Greenbrier enters $1 billion pact to produce, jointly manage rail cars for MUL

The Greenbrier Cos. Inc. and Mitsubishi UFJ Lease & Finance (MUL) today announced a $1 billion agreement aimed at substantially expanding their existing commercial relationship in North America.

The memorandum of understanding (MOU) includes a multi-year purchase commitment by MUL for 6,000 newly manufactured rail cars from Greenbrier through 2020. MUL also committed to obtaining all its newly manufactured cars exclusively from Greenbrier through 2023.

In addition to the new equipment ordered, MUL will supplement its portfolio growth through a combination of lease syndications, and used equipment owned and originated by Greenbrier during the next few years.

Over the next four years, Tokyo-based MUL aims to grow its rail-car portfolio from 5,000 to 25,000 cars.

The combined value of the transaction exceeds $1 billion.

In 2014, Greenbrier and MUL collaborated on a rail-car lease syndication and asset management partnership. Under the arrangement, Greenbrier has syndicated and sold to MUL nearly 5,000 new and used, leased cars, which Greenbrier currently manages.

Under the MOU, Greenbrier-MUL will form a new asset management service entity, owned 50 percent by each company, solely for cars in the MUL fleet. The 5,000 cars currently managed by Greenbrier will be managed by the new entity. Greenbrier will receive fee income from MUL related to its rail-car asset management services.

“The MOU … 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," said Greenbrier Chairman and Chief Executive Officer William Furman in a press release.

Added MUL President and CEO Tadashi Shiraishi: “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 rail cars.”