How a student accommodation start-up became a £4bn FTSE 100 company

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0:41We look forward to seeing you there. I've just finished rereading Walter Isaacson's biography of Steve Jobs, a must-read book for anyone interested in business or indeed modern history. In that book, it's clear that one of Steve Jobs' many gifts was spotting where there was strong demand for something, where the existing products that were available could be so much better. Think music players or phones or tablet computers. This approach could actually be applied to many products and many services. Thousands of miles away from Silicon Valley and Apple, in Bristol in the United Kingdom, it also happened.

1:18Not with tech, but with student accommodation. In 1991, Unite was founded in Bristol. The business aims to offer better quality accommodation for students than the mix of university halls and random rental houses that were currently available. It's gone pretty well for Unite since then. Today, Unite is one of the biggest companies in the UK. It's a foot to 100 company valued at more than£4 billion. This is its story.

1:55I'm Graeme Roddick, and this is the Business Leader Podcast, where we look at the stories and strategies behind modern businesses. In this episode, I speak to Joe Lister, the chief executive of Unite Group, about the story behind the student accommodation provider. Lister joined Unite in 2002 and was employee number 112. Today, Unite employs more than 2 ,000 people. Lister became finance director in 2008 and then in January 2024 he became chief executive.

2:29Yeah so the business was founded in Bristol in 1991 by a guy called Nick Porter. He was young, he was in his early 20s from a property background. He'd seen the growing number of students coming into Bristol and he decided that he would convert an old office building into a student accommodation and he did one building after the next after the next he would always sell or pre sell the rooms to university university west of england back then he floated the business in 1999 on aim and then on the full listing in 2001 really with a growth very ambitious growth story so capital hungary property developer and the the timing coincided with the rapid growth in higher education and universities and so the business grew very quickly as a property development business i think then in that time sort of between 2000 and 2007-8 it was we need to now develop an operating platform to allow us to to manage the buildings that we we develop and yeah really really that transition from a developer to a property operator alongside happened probably sort of 2005 to 2015 and then it was all about scale how we could scale the business up so a number of big acquisitions and we bought liberty living in 2019 which was about 50 of our size again and that took us up to 70 or thousand 70 or thousand beds would it be fair to say that until unite came along student accommodation in the uk was it was it was mom and pop operators basically it was a mixture of university accommodation for first students and then rent what you can in in cities and towns exactly it didn't exist purpose-built student accommodation you know we call ourselves just didn't exist before unite there was a couple of other smaller players at that time who were both sort of vying with none of them are really around in their current form but you either stayed in first year halls which was owned and operated by the university or you lived in that mom and pop owned terrace housing stock which was most of it built in the 1920s or 30s former social housing which has been subsequently converted into student housing over the years you mentioned that period in 2000 in the 2000s when you added on the operating model was that the key to taking this business from a promising business to a foot 200 company yeah because you know and i think the financial crisis was a moment which really told us something about the model that we had or you know that we were operating in that time which as a property developer you play the swings and the moods of the cycle but we being a fast growth company had laid a pretty high risk funding strategy on top of that but then in the financial crisis that hurt us hard you know we were one of the companies that struggled during the financial crisis we borrowed a lot of money our leverage was too high and what we came out of the financial crisis say we should be a pretty stable income generating compounding income business because of the stability of our you know alignment with our HE sector the stability of universities and demand for accommodation to get that we needed to be really good operators and we needed to be able to convince universities that they should entrust us with their students to come live with us and we should be able to build a reputation with young people that unites a really cool place to live while street university so when you joined as employee number 112 first of all why did you join what attracted you to the business so i was i was a student at bristol university so loved bristol i stayed there to do my accountancy training and there was this little upstart business called unite and we sort of watched it grow as a proper you know as an accountancy advisory firm and then i got a phone call one day so they were looking for a corporate finance manager to help them raise money help them pursue that growth ambition and it just seemed like a interesting growth business which met my skill set which was to raise money and do corporate finance type deals I joined 2002 and having worked for 10 years for Pricewaterhouse which was so say global top five employer i got to unite as you say employee 112 the culture just fitted with me and it was a real lesson that if you find somewhere that meets what you're looking for in a career slightly chaotic it was emerging we didn't have that much data we were we were pioneering it was fast it was make mistakes but also achieve some great things kind of just grabbed me from that moment and that that special culture i think is something which i'm really keen that we've we keep and maintain even though we're now a very different business what is the essence of that special culture i think i think at the heart of it is we work with young people at a really exciting time of their lives and if you ever spend time in our properties particularly at check-in you get this sense of excitement mixed with trepidation and anxiety and it's quite magic actually you see the student arriving usually with mum and dad in tow often a sibling or a granny and the student is sort of you can see them so excited and the parents are so fearful you know anxious about almost handing over their child for the first time and it just sort of that that rubs through the year you're seeing young people exploring developing finding out about themselves I think you combine that with a growth business and one which has as I say pioneered it's developed it's created something which doesn't exist those two things have created some magic which is ultimately the essence of what what makes us special am I right in thinking that you encourage staff to be at check-in you get people to help around the different universities at check-in absolutely and all the management team will be there for two or three days because you feel it and you sense it we we ask all of our teams we encourage all of our teams to go out and be there two days over the summer period it's our busiest time of the year it just reminds you what we do you know and it's very easy to sit in an office and look at all the tables and the data the numbers but it's only when you see and feel that emotion that you sort of get that sense of who we're who we're about so that employing 112 you'd come from from the world of accounting corporate finance you've been in a big business effectively what was it like at Unite compared to what you were expecting?

