Haven't found anything about such a development of the He 114 so far, nevertheless, I would not rule
out it completely, although I'm a little bit sceptical about the source, keeping in mind the nonsense, I've
already read from (acknowledged !) aviation authors about naval themes. So, maybe, it wasn't just
M.J. Whitleys cup of tea ?
But the He 114 in general is an interesting theme. The closest to the new version may have been B-2 version,
which is said to have been delivered to Romania, some aircraft allegedly fitted with a DB 600 engine. Unfortuantely
I couldn't find photos of those service type aircraft with inline engines, only drawings of the V-2.
Some problems, I have with that carrier version: Why a retractable landing gear was incorporated, I'm not sure,
Arado and Fieseler still used a fixed one and take-off performance probably wouldn't have been increased, due to
higher weight. Not sure, that changing from sesqui-plane to biplane configuration always isn't that easy, but maybe
it was just an attemot to increase wing area without increasing span (important for carrier use). AFAIK, the two
contenders for the carrier borne recce/torpedo bomber were regarded as backup against each other and the specification
was given to Arado and Fieseler only, priority was low, as the "Graf Zeppelin" wasn't expected to enter service soon,
but maybe Heinkel got to know and answered with an unsolicited proposal ?
The He 114 wasn't intended to carry offensive weapons (contrary to the Ar 195, developed from the Ar 95) and crew
position was obviously quite unsuitable for carrier use, as there already were complaints for "standard" use. So changing
it would have meant really a major re-design, probably without much left of the original, for a different role. So I don't think,
that the "He 114" would have been kept by the RLM (Remember, it was the the "Ar 195", too, not, say, the "Ar 95T") and
honestly I have only slim hopes, that it ever reached the prototype stage, as from that era, I'm pretty confident, that we
haven't lost knowledge about any actually built type completely.
Don't get me wrong, I don't want to reject the possibility of that type completely, I'm just applying Occam's razor.