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         June 30, 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 June 30, 1997
No Par Value Common Stock                     1,872,915 Shares


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


<PAGE>


                      	DIVERSIFIED REALTY, INC.


                              	INDEX

                           	JUNE 30, 1997

                                                             	Page Number
PART I

  Condensed Financial Statements:

Balance Sheet
  June 30, 1997	                                                   2     

Statements of Income - 
  Six Months and Three Months Ended June 30, 1997 and 1996         3     

Statements of Cash Flows -
  Six Months Ended June 30, 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

<PAGE>


                        	DIVERSIFIED REALTY, INC.

                             	BALANCE SHEET

                          	AS OF JUNE 30, 1997


     ASSETS

Current Assets
  Cash                                                        $    991,506     
  Receivables - Net                                                  1,938
  Due From Parent Company                                            2,000

   Total Current Assets                                            995,444  

Noncurrent Receivables                                              10,473 

Property, Plant and Equipment, Net                                 268,863

            TOTAL ASSETS                                      $  1,274,780     



    LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
  Accounts Payable and Accrued Expenses                       $     30,545     
  Income Taxes Payable                                               4,418

             Total Current Liabilities                              34,963 
           
Stockholders' Equity
  Common Stock - No Par Value, 5,000,000 shares
   authorized, 1,875,000 shares issued                           1,416,908
  Accumulated Deficit                                             (176,466)
  Cost of Common Stock in Treasury                                    (625)

             Total Stockholders' Equity                          1,239,817  

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                    $  1,274,780      


                      	See Notes to Financial Statements

                                      2
<PAGE>


                        	DIVERSIFIED REALTY, INC.

                         	STATEMENTS OF INCOME

                              For The Three Months         For the Six Months
                                     Ended                        Ended       
                                   June 30,                      June 30,     
                                1997        1996             1997       1996  

Operating Revenues           $ 31,045    $ 24,195         $ 64,564   $ 50,498 

Operating Expenses             18,877      20,219           33,305     37,507 

                               12,168       3,976           31,259     12,991 

Income Tax Expense             (2,800)        800           (7,000)    (2,900)

    Net Income               $  9,368    $  4,776         $ 24,259   $ 10,091 



Earnings Per Weighted
Average Shares Outstanding
(1,872,915 shares in 1997
and 1,874,704 shares
in 1996)                     $    .01    $   --           $    .01   $    .01 


Dividends Per Share          $   --      $   --           $    --    $    --   



                     	See Notes to Financial Statements


                                   3
<PAGE>


                      	DIVERSIFIED REALTY, INC.

                      	STATEMENTS OF CASH FLOWS

                                                    For The Six Months Ended 
                                                             June 30,         
                                                         1997           1996   

    CASH FLOWS FROM OPERATING ACTIVITIES

Net Cash Provided By Operating
 Activities                                          $   41,487   $   23,378 

     CASH FLOWS FROM INVESTING ACTIVITIES

Cash Received on Principal of
 Notes Receivable                                           906          834

     Net Cash Provided By
       Investing Activities                                 906          834 

     CASH FLOWS FROM FINANCING ACTIVITIES

Net Cash Received From (Advanced To)
 Parent Company                                           1,200       (1,200)

Cash Purchases of Treasury Stock                             -          (266)


     Net Cash Provided (Used) By Financing
       Activities                                         1,200       (1,466)

NET INCREASE IN CASH                                     43,593       22,746 

CASH - BEGINNING OF PERIOD                              947,913      614,560 

CASH - END OF PERIOD                                 $  991,506   $  637,306 


                      	See Notes to Financial Statements
  
                                     4
<PAGE>

	
                          DIVERSIFIED REALTY, INC.

                      	NOTES TO FINANCIAL STATEMENTS

                              	JUNE 30, 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 June 30, 1997 and 
the results of the Company's operations for the six months and three months 
ended June 30, 1997 and 1996 and cash flows for the six months ended
June 30, 1997 and 1996.

The results of operations for the six months and three months ended
June 30, 1997 and 1996 are not necessarily indicative of the results to be 
expected for the full year.


Earnings Per Share-
 
The computation of earnings per share in the accompanying statements is
based on the weighted average number of shares outstanding during each
period.


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 INCOME STATEMENT      

                            June 30, 1997

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


                                        COMPARISON OF                     
 
                           THREE MONTHS                 	SIX MONTHS      
                               ENDED	                       ENDED        
                             JUNE 30,	                     JUNE 30,      
                          1997 AND 1996                 1997 AND 1996    
<TABLE>
<S>                    <C>         <C>               <C>          <C>
Revenues			            $  6,850    28.3%            	$  14,066    27.9%       

Expenses			              (1,342)   (6.6%)               (4,202)  (11.2%) 

Net Income		              4,582    96.1%                14,168   140.4%  

</TABLE>



Revenues increased $14,066 (27.9%) in the first six months of 1997 as 
compared with the first six months of 1996 due primarily to increases in 
interest revenues ($10,335, 73.2%) and other revenues ($4,989). Interest 
revenues increased primarily due to an increase in interest-earning deposits 
maintained by the Company. Operating expenses decreased $4,202 (11.2%) in 
the first six months of 1997 as compared with the first six months of 1996 
with decreases in the provision for depreciation ($1,244, 15.1%) and 
decreases in other operating expenses ($2,958, 1.0%). The decrease in other 
operating expenses during the first six months of 1997 as compared with the 
first six months of 1996 was due primarily to decreases in maintenance 
expenses. The provision for income tax expense increased $4,100, 141.4%, in 
the first six months of 1997 as compared with the first six months of 1996 
due to the increase in pretax income.





                                   6


<PAGE>

                       	DIVERSIFIED REALTY, INC.

                              	PART II

                         	OTHER INFORMATION


                           	JUNE 30, 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:  July 28, 1997	                 s/K. King           
                                        K. King
                                        Assistant 
                                        Secretary-Treasurer        



Date:  July 28, 1997                  s/Jerry K. Mohland         
                                        Jerry K. Mohland          
                                        Accountant               




                                  8

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