DEFINITION of 'Propco'

An abbreviation for property company. Propcos are most often used to describe a subsidiary company that exists to hold or own a parent or operating company's income-generating real estate. The property company 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 'Propco'

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

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