ENVIRONMENTAL
SUSTAINABILITY

We recognize the importance of environmental stewardship and we demonstrate our commitment to sustainability through initiatives at our corporate operations, development projects and to the extent possible our triple-net or absolute-net lease properties. Materially all of our leases are triple-net or absolute-net leases, which means our tenants have ultimate responsibility for deciding when and how to implement environmentally sustainable practices at the hospitals they operate. However, we communicate regularly with our tenants regarding sustainability matters and its importance thereof.

Therefore, our environmental sustainability initiatives focus on environmental improvements to our corporate operations, environmental risk management in our development projects, and dialoging with our tenants to deliver environmental improvements across our hospital portfolio. To understand the operations of, and environmental improvements needed at our facilities, we work closely with a third party to conduct physical inspections of our facilities. We recognize that our operations generate waste and use energy which results in greenhouse gas emissions, and that these actions have an impact on the environment; therefore, we are striving to reduce our impact.

MPT Environmental Policy PDF

CORPORATE OPERATIONS

Our commitment to environmental protection and sustainability is confirmed in our Company-wide environmental policy, which can be found at the PDF link above.

Our employee-led Green Team strives to drive environmental performance improvements across all aspects of our business. Additionally, in 2021, we established the Environmental and Social Committee, a new standing committee of the Board, to drive further environmental performance improvements across all aspects of our business. The responsibilities of the Environmental and Social Committee include, among others, advising management with respect to the development, implementation and continuous improvement of ESG programs, policies and practices. To ensure that management is appropriately incentivized to continuously drive ESG improvements, we have incorporated ESG performance into our executive compensation program beginning in 2020.

Additionally, in an effort to measure the environmental impact of our corporate operations, we have begun tracking our Scope 1, 2 and 3 greenhouse gas emissions. In 2021, we produced the following emissions (measured in metric tons of CO2 equivalent):

Scope 1:

Scope 2:

Scope 3:

5,205

747

709

Energy Star Rated

corporate headquarters building in 2017 and 2018

Over 200,000 kWH
reduction in energy use

compared to 2019, achieved through energy efficient lighting and other energy saving initiatives

Increased Recycling Rates

through introducing recycling program across a number of waste streams

The above data does not include our hospital portfolio, as the vast majority of our hospitals are leased on an absolute net basis. As a result, we do not exercise control over our tenants’ energy usage and emissions. Scope 2 data reported above only contemplates domestic operations, which for these purposes we estimate to comprise more than 80% of our Scope 2 emissions. Scope 3 data includes emissions from business travel.

We are investing in opportunities to reduce the carbon footprint of our corporate operations. We are in the process of developing a new corporate headquarters in Birmingham, Alabama that we expect to be LEED Platinum certified. Additionally, our new corporate office in New York City is projected to be LEED Gold certified, and the first WELL certified commercial building in New York City. This progress has been made possible by an enhanced prioritization of sustainability efforts within our Company culture. The Green Team regularly works with environmental experts to strengthen our sustainability regimen, from the way we think about our corporate offices and business travel to the way we communicate with our tenants.

TENANT RELATIONSHIPS

Key to our ability to deliver sector-leading growth are the deep, strategic relationships we establish with our tenants. Materially all of our leases are triple-net or absolute-net leases, which means our tenants have ultimate responsibility for deciding when and how to implement environmentally sustainable practices at the hospitals they operate. Our strong relationships, and the work we do to support them and to promote the environmental awareness of our tenants, have led to notable environmental improvements in operations across our portfolio.

We actively engage with over 80% of our tenants regarding the environmental sustainability of their properties and operations. Initiatives include a dedicated sustainability section in our regular tenant questionnaires, specifically designed to encourage ongoing environmental performance improvement, and ongoing engagement meetings, during which sustainability initiatives are routinely discussed.

In order to ensure environmental safety and compliance of the properties in which we have invested, we have procedures to:

Collect relevant tenant and property information on:

Operating and financial performance
Property condition
Environmental Assessments

Ensure that our transaction documents require our tenants to repair and remediate environmental issues at the applicable facility, and to comply with environmental laws and regulations
Ensure that we evaluate environmental risks associated with all real estate investment transactions. To this end, we engage third parties to perform Phase I Environmental Site Assessments and, to the extent necessary, Phase II Assessments (or equivalent studies outside the U.S.) and other risk mitigating remediation measures. In the event that our due diligence uncovers environmental contamination, we work with our tenants to mitigate any issues through:

We actively engage with tenants regarding the environmental sustainability of their properties and operations. In 2021, with the support of an expert third-party advisor, we began work to establish a dedicated environmental data gathering process, designed to gauge the sustainability efforts of our tenants. Our ultimate goal is to better understand how we can partner with our tenants to drive positive environmental impact over the long-term.

Prior owner or tenant remediation commitments in accordance with regulatory requirements;
Property submission into a voluntary compliance or clean-up program;
The use of environmental or other insurance policies as recommended by outside counsel and risk management firms; and
The use of third-party firms that conduct physical inspections of our facilities to understand the operations and environmental improvements needed.

