FORM 10-Q
                     SECURITIES AND EXCHANGE COMMISSION
                           WASHINGTON, D.C. 20549


(X)   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

(   ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

                For the quarterly period ended June 30, 1998

                  Commission File Number     001-13937


                          ANTHRACITE CAPITAL, INC.
           (Exact name of registrant as specified in its charter)


           Maryland                               13-3978906
    (State or other jurisdiction of            (I.R.S. Employer
    incorporation or organization)             Identification No.)

  345 Park Avenue, New York, New York                   10154
  (Address of principal executive offices)             (Zip Code)
               

    (Registrant's telephone number including area code): (212) 409-3333

                               NOT APPLICABLE
          (Former name, former address, and former fiscal year if
                         changed since last report)

      Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.

                              Yes X       No

      As of August 12, 1998, 20,232,098 shares of voting common stock
($.001 par value) were outstanding.



                          ANTHRACITE CAPITAL, INC.
                                 FORM 10-Q
                                   INDEX

PART I - FINANCIAL INFORMATION                                            Page

Item 1.  Interim Financial Statements .......................................3

         Statement of Financial Condition
         At June 30, 1998 (Unaudited)........................................3

         Statements of Operations
         For the Three Months Ended June 30, 1998 and
         For the Period March 24, 1998 (Commencement of Operations)
         Through June 30, 1998 (Unaudited)...................................4

         Statement of Changes in Stockholders' Equity
         For the Period March 24, 1998 (Commencement of Operations)
         Through June 30, 1998 (Unaudited)...................................5

         Statement of Cash Flows
         For the Period March 24, 1998 (Commencement of Operations)
         Through June 30, 1998 (Unaudited)...................................6

         Notes to Financial Statements.......................................7

Item 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations..............................................17

Part II - OTHER INFORMATION

Item 1.  Legal Proceedings..................................................25

Item 2.  Changes in Securities and Use of Proceeds..........................25

Item 3.  Defaults Upon Senior Securities....................................25

Item 4.  Submission of Matters to a Vote of Security Holders................25

Item 5.  Other Information..................................................25

Item 6.  Exhibits and Reports on Form 8-K...................................26

SIGNATURES



Part I - FINANCIAL INFORMATION
Item 1.  Financial Statements

ANTHRACITE CAPITAL, INC.
STATEMENT OF FINANCIAL CONDITION
JUNE 30, 1998 (UNAUDITED)
(in thousands, except per share amounts)


ASSETS

Securities available for sale, at fair value                    $ 1,046,340

Principal and interest receivable                                    22,868

Other assets                                                            154
                                                                -----------
   Total Assets                                                 $ 1,069,362
                                                                ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:

Reverse repurchase agreements                                  $    699,347

Payable for securities purchased                                     57,733

Dividends payable                                                     5,769

Accrued interest payable                                              3,416

Accrued expenses, payables and other liabilities                      2,791

Contractual commitments at fair value                                 1,032
                                                               ------------
   Total Liabilities                                                770,088
                                                               ------------


Stockholders' Equity:

Preferred stock, par value $0.001 per share; 100,000 shares
   authorized; no shares issued                                           -

Common stock, par value $0.001 per share; 400,000 shares
   authorized; 21,365 shares issued and outstanding                      21

Additional paid-in capital                                          296,921

Accumulated other comprehensive income                                2,547

Retained earnings (distributions in excess of earnings)                (215)
                                                                ------------
   Total Stockholders' Equity                                       299,274
                                                                ------------
Total Liabilities and Stockholders' Equity                      $ 1,069,362
                                                                ===========


The accompanying notes are an integral part of these financial statements.



ANTHRACITE CAPITAL, INC.
STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per share amounts)


                                                                 For the
                                                               Period March
                                                                 24, 1998
                                                              (Commencement
                                              For the Three   of Operations)
                                               Months Ended      Through
                                              June 30, 1998    June 30, 1998
                                              --------------- ---------------

     Interest Income:

        Securities available for sale           $ 10,772        $ 10,890

        Cash and cash equivalents
                                                      56             154
                                                --------        --------
           Total interest income                  10,828          11,044
                                                --------        --------

     Expenses:

        Interest                                   4,379           4,382

        Management fee                               849             870

        Other expenses                               219             238
                                              ----------      ----------
           Total expenses                          5,447           5,490
                                              ----------      ----------

     Net Income                                 $  5,381        $  5,554
                                                ========        ========

     Net income per share:

        Basic                                    $  0.25         $  0.26

        Diluted                                  $  0.25         $  0.26

     Weighted average number of shares
     outstanding:

        Basic                                     21,365          21,365

        Diluted                                   21,370          21,371


The accompanying notes are an integral part of these financial statements.



ANTHRACITE CAPITAL, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD MARCH 24, 1998 (COMMENCEMENT OF OPERATIONS)
THROUGH JUNE 30, 1998 (UNAUDITED)
(in thousands, except per share amounts)

<TABLE>
<CAPTION>

                                                                           Retained    
                                                           Accumulated     Earnings    
                             Common Stock       Additional      Other      (Distribution     Total     
                                                  Paid-     Comprehensive   In Excess    Stockholders'
                           Shares    Amount     In Capital    Income       Of Earnings)      Equity   
                           ------    ------    -----------  -------------  ------------  -------------

<S>                       <C>        <C>      <C>            <C>          <C>           <C>      
Balance at March 24, 
  1998                        13     $        $     200     $      -     $     -       $     200

Issuance of common        
stock                     21,365         21     296,951            -           -         296,972

Net income                     -          -           -            -         173             173

Change in net
unrealized gain on 
securities available
for sale and
contractual commitments        -          -           -            2           -               2
                         --------   -------   ---------     --------    --------       ---------
Balance at March 31,      
1998                      21,378         21     297,151            2         173         297,347
                         -------    -------   ---------     --------    --------       ---------

Net income                     -          -           -            -       5,381           5,381

Dividends declared                                                     
($0.27 per share)              -          -           -            -      (5,769)         (5,769)

Change in net
unrealized gain on   
securities available 
for sale and
contractual commitments        -           -           -      2,545            -           2,545

Cost of Dividend    
Reinvestment and Stock    
Purchase Plan offering         -          -         (30)          -            -             (30)

Redemption of common         
stock                        (13)                  (200)          -            -            (200)
                       ----------   -------   ----------   --------    ---------       ----------
Balance at June 30,         
1998                      21,365       $21     $296,921      $2,547    $    (215)        $299,274
                       ==========   =======   =========    ========   ==========         =========


The accompanying notes are an integral part of these financial statements.

