Centene’s cuts pleased investors, but could be “disastrous” for St. Louis’ office market. Louis [St. Louis Post-Dispatch]

Aug. 20 — CLAYTON — For decades, managed healthcare company Centene Corp. focused on scale. Now one of the largest in its industry, hundreds it is being recalibrated for efficiency.

The change in strategy brought an abrupt end this week to his plans for one east coast seat at North Carolinasurprising but pleasant local leaders Wall Street. With 90% of its workforce now fully or partially remote, the company has quietly relinquished most of its once expansive office footprint to Saint Louis and throughout the country.

The company may not have had a choice: Investors wanted the company to cut costs and improve profit margins. With a new CEO at the helm, the company has been aggressively reducing its real estate portfolio across the country, moves that are likely to improve its bottom line but leave cities such as Saint Louis region, struggling with dozens of vacant office buildings.

“Making sure that hundreds delivering on their margin expansion promises is something that investors take very seriously,” he said Julie Utterback, senior equity analyst at Morningstar Research Services. “This management team also seems to be taking it very seriously, which is appreciated.”

The east coast the campus was not hundreds of just a victim The company already said it wouldn’t stop 770 million dollars expansion of headquarters a Clayton which would have added nearly 1 million square feet of office space, hundreds of apartments or condos, retail stores, a 1,000-seat civic auditorium and a nearby hotel. South Hanley Road i Forsyth Boulevard.

I hundreds has vacated nearly its entire real estate footprint here (roughly 1 million square feet of office space), according to marketing materials buying these properties for lease or sublease:

— About 300,000 square feet in Chesterfield.

– 180,000 square feet From Peres.

– 100,000 square feet Richmond Heights.

– 100,000 square feet heartbreak.

– More than 60,000 square meters Saint Louis city

The company confirmed in a statement that it will vacate “several leased locations,” though it did not say which ones. The hundreds The spokesman also said it will maintain its headquarters in Claytonoperations center a Ferguson and his Man State Health seat at Saint Louis — despite a marketing brochure advertising the entire building for sublease.

It’s a glimpse into how the company used to operate, gobbling up any office block in the region that was 75,000 square meters or more. And it comes after the pandemic cooled the office market as companies rethought their needs, commercial real estate experts said.

“The hundreds The effect, combined with the COVID effect, is disastrous for the Saint Louis market,” he said Kevin McLaughlin of KMA Commercial Real Estate.

And the hundreds offices come on the market at a time when Saint Louis already has a surplus of offices.

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

hundreds of The extensive real estate portfolio was a product of its former CEO, Michael Neidorffwho led the initial plans for the east coast headquarters that had to provide 3,900 jobs North Carolina.

For years under Neidorff, hundreds succeeded through growth. Neidorff expanded the company from a 40 million dollars health plan to a giant in the managed care industry, contributing to it 126 billion dollars in revenue last year. Neidorff took a medical leave in February and Sarah London was named as his replacement in March. Neidorff died in April at the age of 79.

After years of acquisitions, investors have been looking for change. Analysts said the company’s share price underperformed relative to its peers. Last year the company announced a plan to improve margins and shed non-essential assets. After an activist investor stepped in last year, the company agreed to overhaul its board of directors.

During an earnings report in July, hundreds said it planned to reduce domestic leased space by 70%, which it hoped would save 200 million dollars in rent every year.

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

The company also announced plans to sell a Spanish hospital business and a company that runs radiology clinics Slovakia and the Czech Republic.

Investors seem pleased with the moves. After the news hundreds I was discarding it east coast headquarters plans, Wall Street reacted with enthusiasm: hundreds Shares rose 1.6% on Friday, closing at $96.90.

In Claytonwhere officials are still dismantling their development agreement with the company, Mayor Michelle Harris he said that the presence of the company is really positive for the region.

And his decision not to carry out his east coast campus brought “some closure for the community” that hundreds will not leave the Saint Louis area

“I hope your employees will come to lunch ClaytonHarris said.

___

(c)2022 the post office of St. Louis

Visit the St. Louis Post-Dispatch at www.stltoday.com

Distributed by Tribune Content Agency, LLC.

Leave a Comment

Your email address will not be published.