Six Flags: Significant Upside If Real Estate Is Unlocked [Watchlist Addition]
Quick Note
We recenly did some work on Six Flags (FUN) as we considered investing in the company. We ultimately decided against it, but since some members have asked about it, we are sharing our research anyway. Note that we are constantly assessing new potential opportunities for our portfolio, but you generally do not hear about them if they don’t pass our selection process.
Six Flags has some interesting characteristics and we will monitor it closely going forward. We may invest in it if and when they start considering strategic alternatives to better monetize the value of their real estate.
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In 2024, the two biggest theme park operators in the United States merged into one entity. Six Flags absorbed Cedar Fair, keeping its company name but appropriating the latter’s ticker symbol: (FUN).
Today, FUN owns and operates over 40 theme parks around the US and recently expanded outside the US with the opening of its Qiddiya City location in Saudi Arabia.
As things stand now, post-merger and post-management shakeup, FUN is a theme park giant at a $1.7 billion market cap and a $7.2 billion enterprise value. It carries over $5 billion in debt and has a net debt to EBITDA ratio of over 6x.
Meanwhile, activist investor Jonathan Litt and his Land and Buildings (”L&B”) investment company have been pushing for a sale or spinoff of FUN’s real estate for three years now, with no success. L&B believes such an OpCo/PropCo separation would unlock significant shareholder value while allowing the junk-rated FUN to deleverage and reinvest into its parks.
In its most recent open letter to FUN (from September 2025), L&B estimates that FUN could sell its real estate for up to $6 billion, which would allow the OpCo to pay down the substantial majority of its debt while leaving additional funds for reinvestment.
This caught our attention and led us to dig deeper.
So far, FUN’s management has disagreed and focused instead on operational efficiencies and gradual deleveraging from cash flows.
Recently, however, another activist investor, Jana Partners, took a position in FUN and are pushing management to find ways to create shareholder value in the near future. Jana Partners holds a huge ~9% stake in FUN, compared to L&B’s ~2% position, which gives them greater sway with FUN’s management.
While Jana Partners has stated their openness to “strategic alternatives” to create shareholder value, which could include a PropCo spinoff or sale, their primary stated goals have been to improve operational performance.
As real estate investors, our primary interest in FUN is in the potential for a sale or spinoff of its real estate assets. If the company did undergo such a strategy, buying FUN shares today could be a great way to invest in deeply undervalued theme park real estate.
To quote the L&B letter from September 2025:
Today, with the Company’s valuation near all-time lows, we see an even more compelling re-rating opportunity from separating the real estate, with over 75% immediate upside based on 2026 consensus estimates (Figure 1). Upside could be as much as 130% if 2026 EBITDA recovers to $1.1 billion (FUN’s original 2025 guidance).
While some of L&B’s estimates may be a bit aggressive, we do agree that such a spinoff would unlock the value of the real estate.
