Mitsubishi UFJ Lease & Finance and Greenbrier Companies Inc (NYSE:GBX) have entered a memorandum of understanding that will expand the existing commercial relationship of both parties in North America. The intention of Mitsubishi UFJ Lease & Finance is to increase its portfolio of railcars from the current 5,000 units to 25,000 units in the coming four years.
“MUL is committed to growing our investment in railcars to serve the North American freight rail market,” the president and chief executive officer of Mitsubishi UFJ Lease & Finance, Tadashi Shiraishi, said.
New railcars
The agreement will see Mitsubishi UFJ Lease & Finance commit to acquire newly-manufactured railcars numbering 6,000 through 2020 from Greenbrier. In addition to that, Mitsubishi UFJ Lease & Finance has made a commitment to purchase newly-manufactured railcars only from Greenbrier up to 2023. Besides the new railcars that have been ordered, Mitsubishi UFJ Lease & Finance will also add to its portfolio by leasing used equipment that has been owned and manufactured by Greenbrier. The total value of the deal is in excess of $1 billion.
Mitsubishi’s goal is to grow its market share and emerge as one of the leading railcar lessors in North America. The memorandum of understanding that the two companies have signed also provides for the creation of an asset management entity that will be jointly and equally owned. This entity will manage the new railcars as well as the ones that Greenbrier currently manages on behalf of Mitsubishi UFJ Lease & Finance.
Strategic partnerships
Currently, there are more than 265,000 railcars that Greenbrier manages. In the last two years the asset management and asset-light leasing business has completed lease syndications with a value of more than $1.2 billion. Besides railcars, the Lake Oswego, Oregon-based firm is also involved in the building and marketing of marine barges in the United States and Canada. Most of the manufacturing of rail castings and freight railcars is done in Brazil where the company has formed strategic partnerships.
On Wednesday shares of Greenbrier Companies Inc shot up by 10.14% to close the day at $47.25.
