Merlin Properties is planning an IPO, with proceeds to be spent on Spanish real estate.

The newly created entity said it would become the largest listed property company in Spain by market capitalisation under the country’s new REIT regime – the Sociedad Anónima Cotizada de Inversión en el Mercado Inmobiliario (SOCIMI).

Part of the proceeds from the IPO will be used to buy a portfolio of fully-let, high-quality Spanish real estate. The remainder will be used to finance expansion through commercial property in the Iberian region, with a focus on prime assets in Spain’s main cities, with some investment in Portugal.

Ismael Clemente and Miguel Ollero, founding partners of Spanish asset manager Magic Real Estate, will manage Merlin, along with David Brush, former head of RREEF.

Last month, PIMCO backed Spain’s first SOCIMI by investing €50m in Lar España. The fund manager acted as an anchor investor for Lar, which launched with a total offer size of €400m and a focus on Spain’s office and retail sectors.