F e b r u a r y 2 , 202 6 East Japan Railway Company
Condensed Transcript from Q&A Session of Presentation for the Financial Results in the Third Quarter of FY2026.3
* Please note that this document is not a word-for-word transcript of the actual Q&A session, but a condensed transcript prepared by the Company by summarizing the actual interactions as appropriate.
[Railway Business]
Q: In light of recent transportation disruptions and the fare revision in March 2026, will the level of maintenance Expenses be reconsidered?
A: We sincerely apologize for the considerable inconvenience caused to our customers due to recent transport disruptions.
One of the purposes of the fare revision is to operate the railway business sustainably and to ensure our customers can use our services with security. We are discussing from the perspectives of measures to ensure safe and stable transportation as well as the impact of inflation such as soaring material costs, and we will present the future level of maintenance expenses again.
Q: What is our stance and discussion schedule regarding the loan fees for the Projected Shinkansen Lines after the 31st year?
A: Regarding the handling of loan fees for the Projected Shinkansen Lines after the 31st year, it should be based on the premise that it does not adversely affect the management of the operating entity. The current system of payment of the loan fees based on benefit from the Projected Shinkansen Lines will end 30 years after the opening, and costs required for maintenance and management commensurate with the facility's condition should be used as the basis. The current fixed amount of the loan fees
should serve as the upper limit, and the transfer of Projected Shinkansen Lines facilities should not be conducted. We believe that these points, agreed with the old Ministry of Transport in 1991, are served as the starting point for the discussion. On the other hand, we have heard that the parts which have not yet been decided are matters to be discussed by the subcommittee in the future, and that a certain
conclusion is expected to be reached around the summer of 2026.
[Real Estate Business]
Q: What is the revenue and expense outlook for TAKANAWA GATEWAY CITY in the fiscal year 2027.3?
A: In the fiscal year 2025.3, there was a deficit of approximately 4.5 billion yen due to the upfront expenses related to the opening of THE LINKPILLAR 1. For the fiscal year 2026.3, although revenue is
expanding due to strong tenant sales at Lumine and steady leasing of office spaces, a deficit of just over 10 billion yen is expected because of depreciation expenses for THE LINKPILLAR 1 as well as the recording of opening expenses for THE LINKPILLAR 2 and others.
On the other hand, in the fiscal year 2027.3, both THE LINKPILLAR 1 and 2 are expected to contribute profits due to favorable office leasing conditions.
Q: As advancing a business integration between JR East Real Estate Co., Ltd. ("JERE") and ITOCHU Property Development, Ltd. ("IPD"), what is our thought regarding the expansion of the real estate rotational business in the future?
A: For the fiscal year 2026.3, real estate sales are planned to achieve operating revenue of 71 billion yen and operating income of 48 billion yen, significantly exceeding the previous fiscal year, and progress is on track. Furthermore, regarding the scale of asset management scale in the real estate fund business,
steady progress is being made toward the targets of 550 billion yen for the fiscal year 2028.3 and 1 trillion yen for the fiscal year 2032.3.
In accelerating the rotational business, we believe that speeding up the development of our company housing land and the acquisition and development of external properties, as well as the capabilities of the personnel who realize these, are crucial. Amid this, the decision was made to advance a business integration between IPD, which has strengths in the housing business sector lacking in our group, and
JERE. Currently, we are negotiating terms based on the strategies of both companies, and we would like to finalize and announce the conditions as soon as possible. Furthermore, as a general trading company, ITOCHU Corporation possesses the entire value chain of construction business, including procurement of construction materials. Given that construction costs are soaring, we believe that collaboration could be possible in such areas as well.
[Inbound]
Q: As inbound passenger revenue is below plan, what is the future outlook?
A: First, against the fiscal year 2026.3 plan of 52 billion yen, we will make up for the delay in the fourth quarter. We have focused our approach on customers from Taiwan, our volume zone, to bolster our base, but going forward, we will take more timely country-specific approaches. Furthermore, we are also advancing consideration of strategies for the fiscal year 2027.3 and beyond.
Additionally, although our inbound passenger revenue is calculated based on from pass revenues such as the JAPAN RAIL PASS and estimated individual ticket sales from English-language ticketing, as a result of conducting a survey with inbound customers, there is a possibility that we have not fully
captured their trends. To more appropriately capture inbound usage, discussions are also underway regarding the change in the method of calculating inbound revenue.
[Impact of rising interest rates]
Q: What is the impact on future interest payments due to the rise in interest rates? Also, what is the impact on the hurdle rate in business decision-making?
A: In the group management vision "To the Next Stage" 2034, we assume that the average interest rate on interest-bearing debt in the fiscal year 2032.3 to be about 2%. Additionally, up to now, we have been working on fixing interest rates and extending the procurement period. However, considering the recent
sharp increase in interest rates, we are advancing discussions on reviewing the interest rate outlook as well as the balance between foreign and domestic bonds, and the duration of the procurement period.
On the other hand, especially in the various businesses of Lifestyle Solutions, we believe that the impact of rising interest rates can be passed on through pricing. We would like to present a revised outlook that comprehensively considers these aspects.
At this point in time, there is no impact on the hurdle rate.