Benchmarking Energy, Water and Waste – MPT is committed to working with our operators to reduce our portfolio’s carbon footprint and water consumption. In doing so, we are committed to collecting monthly energy, water, and waste consumption data on at least an annual basis. As we work to increase our data collection to cover an increasingly greater portion of our portfolio, our team is available to assist our tenants in recording the data in ENERGY STAR® Portfolio Manager® or other data management tools. We are also committed to increasing our energy data transparency and helping our tenants to be more sustainable, and therefore will disclose whole-building ENERGY STAR scores annually to tenants upon request when available.

CLIMATE CHANGE RISK

As part of our commitment to environmental sustainability, we also consider climate change related risks to our business. Extreme weather and changes in precipitation and temperature as a result of climate change, could cause physical damage to, or a change in demand for, the properties which our tenants operate. To mitigate these risks, we will continue to collaborate with our tenants and other relevant stakeholders to ensure we are sustainably managing our business and to minimize our impact on the environment.

MPT is committed to identifying, mitigating, and managing the risks of climate change and the related risks to our business. We recognize that our assets are increasingly vulnerable to climate related forces including: rising sea levels, drought, earthquakes, and violent storms.

In an effort to address the increasing risk of climate change to our business, we do the following:

Integrate robust enterprise risk management and strategic planning
Require our governance structure to provide the necessary opportunities for the Board and executive leadership to exercise their oversight responsibilities with respect to strategy and risk
Organize our risk management team to be responsible for managing operational risk for our business and our executives to be responsible for enterprise risk management
Diversify the footprint of our portfolio across multiple risk factors
Work with our tenants to build in resiliency considerations into asset development projects during the planning and construction process. We invest additional funds in upgrades to our properties which helps mitigate the effects of climate change in the long term
Provide our tenants, after appropriate due diligence, with additional funds for capital projects, which may improve the resiliency of our properties, including roof replacements, placement of storm windows and elevation of generators
Monitor the environmental performance of our tenants.
Observe local risks and hazards, including identifying zones likely to experience flooding and earthquakes
Place insurance for our properties at our corporate level to ensure all of our assets are properly insured

SPOTLIGHT ON TENANT
SUSTAINABILITY EFFORTS

Our tenants are focused on making progress to reduce their carbon footprint. Through our ongoing discussions regarding sustainability efforts, we are pleased to report the following environmental improvements, from tenants reporting approximately 80% of our 2021 revenues. Data below was provided to us by our tenants:
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Providence Medical Center, Prime’s 400-bed general acute care hospital in Kansas City, Missouri.

PRIME HEALTHCARE

Prime Healthcare Services has been tackling ESG throughout their portfolio through the lens of five goals: reduce consumption, increase efficiency, increase renewables, cost reduction, and improve corporate responsibility. Measures undertaken to meet these goals include:

Installed solar PV carport projects at two facilities to decrease grid-supplied electricity
Fuel cells have been installed at six locations, which have resulted in decreased energy use and thus decreased carbon emissions
Installed a Co-Generation system at one of the facilities to decreased energy use through high-efficiency energy production
The portfolio is working on a 100% conversion to LED throughout all assets

Conemaugh Memorial Medical Center, LifePoint’s 537-Bed Flagship Facility in Johnstown, Pennsylvania.

Conemaugh Memorial Medical Center Exterior

Conemaugh Memorial Medical Center, LifePoint’s 537-Bed Flagship Facility in Johnstown, Pennsylvania.

LIFEPOINT HEALTH

LifePoint Health has implemented a number of environmental sustainability initiatives:

Expected annual energy savings of $580,000 at all MPT hospitals from projects started in 2020 and 2021 as part of LifePoint’s Energy Optimization Program. Beyond cost savings, LifePoint expects an annual electric consumption reduction of more than 7,300,000 kWh and an annual natural gas consumption reduction of more than 10,000 MMBtu.

The optimization program included LED lighting retrofits, retro-commissioning of HVAC systems and infrastructure upgrades
Energy profiles for all of MPT’s LifePoint hospitals are reviewed monthly to assist in identifying opportunities to drive down energy consumption

An energy analytics tool is actively rolling out to further analyze hospital facilities. Personnel are being educated to identify local energy conservation opportunities
A national waste removal and recycling vendor has been chosen to consolidate operations and find recycling opportunities in the markets. This program will help improve visibility to the waste sent offsite in order to implement local reduction strategies, where possible

* All information above is based on data provided by our tenants.

South Texas Rehabilitation Hospital, Ernest Health’s 40-bed facility in Brownsville, Texas.

