JR East: Life-Style Business (Non-Transportation) Emiko Sayama Director, New York Office East Japan Railway Company, Tokyo, Japan

Today s presentation... Outline of JR East Outline of Life-Style Business - Ekinaka (in-station) shopping zone - Shopping centers - Advertising - Regional revitalization Sample Case : Tokyo Station City Toward the future 2

Fundamental data of JR EAST High-Speed Metropolitan Regional Network: 7,513 km (4,668 miles) No. of Passengers: 17 million /day (Largest passenger rail company in the world) No. of Trains: 13,000 /day Operating Revenue: $ 28.424 billion Net Income: $1.866 billion No. of Employees: 73,017 (51,155 at parent company) - No subsidies from the government Tokyo *Numbers are as of FY ended March 31, 2013 3

Business overview of JR EAST JR East Group/Operating Revenues Non Transportation $ 9.327 billion 32.8 % 67.2% Transportation $ 19.097 billion *Numbers are as of FY ended March 31, 2013 4

National Railways Reform in 1987 Japanese National Railways (JNR) JNR Settlement Corporation Transferred in April 1987 Oct. 1998 Japan Railway Construction Public Corporation Settlement Business Headquarters Passenger Transport Companies 1) JR Hokkaido 2) JR East 3) JR Central 4) JR West 5) JR Shikoku 6) JR Kyushu Japan Freight Railway Company Regional partitioning JR Hokkaido Railway Telecommunication Company Consolidated in May 1989 Softbank Telecom Corp. Railway Information System Company JR Kyushu JR West JR Shikoku JR Central JR East Oct. 1991 Oct. 1997 Shinkansen Holding Corporation Railways Development Fund Corporation for Advanced Transport & Technologies Railway Technical Research Institute 5

Changes after the Reform Before JNR Reforms: Annual average 1977 1986 National government Subsidies Approx. JPY 600 billion Approx. $ 6.3 billion JNR After JNR Reforms FY 2012 National & Local government Corporate taxes etc. Approx. JPY 414 billion* Approx. $ 4.4 billion 7 JR companies *According to all companies accounting documents 6

Today s presentation... Outline of JR East Outline of Life-Style Business - EKINAKA (in-station) shopping zone - Shopping centers - Advertising - Regional revitalization Sample Case : Tokyo Station City Toward the future 7

LIFE-STYLE BUSINESSES Overall strategy is made by JR Life-Style Business Development HQ Housing Sports Leisure Media Publishing Restaurants /Retail shops /Shopping zones Shopping Center/Office /Hotel Business Station Inside Gate Outside Gate JR JR In-station = Ekinaka Ticket Gates 8

LIFE-STYLE BUSINESSES Daily passengers: 17 million Shopping Centre Office Added Value Group companies Trends of the non-transportation ratio (Operating revenues) Hotel Logistics Retail Restaurant Advertising & Publishing Sports & Leisure Housing Strategy Capital (Investment) Space JR East Human Resources FY2012, 72 consolidated subsidiaries FY2012 :Operating revenues. : $28.4 billion FY2012: Operating income : $4.23 billion 9

Our range of life-style businesses Ekinaka In-Station shopping zones: 25 locales Ekinaka Individual retail and restaurants: 2,000 stores Shopping centers: 151 locales Hotels: 45 locales with 6,600 rooms Office buildings: 24 locales Fitness Clubs: 17 facilities Advertising Regional Revitalization & More As of April 1 2014 10

EKINAKA in-station shopping zones Providing a variety of products for the daily needs of station customers on the go. Comprehensive management and customer-friendly design create stylish shopping zones that are sensitive to customers awareness of new trends. Ecute (7 stations) Offers high quality products and services to customers sensitive to new trends Dila (14 stations) Group of shops with products for everyday use. 11 11

Maximizing the potential of stations To create an extra space in the station, the concourse-level floor over the railway tracks are sometimes extended The effects of the extension Concourses can be widened Barrier-free space can be extended Congestion can be mitigated Additional commercial space can be created 12

