ENVIRONMENTAL
SUSTAINABILITY

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.

CORPORATE OPERATIONS

Our commitment to environmental protection and sustainability is confirmed in our company-wide environmental policy which can be found on our website. Additionally, the following highlights reflect several environmental sustainability features at our corporate headquarters:

Energy Star Rated

Over 200,000 kWH
reduction in energy use

Increased Recycling Rates

corporate headquarters building in 2017 and 2018

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

through introducing recycling program across a number of waste streams

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

In 2019. we established a formal Environmental, Social and Governance (“ESG”) committee with responsibility for driving further environmental performance improvements across all aspects of our business. To ensure that we hold management accountable when it comes to fulfilling our sustainability commitments, we have incorporated an ESG performance measure into our executive compensation program beginning in 2020.

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.

We undertake due diligence on all new and existing tenants, and evaluate environmental risks associated with all real estate investment transactions. In the event that our due diligence uncovers environmental contamination, we work with our tenants to mitigate any issues through:

  • 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.

To illustrate the impact of our efforts, we gather environmental performance information from our largest tenants.

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:

  • Robust enterprise risk management and strategic planning;
  • Our governance structure provides the necessary opportunities for the Board and executive leadership to exercise their oversight responsibilities with respect to strategy and risk, including the impact of climate change on our business;
  • Our risk management team is responsible for managing operational risk for our business, while our executives are responsible for enterprise risk management;
  • Portfolio diversification: An inherent strategy for mitigating climate risk is the diversified footprint of our portfolio;
  • Work with our tenants to build in resiliency considerations into asset development projects during the planning and construction process. We invest additional funds for upgrades to our properties to help mitigate the effects of climate change in the long term;
  • Commit to providing our tenants with additional funds for capital projects to improve resiliency of our properties including roof replacements, placement of storm windows and elevation of generators;
  • Monitor the environmental performance of our tenants. Tenant environmental initiatives to reduce the contribution to global carbon emissions at the properties we own include, but are not limited to, supporting the development of new renewable energy supplies, designing and constructing environmentally friendly properties that use less water and energy to operate;
  • Pay attention to local risks and hazards including identifying zones likely to experience flooding and earthquakes; and
  • Place insurance for our properties at our corporate level to ensure all of our assets are properly insured

 

 

SPOTLIGHT ON TENANT RELATIONSHIPS

The following tenants, together representing over 80% of our revenue, are making investments to reduce their carbon footprint. Through our ongoing engagement with our tenants and as a result of our discussions regarding sustainability efforts, we are pleased to report the following environmental improvements, provided to us by our tenants.

Mountain Vista Medical Center, Steward’s 178-bed general acute care hospital in Mesa, Arizona.

Mountain Vista Medical Center, Steward’s 178-bed general acute care hospital in Mesa, Arizona.

STEWARD HEALTH CARE

By investing in various building improvements throughout their hospital portfolio (ventilation, plumbing, lighting etc.), Steward has been able to achieve:

  • Greater than 15% annual energy savings;
  • Reduced electricity demands by 52.5 gigawatt-hours, which equates to taking 8,459 cars off the road for one year and by 8.6 million therms of natural gas which equates to the sequestration of carbon dioxide by 1.2 million trees;
  • Eliminated CO2 emissions by 87,140 metric tons per year, resulting in annual savings in excess of $550K per year; and
  • Reduced air pollution resulting in fewer deaths, hospital visits, and lost days of work and school, resulting in annual savings of $447K

In addition to the positive impact to the environment. these improvements have resulted in significant cost savings:

  • $3.8 million in energy savings in 2020 – equivalent to an increase of top line revenue of $125 million;
  • Additional $1 million savings in community health benefits annually;
  • $14.1 million in accumulated savings to date – sufficient to purchase 28 MRI imaging machines; and
  • $315,000 in energy cost savings per month – equivalent to revenue from 4,623 inpatient days per month

Providence Medical Center, Prime’s 400-bed general acute care hospital in Kansas City, Missouri.

Providence Medical Center, Prime’s 400-bed general acute care hospital in Kansas City, Missouri.

PRIME HEALTHCARE

Prime Healthcare has been installing combustion-free, solid-oxide fuel cells to significantly lower energy usage including:

  • Two fuel cell projects installed at MPT-owned California locations, expected to save more than $12 million over the length of the 20-year power purchase agreement
  • Fuel cell projects expected to reduce carbon dioxide emissions over the life of the contracts by a total of 51 million pounds
  • Other energy-saving projects include:
    • The addition of variable frequency water chillers and hot water heaters at a number of hospitals and related economizing steps, resulting in annualized cost savings of over $398K
    • The replacement of high-pressure sodium lighting in the parking lot at Providence Medical Center in Kansas City, Missouri, with new energy-efficient LED lighting, resulting in annualized cost savings of over $96K

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

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 $613K at certain MPT hospitals from projects executed in 2020 as part of Phase One of LifePoint’s Energy Optimization Program
    • 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
  • Further optimization strategies are being considered in 2021 for other of MPT’s LifePoint campuses
  • 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.

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 ongoing development facility in Bakersfield, California and the recently constructed facility in Elgin, South Carolina 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 to generate over $3.7 million of annual cost savings:

  • Enhanced lighting controls, including occupancy sensors to reduce energy consumption
  • 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

OakLeaf Surgical Hospital, Surgery Partner’s 102,000 square foot facility in Altoona, Wisconsin.

OakLeaf Surgical Hospital, Surgery Partner’s 102,000 square foot facility in Altoona, Wisconsin.

SURGERY PARTNERS

Surgery Partners incorporated the following sustainability features in the development of their Idaho Falls Community Hospital:

  • Water saving flow restrictors on sinks, showers, and toilets that save 30%-60% more water compared to fixtures in most older hospitals
  • All air handling units, except those serving the surgery suites, are variable volume air units which save approximately 35% of the horsepower required to operate older constant volume air units. Air units for the surgery suites are equipped with an “unoccupied” mode that reduces energy usage as well
  • Chillers have a low electricity vs. capacity ratio of 0.55 KW/Ton
  • Boilers have a minimum 85% efficiency ratio, compared to 70% efficiency for boilers at most older hospitals
  • LED lighting throughout the facility that reduces the lighting load by at least 50% over incandescent lighting
  • Installed electronic building automation systems to allow the mechanical, electrical, and plumbing equipment to operate effectively and efficiently without intervention from the engineering staff

Many of the building components utilize recycled material for floors, walls, and ceilings

Circle Bath, Circle Health’s 30-bed facility in Bath, 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 Energy Savings Opportunity Scheme
  • Group-wide energy reduction campaign, including:
    • Smart selection of energy efficient replacement equipment within the capital process
    • Remote connection and optimisation of hospital Building Management Systems (BMS)
    • Synchronising BMS timeclocks with hours of work
  • Voltage Optimisation 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

Infracore signed a cantonal commitment with Swiss Medical Network (“SMN”), its tenant operator, to reach 20% increase in energy management efficiency (consumption and emissions) 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
  • Sustainable solutions implemented such as solar panels

Continuous heavy investments by SMN into the latest medical equipment in all hospitals of the group 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

In the process of developing and implementing a sustainability initiative, which they have named “Green MEDIAN”. Strategies of the initiative include:

  • 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
  • Implementing natural gas-powered block-type thermal power station at various facilities across their portfolio
  • Implementing 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 emissions