Following last week’s announced deal between Apollo Commercial Real Est. Finance Inc ARI 0.51% and Apollo Residential Mortgage Inc AMTG 0.08%, FBR & Co analyst Daniel Atscher released a new report discussing the potential for further consolidation within the mortgage REIT space. According to Atscher, investors can expect more large deals in coming months.

“Between mergers and the eventual Fed pullback from reinvesting repayments into new MBS purchases, we believe the mortgage REIT space could begin to experience a more ‘normal’ marketplace with fewer ‘unnatural’ buyers, which would, in turn, provide more stability to prices and clearer pictures of underlying value,” he explained.

FBR sees Annaly Capital Management, Inc. NLY 0.59% as a likely consolidator because of its size and its recent transition from a pure-play agency mortgage REIT to a more diversified business.

Atscher believes…

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