By Sam Boughedda
In a press release Wednesday morning, Land & Buildings Investment Management, LLC issued a presentation urging Six Flags Entertainment (NYSE:SIX) to unlock "substantial value by executing a strategy to monetize its real estate while driving an operational turnaround."
Land & Buildings Management is an approximately 3% shareholder of Six Flags and said the company has a "tremendous value creation opportunity in front of it."
"The company is currently trading at a deep discount to its historical valuation following an aggressive 2022 repositioning of its parks, which resulted in a sharp drop in attendance this year. However, following recent discussions with management, we are optimistic that modifications to the repositioning strategy should lead to an enhanced guest experience, higher attendance and strong EBITDA growth in 2023," said Land & Buildings Founder and Chief Investment Officer Jonathan Litt.
The firm believes that Six Flags could add $11 per share today by unlocking its real estate value, with the company a "prime candidate for an Opco/Propco separation" and that its real estate is likely valued at more than its entire current equity market capitalization of approximately $1.8 billion.
In addition, Land & Buildings said Six Flags is poised for an operational rebound, that there are clear precedents for monetizing Six Flags' real estate, and that there are attractive partners for sale-leaseback transactions. In addition, Land & Buildings remains optimistic that discussions with management can remain constructive.
"It is the ideal time to take action to monetize Six Flags’ uniquely valuable real estate portfolio given the high multiples similar assets are trading at in the public and private markets. This strategy of separating the real estate and operator is a structure we have seen succeed in maximizing value of numerous hospitality and leisure companies that we’ve invested in historically," Litt added.