Ought to Six Flags Promote Land to Enhance Its Inventory Value?

December 21, 2022, 5:46 PM · A gaggle of Six Flags buyers is asking the corporate to promote the land beneath its amusement parks, to assist increase the corporate’s earnings and inventory value.

Land & Buildings Funding Administration owns roughly 3% of the amusement park chain and at present issued a presentation detailing its proposal. Land & Buildings said that the land worth of Six Flags’ parks now exceeds the fairness worth of the corporate, based mostly on its present inventory value.

“It’s the best time to take motion to monetize Six Flags’ uniquely beneficial actual property portfolio given the excessive multiples related property are buying and selling at in the private and non-private markets,” Land & Buildings Founder and Chief Funding Officer, Jonathan Litt stated. “This technique of separating the actual property and operator is a construction now we have seen reach maximizing worth of quite a few hospitality and leisure firms that we’ve invested in traditionally.”

The investor group stated that it believes a sell-off may drive Six Flags’ inventory value up $11 a share. Six Flags’ inventory closed up practically $2 a share at present, after the presentation, to $23.38.

The presentation urged that Six Flags may promote its land to certainly one of a number of actual property funding belief or personal fairness corporations, together with VICI Properties or Blackstone. (Blackstone has a historical past within the theme park enterprise, having owned SeaWorld, Legoland, in addition to 50% of Common Orlando at numerous factors.) Six Flags would then lease again the land from whomever purchased the properties.

Six Flags, in response, instructed the buyers – in so many phrases – to eff off.

“The Six Flags Board of Administrators and administration group often have interaction with buyers and welcome constructive enter from all Six Flags shareholders. The Firm has met with Land & Constructing representatives a number of occasions over the previous few years together with conversations relating to the monetization of actual property property. The Board, with its advisers, routinely evaluates potential choices to unlock shareholder worth, together with the potential monetization of actual property. Six Flags is inspired by the early indicators of progress in opposition to its strategic plan and stays centered on delivering an distinctive visitor expertise to drive sustainable, long-term earnings progress.”

Land & Buildings famous that Six Flags’ inventory value has tanked this yr, down from simply over $41 a share in late April, partly as a result of new CEO Selim Bassoul’s plan to cut back discounting and place Six Flags as a extra premium vacation spot for theme park followers.

However Six Flags has didn’t ship something close to to a premium expertise in alternate for its now-higher common costs. That is pushed guests away, with the corporate struggling declining attendance in 2022 whilst opponents welcomed rising crowds following the tip of pandemic lockdowns.

Each Six Flags administration and Land & Buildings reps declare that the corporate’s “repositioning” plan will repay with greater income and earnings. Many followers, scuffling with decrease disposable revenue, stay skeptical of such optimism, particularly given the dearth of recent attraction bulletins from Six Flags.

A major purpose why so many Individuals – together with Six Flags staff and prospects – are struggling financially proper now is because of rising hire and housing prices. Among the firms that the Land & Buildings presentation name-checked are amongst these shopping for up single-family houses and residence complexes, elevating rents and pricing younger folks out of the housing market.

Certain, Six Flags may make a windfall by promoting to those corporations, however then it will be left paying hire to them – in perpetuity – to remain in enterprise. That may add to Six Flags’ long-term working prices, stopping it from including the points of interest and facilities that any “premium” out-of-home leisure or journey vacation spot wants. Six Flags could be left in the identical dangerous monetary mess as so a lot of its staff and followers.

After all, by that point, I think that Wall Avenue buyers advocating for a Six Flags asset sell-off could be lengthy gone, having dumped their shares quickly after their value spiked following the deal.

Even a quick glance at the company’s financials exhibits that Six Flags is hurting proper now, and wishes some assist. However I do not assume {that a} pump-and-dump is the joys experience that Six Flags followers had been hoping to see from the corporate within the New 12 months.

* * *
For extra theme park information, please join Theme Park Insider’s weekly newsletter.

And to assist assist Theme Park Insider whereas saving cash on discounted theme park tickets, please observe the ticket icon hyperlinks our Theme Park listings page.

Tweet

Replies (0)