Tokyu : Presentation for Investors for the year ended March, 2024 (Main questions and answers)

Presentation for Investors for the year ended March 2024:

Main Questions and Answers

May 14, 2024

TOKYU CORPORATION

※ Please note in advance that this is not a transcription of the entire Q&A session, but a brief summary

prepared by the Company.

Q1. Is there a possibility that sales of revenue-generating real estate will move beyond the scale at the time of the medium-term management plan announcement? Other companies in the industry are aggressively selling revenue-generating real estate, and demand appears to be high. Are there any options to bolster asset efficiency by promoting the sale of properties?

A1. Since relatively little time has passed since the announcement of the medium-term management plan in March, we are not at a stage where we can disclose any expansion of scale with specific figures at this time. Properties classified as fixed assets will also be considered for sale if the portfolio strategy requires replacement with newly opened properties.

Regarding the sale of the properties, we have been approached by leading domestic and overseas players, and we will consider a wide range of potential buyers, of course, including a cooperation with Tokyu REIT.

There will be numerous redevelopment projects in Shibuya and the areas served by Tokyu lines in the future. We believe that it would be very beneficial to have investors who support Tokyu Corporationʼs urban development policy to participate in the development of Shibuya and other Tokyu areas from a long-term perspective.

Q2. With regard to capturing inbound demand, you disclosed the situation in hotels and retail. Are there any other measures for foreign tourists other than those disclosed, such as in the Transportation Business?

A2: Although Tokyu Corporation does not have any obvious inbound routes such as airport routes, we feel that the number of foreign tourists using the Toyoko Line to visit Yokohama, Motomachi Chinatown, and Minatomirai is steadily increasing. In addition, with the opening of the Tokyu Shin-Yokohama Line, access to the Kansai area via Shinkansen and to the Shonan area, a popular tourist destination, has improved. We expect to capture further inbound demand going forward.

In addition, we have been working on introducing boarding system with contactless credit cards ahead of other companies, and we hope to reflect the results of these efforts in our earnings.

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Apart from the railway business, we operate 11 airports at four locations, and have captured a fair amount of inbound demand in the airport business. In the airport business, in addition to restoring earnings during the period of medium-term management plan, the Company aims to further increase inbound demand in the future by securing slots for routes to and from overseas bases.

As for the Shibuya area, we hope to tap into not only short-term inbound demand, but also office demand from overseas companies. In the office leasing business in Shibuya, we have created pamphlets that promote the attractiveness of the entire town. We are actively distributing them and even placing them in hotels. We would like to take advantage of Shibuya's popularity overseas and actively work to encourage foreign companies and investors to locate their Tokyo bases in Shibuya.

Q3. How do you perceive the current situation of the hotel business, including trends in ADR? Please also describe the performance of two hotels in Tokyu Kabukicho Tower in FY2023.

A3. The ADR for FY 2018, when the hotel business performed at its best, was around 16,000 yen, and ADR is expected to increase to about 1.5 times by FY 2026, the final year of the current medium-term management plan. Hotels are changing the mix of stores and brands, and we hope to increase RevPAR by raising ADR, although occupancy rates are lower than before. In terms of ADR, we will not rely solely on the inbound trend, but will improve our services and provide value for money to ensure customer satisfaction and repeat customers to further increase ADR. The two hotels in the Tokyu Kabukicho Tower are performing well compared to the original plan. The preliminary figures for April 2024 for the hotel business are showing a strong start with an occupancy rate of about 78% and ADR of 24,500 yen.

Q4. The railway business has seen a recovery in demand from the COVID-19 pandemic but costs are also rising. Is there any concern that the profit margin will decline during the period of the medium-term management plan due to increased costs in the future? Also, please let us know if there are any measures to deal with cost increases.

A4. As for railway business, the recovery of demand from the COVID-19 pandemic has run its course, but the transportation network is being expanded with the opening of the Tokyu Shin-Yokohama Line. We expect the number of passengers carried to gradually increase in the future. In addition, we believe that we will be able to respond with cost increases and limit the decline in profit margins by taking further steps to stimulate demand, such as the flexible issuance of special package tickets using QR codes.

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In terms of costs, we have implemented permanent cost reductions of about 5 billion yen through structural reforms since the COVID-19 pandemic, including the shift to one-man driving on the Toyoko Line. While labor and other costs are expected to rise in the future, we believe that this will be offset by continued efforts to improve efficiency, as well as a recovery in the number of passengers carried.

Q5. Are there any updates on future development plans in the Shibuya area, including details on each project?

A5. Each project is being carried out in collaboration with various stakeholders. There

are no projects that we can update information on at this time.

Q6. In the medium-term management plan, there is a plan to invest 260 billion yen in the overseas real estate business in the future. Please tell us to what extent the overseas real estate business is expected to contribute to profit.

A6. During the three-year period of the medium-term management plan, we expect to post an operating profit of about 2 billion yen annually, mainly from the Real Estate Business in Vietnam. We operate overseas businesses in Vietnam, Thailand, and Australia, and we aim to generate operating profit of approximately 10 billion yen per year over the next 10 years. At present, there is substantial land that has yet to be developed, but since unrealized profits are expected to increase due to future land price hikes, etc., we expect this business to support part of the Real Estate Business in the future.

The business profit trend in real estate sales is shown on page 21 of the financial results presentation. It shows that the share of profits from overseas subsidiaries and overseas equity-method affiliates increases during the period from FY2024 to FY2026.

End

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