U.S. Securities and Exchange Commission
                         	Washington, D.C.  20549

                               	FORM 10-QSB
(Mark One)
[X]	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
    OF 1934

       For the quarterly period ended         March 31, 1997       


[ ]	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

       For the transition period from                   to                  

       Commission file number          0-2864                               


                                DIVERSIFIED REALTY, INC.                      
         (Exact name of small business issuer as specified in its charter)

           Montana                                  81-0268110        
(State or other jurisdiction of         (IRS Employer Identification No.)
incorporation or organization)                   

            128 Second Street South, Great Falls, Montana   59405               
	                   (Address of principal executive offices)

                             (406) 727-2600                                     
	                       (Issuer's telephone number)


                               Not Applicable                                  
(Former name, former address and former fiscal year, if changed since last 
report)


Check whether the issuer (1) filed all reports required to be filed by 
Section 13 or 15(d) of the Exchange Act during the past 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      


             	APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
	                PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant filed all documents and reports required to be 
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution 
of securities under a plan confirmed by a court. Yes         No      


                	APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of 
common equity, as of the latest practicable date:

      Class                              Outstanding at March 31, 1997
No Par Value Common Stock                      1,872,915 Shares


Transitional Small Business Disclosure Format (Check One): Yes   ;  No   X    

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                         	DIVERSIFIED REALTY, INC.

                                	INDEX

                            	MARCH 31, 1997




                                                            	Page Number
PART I

Condensed Financial Statements:

Balance Sheet -
  March 31, 1997		                                                 2     

Statements of Income - 
  Three Months Ended March 31, 1997 and 1996                       3     

Statements of Cash Flows -
  Three Months Ended March 31, 1997 and 1996                       4     

Notes to Financial Statements                                      5     

  Management's Discussion and Analysis of the
      Statements of Income                                         6     


PART II

  Other Information	                                               7     

  Signatures		                                                     8     

                                    1
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                         	DIVERSIFIED REALTY, INC.

                              	BALANCE SHEET

                           	AS OF MARCH 31, 1997





     ASSETS
Current Assets
  Cash                                                            $   975,649  
  Receivables - Net                                                     1,896
  Due From Parent Company                                               2,600  

     Total Current Assets                                             980,145  

Noncurrent Receivables                                                 10,974

Property, Plant and Equipment, Net                                    272,364

            TOTAL ASSETS                                          $ 1,263,483 


    LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
  Accounts Payable and Accrued Expenses                           $    31,416  

  Income Taxes Payable                                                  1,618

    Total Current Liabilities                                          33,034


Stockholders' Equity
  Common Stock - No Par Value, 
   5,000,000 shares authorized,
   1,875,000 shares issued                                          1,416,908  
  Accumulated Deficit                                                (185,834)
  Cost of Common Stock in Treasury                                       (625)

   Total Stockholders' Equity                                       1,230,449

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                        $ 1,263,483   

                      	See Notes to Financial Statements
                                   
                                     2
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                         	DIVERSIFIED REALTY, INC.

                         	 STATEMENTS OF INCOME


                                                 For The Three Months Ended
                                                          March 31,       
                                                      1997            1996   

Operating Revenues                               $   33,519      $   26,303

Operating Expenses                                   14,428          17,288

                                                     19,091           9,015 

Provision for Income Taxes                           (4,200)         (3,700)

Net Income                                       $   14,891       $   5,315 


Earnings Per Weighted Average 
Shares Outstanding (1,872,915
Shares in 1997 and 1,875,000
Shares in 1996)                                  $      .01       $      -- 

Dividends Per Share                              $       --       $      -- 


                    	See Notes to Financial Statements

                                   3
<PAGE>


                       	DIVERSIFIED REALTY, INC.

