Land & Buildings Investment Management, a significant shareholder in Six Flags Entertainment Corp. (NYSE: FUN), has publicly called on the theme park operator to monetize its extensive real estate portfolio. In a letter to fellow shareholders, the investment firm argued that separating the company's physical properties from its park operations could unlock substantial value and deliver significant returns amid a period of stock underperformance.
The proposal comes as Six Flags' stock has declined more than 50% year-to-date, a drop the investor attributes to challenges following its merger with Cedar Fair and unusually poor weather conditions affecting park attendance.
Key Takeaways
- Land & Buildings Investment Management issued a public letter urging Six Flags to separate its real estate from its operations.
- The firm estimates the real estate could be worth up to $6 billion, potentially boosting the stock price by over 75%.
- The call for action follows a more than 50% decline in Six Flags' share price this year.
- Land & Buildings suggests either selling the properties to a buyer like VICI Properties or spinning them off into a Real Estate Investment Trust (REIT).
A Renewed Push for a Real Estate Strategy
Land & Buildings (L&B) outlined a clear strategy for Six Flags to enhance shareholder value. The core of the proposal is to create an "OpCo/PropCo" structure, where the operating company (OpCo) would manage the theme parks and lease the land from a separate property company (PropCo).
This property company could either be sold outright to interested buyers or spun off as a publicly traded Real Estate Investment Trust (REIT). According to L&B, this move would allow investors to properly value the company's two distinct assets: a resilient theme park operation and a valuable real estate portfolio.
The firm believes that the current stock price does not reflect the underlying value of the land Six Flags owns. "Monetizing the Company’s real estate provides a straightforward means of delivering substantial near-term shareholder gains while preserving the operational upside as EBITDA recovers and expands," the letter stated.
What is an OpCo/PropCo Split?
An OpCo/PropCo structure is a corporate strategy where a company separates its core business operations (Operating Company or "OpCo") from its real estate assets (Property Company or "PropCo"). The OpCo then pays rent to the PropCo to use the properties. This is common in industries like gaming, hospitality, and healthcare, as it allows each part of the business to be valued independently based on its specific market dynamics.
A History of Engagement
This is not the first time Land & Buildings has advocated for this strategy. The investment firm has been actively engaging with Six Flags management and its board for several years.
In December 2022, L&B published a presentation titled "A Thrilling Real Estate Opportunity," which made a similar case. Following that presentation, Six Flags' stock reportedly rose 45%. The company later appointed a new director to its board and agreed to evaluate a separation of its real estate assets.
L&B re-engaged with the board in August 2023, just months before Six Flags announced its merger with rival Cedar Fair. Land & Buildings publicly opposed the merger, arguing it was not the best way to maximize value. The firm now points to the stock's subsequent poor performance as validation of its concerns.
"Unfortunately, the performance post-merger has not only proven us right, it’s been far worse than we even anticipated," Land & Buildings wrote in its recent letter.
The firm believes the current low valuation, combined with recent board changes and an ongoing CEO succession process, creates a "generational opportunity" for change.
Financial Projections and Potential Upside
Land & Buildings provided a detailed financial model to support its argument. The firm's analysis suggests that separating the assets could result in a 78% immediate upside for the stock, based on consensus earnings estimates for 2026.
By the Numbers: L&B's Valuation Estimate
- Current Share Price (approx.): $22.11
- L&B Estimated Net Asset Value/Share: $39.26
- Potential Upside: 78%
- Estimated Real Estate Value: $5.67 Billion
- Estimated Operator Value: $3.33 Billion
Source: Land & Buildings Investment Management, LLC letter dated 09/25/2025.
The analysis assumes the real estate could be valued at an 8.0% capitalization rate, a standard metric in commercial real estate. The firm notes that publicly traded net lease REITs, particularly those in the experiential sector, trade at much higher valuations, suggesting their estimate is conservative.
Furthermore, L&B argues that if Six Flags' earnings before interest, taxes, depreciation, and amortization (EBITDA) recover to the company's original 2025 guidance of $1.1 billion, the upside for shareholders could be as high as 130%.
Pathways to Monetization
The investment firm laid out two primary pathways for Six Flags to monetize its real estate assets.
- Spin off a REIT: The company could create a new, publicly traded entity to hold all its real estate. Existing Six Flags shareholders would receive shares in this new REIT, crystallizing the value of the land while allowing them to retain ownership in the park operator.
- Evaluate an Outright Sale: While preparing for a potential REIT spin-off, Six Flags should explore selling its real estate to an established buyer. The letter specifically mentions VICI Properties (NYSE: VICI), a REIT that specializes in experiential properties like casinos and has expressed interest in theme parks.
L&B believes the current operational challenges, which it describes as "self-inflicted" merger integration issues and "transitory" weather anomalies, will likely resolve over the next year. The time it would take to execute a real estate transaction would allow for earnings to recover, potentially leading to a better valuation for the properties.
The firm concluded its letter by stating that its recent conversations with Six Flags management and board have been constructive and that it believes there is a greater willingness to consider strategic changes. "Real estate monetization has proven in countless industries... to unlock substantial value," the letter concluded. "There is no reason for further delays."
