Attempting to solve each other's real estate troubles in one fell swoop, the embattled American Folk Art Museum announced Wednesday morning that it is selling its West 53rd Street flagship building to the Museum of Modern Art, which has been itching to expand.

This report is the latest in a series of recent blows for the Folk Art Museum, which is in default on the $31.9 million loan it took out to finance its midtown expansion 10 years ago. Over the last week, the museum appears to have been dismantling itself piece by piece, announcing the departure of its executive director Maria Ann Conelli on May 3 and turning over control of the American Antiques Show, a fundraising fair it has organized for a decade, to the independent Art Fair Company.

According to a statement provided to ARTINFO by MoMA, the Folk Museum approached its neighbor "recently" about purchasing the building because MoMA has the right of first refusal on the property. "This mutually beneficial arrangement between the two museums will provide funding for the American Folk Art Museum at a critical time, and additional space for The Museum of Modern Art," said the statement. According to reports, MoMA will use the new space for exhibitions. Though neither museum would disclose the terms of the sale, Laura Parsons, president of the Folk museum, said it will leave her institution debt-free.

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Despite the mutual benefit, the Folk Museum is publicly saddened by the sale, which Parsons described as a last resort. She told Bloomberg that several board members wore black to last night's meeting, during which the sale was approved. "We are in mourning," she told the site. The building was designed by Tod Williams Billie Tsien Architects and opened in 2001. The museum originally expected attendance to finance repayment of the loan they took out to purchase it, but low visitor traffic and losses on investments during the financial crisis led the museum to default.

Parsons noted in a letter on the Folk Museum's website that the institution will be exploring partnerships with other cultural and educational organizations, traveling exhibitions, and an enriched online presence in order to compensate for the building loss. The decision to sell the space came after a lengthy review of the museum's financial situation, consultation with professional advisers, and "much soul-searching," she said. A representative from the Folk Art Museum declined to clarify exactly when the museum approached MoMA about the sale and to provide any other additional information.

The news is a welcome opportunity for MoMA, which began looking to expand just three years after its large-scale 2004 renovation. In 2007, the museum announced that it had sold a vacant lot on West 54th street to the international real estate firm Hines, which would develop a mixed-use skyscraper designed by Jean Nouvel that would add 60,000 square feet of additional exhibition space. The project was put on hold in September 2009, however, after immense protest from neighbors and a city mandate that the building's height be reduced by 200 feet. "After the expansion we knew — because all you had to do was do the math — that we were going to need more space at some point and possibly even a different footprint," MoMA director Glenn D. Lowry told Art + Auction magazine last January. The Folk Art Museum property will connect MoMA's current building to the 54th street lot.

Meanwhile, the fate of the building itself remains a question mark. The towering,
gray-paneled construction has been criticized in the past as
unattractive and confusing. Critic Jerry Saltz led the charge against
the building, calling it "horrendous," and, in a moment of foresight,
wrote in a 2010 article that, "Really, AFAM should just sell its building to
MoMA. MoMA could then either tear it down and build something new or transform it into offices." It
is unclear at this point whether MoMA plans to tear down the building.