Through our investment, asset and property management, forward funded development and corporate activities we look to minimise the environmental impact of our business.
PHP is committed to the principles of continuous improvement in managing environmental issues, including the reduction of pollution and emissions, the proper management and monitoring of waste, and compliance with environmental legislation and codes of practice.
Environmental and sustainability performance are integral elements of PHP’s approach to the acquisition of existing and funding of new primary healthcare buildings. We use detailed assessments of each location, looking at building efficiency and performance, enhanced service provision for the community and support for wider healthcare infrastructure.
We undertake detailed environmental and building surveys to assess physical environmental risks for each investment, including flooding, to ensure the risk is avoided or appropriate prevention measures are developed (see our TCFD disclosures in our AR 2024).
During 2024 we continued applying our net zero and ESG commitments to investment activities, engaging with developers and asset owners to challenge standards and leverage our influence.
The acquisition of Gillies Health Centre, Basingstoke, demonstrates this with good environmental performance including an EPC rating of B.
PHP, together with its development partners, is committed to promoting the highest possible standards of environmental and social sustainability when designing and constructing new assets.
Our Sustainable Development and Refurbishment policy outlines our minimum requirements for BREEAM Excellent and a range of environmental issues, including energy and carbon, waste and resources, biodiversity, climate adaptation and health and wellbeing. Our development partners are also required to work to the same standards.
We aim to develop new buildings to be net zero carbon in construction (minimising embodied carbon and offsetting residual emissions) and ready to operate with net zero emissions. All developments aim to be fossil fuel free and we are working towards setting specific energy intensity benchmarks and targets.
Construction of PHP’s first NZC development at Croft, West Sussex, is due to reach practical completion in Q2 2025 and the embodied carbon to practical completion has been measured with our contractor.
In July 2024 the Group commenced work on a second development at South Kilburn, London. The scheme comprises the fit-out of a shell unit which is being constructed to NZC standards and is also expected to reach practical completion in Q2 2025.
We are committed to creating best-in-class primary care centres, focusing on the future needs of our occupiers and thereby ensuring we are creating sustainable buildings for the long term. We invest in the portfolio of properties to generate enduring occupier and patient appeal, which provides opportunities to improve rental values, the security and longevity of income, and the quality of assets. This is a key route for PHP to deliver energy efficiency improvements and to introduce low or zero carbon measures for our occupiers and their patients.
Asset and property management will play a key role in achieving our NZC target of having an NZC portfolio by 2040, with interim commitments for all properties to have an EPC rating of at least B and NZC asset management by 2030 and an 80% reduction in portfolio emissions by 2035 via targeted improvements to buildings and occupier engagement.
During 2024 we completed six (2023: eight) asset management refurbishment projects, with all achieving an EPC B rating. This includes three projects where a significant improvement was achieved from D and E. We have a further ten (2023: six) refurbishment projects on site or committed, which include energy efficiency upgrades, installation of roof-mounted solar panels and air source heat pumps and thermal efficiency upgrades. We have continued to use BREEAM for refurbishments but several projects during the year could not be certified due to their scope and size. We agreed 21 (2023: 12) new leases and regears during the year, with all including Green Lease clauses.
In addition, we carried out targeted reassessment of building EPC ratings to better reflect their current performance. Combined with annual renewals, we now have 47% of properties by value at an EPC rating of B or better (2023: 42%) and 88% at A–C (2023: 85%).
Our first net zero ready refurbishment project was completed in the year at Long Stratton in Norfolk, which is on site and has been designed to move away from gas to an air source heat pump.
This has enabled us to provide benchmarks for target setting on future projects and we are assessing embodied carbon for a number of these which along with net zero audits of buildings in operation will pave the way for future NZC asset management projects as we aim to accelerate progress ahead of our current 2030 commitment.
Working with our occupiers is essential to improving the performance of buildings and during 2024 our property management and facilities management teams engaged with all of our tenants, carrying out over 830 (2023: over 1,000) site visits at which issues, including energy and utilities, were discussed. During 2024 we have continued to review ways to improve the performance of the portfolio outside of our asset management programme. This includes 283 (2023: 330) facilities management plant and equipment replacements and upgrades, including LED lighting, more efficient heating systems and building management systems. We also supported tenants to make their own building improvements, including energy efficiency upgrades and solar PV installations.
To build on this, we are planning to roll out larger solar PV installations to sites where PHP will facilitate this for tenants where they procure their own energy. This approach offers the potential to reduce costs for tenants in the long term as well as reducing carbon emissions.