                       	STATEMENTS OF CASH FLOWS

                                                  For The Three Months Ended
                                                          March 31,        
                                                       1997           1996   
CASH FLOWS FROM OPERATING ACTIVITIES

Net Cash Provided By
  Operating Activities                            $   26,689     $   17,686 

CASH FLOWS FROM INVESTING ACTIVITIES

Cash Received on Principal of
 Notes Receivable                                        447            415 

Net Cash Provided By
 Investing Activities                                    447            415 

CASH FLOWS FROM FINANCING ACTIVITIES

Net Cash Advances 
  From (To) Parent Company                               600           (600) 

Net Cash Provided (Used) By
  Financing Activities                                   600           (600) 

NET INCREASE IN CASH                                  27,736         17,501 

CASH - BEGINNING OF PERIOD                           947,913        614,560 

CASH - END OF PERIOD                              $  975,649     $  632,061 

                     	See Notes to Financial Statements

                                   4
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                        DIVERSIFIED REALTY, INC.

                     	NOTES TO FINANCIAL STATEMENTS

                             	MARCH 31, 1997


In the opinion of management, all adjustments necessary (consisting of only 
normal recurring accruals) have been made to the unaudited financial 
statements to present fairly the financial position as of March 31, 1997 and 
the results of the Company's operations and cash flows for the three months 
ended March 31, 1997 and 1996.  

The results of operations for the three months ended March 31, 1997 and 1996 
are not necessarily indicative of the results to be expected for the full 
year.

Parent -

M Corp, Great Falls, Montana owns approximately 84% of the outstanding shares
of the Company.

                                   5
<PAGE>


                        	DIVERSIFIED REALTY, INC.

                   	MANAGEMENT'S DISCUSSION AND ANALYSIS
	                       OF THE STATEMENTS OF INCOME       

                            	MARCH 31, 1997

A summary of the period to period changes in items included in the statements
of income is shown below.





                                                     COMPARISON OF   
                                                     Three Months
                                                         Ended
                                                       March 31,
                                                     1997 and 1996   

                                                       Increases
                                                      (Decreases)

Revenues                                           $  7,216    27.4%
          
Operating Expenses                                 $ (2,860)  (16.5%)        

Net Income                                         $  9,576   180.2%        

Revenues increased $7,216, (27.4%) in the first quarter of 1997 as compared 
with the first quarter of 1996 due primarily to increases in rental revenues
($2,544, 13.2%) and interest revenues ($4,679, 66.1%). Interest revenues
increased primarily due to an increase in interest-bearing deposits 
maintained by the Company. Operating expenses decreased $2,860 (16.5%) in 
the first quarter of 1997 as compared with the first quarter of 1996 with 
decreases in the provision for depreciation ($622, 15.1%) and decreases in 
other operating expenses ($2,274, 17.3%). The decrease in other operating 
expenses during the first quarter of 1997 as compared with the first quarter
of 1996 was due primarily to decreases in maintenance expenses and 
professional fees. The provision for income tax expense increased $500, 
13.5%, due to the increase in pretax income.
 
                                    6        
<PAGE>


                        	DIVERSIFIED REALTY, INC.

                                	PART II

                           	OTHER INFORMATION

                             	MARCH 31, 1997


ITEM 1     LEGAL PROCEEDINGS

           None

ITEM 2     CHANGES IN SECURITIES

           None

ITEM 3     DEFAULTS UPON SENIOR SECURITIES

           None

ITEM 4     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

           None

ITEM 5     OTHER INFORMATION

           None

ITEM 6     EXHIBITS AND REPORTS ON FORM 8-K

           None


                                   7

<PAGE>
                               	SIGNATURES




In accordance with the requirements of the Exchange Act, the registrant 
caused this report to be signed on its behalf by the undersigned, thereunto 
duly authorized.





                          	 DIVERSIFIED REALTY, INC. 
	                                Registrant



Date:  April 29, 1997                  s/K. King           
                                         K. King
                                         Assistant
                                         Secretary-Treasurer


Date:  April 29, 1997                  s/Jerry K. Mohland         
                                         Jerry K. Mohland,
                                         Accountant



                                  8

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