Inside Gaming Blog: Orange Capital again wants Pinnacle Entertainment to split off REIT By Howard Stutz, Las Vegas Review-Journal July 25, 2014 at 9:21 am A hedge fund that owns 4.5 percent of Pinnacle Entertainment reiterated its call that the regional casino operator split the company to include a real estate investment trust. Orange Capital, LLC, a New York-based investment firm, believes Pinnacle’s share price could increase between 60 percent and 90 percent in value if the Las Vegas-based company were to create a REIT. Orange Capital made its initial request in April and issued a statement Thursday after Pinnacle announced its second quarter earnings. “While we have been in contact with management, we are unsatisfied with the company’s response to date,” the statement said. “Pinnacle’s only public comments in regards to our proposal have been to repeat that management is always seeking ways to ‘enhance shareholder value.’” By law, REITs don’t pay federal income taxes. With real estate as their primary source of income, REITs are required to distribute at least 90 percent of their taxable earnings to shareholders. Last year, Penn National Gaming spun off 21 of the company’s 29 casinos and racetracks, including M Resort, into Gaming and Leisure Properties. The REIT also took ownership of two under-construction racetrack casinos in Ohio. Orange Capital, which was was co-founded in 2005 by Daniel Lewis and Russell Hoffman, outlined the REIT idea to Pinnacle CEO Anthony Sanfilippo in April. On Thursday, Orange Capital urged Pinnacle’s board to form a special committee to evaluate a potential spin-off. The hedge fund also wants that committee to promptly get legal, financial and tax advice on the transaction. Should Pinnacle fail to take appropriate steps to maximize shareholder value, Orange said it will explore options to protect the interests of all shareholders. Contact reporter Howard Stutz at email@example.com or 702-477-3871. Follow @howardstutz on Twitter.