Six Flags stock rises after activist investor pushes real estate monetization

Investing.com -- Six Flags Entertainment Corp (NYSE:FUN) stock gained 3% in premarket trading Friday after activist investor Land & Buildings Investment Management issued a public letter urging the company to unlock value by monetizing its real estate assets.

Land & Buildings, a substantial shareholder in Six Flags, outlined a strategy that could potentially deliver up to 78% upside based on 2026 consensus estimates. The investment firm suggested that separating Six Flags’ property assets through a REIT spin-off or sale-leaseback would allow shareholders to realize the "trapped value" in the company’s real estate while preserving operational upside.

"With the Board changes announced in March, a CEO succession process underway and a highly engaged and vocal shareholder base, we see a generational opportunity to buy FUN before it re-rates," Land & Buildings wrote in its letter to shareholders.

The activist investor highlighted that Six Flags stock has declined by over 50% YoY and currently trades at what it describes as a "trough EBITDA multiple of 7x on depressed earnings." Land & Buildings attributed the poor performance to merger integration issues following the Cedar Fair combination and historically poor weather conditions.

This marks Land & Buildings’ third engagement with Six Flags regarding real estate monetization. The firm previously issued a presentation in December 2022 suggesting that such a strategy could deliver 50% immediate upside, after which shares rose 45%. The investor also engaged with the board in August 2023 before the Cedar Fair merger, which it opposed.

Land & Buildings proposed a three-step plan: announce a REIT spin-off, evaluate selling the real estate to interested buyers like VICI Properties (NYSE:VICI), and consider whether the operating company should remain independent or be acquired by private equity or leisure companies seeking synergies.

The firm expressed confidence that Six Flags’ current earnings weakness is largely due to temporary factors, providing "a clear path to improved performance next year."

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