Rouse names outsider as chief financial officer

Hiring such as DeRosa's, opening are rare for firm

August 21, 2002|By Meredith Cohn | Meredith Cohn,SUN STAFF

Jeffrey H. Donahue, a 30-year veteran and a top-tier manager of the Rouse Co., will retire at the end of the month and hand over a rare opening in the hierarchy of the Columbia-based company to an outsider.

Thomas J. DeRosa, a Deutsche Bank AG executive and former Baltimore resident with ties to Rouse, will take over as chief financial officer and also become vice chairman - positions that could make the 44-year-old a potential candidate for the chief executive position.

No clear successor to Anthony W. Deering, chairman and chief executive officer, has emerged. At the time of his last promotion, in 1998, Donahue was viewed as a candidate. But he and Deering are close in age, which means he would be unlikely to succeed the chairman, who says he has no plans to retire. Deering, 57, called Donahue, who is 56 and a career Rouse employee, a well-respected performer.

Rouse, a real estate investment trust, is one of the nation's major mall owners and managers. Its properties include Baltimore's Harborplace and Towson Town Center. It also developed Columbia in Howard County and Summerlin outside of Las Vegas.

The company is also known for the long tenure of its employees and for promoting from within its ranks. All top managers have at least 20 years with Rouse, a fact that has drawn Wall Street criticism for a perceived lack of new blood. Deering said he believed that DeRosa is the highest-ranking new employee to come from outside the company.

"We don't often have major changes at the top of the Rouse Co.," Deering said in a phone interview from Las Vegas yesterday. "It's a solid group that's been together a long time. Tom is someone we've worked with in the past. We know him. ... Tom will fit in seamlessly."

DeRosa, who works for Deutsche Bank in London, will move back to Baltimore with his wife and four children. His title of vice chairman - rather than the executive vice president's rank held by Donahue - reflects the different responsibilities he will have, Deering said.

Acquisitions, rather than development, have become more central to Rouse's strategy of owning premier shopping centers, and DeRosa reportedly will focus more of his attention on buying properties.

It was during an acquisition that Rouse officials got to know DeRosa. As an executive at Alex. Brown & Sons, later Deutsche Bank, DeRosa represented Rouse in its 1996 acquisition of the real estate assets of the Howard Hughes Corp. in Nevada. Rouse has been a long-time client of Deutsche Bank. In a short memo to employees, Deutsche Bank officials said DeRosa was a valued contributor to the company for 10 years.

DeRosa, who was not available for comment yesterday, joined Alex. Brown in 1992 as a vice president in the Real Estate Investment Banking Group and was named a managing director in 1996. Two years later, he joined the firm's Health Care Investment Banking Group and was named a global co-head in June 1999.

"Tom is very experienced at a very senior level. The board will certainly be looking at him for the long term," said Deering, though he said there were other potential candidates for the chief executive's post.

Two other top executives at Rouse, Thomas A. McGregor and Jerome D. Smalley, are closer in age to Deering than is DeRosa.

David Fick, a managing director and Rouse analyst at Legg Mason Wood Walker, said Rouse has had "succession issues" and needed to go outside for a potential future leader.

"It's logical to bring someone into that position now. They had to create some space," said Fick, referring to the need to generate a position for a potential successor to Deering. He noted that Deering's contract is set to expire in two years, though Fick said he believes Deering will stay on longer for the completion of some mall projects.

"The [replacement] choice is somewhat unusual," he said. "DeRosa is an investment banker with no operating experience or retail real estate experience. More and more companies in the real estate business are looking to outside industries for talent. But there have been few successful transitions from investment banking to real estate."

Donahue came to Rouse's Pittsburgh mortgage banking office in 1973. He has been executive vice president since 1998 and chief financial officer since 1993. In a statement, he said he has no immediate plans.

"I've had the pleasure of working with a large number of talented people, who along the years have become close personal friends. I think the company has a wonderful outlook, and I wish Tony and the team every best wish as the company moves ahead," he said. "I'm ... already looking at interesting prospects to keep myself busy for the years ahead."

Donahue earned a $445,000 salary last year, plus a $452,565 bonus and other incentives, according to Securities and Exchange Commission documents.

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