</TABLE>



<TABLE>


ANTHRACITE CAPITAL, INC.
STATEMENT OF CASH FLOWS
FOR THE PERIOD MARCH 24, 1998 (COMMENCEMENT OF OPERATIONS)
THROUGH JUNE 30, 1998 (UNAUDITED)
(IN THOUSANDS)

----------------------------------------------------------------------------

<S>                                                                     <C>  
Cash flows from operating activities:
   Net income                                                           $    5,554

Adjustments to reconcile net income to net cash
provided by operating activities:

         Premium amortization (discount accretion), net                      3,256

         Increase in interest receivable                                   (11,330)

         Increase in other assets                                             (154)

         Increase in accrued interest payable                                3,416

         Increase in accrued expenses, payables and other liabilities        2,791
                                                                        -----------

Net cash provided by operating activities                                    3,533
                                                                        -----------

Cash flows from investing activities:

   Purchase of securities available for sale                            (1,086,518)

   Principal payments received on securities available for sale             11,830

   Proceeds from sales of securities available for sale                     17,133

   Increase in payable for securities purchased                             57,733
                                                                        -----------

Net cash used in investing activities                                     (999,822)
                                                                        -----------

Cash flows from financing activities:

   Increase in net borrowings from reverse repurchase agreements           699,347

   Proceeds from issuance of common stock, net of offering costs           296,972

   Other common stock transactions                                            (230)
                                                                        -----------

Net cash provided by financing activities                                  996,089
                                                                        -----------

Net decrease in cash and cash equivalents                                     (200)

Cash and cash equivalents, beginning of period                                 200
                                                                        ===========

Cash and cash equivalents, end of period                                $        0
                                                                        ===========
Supplemental disclosure of cash flow information:
   Interest paid                                                        $      968
                                                                        ===========

Noncash financing activities:
   Net change in unrealized gain on securities available
     for sale and contractual commitments                               $    2,547
                                                                        ===========

   Dividends declared, not yet paid                                     $    5,769
                                                                        ===========


The accompanying notes are an integral part of these financial statements.

</TABLE>


  ANTHRACITE CAPITAL, INC.
  NOTES TO FINANCIAL STATEMENTS
  (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


  NOTE 1    BASIS OF PRESENTATION

  The accompanying unaudited financial statements have been prepared in
  conformity with the instructions to Form 10-Q and Article 10, Rule 10-01
  of Regulation S-X for interim financial statements. Accordingly, they do
  not include all of the information and footnotes required by generally
  accepted accounting principles ("GAAP") for complete financial
  statements.

  In the opinion of management, the accompanying financial statements
  contain all adjustments, consisting of normal and recurring accruals,
  necessary for a fair presentation of the financial condition of
  Anthracite Capital, Inc. (the "Company") at June 30, 1998, the results of
  its operations for the three months ended June 30, 1998 and for the
  period March 24, 1998 (commencement of operations) through June 30, 1998,
  and the changes in its stockholders' equity and its cash flows for the
  period March 24, 1998 (commencement of operations) through June 30, 1998.
  Operating results for the period ended June 30, 1998 are not necessarily
  indicative of the results that may be expected for any other interim
  periods or the period ended December 31, 1998.

  In preparing the financial statements, management is required to make
  estimates and assumptions that affect the reported amounts of assets and
  liabilities at the dates of the statements of financial condition and
  revenues and expenses for the periods covered. Actual results could
  differ from those estimates and assumptions.

  NOTE 2    ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

  The Company was incorporated in Maryland in November 1997 and commenced
  operations on March 24, 1998. The Company's principal business activity
  is to invest in a diversified portfolio of multifamily, commercial and
  residential mortgage loans, mortgage-backed securities and other real
  estate related assets in the U.S. and non-U.S. markets

  A summary of the Company's significant accounting policies follows:

  SECURITIES AVAILABLE FOR SALE

  Certain U.S. Treasury securities, mortgage-backed securities and
  mortgage-related securities are designated as assets available for sale
  because the Company may dispose of them prior to maturity. Securities
  available for sale are carried at estimated fair value with the net
  unrealized gains or losses reported as a component of accumulated other
  comprehensive income in stockholders' equity. Unrealized losses on
  securities that reflect a decline in value which is other than temporary,
  if any, are charged to earnings. At disposition the realized net gain or
  loss is included in earnings on a specific identification basis. The
  amortization of premiums and accretion of discounts are computed using
  the effective yield method after considering actual and estimated
  prepayment rates, if applicable. Actual prepayment experience is
  periodically reviewed and effective yields are recalculated when
  differences arise between prepayments originally anticipated and amounts
  actually received plus anticipated future prepayments.

  INTEREST RATE SWAP AGREEMENTS

  As part of its asset/liability management activities, the Company enters
  into interest rate swap agreements in order to hedge exposures or modify
  the interest rate characteristics of related items in its statement of
  financial condition. Revenues and expenses from the interest rate swap
  agreements are recognized as a net adjustment to interest expense. During
  the term of the interest rate swap agreements, changes in fair value are
  recognized on the statement of financial condition as contractual
  commitments at fair value and included among assets (if there is a net
  unrealized gain) or among liabilities (if there is an unrealized loss). A
  corresponding amount is included as a component of accumulated other
  comprehensive income in stockholders' equity. In the event that interest
  rate swap agreements are terminated, the associated gain or loss is
  deferred over the remaining term of the agreement, provided that the
  underlying hedged item still exists.

  The Company is exposed to credit loss in the event of nonperformance by
  any other party to the Company's interest rate swap agreements. However,
  the Company does not anticipate nonperformance by any counterparty.

  NET INCOME PER SHARE

  Net income per share is computed in accordance with Statement of
  Financial Accounting Standards ("SFAS") No. 128, Earnings Per Share, and
  is calculated on the basis of the weighted average number of common
  shares outstanding during each period plus the additional dilutive effect
  of common stock equivalents. The dilutive effect of outstanding stock
  options is calculated using the treasury stock method.

  INCOME TAXES

  The Company intends to elect to be taxed as a Real Estate Investment
  Trust ("REIT") and to comply with the provisions of the Internal Revenue
  Code of 1986, as amended, with respect thereto. Accordingly, the Company
  will not be subjected to Federal income tax to the extent of its
  distributions to stockholders and as long as certain asset, income and
  stock ownership tests are met.

  INCOME RECOGNITION

  Income and expenses are recorded on the accrual basis of accounting.

