LED Upgrades: A Brighter Path to ESG Performance

June 2, 2021

Physicians Realty Trust’s (NYSE: DOC) portfolio of 275 medical office buildings contains tens of thousands of installed light fixtures. While it is not typical for a single technology to offer wide-sweeping benefits for commercial buildings, LED lighting is a rare exception.

A wide-scale LED lighting retrofit project to replace incandescent and compact fluorescent lighting was a natural step to enhance our ESG programming. High-level benefits include better energy efficiency, utility savings, and a longer functional life. LED lights can also be recycled while providing an optimal environment for tenants and patients.

In 2020, DOC completed LED retrofits on 1.3M square feet of our properties (29.4% of our managed portfolio), accounting for approximately 7.1M kWh savings annually. 2020 was also the first year DOC began regional retrofit projects instead of a building-by-building approach. This strategy allowed us to drive down the project costs by completing multiple properties in a region at the same time.

Spotlight On DOC’s Nebraska Portfolio

In 2020, DOC worked with Next Step Energy Solutions to audit all of our properties in Nebraska, and the company identified four properties totaling 432,000 RSF that would benefit from a lighting upgrade:

• Lakeside Two Professional Center | Omaha, NE
• Memorial Health Center | Grand Island, NE
• Good Samaritan MOB | Kearney, NE
• NE Heart Institute | Lincoln, NE

All interior lighting at these locations, including tenant suites, was replaced with LED fixtures. The properties had a net cost to convert of $1.1M, with an average payback term of 4.1 years. This initiative also created an estimated $2.3M in utility savings over the next ten years and 3.1M kWh in annual savings, maximizing DOC’s financial and environmental returns. The project was completed in late 2020.

“Our Nebraska project is a true win for DOC, our health care partners, and their patients’ experience at our properties,” said Mark Theine, DOC’s EVP of Asset Management. “DOC’s bold vision for pursuing a more sustainable future not only brings cost benefits but prioritizes the internal environment our patients experience as well as the external environment around us.”

He continued, “Our financial investment in the project will pay immediate dividends in terms of both cost savings and energy reduction, and perfectly exemplifies our approach to pursuing sustainability projects that balance financial and environmental goals.”