British Land is the UK's largest property investment firm by assets

British Land, which specialises in developing and managing office and retail premises, said the deal would increase its assets to more than �10bn.

The takeover has been recommended by the directors of Pillar Property, who own 4.5% of its shares between them.

Pillar owns more than �1bn in property assets and manages retail developments valued at more than �2.5bn.

'Attractive opportunity'

Raymond Mould, Pillar Property's chairman, said he believed British Land's offer was an attractive one for shareholders.

The acquisition of Pillar Property provides British Land with an attractive opportunity to accelerate our stated strategy Stephen Hester, British Land chief executive Check British Land's share price

GE Pension Trust, one of Pillar Property's largest shareholders, has already sold its 21.5% stake to British Land.

"The board of Pillar believes that British Land will be a good steward for the preservation and developments of the existing funds," he said.

The deal will also boost the value of property based investment funds managed by British Land by more than �3bn.