(Bloomberg) -- Singapore’s richest property dynasty’s earnings took a severe hit last year, in part due to its contentious investment in a Chinese developer that has driven a rift in the billionaire family.

City Developments Ltd. posted a net loss of S$1.9 billion ($1.4 billion) for the year ended Dec. 31, it said in a statement Friday. While the pandemic has battered its hotel revenue and rental income, the company also posted an impairment loss of S$1.78 billion from its investment in China’s Sincere Property Group.

Since CDL acquired a majority stake in Chongqing-based Sincere last April, the Chinese property firm has proved to be an onerous investment, creating a rift in a family dynasty that’s worth $16.5 billion, according to last year’s Bloomberg Billionaires Index list of Asia’s richest clans. Three CDL directors, including the cousin of the firm’s chairman, have resigned in disagreement over the Sincere deal, spearheaded by Chief Executive Officer Sherman Kwek.

Money pumped into the Chinese property firm has swelled from an initial investment of S$880 million to S$1.8 billion as of Dec. 31. The internal fallout has prompted CDL to set up a special working group to improve Sincere’s liquidity and profitability. With that in mind, the Singapore developer acquired Sincere’s stake in a Shenzhen technology park this week.

The impairment loss in Sincere constitutes 93% of its total investment, CDL said. Taking into account Sincere’s debts in the next 12 months as well as China’s “three red lines” policy that caps borrowings for real estate developers, CDL cautioned that the Chinese property firm “may face significant liquidity challenges.”

“The situation is fluid and we remain focused on completing our strategic review and embarking on further corporate action, whilst prioritizing shareholder value preservation,” Chairman Kwek Leng Beng said.

Touted as “game changing” for growth, the investment in Sincere -- CDL’s single largest investment in China -- increased its presence in the world’s second-largest economy to about 20 cities from three. But the coronavirus pandemic and tighter borrowing rules governing real estate firms in the country have instead forced losses on the Singaporean company.

CDL’s revenue declined 38.5% to S$2.1 billion last year, with its hotel operations accounting for 81% of the slump, the results showed. Impairment losses on hotels and investment properties totaled S$99.5 million.

Still, the company said it “remains confident to weather the combined challenges with its strong fundamentals and financial strength.” It has a “robust” financial position with sufficient liquidity to meet its operational needs and financial commitments, it said. As of Dec. 31, the company had cash reserves of S$3.2 billion.

(Add more details on Sincere investment and CDL’s chairman comments in fifth and sixth paragraphs.)

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