BUOYANT North-East plc Grainger Trust has made a cash offer of £58m for a London rival.
City North Group, which has a property portfolio of 350 units with an average value of about £247,000, has agreed to be taken over by Newcastle-based Grainger.
The move will strengthen residential property company Grainger's presence in the market rented sector - and in particular the London residential market.
Chairman Robert Dickinson said: "The acquisition will increase our market rented residential portfolio to about £225m.
"City North's high quality portfolio is well located and has been well managed."
The offer is 270p in cash for each City North share.
City North specialises in central London developments and letting and at the end of last year it had net assets of £65m.
It mainly owns one, two and three-bedroom flats.
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