With the retail sector struggling, value investor Bill Miller IV sees an opportunity in shopping centers.
"We think that the actual resistance to the retail downturns is much higher than what the stocks are pricing in," Miller told CNBC's "Closing Bell" on Friday.
Earlier this week, he announced that Bill Miller's Income Strategy investment fund bought real estate investment trusts for Washington Prime and CBL & Associates in the second quarter.
Miller manages the $116 million fund with his father, who rose to prominence through Legg Mason Capital Management before founding Miller Value Partners.
"People have just thrown the baby out with the bathwater here and they're selling everything retail-oriented. They're selling it on a narrative and now the valuations are so far out of whack with what's actually going to occur. We think we can put patient money to work here and sit around for a while," Miller noted.
Washington Prime and CBL & Associates have fallen sharply over the last year, down 34 percent and 31 percent, respectively.
Miller told CNBC that the dividend yield for Washington Prime Group is 12 percent and it has a free cash flow yield of 18 percent.
"That means the dividend is covered 50 percent by free cash flow," he said.
That also allows the company to use excess capital to turn its properties into places where people want to go, he added.
The firm made the move despite the threat from e-commerce giant Amazon, which Miller acknowledged is changing the way people shop and behave.
"That's why a lot of these actively managed properties … are shifting to more restaurants, experiences, places that people want to congregate," he said.
—CNBC's Evelyn Cheng contributed to this report.