Maximizing space: Ecute at Omiya Station New floor space was added to the station Before Now 13

ECUTE: Attractive shopping space Environmental design Comfortable restrooms Fashionably designed waiting space Enhanced decorations, taking seasonality into account Improved lighting 14

ECUTE: Stylish goods and displays Selection of high-profile tenants High visibility and appeal power Use of event space for short span (weekly and monthly) display Limited quantity sales of high-quality products Original packaging with dividers 15

SHOPPING CENTERS 3 flagship operators leading the total management of group s SC business. Providing latest fashion and foodstuffs based on area marketing. Total number of operating companies:23 Total number of buildings:151 S-Pal (5 SCs) Lumine (15 SCs) Sales FY2012 are about 2.2 times compared with those at the time of start of JR East. 16 Atré (24 SCs) * The number of SC is as of April, 2014 16

EXAMPLE: LUMINE CO. LTD. 95.1% JR East owned 15 shopping centers located adjacent to or close to a station Operating revenues: $3.8 billion (FY 2012) Operating Income:$114 million (FY2012) Target: Female commuters Shinjuku Lumine open 11:00a.m. -10:00p.m. 91% of customers are female 20-39 year old females form 71.2% of total customers 17

LUMINE: Fashion Inside :Lumine Shinjuku Inside: Lumine Yokohama Lumine facilities are fashion centers that offer cutting-edge trends. There are many high-end boutiques, including Opening Ceremony,, Steven Alan, and Marc by MARC JACOBS Opening Ceremony Steven Alan Marc by MARC JACOBS 18

LUMINE: Other features Lumine shopping centers also have grocery stores, cafes, and restaurants A unique business model: creating a sophisticated collaborative relationship with tenant shops makes Lumine different from other retail facilities 19

ADVERTISING Extensive advertising in stations and on trains Developing new advertising methods utilizing advanced technologies, such as digital signage media. Station posters Train exterior stickers Train interior posters J. AD Vision 20 Train Channel 20

Collaboration Regional Revitalization Echigoyuzawa Station Station Renaissance Aomori Gangidori opened on Jul.17, 2009 Renovation of Akita Station building Topiko; opening of the Tokyo Sweets Akita A-FACTORY opened on Dec.4, 2010 Visitor center opened on Dec.19, 2009 Towa Folklore Iwate Towa opened on Dec. 4, 2010 Tabiichi Tour programme for re-discovering regional resources New courses are scheduled to be created in each season Echigoyuzawa, GALA, Tokamachi Takasaki Montres iine kitchen opened on Mar.18,2011 Takasaki 高崎 Takao 高尾 Ueno, 上野品川 Shinagawa Rediscover Local Areas Project Farm fresh market: Oct.2010~ Takao station temporary development opened on Mar.25, 2010 Tateyama Familio Tateyama opened on Dec. 4, 2010 21

Regional Revitalization A-Factory, developed in collaboration with Aomori city urban planners and opened when Tohoku Shinkansen service was extended to Shin Aomori Station, is one of the examples of the Rediscover Local Areas Project It is a complex that includes a craft center and a market selling products utilizing apples grown in Aomori prefecture, Japan s leading producer. A-Factory Concept:Workshop & Market A-FACTORY in Aomori Partnership with existing facilities around stations and in town (shopping mall) Cidre workshop Fresh market Eat-in corner (Sake-tasting) 22

Regional Revitalization: HAPPY CHILD PROJECT Childcare facilites along the network As of Apr. 2013 <Photos> top:station nursery middle:station after-school child care center bottom: Oyako community café Station nursery: 60 Station after-school child care center: 2 Nursery within workplace: 4 Others: 5 23

