The commercial property company about to develop New Zealand's largest new waterfront project got a cautious review after its half-year result out yesterday.

Jeremy Simpson of Forsyth Barr analysed Precinct Properties - which in June will start construction work on Auckland's Commercial Bay, its $681 million 39-level Downtown project between Lower Albert St, Quay St, Queen Elizabeth Square and Customs Street West.

Simpson said he was taking "a more cautious view" on revenue growth from the business.

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Precinct yesterday reported net property income down $8.4 million and net profit after tax and unrealised gains up only $3.2 million in the six months to December 2015, compared to the previous year.

"Precinct has reported a soft result with earnings per share well back on the previous corresponding period as it moves through a transitional period ahead of a major development phase.

"We have taken a more cautious view on near-term revenue growth which has dropped our price target slightly to $1.22. Our rating is neutral," Simpson said.

"1H16 was soft given $274 million of asset sales and the FY15 capital-raising as it positions for significant development. Distributable profit (up +1 per cent) was below expectations with revenue down 13 per cent due to asset sales and increased vacancy at Downtown and in Wellington.

"The 2.7 cents per share dividend was flat and FY16 guidance remains flat at 5.4 cents per share, in line with forecasts, as is earnings per share guidance of 6 cents per share.

"The NTA is steady at $1.11 with no interim revaluation. Occupancy is 97 per cent and the weighted average lease term is 4.7 years or 5.8 years including new development leasing. The balance sheet remains well positioned to fund its developments with only 13 per cent gearing," he said, noting what he called a management fee surprise.

"Leasing fees are falling and development fees increasing just as Precinct steps up its development activity, from 2.5 per cent of development cost to 4 per cent (a 3 per cent base fee and 1 per cent success fee).

"The development cost is around $450m for Commercial Bay and excludes land/funding versus a total cost of $680m. Precinct stated that development fees are in the order of 4 per cent in Australia. Fee leakage remains a risk with externally managed vehicles; however Precinct has an incentive management fee linked to outperforming the sector which aligns management with investors," Simpson said.

Precinct said yesterday Commercial Bay would have about 100 new shops, a laneway over three levels, 130m of Queen St retail space, all topped by the PwC Tower which is 52 per cent pre-leased before demolition starts.

Fletcher Construction will build the tower, where work will start in June - with the shops being finished in October 2018 and the office space by June 2019.