A newly renovated, nearly $4,000-a-month apartment two blocks from Times Square was being used as a major heroin-packaging mill, processing millions of dollars' worth of the drug for sale, authorities said Thursday.

Investigators who raided the West 43rd Street apartment Wednesday found 28 pounds of heroin, along with 250,000 small envelopes and workers busily packing the drug for sale, said the office of city Special Narcotics Prosecutor Bridget G. Brennan, the Drug Enforcement Administration and other agencies. The drugs are worth about $6.5 million, they said.

"If our investigators were surprised by the location, you can only imagine the shock of neighbors, commuters and theatergoers," Brennan said in a release.

Three men and a woman were arrested on high-level drug-possession charges; information on their arraignments wasn't immediately available by phone Thursday, the Veterans Day holiday.

Three of the suspects were arrested in the apartment or a nearby courtyard where some tried to hide, while the fourth was stopped driving away in a car with a garbage bag full of heroin-packing paraphernalia, authorities said.

The drug ring rented the $3,800-a-month, duplex apartment two weeks ago from an apparently unsuspecting landlord, Brennan's office said. Officials with the company that manages the building — where rental listings boast hardwood floors and exposed brick walls — didn't immediately return a call Thursday. The building is about two blocks west of Times Square.

Investigators began watching the place days ago as part of a broader investigation into heroin mills, the prosecutors' office said.

When they searched the apartment, investigators found piles of loose heroin, bundles of cash, coffee grinders used to dilute the drug and glassine envelopes stamped with underground brand names such as King Kong and 95 South, an apparent reference to Interstate 95, authorities said.