The Landsec share price has now fallen by 35%. Time to buy this FTSE 100 5% yielder?

Roland Head asks if Land Securities Group plc (LON:LAND) is the best value buy in the FTSE 100 (INDEXFTSE:UKX).

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Will you be heading to the shops on Black Friday, or will you go shopping online? It’s a question that matters to Landsec (LSE: LAND) as this FTSE 100 real estate investment trust is one of the largest retail landlords in the UK. Properties owned by the group include Bluewater in Kent and Lakeside at Thurrock.

Empty units are a common sight on many high streets, but Landsec’s pitch to investors is that the quality of its prime retail space means retailers will continue to demand space.

So far, the firm seems to have been right. During the first half of this year, the group’s revenue rose by 10.3% to £224m, while pre-tax profit rose by 23% to £42m.

Adjusted earnings rose by 17.9% to 30.3p per share during the six-month period, while the interim dividend will increase by 14.7% to 22.6p per share.

The only performance metric that didn’t rise was the valuation of the group’s properties, which fell by £188m or 1.4%. This reduced the group’s net asset value to 1,385p per share.

The modest fall masked a larger drop in the value of the group’s retail property. The value of Landsec’s retail parks fell by 4.5%, while shopping centres were down 3.2%. Even Central London shops got hit, losing 2.7% of their value.

The only properties that rose in value were the firm’s London office blocks.

Is it too soon to buy?

At pixel time, Landsec shares were trading at about 860p. That means the stock is priced at a 37% discount to book value. When a good quality property stock like this trades at a big discount to book value, it’s often a buying opportunity.

The problem here is that many investors — including me — think that the value of Landsec’s retail property is likely to keep falling. Although the 5.4% dividend yield looks safe enough to me, I don’t see any rush to buy the shares at the moment. I plan to wait a little longer before making a decision.

One stock I’m watching closely

One company that is on my shopping list is FTSE 100 advertising group WPP (LSE: WPP).

The marketing giant’s shares fell by 15% at the end of October after new boss Mark Read issued a downbeat third-quarter trading statement. WPP stock has now fallen by about 35% so far this year, but I’m starting to think that there might be some value on offer.

Ad spending may be shifting online, but there’s still a need for skilled marketers to develop and run ad campaigns. Managing the data that’s used in online marketing is also a complex activity requiring specialist skills.

Although my previous call on this stock was too soon, I remain convinced that there’s a lot of value in the sprawling empire created by Sir Martin Sorrell.

I’m very tempted

Profit forecasts for the current year have been cut by 17% over the last 12 months. Earnings are also expected to edge lower next year. However, I think that much of this bad news is already reflected in WPP’s share price.

The group’s stock now trades on just 7.9 times 2018 forecast earnings, with a dividend yield of 7%. Having crunched the numbers, I think the shares could offer good value. I’d rate WPP as a contrarian buy.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Roland Head has no position in any of the shares mentioned. The Motley Fool UK has recommended Landsec. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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