ERNEST HEALTH

Ernest Health has implemented or plans to implement various environmentally efficient and sustainability initiatives at the recently completed development facilities in Bakersfield, California and Elgin, South Carolina and the ongoing development facility in Stockton, California including:

High efficiency LED lighting with occupancy sensors
HVAC equipment designed to utilize economizer cycles to reduce energy consumption

Additionally, at the Bakersfield, California facility, Ernest has plans to implement the following:

10 electric vehicle charging stations planned
Landscaping that requires low irrigation and a 72-hour back-up water storage that will be tied in with the landscape irrigation system so that when flushing the system, the unused water is utilized for landscape irrigation
Building will be solar ready, which means the design considers the necessary electrical panel space in the building and a pathway from that panel to the roof

Additionally, at the Elgin, South Carolina facility, Ernest has implemented the following:

Light color (high albedo) roofing materials that reflect sunlight instead of absorbing heat to reduce heat gain and lower cooling costs
Enhanced roof and wall insulation that reduce heat gain and lower cooling costs
Glazing provided with high solar heat gain coefficient (SHGC) and high insulation values reducing heat gain and lowering cooling costs
Large windows to enhance daylighting and view for staff and patients
Building finishes made of recycled content, wherever possible
Switched to no wax floors to reduce floor maintenance costs and to cut down on floor buffing that affects indoor air quality

Additionally, at the Stockton, California facility, Ernest has plans to implement the following:

Landscaping that requires low irrigation to conserve water

Circle Redding Hospital has 30 beds and is located in Redding, England.

Circle Bath, Circle Health’s 30-bed facility in Bath, England.

CIRCLE HEALTH

Circle Health has communicated to us the following, which indicate the initiatives Circle Health may be implementing:

Reporting of Carbon Reduction Commitment under the Streamlined Energy & Carbon Reporting (SECR) scheme
Reporting under the United Kingdom’s Energy Savings Opportunity Scheme
Group-wide energy reduction campaign, including:

Smart selection of energy efficient replacement equipment within the capital process
Remote connection and optimization of hospital Building Management Systems (BMS)
Synchronizing BMS timeclocks with hours of work

Voltage Optimization and Power Factor Correction across sites to ensure electrical supply loading is efficient
Reporting on energy consumption across the company
Improve the efficiency of waste management processes through monitoring and reporting
Ensure that new capital investment incorporates group environmental requirements as far as possible
Leak-testing of refrigerant gas systems and reporting on gas use across the estate to enable reduction of refrigerant gas impact
Inspection of all oil storage equipment across the estate
Working towards making an electric vehicle point charging solution available to all Circle Group sites

Clinica Ars Medica, Infracore’s 74-bed hospital in Gravesano, Switzerland.

Clinica Ars Medica, Infracore’s 74-bed hospital in Gravesano, Switzerland.

INFRACORE

This healthcare infrastructure company based in Switzerland has committed to reaching 20% increase in energy management efficiency over the next 10 years.

Additionally, Infracore has implemented various energy saving measures and commitments in all new buildings and construction projects, executed according to the state-of-the-art energy saving recommendations, including:

Reduced energy use for space heating, cooling and water heating
Reduced electricity use for lighting
Implementing solar panels as sustainable solutions
Significant investments in the latest medical equipment in their hospitals to optimize energy and water consumption

Klinik AM Park, MEDIAN’s 263-bed hospital in Bad Oeynhausen, Germany.

Klinik AM Park, MEDIAN’s 263-bed hospital in Bad Oeynhausen, Germany.

MEDIAN

MEDIAN has committed to decreasing Scope 1 and Scope 2 emissions by 25% over the next five years with interim annual targets of 5% reductions. MEDIAN’s strategy to meet their carbon reduction goals began with carbon accounting of the portfolio and establishing a data collection framework moving forward, and then evaluating and implementing energy saving measures and supply decarbonization solutions. Implemented measures include:

Procuring renewable electricity for the portfolio
LED lighting conversions across the hospital portfolio, which are nearly complete after spending several years and millions of euros to make this energy saving update
Implemented combined heat and power systems at about 1/3 of their assets to significantly reduce energy use
Decreased pool water temperatures by a few degrees to decrease energy use and thus carbon emissions
Planning to deploy a smart thermostat solution to address the substantial heating load in the portfolio and reduce heating use when spaces are vacant
Investigation and planning for photovoltaic systems on roof tops at various facilities across their portfolio
Purchasing electric transport vehicles (used for patient transport) and installing electric vehicle charging stations
Development of key performance indicators for measuring reductions in energy use and greenhouse gas emission

Priory has set the same carbon reduction targets as MEDIAN and is in the carbon emissions and energy use accounting stage. Following data collection, they plan to develop a targeted list of energy efficiency solutions and supply decarbonization strategies that they will roll out over the portfolio.

ENVIRONMENTALSUSTAINABILITY

CORPORATE OPERATIONS

TENANT RELATIONSHIPS

CLIMATE CHANGE RISK

SPOTLIGHT ON TENANT SUSTAINABILITY EFFORTS

PRIME HEALTHCARE

LIFEPOINT HEALTH

ERNEST HEALTH

CIRCLE HEALTH

INFRACORE

MEDIAN

ENVIRONMENTAL
SUSTAINABILITY

SPOTLIGHT ON TENANT
SUSTAINABILITY EFFORTS