  COMPREHENSIVE INCOME

  SFAS No. 130, Reporting Comprehensive Income, requires the Company to
  classify items of "other comprehensive income", such as unrealized gains
  and losses on securities available for sale, by their nature in a
  financial statement and display the accumulated balance of other
  comprehensive income separately from retained earnings and additional
  paid-in capital in the stockholders' equity section of the statement of
  financial condition. In accordance with SFAS No. 130, cumulative
  unrealized gains and losses on securities available for sale and
  contractual commitments are classified as accumulated other comprehensive
  income in stockholders' equity and current period unrealized gains and
  losses are included as a component of comprehensive income. Comprehensive
  income for the three months ended June 30, 1998 aggregated $7,926 and was
  comprised of net income of $5,381 and the increase in net unrealized gain
  on securities available for sale and contractual commitments of $2,545.
  Comprehensive income for the period March 24, 1998 through June 30, 1998
  aggregated $8,101 and was comprised of net income of $5,554 and the
  increase in net unrealized gain on securities available for sale and
  contractual commitments of $2,547.

  NOTE 3    SECURITIES AVAILABLE FOR SALE

  The Company's securities available for sale are carried at estimated fair
  value. The amortized cost and estimated fair value of securities
  available for sale at June 30, 1998 are summarized as follows:

<TABLE>
<CAPTION>


                                                         Gross        Gross     Estimated
                                           Amortized   Unrealized  Unrealized     Fair
           Security Description               Cost       Gain         Loss       Value
--------------------------------------------------------------------------------------------
<S>                                        <C>          <C>         <C>         <C>   
Commercial mortgage-backed
   securities ("CMBS") interests:
Investment grade rated senior interest                   
   only interests                          $   91,390   $    575    $     31    $      91,934
Non-investment grade rated subordinated       
   interests                                  188,764      3,284         114          191,934
Non-rated subordinated interests               21,738          3         161           21,580
                                           --------------------------------------------------
   Total CMBS interests                       301,892      3,862         306          305,448
                                           --------------------------------------------------
Single-family residential mortgage-backed
   securities ("residential MBS")
   interests:
Agency adjustable rate                        220,614        399          61         220,952
Agency fixed rate                              54,286         66         114          54,238
Agency interest only                           17,504                  1,410          16,094
Investment grade rated private issuer         
   fixed rate                                 386,888        965         179         387,674
                                           -------------------------------------------------
   Total residential MBS interests            679,292      1,430       1,764        678,958
                                           -------------------------------------------------
Agency insured project loans                   28,034        193                     28,227
Investment grade rated asset backed            
   securities                                  14,711        152                     14,863
Non-investment grade rated non-U.S.
   sovereign securities                        18,833         11                     18,844
                                           ================================================
   Total securities available for sale     $1,042,762     $5,648      $2,070     $1,046,340
                                           ================================================

</TABLE>


  The aggregate estimated fair value by underlying credit rating of the
  Company's securities available for sale at June 30, 1998 is as follows:

                              Estimated
        Security Rating       Fair Value    %
   ----------------------------------------------
   Agency, agency insured
       and U.S. Treasury 
       securities             $  319,510   30.5
   AAA                           479,608   45.8
   BBB                            14,864    1.4
   BB+                            31,146    3.0
   BB                             49,317    4.7
   BB-                            36,046    3.4
   B                              65,490    6.3
   B-                             20,903    2.0
   CCC                             7,904    0.8
   Not rated                      21,552    2.1
                              =================
   Total securities
       available for sale     $1,046,340  100.0
                              ===================

  The CMBS interests held by the Company consist of senior interest only
  and subordinated securities collateralized by adjustable and fixed rate
  commercial and multifamily mortgage loans. The residential MBS interests
  held by the Company consist of adjustable rate, fixed rate and interest
  only residential pass-through or mortgage-backed securities
  collateralized by adjustable and fixed rate single-family residential
  mortgage loans. Agency residential MBS were issued by Federal Home Loan
  Mortgage Corporation (FHLMC), Federal National Mortgage Association
  (FNMA) or Government National Mortgage Corporation (GNMA). Private issuer
  residential MBS were issued by entities other than FHLMC, FNMA or GNMA.
  The agency insured project loans held by the Company consist of
  participation interests in mortgage loans guaranteed by the Federal
  Housing Administration (FHA). The asset backed securities held by the
  Company consist of pass-through securities collateralized by manufactured
  housing installment sale contracts. The non-U.S. sovereign securities
  held by the Company consist of unsecured floating rate notes issued by a
  foreign government. The Company's securities available for sale are
  subject to credit, interest rate and/or prepayment risks.

  The yield to maturity on the Company's CMBS interests and residential MBS
  interests depends on, among other things, the rate and timing of
  principal payments (including prepayments, repurchases, defaults and
  liquidations), the pass-through rate and interest rate fluctuations. The
  subordinated CMBS interests owned by the Company provided credit support
  to the more senior interests of the related commercial securitization.
  Cash flow from the mortgages underlying the CMBS interests generally is
  allocated first to the senior interests, with the most senior interest
  having a priority entitlement to cash flow. Then, any remaining cash flow
  is allocated generally among the other CMBS interests in order of their
  relative seniority. To the extent there are defaults and unrecoverable
  losses on the underlying mortgages, resulting in reduced cash flows, the
  most subordinated CMBS interest will bear this loss first. To the extent
  there are losses in excess of the most subordinated interest's stated
  entitlement to principal and interest, then the remaining CMBS interests
  will bear such losses in order of their relative subordination.

  The agency adjustable rate residential MBS held by the Company are
  subject to periodic and lifetime caps that limit the amount such
  securities' interest rates can change during any given period and over
  the life of the loan. At June 30, 1998, the average periodic cap on the
  agency adjustable rate residential MBS was 1.9% per annum and the average
  lifetime cap was equal to 12.3%.

  Agency interest only residential MBS are held primarily to reduce the
  interest rate sensitivity of the Company's portfolio of securities
  available for sale.

  The unamortized net discount on securities available for sale (excluding
  interest only securities) was $90,469 at June 30, 1998. In May 1998,
  $16,750 face amount of U.S. Treasury securities were sold for proceeds
  net of termination costs on the related hedge of $17,133, which equaled
  the approximate amortized cost of such securities.

  NOTE 4    COMMON STOCK

  The Company was initially capitalized with the sale of 13,333 shares of
  common stock on March 5, 1998, for a total of $200. In April 1998, the
  Company redeemed 13,233 of such shares from its initial stockholder at
  the then current market price of $15.0625 per share or approximately $200
  in the aggregate. The redeemed shares were retired.

