U.S. SECURITIES AND EXCHANGE COMMISSION
                              Washington, D.C.  20549
                                   FORM 10-KSB
(Mark One)
XX   ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
     OF 1934 

     For the fiscal year ended December 31, 1998

     TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE    
     ACT  OF 1934 
     For the transition period from             to                      
   
     Commission file number 0-2864

                     DIVERSIFIED REALTY, INC.                                 
            (Name of small business issuer in its charter)

          Montana                   
(State or other jurisdiction                       81-0268110
of incorporation or organization)    (I.R.S. Employer Identification Number)

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

Issuer's telephone number (406) 727-2600                                    

Securities registered under Section 12(b) of the Exchange Act: None
                                     
Securities registered under Section 12(g) of the Exchange Act: 

                       $.10 Par Value Common Stock 
                             (Title of class)

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 XX  No 
  
Check, if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-KSB or any amendment to this Form 10KSB.  
            
State issuer's revenues for its most recent fiscal year $165,740.

State the aggregate market value of the voting and non-voting common equity 
held by non-affiliates computed by reference to the price at which the common
equity was sold, or the average bid and asked price of such common equity, as
of a specified date within the past 60 days.  (See definition of affiliate 
in Rule 12b-2 of the Exchange Act).
As of February 26, 1999, 292,547 shares held by nonaffiliates were
outstanding. The registrant's stock is not traded on any securities
exchange. To registrant's knowledge, bid and asked quotations for 
registrant's stock are not reported in any newspapers nor are records kept 
of any quotations by securities dealers or the National Quotation Bureau, 
Inc. There exists no public market for registrant's common stock.

	             (APPLICABLE ONLY TO CORPORATE REGISTRANTS)
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.
5,372,023 shares $.10 par value common stock are outstanding as
of February 26, 1999.

                DOCUMENTS INCORPORATED BY REFERENCE
If the following documents are incorporated by reference, briefly describe 
them and identify the part of the form 10-KSB (e.g., Part I, Part II, etc.) 
into which the documents are incorporated: (1) any annual report to security 
holders: (2) any proxy or information statement; and (3) any prospectus 
filed pursuant to Rule 424(b) or (c) of the Securities Act of 1933 
("Securities Act"). The listed documents should be clearly described for 
identification. 

         DOCUMENTS          			       FORM 10-KSB REFERENCE     

Annual Report to Shareholders for	  		Part I,   Items 1 and 2
the year ended December 31, 1998.	  		Part II,  Items 5, 6 and 7
                                   			Part III, Item 12
  	                                 		Part IV,  Item 13 


Transitional Small Business Disclosure Format (check one): Yes   ; No X .

<PAGE>
                            	DIVERSIFIED REALTY, INC.

                                    	PART I


ITEM 1.	DESCRIPTION OF BUSINESS AND
ITEM 2.	DESCRIPTION OF PROPERTY

A description of the Company's business and property ownership is set forth
on Page 1 of Exhibit 13, the Annual Report to Shareholders for the year ended
December 31, 1998, which description is incorporated herein by reference.

ITEM 3.	LEGAL PROCEEDINGS

No legal proceedings presently pending by or against Diversified Realty, Inc.
are described herein as management believes that the outcome of such
litigation should not have a material adverse effect on the financial 
position of the Company taken as a whole.

ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders during the fourth
quarter of 1998.


                                 	I-1

                                  	1.
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                         	DIVERSIFIED  REALTY, INC.

                                	PART II


ITEM 5.	MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
ITEM 6.	MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
ITEM 7.	FINANCIAL STATEMENTS

Items 5, 6 and 7 are set forth on Page 12, Pages 1 and 2 and Pages 3 to 11, 
respectively, of Exhibit 13, the Annual Report to Shareholders for the year 
ended December 31, 1998, which report is incorporated herein by reference.

ITEM 8.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

There have been no disagreements concerning accounting principles or 
practices or financial statement disclosures between the Company and the 
Company's independent auditor during the two most recent years.


                                	II-1

                                  	2.
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                        	DIVERSIFIED REALTY, INC.

                               	PART III

ITEM 9.	DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
        COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.

The following are the directors and executive officers of the Company.  
All directors and officers serve as such until the 1999 annual meeting of 
shareholders or until their successors are elected and qualify.

NAME, AGE, AND YEAR ELECTED DIRECTOR		      POSITION   


S. M. McCann       35,    1990              Director

Charles E. Reed    81,    1974              Vice President and
                                               Director

M. A. Arneson	    	43,    1997             	Director

R. Bruce Robson    57,                      President


S. M. McCann is the president and a director of UAC, Inc., an affiliate of 
the Company, and the president and a director of M Corp. R. Bruce Robson is
a director of M Corp. M. A. Arneson is a director of TSI, Inc.

Family Relationships

S. M. McCann and M. A. Arneson are children of Anne Marie and Paul J. McCann.  
Members of the Anne Marie and Paul J. McCann family control a majority of 
the common stock of M Corp.  Anne Marie McCann and Paul J. McCann each 
disclaim beneficial ownership of any shares of stock not owned of record 
directly by them.  Anne Marie and Paul J. McCann do not personally own any 
stock of the Company.

Following are the executive officers of the Company and a description of 
their principal business experience.

