Six Flags Entertainment announced Thursday the sale of seven underperforming amusement parks to EPR Properties in a $331 million all-cash transaction, marking the latest downsizing effort by the struggling regional theme park operator. The deal includes six Six Flags amusement parks and one waterpark, representing properties that generated $260 million in revenue and $45 million in adjusted EBITDA last year, according to company figures.
EPR Properties, a recreational and leisure real estate investment trust, will acquire the assets as Six Flags continues to streamline operations following its merger with Cedar Fair two years ago. The market responded with contrasting reactions, as Six Flags shares rose 5% on the news while EPR stock declined 4%, suggesting investor uncertainty about the transaction’s value for both parties.
Six Flags Divestiture Follows Merger Struggles
The sale comes as Six Flags continues to struggle following its merger with Cedar Fair, which closed two summers ago. The combined company has seen its stock plunge 68% since the merger became official, according to market data. The union was expected to create synergies and improve guest experiences across both park brands, but those benefits have failed to materialize.
The parks being sold represent 9.5% of Six Flags’ 47.4 million annual attendance and 5.7% of its $792 million in adjusted EBITDA. However, the transaction accounts for just 4.5% of the company’s $7.35 billion enterprise value, indicating Six Flags is selling the properties at a significant discount to their operational contribution.
Underperforming Parks Weigh on Operations
Industry observers noted that the divestiture was anticipated after trademark applications for “Enchanted Parks” surfaced two months ago, tied to locations housing some of Six Flags’ less-visited destinations. The company had already closed Six Flags America in Maryland at the end of last year’s operating season and plans to give up California’s Great America next year.
Additionally, activist investors led by Jana Partners, including a team with NFL star Travis Kelce, began pushing for changes late last year. The company brought in a new CEO three months ago as pressure mounted to improve performance and operational efficiency.
EPR Properties Expands Into Theme Park Sector
EPR Properties represents an unexpected buyer for the Six Flags parks, as the REIT’s portfolio primarily consists of movie theaters, driving ranges, and arcade-style entertainment venues. The company has maintained limited presence in amusement parks and waterparks prior to this acquisition, making the purchase a notable strategic shift.
Meanwhile, the transaction raises questions about EPR’s plans for the properties. As a REIT focused on maximizing revenue with a 6.2% dividend yield, the company may face challenges investing heavily in capital improvements for already underperforming attractions.
Limited Buyer Pool Affects Deal Terms
The discounted sale price reflects a narrow pool of potential buyers for regional amusement parks in the current market climate. Major theme park operators showed no interest in acquiring low-volume destinations, while Herschend, a growing attraction operator, recently completed a separate acquisition last year. Private equity firms have largely steered clear of the hands-on theme park sector.
In contrast, both companies may ultimately benefit from the arrangement despite investor skepticism. Six Flags sheds properties it viewed as drags on overall performance, potentially improving margins by focusing on higher-performing locations. EPR makes what it considers an accretive purchase that could be resold to another operator when market conditions improve.
The transaction is expected to close in the coming months, though both companies have not confirmed a specific timeline or disclosed whether regulatory approvals are required. The long-term success of the deal will depend on whether Six Flags can improve performance at its remaining parks and whether EPR can generate sufficient returns from its newly acquired theme park portfolio.
