How many real estate investors does it take to renovate a former Superfund site? Three, plus one savvy developer.

A trio of former Prudential Real Estate Investors portfolio managers -- Joe Margolis, John Maurer and Gary Picone -- have launched their own investment partnership, Arsenal Real Estate Funds, along with developer J. Brian O'Neill. Based in Morristown, New Jersey, the Arsenal team will focus on redeveloping obsolete or environmentally damaged industrial properties in urban areas where population density and limited space are driving demand.

"These sites can often be acquired at favorable pricing," Maurer says. "You just have to be willing to take on the remediation risk and know how to mitigate it."

The new firm's name, Arsenal, was inspired by the success of one such PREI investment, in Watertown, Massachusetts: the Arsenal, a decommissioned military base and Superfund site that in the early '90s was redeveloped into a 754,000-square-foot high-tech office campus with 11 buildings, including a 400-seat community theater. The property was eventually sold to Harvard Business School Publishing Corp., which is now its largest tenant.

Sussing out the risks of such tricky, potentially lucrative deals -- Maurer says the Watertown project generated profits in excess of $60 million -- is old hat for the portfolio managers, who worked with one another for seven years at PREI. Over that period they committed to invest about $5 billion, the vast majority of which was devoted to complex real estate transactions across their separate portfolios.

Now, with the launch of their own $350 million investment fund, the trio plans to pursue the same approach. Arsenal will seek to redevelop so-called brownfields and other environmentally damaged properties in the Northeast corridor, Florida and California.