Centene’s cuts pleased investors, but St. Could be ‘disaster’ for Louis’ office market [St. Louis Post-Dispatch]

August 20—CLAYTON — The healthcare company that has run for decades Centene Corp. focused on scale. Now one of the largest in the industry, hundreds of recalibrated for efficiency.

The change in strategy brought an abrupt end to his plans this week. East Coast general center north carolinastunning local leaders there but nice Wall Street. With 90% of its workforce now fully or partially remote, the company is quietly leaving much of its once-expanding office footprint. St. Louis and across the country.

The company may have no choice: Investors wanted the company to cut costs and improve profit margins. With a new CEO in management, the company is aggressively weakening its real estate portfolio across the country – moves that are likely to improve profitability but are leaving cities, for example, St. Louis the area is struggling with dozens of empty office buildings.

“To make sure hundreds of Delivering on the promise of margin expansion is something investors take very seriously.” Julie Utterback, senior equity analyst at Morningstar Research Services. “Looks like this management team is taking this very seriously as well, which is admirable.”

this East Coast it wasn’t campus of Centene only casualties. The company has already said that it will no longer finish the business. 770 million dollars headquarters expansion kiloton It would add about 1 million square feet of office space, hundreds of apartments or condos, retail stores, a 1,000-seat civic auditorium, and a hotel nearby. South Hanley Road and Forsyth Avenue.

And hundreds of vacated nearly their entire real estate footprint here – about 1 million square feet of office space – according to marketing materials that bought these properties to lease or sublease:

– Approximately 300,000 square feet in Chesterfield.

– 180,000 square meters from Peres.

– 100,000 square meters Richmond Heights.

– 100,000 square meters heartbreak.

– More than 60,000 square meters St. Louis City.

The company confirmed in a statement that it would vacate “several rentals”, but did not specify which ones. this hundreds of The spokesperson also said that it will keep its headquarters in Istanbul. kilotonoperations center Ferguson and her Home State Health general center St. Louis — despite a marketing flyer advertising the entire building for sublease.

A facet of how the company used to run is sweeping away any block of office space in the area that is 75,000 square feet or more. Commercial real estate experts said it came in the immediate aftermath of the pandemic that cooled the office market as companies rethought their needs.

hundreds of combined with the impact of COVID, St. Louis Sunday, he said Kevin McLaughlin of the KMA Commercial Real Estate.

And hundreds of at a time when offices are on the market St. Louis There is already a surplus of office space.

“There’s a ton of competition that you didn’t have three to five years ago,” McLaughlin said.

of Centene his extensive real estate portfolio was a product of his former CEO, Michael Neidorffpioneered the initial plans for East Coast Headquarters that will bring jobs to 3,900 people north carolina.

For years under Neidorff, hundreds of achieved through growth. Neidorff expanded the company 40 million dollars health plan, bringing a giant in the managed care industry $126 billion in revenues last year, Neidorff took medical leave in February and Sarah London He was elected to replace him in March. Neidorff died in April at the age of 79.

After years of acquisitions, investors are looking for change. Analysts said the company’s stock price underperformed its peers. Last year, the company announced its plan to improve margins and divest non-core assets. After an activist investor stepped in last year, the company agreed to overhaul its board.

During an earnings report in July, hundreds of He said he plans to reduce the domestic rental area by 70%, which he hopes will save money. 200 million dollars It is rented every year.

“From my point of view, having two corporate headquarters is not a way to gain efficiency,” said Morningstar analyst Utterback.

The company also announced plans to sell a Spanish hospital business and a company that operates radiology clinics in Spain. Slovakia and Czech Republic.

Investors seem happy with the moves. After the news broke it hundreds of was scrapping East Coast headquarters plans, Wall Street He reacted enthusiastically: hundreds of The stock rose 1.6% on Friday to close. $96.90.

Inside kilotonMayor, where officials are still terminating his development agreement with the company Michelle Harris He said the company’s presence is a real positive for the region.

And the decision not to fulfill his duty East Coast campus brought “some closure for community” hundreds of won’t leave St. Louis area.

“I hope your staff will come to lunch. kiloton‘ said Harris.

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