Shares in Schroder Real Estate Investment Trust (LSE:SREI) rose as much as 12% in early trading after the board said it would propose a managed wind-down and return of capital to shareholders.
The decision follows a prolonged period in which the company's shares traded at a material discount to net asset value.
The board said equity markets continued to disadvantage smaller listed vehicles, particularly those with a market value below £100 million, regardless of management quality.
It added that institutional investors increasingly wanted exposure to larger vehicles offering greater liquidity, diversification and cost efficiencies.
The board said it had explored alternatives, including share buybacks and a shift towards thematic or sector-specific investments.
It concluded that these were unlikely to close the discount significantly or support long-term growth, given macro uncertainty and the structural shift in investor sentiment.
The board said the portfolio could be sold in the direct property market for more than the level implied by the prevailing share price.
The company owns 14 assets across France, Germany and the Netherlands.
It expects the wind-down to take roughly two to three years, citing the market backdrop, heightened geopolitical risks and the need to manage French tax litigation.
The board intends to continue paying dividends to maintain investment trust status, though payments will fall as assets are sold and capital returned.
A circular will be published in due course to convene a general meeting, where shareholders will be asked to approve changes to the investment objective.
Fund manager Jeff O'Dwyer said the discount had hindered the company's ability to scale, despite strong property performance.
After the initial spike, the shares settled at 62p, up 4%,
