Greenbrier, Longwood to Form Leasing JV
Written by Marybeth Luczak, Executive Editor
The GBX Leasing joint venture will “develop an owned portfolio of leased railcars primarily to be built by Greenbrier,” according to Greenbrier and Longwood.
The Greenbrier Companies and The Longwood Group are teaming on a railcar leasing joint venture, they reported Feb. 5.
GBX Leasing will “develop an owned portfolio of leased railcars primarily to be built by Greenbrier,” according to the companies. Its formation is “subject to completion of final documentation,” but origination and funding is slated for the first calendar quarter of 2021, they said.
Greenbrier will own about 95% of GBX Leasing with the balance held by Longwood, a Chicago-based transportation equipment advisory and asset management firm.
Greenbrier will provide lease originations, remarketing and railcar administrative services; Longwood will provide strategic and investment guidance, portfolio management and management oversight. Longwood CEO D. Stephen Menzies has been tapped to serve as Chairman and CEO of GBX Leasing, which will be governed by a board of three Greenbrier representatives and one Longwood representative.
Menzies, who established Longwood in 2018, served previously as Senior Vice President of Trinity Industries and Group President of Trinity’s railcar leasing, manufacturing and services businesses. In 2001, Trinity acquired Transport Capital, a railcar leasing and asset management business, which was founded and led by Menzies beginning in 1991.
“Today’s announcement is a logical bolt-on to Greenbrier’s leasing platform and commercial strategy,” Greenbrier CEO and Chairman William A. Furman said. “The railcar portfolio built by GBX Leasing will create a new annuity stream of tax-advantaged cash flows while reducing Greenbrier’s exposure to the new railcar order and delivery cycle. This move bolsters Greenbrier’s value proposition for its customers and shareholders.”
Leasing Portfolio
Greenbrier and Longwood reported that GBX Leasing will acquire approximately $200 million of newly built and leased railcars per year from Greenbrier. They said, “The initial portfolio for GBX Leasing has been substantially identified from leased railcars on Greenbrier’s balance sheet or in its backlog. GBX Leasing will observe Greenbrier’s established, strict portfolio standards for long-term investment, including credit quality, asset diversity, balanced maturities and asset liquidity. The initial equity investment is tax-advantaged as a result of the five-year net operating loss carryback provision in the Coronavirus Aid, Relief, and Economic Security (CARES) Act, bonus depreciation and the MACRS depreciation system.”
JV Financing
The joint venture will be financed “with non-recourse debt and is expected to be levered about 3:1 debt to equity,” Greenbrier and Longwood reported. “A separate, initial $300 million warehouse debt facility will be established to facilitate the JV’s activities. GBX Leasing will aggregate leased railcars to obtain permanent debt financing issued in connection with asset-backed securities. Greenbrier will consolidate GBX Leasing and intends to provide additional public disclosure regarding its leasing business with its second fiscal quarter financial reporting.”
Greenbrier’s other joint ventures include Greenbrier Europe, Greenbrier Maxion, GBSummit and Ohio Castings.
