Pacific Realty Trust v. APC Investments, Inc.

The decisive issue in this case is whether the trustees of Pacific Realty Trust (PacTrust) could lawfully adopt a bylaw restricting the transferability of trust shares in a way different from and more stringent than that expressly provided by the trust declaration.

PacTrust, an Oregon business trust, was formed in 1972 as a publicly traded real estate investment trust (REIT) as defined by IRC § 856.. So long as such a trust remains qualified as an REIT, its income distributed to its shareholders is tax deductible by the trust. In order to qualify, the trust must distribute at least 95 percent…