Update: Related Companies has confirmed Ross will step down as CEO and Blau will take his place. Read about the formal announcement here

University alum Stephen M. Ross, the namesake of the University’s Ross School of Business, said in an event at the Business School on Thursday that he will step down next week as CEO of The Related Companies, the real estate firm he founded. He announced that the company’s president Jeff Blau, also a University alum, will take over as CEO.

Every one of the 499 seats was filled at Blau Auditorium, with students and guests spilling into three of the Business School’s conference rooms, as Ross and Blau lounged in armchairs and fielded questions ranging from job prospects for business graduates to the state of the Miami Dolphins, the NFL team Ross owns.

But, the surprise of the hour-long presentation came in a truly unscripted exchange between Ross and Blau over the future of Related Companies’ management, when Ross said he will leave his position as CEO and will be replaced by Blau.

“I’ll be the first to tell you that next week we’re announcing he’s the CEO and I’m just the chairman — you’ll read about that next week I’m sure,” Ross said. “Just don’t tell the press, with social media it’s going to be all over the place.”

Both Blau and Ross declined to comment after the event when asked about the personnel change. Representatives from Related Companies did not respond to requests for comment.

Ross didn’t say why he is leaving his position, and it’s unclear when an official announcement will be made. (Update: The Related Companies have confirmed the leadership changes in a statement.)

The Related Companies is one of the largest privately-owned real estate firms in the country, best known for developing Time Warner Center, a skyscraper complex in New York City.

Ross, 72, graduated from the University with a bachelor’s of business administration in 1962. In 2004, he donated $100 million to construct the new Business School complex in 2004, after which the University renamed the school in his honor. As of March, his net worth was $3.1 billion, according to Forbes.

“I really have a lot of respect for what’s taught at Michigan, the people here, and what it stands for,” Ross said.

Blau earned a bachelor’s of business administration from the University in 1990 and has also donated significant sums to the Business School. Blau Auditorium is named after him.

Peter Allen, moderator of the event and a lecturer in the Business School, said he connected Ross and Blau after a lecture in 1988. Allen explained that after Ross spoke to his class, he asked to meet with Allen’s best student, and that started the partnership between Ross and Blau.

“What came through loud and clear was their emphasis on passion and quality, both on people and the product they build,” Allen said in an interview after Thursday’s event.

The majority of the questions from students revolved around job prospects, community values and personal reflection for Ross and Blau. One student said he had started three failed businesses and asked the duo about their greatest business shortcoming.

“That story (the three failed businesses) is worth more than your GPA,” Blau responded. “Failure should be viewed as a learning experience,” he added.

Ross advised students to think outside the traditional market to find jobs, citing his own company as an example.

“You have to have the attitude that you don’t want to be where everybody else is,” Ross said. “We’re always looking to be doing things differently.”

Ross also criticized the Obama administration for new regulations during the event, saying the private sector could “out wait” Obama and the 2012 election before investing.

Ross co-hosted a $2,500-per-plate dinner for Republican presidential nominee Mitt Romney in January according to Palm Beach Daily News. However, Ross did not mention Romney by name during the event.

“From a political standpoint, I think if we don’t have a new president, we could have a worldwide recession, just the way things are lined up,” Ross said.

In an interview after the session, Ross said the only surprising topic was the amount of questions he received about the Miami Dolphins. He also expressed uncertainty about the fate of future entrepreneurs as the country goes through a “great change.”

“It’s unfortunate, you like to think you’re leaving it better for the next generation, and that might not be the case,” Ross said.

Business senior Stan Dupuy said he was impressed with Ross and Blau’s answers during the event, but he wasn’t surprised Blau was being promoted to CEO. Dupuy said two years ago in a class visit, Ross had indicated that Blau was being groomed for the position.

“We were pretty much told that Jeff (Blau), having been in the company for 20 years, was really the next in line, and that Steve was forming him to be the next CEO of Related,” Dupuy said.

Business freshman Abhi Satya said he found Ross’s answers thorough and genuine, and saw the stories of his struggles with failure early in his career as motivational.

“He truly inspired all the students by telling us the story of his failures and made himself seem like a real person, like one of us, who came up from being an eager student to one of the most successful businessmen of all time,” Satya said.

This story was updated with more context at 3 p.m. on Sept. 7.

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