National Australia Bank (NAB) said it reduces the value of the commercial real estate (CRE) portfolio by 20 per cent to £2.38billion, with the proportion of impaired loans dropping by 48 per cent.
All the loans included in the sale are either in default, have passed maturity or are near maturity.
In spite of the deal, incoming NAB chief executive Andrew Thorburn warned the UK business still faces challenges, particularly in relation to conduct-related compensation.
He said: "We've progressively reduced our exposure to UK commercial property loans through organic run-off.
"This sale represents a substantial de-risking of the non-performing portion of the NAB UK CRE portfolio.
"While pleased with the acceleration of the run-off in the NAB UK CRE portfolio, our broader UK operations still face some challenges, in particular in relation to conduct-related costs."
NAB took over the commercial property loan book of its two UK banks, Clydesdale and Yorkshire, two years ago and has been rumoured for some time to be trying to dispose of it.
David Ellis, Sydney-based analyst at Morningstar, suggested NAB may be able to offload the remainder of the loans over the next 12 months.
He said: "The fact that economic conditions in the UK are now improving, particularly in commercial real estate, is increasing interest from funds that buy distressed loan books,
Mr Thorburn, who takes over in the NAB chief executive role from Cameron Clyne next month, said further asset sales were being considered: "We continue to look at opportunities to optimise return on equity by accelerating the sale of non-core assets."
Some Australian media suggested the disposal may help to pave the way for a sale or flotation of Clydesdale Bank, possibly as early as next year.
NAB said it did not comment on speculation.
It emerged earlier this month that small business customers who had their property loans transferred from Clydesdale to NAB were now being asked to supply passports for compliance-related identity checks.
In recent weeks, speculation has suggested Cerberus, which has its headquarters in New York, was willing to pay in the region of £485million for the loan book.
Cerberus and NAB would not comment on the price paid.
The exact number of loans and details on the customers being transferred as part of the sale was also not revealed.
In a statement to the Australian Stock Exchange, NAB said the deal would lead to a small gain above the net book value of the loans and also see around £127m of capital being released.
Although the loans are being transferred, NAB will still retain any liability on them from past conduct issues.
Clydesdale, headed by David Thorburn, is currently engaged in looking at redress for hundreds of business customers relating to whether they were mis-sold complex loan products.
In common with other banks, it is also still compensating consumers for mis-sold payment protection insurance (PPI). On top of that, it is facing a bill of up to £42million for errors in calculating mortgages.
NAB's UK banking operations delivered an increase in underlying profits from £135m to £144m in the six months to March 31 this year.