(Bloomberg) -- RioCan Real Estate Investment Trust will report one of its best results ever for tenant occupancy in the third quarter, its chairman said, as Canadian consumers return to physical stores with Covid-19 restrictions removed.  

“We’re finding that bricks-and-mortar retail are actually better in many ways than they were before the pandemic,” RioCan Chairman Ed Sonshine said in an interview. “Third-quarter numbers aren’t out there yet, but I know they will be pretty close, if not equal to, our all-time best as far as tenant occupancy.” 

Rents are “going up nicely,” and demand has been helped by some retailers seeking more space to hold additional inventory because of supply-chain problems, Sonshine said. 

RioCan is the second-largest publicly traded owner of retail real estate in Canada by stock market value. It has about 200 properties, mostly in Canada’s six largest cities, with about 36 million square feet of net leasable area as of June 30. 

Like other retail property owners, RioCan was hit hard by the Covid-19 outbreak as retail stores, movie theaters and restaurants sought rent holidays or vacated space. Canadian provinces imposed longer and tougher restrictions than most US states did; Quebec even established a nightly curfew that lasted for months to try to limit transmission of the virus. RioCan’s “in-place occupancy” rate fell below 95% in 2020, but rose to 96.2% in the second quarter of this year, just below where it was before the pandemic began. 

Sonshine was RioCan’s chief executive officer when Covid hit, though he was already planning to hand the role over to Jonathan Gitlin, who became CEO in April 2021. 

“Arguably, I retired a year too late. That first year of the pandemic, when it hit in March 2020, I think for the next nine, 10 months I’d never worked as hard in many years,” said Sonshine, who was honored this week with a lifetime achievement award by the Canadian Chamber of Commerce. “I had like eight, 10 meetings every day. And they weren’t pleasant.”

RioCan used the opportunity to renegotiate some agreements with tenants, offering rent breaks in return for the flexibility to end leases early. The company is in the midst of a strategic plan to develop residential towers on some of its sites, though 90% of its gross rent still comes from retail properties. 

“You wouldn’t know it from the stock price, but I’m pretty optimistic about next year,” Sonshine said. RioCan has fallen 19% this year, compared with a 28% drop for the S&P/TSX Capped Real Estate Investment Trusts Index. 

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