An activist investor is publicly pressuring Six Flags Entertainment to sell its real estate assets, a move they claim could be worth over $5.6 billion. Land & Buildings Investment Management, a significant shareholder, identified major casino landlord VICI Properties as a prime candidate to acquire the theme park operator's property portfolio.
The push comes as Six Flags' stock has fallen approximately 50% year-to-date. In a letter to shareholders, Land & Buildings founder Jonathan Litt argued that separating the company's operations from its physical properties through a sale-leaseback agreement could unlock substantial value for investors.
Key Takeaways
- Activist investor Land & Buildings is urging Six Flags to monetize its real estate, valued at an estimated $5.67 billion.
- The firm suggests that casino REIT VICI Properties is a logical and interested potential buyer for the theme park properties.
- The proposal follows a 50% decline in Six Flags' stock price and what the investor calls a disappointing merger with Cedar Fair.
- Land & Buildings projects a potential stock upside of over 75% if the real estate is separated from the operating company.
Shareholder Pressure Mounts on Six Flags
Land & Buildings Investment Management, led by Jonathan Litt, has intensified its campaign to persuade Six Flags Entertainment's management to reconsider its corporate structure. The investment firm believes the amusement park company's real estate is significantly undervalued within its current corporate framework.
In a formal letter, Litt outlined a clear path to what he terms unlocking “trapped real estate value.” The core of the proposal is for Six Flags to either spin off its property holdings into a separate company or sell them outright to a third party and then lease them back. This strategy, known as a sale-leaseback, is common in industries with significant physical assets, such as the casino sector.
"Multiple buyers, such as VICI Properties, remain explicitly interested in acquiring real estate like theme parks in scale at valuations nearly double the current trading multiple," Litt stated in the letter to shareholders.
The investor argues that such a move has a proven track record of creating value for shareholders in other industries, particularly gaming, where real estate investment trusts (REITs) have become dominant landlords.
A History of Strategic Disagreement
This is not the first time Land & Buildings has presented this idea to Six Flags. According to the investor, the proposal was first made in 2022, with the suggestion that it could increase the company's share price by as much as 50%. At that time, Litt identified both VICI Properties and Gaming and Leisure Properties as potential partners.
The firm re-engaged with management on the topic in August 2023, but Six Flags ultimately chose a different strategic path. A few months later, Six Flags announced a major merger with its rival, Cedar Fair. While initially met with some optimism, Land & Buildings contends the deal has not benefited shareholders as promised.
"The performance post-merger has not only proven us right, it’s been far worse than we even anticipated," Litt wrote, highlighting the stock's continued poor performance since the merger announcement.
Potential Financial Impact
Land & Buildings estimates that separating the real estate could result in an immediate stock upside of over 75% based on 2026 consensus estimates. The firm suggests this upside could grow to 130% if Six Flags' earnings recover to its original 2025 guidance of $1.1 billion in EBITDA.
Why VICI Properties is a Logical Suitor
While VICI Properties has not made any public statements about acquiring Six Flags' real estate, the company's recent strategy makes it a plausible buyer. VICI is the largest owner of casino real estate in the United States, with iconic properties like Caesars Palace in its portfolio. However, the company has been actively diversifying its holdings beyond the gaming sector.
The REIT has publicly stated its goal is to expand into other forms of "experiential real estate." This strategy focuses on acquiring properties where people go for leisure and entertainment, a category that theme parks fit into perfectly.
VICI's Diversification Strategy
VICI Properties has already made several significant investments in non-gaming leisure assets. Its growing portfolio includes properties associated with:
- Bowlero: The world's largest operator of bowling centers.
- Cabot: A developer and operator of luxury golf resorts.
- Canyon Ranch: A brand of luxury wellness resorts.
- Chelsea Piers: Large-scale sports and entertainment complexes.
- Kalahari Resorts: A chain of indoor water parks and convention centers.
This established pattern of acquiring large-scale, experience-based properties confirms VICI's willingness to engage in deals outside of its core casino market. According to Land & Buildings, the scale of the Six Flags portfolio would be an attractive acquisition for a company like VICI that is looking to deploy capital into this specific asset class.
For Six Flags, a deal with an established landlord like VICI would provide a massive influx of capital, allowing the company to pay down debt and invest in its parks, while shifting to an asset-light operating model. The outcome of this shareholder pressure remains to be seen as Six Flags management has yet to respond publicly to the latest letter.
