REITs rarely make waves with earnings reports, and Retail Opportunity Investment Corp.'s (ROIC -0.77%) results weren't out of the ordinary. The company reported that its funds from operations (FFO) jumped to $22.3 million for the quarter -- a 31% increase from the year-ago period.

Given that REITs grow primarily by issuing stock to expand their portfolios, the per-share FFO improvement was muted. The company reported FFO of $0.23 per diluted share for the quarter, a 9.5% increase year over year, easily covering its $0.17 quarterly dividend.

Looking inside the portfolio
One of the most important parts of the earnings release is tucked away deep in the financial exhibits. Here the company details how its revenue and expenses have changed compared to the year-ago period for all of its shopping centers that have been in the portfolio for at least one year.

This quarter, the company noted that its same-center cash net operating income grew 4.4% year over year due to a 3.5% increase in revenue (mostly due to a 3.8% increase in base rents) and a smaller 1.2% increase in operating expenses. Over time, investors want to see that rental rates and other revenue can grow faster than operating expenses, leading to fatter funds from operation and bigger dividends for shareholders.

The second quarter was slow for new acquisition,s however. The company reported acquiring only one property at a price of $23.1 million, whereas it made $99.2 million worth of deals in the first quarter and $253.6 million in the same period last year. The third quarter appears promising on the acquisition front, as Retail Opportunity has already closed on $71 million of new investments in the third quarter, with another $84.9 million of transactions currently under contract.

Maximizing returns for investors
Ultimately, the primary drivers for most REITs is occupancy and rental rates -- the higher, the better. Occupancy set a new second-quarter high of 97.3%, just slightly lower than the all-time company record of 97.6% in the fourth quarter of 2014. The REIT also reported a massive 9.9% increase in base rent on renewed leases, suggesting that its tenants are willing to pay up to stay in its shopping centers. 

The company held its guidance for FFO at $0.90 to $0.94 per diluted share after previously increasing its guidance in the first quarter of 2015. With releasing rates showing promise, occupancy high, and the pipeline for acquisitions picking up in the third quarter, it seems as though this year will be a stellar one for this shopping center REIT.