Former Pru Execs Launch $350M Private Equity Fund

Arsenal is specifically targeting for-rent and for-sale multifamily projects in densely populated, high-demand markets, especially in the Northeast, California and Florida. The aim is to partner up with local developers in the target markets.

"Our business model will provide capital throughout the development life cycle," Picone says. "This represents a 360-degree view of real estate development that will enable us to generate profits at every stage of a project.

"The greatest profit potential in any industry occurs in the manufacturing process, and in real estate, creative reuse of land and manufacturing of housing provides the opportunity for outsized returns," Picone says. "Our fund will seek out these opportunities and drive exceptional returns to investors."

Arsenal intends to match its capital in high-margin transactions, including new development and repositioning projects. One of the firm's approaches, according to Picone, is through deals that create high-value residential land in supply-constrained markets through rezoning, entitlements and environmental remediation of industrial properties.

"Communities today are looking to preserve their open space, while meeting the housing needs of their constituents," Picone continues. "We believe that this presents a compelling opportunity for us, as we have had experience in repurposing brownfields and other industrial properties for residential development."

The firm draws its name from an earlier project the four principals had worked on, namely the Watertown Arsenal in Cambridge, MA, a former superfund site that was turned into a 754,000-sf office campus. Watertown Arsenal is now owned by Harvard University and houses the Harvard University Press. That project is said to have generated the foursome an estimated profit in excess of $60 million from a relatively small equity investment.

"The time is right for a new fund focused on creating multifamily residential projects," O'Neill says.