9:08It was chaotic there was no information you had to hunt for information things happen much more quickly but the bit that I loved was that I felt I could make a difference I was working in a corporate finance team in the Bristol office of Pricewaterhouse and probably one of 20 ,000 employees whereas say I was one of 112 I had access to the senior leadership team I was being asked to do things I was being asked to take responsibility yeah so it was just completely different and things get done or got done because of relationships so you had to build good relationships quickly and link the dots. When I was doing my research about Joe Lister before speaking to him a couple of things really stood out he'd previously said he was a farmer at heart and he hadn't had much interest in becoming a chief executive so how has he ended up becoming the boss of a FTSE 100 company?

10:02Well, leadership, it seems, has had a habit of finding him. Business and farming were in my family and in my blood. So both my grandfathers were farmers, but my dad was a businessman. He ran an engineering business. He was sent to the US and took his whole family to live in Kansas City for five years to set up a factory. And he was the managing director of a engineering business and so that concept of going into business was sort of fairly clear well it was either farming or business and when I took a year off and went to Australia and I was shearing sheep and driving a big cotton picker and I rang my dad up and said I'm not coming home because I was earning a thousand pounds a week in Australia and he said you are coming home Joe and I sort of tried to be the rebellious teenager but it didn't last very long so you know I came back but I think probably in commerce and business was was in my blood and from those conversations and the way we grew up.

11:00Was being a chief executive something that you're interested in? It's never been a burning ambition of mine I talked to the team in fact I'm the youngest of three boys so I'm happy to play a supporting role in in my family but I've always been very competitive with them I've tried to keep up with my brothers academically sporty in whatever socially but happy to play a number two or number three role and so the cfo role i know i didn't go into it going i've got a big ceo but i think when the opportunity started to emerge and i could start to see oh this might happen i went oh i do want to do that so that transition was quite slow for me but once i saw and particularly being here at unite with a company who I have a very strong kind of emotional attachment to I felt this is something I do I do really want to do and want to have a go for Am I right in thinking that you mentioned being competitive that you were captains of a lot of sports teams when you were younger so although you're happy playing number two or three also leadership has had a way of finding you Yeah and I think the analogy I use and think about there is I was happy to be captain when I deserved it I've been playing in lots of sports teams when there's been someone who's just clearly happy to captain, even if they don't necessarily have to be one of the strongest or most experienced on the pitch.

