The beaten-down stocks of commercial real-estate companies initially got a big boost in response to the government's decision to take over mortgage giants Fannie Mae and Freddie Mac. But that excitement started to quiet after investors began to contemplate the long-term outlook.

Investors had pushed up the stocks of real-estate investment trusts on Friday and Monday as the federal government moved to stabilize the reeling agencies. The Dow Jones Equity REIT Index -- which tracks the stock of 116 REITs -- gained nearly 4.7% from Thursday's close to Monday's after a 10.9% drop in the previous year. But the index retreated by 4.1% on Tuesday as investors started fretting about Fannie and Freddie perhaps scaling back their mortgage portfolios under the government's watch.

The short-lived rebound in REIT stocks came as investors breathed a sigh of relief that Freddie and Fannie -- major purchasers of mortgages and big lenders to the apartment industry -- won't be allowed by the government to fail.

The takeover "certainly provides some support for the credit markets in the short term," Goldman, Sachs & Co. analyst Jay Habermann said in explaining this week's rise in REIT stocks. "But it doesn't remove the longer-term concerns that we have, whether it is debt coming due in the next few years or [economic] conditions continuing to deteriorate."

The takeover appears likely to benefit the handful of REITs specializing in buying mortgage securities guaranteed by the Fannie and Freddie.

But it remains unclear how the move is going to affect multifamily REITs that have heavily depended on Fannie and Freddie for financing over the past year. Indeed, federal authorities have yet to lay out plans as to whether Fannie and Freddie will be broken up, scaled back or allowed to continue in their present form.

The biggest gainers were stocks of residential mortgage REITs, which jumped 13.8% on Friday and Monday after a 26% decline in the previous year. Stocks of apartment company REITs, which borrow heavily from Fannie and Freddie, were up 5.5% over those two days, following a 6.4% drop in the previous year. But they gave back much of their gains on Tuesday, with residential mortgage REITs declining 3.4% and apartment REITs declining by nearly 4.7%.

Among the many measures that the Treasury Department outlined to shore up Fannie, Freddie and the ailing mortgage market is to buy up mortgage-backed securities on the open market. That will help to lift the prices of those securities, which in turn will ease pressure on companies that hold the securities, including mortgage REITS.

Historically, mortgage-backed bonds have been deemed risk-free because of the implicit backing by the U.S. government. But recently, the deepening financial woes of Fannie and Freddie and their uncertain future pushed the value of those securities lower.

The spread -- or difference between yields on those Fannie- and Freddie-guaranteed bonds and those on the benchmark 10-year Treasury -- widened to 2.15 percentage points in mid-August, the widest in 15 years. Now, with the U.S. government making its backing explicit, the spreads have started to narrow, resulting in higher prices on those bonds.

That amounts to a boost for mortgage REITs such as Annaly Capital Management Inc. and Anworth Mortgage Asset Corp., which saw their shares rise 11.6% and 9.1%, respectively, since Friday.

Bose George, an analyst at Keefe, Bruyette & Woods Inc., estimates that Annaly's book value would increase by about 9% as a result.

Less certain is how the changes at Fannie and Freddie will affect about a dozen apartment-company REITs, which have heavily depended on the mortgage firms for financing.

Several analysts view the increase in apartment-REIT stocks since Friday as overdone in light of that uncertainty. Some worry that Fannie and Freddie eventually will look to scale back their lending activities in multifamily housing, making future apartment development difficult. Others note that the apartment industry might lose renters as the government-led firms bolster the single-family housing market by lowering interest rates and helping would-be renters buy homes. That would reduce landlord's ability to raise rents and could even result in lower rents in some markets.

Fannie and Freddie provide funds for the purchase of apartment-rental buildings by purchasing loans from lenders that follow guidelines set by the duo. Over the past year, as private funding sources retreat, their share in the market for multifamily financing has gone up to more than 90% from less than 50%, and that business has become the sole profit center for the two.

For now, investors in apartment REITs are looking at the optimistic outcomes. Rick Campo, chairman and chief executive of apartment REIT Camden Property Trust, Houston, predicts that Fannie and Freddie will continue to buy apartment loans because that line of business has fared well for them. For example, Fannie's delinquency rate for multifamily loans is 0.11% in comparison to its 1.36% rate for single-family loans. Multifamily loans are "one of the better performing assets in their portfolio," he said. "So why would the government want to shoot that golden goose?"

Camden, which owns 70,000 apartment units, counts more than $1 billion of its $2.8 billion in debt as held by Fannie or Freddie.

Write to Kris Hudson at kris.hudson@wsj.com and Lingling Wei at lingling.wei@dowjones.com

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