Six Flags Won’t Spin Off Its Real Estate Holdings Into A REIT
Amusement park operator Six Flags was entertaining the idea of spinning its real estate holdings into a REIT, but the company announced it has rejected that plan as not in the best interest of its shareholders after evaluating with outside advisers.
Instead, the amusement park company will fund a $500M share buyback plan to reduce its shares outstanding with a $1.2B debt offering, MarketWatch reports.
Plans to launch a REIT were deemed too complicated, harmful to future growth and a potential detriment to shareholders. Six Flags is not the only company to come to this conclusion. Over the past few years activist investors have been itching to push public companies to monetize their real estate assets by spinning off into REITs, but the IRS has called these spinoffs problematic, saying they involve significant concerns, including certain violations of rules meant to make company dividends and other taxable transactions transparent, the Wall Street Journal reports.
As of March 30 Six Flags' stock was down 2.4% from a year ago, and while the company has ruled out forming a REIT, executives said it may revisit the idea in the future.