May 11 (Bloomberg) -- The Museum of Modern Art agreed to buy the midtown Manhattan headquarters of the American Folk Art Museum, which is in default on the $31.9 million it borrowed to construct the building a decade ago.
Terms of the sale weren’t disclosed in a press release issued by the Folk Art Museum, which was founded in 1961 and will relocate to its 6,000-square-foot satellite location opposite Lincoln Center on Manhattan’s Upper West Side.
The Folk Art Museum headquarters building stands a short distance west of MoMA, which said it will use the 30,000-square-foot space for exhibitions.
The Folk Art Museum has missed $3.7 million in payments to a debt-service fund connected to bonds issued for the new premises, according to a Jan. 5 filing to bondholders.
Laura Parsons, president of the museum, described the sale as a last resort, and said several board members wore black last night as they convened to approve it.
“We are in mourning,” she said, adding that the museum is looking at partnerships with cultural institutions and traveling exhibitions.
Parsons said the museum will be debt-free following the sale.
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