12:20And I think that it's that sense of maybe it's imposter syndrome, you might call it, but I didn't want to ever have that sense of I'm not good enough. So having that feeling on the sports pitch or at Unite, I absolutely feel I'm good enough, I'm worthy, I've got the scars, and I feel I've got the experience to be able to lead this organisation and to do it better than anybody else can at the moment. After more than 20 years with Unite, including nearly 16 as finance director, Lister became chief executive in January 2024, as I mentioned at the start of this episode. So how did he feel about that transition to the CEO role and how did he approach the job?

13:00I had pretty much a dream handover, I'd say, and lead into the role. Really supportive chair, previous chief exec, Richard Smith was very helpful in supporting that transition I worked with a mentor and a coach to sort of think about how I needed to shift in terms of my leadership to take on that role and I think the one of the key things that I was keen to do was to create a team environment at the top level I think previous chief execs here we've had teams but the people have been probably more able to directly control the teams and the organization and that's just not my style i need to be able to work through others i don't have the energy emotional connection or that overview to control everything so building a team where it's high performing i've got high levels of trust we can challenge each other such that it really does feel like it's a team that's running this business and from my own kind of way in which i operate i know i operate best when i've got a very clear set of accountabilities clear set of objectives and i'm kind of left to get on with it being checked into from time to time and that's the way i've tried to set my team up in order to then say that i'm only doing what only i can do it's been a sort of mantra that i developed through that from that initial coaching so i'm not getting involved in stuff that I don't need to now occasionally when things go wrong you've got to deep down into it but generally I'll try and stay out of it and then trust my team to be coming to me when there's stuff they want to share with me or there's decisions or something isn't going the way that we we thought it would be was that a hard thing to adapt to not for me no I'm I my wife says I'm a great delegator so she probably you know I'm happy to kind of if I've got high trust high confidence that i'm very happy to let things go so i'm not someone who holds things too tight um so yeah doing that in this environment has been okay high trust obviously means having people around you you can trust so i have a follow-up question to that i guess is you know what are you looking for in the in the people around you you obviously took on ceo and you knew the team around you very well what is it you look for in those people who are reporting into you i think at the heart of it it's the ability to you know a similar mindset that you've got to build good teams around you too but you know we are operating and it's it's easy to forget that we're a footsie hundred business so we are we're a big business now and with that comes real responsibility but also scale complexity and challenge and i don't think people can generally do anything or any of their jobs on their own i've just been out to a couple of our properties in east london and it's exactly the same at that level we've got a general manager jody she's looking after five properties but she needs a team she's got a team of 50 she's got to get that team functioning to make those five properties looking after 5 000 students absolutely singing to make her successful and so i think that is probably the ability to to understand what your role is as a leader build the teams around you and then you know set them with very clear objectives set them with very clear targets and then help them to deliver that so on that point about targets is it absolutely vital everyone knows their target or kpi they're working towards yeah i think that's part of part of you know my role as ceo is set a strategy and we do that as an exec team and work with the board to get that signed off and then sitting behind that is what are the targets that we're going for on a two and a five year basis and what are the objectives that sit beneath that and that's not just financial or you know numbers that's across all of our stakeholders so we have a very clear set of targets that we have for all of our stakeholders that the team know and we're driving driving to deliver what surprised you about being chief executive i think it's the pace and the variety so just you know going from a meeting like this to having to deal with a complaint from a parent that something isn't working in their room through to meeting with a politician and that can all be in the same day and it's just that variety and being moving around and yeah there's always something there's always something that's kind of coming in or dropping so finding that and making sure that i do find that time to to think and to talk to people and to do the other bits because it'd be very easy to get distracted into the the latest thing that kind of is urgent and drops into your time who have you looked to learn from um working with a mentor and a coach so a lot of reflection uh with the coach and and a bit more direction from a mentor previous CEO of a number of different businesses both been very helpful in you know just course correcting encouraging me where to look where to go yeah those are the probably the key areas tell me about the coaching mentor because it strikes me it's becoming more and more common among footsie chief executives to seek to both was the mentor someone you sought out something that happened naturally someone I sought out yeah it was a well I wanted a mentoring relationship someone who had been in a CEO position who was then prepared to share guidance and experience and work with me I wanted someone who'd worked in a customer facing business and also with an asset backing an asset kind of so personal I work with is sort of work with from a hotel background but yeah just very experienced kind of helped me around the creation of a framework for strategy and leadership and this notion of doing only what i only i can do that was sort of part with the coach as well but um yeah definitely sort of that ability to to focus in on where i should be thinking and where i should be operating and what's the different role of a coach the coach is a bit more around self-reflection, reflection of conversations around team and getting into things which might be not here and a space which I can then really think and dive into some of those things that I'm worried about and talk about in a way that I can't talk about with anybody else.

