The young attacker is the son of former Real Madrid and Arsenal winger Jose Antonio Reyes.
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Reyes Snr was killed in a traffic accident in 2019.
Reyes Jr has penned a new deal to 2027 and announced the agreement on social media: "Very proud to continue belonging to this great family! Thank you Real Madrid for trusting in me."
Having just turned 18, Reyes Jr is a Spain youth international and regarded highly inside La Fabrica.