A court-approved settlement agreement between Landmark Recovery and Sabra Health Care REIT (Nasdaq: SBRA) will see the two entities part ways after a years-long partnership.
The engagement between the addiction treatment provider and the real estate investment trust (REIT) helped Landmark accelerate its development and expansion through real estate deals. It also brought renewed relevance to real estate in an era of behavioral health care that increasingly deprioritizes facility-based care, especially the residential treatment Landmark Recovery provides.
Dated April 8, the settlement agreement primarily outlines the resolution of a dispute over missed rent payments and the obligations of Landmark Recovery’s various legal entities to Sarba due to the company’s “cross-collateralization.” Landmark Recovery sought bankruptcy protections from the U.S. Bankruptcy Court for the Middle District of Tennessee in August 2025 for its operations in Colorado and Arkansas. The company ran three facilities owned by Sabra Health Care REIT in those states: one in Arkansas and two in Colorado.
The separation of the two organizations extends to all of the facilities that Landmark Recovery holds leases for with Sabra Health Care REIT. However, the deal will require Landmark Recovery to pay Sabra $52.5 million to acquire the facilities in Colorado and Arkansas that were directly involved in the bankruptcy, as well as two others.
Landmark Recovery will buy the facilities at the following locations:
— 3625 Parkmoor Village Drive, Colorado Springs, Colorado
— Aurora Property: 2000 South Blackhawk Street, Aurora, Colorado
— 12 Hospital Drive, Morrilton, Arkansas
— 4112 Fern Valley Road, Louisville, Kentucky
— 13590 N. Meridian Street, Carmel, Indiana
Behavioral Health Business reached out to both companies for additional information. Neither responded.
The sale will close within 60 days of the agreement becoming effective. Landmark Recovery will hand over the other facilities that it is leasing from Sabra Health Care REIT within 30 days of the close of sale. In the meantime, Landmark Recovery is required to pursue or continue pursuing insurance claim payments to help cover repairs and restorations at the Sabra facilities, the documents state. These include things like mold remediation and pipe repair.
In a separate legal matter involving one of Landmark Recovery’s insurers, court documents show that the Colorado Springs facility was the victim of a “comprehensive and professionally orchestrated theft of all copper pipes, copper conduit and copper wire” in the winter of 2022. Property damage totaled at least $2 million.
According to the settlement agreement, Landmark must remediate mold and replace copper at the facility in Gulf Breeze, Florida; remediate mold, a raccoon infestation and burst-waterpipe damage at a facility in New London, Connecticut; and repair the domestic water line, the fire sprinkler system and flood and water damage for the facility in Bluffton, Indiana.
Until the deal closes, Landmark Recovery will pay Sabra Health Care REIT $500,000 a month to cover rents for the Colorado and Arkansas facilities. It must also make a $850,000 nonrefundable deposit as part of the deal.
Landmark Recovery and Sabra Health Care REIT made initial motions in court but took the matter to mediation with the court’s blessing. On Dec. 2, 2025, the two entities spent the day hashing out an “email agreement, with a more complete settlement agreement to follow,” the documents state.
However, the drafting process led to disputes over what had actually been agreed upon. The two met again for mediation on Feb. 17. Then, Landmark Recovery and Sabra Health Care REIT settled on additional agreements in principle regarding the remaining terms in dispute. They executed the agreement on March 10.
The successful execution of the settlement agreement will also bring an end to the bankruptcy case, the documents state.
Arguing for approval of the settlement agreement, rather than continued litigation, would entail unnecessary costs and potential harm to both parties. While Landmark Recovery maintains it had the superior legal argument, litigation would be an existential challenge for it in Colorado and Arkansas.
“The outcome of the central dispute concerning [Landmark Recovery’s Colorado and Arkansas] leases is crucial to [their] continued operations and survival,” Landmark’s motion to approve the agreement states. “Without the ability to operate at these facilities, [Landmark Recovery’s] businesses would grind to a halt.”
Landmark Recovery, now operating publicly under the brand Alsos Behavioral Health, has had conflicts with other landlords as well. In 2022, the company was contemplating a facility development blitz. But in the following Summer, a string of deaths at its Indiana facilities plus exposes alleging poor conditions in the facilities, apparently due to lean staffing, led to the shuttering of its Indiana operations and knocked the company off track. About a year ago, the company faced fresh scrutiny after one patient at a Louisville, Kentucky, facility killed another patient.