Six Flags Entertainment (NYSE: FUN) is being urged by Jonathan Litt's Land & Buildings Investment Management, LLC (L&B) to think about spinning off or selling its real estate holdings, pointing out that a property sale might attract interest from a number of suitors, including VICI Properties (NYSE: VICI).

L&B, a significant investor in Six Flags, estimates the amusement park operator's property holdings to be worth $5.67 billion. Given that the stock has dropped 50% so far this year, it may be time for the company to consider sale-leasebacks or a real estate spin-off in order to unlock "trapped real estate value."  The Caesars Palace owner may be one of the businesses interested in Six Flags' real estate, according to L&B, which formerly controlled shares of VICI.

"Multiple buyers, such as VICI Properties, remain explicitly interested in acquiring real estate like theme parks in scale at valuations nearly double the current trading multiple,” Litt wrote in a Friday letter to Six Flags shareholders.

He continues by saying that real estate monetization has opened up "substantial value for real estate heavy operating business" in a number of sectors, including gaming.

Strong Justifications for Six Flags to Sell Property

L&B suggested real estate monetization to Six Flags management in 2022, pointing out that at the time it may increase shares by 50%.  He informed management that, in a sale-leaseback situation, casino landlords Gaming and Leisure Properties (NASDAQ: GLPI) and VICI Properties could be "attractive partners" for Six Flags.

The investor returned to that well in August 2023, but Six Flags management changed course.  Investors originally welcomed the company's announcement a few months later that it would acquire rival Cedar Fair, but the buyer's stock price has suffered as a result.

“The performance post-merger has not only proven us right, it’s been far worse than we even anticipated,” wrote Litt.

The investor goes on to say that given Six Flags' low value, a significant real estate deal may boost the stock, and now is the ideal time for the business to think about making such a move.

“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,” observes Litt. “Upside could be as much as 130% if 2026 earnings before interest, taxes, depreciation, and amortization (EBITDA) recovers to $1.1 billion (FUN’s original 2025 guidance).”

VICI Would Make Sense to Purchase Six Flags Real Estate

Even while VICI hasn't stated openly that it is interested in Six Flags' real estate, it's not out of the question that such a purchase may eventually materialize.  The largest owner of casino real estate in Las Vegas and the US is the real estate investment trust (REIT), which doesn't need to add bulk in the gaming industry even though it is open to more deals.

The REIT has also stated that it intends to expand its portfolio to include further types of experiential real estate.  Six Flags currently owns property that satisfies that requirement.

In recent years, VICI has invested in or purchased properties that were once owned by leisure organizations, such as Bowlero, Cabot, Canyon Ranch, Chelsea Piers, and Kalahari, among others, demonstrating that the REIT will enter into nongaming transactions when the terms are favorable.