  The Company received commitments on March 23, 1998 for the purchase, in
  private placements, of 1,365,198 shares of common stock at $13.95 per
  share for a total of $19,045. The sale of these shares was consummated at
  the time of the closing of the Company's initial public offering.

  On March 27, 1998, the Company completed its initial public offering of
  common stock. The Company issued 20,000,000 shares of common stock at a
  price of $15 per share and received proceeds of $279,000, net of
  underwriting discounts and commissions. Offering costs in connection with
  the public offering amounting to $1,073 have been charged against the
  proceeds of the offering.

  In June 1998, the Company registered with the Securities and Exchange
  Commission up to 2,000,000 shares of common stock in connection with a
  new Dividend Reinvestment and Stock Purchase Plan (the "Plan"). The Plan
  allows investors the opportunity to purchase additional shares of the
  Company's common stock through the reinvestment of the Company's
  dividends, optional cash payments and initial cash investments. Offering
  costs in connection with the establishment of the Plan amounting to $30
  have been charged against additional paid-in capital. As of June 30,
  1998, no shares had been issued under the Plan.

  On June 15, 1998, the Company declared dividends to its stockholders
  totaling $5,769 or $0.27 per share. These dividends were paid on July 15,
  1998 to stockholders of record on June 30, 1998. For Federal income tax
  purposes, all dividends paid to date are ordinary income to the Company's
  stockholders.

  NOTE 5    TRANSACTIONS WITH AFFILIATES

  The Company has entered into a Management Agreement (the "Management
  Agreement") with BlackRock Financial Management, Inc. (the "Manager"), a
  majority owned indirect subsidiary of PNC Bank Corp. ("PNC") and the
  employer of certain directors and officers of the Company, under which
  the Manager manages the Company's day-to-day operations, subject to the
  direction and oversight of the Company's Board of Directors. The Company
  will pay the Manager an annual base management fee equal to a percentage
  of the Average Invested Assets of the Company as further defined in the
  Management Agreement. The base management fee is equal to 1% per annum of
  the Average Invested Assets rated less than BB- or not rated, 0.75% of
  Average Invested Assets rated BB- to BB+, and 0.35% of Average Invested
  Assets rated above BB+.

  The Company accrued $849 and $870 in base management fees in accordance
  with the terms of the Management Agreement for the three months ended
  June 30, 1998 and for the period March 24, 1998 through June 30, 1998,
  respectively. The amount payable for base management fees is included in
  accrued expenses, payables and other liabilities in the statement of
  financial condition.

  The Company will also pay the Manager, as incentive compensation, an
  amount equal to 25% of the Funds from Operations of the Company plus
  gains (minus losses) from debt restructuring and sales of property,
  before incentive compensation, in excess of the amount that would produce
  an annualized Return on Equity equal to 3.5% over the Ten-Year U.S.
  Treasury Rate as further defined in the Management Agreement. For
  purposes of the incentive compensation calculation, equity is generally
  defined as proceeds from issuance of common stock before underwriting
  discounts and commissions and other costs of issuance.

  The Company did not accrue for or pay the Manager any incentive
  compensation for the three months ended June 30, 1998 and for the period
  March 24, 1998 through June 30, 1998.

  The Company may also grant stock options to the Manager, directors,
  officers and any key employees of the Company, directors, officers and
  key employees of the Manager and to any other individual or entity
  performing services for the Company. Options granted during the three
  months ended June 30, 1998 and during the period March 24, 1998 through
  June 30, 1998 are disclosed in Note 6.

  The Company received a commitment from PNC Investment Corp., a wholly
  owned indirect subsidiary of PNC, on March 23, 1998 for the purchase, in
  a private placement, of 648,352 shares of common stock at $13.95 per
  share for a total of $9,045. The sale of these shares was consummated at
  the time of the closing of the Company's initial public offering.

  NOTE 6    STOCK OPTIONS

  The Company has adopted a stock option plan (the "1998 Stock Option
  Plan") that provides for the grant of both qualified incentive stock
  options that meet the requirements of Section 422 of the Code, and
  non-qualified stock options, stock appreciation rights and dividend
  equivalent rights. Stock options may be granted to the Manager,
  directors, officers and any key employees of the Company, directors,
  officers and key employees of the Manager and to any other individual or
  entity performing services for the Company.

  The exercise price for any stock option granted under the 1998 Stock
  Option Plan may not be less than 100% of the fair market value of the
  shares of common stock at the time the option is granted. Each option
  must terminate no more than ten years from the date it is granted.
  Subject to anti-dilution provisions for stock splits, stock dividends and
  similar events, the 1998 Stock Option Plan authorizes the grant of
  options to purchase an aggregate of up to 2,470,453 shares of common
  stock.

  On March 27, 1998, pursuant to the 1998 Stock Option Plan, options to
  purchase 1,313,967 shares of the Company's common stock were granted to
  certain officers, directors and employees of the Company and the Manager
  and options to purchase 324,176 shares of the Company's common stock were
  granted to PNC Investment Corp. The exercise price of these options is
  $15 per share. The remaining contractual life of each option is
  approximately 9.7 years. The options vest in four equal installments on
  March 27, 1999, March 27, 2000, March 27, 2001 and March 27, 2002.

  In addition to the options granted pursuant to the 1998 Stock Option
  Plan, on March 27, 1998 options to purchase 246,544 shares of the
  Company's common stock were granted to certain officers, directors and
  employees of the Company and the Manager. The exercise price of these
  options is $13.95 per share. The remaining contractual life of each
  option is approximately 0.7 years. The options become exercisable on
  September 30, 1998.

  No options were granted, exercised or forfeited during the three months
  ended June 30, 1998. No options were exercised or forfeited during the
  period March 24, 1998 through June 30,1998.

