Operating Company/Property Company Deal - Opco/Propco Deal

DEFINITION of 'Operating Company/Property Company Deal - Opco/Propco Deal'

A type of business arrangement in which a subsidiary company (the property company) owns all the revenue-generating properties instead of the main company (operating company). Opco/propco deals allow all financing and credit rating related issues for the companies to remain separate.

BREAKING DOWN 'Operating Company/Property Company Deal - Opco/Propco Deal'

In the U.K., opco/propco deals are a very popular method in which a parent company can create a real estate income trust (REIT). This can be done by initially selling income-generating assets from the operating company to a subsidiary. The subsidiary then leases the property back to the operating company. The operating company can then spin off the subsidiary as an REIT. The advantage of doing this is that the company can then avoid the double taxation on its income distributions.

RELATED TERMS
  1. Opco

    An abbreviation for operating company. Opco is most often used ...
  2. Propco

    An abbreviation for property company. Propcos are most often ...
  3. Subsidiary

    A company whose voting stock is more than 50% controlled by another ...
  4. Wholly Owned Subsidiary

    A company whose common stock is 100% owned by another company, ...
  5. Holding Company

    A parent corporation that owns enough voting stock in another ...
  6. Downstream Guarantee

    A guarantee placed on a loan on behalf of the borrowing party ...
Related Articles
  1. Investing

    What's a Subsidiary?

    A subsidiary is a corporation owned 50% or more by another corporation. The owning corporation is usually called the parent or holding company. A company that is 100% owned and controlled by ...
  2. Markets

    What is a Wholly Owned Subsidiary?

    A company whose common stock is 100% owned by another company, called the parent company.
  3. Investing

    What's a Holding Company?

    A holding company is a corporation that owns enough voting stock in another company to control its management and policies.
  4. Investing

    Explaining Affiliate, Associate And Subsidiary

    Affiliate, associate and subsidiary are all terms referring to the degree of ownership a parent company holds in another company.
  5. Managing Wealth

    6 REITs That Pay Dividends Monthly (AGNC, APLE)

    Learn about six real estate investment trusts that pay monthly dividends and invest in a variety of properties and mortgage-backed securities.
  6. Investing

    Sneaky Subsidiary Tricks Can Cloud Financials

    Use consolidated financial statements to uncover a parent company's true performance.
  7. Investing

    7 Sectors for Diversified REITs

    An overview of the different types of property that REITs own.
  8. Markets

    The Top 5 REITS for 2016

    Read about REITs investors may want to consider for 2016. Understand why investors may want to consider the impact of rising interest rates on REITS.
  9. Personal Finance

    Real Estate Investing in a High-Interest-Rate Environment

    Learn how private real estate investing and public real estate investing (or investing in REITs) is affected by a high-interest rate environment.
  10. Investing

    How to Calculate the OER

    An operating expense ratio describes a property’s operating expense compared to the income it generates.
RELATED FAQS
  1. Are domestic and foreign subsidiaries included on a company's financial statements?

    A subsidiary is a company that is controlled by another 'parent' company. The subsidiary acts and operates like its own entity ... Read Answer >>
  2. What is the difference between a subsidiary and a wholly owned subsidiary?

    Understand the primary differences between a subsidiary company and a wholly owned subsidiary, and their relationship to ... Read Answer >>
  3. What is the difference between a subsidiary and a sister company?

    Discover the differences between subsidiary companies and sister companies, and understand how both are related to parent ... Read Answer >>
  4. Are there any practical differences between a wholly owned subsidiary and a regular ...

    Explore the real, practical differences between a wholly owned subsidiary and a regular subsidiary. Local conditions determine ... Read Answer >>
  5. How is taxation treated for both the parent and subsidiary company during a spinoff?

    Learn how the potential tax implications of a spinoff can affect both parent and subsidiary companies and how taxes may be ... Read Answer >>
  6. How do wholly owned subsidiaries operate in the European Union?

    Find out how wholly owned subsidiaries and their parent companies are treated in the European Union, specifically regarding ... Read Answer >>
Hot Definitions
  1. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  2. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
  3. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  4. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
  5. Brexit

    The Brexit, an abbreviation of "British exit" that mirrors the term Grexit, refers to the possibility of Britain's withdrawal ...
  6. Underweight

    1. A situation where a portfolio does not hold a sufficient amount of a particular security when compared to the security's ...
Trading Center