Centene’s cuts cheered investors, but could be ‘disastrous’ for the St. Louis office market. [St. Louis Post-Dispatch]

Aug. 20—Clayton—For decades, the health care company managed Centene Corporation Focus on scale. Now one of the largest in its industry, hundreds of Recalibrating for efficiency.

The change in strategy brought an abrupt end to its plans for this week east coast Headquartered in North CarolinaThere are surprising local leaders but fascinating Wall Street. With 90% of its workforce now fully or partially remote, the company has been quietly shedding much of its expanding office footprint. St. Louis and across the country.

The company may have had no choice: Investors wanted the company to cut costs and improve profit margins. Under a new CEO, the company is aggressively slimming its real estate portfolio across the country — moves that could improve its bottom line but leave cities, such as St. Louis area, dealing with dozens of vacant office buildings.

“Ensuring that hundreds of It is something that investors take very seriously to deliver on their promise of margin expansion,” he said Julie Utterback, senior equity analyst at Morningstar Research Services. “It looks like this management team is taking it very seriously, which is commendable.”

The east coast There was no campus of Centene Casualties only. The company has already said it will not complete its work $770 million Headquarters expansion in Clayton It added nearly 1 million square feet of office space, hundreds of apartments or condos, retail shops, a 1,000-seat civic auditorium and a nearby hotel. South Hanley Road and Forsyth Boulevard.

and hundreds of Here it has vacated nearly its entire real estate footprint — about 1 million square feet of office space — according to marketing materials shopping those properties for lease or sublease:

– Approximately 300,000 sq. ft. in Chesterfield.

– Within 180,000 sq.ft From Peres.

– Within 100,000 sq.ft Richmond Heights.

– Within 100,000 sq.ft heart attack.

– Over 60,000 square feet St. Louis the city

The company confirmed in a statement that it will be vacating “several lease locations,” though it did not say which ones. The hundreds of The spokesperson said that it will also be kept at its headquarters ClaytonIn the operations center Ferguson And its Home State Health Headquartered in St. Louis – Even if the marketing brochure advertises the entire building for the subdivision.

It’s a facet of how the company previously operated, gobbling up any block of office space in the area that exceeded 75,000 square feet. And it comes on the heels of a pandemic that has cooled the office market as companies reconsider their needs, commercial real estate experts said.

“The hundreds of The effect, combined with the covid effect, is devastating St. Louis market,” he said Kevin McLaughlin who KMA Commercial Real Estate.

and the hundreds of Offices are coming up in the market one at a time St. Louis There is already a surplus of office space.

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

of Centene The extensive real estate portfolio was the product of its former CEO, Michael NeidorfThat led to the initial plans east coast The headquarters would bring 3,900 jobs North Carolina.

For years under Neidorff, hundreds of Succeeded through growth. Neidorff expanded the company $40 million Bringing in health plans, for a giant in the managed care industry $126 billion In last year’s revenue. Neidorf took a medical leave of absence in February, and Sarah London His replacement was named in March. Neidorf died in April at the age of 79.

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

During the earnings report in July, hundreds of It plans to reduce its domestic leased space by 70 percent, which it expects to generate savings $200 million rent each year.

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

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

Investors seem satisfied with this step. After that news came out hundreds of was dismissing it east coast headquarters plan, Wall Street Respond with enthusiasm: hundreds of The stock rose 1.6% on Friday, closing at $96.90.

in ClaytonWhile officials are still hammering out the development agreement with the company, the mayor Michelle Harris He said that the company’s presence is positive for the region.

and the decision not to implement it east coast The campus brought “some closure to the community.” hundreds of will not leave St. Louis area.

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

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