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, 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 March 31, 1998
$.10 Par Value Common Stock                      5,372,915 Shares


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

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                         	DIVERSIFIED REALTY, INC.

                                	INDEX

                            	MARCH 31, 1998




                                                            	Page Number
PART I

Condensed Financial Statements:

Balance Sheet -
  March 31, 1998		                                                 2     

Statements of Income - 
  Three Months Ended March 31, 1998 and 1997                       3     

Statements of Cash Flows -
  Three Months Ended March 31, 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
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                         	DIVERSIFIED REALTY, INC.

                              	BALANCE SHEET

                           	AS OF MARCH 31, 1998





     ASSETS
Current Assets
  Cash                                                            $ 1,853,103  
  Receivables - Net                                                     2,507
  Due From Parent Company                                             233,200  

     Total Current Assets                                           2,088,810  

Noncurrent Receivables                                                  3,360

Property, Plant and Equipment, Net                                    258,372

            TOTAL ASSETS                                          $ 2,350,542 


    LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
  Accounts Payable and Accrued Expenses                           $    32,365  

  Income Taxes Payable                                                 10,118

    Total Current Liabilities                                          42,483


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
  Accumulated Deficit                                                (158,218)
  Cost of Common Stock in Treasury                                       (631)

   Total Stockholders' Equity                                       2,308,059

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                        $ 2,350,542   

                      	See Notes to Financial Statements
                                   
                                     2
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                         	DIVERSIFIED REALTY, INC.

                         	 STATEMENTS OF INCOME


                                                 For The Three Months Ended
                                                          March 31,       
                                                      1998            1997   

Operating Revenues                               $   40,468      $   33,519

Operating Expenses                                   15,343          14,428

                                                     25,125          19,091 

Provision for Income Taxes                          (10,300)         (4,200)

Net Income                                       $   14,825       $  14,891 



                    	See Notes to Financial Statements

                                   3
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                       	DIVERSIFIED REALTY, INC.

                       	STATEMENTS OF CASH FLOWS

                                                  For The Three Months Ended
                                                          March 31,        
                                                       1998           1997   
CASH FLOWS FROM OPERATING ACTIVITIES

Net Cash Provided By
  Operating Activities                            $   31,711     $   26,696 

CASH FLOWS FROM INVESTING ACTIVITIES

Cash Received on Principal of
 Notes Receivable                                      5,599            447 

Net Cash Provided By
 Investing Activities                                  5,599            447 

CASH FLOWS FROM FINANCING ACTIVITIES

Net Cash Advances 
  From (To) Parent Company                          (249,400)           600 

Net Cash Provided (Used) By
  Financing Activities                              (249,400)           600 

NET INCREASE (DECREASE) IN CASH                     (212,090)        27,736 

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

CASH - END OF PERIOD                              $1,853,103     $  975,649 

                     	See Notes to Financial Statements

                                   4
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                        DIVERSIFIED REALTY, INC.

                     	NOTES TO FINANCIAL STATEMENTS

                             	MARCH 31, 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 March 31, 1998 and 
the results of the Company's operations and cash flows for the three months 
ended March 31, 1998 and 1997.  

The results of operations for the three months ended March 31, 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
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                        	DIVERSIFIED REALTY, INC.

                   	MANAGEMENT'S DISCUSSION AND ANALYSIS
	                       OF THE STATEMENTS OF INCOME       

                            	MARCH 31, 1998

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,
                                                     1998 and 1997   

                                                       Increases
                                                      (Decreases)

Revenues                                           $  6,949    20.7%
          
Operating Expenses                                 $    915     6.3%        

Net Income                                         $    (66)    (.4%)        

Revenues increased $6,949 (20.7%) in the first quarter of 1998 as compared 
with the first quarter of 1997 due primarily to increases in rental revenues 
($2,254, 13.5%) and interest revenues ($9,616, 81.8%). Interest revenues 
increased primarily due to an increase in interest-earning deposits 
maintained by the Company. Operating expenses increased $915 (6.3%) in the 
first quarter of 1998 as compared with the first quarter of 1997 with 
decreases in the provision for depreciation ($11, .3%) and increases in other 
operating expenses ($929, 8.5%). The increase in other operating expenses 
during the first quarter of 1998 as compared with the first quarter of 
1997 was due primarily to increases in maintenance expenses. The provision 
for income tax expense increased $6,100, 145.2%, due primarily to the 
increase in pretax income.


 
                                    6        
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                        	DIVERSIFIED REALTY, INC.

                                	PART II

                           	OTHER INFORMATION

                             	MARCH 31, 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:  April 30, 1998                  s/K. King           
                                         K. King
                                         Assistant
                                         Secretary-Treasurer


Date:  April 30, 1998                  s/Jerry K. Mohland         
                                         Jerry K. Mohland,
                                         Accountant



                                  8

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