An activist investor is turning up the pressure on Six Flags after the amusement park operator’s roller coaster of losses.
Jonathan Litt’s Land & Buildings Investment Management made a number of requests for the amusement park company, according to a letter published early Friday reported by the Wall Street Journal. Chief among them is for Six Flags Entertainment to either sell or spin out its real estate.
Land & Buildings, which has a roughly 2 percent stake in Six Flags, called on the company to spin out the real estate of its parks into a separate real estate investment trust, often referred to as an “opco-propco split.
Alternatively, Land & Buildings also thinks management should look into an outright sale of the park real estate, which the activist investor believes could be worth as much as $6 billion.
Litt claims to have had positive conversations with Six Flags officials about his ideas.
There’s no guarantee those discussions result in what Litt desires, though, which he already knows when it comes to dealing with Six Flags. Three years ago, Litt similarly applied pressure for Six Flags to monetize its real estate, even getting an amenable board member appointed. Six Flags didn’t take action on the proposals.
But the theme park operator is facing a challenging moment. Before the letter’s publication, Six Flags’ stock was down 55 percent year-to-date after a troubling first half to the summer. Additionally, reviews of a merger with Cedar Fair last July have been less than stellar, resulting in plenty of short interest from investors.
Six Flags has closed parks and put them up for sale in recent years. Six Flags America in Maryland is scheduled to close in about a month, setting up a potential 500-acre redevelopment opportunity a dozen miles from the nation’s capital.
Shares in Six Flags surged by more than 3 percent following the activist investor news, but had hit a 52-week low on Thursday, when the market value of the company sank to $2.1 billion.
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