  The electronic structure and magnetism of a new magnetic intercalation
compound (Li0.8Fe0.2)OHFeSe are investigated theoretically. The electronic
structure calculations predict that the Fe in the (Li,Fe)OH intercalated layer
is in +2 valence state, i.e. there is electron doping to the FeSe layer,
resulting in the shrinking of the Fermi surface (FS) pocket around Gamma and a
strong suppression of dynamical spin susceptibility at M in comparison with the
bulk FeSe compound. The ground state of the FeSe layer is a striped
antiferromagnetic (SAFM) metal, while the (Li,Fe)OH layer displays a very weak
localized magnetism, with an interlayer ferromagnetic (FM) coupling between the
FeSe and intercalated (Li,Fe)OH layers. Moreover, the (Li,Fe)OH is more than a
block layer; it is responsible for enhancing the antiferromagnetic (AFM)
correlation in the FeSe layer through interlayer magnetic coupling. We propose
that the magnetic spacer layer introduces a tuning mechanism for spin
fluctuations associated with superconductivity in iron-based superconductors.
