Lease extension agreement is a legal document and as the name prescribed it is usually composed with the purpose of extending out the lease period.
Once the lease period is over tenant is required to pay the rest of amount at once to own the property or to leave the property. However if he is interested in buying the property but investing major amount at once is not possible he adopt this method.
Once this agreement is about to prepare among two parties usually value of the property at the current time is observable by the landlord to make the lease installments correctly.
It is beneficial for the tenant as he is charged the legal price of the property instead of more prices and paying out rest of amount is therefore easy through extension.