Apartment investors continue to show a strong appetite for San Francisco, even though the condo market has rebounded and some observers think the city is at risk of becoming oversaturated with rental stock.

This week, Avant Housing closed its sale of Vara (1880 Mission St.) to Dallas-based Behringer Harvard. While the price was not disclosed, sources put it at $108.5 million, which comes out to about $535,000 per unit. The terms of the deal, which closed on July 19, were agreed to six months ago, according to sources.

Brett Betzler and Mary Ann King of Moran Co. represented Avant Housing.

Avant bought the site for $12.5 million and spent about $53 million on construction, for a total investment of about $65.5 million. If the project were to go condo in the current market, the sell out would be approximately $130 million. The additional risks and costs of going condo — marketing, carrying expenses, the inevitable construction-defect lawsuits — probably wouldn’t justify the likely additional upside.

Vara apartments average 770 square feet, ranging from studios to units with three bedrooms and two baths and an optional loft. The apartments feature full-size washers and dryers and condominium-quality finishes including granite or quartz countertops, maple cabinetry and stainless steel appliances. Common-area amenities include a state-of-the-art fitness center, two landscaped courtyards and a Wi-Fi-enabled resident lounge.

“We believe Vara will appeal to young professionals who have been increasingly attracted to employment opportunities in the San Francisco metro area,” said Mark Alfieri, chief operating officer of Behringer Harvard Multifamily REIT I. “The Mission District neighborhood has experienced rapid transformation and gentrification over the last decade as tech companies and incubator firms have moved to the area.”

Of the 8,117 apartment units under construction in the city (or soon to be), nearly 90 percent are owned by REITs or multi-family operators, according to Polaris Pacific. Between 800 and 1,000 of the units are candidates for conversion.

The sale reflects a changing attitude investors have toward neighborhoods like the Mission and Dogpatch, according to Avant’s Eric Tao. About 18 months ago, Avant took the whole apartment portfolio to market, expecting that a single buyer would grab all three as a package.

“We thought somebody who has always wanted to be in San Francisco would want to have close to 700 units in one fell swoop,” he said.

At the time, however, investors were crawling all over the SoMa projects but apprehensive about the Mission, Tao said.

“There was a feeling that it was gritty and challenging,” he said.

Avant took Vara off the market for a while and brought it back in the first quarter of this year.

“By the time we came out in Q1 this year, the comfort level had changed,” Tao said. “The interest level had tripled. We had 15 major national investment groups tour the site.”

“We are happy we sold it — we are going to make an excellent return for our investors, CalPERS,” he said. “But it’s a little bittersweet. It’s like building this awesome car and not getting to drive it.”