off the company's Term Loans and Revolving Loan, improving monthly cash flows as interest savings will exceed rental payments.

Positive

• Sale price of $32.5 million will eliminate Term Loans and Revolving Loan debt
• Interest savings will exceed monthly rental payments, improving cash flow
• Company retains ownership of adjacent excess land parcel
• Strong tenant mix with Hilti (15-year lease) and Crusoe AI (10-year lease)
• Two five-year renewal options provide long-term operational flexibility

Negative

• Company will no longer own its headquarters and distribution facility
• Additional expenses through triple-net lease terms (utilities, insurance, taxes, maintenance)
• 2.5% annual rent escalations will increase operational costs

Insights

Corporate Finance Specialist

EDUC's $32.5M sale-leaseback deal eliminates debt, improves cash flow, and strategically transforms balance sheet while maintaining operational footprint.

Educational Development Corporation has executed a strategic $32.5 million sale-leaseback transaction for its Tulsa headquarters and warehouse facility. This financial maneuver serves multiple purposes with immediate positive implications for the company's balance sheet and cash flow.

The transaction's primary benefit lies in debt elimination - EDUC will use the proceeds to completely pay off both term loans and revolving credit, significantly de-leveraging the balance sheet. The financial engineering is particularly clever because the company states the interest savings will exceed the new lease payments, creating an immediate positive impact on monthly cash flows.

The property itself is substantial at 402,000 square feet on 37 acres, with only a portion actually used by EDUC. The company has existing long-term tenants (Hilti with a 15-year lease for 183,800 sq ft and Crusoe AI with a 10-year lease for 110,000 sq ft) whose leases will transfer to the new owner. EDUC will then lease back only its needed space under a 10-year triple-net lease at $8.00 per square foot with 2.5% annual escalations.

Management's reference to converting "excess inventory into cash" suggests this move is part of a broader operational efficiency strategy. By retaining the adjacent land parcel, EDUC maintains future expansion possibilities while optimizing its current footprint and capital structure.

The 45-day due diligence period and absence of financing contingency indicate confidence in the deal's completion. The transaction transforms EDUC from a property owner with substantial debt to a leaner operation with improved liquidity and operational flexibility.

Tulsa, Oklahoma--(Newsfile Corp. - August 21, 2025) - Educational Development Corporation (NASDAQ: EDUC) ("EDC", the "Company" or "Seller") (http://www.edcpub.com) today announced that on August 18, 2025, it executed a Commercial Real Estate Contract ("Contract") with Buyer for the sale of the Company's headquarters and distribution warehouse located at 5400-5402 South 122^nd East Avenue, Tulsa, Oklahoma 74146 (the "Hilti Complex").

The agreed upon sale price of the Hilti Complex per the executed Contract totalled $32,500,000. 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. At closing, EDC will assign the existing Hilti and Crusoe Energy tenant leases to the Buyer and will execute a separate Triple-Net Lease (the "Lease") for its occupied space in the Hilti Complex. The sale agreement does not include the excess land parcel adjacent to the Hilti Complex which will remain under the ownership of EDC.

Per Craig White, President and Chief Executive Officer of Educational Development Corporation, "Over the last several weeks we have evaluated options to either sell the Hilti Complex or refinance it, with the proceeds to be used to pay back our borrowings with the bank. After this review, and with the support of the new buyer and our brokers, we have decided to proceed with executing a new Purchase/Sale Agreement. We expect to announce the buyer's name following the initial 45 day due diligence period."

"Selling the Hilti Complex and reducing our borrowings is in the best interest of our shareholders, and we expect to have limited working capital borrowings going forward. The interest saved on the reduced borrowings will exceed our monthly rental payments and we will no longer have monthly mortgage payments, providing an immediate improvement to our monthly cashflows. We also expect our cashflow from operations to be very strong in the upcoming years as we convert our excess inventory into cash."

The Complex consists of multiple buildings totalling 402,000 square feet of rentable office and warehouse space on 37-acres. Approximately 183,800 square feet of the Hilti Complex is occupied by Hilti under a 15-year lease. In addition, approximately 110,000 square feet of the Hilti Complex is occupied by Crusoe AI under a 10-year lease. At closing, EDC will assign the existing third-party tenant leases to the Buyer and will execute a separate Triple-Net Lease (the "Lease") for its occupied space in the Hilti Complex.

Per the terms of the Contract, the Buyer will have 45 days to complete due diligence, commencing August 18th, including necessary investigations, inspections, and reviews. The closing of the Contract is to be completed 45 days after the due diligence period. The Contract does not contain a financing contingency.

The terms of the lease will be 10 years, and the initial lease rate will be $8.00 per square foot, with 2.5% annual escalations. The Seller will also have two five-year renewal and extension options with 2.5% increases annually in the base rental rate of the preceding year. The Lease will also include triple-net terms, where the Seller will be responsible for utilities, insurance, property taxes, and regular maintenance.

About Educational Development Corporation (EDC)

EDC began as a publishing company specializing in books for children. EDC is the owner and exclusive publisher of Kane Miller Books ("Kane Miller"); Learning Wrap-Ups, maker of educational manipulatives; and SmartLab Toys, maker of STEAM-based toys and games. EDC is also the exclusive United States MLM distributor of Usborne Publishing Limited ("Usborne") children's books. EDC-owned products are sold via 4,000 retail outlets and EDC and Usborne products are offered by independent brand partners who hold book showings through social media, book fairs with schools and public libraries, in individual homes, as well as other in-person events and internet sales.

Contact:
Educational Development Corporation
Craig White, (918) 622-4522

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/263395

FAQ

What is the sale price of EDUC's Hilti Complex headquarters?

Educational Development Corporation is selling its Hilti Complex headquarters for $32.5 million.

How will EDUC use the proceeds from the Hilti Complex sale?

The proceeds will be used to pay off the company's Term Loans and Revolving Loan with their bank.

What are the terms of EDUC's leaseback agreement?

EDUC will enter a 10-year triple-net lease at $8.00 per square foot with 2.5% annual increases and two five-year renewal options.

Who are the current tenants in EDUC's Hilti Complex?

The complex has two major tenants: Hilti occupying 183,800 sq ft under a 15-year lease and Crusoe AI occupying 110,000 sq ft under a 10-year lease.

When will the EDUC property sale close?

The sale is expected to close 90 days after the contract execution, following a 45-day due diligence period starting August 18, 2025.