Opco

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DEFINITION of 'Opco'

An abbreviation for operating company. Opco is most often used to describe the main operating company that is involved in an opco/propco deal. The property company (propco) owns all of the real estate and related debt, providing the parent or operating company with advantages related to financing and credit rating issues.

BREAKING DOWN 'Opco'

This opco/propco type of arrangement allows the operating company to rent or lease property from its subsidiary. Sometimes the operating company will spin the subsidiary off as a real estate investment trust (REIT) for tax advantages.

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