Aug. 29 (Bloomberg) -- Westfield Group, the world's biggest shopping center owner by market value, said first-half profit rose 7.4 percent as rents increased at malls across Australia, the U.S. and New Zealand.

Net operating income rose to A$844 million ($687 million) in the six months ended June 30, from A$804.3 million a year earlier, the Sydney-based company said in a statement today. The figure excludes property revaluations and currency adjustments.

Westfield, with malls in 13 states including California, Florida and Nebraska, joined rivals Simon Property Group Inc. and General Growth Properties Inc. in lifting U.S. rents during the past year, as retail sales gained in the world's largest economy. Managing Director Peter Lowy may sell more stakes in some of Westfield's 119 malls worldwide after using six such deals this year to reduce debt costs.

``Assuming the consumer doesn't stop spending, I think the company will continue to generate mediocre returns in the short term and better returns in the longer term,'' said Scott Marshall, an analyst at Shaw Stockbroking in Sydney who rates Westfield ``outperform.''

Lowy is tapping equity in some of the A$62 billion of retail centers Westfield manages as debt costs rise amid a global credit squeeze and after Australia's central bank raised interest rates by 1 percentage point in the past 15 months.

``In recent high volatility in global debt and equity markets, Westfield continues to deliver strong performance,'' Chairman Frank Lowy, Australia's second-richest man, said today on a conference call.

Paying Down Debt

Net debt fell to 36.3 percent of assets as of June 30, from 38.4 percent six months earlier, and is set to drop to 30 percent after a A$3 billion share sale completed after the half ended.

The company yesterday sold half of the Doncaster Mall in Melbourne, capping $7.5 billion of securities and asset sales in eight months to fund expansion of the world's biggest portfolio of shopping centers. Westfield has more than A$14 billion of projects planned or already under construction.

A unit of Jones Lang LaSalle Inc., the world's second- largest commercial real estate broker, will invest A$738 million to help redevelop Doncaster by the end of 2008.

The Doncaster sale enables Westfield to raise funds at a cost of about 4.7 percent that can be used to pay down debt that costs more than 6 percent, Simon Scott, an analyst at Goldman Sachs JBWere Ltd. in Sydney, wrote yesterday in a note to clients.

Westfield shares fell 2.3 percent to A$20.51 as of 3:21 p.m. in Sydney. The stock has declined 2.3 percent this year, compared with a 7.3 percent advance by the benchmark S&P/ASX 200 Index.

Property Income

Net property income from Australian and New Zealand malls totaled A$604 million, up from A$592 million a year earlier, bolstered by a 5.4 percent increase in average rents.

In the U.S., income rose $6 million to $466 million, as rents increased 5.2 percent. U.S. centers such as the 1-million- square-foot Galleria at Roseville in Placer County, California, generate about 46 percent of Westfield's revenue, excluding gains from property revaluations.

Westfield's projects under development include its 1 billion pound ($2 billion) share in the development of White City, London's biggest shopping mall. The center is expected to open in the second half of 2008.

Westfield's net income fell to A$1.97 billion, or 110.57 cents a share, from A$3.4 billion, or 191.14 cents, as property revaluations declined.

To contact the reporter on this story: Laura Cochrane in Melbourne lcochrane3@bloomberg.net.

Last Updated: August 29, 2007 01:23 EDT