The Greenbrier Companies, Inc. and Tokyo-based Mitsubishi UFJ Lease & Finance (MUL) have executed a Memorandum of Understanding (MOU) that includes a multiyear purchase commitment by MUL for 6,000 newly manufactured railcars from Greenbrier through 2020. The MOU also includes a commitment by MUL to obtain all its newly manufactured railcars exclusively from Greenbrier through 2023.
In addition to the railcar orders, MUL will supplement its portfolio growth through a combination of lease syndications and used equipment owned and originated by Greenbrier. MUL intends to grow its portfolio from 5,000 railcars to a total of 25,000 railcars over the next four years. The combined value of the transaction is more than $1 billion.
Under the MOU, the parties will form a new asset management service entity, owned 50 percent by each company, solely for railcars in the MUL fleet. The 5,000 cars currently managed by Greenbrier will be managed by this new entity, with Greenbrier receiving fee income from MUL related to its railcar asset management services. The agreements, including the sale of new and used railcars, are subject to agreement on remaining terms, completion of documentation, and other customary conditions.
"Greenbrier's business relationship with MUL continues to flourish as we focus on mutually beneficial transactions to achieve our respective business goals," said William A. Furman, Greenbrier chairman and CEO. “The MOU we announced today advances Greenbrier's well-established strategy to reduce the amount of long-term capital invested in our Leasing & 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,” added Furman.
"MUL is a good and trusted partner, joining other Greenbrier syndication partners and industry customers who buy our railcars and access various services supplied through our integrated services model,” continued Furman. “Under this model, Greenbrier assumes fiduciary duties including management of complex information with firewall protections to ensure complete customer confidentiality. We value the optimism and long-term view that MUL brings with its approach to the freight car markets. We appreciate the opportunity to extend our business relationship with MUL into the next decade and we are pleased to support U.S. rail industry jobs through this new investment."
"MUL is committed to growing our investment in railcars to serve the North American freight rail market,” stated Tadashi Shiraishi, MUL president and CEO. “We have set an ambitious target to increase MUL's market share to a level that places it among North America's top 8 leading operating lessors of railcars. MUL selected Greenbrier as the exclusive builder of new railcars for our fleet because of Greenbrier's well-established reputation for building high quality freight railcars. MUL has also secured access to Greenbrier's proficiency in railcar management through the formation of a new enterprise that will serve as the sole provider of railcar management supporting MUL's rapidly expanding fleet."
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, used and leased railcars.