Gentlemen-
We are transmitting herewith
Form 10-QSB for the quarter ended
September 30, 2001 for
Diversified Realty, Inc.

Diversified Realty, Inc.
S/Lori Olson
  Lori Olson
  Accountant

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
 September 30, 2001

[   ]   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
September 30, 2001
$.10 Par Value
Common Stock 5,369,940 Shares

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



DIVERSIFIED REALTY, INC.

INDEX SEPTEMBER 30, 2001
Page Number
PART I

  Condensed Financial Statements:

Balance Sheet
  September 30, 2001	2

Statements of Income -
  Three Months and Nine
Months Ended
  September 30, 2001 and 2000 3

Statements of Cash Flows -
  Nine Months Ended September
30, 2001 and 2000  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

DIVERSIFIED REALTY, INC.



BALANCE SHEET



AS OF SEPTEMBER 30, 2001






ASSETS


Current Assets
   Cash
$1,664,560
Marketable Securities
640,000
Deferred Tax Asset
3,300
Due From Parent Company
85,068
Total Current Assets
2,392,928

Property, Plant and Equipment, Net
203,176
Total Assets
$2,596,104

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
  Accounts Payable and Accrued Liabilities
$35,025
  Income Taxes Payable
6,968
Total Current Liabilities
41,993

Stockholders' Equity
  Common Stock, $.10 Par Value,
    11,000,000 shares authorized,
    5,375,000 shares issued
537,500
  Additional Paid-In-Capital
1,929,408
  Retained Earnings
93,609
  Accumulated Other Comprehensive Income
(4,702)
  Cost of Common Stock in Treasury (5060 shares)
(1,704)
Total Stockholders' Equity
2,554,111

Total Liabilities and Stockholders' Equity
$2,596,104


See Notes to Financial Statements.



2


DIVERSIFIED REALTY, INC.

STATEMENTS OF INCOME


For The Three Months

For The Nine Months


Ended

Ended


September 30,

September 30,


2001

2000

2001

2000


Operating Revenues
$
18,490
$
52,773
$
101,158
$
154,415


Operating Expenses

15,385

19,619

48,447

57,068

3,105

33,154

52,711

97,347


Income Tax Expense

300

(12,700)

(20,000)

(39,700)


Net Income
$3,405
$20,454
$32,711
$57,647
Other Comprehensive Income (Loss)
  Increase (Decrease) in
  Unrealized Holding Gains,
  Net of Income Taxes
(4,702)

-

-

-

Comprehensive Income (Loss)
$(1,297)
$20,454
$32,711
$57,647

See Notes to Financial Statements.

3


DIVERSIFIED REALTY, INC.

STATEMENTS OF CASH FLOWS


For The Nine Months
Ended

September 30,

2001

2000
CASH FLOWS FROM OPERATING ACTIVITIES
  Net Cash From Operations
69,375

113,438
  Income Taxes Paid in Cash
(10,000)

Net Cash Provided By
   Operating Activities
$59,375
$113,438

CASH FLOWS FROM INVESTING ACTIVITIES
 Cash Used For Purchases of Marketable
   Securities Available For Sale
(648,002)

-

Net Cash Provided (Used) By
   Investing Activities

(648,002)

-

CASH FLOWS FROM FINANCING ACTIVITIES
   Cash Purchases of Treasury Stock

(473)

(7)

   Net Cash Advances
      From (To) Parent Company

(8,200)

(54,309)

Net Cash (Used) By

   Financing Activities

(8,673)

(54,316)

     NET INCREASE IN CASH

(597,300)

59,122

CASH - BEGINNING OF PERIOD

2,261,860

2,220,920
CASH - END OF PERIOD
$1,664,560
$2,280,042

See Notes to Financial Statements.

4

DIVERSIFIED REALTY, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2001



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 September 30,
2001 and the results of the Company's operations
for the three months and nine months ended
September 30, 2001 and 2000 and cash flows
for the nine months ended September 30, 2001 and 2000.

The results of operations for the three months
and nine months ended September 30, 2001 and
 2000 are
not necessarily indicative of the results to
be expected for the full year.

Parent -M Corp, Great Falls, Montana owns
approximately 95% of the outstanding shares
 of the Company.
5

DIVERSIFIED REALTY, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS
       OF THE INCOME STATEMENT

SEPTEMBER 30, 2001


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


  COMPARISON           OF



THREE MONTHS
                        ENDED
SEPTEMBER 30,
                        2001 AND 2000

NINE MONTHS
                          ENDED
SEPTEMBER 30,
                          2001 AND 2000

INCREASES            (DECREASES)


Revenues $ (34,283)(65.0%)$ (53,257)(34.5%)

Expenses  (4,234)(21.6%)    (8,621) (15.1%)

Net Income(17,049)(83.4%)(24,936)(43.3%)

Revenues decrease $53,257 (34.5%) in the
 first nine months of 2001 as compared with
 the first nine months of 2000 due primarily
 to the decrease in interest and dividend
revenues of $49,740 (52.0%).  Interest
and dividend revenues decreased primarily due
 to a decrease in interest rates earned by the
 company.  Operating expenses decreased
$8,621 (15.1%) in the first nine months of
2001 as compared with the first nine months of
2000.  This is due primarily to the decrease
in salaries of $3,208 (79.1%).  The provision
 for income tax expense decreased $13,000
 (102.4%) in the first nine months of 2001 as
 compared with the first nine months of 2000
due primarily to the decrease in pretax income.




6




DIVERSIFIED REALTY, INC.

PART II

OTHER INFORMATION


SEPTEMBER 30, 2001



ITEM 1	LEGAL PROCEEDINGS

None

ITEM 2	CHANGES IN SECURITIES
AND USE OF PROCEEDS

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



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: October 22, 2001
    s/T. Lown
      T.Lown, Assistant
      Secretary-Treasurer

Date: October 22, 2001
    s/Lori Olson
      Lori Olson,
      Accountant



8