  NOTE 7    EARNINGS PER SHARE (EPS)

  A reconciliation of the numerator and denominator of the basic EPS
  computation and the diluted EPS computation is as follows:


<TABLE>
<CAPTION>

                           For the Three Months Ended    For the Period March 24, 1998
                                 June 30, 1998              Through June 30, 1998
                                 -------------              --------------------- 
                          Income       Shares    Per Share    Income      Shares    Per Share
                          Numerator  Denominator  Amount     Numerator  Denominator  Amount
                          ---------  ----------- ---------   ---------  ----------- ---------

<S>                       <C>       <C>         <C>          <C>       <C>          <C>   
   Net Income             $  5,381                           $ 5,554
                          --------                           --------
   Basic EPS                 5,381   21,365,298  $ 0.25        5,554    21,365,298   $ 0.26
                                                 ======                              =======

   Effect of dilutive
   securities:

     Dilutive              
       stock options             0       4,229                     0         5,451
                         ---------   ---------               -------    ----------
     Diluted EPS           $ 5,381  21,369,527  $ 0.25       $ 5,554    21,370,749  $ 0.26
                         =========  ==========  ======       =======    ==========  ======

</TABLE>

  Options to purchase 1,884,687 shares were outstanding beginning March 27,
  1998 (see Note 6). Options with respect to 1,638,143 shares were not
  considered dilutive as the exercise price of $15 was greater than the
  average stock price for the Company for three months ended June 30, 1998
  ($14.19) and for the period March 24, 1998 through June 30, 1998
  ($14.27). Options with respect to the remaining 246,544 shares were
  considered dilutive as their exercise price of $13.95 was less than such
  average stock prices.

  NOTE 8          REVERSE REPURCHASE AGREEMENTS

  The Company has entered into reverse repurchase agreements to finance
  most of its securities available for sale. The reverse repurchase
  agreements are collateralized by most of the Company's securities
  available for sale and bear interest rates that have historically moved
  in close relationship to the London Interbank Offered Rate (LIBOR).

  At June 30, 1998, the Company had outstanding $699,347 of reverse
  repurchase agreements with a weighted average borrowing rate of 5.64% and
  a weighted average remaining maturity of 49 days. At June 30, 1998,
  securities available for sale pledged as collateral for these reverse
  repurchase agreements had an estimated fair value of $737,137.

  At June 30, 1998, the reverse repurchase agreements had the following
  remaining maturities:

  Within 30 days     $188,889
  30 to 59 days       326,498
  Over 59 days        183,960
                     ========
                     $699,347
                     ========

  NOTE 9          FAIR VALUE OF FINANCIAL INSTRUMENTS

  The following table presents the amortized cost and estimated fair values
  of the Company's financial instruments at June 30, 1998:

                              Estimated
                              Amortized     Fair
                                 Cost       Value
                              ----------------------
  Assets
  Securities available         
  for sale                   $1,042,762   $1,046,340

  Liabilities
  Contractual commitments             -   $    1,032


  SFAS No. 107, Disclosures About Fair Value of Financial Instruments,
  defines the fair value of a financial instrument as the amount at which
  the instrument could be exchanged in a current transaction between
  willing parties other than in a forced or liquidation sale.

  The fair value of the Company's securities available for sale and
  contractual commitments are based on market prices provided by certain
  dealers who make markets in these financial instruments. The fair values
  reported reflect estimates and may not necessarily be indicative of the
  amounts the Company could realize in a current market exchange. The
  carrying amounts of all other asset and liability accounts in the
  statements of financial condition approximate fair value because of the
  short-term nature of these accounts.

  NOTE 10         CONTRACTUAL COMMITMENTS

  The Company has entered into an interest rate swap transaction with a
  notional amount of $70,000. Under the interest rate swap agreement, the
  Company will receive quarterly payments of interest based on three-month
  LIBOR and will remit semi-annual payments based on a fixed interest rate
  of approximately 6.19%, in each case based upon a notional balance of
  $70,000. The swap became effective on May 19, 1998 and will terminate on
  May 19, 2008. In certain circumstances, the Company may be required to
  provide collateral to secure its obligations under the interest rate swap
  agreement, or may be entitled to receive collateral from the counterparty
  to the swap agreement. At June 30, 1998, no collateral was required under
  the interest rate swap agreement. At June 30, 1998, the interest rate
  payable to the Company by the counterparty to the swap transaction was
  approximately 5.70%.

  Item 2.  Management's Discussion and Analysis of Financial Condition 
           and Results of Operations

  GENERAL: The Company was organized in November 1997 to invest in a
  diversified portfolio of multifamily, commercial and residential mortgage
  loans, mortgage-backed securities and other real estate related assets in
  the U.S. and non-U.S. markets. The Company expects to generate income for
  distribution to its stockholders primarily from the net earnings derived
  from its investments in real estate related assets. The Company intends
  to operate in a manner that permits it to maintain its status as a REIT
  for Federal income tax purposes.

  In March 1998, the Company received $297.0 million of net proceeds from
  the initial public offering of 21,365,198 shares of its common stock. As
  of June 30, 1998, the Company had invested, net of repayments to date,
  $1.1 billion to acquire its initial portfolio of securities available for
  sale. The Company is currently performing due diligence on a variety of
  assets including CMBS subordinate interests and mezzanine loans and
  participating debt opportunities on both stabilized properties and
  construction projects.

  The following discussion should be read in conjunction with the Interim
  Financial Statements and related Notes included in Item 1 hereof. Dollar
  amounts are expressed in thousands, other than per share amounts.

  RECENT DEVELOPMENTS: On July 15, 1998, the Company's Board of Directors
  authorized a program to repurchase up to 10% of the number of then
  outstanding shares of the Company's common stock. Through August 12,
  1998, the Company had repurchased 1,133,100 shares of its common stock
  pursuant to the program at an average price of $11.56 per share. An
  additional 1,003,419 shares are currently authorized for potential
  repurchase in the future.

  On July 24, 1998, the Company committed to provide $35,000 in mezzanine
  financing for the construction of two office buildings in Santa Monica,
  California, totaling more than 600,000 square feet of prime office space.

  On July 29, 1998, the Company purchased subordinated CMBS interests with
  a face value of approximately $66,000 and a purchase price of
  approximately $40,000. The CMBS were issued in a transaction in which PNC
  Bank, N.A., a subsidiary of PNC, contributed a portion of the underlying
  commercial loans and Midland Loan Services, Inc., also a subsidiary of
  PNC, will act as special servicer and master servicer.

  On July 31, 1998, the Company committed to provide $13,000 in mezzanine
  financing for the construction of a 327,000 square foot office building
  in Kansas City, Missouri.

  MARKET CONDITIONS: Changes in market interest rates during the period
  March 24, 1998 through June 30, 1998 resulted in a further "inversion" of
  the yield curve, that is, the excess of short-term interest rates over
  long-term interest rates became more pronounced during such period.
  Average one-month LIBOR for the three months ended June 30, 1998 and for
  the period March 24, 1998 through June 30, 1998 was 5.65%. The average
  ten-year U.S. Treasury yield for the three months ended June 30, 1998 was
  5.59% and for the period March 24, 1998 through June 30, 1998 was 5.60%.
  The excess of one-month LIBOR over the ten-year U.S. Treasury yield was
  0.12% on March 24, 1998, (0.02)% on March 31, 1998 and 0.22% on June 30,
  1998.

