Precinct Properties New Zealand, the listed commercial property investor, increased annual profit 13 per cent and lifted its guidance as it shifted its weighting to Auckland, where it sees long-term growth.

Net profit rose to $138.2 million in the 12 months ended June 30, from $122.4 million a year earlier, the Auckland-based company said in a statement. Gross rental revenue fell 14 per cent to $146 million.

Net operating income, an alternate performance measure Precinct uses which excludes non-cash items such as unrealised movements in the value of investment properties, rose 6.6 per cent to $72.8m. Precinct uses its net operating income to determine its dividend payout. It lifted its dividend guidance to 5.6 cents per share for 2017, from 5.4 cents per share in 2016, and gave full-year earnings guidance of 6.2 cents per share from 6.01 cents.

Chief executive Scott Pritchard said the company had ended the year strongly, and developments begun in 2016, which it's invested $968m in with a forecast completion of $1.14 billion, will increase Precinct's weighting to Auckland and improve its long-term earnings outlook.

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"The Auckland city centre office market remains extremely strong with a continuation of historically low vacancy levels," Pritchard said. "The Auckland city centre retail environment continues to strengthen driven by strong demand from a unique blend of international and local retailers, improvement in dining and entertainment precincts and strong growth in tourist numbers. In Wellington, the conclusion of the government's Wellington Accommodation Project will remove uncertainty in the market providing stability."

Commercial Bay, the company's most significant project, is developing well, Pritchard said. The $681m development in downtown Auckland will include a 39-storey waterfront office tower and retail centre. The development will encompass Precinct's four buildings in the surrounding area, which it anticipates will be worth about $1.5b on completion and represent 63 per cent of the property investor's portfolio. Some 60 per cent of the office tower leasing is now complete, with law firm MinterEllisonRuddWatts announcing its intention to move, while H&M is the latest retailer to commit.

"We are delighted with our leasing progress given we are three years from the completion date," Pritchard said.

The shares were unchanged at $1.275, and have gained 2 per cent this year. The stock is rated a 'hold' by an average of six analyst recommendations compiled by Reuters, with a median target price of $1.24.