LONDON-Morgan Stanley Real Estate, the new owner of Canary Wharf, has bought a 25.5% stake in Great Portland Estates (GPE) for euro 178.43 million ($221.11 million). The bank paid 297½p a share for the stake and follows an earlier euro 2.46-billion ($3.16-billion) acquisition of Canary Wharf.

The acquisition from Liberty International has triggered speculation in the city that the Americans may bid for the whole of GPE. Such a move would add a significant stake in central London offices and retail to their dominance of the Docklands market. But even without a full bid the stake significantly strengthens Morgan Stanley’s presence in the UK real estate sector.

In recent years GPE has streamlined its portfolio, valued at euro 1 billion ($1.34 billion) earlier this year, so the focus is primarily in central London particularly the West End. Roughly 80% of the portfolio, or euro 851.54 million ($1.1 billion), is in offices with the remainder in retail.

Last November Toby Courtauld, Great Portland’s chief executive, announced the company had switched strategy from selling buildings and paying off debt to buying more office and retail property in London.

“We have watched the company restructure and reposition itself over the past three years and feel it is the right time to be investing in the company at this point in the cycle in the West End and Central London office markets,” John Carrafiell, head of Morgan Stanley’s European Real Estate Group, says in a statement.

Speculation is now growing in the city that Morgan Stanley will launch a full bid for the company. “The buyer says it will be a supportive shareholder, but we believe this is a precursor to a bid,” one property analyst notes. That sentiment seemed to be widespread and shares in GPE rose 13 ¾p in response to the news.

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