Equity release property specialist Sovereign Reversions is seeking acquisitions to boost net assets to £100 million after last year's 14 per cent increase to £45 million.

AIM-quoted Sovereign buys homes cheaply from old people who can then occupy them on below-market terms until death, when the company can then sell or otherwise turn them to profitable use. In the year to April, Sovereign invested £11.7 million in new reversionary properties and saw its average stake in each of its properties rise £10,000 to £127,000, with 39 per cent invested outside the south of England (where life expectancies are lower), 38 per cent in 100 per cent reversions and the average tenant's age up one year to 78.

Claiming net current assets of £2.2 million, fixed assets up 14.2 per cent at £46.5 million, 'embedded' assets of 564p a share and net assets of 498p a share – against a share price up 4p today at 287.5p – chief executive Graeme Marshall says Sovereign will gear up with borrowing and probably issue shares to fund one or two chunky acquisitions, if it can find them. He concedes the company failed to clinch two hoped-for purchases during the last financial year, but hopes to do better this time.

These plans and the current outlook for the equity release market could be called into question if a speculative boom (like the recent 'buy to let' excitement) pushed up prices too far. But most analysts agree with Marshall that this is unlikely and that sector prospects are fair.

Recent legislation could see the equity release market more fully regulated by the beginning of 2007. Marshall (who cites an often-ignored proviso that 'you cannot sell a lifetime mortgage without offering a reversion') says these changes should bring in more independent financial advisers, who should stimulate the market.

The shares could go better, especially if the mooted acquisitions look encouraging.