DeRosa preparing for helm at Rouse

Credentials: Tom DeRosa showed his stuff to the Rouse people when he closed their deal for the Hughes holdings in Nevada. Now he could be the next head of Rouse.

April 20, 2003|By Meredith Cohn | Meredith Cohn,SUN STAFF

It was 1996 when the Rouse Co. looked westward and embarked on an ambitious expansion.

The company that had created the community of Columbia and pieced together one of the largest and best-performing mall portfolios in the nation was eyeing the Nevada real estate amassed by the late billionaire Howard Hughes. The vast holdings stretched from The Strip in Las Vegas to the growing desert suburbs.

To help cement the complicated $520 million deal that would bring Rouse one of its ritziest malls, Fashion Show, and the tony planned community of Summerlin, the company turned to Deutsche Bank AG. It sent a young investment banker named Thomas J. DeRosa, who would participate in sensitive negotiations with Hughes' heirs, help craft a plan to pay them and persuade European investors to join in.

Anthony W. Deering, Rouse's chief executive, was impressed.

"He got this very complex deal closed," Deering said of DeRosa. "At the time I jokingly said `Why don't you come work for the Rouse Co.?' He wanted to stay at Deutsche Bank. But I did keep in touch with him. It took seven more years to decide the time was right."

DeRosa finally joined Rouse in September, as vice chairman and chief financial officer. Not only is DeRosa the first outsider to enter the company's top executive ranks, but he is also the acknowledged front-runner to replace Deering.

Those who know DeRosa acknowledged that his expertise in investment banking is a valuable asset for the real estate company. But it was his polish and ability to form and build relationships that propelled him to the No. 2 job at Rouse, they said.

During a recent interview, a smiling DeRosa said he has already made friends and allies at a company where the average tenure is 20 years. He wants the chief executive's job, held by only three men since James Rouse founded the company in 1939.

"I have a shot at it. Why not? I'm sure it's one of the reasons Tony Deering brought me here," DeRosa said. "If you've been here 15 years, you're a newcomer, but I don't feel like a newcomer."

In coming to Rouse, DeRosa, 45, became a key piece of a continuing shake-up at a company analysts have often described as staid. They have criticized Rouse management for resisting change and new blood, for big spending on development and debt and for the stock price totaling less than the value of company's assets.

In a whirlwind that began less than a year ago, three top executives - all career Rouse employees and close in age to the 58-year-old Deering - have taken early retirement. The company's structure has been streamlined to cut costs and reflect a shift away from expensive development. Rouse is now focusing on refining its portfolio of upscale malls and selling land in its planned communities, mainly to homebuilders.

As a former investment banker, DeRosa brings an understanding of capital markets that few others at Rouse possess, company officials and analysts said. That's important at a company that needs to borrow money to pay for mall developments, acquisitions and overhauls.

He also has management experience, including his last position at Deutsche Bank in London, where he helped to oversee at least 100 workers.

While still in Baltimore, DeRosa helped with Deutsche Bank's recruiting effort, giving talks at business schools and reviewing candidates, according to Richard Franyo, a former head of investment banking at Deutsche Bank. That responsibility, Franyo said, was "a big deal" because most any company's success hinges on the hiring of good people.

Franyo said DeRosa had a worldliness about him that made him seem like executive material. "He liked to travel. If you wanted to go to Prague, you could ask him, `Where do I stay or where do I dine?'"

DeRosa does lack experience in retailing and in forging the bonds with anchors and major tenants that are crucial to a mall company. That might mean that his skills at building relationships could be tested.

Analyst David Fick, a managing director at Legg Mason Wood Walker Inc., approved of the first major Rouse transaction in which DeRosa had a hand: the sale of six mediocre-performing shopping malls in exchange for the upscale, high-income-producing Christiana Mall in Delaware. Wall Street will continue watching.

"Initial investor impressions of Tom DeRosa have been generally favorable since he joined the company," Fick said. "As with any new executive, analysts and investors tend to withhold judgment until they see him/her in action. Based on his strong background in investment banking, we think there is no question that he can succeed on the capital markets transaction front.

"The market will likely continue to watch his transition into the real estate business in an operating management role, but we see no reason that he would not also be successful in that regard."

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