Name and Position      	Business Experience During Past 5 Years  

R. Bruce Robson         Data Processing Manager
President               Sletten Construction Co.
                        Great Falls, Montana

M. A. Arneson    		     Investor,
Secretary- Treasurer    Billings, Montana

S. M. McCann          		Attorney at Law, Business Owner, Investor
                        San Luis Obispo, California

Charles E. Reed	       	President, Continental Realty and Escrow,
Vice President          Butte, Montana.

Based solely on its review of reports of persons subject to Section 16 of 
the Securities and Exchange Act, the Company believes that required reports 
were filed in a timely manner disclosing transactions involving the 
Company's common stock.

                            	III-1

                               3.
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                   	DIVERSIFIED REALTY, INC.




ITEM 10.	EXECUTIVE COMPENSATION

Summary Compensation Table.  The following table shows the cash compensation 
paid by the Company to its President and Chief Executive Officer for 1998, 
1997 and 1996.  No officer or director of the Company received cash 
compensation exceeding $250 during 1998, 1997 or 1996.


                          Summary Compensation Table

Name of individual                 Calendar             Total Cash
and Position                         Year              Compensation

R. Bruce Robson                      1998                  $  0
President 

M. A. Arneson                        1997                  $  0
President, Director                  1996                  $  0


The Company has no pension plan, no stock option or stock appreciation rights 
plans and no long-term incentive plans and there was no other material 
compensation paid during the years ended December 31, 1998, 1997 and 1996.  
The Company has not adopted a formal plan for the compensation of directors.
During 1998 the Company did not pay directors fees to any director.

ITEM 11.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

(a)	Security Ownership of Certain Beneficial Owners

Set forth below is certain information concerning persons who are known by 
the Company to own beneficially more than 5% of the Company's voting shares 
on February 26, 1999.


Title of Class                         No Par Value
                                       Common Stock

Name and Address                       M Corp              
of Beneficial Owner                    110 Second Street South
                                       Great Falls, Montana

Amount and Nature                      5,076,423 (1)
of Beneficial                          Direct
Ownership        


Percent                                94.5%
of Class

   
(1) S. M. McCann, M. A. Arneson and other members of the Anne Marie and Paul 
J. McCann family own directly or indirectly a majority of the outstanding 
stock of M Corp, which company owns 5,076,423 shares (94.5%) of the 
outstanding common stock of the Company. Members of the Anne Marie and Paul 
J. McCann family own directly 3,033 shares (.06%) of the Company's stock.  
Anne Marie and Paul J. McCann, parents of S. M. McCann and M. A. Arneson,
each disclaim beneficial ownership of any shares of stock not owned 
of record directly by them.  Neither Anne Marie nor Paul J. McCann personally
own any shares of stock in the Company.


                             	III-2

                               	4.

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                      	DIVERSIFIED REALTY, INC.




ITEM 11.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT - 
Continued

(b)	Security Ownership of Management

The following table sets forth as of February 26, 1999, information concerning 
the beneficial ownership of the Company's common stock by each director, each 
executive officer named in the Company's Summary Compensation Table and by 
all directors and executive officers of the Company as a group:  

                               Amount and Nature   
     Name of                     of Beneficial
Beneficial Owner                   Ownership                 Percent

Charles E. Reed                    20 Direct                    -  

M. A. Arneson                          - (1)                    -  

S. M. McCann                           - (1)                    -

All Directors and Officers 
 as a Group                           20 (1)                    - 

(1)	See Note (1) Item 11(a) on preceding page.

(c)	Changes In Control

The Company knows of no contractual arrangements which may at  a subsequent
date result in a change in control of the Company.

ITEM 12.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Transactions with the Company's parent company, M Corp and its other 
subsidiaries, are disclosed in Note 5 of the notes to financial statements 
in the Annual Report to Shareholders for the year ended December 31, 1998, 
which note is incorporated herein by reference.  M Corp owns approximately 
94.5% of the Company's outstanding common stock.

                                	III-3

                                  	5.
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                       	DIVERSIFIED REALTY, INC.

                               	PART IV


ITEM 13.	EXHIBITS AND REPORTS ON FORM 8-K

(a)	Exhibits

No. 13 - Diversified Realty, Inc., Annual Report to Shareholders for the 
year ended December 31, 1998, incorporated by reference in this Annual Report 
on Form 10-KSB.

No. 27 - Financial Data Schedule

(b)	Reports on Form 8-K

No Current Reports on Form 8-K were filed by the Company during the three 
months ended December 31, 1998.





                                   IV-1

                                     6.
<PAGE>


                 
                            DIVERSIFIED REALTY, INC.

                                  SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant 
has caused this report to be signed on its behalf by the undersigned, 
thereunto duly authorized.



	                                         DIVERSIFIED REALTY, INC.      




Date:  February 26, 1999                 	By:s/R. Bruce Robson          
	                                              R. Bruce Robson, President



In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities indicated 
on February 26, 1999.



Director					                                s/M. A. Arneson               
                                               M. A. Arneson


Director					                                s/S. M. McCann                
                                               S. M. McCann


Principal Accountant	                        s/Jerry K. Mohland            
                                               Jerry K. Mohland



                                     IV-2

                                       7.

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