  The Company's earnings depend, in part, on the relationship between
  long-term interest rates and short-term interest rates. The Company's
  investments bear interest at fixed rates determined by reference to the
  yields of medium- or long-term U.S. Treasury securities or at adjustable
  rates determined by reference (with a lag) to the yields on various
  short-term instruments. The Company's borrowings bear interest rates that
  have historically moved in close relationship to LIBOR. To the extent
  that interest rates on the Company's borrowings increase without an
  offsetting increase in the interest rates earned on the Company's
  investments, the Company's earnings could be negatively affected.

  FUNDS FROM OPERATIONS: Most industry analysts, including the Company,
  consider FFO an appropriate supplementary measure of operating
  performance of a REIT. In general, FFO adjusts net income for non-cash
  charges such as depreciation, certain amortization expenses and most
  non-recurring gains and losses. However, FFO does not represent cash
  provided by operating activities in accordance with GAAP and should not
  be considered an alternative to net income as an indication of the
  results of the Company's performance or to cash flows as a measure of
  liquidity.

  In 1995, the National Association of Real Estate Investment Trusts
  ("NAREIT") established new guidelines clarifying its definition of FFO
  and requested that REITs adopt this new definition beginning in 1996. The
  Company computes FFO in accordance with the definition recommended by
  NAREIT.

  The Company's FFO for the three months ended June 30, 1998 was $5,396, or
  $0.25 per share (basic and diluted), and for the period March 24, 1998
  through June 30, 1998 was $5,569, or $0.26 per share (basic and diluted).
  For the three months ended June 30, 1998 and for the period March 24,
  1998 through June 30, 1998, FFO exceeded reported net income by $15 due
  primarily to the exclusion from FFO of certain non-recurring costs
  incurred in connection with the termination of hedges relating to
  securities sold.

  RESULTS OF OPERATIONS

  Net income for the three months ended June 30, 1998 was $5,381, or $0.25
  per share (basic and diluted), and for the period March 24, 1998 through
  June 30, 1998 was $5,554, or $0.26 per share (basic and diluted).

  INTEREST INCOME: The following tables sets forth information regarding
  the total amount of income from interest-earning assets and the resultant
  average yields. Information is based on daily average balances during the
  reported periods.

<TABLE>
<CAPTION>


                                      For the Three Months Ended June 30, 1998
                                   ---------------------------------------------
                                      Interest       Average       Annualized
                                       Income        Balance          Yield
                                   ---------------------------------------------

<S>                                  <C>           <C>                <C>  
  Securities available for sale      $ 10,772      $ 587,943          7.35%
  Cash and cash equivalents                56          3,900          5.76
                                   ---------------------------------------------
  Total                              $ 10,828      $ 591,843          7.34%
                                   =============================================

                                           For the Period March 24, 1998
                                               Through June 30, 1998
                                   ---------------------------------------------
                                      Interest       Average       Annualized
                                       Income        Balance          Yield
                                   ---------------------------------------------
  Securities available for sale      $ 10,890      $ 552,497          7.27%
  Cash and cash equivalents               154         10,180          5.56
                                   ----------------------------------------------
  Total                              $ 11,044      $ 562,677          7.24%
                                   =============================================

  EXPENSES: The following tables set forth information regarding the total
  amount of interest expense from reverse repurchase agreements (including
  the net amount payable under the interest rate swap agreement) and the
  resultant average yields. Information is based on daily average balances
  during the reported periods.

                                      For the Three Months Ended June 30, 1998
                                   ---------------------------------------------
                                      Interest       Average       Annualized
                                       Expense       Balance          Yield
                                   ---------------------------------------------
  Reverse repurchase 
  agreements                          $ 4,379      $ 310,862          5.65%

                                           For the Period March 24, 1998
                                               Through June 30, 1998
                                   ---------------------------------------------
                                      Interest       Average       Annualized
                                       Expense       Balance          Yield
                                   ---------------------------------------------
  Reverse repurchase 
  agreements                          $ 4,382      $ 285,906          5.65%

</TABLE>

  Management fees of $849 for the three months ended June 30, 1998 and $870
  for the period March 24, 1998 through June 30, 1998 were comprised solely
  of the base management fee paid to the Manager for such periods (as
  provided pursuant to the management agreement between the Manager and the
  Company), as the Manager earned no incentive fee for such periods. Other
  expenses of $219 for the three months ended June 30, 1998 and $238 for
  the period March 24, 1998 through June 30, 1998 were comprised of
  accounting agent fees, custodial agent fees, directors' fees, insurance
  premiums and other miscellaneous expenses.

  NET INTEREST MARGIN: Net interest margin is annualized net interest
  income divided by the average daily balance of interest-earning assets.
  Net interest income is total interest income less interest expense
  (including the net amount payable under the interest rate swap
  agreement). Net interest margin was 4.37% for the three months ended June
  30, 1998 and for the period March 24, 1998 through June 30, 1998.

  DIVIDENDS DECLARED AND DISTRIBUTIONS IN EXCESS OF EARNINGS: On June 15,
  1998, the Company declared dividends to its stockholders totaling $5,769
  or $0.27 per share. These dividends were paid on July 15, 1998 to
  stockholders of record on June 30, 1998. These dividends covered the
  Company's undistributed tax basis income for the period March 24, 1998
  through June 30, 1998. As a result of these dividends, the Company
  incurred distributions in excess of earnings of $215 as of June 30, 1998.
  For Federal income tax purposes, all dividends paid to date are ordinary
  income to the Company's stockholders.

  TAX BASIS INCOME AND GAAP NET INCOME: Net income as calculated for tax
  purposes (tax basis income) was $5,652, or $0.26 per share (basic and
  diluted), for the three months ended June 30, 1998 and $5,825, or $0.27
  per share (basic and diluted), for the period March 24, 1998 through June
  30, 1998, compared to net income as calculated in accordance with
  generally accepted accounting principles (GAAP) of $5,381, or $0.25 per
  share (basic and diluted), for the three months ended June 30, 1998 and
  $5,554, or $0.26 per share (basic and diluted), for the period March 24,
  1998 through June 30, 1998. Differences between tax basis income and GAAP
  net income arise for various reasons. For example, in computing income
  from its subordinated CMBS interests for GAAP purposes, the Company takes
  into account estimated credit losses on the underlying loans whereas for
  tax basis income purposes, only actual credit losses are taken into
  account. In addition, certain general and administrative expenses may
  differ due to differing treatment of the deductibility of such expenses
  for tax basis income. Also, differences could arise in the treatment of
  premium and discount amortization on the Company's securities available
  for sale.