Station + town + railroad network Station development is planned from the multidimensional perspective of town development Especially in the Tokyo metropolitan area, station design strategy is planned to make maximum use of the each site s location as well as to endow each station with multiple functions Stations are designed to add to the value of the connecting raill ine line and to the entirre rail system Nature Entertain ment Hotel Local line area Station building Medical and welfare Housing Medical and welfare Center of a city Office Station building Housing Office Entertain ment Cultural facilities Station building Hotel Regional core stations Develop unique stations that attract users from Tokyo metropolitan to the line side core stations Regional sub-core stations Supporting people s attractive living on lineside area Supporting city function Enhancing convenience of living in the center of a city Mega terminal city Multifunctional city, the attractive destination 25

EXAMPLE: TOKYO STATION CITY Sapia Tower Gran Tokyo North Tower Hotel Office Office Gran Tokyo South Tower RAILWAY Shopping Center GranRoof Office In-Station business ( EKINAKA RETAIL AD) The Tokyo Station Hotel 26

TOKYO STATION BUILDING Façade of Tokyo Station Building in 1914 Post-war reconstruction appearance: 1947-2006 Recent conservation and restoration: completed in 2012 27

TOKYO STATION HOTEL Originally opened in 1915, it re-opened in Oct.2012 with 3 banquet halls, 10 restaurants and bars, a fitness and spa facility, and 150 guest rooms. 28

EKINAKA in-station shopping zones South Court... (31 shops, 1,700 sqm, 2033 sqyd ) Nippon (Japan) Re-Standard GranSta... (50shops, 4,500 sqm, 5382 sqyd ) Tokyo Precious memory GranSta Marunouchizaka... (13shops, 600 sqm, 717.6 sqyd) Daily Happiness! Central Street... (15shops, 2,900 sqm, 346.8 sqyd) Link Japan North Court... (13 shops, 990 sqm, 1184 sqyd) Japanese Kitchen (Food culture) Keiyo Street... (23shops, 2,400sqm, 2870 sqyd) ) Tokyo green Style 29

GRANSTA: Before development 30

Exceptional Floor Area System Exceptional Floor Area Ratio District (116.7ha (288.4 acre) June,2002) Maximum floor area-to-land ratio : 400 % B 300% 400% 700% 300% 100% A 31

Buildings on YAESU side Sapia Tower 35floors above 4floors underground, 30,000 sqm (7.4 acre) GranTokyo South Tower 42floors above 4floors underground, 50,000 sqm (12.4 acre) (JR East possession) GranTokyo North Tower 43floors above 4floors underground, 15,000 sqm (3.7acre) (JR East possession) 32

Tokyo Station: YAESU Side Gran Tokyo South Tower Gran Tokyo North Tower Office Office Gran Roof SC 33

GRAN ROOF: Open to the public Opened in September 2013, with 15 shops in an area of 14,000 sqms (3.4 acre). on floors B1 through 3F. Pedestrian deck between North tower and south tower [Eco] Wall vegetation Watering utilizes waste water and rainwater falling on the roof Mist spraying Latest environmental technology reduces temperature 2-3 degrees [ICT] ICT Terrace (2F) Interactive facilities of Information & Communication Technology Station square will be re-opened in fall 2014 [Design Concept] Tower of Crystal and sail of light 34

Outline of the presentation Outline of JR East Outline of Life-Style Business - Ekinaka (in-station) shopping zone - Shopping centers - Advertising - Regional revitalization Sample Case:Tokyo Station City Toward the future 35

Concepts for the future Base for living Transit point Station Consumption base Needs special and unique to station Station Changein consumption structure Create new value Strengthen network between overseas and Japanese local communities (To be Station Collaboration with local communities Town that people want to live in Town that people want to go to work Past 17 million passengers/day Future 36

CONCLUSIONS Stations are great resources with unlimited potential. Proximity to stations has great value. However, accompanying marketing strategy is indispensable. Overall strategy for life-style businesses is an absolute necessity from the railroad perspective and adds tremendous value to both our company and our nation. 37

Thank you for your attention