OPCO/PROPCO Deals in Australia (2025): Structure, Benefits & Trends

Thinking about how leading Australian businesses are unlocking capital and optimising their operations in 2025? The OPCO/PROPCO deal structure is increasingly at the centre of these strategic moves. Whether you’re running a fast-growing SME, managing a family business, or eyeing commercial property investment, understanding how OPCO/PROPCO works can give you a serious edge in the current market.

What is an OPCO/PROPCO Deal?

At its core, an OPCO/PROPCO structure splits a business into two distinct entities:

• Operating Company (OPCO): Handles the core business activities—like retail, manufacturing, or hospitality.
• Property Company (PROPCO): Owns the physical assets—typically land and buildings—and leases them to the OPCO.

This separation allows each entity to focus on its strengths, manage risks, and attract different types of investors. It’s a model that’s been used by major ASX-listed companies, from big-box retailers to aged care providers, and is now finding fresh relevance across Australia in 2025.

Why OPCO/PROPCO is Hot in 2025

Several trends are fuelling interest in OPCO/PROPCO deals this year:

• Rising Interest Rates: As the RBA continues its cautious approach to monetary policy, businesses are looking for ways to free up capital without taking on expensive debt.
• Focus on Core Competencies: Many firms want to concentrate on their main business, leaving property management to specialists.
• Superannuation Fund Appetite: Major Australian super funds are seeking stable, long-term returns from property, making them keen buyers of PROPCO assets.
• Regulatory Clarity: Updates from the ATO in late 2024 clarified tax treatment for lease payments and asset transfers, making the structure more attractive and transparent for mid-sized businesses.

For example, in early 2025, a well-known Queensland childcare chain spun off its property assets into a PROPCO, selling a minority stake to a property trust while continuing to operate its centres as an OPCO. This injected fresh capital for expansion, while the new PROPCO owners gained a reliable income stream from long-term leases.

How OPCO/PROPCO Works: Anatomy of a Deal

The typical OPCO/PROPCO arrangement unfolds in several steps:

1. Separation of Entities: The business splits into two companies—one for operations, one for property ownership.
2. Lease Agreement: The OPCO signs a lease with the PROPCO, often for 10+ years, locking in stable rental income.
3. Capital Release: The PROPCO may be sold (wholly or in part) to investors, allowing the original owners to unlock the value tied up in property.
4. Ongoing Operations: The OPCO continues running the business, paying rent but with more capital to invest in growth, tech, or marketing.

Key considerations in 2025 include:

• Stamp Duty and CGT: The 2024-25 Federal Budget reaffirmed that asset transfers between related entities may trigger duty and capital gains tax, but certain roll-over reliefs are available for genuine restructures.
• Financing Structures: Lenders are increasingly comfortable providing debt to PROPCOs with strong lease covenants, often at lower rates than trading businesses could achieve on their own.
• Valuation Dynamics: In sectors like healthcare and logistics, the underlying property value can be a multiple of the operating company’s annual profits, creating powerful incentives for separation.

Benefits and Risks for Australian Businesses

Why are so many businesses considering this approach in 2025? Here are the main advantages:

• Unlock Capital: Free up cash for expansion, tech upgrades, or debt reduction.
• Risk Management: Isolate valuable property from trading risks or potential insolvency.
• Attract Investors: Differentiate between yield-seeking property investors and growth-focused business partners.
• Tax Efficiency: Structure leases and debt to optimise tax outcomes, in line with ATO guidance.

But there are also real risks:

• Complexity: Legal and tax structures must be airtight to avoid costly mistakes.
• Control Issues: If the PROPCO is sold to third parties, the OPCO may face less flexibility in negotiations over rent or lease terms.
• Ongoing Liabilities: The OPCO’s long-term lease commitments can become a burden if business conditions change.

Australian business owners should work closely with their financial and legal advisers to ensure the structure fits their goals and risk appetite.

2025 Outlook: Sectors to Watch and Emerging Trends

OPCO/PROPCO deals are especially active in these sectors:

• Aged Care & Healthcare: Providers are separating property and operations to attract super funds and REITs.
• Hospitality: Hotels and pubs are leveraging OPCO/PROPCO to expand without over-leveraging their balance sheets.
• Retail & Logistics: Big-box retailers and logistics operators are monetising property to fund e-commerce infrastructure.

Emerging trends in 2025 include:

• ESG-Linked Leases: More PROPCOs are tying rental terms to sustainability performance, in line with investor demand.
• Digital Asset Integration: Some businesses are exploring digital registry and smart contract solutions to streamline lease management and compliance.

Conclusion

The OPCO/PROPCO model is no longer just the preserve of ASX giants—it’s a powerful, flexible tool that’s reshaping how Australian businesses structure their growth, manage assets, and attract investors in 2025. With regulatory clarity and investor appetite both on the rise, now is the time for business owners and entrepreneurs to take a close look at whether this structure could unlock new opportunities for their enterprise.