  A reconciliation of GAAP net income to tax basis income is as follows:

                                                            For the Period
                                         For the Three      March 24, 1998
                                         Months Ended          Through
                                         June 30, 1998      June 30, 1998
                                        ----------------- ------------------
  GAAP net income                          $ 5,381            $ 5,554
  Subordinate CMBS interests income 
    differentials                              143                143
  General and administrative expense 
    differences                                113                113
  Other                                         15                 15
                                        ================= ==================
  Tax basis income                         $ 5,652            $ 5,825
                                        ================= ==================

  CHANGES IN FINANCIAL CONDITION

  SECURITIES AVAILABLE FOR SALE: At June 30, 1998, an aggregate of $3,579
  of net unrealized gains on securities available for sale was included as
  a component of accumulated other comprehensive income in stockholders'
  equity.

  The Company's securities available for sale, which are carried at
  estimated fair value, included the following at June 30, 1998:

                                             Estimated
            Security Description            Fair Value    %
  -------------------------------------------------------------
  Commercial mortgage-backed securities
     ("CMBS") interests:
  Investment grade rated senior interest 
     only interests                           $  91,934    8.8
  Non-investment grade rated subordinated 
     interests                                  191,934   18.3
  Non-rated subordinated interests               21,580    2.1
                                            -------------------
     Total CMBS interests                       305,448   29.2
                                            -------------------

  Single-family residential mortgage-
     backed securities ("residential 
     MBS") interests:
  Agency adjustable rate                        220,952   21.1
  Agency fixed rate                              54,238    5.2
  Agency interest only                           16,094    1.5
  Investment grade rated private issuer
     fixed rate                                  387,674   37.1
                                            -------------------
     Total residential MBS interests            678,958   64.9
                                            -------------------
  Agency insured project loans                   28,227    2.7
  Investment grade rated asset backed 
     securities                                  14,863    1.4
  Non-investment grade rated non-U.S.
     sovereign securities                        18,844    1.8
                                            -------------------
     Total securities available for sale     $1,046,340  100.0
                                            ===================


  In May 1998, $16,750 face amount of U.S. Treasury securities were sold
  for proceeds net of termination costs on the related hedge of $17,133,
  which equaled the approximate amortized cost of such securities.

  REVERSE REPURCHASE AGREEMENTS: To date, the Company's debt has consisted
  entirely of borrowings collateralized by a pledge of most of the
  Company's securities available for sale. These borrowings appear in the
  statement of financial condition as reverse repurchase agreements. The
  Company has obtained, and believes it will be able to continue to obtain,
  short-term financing in amounts and at interest rates consistent with the
  Company's financing objectives.

  During the three months ended June 30, 1998 and during the period March
  24, 1998 through June 30, 1998, the term to maturity of the Company's
  borrowings ranged from 1 day to 175 days, with a weighted average
  remaining maturity of 49 days at June 30, 1998. At June 30, 1998, the
  Company had outstanding $699,347 of reverse repurchase agreements with a
  weighted average borrowing rate of 5.64%. At June 30, 1998, securities
  available for sale pledged as collateral for these reverse repurchase
  agreements had an estimated fair value of $737,137.

  CONTRACTUAL COMMITMENTS: The Company has entered into an interest rate
  swap transaction with a notional amount of $70,000. Under the interest
  rate swap agreement, the Company will receive quarterly payments of
  interest based on three-month LIBOR and will remit semi-annual payments
  based on a fixed interest rate of approximately 6.19%, in each case based
  upon the notional amount of the swap. The swap became effective on May
  19, 1998 and will terminate on May 19, 2008. In certain circumstances,
  the Company may be required to provide collateral to secure its
  obligations under the interest rate swap agreement, or may be entitled to
  receive collateral from the counterparty to the swap agreement. At June
  30, 1998, no collateral was required under the interest rate swap
  agreement. At June 30, 1998, the interest rate payable to the Company by
  the counterparty to the swap transaction was approximately 5.70%.
  Contractual commitments are carried in the statement of financial
  condition at estimated liquidation value. During the three months ended
  June 30, 1998 and during the period March 24, 1998 through June 30, 1998,
  there were $1,032 in unrealized losses on contractual commitments, which
  are included as a component of accumulated other comprehensive income in
  stockholders' equity.

  CAPITAL RESOURCES AND LIQUIDITY: Liquidity is a measurement of the
  Company's ability to meet potential cash requirements, including ongoing
  commitments to repay borrowings, fund investments, loan acquisition and
  lending activities and for other general business purposes. The primary
  sources of funds for liquidity consist of reverse repurchase agreements
  and maturities and principal payments on securities available for sale,
  and proceeds from sales thereof.

  The Company's operating activities provided cash flows of $3,412 during
  the period March 24, 1998 through June 30, 1998. During the foregoing
  period cash flows from operating activities were used primarily to
  purchase securities available for sale.

  The Company's investing activities used cash flows totaling $999,701
  during the period March 24, 1998 through June 30, 1998. During the
  foregoing period, cash flows from investing activities were used
  primarily to purchase securities available for sale.

  The Company's financing activities provided $996,089 during the period
  March 24, 1998 through June 30, 1998 and consisted primarily of net
  borrowings under reverse repurchase agreements and net proceeds from the
  issuance of 21,365,198 shares of common stock.

  As discussed above, the Company is engaged in due diligence with respect
  to a variety of investments. In addition, the Company is engaged in
  discussions with respect to obtaining various third-party borrowings. To
  the extent that either of these two activities come to fruition, the
  Company's liquidity and capital resources could be materially affected.
  There can be no assurance that the Company will have adequate funds
  available to take advantage of all investment opportunities that become
  available.

  REIT STATUS: The Company intends to elect to be taxed as a REIT and to
  comply with the provisions of the Internal Revenue Code of 1986, as
  amended, with respect thereto. Accordingly, the Company will not be
  subjected to Federal income tax to the extent of its distributions to
  stockholders and as long as certain asset, income and stock ownership
  tests are met. The Company may, however, be subject to tax at normal
  corporate rates on net income or capital gains not distributed.