19:43So yeah, that's a little bit different, whereas the mentoring is more directional about this is what I've tried in the past. You might want to try and think about this. I would encourage you to do that. It's clear that culture has been a big part of Unite Group's success. For a start, look at the fact that Joe Lister has been here for more than 20 years. Walking into their office, it doesn't actually feel that dissimilar an atmosphere to walking into a university. We are in the West End of London, but this is a pretty small office, and it's young and vibrant. Yeah, I think it's about being clear that that is something that we're striving for.

20:21So we do talk about that as a team. I think the most important thing is the ability to have straightforward conversations with people and provide feedback, good and bad, on a regular basis. So you know whether you're meeting the standards. So you've got your targets and what you're trying to achieve. We've also got our values and the way we want to be. So how you deliver, not just what you deliver. and then it's the ability to have those proper conversations to say you're doing these things well you need to improve on these areas in order for us to meet those objectives of what high performance is and creating that culture where you can do that safely openly and you're not going to get shouted at is really important to me i've heard you talk about psychological safety before in a business why does it matter so much because without it then you won't get that honest feedback um you know one of the things i do work quite hard at and actually comes from her from a personal and almost a frustration perspective is that i've got a badge that says ceo on it people speak to me differently just because i've got that badge even from when i had a cfo badge people look to you differently people speak to you differently i joke and we've got open plan here office where you are today people don't come and sit next to me you know and that sort of it really upsets me you know why i'm still joe you know and um i've got three kids and they're grown up but they they tell me straight every day you're just joe you're just dad you know and that's how i feel it should be at work so psychological safety is everybody should feel comfortable coming to it next to me such that when you're in a meeting when you have got something difficult to say it's said it's not hidden it doesn't go unsaid it's not so oh we can't tell joe about that we're gonna go and fix it because that's when things go wrong and you haven't got that ability to to feel like you can share things that need to be shared how do you make sure you have it in the business personally it's and for our team it's about role modeling so we need to be out there we need to be open we need to you know be the ones that are demonstrating that you need to have regularly performance conversations you need to be asking for feedback you need to then not get upset when someone gives you some feedback you might not you might not like ultimately it's us as a team as a senior leadership team agreeing it's something that we're trying to create and then role modeling it that you know asking our team to do the same and spreading that culture down through the organization is it something you're constantly thinking about and worrying about this the this issue that you just know there was if we don't tell joe and there's a problem that someone somewhere in the business isn't coming to light look we're a business that's performed well and we've got a great track record of performance so it's not something i'd constantly worry about but i think from a culture and a what trying to create in a leadership environment then it's definitely on our agenda how we can shift that forward people often say we're a very nice organization to work in and it's a really open and when people join us they say so it's such a wonderful nice organization it's so welcoming but i think we need an edge to that as well so it's not just about being fluffy nice welcoming which you know we want to be but you also have to have an edge when things aren't going so well you can have a grown-up conversation about that as well to make sure you're getting the balance of the two things am i right in thinking the kids help keep you grounded by calling you ce joe whenever they feel like you yeah that was a new nickname that i got so ce joe is uh if ever i'm sort of overstepping the mark at home then now they they roll that one out now you mentioned this business has been fast moving so i just want to ask you about the future now um what are the short-term and long-term priorities short term we still are a business that's growing and we want to maintain that growth one of the new areas of growth is working with universities in a slightly different way so we see a big opportunity that universities own about 300 000 of their own beds it's about 30 billion of real estate our belief is that they don't need to own those buildings we've demonstrated that we can provide the accommodation and the services and the student support that goes with those as effectively if not better than a lot of universities so we're running 70 000 beds the biggest university's got 5 000 beds so the scale and our systems and our peoples and our processes