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, 1998        


[ ]	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, 1998
$.10 Par Value Common Stock                     5,372,895 Shares


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


<PAGE>


                      	DIVERSIFIED REALTY, INC.


                              	INDEX

                           	JUNE 30, 1998

                                                             	Page Number
PART I

  Condensed Financial Statements:

Balance Sheet
  June 30, 1998	                                                   2     

Statements of Income - 
  Six Months and Three Months Ended June 30, 1998 and 1997         3     

Statements of Cash Flows -
  Six Months Ended June 30, 1998 and 1997                          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, 1998


     ASSETS

Current Assets
  Cash                                                        $  1,869,697     
  Receivables - Net                                                    182
  Due From Parent Company                                          226,600

   Total Current Assets                                          2,096,479  

Property, Plant and Equipment, Net                                 254,882

            TOTAL ASSETS                                      $  2,351,361     



    LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
  Accounts Payable and Accrued Expenses                       $     30,345     

             Total Current Liabilities                              30,345 
           
Stockholders' Equity
  Common Stock - $.10 Par Value, 
  11,000,000 shares authorized,
  5,875,000 shares issued                                          537,500
  Accumulated Deficit                                             (145,261)
  Cost of Common Stock in Treasury                                    (631)

             Total Stockholders' Equity                          2,321,016  

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                    $  2,351,361      


                      	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,     
                                1998        1997             1998       1997  

Operating Revenues           $ 41,737    $ 31,045         $ 82,205   $ 64,564 

Operating Expenses             19,080      18,877           34,423     33,305 

                               22,657      12,168           47,782     31,259 

Income Tax Expense             (9,700)     (2,800)         (20,000)    (7,000)

    Net Income               $ 12,957    $  9,368         $ 27,782   $ 24,259 




                     	See Notes to Financial Statements


                                     3
<PAGE>


                      	DIVERSIFIED REALTY, INC.

                      	STATEMENTS OF CASH FLOWS

                                                    For The Six Months Ended 
                                                             June 30,         
                                                         1998           1997   

    CASH FLOWS FROM OPERATING ACTIVITIES

Net Cash Provided By Operating
 Activities                                          $   35,838   $   41,487 

     CASH FLOWS FROM INVESTING ACTIVITIES

Cash Received on Principal of
 Notes Receivable                                        11,466          906

     Net Cash Provided By
       Investing Activities                              11,466          906 

     CASH FLOWS FROM FINANCING ACTIVITIES

Net Cash Advances
   From (To) Parent Company                            (242,800)       1,200 


     Net Cash Provided (Used) By Financing
       Activities                                      (242,800)       1,200 

NET INCREASE (DECREASE) IN CASH                        (195,496)      43,593 

CASH - BEGINNING OF PERIOD                            2,065,193      947,913 

CASH - END OF PERIOD                                 $1,869,697   $  991,506 


                      	See Notes to Financial Statements
  
                                     4
<PAGE>

	
                          DIVERSIFIED REALTY, INC.

                      	NOTES TO FINANCIAL STATEMENTS

                              	JUNE 30, 1998


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, 1998 and 
the results of the Company's operations for the six months and three months 
ended June 30, 1998 and 1997 and cash flows for the six months ended
June 30, 1998 and 1997.

The results of operations for the six months and three months ended
June 30, 1998 and 1997 are not necessarily indicative of the results to be 
expected for the full year.


Parent -

M Corp, Great Falls, Montana owns approximately 94% of the outstanding shares
of the Company.



                                  5
<PAGE>

                                  
	
                       DIVERSIFIED REALTY, INC.

                  	MANAGEMENT'S DISCUSSION AND ANALYSIS

                       OF THE INCOME STATEMENT      

                            June 30, 1998

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,      
                          1998 AND 1997                 1998 AND 1997    
<TABLE>
<S>                    <C>         <C>               <C>          <C>
Revenues			            $ 10,692    34.4%            	$  17,641    27.3%       

Expenses			                 203     1.1%                 1,118     3.4% 

Net Income		              3,589    38.3%                 3,523    14.5%  

</TABLE>



Revenues increased $17,641 (27.3%) in the first six months of 1998 as 
compared with the first six months of 1997 due primarily to an increase in 
interest revenues ($20,571, 84.4%) partially offset by a decrease in other 
revenues ($4,852, 97.1%). Interest revenues increased primarily due to an 
increase in interest-earning deposits maintained by the Company. Operating 
expenses increased $1,118 (3.4%) in the first six months of 1998 as compared 
with the first six months of 1997 with an increase in other operating 
expenses ($1,251) partially offset by a decrease in the provision for 
depreciation. The increase in other operating expenses during the first six 
months of 1998 as compared with the first six months of 1997 was due 
primarily to increases in maintenance expenses. The provision for income tax 
expense increased $13,000, 185.7%, in the first six months of 1998 as 
compared with the first six months of 1997 due to increases in pretax 
income and income tax rates.



                                   6


<PAGE>

                       	DIVERSIFIED REALTY, INC.

                              	PART II

                         	OTHER INFORMATION


                           	JUNE 30, 1998



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
<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:  August 7, 1998                 s/K. King           
                                        K. King
                                        Assistant 
                                        Secretary-Treasurer        



Date:  August 7, 1998                 s/Jerry K. Mohland         
                                        Jerry K. Mohland          
                                        Accountant               




                                  8

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