Two large Manhattan office delinquencies fueled a double-digit increase in the overall delinquency rate in commercial mortgage-backed securities (CMBS) for September, according to Fitch Ratings.
Overall, new 60-day-plus delinquencies totaled $2 billion, up from $1.69 billion in August, Fitch said. Maturity defaults accounted for half, or 51% ($1.05 billion) of new delinquencies, while the rest were term defaults.
Delinquencies that were resolved decreased to $964 million in September, down from $2.18 million in August, for deals that the rating agency assesses. Loans in special servicing across Fitch's entire commercial real estate coverage was $36.0 billion, representing 5.9% of its CMBS universe, the rating agency said.
For September's results, the most acute problems seemed to stemmed from two office deals, Fitch analysts said.
A loan on 261 Fifth Avenue, a 446,820-square-foot office property, was transferred to special servicing after its September 2025 maturity default. Although the loan had been performing, the borrower was unable to pay it off because of poor refinance metrics, according to analysts at Fitch Ratings.
Another loan, backed by a 136,886-square-foot, retail and office space near Union Square in Manhattan faced a slew of challenges, including property tax arrears, a transfer to special servicing in March 2024 and then foreclosure and receivership proceedings that started in February 2025. Even more recently the loss of a major tenant was a blow to occupancy, Fitch said.
The loans on 261 Fifth Avenue and 90 Fifth Avenue are securitized as pari passu companion notes in several CMBS deals, Wasiq Chughtai, Fitch Ratings' director of CMBS research for North America told Asset Securitization Report via email. Those deals include the BACM 2015-UBS7 for 261 Fifth Avenue and GSMS 2017-GS7, and series GS8 for 90 Fifth Avenue, according to Fitch.
Compared to one year ago, overall CMBS delinquencies re up 21 basis points, driven mainly by office loans. In that sector, delinquencies are up 227 basis points year-over year, Chughtai said.
A wary industry view
Heading into the securitization industry's ABS East conference in Miami, industry professionals also expressed concern about how consumer-oriented sectors could respond to weaker spending and policy uncertainty.
"Still elevated interest rates and lower office valuations in the lower-tier segment will continue to drive refinancing challenges," Chughtai said. "We expect more transfers to special servicing, maturity-related defaults and continued loan extensions for borrower-supported assets."
