Investors can sometimes get caught up in short-term volatility in equity price movements. But the savvy investor knows that the best investment opportunities often present themselves when a stock's share price is far removed from its fundamentals and marred by pessimism.

Down 31% and 37% so far this year, respectively, Digital Realty Trust (DLR 2.58%) and Simon Property Group (SPG 1.55%) are two real estate investment trusts (REITs) whose fundamentals are stronger than let on by their recent performance. For context, this is much worse than the S&P 500 index's 17% decline during that time. Let's dig into the case for each REIT. 

1. Digital Realty Trust

What innovation of the last 70 years has revolutionized the world more than any other? I would argue that the answer is mainframes, which are now known as data centers. Without data centers, the modern economy as we know it wouldn't exist. 

Everything from online shopping to checking emails to browsing the web to streaming video depends on the ability of data centers to connect devices, process data, and store it. And everyone has Digital Realty's 300-plus dependable data centers throughout the world to thank for steady access to the web and all its amenities. 

As the prevalence of e-commerce and video streaming continues to rise around the world, so too will the demand for data centers. This is why the market research firm Allied Market Research forecasts the global data center industry will expand at 10.5% each year from $187.4 billion in 2020 to $517.2 billion by 2030. 

Because Digital Realty is already a large player in the data center market, the law of large numbers dictates that its growth will likely lag behind the industry as a whole. However, it's reasonable to expect that the company's core funds from operations (FFO) per share will grow at least in the mid- to upper-single digits annually for the foreseeable future.

Digital Realty offers passive income investors a 4% dividend yield, which is far above the S&P 500 index's 1.6% yield. Given that the dividend payout ratio will come in at 71.8% in 2022, the dividend is safe and should grow as fast as core FFO per share. 

And due to the massive drop in Digital Realty's share price in recent months, the stock's valuation has become intriguing. Digital Realty trades at a forward price-to-core-FFO-per-share ratio of just 17.9, which is a bargain for a leader in a promising industry, in my opinion. 

Two people shop at a mall during the COVID-19 pandemic.

Image source: Getty Images.

2. Simon Property Group

What's the first word that comes to your mind when thinking about malls in this supposed golden age of e-commerce? Outdated? Perhaps prehistoric? The largest mall owner in the world, known as Simon Property Group, has been working to dispel these preconceived notions. As of June, the REIT either wholly owned or partially owned stakes in more than 200 shopping, dining, and mixed-use properties throughout the U.S., Europe, and Asia.

Malls have had to either adapt to the current environment or eventually succumb to it. Malls can't compete with e-commerce without focusing on providing a unique experience for the consumer. While consumers can purchase products online from the tremendous convenience of the comfort of their own homes, the novelty of top-notch malls is still unmatched.

Simon Property Group saw the writing on the wall years ago that it would have to enhance the consumer experience to both survive and thrive. This is why the company has proactively added interesting features to its malls in recent years, such as food courts, restaurants, and aquariums.

At first glance, Simon Property Group's 6.9% dividend yield seems like a yield trap: Too good to be true. But with the dividend payout ratio set to clock in around 59% in 2022, Simon Property Group is definitively not a yield trap. And yield-oriented investors can scoop up shares of the REIT at a forward price-to-FFO-per-share ratio of merely 8.6.