are just that much sharper so the notion of working with universities to effectively run that with them or for them and we see doing that in joint venture particularly where it is on their campuses is a really exciting opportunity we've created two of these joint ventures one with newcastle university one with manchester metropolitan and we feel that there's a great opportunity to continue and rolling out and extending that as a growth agenda for us as a business and looking longer term what do you think is sort of the key opportunities both both unite and for how this sector may change yeah i think that the way in which young people are living students and young people are living is sort of merging you know the housing crisis that we have in this country needs a variety of solutions to fix it and we think we can be one part of that we are skilled at developing large-scale residential properties and then running those properties we believe that we will see and with the emergence of co-living private rented built to rent it's all merging the way in which young people are living and we've got a role to play within that sphere to provide housing for for young people so i think longer term we see that as a aspiration and a way in which we can we can really sort of contribute and grow so that's the market when people leave university they go let's say they come to london to live for the first time looking for somewhere to live they maybe end up living with friends certainly what i did you end up in a similar sort of market that that's the market yeah but even so i'd say the 70 of our business maybe 80 is first years so we are a first year product really it's where you go where you find your friends most uk domestic students will then go and live in that private housing and they still see that there's an element of independence it's a rite of passage there's the excitement of having your own front door but we're seeing a growing opportunity that actually with the quality of that accommodation being mixed at best with a lot of those landlords choosing to leave the market with increasing regulation and increasing pressures on those landlords that actually developing a product that uk students domestic students want to live in which provides some of that greater flexibility greater independence it might be smaller flat sizes smaller building sizes such people still feel they have that sense of independence and growing up and they're not got a you know highly branded building with 24 7 support that's almost step one so i don't think we need to sort of jump straight to the young professionals now we we still see that that is going to be an opportunity but sort of that as i say living in that way to then living as a young professional it's not that much different so listen to what you're saying that you barely scratch the surface potentially of the market here have you exactly we've got 70 000 beds there's a million students who live in the mom and pop owned terrace houses so we've got seven percent of that market and you know why why again if my belief is we should be able to offer something which is as least as good at if not better than what they get from living in those those houses now talked about my kids three of my kids none of them have lived in purpose-built accommodation in years two and three and i talk to them a lot about it what would it take what would in me and when we start to talk about some of our concepts they actually get quite excited about that actually sounds quite cool that might be something i could see myself doing in a in a different world for a different life so yeah i think there's there's loads for us to go out there so you had that you then had the university accommodation that they own themselves you know there's still loads for us to go out what's the biggest barrier to your growth you know we're a capital constrained business you know we even though we're a big business you know we need to be able to demonstrate that we can generate really sensible and good returns such that we can attract that capital and i think that's number one i think then number two will be those universities and it takes time to to create those opportunities with universities and that is a good thing and a bad thing you know i think that we are in a fairly unique position because of our reputation in the sector the way that we've operated over time and you know the fact that universities want to be absolutely certain if they're signing a hundred year deal with a private company that it's someone that's got that reputation that they want to work with in that way and you know when I in both those joint ventures we've had to sort of really over index and demonstrate to the boards of those universities that we're here for the long term that you know we do take our reputation very very seriously and we can prove that in the way that we've responded to things in the past

29:52you've been listening to the business leader podcast with me graham roddick our producer is Anushka Tate. If you enjoyed this episode, then please subscribe to the Business Leader Podcast on Apple Podcasts, Spotify, or wherever you get your podcasts. And that will make sure you get updates whenever new episodes go live.

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