The deal with Morgan Stanley's Real Estate Fund will increase Brixton's euro 2.4-billion ($3.13 billion) portfolio by about a third. Because of the transaction's size, Brixton, run by Tim Wheeler, is likely to need to secure shareholder approval at an extraordinary general meeting.

In a statement, company officials said they could successfully export its intensive management approach to new parts of the country. According to Wheeler, the deal was "a major strategic move and gives Brixton a one-off opportunity to acquire a sizeable portfolio extending our sphere of influence."

The company will fund the acquisition from its own cash reserves and with a loan from HSBC holdings. The deal will raise Brixton's gearing from 61% to 131% before disposals. But that figure is expected to fall back to 85% to 90% when the sells 50 properties that do not fit a strategy of "establishing a critical mass" in the north and the midlands.

The company fought off competition for the portfolio from Highcross, a private property company; Protego Real Estate Investors, a property group set up by Iain Reid, the the former head of Aberdeen Property Investors; and Property Fund Management, which was recently taken over Teesland.