Clarian nabs UAC building: Hospital network wins bid for former corporate headquarters

December 5, 2005

Clarian Health Partners is polishing a deal to buy the former Union Acceptance Corp. headquarters on North Shadeland Avenue, a move that plants a large footprint for the burgeoning hospital network squarely in a competitor's east-side back yard.

Clarian made the winning bid for the 126,000-square-foot building at a Nov. 15 auction, but the sale had not closed as of Nov. 30, said Bob Getts of Colliers Turley Martin Tucker, which ran the auction. He referred all questions to Clarian.

Scott Rigney, the network's corporate real estate director, declined to discuss the price or Clarian's intentions. The building is less than two miles from Community Hospital East.

"We only buy property when we have a definitive need for it," he said. "Sometimes it's immediate and sometimes it's for something in the works."

The sprawling, two-story building sits on a 15-acre site that includes a large parking lot and manicured lawns. Experts in real estate development say it would be a fitting site for Clarian's administrative offices, which are now split among several buildings downtown.

Regardless of the exact use, Clarian's purchase is a boon for the area, neighborhood leaders believe. The building sits at the northwest intersection of Washington Street and North Shadeland, next to a used car lot and across from dilapidated Eastgate Mall, which will be demolished in a few months.

"We want to start revitalizing that area, and what a better fit than to get Clarian, a very stable tenant," said Ruth Ann Walker, a community activist and member of the Warren Township Development Association.

Indianapolis Economic Development Direc- tor Gordon Hendry agreed.

"I would characterize it as a win for the east side," said Hendry, who declined to comment on Clarian's intentions.

The 44-year-old building has sat largely vacant since Union Acceptance Corp. slid into bankruptcy a few years ago. The car-financing company formed as an arm of Union Federal Bank of Indianapolis in 1986 and employed more than 600 people before waves of bad loans sent it into a financial tailspin. Six employees for a successor company, White River Capital Inc., still work in the building.

A Union Federal Bank branch remains there, too, but plenty of room is left over, said Union Federal Executive Vice President Michael Newbold.

"It's basically what I would call a cube farm: lots of cubicles, lots of space," he said.

Newbold said he's not sure what will happen with his branch. Union Federal has 17 months remaining on its lease. The bank wants to stay in the area and would prefer to keep its current location.

However, Newbold plans to meet with Clarian officials after the deal closes "to see how our needs fit with their needs."

White River Chief Financial Officer Martin Szumski said his company hasn't discussed what to do if Clarian needs the entire building.

The seller is Shadeland Properties, a Fort Wayne company affiliated with Richard Waterfield, who'd been a major Union Acceptance shareholder. Representatives of Shadeland Properties could not be reached for comment.

Clarian has been on a growth spurt. Last year, it opened Clarian West Medical Center in Hendricks County, and this fall it began construction on a $150 million cancer center next to Indiana University Hospital. In addition, last week it opened the $284 million Clarian North Medical Center in Hamilton County.

Clarian formed in 1997 when Riley Hospital for Children joined forces with Methodist and IU hospitals. Before the recent wave of development, the network kept its focus mainly on downtown.

On the east side, it already operates a Methodist Medical Plaza on East Washington Street, about a block west of Washington Square Mall.

Clarian could use the UAC building to provide additional health care services on the east side, although it would be entering a tough market, noted Bill Thompson, a managing partner with the Indianapolis law firm Hall Render Killian Heath & Lyman, which specializes in health care.

That part of town contains a higher percentage of patients covered by Medicaid and Medicare, government programs that generally reimburse less than commercial insurance.

In addition, nearby Community Hospital East offers a full range of services and is drawing up plans to spend more than $5 million on a cancer center expansion of its own.

"I don't think that there's any specialty that's not available in that market," Thompson said.

Still, across the country many health care systems have bought similar buildings and used them to provide a range of outpatient services, from primary care and diagnostic testing to women's health.

Thompson said it's also not unusual for providers to clear space in their hospitals by moving administrative offices elsewhere. Clarian now divides its administrative staff among several buildings, including Methodist and IU hospitals.

The building's broad main floors, each offering more than 40,000 square feet of space, make it better suited for an administrative headquarters than medical offices or an ambulatory care center, said Todd Jensen, senior vice president for health care at locally based Lauth Property Group.

The layout would lead to a collection of long, narrow doctors' offices.

"It's hard to fit a relatively small tenant in a deep building," he said. "It ends up being a bowling alley configuration, which is difficult."

City and community leaders hope Clarian's investment will spur other development in the area, especially additional medical complexes or office buildings for professionals.

Walker noted that a cancer clinic opened at 21st Street and Shadeland more than a year ago. She hopes another medical use at such a key location will add to the momentum, diversifying the corridor away from its reliance on car dealerships.

"That's a major, major corner for us in Warren Township," she said.
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