$1 billion railcar leasing deal

Greenbrier Companies and global leasing specialist Mitsubishi UFJ Lease & Finance Company (MUL) have agreed a $1 billion deal to expand their North America relationship.

Greenbrier is a leading international supplier of equipment and services to freight rail transportation markets.

Tokyo-based MUL has said it intends to grow its portfolio from 5,000 railcars to a total of 25,000 railcars over the next four years.

The two companies have signed a Memorandum of Understanding which includes a multi-year purchase commitment by MUL for 6,000 newly-manufactured railcars from Greenbrier through 2020.

MUL has also committed to obtain all its newly-manufactured railcars exclusively from Greenbrier through 2023. The company will also supplement its portfolio growth through a combination of lease syndications and used equipment owned and originated by Greenbrier.

In 2014, Greenbrier and MUL collaborated on a railcar lease syndication and asset management partnership designed to establish MUL as a leading owner and lessor of railcar assets in North America.

Under this arrangement, Greenbrier has syndicated and sold to MUL nearly 5,000 new and used, leased railcars. The units are also managed by Greenbrier.

In the latest agreement, the two firms will form a new asset management service entity, owned 50% by each company, solely for railcars in the MUL fleet including the 5,000 cars currently managed by Greenbrier.

William Furman, president, chairman and CEO Greenbrier said: “[The agreement] advances Greenbrier’s well-established strategy to reduce the amount of long-term capital invested in our leasing and services business as we drive greater transaction volume through our lease underwriting, syndication and asset management model.

“From modest beginnings, Greenbrier has evolved a very successful, asset-light leasing and asset management business that today manages over 265,000 railcars and completed over $1.2 billion in lease syndications during the last two years.”

MUL president and CEO Tadashi Shiraishi said: “MUL is committed to growing our investment in railcars to serve the North American freight rail market.

“We have set an ambitious target to increase MUL’s market share to a level that places it among North America’s top eight leading operating lessors of railcars.”

He added that MUL selected Greenbrier as the exclusive builder of new railcars for its fleet because of Greenbrier’s well-established reputation for building high-quality freight railcars.

Furman added: “We appreciate the opportunity to extend our business relationship with MUL into the next decade and we are pleased to support US rail industry jobs through this new investment.”