  INVESTMENT COMPANY ACT: The Company intends to conduct its business so as
  not to become regulated as an investment company under the Investment
  Company Act of 1940, as amended (the "Investment Company Act"). Under the
  Investment Company Act, a non-exempt entity that is an investment company
  is required to register with the Securities and Exchange Commission
  ("SEC") and is subject to extensive, restrictive and potentially adverse
  regulation relating to, among other things, operating methods,
  management, capital structure, dividends and transactions with
  affiliates. The Investment Company Act exempts entities that are
  "primarily engaged in the business of purchasing or otherwise acquiring
  mortgages and other liens on and interests in real estate" ("Qualifying
  Interests"). Under current interpretation by the staff of the SEC, to
  qualify for this exemption, the Company, among other things, must
  maintain at least 55% of its assets in Qualifying Interests. Pursuant to
  such SEC staff interpretations, certain of the Company's interests in
  agency pass-through and mortgage-backed securities and agency insured
  project loans are Qualifying Interests. In general, the Company will
  acquire subordinated interests in commercial mortgage-backed securities
  ("subordinated CMBS interests") only when such mortgage securities are
  collateralized by pools of first mortgage loans, when the Company can
  monitor the performance of the underlying mortgage loans through loan
  management and servicing rights, and when the Company has appropriate
  workout/foreclosure rights with respect to the underlying mortgage loans.
  When such arrangements exist, the Company believes that the related
  subordinated CMBS interests constitute Qualifying Interests for purposes
  of the Investment Company Act. Therefore, the Company believes that it
  should not be required to register as an "investment company" under the
  Investment Company Act as long as it continues to invest primarily in
  such subordinated CMBS interests and/or in other Qualifying Interests.
  However, if the SEC or its staff were to take a different position with
  respect to whether the Company's subordinated CMBS interests constitute
  Qualifying Interests, the Company could be required to modify its
  business plan so that either (i) it would not be required to register as
  an investment company or (ii) it would comply with the Investment Company
  Act and be able to register as an investment company. In such event, (i)
  modification of the Company's business plan so that it would not be
  required to register as an investment company would likely entail a
  disposition of a significant portion of the Company's subordinated CMBS
  interests or the acquisition of significant additional assets, such as
  agency pass-through and mortgage-backed securities, which are Qualifying
  Interests or (ii) modification of the Company's business plan to register
  as an investment company, which would result in significantly increased
  operating expenses and would likely entail significantly reducing the
  Company's indebtedness (including the possible prepayment of the
  Company's reverse repurchase agreement financing), which could also
  require it to sell a significant portion of its assets. No assurances can
  be given that any such dispositions or acquisitions of assets, or
  deleveraging, could be accomplished on favorable terms. Consequently, any
  such modification of the Company's business plan could have a material
  adverse effect on the Company. Further, if it were established that the
  Company were an unregistered investment company, there would be a risk
  that the Company would be subject to monetary penalties and injunctive
  relief in an action brought by the SEC, that the Company would be unable
  to enforce contracts with third parties and that third parties could seek
  to obtain recission of transactions undertaken during the period it was
  established that the Company was an unregistered investment company. Any
  such results would be likely to have a material adverse effect on the
  Company.

  FORWARD-LOOKING STATEMENTS: Certain statements contained herein are not,
  and certain statements contained in future filings by the Company with
  the SEC, in the Company's press releases or in the Company's other public
  or shareholder communications may not be, based on historical facts and
  are "Forward-looking statements" within the meaning of the Private
  Securities Litigation Reform Act of 1995. Forward-looking statements
  which are based on various assumptions (some of which are beyond the
  Company's control), may be identified by reference to a future period or
  periods, or by the use of forward-looking terminology, such as "may,"
  "will," "believe," "expect," "anticipate," "continue," or similar terms
  or variations on those terms, or the negative of those terms. Actual
  results could differ materially from those set forth in forward-looking
  statements due to a variety of factors, including, but not limited to,
  those related to the economic environment, particularly in the market
  areas in which the Company operates, competitive products and pricing,
  fiscal and monetary policies of the U.S. Government, changes in
  prevailing interest rates, acquisitions and the integration of acquired
  businesses, credit risk management, asset/liability management, the
  financial and securities markets and the availability of and costs
  associated with sources of liquidity. The Company does not undertake, and
  specifically disclaims any obligation, to publicly release the result of
  any revisions which may be made to any forward-looking statements to
  reflect the occurrence of anticipated or unanticipated events or
  circumstances after the date of such statements.

  OTHER: The Company is currently in the process of evaluating its
  information technology infrastructure for Year 2000 compliance. The
  Company does not expect that the cost to modify its information
  technology infrastructure to be Year 2000 compliant will be material to
  its financial condition or results of operations. The Company does not
  anticipate any material disruption in its operations as a result of any
  failure by the Company to be in compliance. The Company is currently
  evaluating Year 2000 compliance status of its suppliers. In the event
  that any of the Company's significant suppliers do not successfully and
  timely achieve Year 2000 compliance, the Company's business or operations
  could be adversely affected.

  Part II - OTHER INFORMATION

  Item 1.   Legal Proceedings

  At June 30, 1998 there were no pending legal proceedings to which the
  Company was a party or of which any of its property was subject.

  Item 2.   Changes in Securities and Use of Proceeds

  Not applicable

  Item 3.   Defaults Upon Senior Securities

  Not applicable

  Item 4.   Submission of Matters to a Vote of Security Holders

  Not applicable

  Item 5.   Other Information

  None

  Item 6.   Exhibits and Reports on Form 8-K

  (a) Exhibits

  Exhibit 27.1 - Financial Data Schedule (filed herewith)

  (b) Reports on Form 8-K

  None


                                 SIGNATURES


   Pursuant to the requirements of the Securities Exchange Act of 1934, the
   registrant has duly caused this report to be signed on its behalf by the
   undersigned thereunto duly authorized.


                                                ANTHRACITE CAPITAL, INC.


   Dated:  August 14, 1998                      By: /s/ Hugh R. Frater
                                                    ______________________
                                                Name:  Hugh R. Frater
                                                Title: President and Chief
                                                       Executive Officer
                                                       (authorized officer 
                                                       of registrant)


   Dated:  August 14, 1998                      By:  /s/ Richard M. Shea
                                                     ______________________
                                                Name:  Richard M. Shea
                                                Title: Chief Operating Officer
                                                       and Chief Financial
                                                       Officer (principal
                                                       accounting officer)



                              FINANCIAL DATA SCHEDULE